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Report of the Report of the
Contents Overview Executive Board Supervisory Board
Financial
statements
Other information
Defined benefit plan assets
2013
2012
In millions of EUR
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Equity instruments:
Europe
711
711
620
620
Northern America
582
582
458
458
Japan
197
197
170
170
Asia other
177
177
236
236
Other
252
252
201
201
1,919
1,919
1,685
1,685
Debt instruments:
Corporate bonds - investment grade
2,150
1,986
Corporate bonds - non-investment grade
39
58
2,189
20
2,209
2,044
16
2,060
Derivatives
423
2
425
210
6
216
Properties and real estate
233
214
447
213
222
435
Cash and cash equivalents
107
12
119
243
24
267
Investment funds
979
228
1,207
1,320
166
1,486
Other plan assets
184
43
227
197
55
252
1,926
499
2,425
2,183
473
2,656
Balance as at 31 December
6,034
519
6,553
5,912
489
6,401
The primary goal of the Heineken pension funds is to monitor the mix of debt and equity securities in its investment portfolio based
on market expectations. Material investments within the portfolio are managed on an individual basis. Through its defined benefit
pension plans, HEINEKEN is exposed to a number of risks, the most significant which are detailed below:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this
yield, this will create a deficit. Both the Netherlands and the UK plans hold a significant proportion of equities, which are expected
to outperform corporate bonds in the long term, while providing volatility and risk in the short term.
In the Netherlands, an Asset-Liability Matching (ALM) study is performed at least on a triennial basis. The ALM study is the basis
for the strategic investment policies and the (long-term) strategic investment mix. This resulted in a strategic asset mix comprising
35 percent equity securities, 40 per cent bonds, 10 per cent property and real estate and 15 per cent other investments. The objective
is to hedge currency risk on the dollar, yen and sterling for 50 per cent in the strategic investment mix.
In the UK, an Asset-Liability Matching study is performed at least on a triennial basis. The ALM study is the basis for the strategic
investment policies and the (long-term) strategic investment mix. This resulted in a strategic asset mix comprising 29 per cent equity
securities (including synthetic exposure from derivatives), 35 per cent bonds (including synthetic exposure from derivatives), 5 per cent
property and real estate and 31 per cent other investments. The objective is to hedge currency risk on developed non-GBP equity
market exposures for 70 per cent, with USD currency risk on other investments hedged 100 per cent in the strategic investment mix.
Interest rate risk
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the
plans' bond holdings.
In the Netherlands, interest rate risk is partly managed through fixed income investments. These investments match the liabilities for
23.4 per cent. In the UK, interest rate risk is partly managed through the use of a mixture of fixed income investments and interest rate
swap instruments. These investments and instruments match the liabilities for 29.2 per cent.
Heineken N.V. Annual Report 2013
107