Report of the Report of the
Contents Overview Executive Board Supervisory Board
Financial
statements
Other information
3. Significant accounting policies
(iii) Available-for-sale investments
HEINEKEN's investments in equity securities and certain debt securities are classified as available-for-sale. Subsequent to initial
recognition, they are measured at fair value and changes therein-other than impairment losses (see note 3i(i)), and foreign currency
differences on available-for-sale monetary items (see note 3b(i)) -are recognised in other comprehensive income and presented
within equity in the fair value reserve. When these investments are derecognised, the relevant cumulative gain or loss in the fair value
reserve is transferred to profit or loss.
Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the profit or loss.
Available-for-sale investments are recognised or derecognised by HEINEKEN on the date it commits to purchase or sell the investments.
(iv) Investments at fair value through profit or loss
An investment is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial
recognition. Investments are designated at fair value through profit or loss if HEINEKEN manages such investments and makes
purchase and sale decisions based on their fair value in accordance with ElEINEKEN's documented risk management or investment
strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss as incurred.
Investments at fair value through profit or loss are measured at fair value, with changes therein recognised in profit or loss as part
of the other net finance income/(expenses). Investments at fair value through profit and loss are recognised or derecognised by
EIEINEKEN on the date it commits to purchase or sell the investments.
(v) Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment
losses. Included in non-derivative financial instruments are advances to customers. Subsequently, the advances are amortised over
the term of the contract as a reduction of revenue.
(d) Derivative financial instruments (including hedge accounting)
General
EIEINEKEN uses derivatives in the ordinary course of business in order to manage market risks. Generally EIEINEKEN seeks to apply
hedge accounting in order to minimise the effects of foreign currency, interest rate or commodity price fluctuations in profit or loss.
Derivatives that can be used are interest rate swaps, forward rate agreements, caps and floors, commodity swaps, spot and forward
exchange contracts and options. Transactions are entered into with a limited number of counterparties with strong credit ratings.
Foreign currency, interest rate and commodity hedging operations are governed by internal policies and rules approved and monitored
by the Executive Board.
Derivative financial instruments are recognised initially at fair value, with attributable transaction costs recognised in profit or loss as
incurred. Derivatives for which hedge accounting is not applied are accounted for as instruments at fair value through profit or loss.
When derivatives qualify for hedge accounting, subsequent measurement is at fair value, and changes therein accounted for as
described in 3b(iv), 3d(ii) or 3d(iii).
(ii) Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised in other comprehensive
income and presented in the hedging reserve within equity to the extent that the hedge is effective. To the extent that the hedge
is ineffective, changes in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge
accounting is discontinued and the cumulative unrealised gain or loss previously recognised in other comprehensive income and
presented in the hedging reserve in equity, is recognised in profit or loss immediately, or when a hedging instrument is terminated,
but the hedged transaction still is expected to occur, the cumulative gain or loss at that point remains in other comprehensive income
and is recognised in accordance with the above-mentioned policy when the transaction occurs. When the hedged item is a non-financial
asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when it is recognised.
In other cases the amount recognised in other comprehensive income is transferred to the same line of profit or loss in the same
period that the hedged item affects profit or loss.
Eleineken N.V. Annual Report 2013
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