Notes to the consolidated financial statements continued - - - - - - - - - - - - Report of the Report of the Financial Other Contents Overview Executive Board Supervisory Board statements information 32. Financial risk management and financial instruments Net investment hedges HEINEKEN hedges its investments in certain subsidiaries by entering local currency denominated borrowings, which mitigate the foreign currency translation risk arising from the subsidiaries net assets. These borrowings are designated as a net investment hedge. The fair value of these borrowings at 31 December 2014 was EUR520 million (2013: EUR273 million), and no ineffectiveness was recognised in profit and loss in 2014 (2013: nil). Capital management There were no major changes in ElEINEKEN's approach to capital management during the year. The Executive Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business and acquisitions. Capital is herein defined as equity attributable to equity holders of the Company (total equity minus non-controlling interests). EIEINEKEN is not subject to externally imposed capital requirements other than the legal reserves explained in note 22. Shares are purchased to meet the requirements of the share-based payment awards, as further explained in note 29. Fair values The fair values of financial assets and liabilities that differ from the carrying amounts shown in the statement of financial position are as follows: In millions of EUR Carrying amount 2014 Fair value 2014 Carrying amount 2013 Fair value 2013 Bank loans (540) (540) (711) (711) Unsecured bond issues (8,769) (9,296) (8,987) (8,951) Finance lease liabilities (15) (15) (9) (9) Other interest-bearing liabilities (1,275) (1,275) (1,742) (1,742) Basis for determining fair values The significant methods and assumptions used in note 4. in estimating the fair values of financial instruments reflected in the table above are discussed Fair value hierarchy The tables below present the financial instruments accounted for at fair value and amortised cost by level of the following fair value measurement hierarchy: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3) 31 December 2014 Level 1 Level 2 Level 3 Available-for-sale investments 99 86 68 Non-current derivative assets 97 Current derivative assets 122 Investments held for trading 13 112 305 68 Non-current derivative liabilities (8) Loans and borrowings (9,296) (1,829) Current derivative liabilities (104) (9,296) (1,941) 122 Eleineken N.V. Annual Report 2014

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