Notes to the Consolidated Financial Statements continued
249 1 250 253 1 254
1,871 1 1,872 2,176 1 2,177
Reportofthe Reportofthe Financial Other
Contents Overview Executive Board Supervisory Board Statements Information
28. Employee benefits continued
Defined benefit plan assets
2015 2014*
In millions of EUR Quoted Unquoted Total Quoted Unquoted Total
Equity instruments:
746 - 746 766 - 766
Northern America 511 - 511
212 - 212 207 - 207
Asia other 153 - 153 234 - 234
Debt instruments:
Corporate bonds-investment grade 2,791 1,355 4,146
Corporate bonds-non-investment grade 131 178 309
2,922 1,533 4,455 2,684 1,399 4,083
Derivatives 16 (1,229) (1,213) 5 (924)
Properties and real estate 253 267 520 281 212 493
Cash and cash equivalents 195 47 242
Investment funds 1,219 292 1,511 923 309 1.232
Other plan assets 4 270 274 199 61 260
1,687 (353) 1,334 1,614 (327) 1,287
Balance as at 31 December 6,480 1,181 7,661 6,474 1,073 7,547
Revised.
The H EIN EKEN pension funds monitor the mix of debt and equity securities in their investment portfolios based on market expectations. Material
investments within the portfolio are managed on an individual basis. Through its defined benefit pension plans, HEIN EKEN 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 38 per cent equity securities, 40 per cent
bonds, 7 per cent property and real estate and 15 per cent other investments. The objective is to hedge currency risk on the US dollar, Japanese yen and
British pound for 50 per cent of the equity exposure 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 US dollar 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 22.7 percent (2014:
20.1 percent). 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 24.7 per cent (2014:24.7 per cent).
110 Helneken N.V. Annual Report 2015
