Notes to the Consolidated Financial Statements continued
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Reportofthe Reportofthe Financial Other
Contents Overview Executive Board Supervisory Board Statements Information
32. Financial risk management and financial instruments continued
Carrying
In millions of EUR amount
Expected
cash flows
Less than
1 year
1 -2 years
2-5 years
2014
More than
5 years
Interest rate swaps
Assets
Liabilities
(3)
(4)
(2)
(2)
Cross-currency interest rate swaps
Assets
166
1,701
605
82
1,014
Liabilities
(1,459)
(507)
(68)
(884)
Forward exchange contracts
Assets
24
1,541
1,394
147
Liabilities
(88)
(1,607)
(1,454)
(153)
Commodity derivatives
Assets
5
9
6
2
1
Liabilities
(15)
(19)
(13)
(5)
(1)
89
162
29
3
130
The periods in which the cash flows associated with forward exchange contracts that are cash flow hedges are expected to impact profit or loss is typically
one or two months earlier than the occurrence of the cash flows as in the above table.
HEINEKEN has entered into several cross-currency interest rate swaps which have been designated as cash flow hedges to hedge the foreign exchange
rate risk on the principal amount and future interest payments of its US dollar and GBP borrowings. HEINEKEN has also entered into a few interest rate
swaps which have been designated as cash flow hedges to hedge the value of future interest cash flows payable on floating interest borrowings.
The borrowings are designated as the hedged item as part of the cash flow hedge. The borrowings and the interest rate and cross-currency interest
rate swaps have the same critical terms.
Net investment hedges
HEINEKEN hedges its investments in certain subsidiaries by entering into 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 2015 was EUR535 million (201 A: EUR520 million), and no ineffectiveness was recognised in profit and loss in 2015 (2014: nil).
Capital management
There were no major changes in HEIN EKEN'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 acguisitions. Capital is herein
defined as eguity attributable to eguity holders of the Company (total eguity minus non-controlling interests).
HEINEKEN is not subject to externally imposed capital reguirements other than the legal reserves explained in note 22. Shares are purchased to meet the
reguirements of the share-based payment awards, as further explained in note 29. In 2015, HEINEKEN also purchased shares following the completion of
the divestment of EMPAQUE in February 2015. as further explained in note 22.
Fair values
For bank loans and finance lease liabilities the carrying amount is a reasonable approximation of fair value. The fair value of the unsecured bond issues as
at 31 December 2015 was EUR10.025 million (2014: EUR9.295 million) and the carrying amount was EUR9.559 million (2014: EUR8.759 million). The fair
value of the other interest bearing liabilities as at 31 December 2015 was EUR1,870 million (2014: EUR1.829) and the carrying amount was EUR1.759
million (2014: EUR1.829 million).
Basis for determining fair values
The significant methods and assumptions used in estimating the fair values of financial instruments reflected in the table above are discussed in note 4.
124 Heineken N.V. Annual Report 2015
