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
Level 3
Details of the determination of level 3 fair value measurements as at 31 December 2015 are set out below:
In millions of EUR
2015
Available-for-sale investments based on level 3
Balance as at 1 January
68
59
Fair value adjustments recognised in other comprehensive income
16
10
Disposals
(1)
Transfers
Balance as at 31 December
84
68
The fair values for the level 3 available-for-sale investments are based on the financial performance of the investments and the market multiples of
comparable equity securities.
33. Off-balance sheet commitments
In millions of EUR
Total 2015
Less than
1 year
1-5 years
More than
5 years
Operational lease commitments
1,114
150
415
549
993
Property, plant and equipment ordered
293
282
11
158
Raw materials purchase contracts
8,507
1,987
4,794
1,726
3,400
Marketing and merchandising commitments
370
156
213
1
402
Other off-balance sheet obligations
2,004
629
778
597
1,606
Off-balance sheet obligations
12,288
3,204
6,211
2,873
6,559
Undrawn committed bank facilities
2,930
398
2,523
9
2,871
HEIN EKEN leases buildings, cars and equipment in the ordinary course of business.
Raw material contracts include long-term purchase contracts with suppliers in which prices are fixed or will be agreed based upon predefined price
formulas. These contracts mainly relate to malt, bottles and cans. The significant increase of raw materials purchase commitments relates to purchase
contracts with EMPAQUE which has become a third party supplier after the disposal in 2015.
During the year ended 31 December 2015, EUR301 million (2014: EUR291 million) was recognised as an expense in profit or loss in respect of operating
leases and rent.
Other off-balance sheet obligations mainly include distribution, rental and service contracts.
Committed bank facilities are credit facilities on which a commitment fee is paid as compensation for the bank's requirement to reserve capital. The bank is
legally obliged to provide the facility under the terms and conditions of the agreement.
34. Contingencies
As part of the acquisition of the beer operations of FEMSAin 2010, HEINEKEN inherited existing legal proceedings with labour unions, tax authorities and
other parties of its. now wholly-owned, subsidiaries Cervejarias Kaiser Brasil and Cervejarias Kaiser Nordeste (jointly, Heineken Brasil). The proceedings have
arisen in the ordinary course of business and are common to the current economic and legal environment of Brazil. The proceedings have partly been
provided for (refer to note 30). The contingent amount being claimed against Heineken Brasil resulting from such proceedings as at 31 December 2015 is
EUR450 million. Such contingencies were classified by legal counsel as less than probable of being settled against Heineken Brasil, but more than remote.
However, HEINEKEN believes that the ultimate resolution of such legal proceedings will not have a material adverse effect on its consolidated financial
position or result of operations. HEIN EKEN does not expect any significant liability to arise from these contingencies. A part of the aforementioned
contingencies (EUR238 million) is tax-related and qualifies for indemnification by FEMSA (refer to note 17).
126 Heineken N.V. Annual Report 2015
