116
Notes to the Consolidated Financial Statements (continued)
30. Financial risk management and financial instruments (continued)
Interest rate risk - profile
-
-
Cash flow sensitivity analysis for variable rate instruments
-
-
-
-
Commodity price risk
Sensitivity analysis for aluminium hedges
Heineken NV.
Report of the
Report of the
Financial
Sustainability
Other
Annual Report 2016
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
At the reporting date, the interest rate profile of HEINEKEN's interest-bearing financial instruments was as follows:
In millions of EUR
2016
2015
Fixed rate instruments
Financial assets
83
93
Financial liabilities
(11,984)
(11,057)
Net interest rate swaps
(42)
(11,901) (11,006)
Variable rate instruments
Financial assets
3,214
1,023
Financial liabilities
(2,587)
(1,508)
Net interest rate swaps
42
627 (443)
HEINEKEN applies cash flow hedge accounting on certain floating rate financial liabilities and designates derivatives as hedging instruments. A change
of 100 basis points in interest rates constantly applied during the reporting period would have increased (decreased) equity and profit or loss by the
amounts shown below (after tax). This analysis assumes that all other variables, in particular foreign currency rates, remain constant and excludes any
possible change in fair value of derivatives at period-end because of a change in interest rates. This analysis is performed on the same basis as for 2015.
Profit or loss Equity
In millions of EUR 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
31 December 2016
Variable rate instruments 5 (5) 5 (5)
Net interest rate swaps - - - -
Cash flow sensitivity (net) 5 (5) 5 (5)
31 December 2015
Variable rate instruments
(4)
4
(4)
4
Net interest rate swaps
Cash flow sensitivity (net)
(4)
4
(4)
4
Commodity price risk is the risk that changes in commodity prices will affect HEINEKEN's income. The objective of commodity price risk
management is to manage and control commodity risk exposures within acceptable parameters, while optimising the return on risk. The main
commodity exposure relates to the purchase of cans, glass bottles, malt and utilities. Commodity price risk is in principle addressed by negotiating
fixed prices in supplier contracts with various contract durations. So far, commodity hedging with financial counterparties by HEINEKEN has been
limited to aluminium hedging and to a limited extent gas and grains hedging, which are done in accordance with risk policies. HEINEKEN does not
enter into commodity contracts other than to meet HEINEKEN's expected usage and sale requirements. As at 31 December 2016, the market value
of commodity swaps was EUR 11 million positive (2015: EUR 70 million negative).
The table below shows an estimated pre-tax impact of 10% change in the market price of aluminium.
Equity
10% 10%
In millions of EUR increase decrease
31 December 2016
Aluminium hedges
40 (40)