107
Notes to the Consolidated Financial Statements (continued)
29. Trade and other payables
30. Financial risk management and financial instruments
Overview
Risk management framework
Credit risk
Loans and advances to customers
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
In millions of
Note
2017
2016
Trade payables
3,430
2,934
Accruals
1,344
1,263
Taxation and social security contributions
924
879
Returnable packaging deposits
607
628
Interest
168
129
Derivatives
21
75
Dividends
30
45
Other payables
232
271
30
6,756
6,224
The returnable packaging liability is based on the expected return of delivered returnable packaging materials with a deposit such as bottles,
crates and kegs, where HEINEKEN has the legal or constructive obligation to buy back the materials. The expected return is determined based on
measured circulation times and historical losses of returnable packaging materials in the market.
HEINEKEN has exposure to the following risks from its use of financial instruments, as they arise in the normal course of HEINEKEN's business:
- Credit risk
- Liquidity risk
- Market risk
This note presents information about HEINEKEN's exposureto each of the above risks, and it summarises HEINEKEN's policies and processes
that are in place for measuring and managing risk, including those related to capital management. Further quantitative disclosures are included
throughout these consolidated financial statements.
The Executive Board, underthe supervision of the Supervisory Board, has overall responsibility and sets rules for HEINEKEN's risk management and
control systems. They are reviewed regularly to reflect changes in market conditions and HEINEKEN's activities. The Executive Board oversees the
adequacy and functioning of the entire system of risk management and internal control, assisted by HEINEKEN Group departments.
The Global Treasury function focuses primarily on the management of financial risk and financial resources. Some of the risk management
strategies include the use of derivatives, primarily in the form of spot and forward exchange contracts and interest rate swaps, but options can be
used as well. It is HEINEKEN's policythat no speculative transactions are entered into.
Credit risk is the risk of financial loss to HEINEKEN if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and it arises principally from HEINEKEN's receivables from customers and investment securities.
All local operations are required to comply with the principles contained within the Global Credit Policy and develop local credit management
procedures accordingly HEINEKEN regularly reviews and updates the Global Credit Policy ensuring that adequate controls are in place to mitigate
any identified risks in respect of customer credit risk.
As at the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial instrument, including derivative financial instruments, in the consolidated statement of financial position.
HEINEKEN's exposureto credit risk is mainly influenced by the individual characteristics of each customer. HEINEKEN's loans and receivables
include loans and advances to customers, issued based on a loan or advance contract. Loans and advances to customers are secured by, among
others, rights on property or intangible assets, such as the right to take possession of the premises of the customer. On loans to customers interest
rates calculated by HEINEKEN are at least based on the risk-free rate plus a margin, which takes into account the risk profile of the customer and
value of security given.
In a few countries HEINEKEN provides guarantees to third parties who issue loans to our customers.
