O A Notes to the Consolidated Financial Statements (continued) 11.6 Derivative financial instruments - - - - - - - - - - - - Introduction Report of the Executive Board Report of the Supervisory Board Cash flow sensitivity analysis for variable rate 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 2017. Profit or loss Equity 100 bp 100 bp 100 bp 100 bp In millions of increase decrease increase decrease 31 December 2018 Variable rate instruments 9 (9) 9 (9) Cross currency interest rate swaps (3) 3 (3) 3 Cash flow sensitivity (net) 6 (6) 6 (6) 31 December 2017 Variable rate instruments 2 (2) 2 (2) Net interest rate swaps (3) 3 (3) 3 Cash flow sensitivity (net) (1) 1 (1) 1 Commodity price risk Commodity price risk is the risk that changes in the prices of commodities will affect HEINEKEN's income. The objective of commodity price risk management is to manage and control commodity risk exposures within acceptable parameters. The main commodity exposure relates to the purchase of aluminium cans, glass bottles, malt and utilities. Commodity price risk is in principle mitigated by negotiating fixed prices in supplier contracts with various contract durations. Another method to mitigate commodity price risk is by entering into commodity derivatives. HEINEKEN enters into commodity derivatives for aluminium hedging and to a certain extent gas, fuel and sugar hedging. HEINEKEN does not enter into commodity contracts other than to meet HEINEKEN's expected usage and sale requirements. Sensitivity analysis for aluminium hedges The table below shows an estimated pre-tax impact of 10% change in the market price of aluminium. Equity 10% 10% In millions of increase decrease 31 December 2018 Aluminium hedges 43 (43) Financial Statements Sustainability Review Heineken N.V. Annual Report 2018^10' Other Information HEINEKEN uses derivatives in order to manage market risks. The schedule below shows the fair value of the derivatives on the balance sheet of HEINEKEN as per reporting date: 2018 2017 In millions of Asset Liability Asset Liability Current 35 (70) 219 (21) Non-current* 35 (33) 36 (57) 70 (103) 255 (78) *Non-current derivative assets and liabilities are part of 'Other non-current assets' (note 8 3.4), respectively 'Other non-current liabilities'. Generally, HEINEKEN seeks to apply hedge accounting or make use of natural hedges in order to minimise profit and loss or cash flow volatility. The schedule below shows which derivatives are used in hedge accounting: 2018 2017 In millions of Asset Liability Asset Liability No hedge accounting - CCIRS 7 4 No hedge accounting - Other 6 (3) 7 (14) Cash flow hedge - CCIRS 113 Cash flow hedge - Forwards 21 (38) 50 (4) Cash flow hedge - Commodity forwards 12 (30) 81 (4) Fair value hedge - CCIRS (29) (48) Net investment hedge - CCIRS 24 (8) Net investment hedge - Forwards (3) 70 (103) 255 (78) Cash flow hedges HEINEKEN 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 borrowings. In August 2018, the cross-currency interest rate swaps were settled and resulted in a cash receipt of €168 million. In connection with the transactions related to CR Beer in China, HEINEKEN entered into several forward exchange contracts which have been designated as cash flow hedges to hedge the foreign exchange rate risk on the net HKD consideration. The market value of these forward exchange contracts is not material as at 31 December 2018 and is included in the cash flow hedge forwards above.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2018 | | pagina 104