Notes to the Consolidated Financial Statements (continued) 13.2 Off-balance sheet commitments - - 13.3 Related parties Key management remuneration O Q, Introduction Report of the Executive Board Report of the Supervisory Board HEINEKEN leases offices, warehouses, pubs, cars and other equipment in the ordinary course of business. The raw materials purchase contracts mainly relate to malt, bottles and cans which are used in the production and sale of finished products. Total Less than 1-5 More than In millions of 2018 1 year years 5 years 2017 Operating lease commitments 2,013 307 767 939 1,704 Property, plant and equipment ordered 305 287 18 329 Raw materials purchase contracts 7,571 2,717 3,583 1,271 6,153 Marketing and merchandising commitments 635 273 358 4 647 Other off-balance sheet obligations 4,375 3,005 590 780 2,092 Off-balance sheet obligations 14,899 6,589 5,316 2,994 10,925 Undrawn committed bank facilities 3,845 166 3,679 3,929 During the year ended 31 December 2018, €375 million (2017: €364 million) was recognised as an expense in profit or loss in respect of operating leases and rent. Other off-balance sheet obligations in 2018 include HKD24.3 billion (€2.7 billion as per 31 December 2018) as the committed amount by HEINEKEN for acquiring a shareholding of 40% in CRH (Beer) Limited, which is expected to close in 2019. Other off-balance sheet obligations also include energy, distribution 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. Accounting policies Off-balance sheet commitments are not discounted. Operating lease commitments Operating leases are not recognised in HEINEKEN's statement of financial position. Payments made under operating leases are charged to profit or loss on a straight-line basis over the term of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. The lease commitments contain the lease payments for the non-cancellable period of a lease and the period for extension options that are reasonably certain to be exercised. Heineken N.V. Annual Report 2018! 10 Financial Statements Sustainability Review Other Information Raw materials purchase contracts Raw material contracts include long-term purchase contracts with suppliers in which prices are fixed or will be agreed based upon predefined price formulas. Identification of related parties The following parties are considered to be related to Heineken N.V.: - Key management personnel: the Executive Board and the Supervisory Board - Parent company Heineken Holding N.V. and ultimate controlling party Mrs. Carvalho-Heineken (refer to 'Shareholder Information') - Associates and Joint ventures of Heineken N.V. - Shareholder with significant influence Fomento Económico Mexicano, S.A.B. de CV (FEMSA) - HEINEKEN pension funds (refer to note 9.1) - Employees of HEINEKEN (refer to note 6.4) In millions of 2018 2017 Executive Board 12.0 13.3 Supervisory Board 1.0 1.0 Total 13.0 14.3 Executive Board The remuneration of the members of the Executive Board consists of a fixed component and a variable component. The variable component is made up of a Short-term Incentive (STI) and a Long-term Incentive (LTI). The STI is based on financial and operational measures (75%) and on individual leadership measures (25%) as set by the Supervisory Board at the beginning of the year. For the LTI we refer to note 6.5. The separate Remuneration Report is stated on pages 52-60.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2018 | | pagina 110