Notes to the Consolidated Financial Statements (continued)
O O Qs
Introduction Report of the Executive Board Report of the Supervisory Board
Loans and advances to customers
HEINEKEN's loans and receivables include loans and advances to customers. Loans and advances to
customers are usually backed by collateral such as properties. HEINEKEN charges interest on loans to
its customers.
Trade and other receivables
HEINEKEN's local management has credit policies in place and the exposure to credit risk is monitored on
an ongoing basis. Under these policies all customers requiring credit above a certain amount are reviewed
and new customers are analysed individually for creditworthiness before HEINEKEN's standard payment
and delivery terms and conditions are offered. This review can include external ratings, where available,
and in some cases bank references. Credit limits are determined for each customer and are reviewed
regularly. Customers that fail to meet HEINEKEN's credit requirements transact only with HEINEKEN
on a prepayment basis or Cash on Delivery.
Customers are monitored, on a country basis, according to their credit risk characteristics. Distinction is made
between individuals and legal entities, type of distribution channel, geographic location, ageing profile,
maturity and existence of previous financial difficulties.
HEINEKEN has a policy in place in respect of compliance with Anti-Money Laundering Laws.
HEINEKEN considers it important to know with whom business is done and from whom payments
are received.
Allowances
HEINEKEN establishes allowances for impairment of loans and advances to customers, trade and other
receivables using an expected credit losses model. These allowances cover specific loss components that
relate to individual exposures, and a collective loss component established for groups of similar customers.
The collective loss allowance is determined based on historical data of payment statistics and updated
periodically to incorporate forward looking information. The loans and advances to customers, trade and
other receivables are written off when there is no reasonable expectation of recovery
Investments
HEINEKEN limits its exposure to credit risk by only investing available cash balances in deposits and
liquid investments with counterparties that have strong credit ratings. HEINEKEN actively monitors
these credit ratings.
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2019^10
Other Information
Guarantees
HEINEKEN's policy is to avoid issuing guarantees unless this leads to substantial benefits for HEINEKEN.
For some loans (to customers) HEINEKEN does issue guarantees. In these cases HEINEKEN aims to
receive security from the customer to limit the credit risk exposure.
Heineken N.V. has issued a joint and several liability statement to the provisions of Section 403, Part 9,
Book 2 of the Dutch Civil Code with respect to legal entities established in the Netherlands. Refer to note
A.1 of the Company financial statements.
Exposure to credit risk
Below the maximum exposure to credit risk as per reporting date is shown:
In millions of
Note
2019
2018*
Cash and cash equivalents
11.2
1,821
2,903
Trade and other receivables, excluding prepayments
72
3,738
3,413
Derivative assets
11.6
30
70
Fair value through OCI investments
8.4
408
501
Loans and advances to customers
8.3
277
341
Other non-current receivables
8.4
406
218
Guarantees to banks for loans (to third parties)
9.3
332
325
7,012
7,771
Restated for IAS 37. Refer to note 4 for further details.
