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Notes to the Consolidated Financial Statements
11.4 Capital and reserves
1 O'? Heineken N.V. Report of the Report of the Financial Sustainability Other
±yj^) Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
Changes in borrowings
Cash flows from financing activities are mainly generated by bonds, commercial paper, bank loans and
other interest-bearing liabilities presented above. Additionally, HEINEKEN also uses derivatives related
to its financing, which can be recognised as assets or liabilities. The above table details the reconciliation
of the liabilities and assets arising from financing activities to the cash flow from financing activities.
Bank overdrafts form an integral part of HEINEKEN's cash management and are included as a component of
cash and cash equivalents for the purpose of the statement of cash flows. For more information on derivatives
refer to note 11.6.
The interest rate on the net debt position as at 31 December 2020 was 3.0% (2019: 3.0%). The average maturity
of the bonds as at 31 December 2020 was 8 years (2019: 7 years).
Centrally available financing headroom
The centrally available financing headroom at Group level was approximately €5.2 billion as at 31 December
2020 (2019: €3.0 billion) and consisted of the undrawn revolving credit facility and cash minus commercial
paper and other short-term borrowings. HEINEKEN increased its financing headroom by issuing new
bonds and acquiring short-term funding, including raising €3.0 billion through five new bonds under the
EMTN programme.
Accounting estimates and judgements
Significant judgement is required to determine the lease term and the incremental borrowing rate.
The assessment of whether HEINEKEN is reasonably certain to exercise extension options or not to make use
of termination options impacts the lease term, which as a result could affect the amount of lease liabilities
recognised. The assumptions used in the determination of the incremental borrowing rate could impact the
rate used in discounting future payments, which as a result could have an impact on the amount of lease
liabilities recognised.
Accounting policies
Borrowings
Borrowings are initially measured at fair value less transaction costs. Subsequently the borrowings are
measured at amortised cost using the effective interest rate method. Borrowings included in a fair value
hedge are stated at fair value in respect of the risk being hedged.
Borrowings for which HEINEKEN has an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date are classified as non-current liabilities. For the accounting policy on
derivatives and cash and cash equivalents refer to notes 11.6. and 11.2 respectively.
Lease liabilities
Lease liabilities are measured at the present value of the lease payments to be paid during the lease term,
discounted using the incremental borrowing rate ('IBR'). Lease liabilities are subsequently increased by
the interest cost on the lease liabilities and decreased by lease payments made. The lease liabilities will be
remeasured when there is a change in the amount to be paid (e.g. due to indexation) or when there is a change
in the assessment of the lease terms.
The IBR is determined on a country level. For each country there are separate rates depending on the contract
currency and the term of the lease. The IBR is calculated based on the local risk free rate plus a country
default spread and a credit spread.
The lease term is determined as the non-cancellable period of a lease, together with:
- Periods covered by a unilateral option to extend the lease if HEINEKEN is reasonably certain to make use of
that option.
- Periods covered by an option to terminate the lease if HEINEKEN is reasonably certain not to make use of
that option.
HEINEKEN applies the following practical expedients for the recognition of leases:
- Apply a single discount rate per country to a portfolio of leases with reasonably similar characteristics.
- Include non-lease components in the lease liability for equipment leases.
Share capital
Refer to the table below for the issued share capital as at 31 December. All issued shares are fully paid.
2020
2019
Share capital
Shares of €1.60
Nominal value in
millions of€
Shares of €1.60
Nominal value in
millions of
1 January
576,002,613
922
576,002,613
922
Changes
31 December
576,002,613
922
576,002,613
922
The Company's authorised capital amounts to €2,500 million, consisting of 1,562,500,000 shares.
The shareholders are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at shareholder meetings of the Company. In respect of the treasury shares that are held by
HEINEKEN, rights are suspended.
Share premium
As at 31 December 2020, the share premium amounted to €2,701 million (2019: €2,701 million).
