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Notes to the Consolidated Financial Statements
13.2 Off-balance sheet commitments
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11^ Heineken N.V. Report of the Report of the Financial Sustainability Other
J- J-T1 Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
Refer to the table below for detail of the determination of level 3 fair value measurements as at 31 December:
In millions of
2020
2019
Fair value through OCI investments based on level 3
Balance as at 1 January
125
91
Fair value adjustments recognised in other comprehensive income
(41)
34
Balance as at 31 December
84
125
The fair values for the level 3 fair value through OCI investments are based on the financial performance of
the investments and the market multiples of comparable equity securities.
Accounting estimates
The different methods applied by HEINEKEN to determine the fair value require the use of estimates.
Investments in equity securities
The fair value of financial assets at fair value through profit or loss and fair value through OCI is determined
by reference to their quoted closing bid price at the reporting date or, if unquoted, determined using an
appropriate valuation technique. These valuation techniques maximise the use of observable market data
where available.
Derivative financial instruments
The fair value of derivative financial instruments is based on their listed market price, if available. If a listed
market price is not available, fair value is in general estimated by discounting the difference between the cash
flows based on contractual price and the cash flows based on current price for the residual maturity of the
contract using observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the valuation received
from the counterparty. Fair values include the instrument's credit risk and adjustments to take account of the
credit risk of the HEINEKEN entity and counterparty when appropriate.
Non-derivative financial instruments
Fair value, which is determined for disclosure purposes or when fair value hedge accounting is applied, is
calculated based on the present value of future principal and interest cash flows, discounted at the market
rate of interest at the reporting date. Fair values include the instrument's credit risk and adjustments to take
account of the credit risk of the HEINEKEN entity and counterparty when appropriate.
The raw materials purchase contracts mainly relate to malt, bottles and cans which are used in the production
and sale of finished products.
In millions of
Total 2020
Less than
1 year
1-5 years
More than
5 years
Total 2019
Property, plant and equipment ordered
363
352
11
321
Raw materials purchase contracts
9,586
2,934
5,791
861
8,827
Marketing and merchandising commitments
851
311
525
15
1,051
Other off-balance sheet obligations
1,773
324
629
820
2,005
Off-balance sheet obligations
12,573
3,921
6,956
1,696
12,204
Undrawn committed bank facilities
3,941
389
3,552
3,750
Other off-balance sheet obligations 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 reported on an undiscounted basis.
Raw materials purchase contracts
Raw material purchase contracts include long-term purchase contracts with suppliers in which prices are
fixed or will be agreed based upon predefined price formulas.
