Overview
Report of the
Executive Board
Report of the
Supervisory Board
Financial
Statements
Other
Information
Welcome to HEINEKEN
HEINEKEN is the world’s most international
brewer with brands available in 179 countries
around the world.
We are a proud
independent global brewer
committed to bringing
enjoyment to consumers
around the world.
We value a passion for
quality, brands that people
love, enjoyment of life,
respect for people and
for our planet.
We want to win in all
markets with Heineken®
and with a full brand
portfolio in markets
where we choose.
Further information online:
theHEINEKENcompany.com
• Download the Annual Report
• Find out about HEINEKEN’s history
• Explore our countries and brands
Follow us on Twitter for news
and updates: @HEINEKENCorp
Contents
Contents
Overview
Overview
Performance highlights
Performance highlights
Key fi gures
Key figures
Report of the Executive Board
Report of the Executive Board
Chief Executive’s statement
Chief Executive’s statement
Executive Team
Executive Team
From Barley to Bar
From Barley to Bar
2
2
3
3
4
4
6
6
8
8
Operational Review
Operational Review
10 Our business priorities
10 Our business priorities
11 Win in premium led by Heineken®
11 Win in premium led by Heineken®
Shape the cider category
12
Shape the cider category
12
Lead by cool marketing & innovation
13
Lead by cool marketing & innovation
13
Be commercially assertive
14
Be commercially assertive
14
15 Drive end2end productivity
15 Drive end2end productivity
Brewing a Better World
16
Brewing a Better World
16
1 Heineken N.V. Annual Report 2015
65
65
67
67
Consolidated Statement
Consolidated Statement
of Changes in Equity
of Changes in Equity
Notes to the Consolidated
Notes to the Consolidated
Financial Statements
Financial Statements
132 Heineken N.V. Balance Sheet
132 Heineken N.V. Balance Sheet
132
132
133
133
Heineken N.V. Income Statement
Heineken N.V. Income Statement
Notes to the Heineken N.V.
Notes to the Heineken N.V.
Financial Statements
Financial Statements
Other Information
Other Information
141 Appropriation of Profi t
141 Appropriation of Profit
142 Independent Auditor’s Report
142 Independent Auditor’s Report
146 Shareholder Information
146 Shareholder Information
150 Bondholder Information
150 Bondholder Information
151 Historical Summary
151 Historical Summary
153 Glossary
153 Glossary
Regional Review
Regional Review
17 Our regions
17 Our regions
18
Africa, Middle East and Eastern Europe
18 Africa, Middle East and Eastern Europe
Americas
19
Americas
19
20 Asia Pacifi c
20 Asia Pacific
Europe
21
Europe
21
Risk Management
22
Risk Management
22
Financial Review
28
Financial Review
28
34 Corporate Governance Statement
34 Corporate Governance Statement
Report of the Supervisory Board
Report of the Supervisory Board
To the Shareholders
To the Shareholders
Remuneration Report
Remuneration Report
47
47
51
51
Financial Statements
Financial Statements
60 Consolidated Income Statement
60 Consolidated Income Statement
Consolidated Statement
61
Consolidated Statement
61
of Comprehensive Income
of Comprehensive Income
Consolidated Statement
Consolidated Statement
of Financial Position
of Financial Position
Consolidated Statement
Consolidated Statement
of Cash Flows
of Cash Flows
62
62
63
63
Contents
Performance highlights
“ Our strong performance in 2015 refl ects
the successful execution of our strategy,
as well as the relevance of our unique
geographic diversity and portfolio of
premium brands, led by Heineken®.”
Jean-François van Boxmeer
Chairman of the Executive Board/CEO
SUPERMERCARDO
Revenue
(in millions of EUR)
€20,511 m
2015
20,511
2014
2013
2012
2011
19,257
19,203
18,383
17,123
Consolidated beer volume
(in millions of hectolitres)
188.3mhl
2015
2014
2013
2012
2011
188.3
181.3
178.3
171.7
164.6
Heineken® volume
in premium segment
(in millions of hectolitres)
Operating profi t (beia)
(in millions of EUR)
Net profi t (beia)
(in millions of EUR)
30.5mhl
€3,381m €2,048m
2015
2014
2013
2012
2011
30.5
29.5
28.1
29.1
27.4
2015
2014
2013
2012
2011
3,381
3,129
2,941
2,666
2,456
2015
2014
2013
2012
2011
2,048
1,758
1,585
1,661
1,584
2 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardContentsOverviewOther Information 2015
20,511
3,381
1,892
2,048
4,841
4,722
741
1,692
37,714
13,535
11,510
45,131
2014
19,257
3,129
1,516
1,758
4,365
4,370
632
1,574
34,830
12,409
10,9101
33,955
572,292,454
3.31
3.58
1.30
2.96
23.65
78.77
572,944,188
3.57
574,945,645
2.64
3.06
1.10
2.74
21.58
58.95
576,002,613
3.05
Change in %
6.5%
8.1%
24.8%
16.5%
10.9%
8.1%
17.2%
7.5%
8.3%
9.1%
5.5%
32.9%
(0.5)%
25.4%
17.0%
18.2%
8.0%
9.6%
33.6%
(0.5)%
17.0%
73,767
76,136
(3.1)%
16.5%
14.6%
2.44
36.2%
73.3%
16.2%
12.7%
2.501
35.9%
78.9%
Key fi gures
Consolidated results
In millions of EUR
Revenue
Operating profi t (beia)
Net profi t
Net profi t (beia)
EBITDA
EBITDA (beia)
Dividend (proposed)
Free operating cash fl ow
Balance sheet
In millions of EUR
Total assets
Equity attributable to equity holders of the Company
Net debt position
Market capitalisation
Per share
Weighted average number of shares – basic
Net profi t
Net profi t (beia)
Dividend (proposed)
Free operating cash fl ow
Equity attributable to equity holders of the Company
Share price
Weighted average number of shares – diluted
Net profi t (beia) – diluted
Employees
Average number of employees (FTE)
Ratios
Operating profi t (beia) as a % of revenue
Net profi t as % of average equity attributable to equity
holders of the Company
Net debt/EBITDA (beia)
Dividend % payout
Cash conversion rate
1 Revised for the change in defi nition of net debt in 2015.
3 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardContentsOverviewOther Information Report of the Executive Board
Left Jean-François van Boxmeer
Chairman of the Executive Board/CEO
Right Laurence Debroux
Member of the Executive Board/CFO
Chief Executive’s statement
Delivering sustainable growth
Our collaborations with global organisations
such as UNIDO and WWF International, and
with local stakeholders, are helping to reduce
and balance our water usage. Solar power
is enabling a number of our brands to be
‘brewed by the sun’ – the latest being Tiger in
Singapore. And we continued to make good
progress in creating what will be the world’s
fi rst carbon neutral brewery at Göss in Austria,
a best practice that we will learn from and use
elsewhere. Addressing the issues associated with
alcohol abuse remains a priority. We continue
to invest signifi cantly in ‘Enjoy Responsibly’
campaigns. In December, the fi rst of our
markets launched the latest iteration: ‘Moderate
Drinkers Wanted’. This is a compelling, yet light-
hearted, international campaign that engages
women and encourages them to let men know
that drinking in moderation is cool.
marketing. 2015 was no exception with the
new James Bond fi lm ‘Spectre’, the Rugby
World Cup and the UEFA Champions League
all providing brilliant opportunities to engage
our consumers.
Our premium focus goes well beyond the
Heineken® brand. Desperados and Strongbow
are leading in the high-growth, global premium
fl avoured beer and cider categories. And
with Tiger and Dos Equis we have regional
powerhouse brands that are gaining recognition
around the world. We are also using our expertise
to deliver premium extensions of local brands,
like Birra Moretti Le Regionali in Italy, which
are meeting the growing demand for premium-
quality brands that deliver a sense of local pride
and loyalty.
During the year we acquired a 50 per cent
shareholding in the Lagunitas Brewing
Company. The Lagunitas team has built one
of the great US craft beer brands and we
are looking forward to partnering with them
to expand the brand globally. We will bring
Lagunitas to parts of the world yet to be
reached by the craft brewing phenomenon.
Focus on premium
Our strategic focus on premium brands is
allowing us to benefi t from continued and
increasing consumer demand for premium
and craft beer. Our premium portfolio is
growing across all regions.
Heineken® remains the world’s most valuable
premium beer brand. It continues to grow across
all regions. Our ability to achieve this is testament
to the quality of the beer and our commitment
to invest in high-impact, consumer-focused
2015 has been another strong year for our
business, refl ecting the continued success of our
strategy. Our focus on premium brands, together
with disciplined cost management, has enabled
us to drive top- and bottom-line growth and at
the same time to increase our operating margin
by 23 basis points, after the impact of the
divestiture of Empaque, in line with our guidance
for the year. Consolidated revenue grew 3.5 per
cent organically with revenue per hectolitre up
1.3 per cent. Consolidated operating profi t (beia)
grew 6.9 per cent organically.
The world in which we live and work
Our progress was achieved against a backdrop
of signifi cant geopolitical, socio-economic and
environmental challenges, all of which in one
way or another had an impact on our business.
It is therefore no coincidence that I begin my
review with Brewing a Better World (BaBW), our
approach to delivering sustainable growth and
creating shared value across our stakeholders.
The new thinking and partnerships that we
are developing as part of this are central to
navigating through, and ultimately meeting,
the global challenges we face. At every stage
of our business – from Barley to Bar – we
are making positive progress in terms of
achieving our targets. We also have a stronger
understanding of how to optimise our impact
in terms of the resources we use.
4 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Chief Executive’s Statement continued
Shaping the cider category
2015 was a landmark year for our cider business.
We have made great progress in unlocking some
of the technical, cost and regulatory barriers to
growth and take-up by our global businesses.
As a result, we have expanded availability to
71 markets and for the fi rst time sold more
than 1 million hl outside the UK. Consumers
in Nigeria, Bulgaria and Singapore are now
discovering the appeal of cider. And to
complement this, the UK cider market is back
in growth thanks to new fl avour innovations
and increased investment in the category.
Innovations driving top-line growth
Innovation is the engine of growth for our
business. In 2015 9.2 per cent of our revenue
was driven by innovations. Our consumer-
focus and insights enabled us to capitalise on
the growing appetite for low and no alcohol
products. Radler 2.0% and Radler 0.0% are now
available in 45 countries on fi ve continents
and are helping to create new and diff erent
drinking opportunities. The focus on fi nding
innovative new ways of delivering these and
our other beers is also driving good results. The
SUB, for the home market, and Brewlock in bars
are ensuring a premium draught experience
for consumers. Innovation is at the core of our
business and is supported by our behaviours.
Our focus is on investing in the types of
innovation that will fuel continued growth
in the future.
Accelerating delivery of global strategy
Over many years we have learned and proved
that success is achieved by having a well-
articulated, aligned strategy that leverages your
strengths as a business and that is delivered
with energy, innovation and commitment. At
HEINEKEN we have all of this plus a relentless
focus on improvement. Earlier in the year, we
changed our operating model and ways of
working in order to better deliver our strategy,
to focus more on growth and to be more
agile in responding to consumer needs in the
marketplace. The business has been regrouped
around four geographic regions, we have
appointed a dedicated Chief Commercial
Offi cer and we have streamlined the Head Offi ce
organisation. As a result our management
structure is fl atter, our operating companies
are more empowered and our cost of doing
business is lower.
Consolidation in the industry
The competitive landscape will shift signifi cantly
in 2016. We again demonstrated in 2015 that
when we believe there is a clear opportunity to
create value through acquisition or investment in
new markets, we will act. In July, we inaugurated
our $60 million greenfi eld brewery in Myanmar;
in September we announced a new joint venture
and brewery in Ivory Coast.
We also realigned our partnership arrangements
with Diageo in a number of key markets: we
now have ownership of Desnoes & Geddes in
Jamaica along with the iconic Red Stripe brand;
we acquired Diageo’s shareholding in GAPL,
giving us Guinness Anchor Berhad (GAB) in
Malaysia and the licence for Guinness and ABC
Stout in Singapore. As part of the transactions
we also sold our minority interest in Ghana to
Diageo. During the year we also restructured
our operations in South Africa and Namibia.
In Europe too we were active with the
acquisition of Pivovarna Lasko in Slovenia.
I feel very confi dent that with our strategy,
well-balanced global footprint and fantastic
people and brands we are ready to meet or
take advantage of whatever competitive
challenges or opportunities that may come
our way. 2015 was a strong year for the
Company and we are well positioned to build
on this momentum.
2016 outlook
In 2016 HEINEKEN expects to deliver further
organic revenue and profi t growth despite an
increasingly challenging external environment,
with margin expansion in line with the medium
term margin guidance of a year on year
improvement in operating profi t (beia) margin
of around 40bps. Assuming spot rates as
of 4 February 2016 the calculated negative
currency translational impact would be
approximately €60 million at consolidated
operating profi t (beia), and €35 million at net
profi t (beia). Foreign exchange markets remain
very volatile. We expect an average interest
rate of c.3.3%, and an eff ective tax rate (beia)
broadly in line with 2015. Capital expenditure
related to property, plant and equipment should
be slightly above €2 billion (2015: €1.6 billion).
Thank you
As I do every year, I want to thank all
my colleagues around the world for their
professionalism and commitment. It is a
privilege to work with such a dynamic and
diverse group and to lead this exceptional
Company. The changes we made during the
year at our Head Offi ce were diffi cult. We said
goodbye to colleagues who had made a strong
contribution to the Company. I want to thank
them again for their hard work and commitment
and to wish them well. I would also like to thank
every single one of our consumers who – every
day – make the choice to enjoy our brands and
I would like to recognise our customers, partners
and stakeholders for their continuing support
and input into what we do and how we do it.
The world and the challenges it presents will
continue to test us into 2016 and beyond. But
thanks to all our people, brands, global footprint
and strategy, I believe we are well positioned to
maintain the momentum we have created.
Jean-François van Boxmeer
Chairman of the Executive Board/CEO
Amsterdam, 9 February 2016
5 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Executive Team
The two members of the Executive Board, the four Regional
Presidents and four Chief Offi cers form the Executive Team.
The Executive Team is the highest consultative body within
our Company. Its members are accountable for the global
agendas for their particular function and are business
partners for our operating companies.
5
6
3
7
1
8
9
10
2
4
Key
1. Jean-François van Boxmeer
2. Laurence Debroux
3. Marc Busain
4. Frans Eusman
5. Chris Van Steenbergen
6. Marc Gross
7. Jan Derck van Karnebeek
8. Roland Pirmez
9. Sean O’Neill
10. Stefan Orlowski
6 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents 1. Jean-François van Boxmeer (Belgian; 1961)
Chairman Executive Board/CEO
In 2001, appointed member of the Executive Board and from 1 October
2005, Chairman of the Executive Board/CEO. Joined HEINEKEN in 1984
and held various management positions in Rwanda (Sales & Marketing
Manager), Democratic Republic of Congo (General Manager), Poland
(Managing Director), and Italy (Managing Director). Executive Board
responsibility for HEINEKEN Regions and Global functions: Human
Resources, Corporate Relations, Supply Chain, Commerce, Legal Aff airs,
Strategy, Internal Audit and Company Secretary.
2. Laurence Debroux (French; 1969)
Member Executive Board/CFO
In 2015, appointed member of the Executive Board. Joined HEINEKEN
in 2015 from JCDecaux where she had been Chief Financial and
Administrative Offi cer and member of the Executive Board since July
2010. Prior to this, she spent 14 years with global healthcare company
SANOFI where she held various management positions. Mrs. Debroux
began her career in banking. Executive Board responsibility for Global
functions: Finance, Tax & Financial Markets, Business Development,
Procurement, Information Systems and Integrated Portfolio
Management (IPM).
3. Marc Busain (Belgian; 1967)
President Americas
In 2015, appointed President Americas. Marc Joined HEINEKEN in
1995 as Managing Director HEINEKEN Burundi. In 2006, he became
Managing Director HEINEKEN Egypt. He was appointed Managing
Director HEINEKEN France in 2010. From 2011 until 2015, he was
Managing Director CM/HEINEKEN Mexico. Prior to this, Marc worked
in Africa for three years in a Painting and Coating production company.
4. Frans Eusman (Dutch; 1962)
President Asia Pacifi c
In 2015, appointed President Asia Pacifi c. From 2010 until 2015 he was
Chief Business Service Offi cer. Frans joined HEINEKEN in 1987. He has
worked in various fi nance and general management positions in Europe
and Asia, which included his role as Corporate Control & Accounting
Director from 2003 to 2005. From 2005 to 2010, he was President of
HEINEKEN France.
5. Chris Van Steenbergen (Belgian; 1956)
Chief Human Resources Offi cer
In 2014, appointed Chief Human Resources Offi cer. Joined HEINEKEN
from Royal DSM where for the last four years he was Executive Vice
President Corporate HR in the Netherlands. Prior to this, Chris spent more
than 20 years in Senior HR and operational roles including Chief Human
Resources Offi cer Cadbury, President Europe Cadbury, CEO of Quick
Restaurants SA in Belgium and Managing Director Randstad Belgium.
6. Marc Gross (French; 1958)
Chief Supply Chain Offi cer
In 2005, appointed Chief Supply Chain Offi cer. Joined HEINEKEN in
Greece as plant manager in 1995. In 1999, he became Regional Technical
Director North, Central and Eastern Europe. In 2002, Marc became
Managing Director of HEINEKEN Netherlands Supply. Prior to joining
the Company, he held various management roles with international
food and consumer businesses (Danone, Sara Lee).
7. Jan Derck van Karnebeek (Dutch; 1967)
Chief Commercial Offi cer
In 2015, appointed Chief Commercial Offi cer. From 2013 until 2015,
he was President Central & Eastern Europe & Chief Sales Offi cer.
Jan Derck was appointed President Central and Eastern Europe in 2012.
Joined HEINEKEN in 1991. In 1999, he was appointed Commercial
Director HEINEKEN, Slovak Republic. In 2001, he became General
Manager HEINEKEN Beer Systems in the Netherlands. From 2006
until 2009, he managed HEINEKEN/CCHBC, Bulgaria and in 2009
became Managing Director HEINEKEN Romania.
8. Roland Pirmez (Belgian; 1960)
President Africa, Middle East and Eastern Europe
In 2015, appointed President Africa Middle East and Eastern Europe.
From 2013 until 2015, he was President Asia Pacifi c and Chief Executive
Offi cer APB. Roland joined HEINEKEN in 1995. From 1995 to 1998, he
was Managing Director of HEINEKEN Angola. In 1998, he was appointed
General Manager Thai Asia Pacifi c Brewery Co. Ltd, Thailand and in 2002,
he became Chief Executive Offi cer of HEINEKEN Russia. In 2008, he
returned to Asia as Chief Executive Offi cer of Asia Pacifi c Breweries Ltd
(now Heineken Asia Pacifi c Pte Ltd) until the takeover by HEINEKEN.
9. Sean O’Neill (British; 1963)
Chief Corporate Relations Offi cer
In 2005, appointed Chief Corporate Relations Offi cer. Joined HEINEKEN
in 2004, following eight years in senior roles within the alcoholic beverages
sector. Prior to this, he held international management roles in the UK,
Russia, the Middle East and Australia for a global corporate aff airs and
communication consultancy.
10. Stefan Orlowski (Australian; 1966)
President Europe
In 2015, appointed President Europe. From 2013 until 2015, he was
President Americas. Stefan joined HEINEKEN in 1998 as Sales, Marketing
and Distribution Director for Żywiec in Poland. From 2003 until 2005,
Stefan was Chief Operating Offi cer of Brau Union. In 2005, he became
Managing Director of HEINEKEN Central and Eastern Europe. In 2007,
Stefan was appointed Group Commerce Director HEINEKEN. From 2009
he was Managing Director HEINEKEN UK.
7 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents From Barley to Bar
Our value chain uses many forms of capital, from the
vital resources needed to brew our products, through
to the intellectual capital of our people and brands.
We continuously consider the sustainability of each
step with respect to our key focus areas.
AGRICULTURE
HEINEKEN Inputs
Financial
Shareholders’ equity, assets
and borrowing
Natural
Land, water, energy and ecosystem
Human
Employees, training and benefi ts, safety
and Code of Conduct
Manufactured
Buildings, breweries, equipment
and supply chain
Social
Communities and NGOs
Intellectual
Brands, R&D, innovation, processes and
corporate reputation
EMPLOYEES
HEINEKEN employs more than 73,000 people. They enjoy the benefi ts
and rewards – pay, training, healthcare, career opportunities – their hard
work deserves. The HEINEKEN Employees’ and Human Rights Policy
supports and guides us all to act according to our core values. And our
Global Code of Conduct ensures every employee knows what is expected
of them. The annual employee ‘climate’ survey tracks engagement
levels and action is required on dimensions which fall short.
BREWING
PACKAGING
The majority of our beer and cider is served
in bottles, cans and kegs. We are constantly
looking to innovate, fi nding ways to optimise
the production of our packaging, such as
light-weighting and increasing the recycling
and re-use rate.
DISTRIBUTION
CUSTOMERS
COMMUNITY
The movement of our products around the globe is carefully
managed. Several modes of transport are used, including
road, rail and ocean freight as well as inland barges. Health
and safety policies are in place to reduce the incidence of
accidents. We optimise the distribution by changing the
form of transport, training drivers on road safety, using more
effi cient engines, improved vehicle design and reassessment
of distribution networks.
Millions of retailers, bars, restaurants and clubs
serve a selection of our brands. New fridges
purchased by HEINEKEN meet green standards
and we continue to develop greener draught
brewing equipment. We work in partnership
to ensure our products are only sold to
consumers of legal drinking age.
CONSUMERS
8 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents AGRICULTURE
We work with farmers worldwide to sustainably
grow raw materials, like barley and hops,
needed to brew our beers. In addition, we use
bittersweet apples for cider-making. Local
sourcing is a priority because of the shared
value it creates for the local communities,
the country and for HEINEKEN.
EMPLOYEES
BREWING
Brewing beer and making cider is an art. We own 11 malteries across the
world and buy malted barley from business partners who have all signed
our Supplier Code. We also operate 156 breweries, cider plants and other
production facilities. Strict safety standards are adhered to. We invest in
capacity expansion and build greenfi eld breweries, respecting all land
rights. We are committed to improving energy and water effi ciency and
switching to more environmentally friendly energy sources where feasible.
PACKAGING
DISTRIBUTION
CUSTOMERS
COMMUNITY
Growing with communities underlines our ambition to have
a positive impact in the communities where we live, work and
sell our products. Our support is based on three building blocks:
direct contributions made locally, shared-value projects, and the
Heineken Africa Foundation (HAF). The biggest contribution
we make to communities is through the positive impact of our
business itself: creating jobs, providing business to suppliers and
paying taxes that support local and national development.
9 Heineken N.V. Annual Report 2015
HEINEKEN outputs*
Financial
€20.5 billion revenue
€822 million income tax expense (beia)
27.8% eff ective income tax rate (beia)
Total dividend of €1.30 per share (to be approved
at 2015 AGM)
Natural
Sustainably sourced raw materials:
21% barley, 58% hops and 71% bittersweet apples
21% renewable electricity under green certifi cates
2% own generated renewable electricity
3.8% renewable thermal energy used
Human
Over 1.5 million training hours completed by employees
50,000 employees completed HeiCode e-learning training
2000+ employees completed Road safety training
6000+ employees completed Anti-bribery e-module
53 nationalities represented in Senior Management
77% employee ‘Climate’ engagement score
Manufactured
167 breweries, malteries, cider plants and other
production facilities
25% water reduction since 2008
24% energy reduction since 2008
Social
Over €20 million donations
HAF €30 million endowment
115,000+ green fridges purchased in 2015 with 45%
average energy saving compared to 2010
50 operating companies have a partnership to
address alcohol-related harm
Participation in Global Commitment to reduce
alcohol-related harm
Intellectual
4.15 (out of 5) reputation rating across 30 countries
and 3,000 external stakeholders
250+ brands
€1.9bn revenue from innovations
CONSUMERS
Every day, millions of consumers in 179 countries
choose to enjoy one of our more than 250 brands.
We provide choice through our premium portfolio
approach. Innovations, especially in the low and
no alcohol categories, are meeting changing
consumer tastes. Across the world we engage
consumers on responsible drinking, most notably
with the Heineken® brand campaigns.
* Non-fi nancial data are preliminary fi gures and not
in scope for assurance. Final, assured data will be
published in the 2015 Sustainability Report.
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Our business priorities
HEINEKEN is focused on six business priorities. They
help us to achieve sustainable growth in all markets and
to create value out of our heritage, global scale, people,
brands and the green thread that unites us all around
the world, the Heineken® brand.
Win in premium
led by Heineken®
Lead by cool
marketing & innovation
SUPERMERCARDO
Drive end2end
productivity
10 Heineken N.V. Annual Report 2015
Shape the
cider category
ntinue d g l o b a l roll-out o
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Heineken®
largest brand in
premium segment
E I N P REMIUM S
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30.5mhl
Be commercially
assertive
And we welcomed...
Brewing a Better World
in US Portfolio2nd
by volume
Asia-Pacific2nd
by volume in
largest brand
Explore our regional and local brands:
theHEINEKENcompany.com
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Shape the
cider category
Win in premium
led by Heineken®
Lead by cool
marketing & innovation
SUPERMERCARDO
Drive end2end
productivity
Win in premium
led by Heineken®
Heineken®, the undisputed leader in
the premium segment, is complemented
by a portfolio of other premium brands,
to ensure we win in premium.
Heineken®
largest brand in
premium segment
ntinue d g l o b a l roll-out o
f i
n
o
C
t
e
r
n
a
t
i
o
n
a
l brands
E I N P REMIUM S
M
E
G
E
V
OLU M
30.5mhl
N
T
Be commercially
assertive
And we welcomed...
Brew a Better World
11 Heineken N.V. Annual Report 2015
in US Portfolio2nd
by volume
Asia-Pacific2nd
largest brand
by volume in
Explore our regional and local brands:
theHEINEKENcompany.com
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Shape the
cider category
HEINEKEN is the global leader in cider.
With our established footprint, we are focusing
on growing the cider category and creating
a broader global cider portfolio.
Strongbow®
Apple Ciders
locally produced
Bulgaria, Nigeria,
Singapore and
Slovakia
EXPANDING UK
CIDER MARKET
Strongbow® Cloudy Apple,
Strongbow® Dark Fruits,
Bulmers Zesty Blood Orange
FASTEST-
GROWING CIDER MARKETS
Romania, USA and Ireland
Strongbow® 2nd largest
USA cider brand
1mhl
sold outside
UK for
first time
Growing Strongbow®
Apple Ciders
flavour portfolio
internationally
digit
e
l
g
n
i
s
d
i
m
y
b
w
o lu m es gre
available in
71
countries
Global c i d e r v
12 Heineken N.V. Annual Report 2015
Discover how we are growing at HEINEKEN:
theHEINEKENcompany.com
I n n ovation
¤1.9bn
revenue from innovation
9.2%
Innovation rate
up from 7.7% in 2014
Win with low
and no alcohol
Radler 2.0% in
45 markets
ACROSS 5 CONTINENTS
0.0% beer
now in 10 MARKETS
Worldwide Partner of biggest ever tournament.
Final watched by more than
120 million fans
View our latest campaigns at HEINEKEN:
theHEINEKENcompany.com
Partnership with
JAMES BOND
0.5bn
SPECIAL
EDITION
BOTTLES
Activated in
90MARKETS
109
markets activated
76%
Share of Voice
Most activated global Heineken® campaign
#CHAMPIONTHEMATCH
Rugby World Cup 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Strongbow®
Apple Ciders
locally produced
Bulgaria, Nigeria,
Singapore and
Slovakia
EXPANDING UK
CIDER MARKET
Strongbow® Cloudy Apple,
Strongbow® Dark Fruits,
Bulmers Zesty Blood Orange
FASTEST-
GROWING CIDER MARKETS
Romania, USA and Ireland
Strongbow® 2nd largest
USA cider brand
sold outside
1mhl
UK for
first time
Growing Strongbow®
Apple Ciders
flavour portfolio
internationally
digit
e
l
g
n
i
s
d
i
m
y
b
w
o lu m es gre
available in
71
countries
Global c i d e r v
Lead by cool
marketing & innovation
HEINEKEN is committed to being part of the
conversation with consumers and we continue
to unleash the power of our innovation, a core
part of our DNA.
I n n ovation
¤1.9bn
9.2%
revenue from innovation
Innovation rate
up from 7.7% in 2014
Partnership with
JAMES BOND
0.5bn
90MARKETS
SPECIAL
EDITION
BOTTLES
Activated in
Win with low
and no alcohol
Radler 2.0% in
45 markets
ACROSS 5 CONTINENTS
0.0% beer
now in 10 MARKETS
#CHAMPIONTHEMATCH
Rugby World Cup 2015
109
markets activated
76%
Share of Voice
Most activated global Heineken® campaign
Discover how we are growing at HEINEKEN:
theHEINEKENcompany.com
13 Heineken N.V. Annual Report 2015
Worldwide Partner of biggest ever tournament.
Final watched by more than
120 million fans
View our latest campaigns at HEINEKEN:
theHEINEKENcompany.com
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Be commercially
assertive
HEINEKEN is driving excellence in outlet
execution and ensuring availability, visibility,
and quality of our brands to win at point of sale.
Excellent
Outlet
Execution
GLOBAL ROLL-OUT
Common language… assessments… KPIs
BUILDING CAPABILITIES
1moutlets in
scope
GOING DIGITAL
GLOBAL WAY
OF WORKING
NEW SALES FORCE
TECHNOLOGY
Executing our
‘PICTURE OF SUCCESS’
SALES FORCE... PUTTING MORE
23,000
FEET ON THE
STREET
Building a
world-class sales
community
In 37 OpCos
2,700+
Sales people trained
at Global Sales Academy
Driving
excellence
SUPERMERCADO
Global
Procurement
Delivering efficiencies
HEINEKEN GLOBAL SHARED SERVICES (HGSS)
DELIVERING TRANSACTIONAL
FINANCE ACTIVITIES
FINANCE SHARED SERVICES
CENTRES ESTABLISHED IN
o u ntries s
C
u
p
63
p
o
r
t
e
d
EU R O P E
25
languages
Covering
24operating companies
26
nationalities
25%
increase in productivity
invoice processing
26%
reduction in
cost per invoice
EXI C O
M
C
H
I
N
A
SI N G APO
R
E
BRA
Z
I
L
2,700
procurement-led
cost reduction projects
Global Supply Chain
Improved customer service
REDUCED
water usage in
energy consumption in
66%
of our breweries
59%
of our breweries
INCREASED
productivity in
69%
of our breweries
14 Heineken N.V. Annual Report 2015
Read more at HEINEKEN:
theHEINEKENcompany.com
Find out more at:
theHEINEKENcompany.com
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Drive end2end
productivity
HEINEKEN is leveraging the global scale
of its operations to deliver increased
effi ciencies across the business.
SUPERMERCADO
HEINEKEN GLOBAL SHARED SERVICES (HGSS)
DELIVERING TRANSACTIONAL
FINANCE ACTIVITIES
FINANCE SHARED SERVICES
CENTRES ESTABLISHED IN
EU R O P E
languages
25
25%
Covering
24operating companies
26
26%
nationalities
increase in productivity
invoice processing
reduction in
cost per invoice
EXI C O
M
C
H
I
N
A
SI N G APO
R
E
BRA
Z
I
L
Global
Procurement
Delivering efficiencies
o u ntries s
u
C
63
p
p
o
r
t
e
d
2,700
procurement-led
cost reduction projects
Global Supply Chain
Improved customer service
REDUCED
water usage in
energy consumption in
66%
of our breweries
59%
of our breweries
INCREASED
productivity in
69%
of our breweries
Read more at HEINEKEN:
theHEINEKENcompany.com
Find out more at:
theHEINEKENcompany.com
15 Heineken N.V. Annual Report 2015
Excellent
Outlet
Execution
GLOBAL ROLL-OUT
Common language… assessments… KPIs
BUILDING CAPABILITIES
Driving
excellence
1moutlets in
scope
GOING DIGITAL
GLOBAL WAY
OF WORKING
NEW SALES FORCE
TECHNOLOGY
Executing our
‘PICTURE OF SUCCESS’
23,000
SALES FORCE... PUTTING MORE
FEET ON THE
STREET
Building a
world-class sales
community
In 37 OpCos
2,700+
Sales people trained
at Global Sales Academy
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Brewing a Better World
Our approach to sustainability is embedded in the
Company strategy and focuses on creating sustainable
value for the business and our stakeholders.
g
o
t
g
n
w
a
eth e r t o tackle
scarcity
W
o
e
r
i
k
r
t
g
s
a
u
W
a
t
e
r
Ethiopia
and
Nigeria
joint stakeholder
water stewardship
workshops
wing continue s t o f
5 0 o p erating companies have partnership
to address alcohol-related harm
a ll
r
e
i
b
n
e
cal sourci n
o
L
g t a rget in Afric
60%
a
b
G R O WING WITH
C O M MUNITIES
ECTIN G
URCES
ATER
W
O
S
E
R
T
O
R
P
A
D
R
E
C
O
S
V
N
P
O
S
O
C
U
N
A
T
M
S
I
P
I
N
B
T
I
L
G
E
O
N
Sustain a
50
countries
50,000
colleagues
SOURCIN G
SUSTAINA B L Y
b l y s o urced raw m
a
t
e
r
i
a
l
s
e
n t s in brewerie
s a
n
d
o
u
t
s
i
d
e
p
r
o
d
uction
Göss
To be
first C02 neutral
brewery in Austria
y
2
0
2
0
uce acci d
d
e
R
P
H
R
E
O
A
M
S
L
A
T
O
F
H
T
E
I
T
A
N
Y
N
G
D
S
G
N
N
O
CI
SI
U
EMIS
RED
CO 2
B r e w e d by the s
t s o l a r roof installation a
Our la r g
t o
u
s
e
r
u
n
b
r
e
w
e
r
y
i
n
S
i
n
g
a
p
o
re
16 Heineken N.V. Annual Report 2015
Read more about sustainability at HEINEKEN:
theHEINEKENcompany.com
EUROPE
ASIA PACIFIC
AMERICAS
AFRICA,
MIDDLE EAST AND
EASTERN EUROPE
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
cal sourci n
g t a rget in Afric
60%
a
b
y
o
L
2
0
2
0
G R O WING WITH
C O M MUNITIES
eth e r t o tackle
g
o
t
g
n
i
k
r
o
W
w
a
t
e
r
scarcity
Ethiopia
and
Nigeria
W
a
t
e
r
u
s
joint stakeholder
water stewardship
workshops
a
g
e
i
n
b
r
e
wing continue s t o f
a ll
5 0 o p erating companies have partnership
to address alcohol-related harm
ECTIN G
ATER
W
O
S
E
R
T
O
R
P
URCES
A
D
C
R
E
O
S
V
N
P
O
S
O
C
U
N
A
M
S
T
I
I
B
P
N
T
L
G
I
E
O
N
50
countries
50,000
colleagues
SOURCIN G
SUSTAINA B L Y
b l y s o urced raw m
a
t
e
r
i
a
l
s
Sustain a
n t s in brewerie
e
uce acci d
d
e
R
P
H
R
E
O
A
M
S
L
A
T
O
F
H
T
E
I
T
A
N
Y
N
G
D
S
N
O
SI
G
N
CI
U
EMIS
RED
CO 2
Göss
To be
first C02 neutral
brewery in Austria
B r e w e d by the s
t s o l a r roof installation a
s
e
Our la r g
s a
n
d
o
u
t
s
i
d
e
p
r
o
d
uction
u
n
t o
u
r
b
r
e
w
e
r
y
i
n
S
i
n
g
a
p
o
re
Regional Review
Wherever you are in the world, you are able
to enjoy one of our brands. We own, market
and sell more than 250 of them.
Europe
Consolidated beer volume
76.6mhl
Asia Pacifi c
Consolidated beer volume
19.8mhl
EUROPE
ASIA PACIFIC
AMERICAS
AFRICA,
MIDDLE EAST AND
EASTERN EUROPE
Americas
Consolidated beer volume
56.0mhl
Africa, Middle East
and Eastern Europe
Consolidated beer volume
35.9mhl
The Company’s new regional structure consists of four geographic regions: Africa, Middle East and Eastern Europe, Americas, Asia Pacifi c
and Europe. The changes from HEINEKEN’s previous regional structure are the combination of the previous regions of Western Europe and
Central & Eastern Europe to form a single Europe region, and the addition of Russia and Belarus to the previous Africa, Middle East region
to form a new Africa, Middle East and Eastern Europe region. The Americas and the Asia Pacifi c regions remain unchanged.
Read our regional announcement in full: theHEINEKENcompany.com
Read more about sustainability at HEINEKEN:
theHEINEKENcompany.com
17 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Africa, Middle East
and Eastern Europe
“Overall a challenging year for the region,
largely due to tough macroeconomic
conditions in Africa. Despite this, the depth
of our portfolio and good progress with our
innovation agenda helped to underpin solid
performance. Whilst Nigeria was impacted
by a weaker consumer environment we saw
strong momentum in Ethiopia, and in Russia
our premium brand portfolio continues to
outperform the overall beer market.”
Roland Pirmez, President Africa, Middle East
and Eastern Europe
Revenue
Revenue as % of total
Key brands
¤3,263m
15.4%
Consolidated beer volume
Consolidated beer volume
as % of total
35.9mhl
19.1%
Heineken® volume
in premium segment
4.6mhl
Operating profi t (beia)
¤579m
Operating profi t (beia)
as % of total
17.1%
18 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Americas
“ Our portfolio strategy, continued
investment in brands and excellent outlet
execution supported strong revenue
and profi t growth in most markets. We
strengthened our brand portfolio further
with the acquisition of Lagunitas and Red
Stripe. This performance demonstrates
our continued ability to deliver volume
and value growth across the region.”
Marc Busain, President Americas
Revenue
Revenue as % of total
Key brands
¤5,159m
24.4%
Consolidated beer volume
Consolidated beer volume
as % of total
56.0mhl
29.7%
Heineken® volume
in premium segment
9.4mhl
Operating profi t (beia)
¤904m
Operating profi t (beia)
as % of total
26.7%
19 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Asia Pacifi c
“ Another exciting year for the region as we
expanded our regional footprint, including
opening a brewery in Myanmar. Volume
growth was led by an especially strong
performance of the Tiger brand. Despite
macroeconomic and regulatory headwinds
in a number of markets, we delivered solid
top- and bottom-line growth.”
Frans Eusman, President Asia Pacifi c
Revenue
Revenue as % of total
Key brands
¤2,483m
11.8%
Consolidated beer volume
Consolidated beer volume
as % of total
19.8mhl
10.5%
Heineken® volume
in premium segment
6.4mhl
Operating profi t (beia)
¤702m
Operating profi t (beia)
as % of total
20.8%
20 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Europe
“A year of good progress with
several key markets gaining share
in the premium segment. Continued
innovation in our beer and cider
portfolio, improved effi ciency and
greater leverage of our position as
Europe’s largest brewer helped drive
top- and bottom-line growth.”
Stefan Orlowski, President Europe
Revenue
Revenue as % of total
Key brands
¤10,227m
48.4%
Consolidated beer volume
Consolidated beer volume
as % of total
76.6mhl
40.7%
Heineken® volume
in premium segment
10.2mhl
Operating profi t (beia)
Operating profi t (beia)
as % of total
¤1,196m 35.4%
21 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Risk Management
This section presents an overview of HEINEKEN’s approach to risk management: HEINEKEN’s internal control and risk management systems, risk profi le,
risk appetite and a description of the nature and extent of its exposure to risks.
Eff ective management of risk forms an integral part of how HEINEKEN operates as a business and is embedded in day-to-day operations. Responsibility
for identifying potential strategic, operational, reporting and compliance risks, and for implementing fi t-for-purpose responses, lies primarily with line
management. Group-wide risk management priorities are defi ned by regional and functional management and endorsed by the Executive Board, who
bears ultimate responsibility for managing the main risks faced by the Company and for reviewing the adequacy of HEINEKEN’s internal control system.
Risk profi le
HEINEKEN is predominantly a single-product business, operating throughout the world in the alcohol industry. HEINEKEN is present in more than
70 countries, with a growing share of its revenues originated in emerging markets.
In recent years, there has been increased media, social and political criticism directed at the alcoholic beverage industry. An increasingly negative
perception in society towards alcohol could prompt legislators to implement further restrictive measures such as limitations on availability, advertising,
sponsorships, distribution and points of sale and increased tax. This may cause changes in consumption trends, which could lead to a decrease in the brand
equity and sales of HEINEKEN’s products. In addition, it could adversely aff ect HEINEKEN’s commercial freedom to operate and restrict the availability of
HEINEKEN’s products.
HEINEKEN has undertaken business activities with other market parties in the form of joint ventures and strategic partnerships. Where HEINEKEN does not
have eff ective control, decisions taken by these entities may not be fully harmonised with HEINEKEN’s strategic objectives. Moreover, HEINEKEN may not
be able to identify and manage risks to the same extent as in the rest of the Group.
Risk appetite
The international spread of its business, a robust balance sheet and strong cash fl ow, as well as a commitment to prudent fi nancial management, form the
context based on which HEINEKEN determines its appetite to risk. A structured risk management process allows HEINEKEN to take risks in a managed and
controlled manner. Key to determining the risk appetite is the nature of the risks:
• Strategic: Taking strategic risks is an inherent part of HEINEKEN’s entrepreneurial heritage. In its pursuit of balanced growth, HEINEKEN is open to
certain risks linked to its presence in a wide array of developing countries.
• Operational: Depending on the type of the operational risk, HEINEKEN is cautious to averse. In particular, ensuring its employees’ and contractors’
safety, delivering the highest level of product quality and protecting its reputation have priority over any other business objective.
• Reporting: HEINEKEN is averse to any risks that could jeopardise the integrity of its reporting.
• Compliance: HEINEKEN is averse to the risk of non-compliance with applicable laws or regulations, as well as with its own Code of Business Conduct.
HEINEKEN Business Framework
HEINEKEN
Vision, purpose and values
Behaviours
How we act
Strategy
Our global priorities
One HEINEKEN
How we govern internally
Code of Business Conduct
How we behave
Rules
How we work
Policies
Laws and regulations
Standards and Procedures
Risk Management
How we manage risks
Monitoring and Assurance
People
Processes
Systems
Data
Execution and change management
22 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Risk Management continued
Risk Management and Internal Control
The HEINEKEN Governance, Risk and Compliance activities are an integral part of the HEINEKEN Business Framework. Based on the COSO reference
model, this framework provides an overview of how HEINEKEN’s vision, purpose and values lie at the core of the Company’s strategic priorities, organisation
structure and behaviours. Translating this into policies and processes, the Code of Business Conduct, Company Rules and Risk Management process enable
the achievement of HEINEKEN’s strategic priorities while protecting the Company’s employees, assets and reputation.
Risk identifi cation and assessment
HEINEKEN’s risk management activities seek to ensure identifi cation and appropriate response to any signifi cant threat to the safety of its employees,
the Company’s reputation, its assets and the achievement of its strategic objectives. To this end, HEINEKEN has put in place a comprehensive risk
management system which identifi es, assesses, prioritises and manages risks on a continuous and systematic basis, and covers all subsidiaries across
regions, countries, markets and corporate functions.
Ongoing identifi cation and assessment of risks is an integral part of HEINEKEN’s governance and business review. Implementation of adequate responses
and progress of risk mitigating measures is monitored on a quarterly basis. In parallel, the risks reported by the operating companies are aggregated on a
global level and serve as a basis to determine HEINEKEN’s risk management priorities and coordinated risk response across geographies. Accountability for
mitigating, monitoring and reporting on each of the most signifi cant risks is assigned to functional directors. Internal policies and operational controls are
periodically updated to refl ect both these key risks and the extent to which the Company is willing and able to mitigate them.
Internal control activities
HEINEKEN’s internal control activities aim to provide reasonable assurance as to the accuracy of fi nancial information, the Company’s compliance with
applicable laws and internal policies and the eff ectiveness of internal processes.
The foundation for managing the Company’s operations are the Company Rules which translate HEINEKEN’s objectives and strategies into clear rules.
They articulate how to work as they comprise all mandatory standards and procedures. Compliance with the rules is tested every year through self-
assessment of key processes and controls by management. Appropriate action plans for defi ciencies are established by local management. Progress
on these remediation steps is monitored and reported on at least a quarterly basis.
Underpinning the Company Rules and supporting HEINEKEN’s ethical culture, the fi rst rule pertains to the Code of Business Conduct. The Code
of Business Conduct and its underlying policies set out the expected standard of behaviour of all HEINEKEN employees and third parties working with
HEINEKEN. Adherence to these policies is supported by regular training and a reporting platform available 24/7 where employees and third parties can
speak up confi dentially and securely if they observe or suspect ethics violations.
Assurance
HEINEKEN has a ‘three lines of defence’ structure in place:
• Operational management, as fi rst line of defence, has the ownership, responsibility and accountability for assessing, controlling
and mitigating risks.
• HEINEKEN’s internal control function (‘Process & Control Improvement’), as second line of defence, oversees compliance with HEINEKEN’s
fi nancial reporting policies, drives continuous process improvement, facilitates risk assessments and ensures follow-up of identifi ed risks or defi ciencies.
Additional control activities are performed by the Accounting & Reporting and Business Control functions.
• Acting as third line of defence, HEINEKEN’s internal audit function (‘Global Audit’) is mandated to perform Group-wide reviews of key processes
based on HEINEKEN’s strategic priorities and most signifi cant risk areas.
Global Audit provides independent and objective assurance and consultancy services. Global Audit employs a systematic and disciplined approach to
evaluate and improve the organisation’s governance and risk management processes including reliability of information, compliance with laws, regulations
and procedures, and effi cient and eff ective use of resources. The methodology followed by Global Audit is in accordance with the standards of the Institute
of Internal Auditors and other relevant governing bodies.
23 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Risk Management continued
Main risks
The following risk overview highlights the main risks could hinder HEINEKEN in achieving its fi nancial and strategic objectives or could represent a threat to
the business. This overview does not include all risks and uncertainties that may ultimately aff ect the Company: some risks currently deemed immaterial,
or unknown to the Company, could ultimately have an adverse impact on HEINEKEN’s fi nancial performance, reputation, business objectives, employees
or assets. Timely discovery and accurate evaluation of such risks is at the core of HEINEKEN’s risk management processes. The fi nancial risks are dealt with
separately in note 32 to the Financial Statements. The Statement of the Executive Board is included in the Corporate Governance Statement on page 34.
Strategic risks
Risk description
Regulatory Changes related to Alcohol
Alcohol remains under scrutiny in many markets and prompts
regulators to take further restrictive measures including restrictions
and/or bans on advertising and marketing, sponsorship, points of sale,
and increased taxes leading to lower revenues and profi t.
Specifi c risks include:
• Increased restrictions on commercial freedom
• Increased taxes and duties
• Increased restrictions on availability
Economic and political environment
The economic and political uncertainties could impact our business
and that of our customers. This may lead to lower volumes, pressure
on selling prices and increased credit risk and suppliers’ insolvency.
Specifi c risks include:
• Downtrading
• Increased taxes
• Insolvency of key customers or of critical suppliers
• Impairment of goodwill related to acquisitions
• Adverse exchange rate fl uctuations
• Pension plan shortfalls due to developments in the
fi nancial markets
Customer relationships
Maintaining strong relationships with our customers is key for
brand positioning and availability to consumers. Consolidation among
our customers may aff ect our ability to obtain pricing and favourable
trade terms, and negatively impact our operating margin.
Specifi c risks include:
• Limited ability to raise prices
• Increased cost of promotional activities
• Inability to secure appropriate shelf space
Changing consumer preferences
Consumers’ preferences and behaviours are evolving, shaping an
increasingly complex and fragmented beer category. This requires
HEINEKEN to constantly adapt its product off ering, innovate and
invest to maintain the relevance and strength of its brands. Failure
to do so would in the longer term aff ect our revenues and profi t
Specifi c risks include:
• Inability to further build our brands due to lack of consumer insight
• Loss of brand equity and market share of HEINEKEN brands
24 Heineken N.V. Annual Report 2015
Risk Management
• Placing of responsible consumption labels on HEINEKEN’s products
• Continuous advocacy of responsible consumption of HEINEKEN
products
• Co-operation with governments, NGOs and businesses to prevent
abusive consumption
• Global commitments by alcohol producers to support reduction in
abusive consumption
• Innovations in low alcohol and alcohol-free products
• Monitoring and mitigating actions related to customers’ solvency
• Global Credit Policy
• Supplier selection process
• Developing contingency plans
• Taking prudent balance sheet measures
• Strengthening of short-term liquidity positions
• Training country general managers in Public Aff airs
• Management of customer relationships at central level
(multinational customers) as well as local level
• Development of joint business plans with distributors and
key retailers
• Central commercial capabilities programme to enhance sales
performance (Excellent Outlet Execution)
• Strengthened commercial organisation
• Central marketing academy
• Investments in consumer and market intelligence
• Strengthened innovation organisation and focus to anticipate
and respond to industry changes
• Investments in protecting brands, including the registration
of trademarks, anti-counterfeit measures and domain names
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Risk Management continued
Risk description
Management capabilities
HEINEKEN relies on the skills of its people to lead its growth agenda
and strategic change programmes. HEINEKEN may not be successful
in attracting, developing and retaining talented staff with the required
capabilities, which may jeopardize our capacity to execute our strategy
and achieve the targeted returns.
Specifi c risks include:
• Shortage of skilled staff to fi ll current and future positions
• Lower than required quality of staff in key positions
Risk Management
• Strengthening of the management talent pipeline
• Deepening of appraisal and evaluation processes
• Broad range of management development programmes and initiatives
• Functional Resource Committees
• Implementation of a new People Strategy, including supporting
global tooling.
Industry consolidation
Consolidation of the alcoholic beverage industry has accelerated
in 2015 and may aff ect existing market dynamics in the future.
Specifi c risks include:
• Competitive disadvantage with suppliers
• Increased competition on commercial spent and customer
acquisition strategies
• Improved cost effi ciency by lifting end-to-end productivity
• Execution of HEINEKEN’s strategy to maintain and develop our
competitive advantages
• Permanent market intelligence ensuring timely identifi cation of
promising acquisition targets
• Robust balance sheet providing access to liquidity when required
• Proven business integration capabilities
Operational risks
Risk description
Safety, Health and Environment (SHE)
HEINEKEN is committed to providing a safe workplace for all
employees and contractors. Despite the controls in place, incidents
and accidents may happen in the brewery, the supply chain and in
HEINEKEN’s route-to-market.
Specifi c risks include:
• Physical injuries
• Fatalities to employees, contractors or members of the public.
Supply chain continuity
Disruptions in the supply chain could lead to HEINEKEN’s inability to
deliver key products to key customers, revenue loss and brand damage.
Changes in the availability or price of raw materials, commodities,
energy and water may result in a shortage of those resources or
increased costs.
Specifi c risks include:
• Failure of IT systems
• Factors beyond our control such as natural disasters, political
instability, military confl icts, epidemic disease
• Limited availability of production materials or resources,
including water, leading to business disruption
Risk Management
• Establishing ‘Safety First’ as a key business behaviour
• Global safety programme to strengthen global standards, organisation,
processes and competencies
• Training and development focus on safety leadership and
safety behaviours
• Global reporting and deployment of accidents, incidents and near-
misses to drive continuous improvement
• Global compliance monitoring and gap-closing
• Establishing Health and Safety as a key pillar in Brewing a Better World
• Business continuity plans and back-up scenarios
• Global Procurement organisation, strategy and policies:
– Supplier performance measurement system
– Suppliers’ solvency monitoring
– Long-term commodity contracts
– Dual suppliers policy for all primary production materials
• Ownership of several strategic malteries
• Increased focus on sustainable water sourcing and water protection
• Global insurance policies
25 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Risk Management
• Global production standards and governance,
product Quality Assurance
• Recall and crisis procedures
• Global production material standards and governance
• Global and local supplier governance, including periodic
suppliers review
• Company-wide sustainability programme covering suppliers risk,
production material risk and country risk
• Strengthened information security policy
• Implementation and testing of continuity measures with our
outsourcing partners
• Implementation of measures to secure confi dentiality and integrity
of data
• Back-up of core operating data with separate contingency systems
• Increased centralisation of IT systems allowing central enforcement
of security measures
• Eff ective use of social media and consumer and marketing intelligence
• Monitoring of social media platforms by various departments
(Marketing, Corporate Relations, Legal Aff airs) and monitoring
response systems including dedicated digital dashboard
• Selection and prioritisation of business improvement projects
• Involvement of top management in all major projects
• Planning of projects and monitoring of third party providers,
project costs and benefi ts
• Consistent and eff ective project and programme portfolio
governance organisation
Risk Management continued
Operational risks continued
Risk description
Product safety and integrity
HEINEKEN is committed to achieving the highest standards for
integrity and safety of its products. Poor quality of any of its products
may result in health hazards, reputational damage, lower volumes
and fi nancial liabilities.
Specifi c risks include:
• Accidental or malicious contamination
• Insuffi cient quality of products
• Cost of recalls
Information security
HEINEKEN’s business relies heavily on its IT infrastructure. Failure of
its IT system or a breach in the security infrastructure may lead to
business disruption, loss of confi dential information, fi nancial and
reputational damage.
Specifi c risks include:
• Disruption of processes outsourced to shared service centres
• Unauthorised access / Security breaches/ Cyber crime
• Reliability of key IT suppliers
Social media
Having a strong online presence and developing the opportunities
off ered by social media involves new challenges and risks. HEINEKEN
may not be able to control information or respond in a timely manner
to threats to the Company’s reputation, which could materially aff ect
its brand equity and income-generating capacity.
Specifi c risks include:
• Rapid and large-scale spread of damaging claims or comments
about HEINEKEN among social media users
• Use of fake HEINEKEN accounts to spread misinformation
about the Company or its products
Execution and change management
In the last years, HEINEKEN has engaged in several signifi cant
business improvement projects. The large number of operating
companies and their varying level of integration represent a specifi c
challenge to these projects. These strategic transformation
programmes may not deliver the expected benefi ts or may incur
signifi cant cost or time overruns.
Specifi c risks include:
• Lower than expected benefi ts
• Ineff ective or ineffi cient programme execution aff ecting supply
chain, wholesale business, support functions, quality standards,
business plans and synergies
26 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Risk Management continued
Reporting risks
Risk description
Historically HEINEKEN has grown its footprint organically and through
mergers and acquisitions, which contributed to a diverse landscape of
processes and systems and a low level of centralisation. Deviations
from the common accounting and reporting processes and related
controls could impair the accuracy of the data used for Group
reporting and external communication.
Specifi c risks include:
• Diverging accounting and reporting processes or controls
• Unauthorised access to fi nancial data
• Improper segregation of duties
Risk Management
• Common accounting policies and standard chart of accounts
• HEINEKEN Risk and Control Matrix implemented across the operating
companies and including controls at Group level
• Internal Controls on Financial Reporting (ICFR) testing, including
planned remediation of defi ciencies
• Internal Letters of Representation
• Monitoring of critical access and segregation of duties confl icts
with Access Control Monitoring Tooling
• Training and global support towards balance sheet reconciliations
and reporting.
Compliance risks
Risk description
Non-compliance
Changes in the legal and regulatory environment tend to increase
the risk of non-compliance to local and global laws and regulations.
Failure to comply with applicable regulations could lead to fi nes,
claims and brand damage.
Specifi c risks include:
• Non-compliance with the Company Rules and the Code of
Business Conduct
• Non-compliance with competition law
• Non-compliance to local tax regulations
• Non-compliance with marketing and advertisement regulations,
among others on under legal drinking age consumers
Risk Management
• Embedding of certain risk and control systems and processes aimed
at compliance with all applicable laws and regulations
• Assessment of compliance with the Company Rules and the Code
of Business Conduct
• Global functions (such as legal and tax) to maintain the standards
and procedures and develop relevant training
27 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Financial Review
Results from operating activities
In millions of EUR
Revenue
Other income
Raw materials, consumables and services
Personnel expenses
Amortisation, depreciation and impairments
Total expenses
Results from operating activities
Share of profi t of associates and joint ventures and impairments thereof (net of income tax)
EBIT
2015
20,511
411
(12,931)
(3,322)
(1,594)
(17,847)
3,075
172
3,247
2014
19,257
93
(12,053)
(3,080)
(1,437)
(16,570)
2,780
148
2,928
Consolidation impact
The main consolidation changes impacting 2015 are:
• The disposal of the Mexican packaging business EMPAQUE completed on 18 February 2015.
• On 7 October 2015, HEINEKEN and Diageo plc (‘Diageo’) completed a transaction to bring increased focus to their respective beer businesses:
– HEINEKEN acquired Diageo’s 57.9 per cent stake in Jamaican listed Desnoes & Geddes (‘D&G’) taking its shareholding to 73.3 per cent.
– HEINEKEN now has full ownership of GAPL Pte Ltd (‘GAPL’), having acquired Diageo’s shareholding, which was slightly lower than 50 per cent.
GAPL owns 51 per cent of the issued share capital of Guinness Anchor Berhad, which is listed on the Malaysian Stock Exchange.
• On 15 October 2015, HEINEKEN completed the acquisition of a 53.43 per cent stake in Pivovarna Laško d.d. in Slovenia.
• On 1 December 2015, HEINEKEN completed the restructuring of the operations in South Africa and Namibia. In South Africa, HEINEKEN now holds
a 75 per cent stake in DHN Drinks (Pty) Limited and a 75 per cent stake in Sedibeng Brewery (Pty) Limited.
• The acquisition of the indirect shareholding of Coca-Cola HBC in Zagorka AD, the Bulgarian brewer, which increased HEINEKEN’s ownership to a
controlling stake of 98.86 per cent. The transaction completed on 27 October 2014.
Revenue
Revenue increased by 6.5 per cent to EUR20,511. Currency impact contributed 2.5 per cent (EUR489 million), largely driven by appreciation of the British
pound (+11 per cent), US Dollar and Vietnamese dong (+16 per cent). The impact of consolidation changes was EUR85 million, adding 0.5 per cent.
The organic revenue increase of 3.5 per cent comprised of total consolidated volume growth of 2.2 per cent, and a 1.3 per cent increase in revenue
per hectolitre.
Total expenses (beia)
Total expenses (beia) were EUR17,130 million, up by 2.9 per cent organically. On an organic basis, input costs increased by 4.7 per cent and by
2.4 per cent on a per hectolitre basis driven by mix and adverse foreign currency. Marketing and selling (beia) expenses increased organically by
6.3 per cent to EUR2,755 million, representing 13.4 per cent of revenues (2014: 12.7 per cent). Personnel expenses increased organically by 1.9 per cent
to EUR3,322 million.
28 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Financial Review continued
The 2015 exceptional items included in EBIT contain the amortisation of acquisition-related intangibles for EUR321 million (2014: EUR291 million), the
disposal gain for EMPAQUE of EUR379 million, restructuring expenses of EUR106 million (2014: EUR111 million) and the impairment of intangible assets
and P, P & E of EUR78 million (2014: EUR21 million). Additional exceptional items included in EBIT are the write down of assets and recording of provisions
in DRC and Rwanda for an amount of EUR79 million and the combined loss on the Previously Held Equity Interests of GAB, DHN and Sedibeng of
EUR19 million.
Operating profi t (beia)
Operating profi t (beia) was EUR3,381 million, up 6.9 per cent organically, with a EUR104 million benefi t from favourable foreign currency and a EUR69
million decline from consolidation. Higher revenue and the benefi t of realised cost savings was partly off set by higher marketing and selling expenses.
Share of net profi t of associates and joint ventures
Share of net profi t of associates and joint ventures (beia) increased from EUR139 million to EUR177 million. On an organic basis, an increase of EUR38
million refl ected a higher share of net profi t mainly from the joint venture operations in South Africa.
Results (beia)
In millions of EUR
Results from operating activities
Share of profi t of associates and joint ventures and impairments thereof (net of income tax)
EBIT
Exceptional items and amortisation of acquisition-related intangible assets included in EBIT
EBIT (beia)
Share of profi t of associates and joint ventures and impairments thereof (beia) (net of income tax)
Operating profi t (beia)
Profi t attributable to equity holders of the Company (net profi t)
Exceptional items and amortisation of acquisition-related intangible assets included in EBIT
Exceptional items included in fi nance costs
Exceptional items included in income tax expense
Exceptional items included in non-controlling interest
Net profi t (beia)
2015
3,075
172
3,247
311
3,558
(177)
3,381
1,892
311
(18)
(124)
(13)
2,048
2014
2,780
148
2,928
340
3,268
(139)
3,129
1,516
340
(1)
(52)
(45)
1,758
29 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Financial Review continued
EBIT (beia) and net profi t (beia)
In millions of EUR
2014
Organic growth
Changes in consolidation
Eff ects of movement in exchange rates
2015
EBIT to profi t
In millions of EUR
EBIT
Net interest expenses
Other net fi nance income/(expenses)
Profi t before income tax
Income tax expenses
Profi t
EBIT beia
3,268
255
(82)
117
3,558
Net profi t beia
1,758
277
(57)
70
2,048
2015
3,247
(352)
(57)
2,838
(697)
2,141
2014
2,928
(409)
(79)
2,440
(732)
1,708
Net fi nance expenses (beia)
Net interest expenses (beia) decreased by EUR57 million to EUR352 million, refl ecting a lower average eff ective interest rate on outstanding debts.
The average interest rate in 2015 was 3.3 per cent compared with 3.7 per cent in 2014.
Other net fi nance expenses (beia) decreased by EUR4 million to EUR76 million.
Income tax expense (beia)
The eff ective tax rate (beia) was 27.8 per cent (2014: 29.7 per cent). The decrease was mainly due to a number of one-off tax benefi ts as well as lower tax
rates in some countries.
Earnings per share diluted
Earnings per share – diluted increased to EUR3.30 (2014: EUR2.63). Earnings per share – diluted (beia) increased by 17 per cent from EUR3.05 to EUR3.57.
EBIT to EBITDA (beia)
In millions of EUR
EBIT
Depreciation and impairments of property, plant and equipment
Amortisation and impairment of intangible assets
EBITDA
Exceptional items
EBITDA (beia)
2015
3,247
1,222
372
4,841
(119)
4,722
2014
2,928
1,088
349
4,365
5
4,370
30 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Financial Review continued
Cash fl ow
In millions of EUR
Cash fl ow from operations before changes in working capital and provisions
Total change in working capital
Change in provisions and employee benefi ts
Cash fl ow from operations
Cash fl ow related to interest, dividend and income tax
Cash fl ow from operating activities
Cash fl ow (used in)/from operational investing activities
Free operating cash fl ow
Cash fl ow (used in)/from acquisitions and disposals
Cash fl ow (used in)/from fi nancing activities
Net cash fl ow
Cash conversion ratio
2015
4,280
371
(165)
4,486
(997)
3,489
(1,797)
1,692
(267)
(1,173)
252
73%
2014
4,279
27
(166)
4,140
(1,082)
3,058
(1,484)
1,574
(189)
(2,453)
(1,068)
79%
Capital expenditure and cash fl ow
Capital expenditure related to property, plant and equipment amounted to EUR1,638 million in 2015 (2014: EUR1,494 million) representing 8.0 per cent of
revenues. The increase in capital expenditure on the prior year included investing in capacity expansion in Ethiopia, Cambodia, East Timor, Ivory Coast,
Mexico, Brazil and China.
Free operating cash fl ow amounted to EUR1,692 million (2014: EUR1,574 million), higher than last year primarily due a positive benefi t from working
capital, which more than off set the higher capital expenditure.
Financial structure
In millions of EUR
Total equity
Deferred tax liabilities
Employee benefi ts
Provisions
Interest-bearing loans and borrowings
Other liabilities
Total equity and liabilities
2015
15,070
1,858
1,289
474
12,565
6,458
37,714
%
40
5
3
1
34
17
100
2014
13,452
1,503
1,443
563
11,757
6,112
34,830
%
39
4
4
2
34
17
100
Total equity
as a percentage of total assets
Net debt/EBITDA (beia) ratio
2011
2012
2013
2014
2015
37.2
35.6
37.1
38.6
40.0
2011
2012
2013
2014
2015
3.1
2.3
2.6
2.5
2.4
31 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Financial Review continued
Financing and liquidity
Equity attributable to equity holders of the Company increased by EUR1,126 million to EUR13,535 million, mainly driven by net profi t of EUR1,892 million
being partly off set by dividends paid of EUR676 million.
Total gross debt amounts to EUR12,565 million (2014: EUR11,757 million). Net debt1 increased to EUR11,510 million (2014: EUR10,910 million) as the cash
outfl ow for dividends, share buyback, acquisitions and foreign currency impact on debt exceeded the strong FOCF and proceeds of the EMPAQUE
divestment.
HEINEKEN remains focused on cash fl ow generation and disciplined working capital management, with a commitment to a long-term target net debt/
EBITDA (beia) ratio of below 2.5. The net debt/EBITDA (beia) ratio was 2.4 on 31 December 2015 (2014: 2.5).
In 2015, HEINEKEN extended its EUR2,500 million revolving credit facility by one year and the facility matures now in 2020. The facility is committed
by a group of 19 banks and has one further one-year extension option.
On 10 September 2015, HEINEKEN issued 6-year Notes for a principal amount of EUR500 million with a coupon of 1.25 per cent. In October HEINEKEN
privately placed EUR540 million of 7-year USD Notes, 8-year and 10-year EUR Notes, with a weighted average yield of approximately 2.4 per cent.
On 1 December 2015, HEINEKEN issued 9-year Notes for a principal amount of EUR460 million with a coupon of 1.5 per cent. All these Notes have been
issued under HEINEKEN’s Euro Medium Term Note Programme. The proceeds of the Notes were used for general corporate purposes.
In 2015, HEINEKEN has launched a EUR1,000 million Euro Commercial Paper programme to facilitate its cash management operations and
to further diversify its funding sources. EUR237 million was in issue as per 31 December 2015.
Heineken N.V. was assigned solid investment grade credit ratings by Moody’s Investor Service and Standard & Poor’s in 2012. The ratings from both
agencies, Baa1/P-2 and BBB+/A-2 respectively, have ‘stable’ outlooks as per the date of the 2015 Annual Report.
Following the completion of the divestment of EMPAQUE in February 2015, HEINEKEN announced that it would deploy up to EUR750 million of the
proceeds for a share buyback program in 2015. HEINEKEN announced with its third quarter trading update on 28 October 2015 that it would discontinue
the share buyback in light of the recently announced acquisitions. HEINEKEN purchased 5,229,279 shares for a total consideration of EUR365 million.
Currency split of net debt
This currency breakdown includes the eff ect of derivatives, which are used to hedge intercompany lending denominated in currencies other than Euro. Of
total net interest-bearing debt, 55 per cent is denominated in Euro and 33 per cent is US dollar-related. This is including the eff ect of cross-currency interest
rate swaps on some of the non-Euro denominated debt. The fair value of these cross-currency interest rate swaps form part of net debt.
1 HEINEKEN has amended its net debt defi nition to include derivative fi nancial instruments designated as cash fl ow hedges if these hedges are considered to be
inextricably linked to the underlying borrowings. The change in this defi nition has resulted in a reduction in net debt of EUR215 million at December 2015 and
EUR166 million at 31 December 2014.
32 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Financial Review continued
Currency split of net debt
Currency split of net debt
in millions of EUR
Obligatory long- term debt repayments
Obligatory debt repayments
in millions of EUR
7%
5%
33%
55%
• EUR
• USD + USD proxy
• GBP
• Other
55%
33%
5%
7%
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
>2025
866
1,300
1,081
1,085
1,028
1,022
833
1,059
960
975
1,014
Profi t appropriation
The Heineken N.V. dividend policy is to payout a ratio of 30 per cent to 40 per cent of full-year net profi t (beia). For 2015, payment of a total cash dividend
of EUR1.30 per share (2014: EUR1.10) will be proposed to the Annual General Meeting. This implies a 36 per cent payout ratio, in line with the payout ratio
in 2014. If approved, a fi nal dividend of EUR0.86 per share will be paid on 4 May 2016, as an interim dividend of EUR0.44 per share was paid on 12 August
2015. The payment will be subject to a 15 per cent Dutch withholding tax. The ex-fi nal dividend date for Heineken N.V. shares will be 25 April 2016.
33 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Corporate Governance Statement
Introduction
Heineken N.V. (the ‘Company’) is a public company with limited liability
incorporated under the laws of the Netherlands. Its shares are listed
on the Amsterdam Stock Exchange, Euronext Amsterdam.
The Company’s management and supervision structure is organized in a
so-called two-tier system, which consists of an Executive Board (made up
of two executive directors) and a Supervisory Board (made up of 10 non-
executive directors). The Supervisory Board supervises the Executive Board
and ensures that external experience and knowledge are embedded in the
Company’s way of operating. These two Boards are independent of one
another and accountable to the Annual General Meeting (AGM).
The Company is required to comply with, among other regulations, the
Dutch Corporate Governance Code (as lastly amended on 10 December
2008) (the ‘Code’). Deviations from the Code are explained in accordance
with the Code’s “comply or explain” principle.
In this report, the Company addresses its corporate governance structure
and states to what extent it applies the best practice provisions of the Code,
and explains which best practice provisions of the Code the Company does
not apply, and why. This report also includes the information that the
Company is required to disclose pursuant to the Dutch governmental decree
on Article 10 Takeover Directive and the governmental decree on Corporate
Governance. Substantial changes in the Company’s corporate governance
structure and in the Company’s compliance with the Code, if any, will be
submitted to the AGM for discussion under a separate agenda item.
Executive Board
General
The role of the Executive Board is to manage the Company, which means,
among other things, that it is responsible for setting and achieving the
operational and fi nancial objectives of the Company, the design of the
strategy to achieve the objectives, the parameters to be applied in relation
to the strategy (for example, in respect of the fi nancial ratios), the associated
risk profi le, the development of results and corporate social responsibility
issues that are relevant to the Company. The Executive Board is accountable
for this to the Supervisory Board and to the AGM. In discharging its role,
the Executive Board shall be guided by the interests of all of the Company
and its affi liated enterprises, taking into consideration the interests of the
Company’s stakeholders. The Executive Board is responsible for complying
with all primary and secondary legislation, for managing the risks associated
with the Company’s activities and for fi nancing the Company.
The Company has four operating regions: Europe, The Americas, Africa
Middle East and Eastern Europe, and Asia Pacifi c. Each region is headed by
a President. The two members of the Executive Board, the four Presidents
and four Chief Offi cers jointly form the Executive Team (formerly known
as the Executive Committee). The Executive Team is responsible for the
implementation of key priorities and strategies across the organisation.
Executive Board members are appointed by the AGM from a non-binding
nomination drawn up by the Supervisory Board. The Supervisory Board
appoints one of the Executive Board members as Chairman/CEO.
The AGM can dismiss members of the Executive Board by a majority
of the votes cast, if the subject majority at least represents one-third
of the issued capital.
In 2015, the AGM approved a proposal to appoint Mrs. Laurence Debroux
to the Executive Board, in succession of Mr. René Hooft Graafl and.
For 2016, no (re)appointments to the Executive Board are scheduled
to be proposed to the AGM.
34 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Members of the Executive Board are not allowed to hold more than two
supervisory board memberships or non-executive directorships in a Large
Dutch Entity or foreign equivalent. Acceptance of such external supervisory
board memberships or non-executive directorships by members of the
Executive Board is subject to approval by the Supervisory Board, which
has delegated this authority to the Selection & Appointment Committee.
Pursuant to the Act on Management and Supervision (the ‘Act’), which
came into force on 1 January 2013, executive boards of large Dutch
public companies, such as Heineken N.V., are deemed to have a balanced
composition if they consist of at least 30 per cent female and 30 per cent
male members. Currently, the Executive Board is composed of one male
and one female member, and is therefore deemed to be balanced within
the meaning of the Act.
Confl ict of interest
Dealing with (apparent) confl icts of interest between the Company and
members of its Executive Board is governed by the Articles of Association
of the Company (the ‘Articles of Association’) and the Code. A member of
the Executive Board shall not take part in any discussion or decision-making
that involves a subject or transaction in relation to which he has a personal
confl ict of interest with the Company. Decisions to enter into transactions
under which members have confl icts of interest that are of material
signifi cance to the Company and/or the relevant member(s) of the
Executive Board require the approval of the Supervisory Board. Any such
decisions shall be published in the Annual Report for the relevant year,
along with a reference to the confl ict of interest and a declaration that
the relevant best practice provisions of the Code have been complied with.
In 2015, no transactions were reported under which a member of the
Executive Board had a confl ict of interest that was of material signifi cance.
Corporate Governance Statement continued
Composition of the Executive Board
The Executive Board currently consists of two members, Chairman/CEO
Jean-François (J.F.M.L.) van Boxmeer and CFO Laurence Debroux.
Information on these Executive Board members is provided below.
Jean-François (J.F.M.L.) van Boxmeer (1961)
Belgian nationality; male.
Initial appointment in 2001;
Reappointment: 2013*;
four-year term ends in 2017;
Chairman/CEO (since 2005).
No supervisory board seats (or non-executive board memberships) in Large
Dutch Entities**.
Other positions***: Mondelēz International, USA; Henkel AG & Co., Germany;
The Dutch Opera (Chairman).
Laurence Debroux (1969)
French nationality; female.
Initial appointment in 2015;
four-year term ends in 2019;
CFO (since 2015).
No supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**.
Other positions***: Natixis.
* For the maximum period of four years.
** Large Dutch Entities are Dutch N.V.s, B.V.s or Foundations (that are required
to prepare annual accounts pursuant to Chapter 9 of Book 2 of the Dutch Civil
Code or similar legislation) that meet two of the following criteria (on a
consolidated basis) on two consecutive balance sheet dates:
(i) The value of the assets (according to the balance sheet with the
explanatory notes and on the basis of acquisition and manufacturing
costs) exceeds EUR17.5 million (as of 1 January 2016: EUR20 million);
(ii) The net turnover exceeds EUR35 million (as of 1 January 2016:
EUR40 million);
(iii) The average number of employees is at least 250.
*** Under ‘Other positions’, other functions are mentioned that may be relevant
to performance of the duties of the Executive Board.
Best practice provision II.1.1 of the Code recommends that an Executive
Board member is appointed for a maximum period of four years and that
a member may be reappointed for a term of not more than four years
at a time. In compliance with this best practice provision, the Supervisory
Board has drawn up a rotation schedule in order to avoid, as far as possible,
a situation in which Executive Board members retire at the same time.
35 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
Remuneration
In line with the remuneration policy adopted by the AGM, the remuneration
of the members of the Executive Board is determined by the Supervisory
Board, upon recommendation of the Remuneration Committee. The
remuneration policy and the elements of the remuneration of the Executive
Board members are set out in the Remuneration Report and notes 29 and
35 to the Financial Statements. The main elements of the employment
agreement with Mr. Van Boxmeer and the service agreement with Mrs.
Debroux are available on our corporate website.
Risk Management and Control System for Financial Reporting
The risk management and control system for fi nancial reporting includes
clear accounting policies, a standard chart of accounts and annual Letters
of Representation signed by regional, functional and local management.
Common systems and embedded control frameworks support common
accounting and regular fi nancial reporting in standard forms. Internal
controls over fi nancial reporting are part of the assurance model,
implemented and operated by management, monitored and assessed
by the Process & Control Improvement function. A review by the internal
audit function provides additional assurance on the fi nancial reporting.
The external auditor also reports on internal control issues through their
management letters, and attend the regional and certain local
assurance meetings.
Supervisory Board
General
The role of the Supervisory Board is to supervise the management
of the Executive Board and the general aff airs of the Company
and its affi liated enterprises, as well as to assist the Executive Board
by providing advice. In discharging its role, the Supervisory Board
shall be guided by the interests of the Company and its affi liated
enterprises and shall take into account the relevant interest of the
Company’s stakeholders.
The supervision of the Executive Board by the Supervisory Board includes
the achievement of the Company’s objectives, the corporate strategy
and the risks inherent in the business activities, the design and eff ectiveness
of the internal risk and control system, the fi nancial reporting process,
compliance with primary and secondary legislation, the Company–
shareholder relationship and corporate social responsibility issues that
are relevant to the Company.
The Supervisory Board evaluates at least once a year the corporate
strategy and main risks to the business, and the result of the assessment
by the Executive Board of the design and eff ectiveness of the internal
risk management and control system, as well as any signifi cant
changes thereto.
The division of duties within the Supervisory Board and the procedure
of the Supervisory Board are laid down in the Regulations for the
Supervisory Board, which are available on our corporate website.
The Supervisory Board members are appointed by the AGM from
a non-binding nomination drawn up by the Supervisory Board. The
AGM can dismiss members of the Supervisory Board by a majority
of the votes cast, if the subject majority at least represents one-third
of the issued capital.
Composition of the Supervisory Board
The Supervisory Board consists of 10 members: Hans Wijers (Chairman),
José Antonio Fernández Carbajal (Vice-Chairman), Maarten Das, Michel
de Carvalho, Annemiek Fentener van Vlissingen, Mary Minnick, Christophe
Navarre, Javier Astaburuaga Sanjinés, Henk Scheff ers and Jean Marc Huët.
Information on these Supervisory Board members is provided below.
Hans (G.J.) Wijers (1951)
Dutch nationality; male.
Appointed in 2012*; Chairman (as of 2013).
Profession: Company Director.
Supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**: AFC Ajax N.V. (Chairman)
Other positions***: Royal Dutch Shell plc (Deputy Chairman);
GlaxoSmithKline plc; HAL Holding N.V.; Natuurmonumenten (Chairman);
Concertgebouw N.V. (Chairman).
José Antonio (J.A.) Fernández Carbajal (1954)
Mexican nationality; male.
Appointed in 2010; latest reappointment in 2014*.
Vice-Chairman (as of 2010).
Profession: Executive Chairman Fomento Económico Mexicano
S.A.B. de C.V. (FEMSA).
Supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**: Heineken Holding N.V.
Other positions***: Coca-Cola Femsa S.A.B. de C.V. (Chairman); Tecnológico
de Monterrey (Chairman); Fundación Femsa (Chairman); participates on
Boards of Industrias Peñoles and Grupo Televisa.
36 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Javier (J.G.) Astaburuaga Sanjinés (1959)
Mexican nationality; male.
Appointed in 2010; latest reappointment in 2014*.
Profession: Senior Vice President Corporate Development Fomento
Económico Mexicano S.A.B. de C.V. (FEMSA).
No supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**.
Hendrik (H.) Scheff ers (1948)
Dutch nationality; male
Appointed in 2013*.
Profession: Company Director.
Supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**: Aalberts Industries N.V. (Chairman);
Royal BAM Group N.V. (Vice-Chairman).
Jean Marc (J.M.) Huët (1969)
Dutch nationality; male.
Appointed in 2014*.
Profession: Company Director
Supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**: SHV Holdings N.V.
Other positions***: Delta Topco Limited.
* For the maximum period of four years.
** Large Dutch Entities are Dutch N.V.s, B.V.s or Foundations (that are required
to prepare annual accounts pursuant to Chapter 9 of Book 2 of the Dutch
Civil Code or similar legislation) that meet two of the following criteria
(on a consolidated basis) on two consecutive balance sheet dates:
(i) The value of the assets (according to the balance sheet with the
explanatory notes and on the basis of acquisition and manufacturing
costs) exceeds EUR17.5 million (as of 1 January 2016: EUR20 million);
(ii) The net turnover exceeds EUR35 million (as of 1 January 2016:
EUR40 million);
(iii) The average number of employees is at least 250.
*** Under ‘Other positions’, other functions are mentioned that may be relevant
to performance of the duties of the Supervisory Board.
Corporate Governance Statement continued
Maarten (M.) Das (1948)
Dutch nationality; male.
Appointed in 1994; latest reappointment in 2013*.
Delegated Member (1995).
Profession: Advocaat (Attorney at law).
Supervisory board seats (or non-executive board memberships) in Large
Dutch Entities**: Heineken Holding N.V. (Chairman) and Groene Energie
Administratie B.V. (Chairman).
Other positions***: L’Arche Green N.V. (Chairman); Stichting
Administratiekantoor Priores; LAC B.V.; Greenfee B.V. (Chairman).
Michel (M.R.) de Carvalho (1944)
British nationality; male.
Appointed in 1996; latest reappointment in 2015*.
Profession: Banker, Vice-Chairman – Citigroup Investment Bank EMEA;
Chairman – Citigroup Private Bank EMEA.
Executive Director of Heineken Holding N.V.
No supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**
Other positions***: L’Arche Green N.V.
Annemiek (A.M.) Fentener van Vlissingen (1961)
Dutch nationality; female.
Appointed in 2006; latest reappointment in 2014*.
Profession: Company Director.
Supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**: SHV Holdings N.V. (Chairman);
University Medical Center Utrecht (UMC Utrecht).
Other positions***: Lhoist, Belgium; EXOR S.p.A., Italy.
Mary (M.E.) Minnick (1959)
American nationality; female.
Appointed in 2008; latest reappointment in 2012*.
Profession: Partner in Lion Capital LLP, UK.
No supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**.
Christophe (V.C.O.B.J.) Navarre (1958)
Belgian nationality; male.
Appointed in 2009; latest reappointment in 2013*.
Profession: Chairman & CEO Moët Hennessy, LVMH Wines
& Spirits Brands.
No supervisory board seats (or non-executive board memberships)
in Large Dutch Entities**.
37 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
The Supervisory Board endorses the principle that the composition
of the Supervisory Board is such that the members are able to act critically
and independently of one another and of the Executive Board. Each
Supervisory Board member is capable of assessing the broad outline
of the overall strategy of the Company and its businesses and carrying
out its duties properly.
The majority of the Supervisory Board consists of ‘independent’ members
within the meaning of best practice provision III.2.2 of the Code. Four
of its members (i.e. Messrs. de Carvalho, Das, Fernández Carbajal and
Astaburuaga Sanjinés) do not meet the applicable criteria for being
‘independent’. In this respect, it is relevant to note that the appointment
of Messrs. Fernández Carbajal and Astaburuaga Sanjinés is based on
the contractual arrangements concluded between (among others) the
Company and FEMSA in connection with the acquisition by the Company
of FEMSA’s beer activities in 2010; these arrangements were approved
by the AGM on 22 April 2010.
Best practice provision III.3.5 of the Code provides that a person may be
appointed to the supervisory board for a maximum of three four-year terms.
However, in the interest of preserving the core values and the structure of
the Company, this maximum term will not be applied to members of the
Supervisory Board who are related by blood or marriage to the late Mr. A.H.
Heineken or to members who are also members of the Board of Directors
of Heineken Holding N.V.
The Supervisory Board has drawn up a rotation schedule in order to
avoid, as far as possible, a situation in which many Supervisory Board
members retire at the same time. The rotation schedule is available
on our corporate website.
The Act on Management and Supervision stipulates that supervisory boards
of large Dutch public companies, such as Heineken N.V., are deemed to have
a balanced composition if they consist of at least 30 per cent female and
30 per cent male members. The Supervisory Board currently consists of
eight male and two female members. The Supervisory Board will take the
balanced composition requirements into account when nominating
and selecting new candidates for the Supervisory Board. However, the
Supervisory Board is of the opinion that gender is only one element of
diversity, and that experience, background, knowledge, skills and insight
are equally important and relevant criteria in selecting new members.
Profi le
The Supervisory Board has prepared a profi le of its size and composition,
taking account of the nature of the business, its activities and the desired
expertise and background of the Supervisory Board members. The profi le
deals with the aspects of diversity in the composition of the Supervisory
Board that are relevant to the Company and states what specifi c objective
is pursued by the Supervisory Board in relation to diversity. At least one
member of the Supervisory Board shall be a fi nancial expert with relevant
knowledge and experience of fi nancial administration and accounting
for listed companies or other large legal entities. The composition of
the Supervisory Board shall be such that it is able to carry out its duties
properly. The profi le is available on our corporate website.
Regulations of the Supervisory Board
The tasks and responsibilities, as well as internal procedural matters
for the Supervisory Board, are addressed in the Regulations of the
Supervisory Board, and are available on our corporate website.
The Supervisory Board appoints from its members a Chairman (currently
Mr. G.J. Wijers). The Chairman of the Supervisory Board may not be
a former member of the Executive Board. The Chairman of the Supervisory
Board determines the agenda, chairs the meetings of the Supervisory
Board, ensures the proper functioning of the Supervisory Board and
its Committees, arranges for the adequate provision of information
to its members and acts on behalf of the Supervisory Board as the
main contact for the Executive Board and for shareholders regarding the
functioning of the Executive Board and the Supervisory Board members.
The Chairman also ensures the orderly and effi cient conduct of the AGM.
The Chairman of the Supervisory Board is assisted in his role by the
Company Secretary. All members of the Supervisory Board have access
to the advice and services of the Company Secretary. The Company
Secretary is responsible for ensuring that procedures are followed and
that the Supervisory Board acts in accordance with its statutory obligations
as well as its obligations under the Articles of Association.
The Supervisory Board appoints from its members a Vice-Chairman
(currently Mr. J.A. Fernández Carbajal). The Vice-Chairman of the
Supervisory Board acts as deputy for the Chairman. The Vice-Chairman
acts as contact for individual Supervisory Board members and Executive
Board members concerning the functioning of the Chairman of the
Supervisory Board.
38 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
The Supervisory Board can only adopt resolutions in a meeting if the
majority of its members is present or represented at that meeting.
In such meetings, resolutions must be adopted by absolute majority of
the votes cast. In addition, approval of a resolution by the Supervisory
Board, as referred to in Article 8, section 6 under a, b and c of the Articles
of Association, requires the affi rmative vote of the delegated member.
Induction and training
After appointment to the Supervisory Board, members receive an induction
programme, drawn up by the Company in consultation with the Chairman
of the Supervisory Board. The programme includes a general information
package in respect of the Company and its corporate governance, as well
as meetings with members of the Executive Team and other senior
management leaders, and a tour of our brewery in Zoeterwoude, the
Netherlands. Furthermore, the Executive Board provides regular updates
to the Supervisory Board on the Company’s operations, legal matters,
corporate governance, accounting and compliance.
Confl ict of interest
The Articles of Association and the Regulations of the Supervisory Board
prescribe how to deal with (apparent) confl icts of interest between the
Company and members of the Supervisory Board. A member of the
Supervisory Board shall not take part in any discussion or decision-making
that involves a subject or transaction in relation to which he has a personal
confl ict of interest with the Company. Decisions to enter into transactions
under which Supervisory Board members have confl icts of interest that
are of material signifi cance to the Company and/or the relevant member(s)
of the Supervisory Board require the approval of the Supervisory Board.
Any such decisions shall be published in the Annual Report for the relevant
year, along with a reference to the confl ict of interest and a declaration
that the relevant best practice provisions of the Code have been complied
with. Note 35 of the 2015 Financial Statements sets out related party
transactions in 2015.
Remuneration
Supervisory Board members receive a fi xed annual remuneration fee,
as determined by the AGM. More information on the remuneration
of Supervisory Board members can be found in note 35 to the 2015
Financial Statements.
Resolutions subject to Supervisory Board approval
Certain resolutions of the Executive Board are subject to the approval of
the Supervisory Board. Examples are resolutions concerning the operational
and fi nancial objectives of the Company, the strategy designed to achieve
the objectives, the parameters to be applied in relation to the strategy (for
example, in respect of the fi nancial ratios) and corporate social responsibility
issues that are relevant to the Company. Also, decisions to enter into
transactions under which Executive Board or Supervisory Board members
would have confl icts of interest that are of material signifi cance to the
Company and/or to the relevant Executive Board member/Supervisory
Board member require the approval of the Supervisory Board. Further
reference is made to Article 8 paragraph 6 of the Articles of Association,
which contains a list of resolutions of the Executive Board that require
Supervisory Board approval.
Delegated Member
The AGM may appoint one of the Supervisory Board members
as Delegated Member. Mr. M. Das currently acts as the Delegated Member.
The delegation to the Delegated Member does not extend beyond the
duties of the Supervisory Board and does not comprise the management
of the Company. It intends to eff ect a more intensive supervision and advice
and more regular consultation with the Executive Board. The Delegated
Member has a veto right concerning resolutions of the Supervisory Board
to approve the resolutions of the Executive Board referred to in Article 8
paragraph 6 under a, b and c of the Articles of Association of the Company.
The role of Delegated Member is consistent with best practice provision
III.6.6 of the Code, except insofar that the delegation is not temporary
but is held for the term for which the member concerned is appointed
by the AGM. The Company is of the opinion that the position of
Delegated Member, which has been in existence since 1952, befi ts
the structure of the Company.
Committees
The Supervisory Board has fi ve committees: the Preparatory Committee,
the Audit Committee, the Remuneration Committee, the Selection &
Appointment Committee and the Americas Committee.
39 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
The function of these committees is to prepare the decision-making of
the Supervisory Board. The Supervisory Board has drawn up regulations for
each committee, which indicate the role and responsibility of the committee
concerned, its composition and the manner in which it discharges its duties.
The regulations of the Audit Committee, Remuneration Committee and
Selection & Appointment Committee provide that at least two of its
respective members are ‘independent’ (within the meaning of best practice
provision III.2.2 of the Code), whereas the regulations of the Americas
Committee and Preparatory Committee do not stipulate a minimum
number of ‘independent’ members. These regulations are available
on our corporate website.
The Report of the Supervisory Board states the composition of
the committees, the number of committee meetings and the main
items discussed.
Preparatory Committee
The Preparatory Committee prepares decision-making of the Supervisory
Board on matters not already handled by any of the other committees,
such as in relation to acquisitions and investments.
Audit Committee
The Audit Committee may not be chaired by the Chairman of the
Supervisory Board or by a former member of the Executive Board.
At least one member of the Audit Committee shall be a fi nancial expert
with relevant knowledge and experience of fi nancial administration
and accounting for listed companies or other large legal entities.
The Audit Committee focuses on supervising the activities of the Executive
Board with respect to (i) the operation of the internal risk management
and control system, including the enforcement of the relevant primary
and secondary legislation and supervising the operation of codes of
conduct, (ii) the provision of fi nancial information by the Company,
(iii) compliance with recommendations and observations of internal and
external auditors, (iv) the role and functioning of the internal audit function,
(v) the policy of the Company on tax planning, (vi) relations with the
external auditor, including, in particular, its independence, remuneration and
any non-audit services for the Company, (vii) the fi nancing of the Company
and (viii) the applications of information and communication technology.
The Audit Committee acts as the principal contact for the external
auditor if the external auditor discovers irregularities in the content
of the fi nancial reporting.
The Audit Committee meets with the external auditor as often
as it considers necessary, but at least once a year, without the
Executive Board members being present.
Remuneration Committee
The Remuneration Committee may not be chaired by the Chairman
of the Supervisory Board or by a former member of the Executive Board
or by a Supervisory Board member who is a member of the management
board of another listed company. However, given the structure of the
Heineken Group and the character of the Board of Directors of Heineken
Holding N.V., the regulations of the Remuneration Committee permit that
the Remuneration Committee is chaired by a Supervisory Board member
who is a member of the Board of Directors of Heineken Holding N.V.
The current Chairman of the Remuneration Committee, Mr. M. Das,
is a Non-Executive Director (and Chairman) of Heineken Holding N.V.
No more than one member of the Remuneration Committee may be
a member of the management board of another Dutch listed company.
The Remuneration Committee, inter alia, makes the proposal to the
Supervisory Board for the remuneration policy to be pursued, and makes
a proposal for the remuneration of the individual members of the Executive
Board for adoption by the Supervisory Board.
Selection & Appointment Committee
The Selection & Appointment Committee, inter alia, (i) draws up selection
criteria and appointment procedures for Supervisory Board members and
Executive Board members, (ii) periodically assesses the size and composition
of the Supervisory Board and the Executive Board, and makes a proposal
for a composition profi le of the Supervisory Board, (iii) periodically assesses
the functioning of individual Supervisory Board members and Executive
Board members and reports on this to the Supervisory Board, (iv) makes
proposals for appointments and reappointments, (v) supervises the
policy of the Executive Board on the selection criteria and appointment
procedures for senior management, and (vi) decides on a request from
Executive Board members to accept a board membership of a Large
Dutch Entity (as defi ned above) or foreign equivalent.
40 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
Americas Committee
The Americas Committee advises the Supervisory Board on the
overall strategic direction of the Americas Region and reviews and
evaluates the performance, the organisation and the management
in the Americas Region.
General Meeting of Shareholders
Annually, within six months after the end of the fi nancial year, the AGM
shall be held, in which, inter alia, the following items shall be brought
forward: (i) the discussion of the Annual Report, (ii) the discussion and
adoption of the fi nancial statements, (iii) discharge of the members of
the Executive Board for their management, (iv) discharge of the members
of the Supervisory Board for their supervision on the management and
(v) appropriation of profi ts. The AGM shall be held in Amsterdam.
Convocation
Pursuant to the law, the Executive Board or the Supervisory Board
shall convene the AGM with a convocation period of at least 42 days
(excluding the date of the meeting, but including the convocation date).
The Executive Board and the Supervisory Board are obliged to convene
an AGM upon request of shareholders individually or collectively owning
25 per cent of the shares. Such meeting shall then be held within eight
weeks from the request and shall deal with the subjects as stated by those
who wish to hold the meeting.
Right to include items on the agenda
If the Executive Board has been requested in writing not later than
60 days prior to the date of the AGM to deal with an item by one or more
shareholders who solely or jointly (i) represent at least 1 per cent of the
issued capital or (ii) at least represent a value of EUR 50 million, then the
item will be included in the convocation or announced in a similar way.
A request of a shareholder for an item to be included on the agenda of
the AGM needs to be substantiated. The principles of reasonableness
and fairness may allow the Executive Board to refuse the request.
The Code provides the following in best practice provision IV.4.4: “A
shareholder shall exercise the right of putting an item on the agenda
only after he consulted the executive board about this. If one or more
shareholders intend to request that an item be put on the agenda that
may result in a change in the company’s strategy, for example through
the dismissal of one or more Executive or Supervisory Board members,
the Executive Board shall be given the opportunity to stipulate a reasonable
period in which to respond (the response time).
This shall also apply to an intention as referred to above for judicial leave
to call a general meeting pursuant to Article 2:110 of the Dutch Civil Code.
The shareholder shall respect the response time stipulated by the Executive
Board within the meaning of best practice provision II.1.9.”
If the Executive Board invokes a response time, such period shall not exceed
180 days from the moment the Executive Board is informed by one or more
shareholders of their intention to put an item on the agenda to the day of
the general meeting at which the item is to be dealt with. The Executive
Board shall use the response time for further deliberation and constructive
consultation. This shall be monitored by the Supervisory Board. The response
time shall be invoked only once for any given general meeting and shall
not apply to an item in respect of which the response time has been
previously invoked.
Record date
For each AGM, the Company shall determine a record date for the exercise
of the voting rights and participation in the meeting. The record date shall
be the 28th day prior to the date of the meeting. The record date shall be
included in the convocation notice, as well as the manner in which those
entitled to attend and/or vote in the meeting can be registered and the
manner in which they may exercise their rights.
Only persons who are shareholders on the record date may participate
and vote in the AGM.
Participation in person, by proxy or through
electronic communication
Each shareholder is entitled, either personally or by proxy authorised in
writing, to attend the AGM, to address the meeting and to exercise his
or her voting rights.
The Executive Board may determine that the powers set out in the previous
sentence may also be exercised by means of electronic communication.
If a shareholder wants to exercise his or her rights by proxy authorised in
writing, the written power of attorney must be received by the Company no
later than on the date indicated for that purpose in the convocation notice.
Through its corporate website, the Company generally facilitates that
shareholders can give electronic voting instructions.
41 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Corporate Governance Statement continued
Attendance list
Each person entitled to vote or otherwise entitled to attend a meeting
or such person’s representative shall have to sign the attendance list,
stating the number of shares and votes represented by such person.
Chairman of the AGM
The AGM shall be presided over by the Chairman or the Vice-Chairman
of the Supervisory Board, or in his absence, by one of the Supervisory
Board members present at the meeting, to be designated by them
in mutual consultation. If no members of the Supervisory Board are
present, the meeting shall appoint its own chairman.
Voting
All resolutions of the AGM shall be adopted by an absolute majority
of the votes cast, except for those cases in which the law or the Articles
of Association prescribe a larger majority.
Each share confers the right to one vote. Blank votes shall be considered
as not having been cast.
The Executive Board may determine in the convocation notice that any
vote cast prior to the AGM by means of electronic communication shall
be deemed to be a vote cast in the AGM. Such a vote may not be cast prior
to the record date. A shareholder who has cast his or her vote prior to the
AGM by means of electronic communication remains entitled, whether
or not represented by a holder of a written power of attorney, to participate
in the AGM.
Minutes
The proceedings in the AGM shall be recorded in minutes taken
by a secretary to be designated by the chairman of the meeting, which
minutes shall be signed by the chairman of the meeting and the secretary.
If, in deviation of the above, a notarial record of the proceedings of the AGM
is drawn up, the chairman of the meeting shall countersign the notarial
record. Upon request, the record of the proceedings of the AGM shall be
submitted to shareholders ultimately within three months after the
conclusion of the meeting.
Resolutions to be adopted by the AGM
The AGM has authority to adopt resolutions concerning, inter alia,
the following matters:
• Issue of shares by the Company or rights on shares (and to authorise
the Executive Board to resolve that the Company issues shares or rights
on shares)
• Authorisation of the Executive Board to resolve that the Company
acquires its own shares
• Cancellation of shares and reduction of share capital
• Appointment of Executive Board members
• The remuneration policy for Executive Board members
• Suspension and dismissal of Executive Board members
• Appointment of Supervisory Board members
• The remuneration of Supervisory Board members
• Suspension and dismissal of Supervisory Board members
• Appointment of the Delegated Member of the Supervisory Board
• Adoption of the fi nancial statements
• Granting discharge to Executive and Supervisory Board members
• Dividend distributions
• A substantial change in the corporate governance structure
• Appointment of the external auditor
• Amendment of the Articles of Association, and
• Liquidation.
Resolutions on a major change in the identity or character of the Company
or enterprise shall be subject to the approval of the AGM. This would at least
include (a) the transfer of the enterprise or the transfer of practically the
entire enterprise of the Company to a third party, (b) the entering into or
the termination of a lasting co-operation of the Company or a subsidiary
with another legal entity or company or a fully liable partner in a limited
partnership or general partnership, if such co-operation or termination is of
fundamental importance to the Company and (c) acquiring or disposing of
a participation in the capital of a company by the Company or a subsidiary
amounting to at least one-third of the amount of assets according to the
Company’s consolidated balance sheet plus explanatory notes as laid down
in the last adopted fi nancial statements of the Company.
42 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
Article 10 of the EU Take-Over Directive Decree
Shares
The issued share capital of the Company amounts to EUR921,604,180.80,
consisting of 576,002,613 shares of EUR1.60 each. Each share carries one
vote. The shares are listed on Euronext Amsterdam.
All shares carry equal rights and are freely transferable (unless provided
otherwise below).
Shares repurchased by the Company for the share-based Long-Term
Variable (LTV) awards or for any other purpose do not carry any voting
rights and dividend rights.
Shareholders who hold shares on a predetermined record date are entitled
to attend and vote at the AGM. The record date for the AGM of 21 April
2016 is 28 days before the AGM, i.e. on 24 March 2016.
Substantial shareholdings
Pursuant to the Financial Supervision Act (Wet op het fi nancieel toezicht)
and the Decree on Disclosure of Major Holdings and Capital Interests in
Issuing Institutions (Besluit melding zeggenschap en kapitaalbelang in
uitgevende instellingen), the Netherlands Authority for the Financial
Markets has been notifi ed about the following substantial shareholdings
regarding the Company on 1 January 2016:
Mrs. C.L. de Carvalho-Heineken (indirectly 50.005 per cent; the direct
50.005 per cent shareholder is Heineken Holding N.V.).
Voting Trust (FEMSA) (indirectly 10.14 per cent; the direct 10.14 per cent
shareholder is CB Equity LLP); as at 31 December 2015, Voting Trust
(FEMSA)’s indirect shareholding in the Company (through
CB Equity LLP) stands at 12.53 per cent.
Massachusetts Financial Services Company (a capital interest of
2.67 per cent (of which 1.73 per cent is held directly and 0.94 per cent
is held indirectly) and a voting interest of 4.97 per cent (of which
2.04 per cent is held directly and 2.94 per cent is held indirectly).
Restrictions related to shares held by FEMSA
Upon completion (on 30 April 2010) of the acquisition of the beer
operations of Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA),
CB Equity LLP (belonging to the FEMSA group) received Heineken N.V.
shares (and Heineken Holding N.V. shares).
Pursuant to the Corporate Governance Agreement of 30 April 2010
concluded between the Company, Heineken Holding N.V., L’Arche Green
N.V., FEMSA and CB Equity LLP the following applies:
• Subject to certain exceptions, FEMSA, CB Equity LLP, and any member
of the FEMSA group shall not increase its shareholding in Heineken
Holding N.V. above 20 per cent and shall not increase its holding in the
Heineken Group above a maximum of 20 per cent economic interest
(such capped percentages referred to as the ‘Voting Ownership Cap’).
• Subject to certain exceptions, FEMSA, CB Equity LLP and any member
of the FEMSA group may not exercise any voting rights in respect of
any shares benefi cially owned by it, if and to the extent that such shares
are in excess of the applicable Voting Ownership Cap.
• Unless FEMSA’s economic interest in the Heineken Group were to fall
below 14 per cent, the current FEMSA control structure were to change
or FEMSA were to be subject to a change of control, FEMSA is entitled
to have two representatives on the Company’s Supervisory Board, one
of whom will be Vice-Chairman, who also serves as the FEMSA
representative on the Board of Directors of Heineken Holding N.V.
Share plans
There is a share-based Long-Term Variable Award (‘LTV’) for both
the Executive Board members and senior management. Eligibility
for participation in the LTV by senior management is based on
objective criteria.
Each year, performance shares are awarded to the participants. Depending
on the fulfi lment of certain predetermined performance conditions during
a three-year performance period, the performance shares will vest and the
participants will receive Heineken N.V. shares.
Shares received by Executive Board members upon vesting under the LTV
Award are subject to a holding period of fi ve years as from the date of
award of the respective performance shares, which is approximately
two years from the vesting date.
Under the Short-Term Variable Pay (STV) for the Executive Board, the
Executive Board members are entitled to receive a cash bonus subject to the
fulfi lment of predetermined performance conditions. The Executive Board
members are obliged to invest at least 25 per cent of their STV payout in
Heineken N.V. shares (investment shares) to be delivered by the Company;
the maximum they can invest in Heineken N.V. shares is 50 per cent of their
STV payout (at their discretion).
43 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
The investment shares (which are acquired by the Executive Board
members in the year after the year over which the STV payout is calculated)
are subject to a holding period of fi ve years as from 1 January of the year
in which the investment shares are acquired. Executive Board members are
entitled to receive one additional Heineken N.V. share (a matching share)
for each investment share held by them at the end of the respective holding
period. The entitlement to receive matching shares shall lapse upon the
termination by the Company of the employment agreement (in respect of
Mr. Van Boxmeer), or service agreement (in respect of Mrs. Debroux), as the
case may be, for an urgent reason (‘dringende reden’) within the meaning
of the law or in case of dismissal for cause (‘ontslag met gegronde redenen’)
whereby the cause for dismissal concerns unsatisfactory functioning of the
Executive Board member.
In exceptional situations, extraordinary share entitlements may be awarded
by the Executive Board to employees. These share entitlements are usually
non-performance-related and the employees involved are usually entitled
to receive Heineken N.V. shares after the expiry of a period of time.
The shares required for the LTV, the STV and the extraordinary share
entitlements will be acquired by the Company on the basis of an
authorisation granted by the AGM and subject to approval of the
Supervisory Board of the Company.
Change of control
There are no important agreements to which the Company is
a party and that will automatically come into force, be amended
or be terminated under the condition of a change of control over
the Company as a result of a public off er.
However, the contractual conditions of most of the Company’s important
fi nancing agreements and notes issued (potentially) entitle the banks and
noteholders respectively to claim early repayment of the amounts borrowed
by the Company in the situation of a change of control over the Company
(as defi ned in the respective agreement).
Also, some of HEINEKEN’s important joint venture agreements provide that
in case of a change of control over HEINEKEN (as defi ned in the respective
agreement), the other party to such agreement may exercise its right to
purchase HEINEKEN’s shares in the joint venture, as a result of which the
respective joint venture agreement will terminate.
Compensation rights on termination
of employment / service agreement
There are no agreements of the Company with Executive Board members
that specifi cally entitle them to any compensation rights upon termination
of their employment agreement (in respect of Mr. Van Boxmeer), or service
agreement (in respect of Mrs. Debroux), as the case may be, after
completion of a public off er for Heineken N.V. shares.
If the Company gives notice of termination of the employment
agreement of Mr. Van Boxmeer for a reason which is not an urgent
reason (‘dringende reden’) within the meaning of the law, the Company
shall pay severance compensation to Mr. Van Boxmeer on expiry of his
employment agreement. This severance compensation shall be set on
the basis of the notion of reasonableness taking into account all the
circumstances of the matter, including whether the Executive Board
member shall be bound by a non-competition obligation and whether
any allowance is paid by the Company in relation to this non-competition
obligation. In case of dismissal for cause (‘ontslag met gegronde reden’)
whereby the cause for dismissal concerns unsatisfactory functioning of
Mr. Van Boxmeer, the severance compensation cannot exceed one year’s
base salary, including holiday allowance.
If the Company gives notice of termination of the service agreement of
Mrs. Debroux for a reason which is not an urgent reason (‘dringende reden’)
within the meaning of the law, or decides not to extend the service agreement
upon its expiry, or if the AGM does not reappoint Mrs. Debroux as member
of the Executive Board for a subsequent term, the Company shall pay Mrs.
Debroux an amount equal to two years of management fee (in the event
of termination during or upon expiry of Mrs. Debroux’s fi rst four-year term),
or an amount equal to one year’s management fee (in the event of
termination during or upon expiry of any subsequent term), respectively.
Appointment and dismissal of Supervisory
and Executive Board members
Members of the Supervisory Board and the Executive Board are
appointed by the AGM on the basis of a non-binding nomination
by the Supervisory Board.
The AGM can dismiss members of the Supervisory Board and the
Executive Board by a majority of the votes cast, if the subject majority
at least represents one-third of the issued capital.
44 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
Amendment of the Articles of Association
The Articles of Association can be amended by resolution of the AGM in
which at least half of the issued capital is represented and exclusively either
at the proposal of the Supervisory Board or at the proposal of the Executive
Board that has been approved by the Supervisory Board, or at the proposal
of one or more shareholders representing at least half of the issued capital.
Acquisition of own shares
On 23 April 2015, the AGM authorised the Executive Board (for the statutory
maximum period of 18 months) to acquire own shares subject to the
following conditions and with due observance of the law and the Articles
of Association (which require the approval of the Supervisory Board):
a. The maximum number of shares which may be acquired is 10 per cent
of the issued share capital of the Company.
Compliance with the Code
On 10 December 2008, the current Code was introduced. The Code can
be downloaded at www.commissiecorporategovernance.nl.
The Company has prepared a Comply or Explain report on the
basis of the Code. The Comply or Explain report is available at
www.theHEINEKENcompany.com/investors/governance/
corporate-governance-code.
As stated in the Code (principle ‘Compliance with and enforcement of
the Code’, paragraph I), there should be a basic recognition that corporate
governance must be tailored to the company-specifi c situation and
therefore that non-application of individual provisions by a company
may be justifi ed.
b. Transactions must be executed at a price between the nominal value
of the shares and 110 per cent of the opening price quoted for the shares
in the Offi cial Price List (Offi ciële Prijscourant) of Euronext Amsterdam on
the date of the transaction or, in the absence of such a price, the latest
price quoted therein.
HEINEKEN in principle endorses the Code’s principles and applies virtually
all best practice provisions. However, given the structure of the HEINEKEN
Group, and specifi cally the relationship between the Company and its
controlling shareholder Heineken Holding N.V., the Company does not
(fully) apply the following best practice provisions:
c. Transactions may be executed on the stock exchange or otherwise.
• III.2.1, III.2.3 and III.5.1: Number of independent
The authorisation may be used in connection with the LTV for the members
of the Executive Board and the LTV for senior management, but may also
serve other purposes, such as other acquisitions.
Supervisory Board members;
• III.3.5: Maximum terms of appointment
Supervisory Board members; and
A new authorisation will be submitted for approval at the next AGM
on 21 April 2016.
• III.6.6: Temporary nature of appointing a delegated
Supervisory Board member.
In 2015, the Executive Board launched a share buyback programme.
During the period starting on 7 May 2015 and ending on 26 October 2015,
the Company acquired 5,229,279 shares in its own share capital for a total
consideration of €365 million.
Furthermore, HEINEKEN does not fully apply best practice provision II.2.8
(severance payment Executive Board members) to Mr. Van Boxmeer.
In view of his long-standing employment relationship (over 25 years in
service), the limitation of severance payment to one year’s salary will only
be applied in case of dismissal for cause.
Issue of shares
On 23 April 2015, the AGM also authorised the Executive Board (for a period
of 18 months) to issue shares or grant rights to subscribe for shares and
to restrict or exclude shareholders’ pre-emption rights, with due observance
of the law and Articles of Association (which require the approval of the
Supervisory Board). The authorisation is limited to 10 per cent of the
Company’s issued share capital, as per the date of issue. The authorisation
may be used in connection with the LTV for the members of the Executive
Board and the LTV for senior management, but may also serve other
purposes, such as acquisitions. A new authorisation will be submitted
for approval to the AGM at 21 April 2016.
Other best practice provisions which are not applied relate to the
fact that these principles and/or best practice provisions are not applicable
to the Company:
• II.2.4, II.2.6 and II.2.7: HEINEKEN does not grant options on shares;
• III.4.1 (g): the Central Works Council operates at the level of Heineken
Nederlands Beheer B.V., a subsidiary of HEINEKEN
with its own Supervisory Board;
• III.8: HEINEKEN does not have a one-tier management structure;
• IV.1.2: HEINEKEN has no fi nancing preference shares;
• IV.2: HEINEKEN has no depositary receipts of shares, nor a trust offi ce;
• IV.3.11: HEINEKEN has no anti-takeover measures;
• IV.4: the principle and best practice provisions relate
to shareholders; and
• V.3.3: HEINEKEN has an internal audit function.
45 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Corporate Governance Statement continued
Statement of the Executive Board
In accordance with best practice provision II.1.5 of the Code, we are of
the opinion that, in respect of fi nancial reporting risks, the internal risk
management and control system, as described in the Risk Management
section of this Annual Report 2015:
• provides a reasonable level of assurance that the fi nancial reporting
in this Annual Report 2015 does not contain any errors of material
importance; and
This statement cannot be construed as a statement in accordance with the
requirements of Section 404 of the US Sarbanes-Oxley Act, which Act is not
applicable to Heineken N.V.
Executive Board
J.F.M.L. van Boxmeer
L. Debroux
• has worked properly during the year 2015.
Amsterdam, 9 February 2016
It should be noted that the foregoing does not imply that this system
and these procedures provide absolute assurance as to the realisation
of operational and strategic business objectives, or that they can prevent
all misstatements, inaccuracies, errors, fraud and non-compliance with
legislation, rules and regulations. For a detailed description of the risk
management system and the principal risks identifi ed, please refer to
the Risk Management section.
In accordance with Article 5:25c paragraph 2 sub c of the Financial Markets
Supervision Act, we confi rm that, to the best of our knowledge,
• the fi nancial statements in this Annual Report 2015 give a true and fair
view of our assets and liabilities, our fi nancial position at 31 December
2015, and the results of our consolidated operations for the fi nancial
year 2015; and
• the Report of the Executive Board includes a fair review of the position
at 31 December 2015 and the development and performance during
the fi nancial year 2015 of Heineken N.V. and the undertakings included
in the consolidation taken as a whole, and describes the principal risks
that Heineken N.V. faces.
46 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
To the Shareholders
During the year under review, the Supervisory Board performed
its duties in accordance with primary and secondary legislation
and the Articles of Association of Heineken N.V. and supervised
and advised the Executive Board on an ongoing basis.
Financial statements and profi t appropriation
The Supervisory Board hereby submits to the shareholders the fi nancial
statements and the report of the Executive Board for the fi nancial year
2015, as prepared by the Executive Board and approved by the Supervisory
Board in its meeting of 9 February 2016. Deloitte Accountants B.V. audited
the fi nancial statements. Its report can be found on page 142 in the Other
information section.
The Supervisory Board recommends that shareholders, in accordance with
the Articles of Association, adopt these fi nancial statements and, as
proposed by the Executive Board, appropriate EUR741 million for payment
of dividend. The underlying principle of the dividend policy is that 30-40 per
cent of net profi t before exceptional items and amortisation of acquisition-
related intangible assets (net profi t beia) is placed at the disposal of
shareholders for distribution as dividend. The proposed dividend amounts
to EUR1.30 per share of EUR1.60 nominal value, of which EUR0.44 was
paid as an interim dividend on 12 August 2015.
Supervisory Board composition, independence
and remuneration
Composition
The Annual General Meeting (AGM) on 23 April 2015 reappointed
Mr. M.R. de Carvalho as a member of the Supervisory Board for a period
of four years.
The Supervisory Board has a diverse composition in terms of experience,
gender, nationality and age. Two out of 10 members are women and fi ve
out of 10 members are non-Dutch. There are fi ve nationalities (American,
Belgian, British, Dutch and Mexican) and age ranges between 45 and 70.
The Supervisory Board is of the opinion that a diversity of experience and
skills is represented on its Board.
In line with the Dutch Act on Management and Supervision (Wet bestuur
en toezicht), the profi le of the Supervisory Board states that the Supervisory
Board shall pursue that at least 30 per cent of the seats shall be held by men
and at least 30 per cent by women. Currently, 20 per cent of the Supervisory
Board members are female. Diversity and gender are important drivers in
the selection process. With reference thereto, the Supervisory Board will
retain an active and open attitude as regards selecting female candidates,
and has established a list of potential female candidates who will be
considered should a vacancy in the Supervisory Board arise. The Supervisory
Board notes that, in its opinion, gender is only one element of diversity, and
that experience, background, knowledge, skills and insight are equally
important and relevant criteria in selecting new members.
Mr. Hans Wijers and Mrs. Mary Minnick will resign by rotation from the
Supervisory Board at the AGM on 21 April 2016. Mr. Wijers is eligible for
reappointment for a period of four years. A non-binding nomination for
his reappointment will be submitted to the AGM. The notes to the agenda
contain further information on the proposed reappointment.
Mrs. Minnick will step down from the Supervisory Board after the AGM on
21 April 2016. Mrs. Minnick has been a member of the Supervisory Board
since 2008, and was a member of the Remuneration Committee and
Americas Committee. The Supervisory Board is grateful for her commitment
over the past eight years and for the way she contributed to the Supervisory
Board and the Committee meetings.
47 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
To the Shareholders continued
Independence
The Supervisory Board endorses the principle that the composition
of the Supervisory Board shall be such that its members are able to act
critically and independently of one another and of the Executive Board
and any particular interests. In a strictly formal sense, Messrs. Astaburuaga
Sanjinés, de Carvalho, Das and Fernández Carbajal do not meet the
applicable criteria for ‘independence’ as set out in the Dutch Corporate
Governance Code dated 10 December 2008. However, the Supervisory
Board has ascertained that Messrs. Astaburuaga Sanjinés, de Carvalho,
Das and Fernández Carbajal in fact act critically and independently.
Remuneration
The AGM determines the remuneration of the members of the
Supervisory Board. In 2011, the AGM resolved to adjust the remuneration
of the Supervisory Board eff ective 1 January 2011. The detailed amounts
are stated in the notes to the fi nancial statements.
Meetings and activities of the Supervisory Board
During 2015, the Supervisory Board held eight meetings with the
Executive Board. The agenda included subjects such as the Company’s
strategy, its fi nancial position, the results of the Regions and operating
companies, acquisitions, large investment proposals, the yearly budget,
management changes and the internal risk management and control
system. The external auditor attended the meeting in which the
annual results were discussed. In 2015, specifi c attention was given
to the following:
• The Supervisory Board had a two-day meeting with the Executive Board
to discuss the Company’s strategic priorities and main risks of the
business. During this meeting, members of the Executive Team
presented their respective strategic topics and risks per region or
function, as the case may be.
• The Supervisory Board visited Krakow, Poland, where the Managing
Directors of Grupa Żywiec, Heineken Rumania and Brau Union
Österreich, and the Senior Director Global Finance Processes & Internal
Control and Director HEINEKEN Global Shared Services presented
developments. In addition, trade visits were made to on- and off -
premises in the boroughs around Krakow.
• During the year, several representatives of senior management
were invited to give presentations to the Supervisory Board.
• In 2015, the following subjects were presented in more detail:
– Sustainability
– Human Resources and succession planning.
• Regular Executive Sessions were held without the Executive Board being
present. The purpose of these sessions was to evaluate the Supervisory
Board meetings and, where relevant, further refl ect on particular
subjects discussed at the meetings. One Executive Session was
dedicated to the evaluation of the Supervisory Board relating to the
performance, working methods, procedures and functioning of the
Supervisory Board, its committees and its members as well as the
functioning of the Executive Board. These evaluations were conducted
on the basis of responses to a questionnaire submitted by the members
of the Supervisory Board to the Chairman. The questionnaire covered
topics such as the composition and expertise of the Supervisory Board,
access to information, frequency and quality of the meetings, quality
and timeliness of the meeting materials, the nature of the topics
discussed during meetings and the functioning of the Supervisory
Board’s committees. The Chairman was evaluated by the Vice-
Chairman. The responses provided by the Supervisory Board members
indicated that the Board continues to be a well-functioning team.
Certain areas were identifi ed that could be improved and it was decided
that the Chairman would follow up on a number of specifi c items.
The Chairman of the Supervisory Board met frequently with the CEO,
among others, to prepare the Supervisory Board meetings.
The Supervisory Board confi rms that all Supervisory Board members have
adequate time available to give suffi cient attention to the concerns of
the Company. In 2015, the attendance rate as a whole was 89 per cent.
Nearly all Supervisory Board members were able to attend all eight
meetings. Two members were frequently absent (an absence of twice
or more is considered frequent). In case of absence, members are fully
informed in advance, enabling them to provide input for the meeting,
and they are also updated on the meeting outcomes.
48 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents To the Shareholders continued
Committees
The Supervisory Board has fi ve Committees: the Preparatory Committee,
the Audit Committee, the Selection & Appointment Committee, the
Remuneration Committee and the Americas Committee. The terms of
reference for the Committees are posted on the Company’s website.
At the beginning of the year, the Committee reviews the audit plan of the
external auditor as well as the internal audit plan. The Committee focuses
mainly on the scoping, key risks, staffi ng and budget. During the year, the
Committee reviews the reports of the external and the internal auditor in
respect of these items.
Preparatory Committee
Composition: Messrs. Wijers (Chairman), de Carvalho, Das and Fernández
Carbajal. The Preparatory Committee met seven times. The Committee
formulates decision-making by the Supervisory Board on matters not
already handled by any of the other Committees, such as in relation to
acquisitions and investments.
Audit Committee
Composition: Messrs. Scheff ers (Chairman), Astaburuaga Sanjinés,
Huët and Mrs. Fentener van Vlissingen. The Audit Committee met four
times. The members collectively have the experience and fi nancial expertise
to supervise the fi nancial statements and the risk profi le of Heineken N.V.
The Executive Board attended all meetings, and so did the external auditor,
the Executive Director Global Audit, the Chief Business Services Offi cer
(up to 12 May 2015) and, the Director Global Accounting and Reporting
(as of 30 July 2015).
The Executive Director Global Audit has direct access to the Audit
Committee, primarily through its chairman. During the year, the
Audit Committee met once with the external auditors and once
with the Executive Director Global Audit, in both instances without
management being present.
The Committee supervises the activities of the Executive Board with
respect to the publication of fi nancial information. The Committee
reviews, in the presence of the Executive Board and the external auditor,
the appropriateness of the half-year reporting and the annual fi nancial
statements, focusing on:
Furthermore, the Committee in 2015 discussed recurring topics,
such as:
• The eff ectiveness and the outcome of the internal control and risk
management systems, as well as changes made and improvements
planned to these systems.
• Functional updates in respect of Global Information Systems,
Global Procurement, Financial Shared Services, Global Treasury
and Tax, Pensions, Litigation and Risk Management.
• HEINEKEN’s governance, risk and compliance (GRC) activities,
including the HEINEKEN Company Rules and the HEINEKEN
Code of Business Conduct.
• Post Audit Reviews of large investments.
• The outcome of the annual Letter of Representation process and
the report from the Integrity Committee related to fraud reporting
and Speak Up policy.
The Chairman of the Audit Committee informed the Supervisory Board
of the discussions held in the Audit Committee in respect of these
recurring topics.
Selection & Appointment Committee
Composition: Messrs. Wijers (Chairman), de Carvalho, Das,
Fernández Carbajal, and Mrs. Fentener van Vlissingen.
The Selection & Appointment Committee met fi ve times.
In 2015, the following subjects were discussed:
• The composition and rotation schedule of the Supervisory Board
• Female representation on the Supervisory Board, including a list
• The decisions made on the selection and application
of potential female candidates.
of accounting policies.
• The composition of the Executive Team (which took eff ect as
• The reliability and completeness of disclosures.
• Compliance with fi nancial and other reporting requirements.
• Signifi cant judgements, estimates and assumptions used in preparing
the reports in respect of, among others, accounting for acquisitions
and divestments, the annual impairment test and determining
the level of provisions.
• Any correspondence from regulators in relation to our
fi nancial reporting.
of 1 July 2015).
49 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents To the Shareholders continued
Remuneration Committee
Composition: Messrs. Das (Chairman), de Carvalho, Wijers and
Mrs. Minnick. The Remuneration Committee met three times in 2015.
Mr. Jean-François van Boxmeer was initially appointed for an indefi nite
term in 2001 and was reappointed for a period of four years in 2013.
Mrs. Laurence Debroux was appointed in 2015 for a period of four years.
The Committee made recommendations to the Supervisory Board on
target setting and payout levels for the STV pay and LTV awards to the
Executive Board, as well as technical changes to the STV and LTV Plan
Rules, all of which were endorsed by the Supervisory Board.
The Remuneration Committee received a presentation on status and
trends in executive remuneration and executive remuneration governance
in order to fulfi ll its remuneration governance responsibilities.
The presentation aimed to review, among other things, alignment of
HEINEKEN’s remuneration practices with its remuneration principles,
to provide an overview of HEINEKEN’s competitive positioning versus
the market, to assess the relationship between actual remuneration
and performance and to update the Committee on executive
compensation trends and regulatory developments. A copy of
the report was also submitted to the full Supervisory Board.
Pursuant to the Act on Management and Supervision, the Supervisory
Board shall pursue that on the Executive Board at least 30 per cent of the
seats shall be held by men and at least 30 per cent by women. The current
composition of the Executive Board meets this statutory requirement.
HEINEKEN also strives to appoint a well-balanced mix of men and women
to its senior management. We note that there may be various pragmatic
reasons – such as the other relevant selection criteria and the availability
of suitable candidates – that could play a complicating role in achieving
a well-balanced mix of men and women to its senior management,
at least in the short term.
Remuneration
The AGM approved the current remuneration policy for the Executive Board
in 2011 and 2014, respectively. Details of the policy and its implementation
are described in the Remuneration Report.
Americas Committee
Composition: Messrs. Fernández Carbajal (Chairman), de Carvalho, Navarre
and Mrs. Minnick.
Appreciation
The Supervisory Board wishes to express its gratitude to the members
of the Executive Board and all HEINEKEN employees for their hard work
and dedication in 2015.
The Committee advises the Supervisory Board on the overall strategic
direction of the Americas Region and reviews and evaluates the
performance, the organisation and the management in the Americas
Region. The Chairman of the Executive Board and the President Americas
also attend the Americas Committee meetings.
The Committee met twice in 2015 and paid attention to specifi c
developments in the region, including fi nancial results and strategic
priorities, presented by the President Americas.
Supervisory Board Heineken N.V.
Fentener van Vlissingen
Wijers
Fernández Carbajal Minnick
Navarre
Das
Astaburuaga Sanjinés
de Carvalho
Scheff ers
Huët
Amsterdam, 9 February 2016
Executive Board composition and remuneration
Composition
Best practice provision II.1.1 of the Dutch Corporate Governance Code
of 10 December 2008 recommends that an Executive Board member
is appointed for a period of four years and that a member may be
reappointed for a term of not more than four years at a time. In compliance
with this best practice provision, the Supervisory Board has drawn up a
rotation schedule in order to avoid, as far as possible, a situation in which
Executive Board members retire at the same time.
50 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Remuneration Report
The Executive Board’s remuneration policy refl ects our longstanding remuneration principles of supporting the business strategy, paying
for performance, and paying competitively and fairly. The remuneration policy and underlying principles continue to support our business
growth in the widely diverse markets in which we operate. In 2015, the Remuneration Committee reviewed the remuneration policy versus
its implementation, and its outcome versus performance. With regard to policy, the Supervisory Board concluded that there were no reasons
to recommend adjustments to the 2016 Annual General Meeting. In regard to implementation, the Supervisory Board decided to increase
the Executive Board base salaries to the aspired policy levels, thereby bringing their target variable remuneration closer to the aspired
policy levels as well. An important occurrence in 2015 was that following the 2015 AGM on 23 April 2015, Mrs. Laurence Debroux succeeded
Mr. René Hooft Graafl and as member of the Executive Board and CFO. To that end, a mutual agreement was reached with Mr. René Hooft
Graafl and on 3 November 2014 on his resignation from the Executive Board and his CFO position at the time of succession, and on the
termination of his employment contract with the Company as of 1 May 2015.
Introduction
This Remuneration Report includes three sections:
• Part I – Describes the prevailing Executive Board’s remuneration policy, as it was adopted by the AGM in 2011, and as it has been applied in 2015
and will be applied in 2016.
• Part II – Provides details of the Executive Board’s actual remuneration for performance ending in, or at year-end, 2015.
• Part III – Outlines the adjustments to the Executive Board target remuneration for 2016 within prevailing policy.
Part I – Executive Board remuneration policy
Remuneration principles
The Executive Board’s remuneration policy is designed to meet four key principles:
• Support the business strategy – We align our remuneration policy with business strategies focused on creating long-term growth and shareholder
value, while maintaining a tight focus on short-term fi nancial results.
• Pay for performance – We set clear and measurable targets for our short-term variable pay and long-term variable award policies, and we pay higher
remuneration when targets are exceeded and lower remuneration when targets are not met.
• Pay competitively – We set target remuneration to be competitive with other relevant multinational corporations of similar size and complexity.
• Pay fairly – We set target remuneration to be internally consistent and fair; we regularly review internal pay relativities between the Executive Board
and senior managers and aim to achieve consistency and alignment where possible.
51 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
Summary overview of remuneration elements
The Executive Board’s remuneration policy is simple and transparent in design, and consists of the following key elements:
Remuneration element
Base salary
Description
• Involves fi xed cash compensation
• Aims for the median of the labour market peer group
Strategic role
• Facilitates attraction and is the basis for
competitive pay
• Rewards performance of day-to-day activities
• Drives and rewards annual HEINEKEN performance
• Drives and rewards sound business decisions for the
long-term health of HEINEKEN
• Aligns Executive Board and shareholder interests
Short-term variable pay
• Is based on achievements of annual measures, of which
a weighted 75 per cent relate to fi nancial and
operational measures for Heineken N.V. and 25 per cent
to individual leadership measures
• Aims, at target level, for the median of the labour
market peer group
• Is partly paid in cash, and partly in investment shares
with a holding restriction of fi ve calendar years:
– the part paid in shares is between 25 and 50 per
cent of the full gross pay, depending on the
individual’s choice
– the part in cash is paid net of taxes (i.e. after
deduction of withholding tax due on the full
gross pay)
• Investment shares are matched on a 1:1 basis after
the holding period
Long-term variable award
• Is based on achievements of three-year fi nancial
targets for Heineken N.V. as specifi ed on page 54
• Aims, at target level, for the median of the labour
market peer group
• Drives and rewards sound business decisions
for the long-term health of HEINEKEN
• Aligns Executive Board and shareholder interests
• Supports Executive Board retention
• Is awarded through the vesting of shares, net of taxes
(i.e. after deduction of withholding tax due on the full
gross award)
• Vested shares are blocked for another two years, to
arrive at a fi ve-year holding restriction after the date
of the conditional performance grant
Pensions
• Defi ned Contribution Pension Plan and/or Capital
• Provides for employee welfare and retirement needs
Creation Plan
Labour market peer group
A global labour market peer group was adopted by the AGM in 2011, and subsequently adjusted in 2012. The median target remuneration of this peer
group is a reference point for the target remuneration of the CEO and CFO. Each year, the Remuneration Committee validates the peer group to ensure
relevance, and recommends adjustments to the Supervisory Board if needed. For 2015, the peer group consisted of the following companies, which will
basically apply to 2016 as well, with the understanding that Philips may need to be replaced after its separation from its Lighting business in 2016, and
SABMiller may need to be replaced after its acquisition by Anheuser-Busch InBev:
• Anheuser-Busch InBev (BE)
• Carlsberg (DK)
• Coca-Cola (US)
• Colgate-Palmolive (US)
• Danone (FR)
• Diageo (UK)
• Henkel (DE)
• Kimberley-Clark (US)
• Mondelēz International (US)
• L’Oréal (FR)
• Pepsico (US)
• Pernod Ricard (FR)
• Philips (NL)
• SABMiller (UK)
• Unilever (NL)
52 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
Base salary
Base salaries are determined by reference to the median base salary levels of the aforementioned labour market peer group. Every year, peer group and
base salary levels are reviewed, and the Remuneration Committee may propose adjustments to the Supervisory Board taking into account the external
labour market peer group data and internal pay relativities. The annual base salaries for 2015 were EUR1,150,000 for the CEO, EUR610,000 for the CFO
(Mrs. Laurence Debroux; as from 23 April following the 2015 AGM) and EUR650,000 for the former CFO (Mr. René Hooft Graafl and; until the end of the
2015 AGM). For 2016 the Supervisory Board decided to increase the Executive Board base salaries to the aspired policy levels, viz. EUR1,200,000 for the
CEO and EUR720,000 for the CFO, thereby bringing their target variable remuneration, which is defi ned as a percentage of base salary, closer to the
aspired policy levels as well.
Short-term variable pay
The short-term variable pay (STV) is designed to drive and reward the achievements of HEINEKEN’s annual performance targets. Through its payout in
both cash and investment shares it also drives and rewards sound business decisions for HEINEKEN’s long-term health while aligning Executive Board and
shareholder interests at the same time. The target STV opportunities for both 2015 and 2016 are 140 per cent of base salary for the CEO and 100 per cent
of base salary for the CFO. These percentage opportunities are well aligned with the global labour market peer group medians.
The STV opportunities are for a weighted 75 per cent based on fi nancial and operational measures for Heineken N.V., and for a weighted 25 per cent on
individual leadership measures. At the beginning of each year, the Supervisory Board establishes the performance measures, their relative weights and
corresponding targets based on HEINEKEN’s business priorities for that year. The fi nancial and operational measures and their relative weights are
reported in the Remuneration Report upfront; the numerical performance targets themselves are not disclosed as they are considered to be commercially
sensitive. In the fi rst weeks of the following year, the Supervisory Board reviews the Company’s and individual performance against the pre-set targets, and
approves the STV payout levels based on the performance achieved. The performance on each of the measures is reported in qualitative terms in the
Remuneration Report after the end of the performance period (cf. Part II). The STV payout for 2015 is, and for 2016 remains, subject to four performance
measures with equal weights: Organic Revenue Growth, Organic Net Profi t beia Growth, Free Operating Cash Flow and Individual Leadership measures.
For each performance measure, a threshold, target and maximum performance level is set with the following STV payout, as a percentage
of target payout:
• Threshold performance – 50 per cent of target payout
• Target performance – 100 per cent of target payout
• Maximum performance – 200 per cent of target payout
For each measure, payout in between these performance levels is on a straight-line basis; below threshold performance the payout is zero,
whereas beyond maximum performance it is capped at 200 per cent of payout at target.
The CEO and CFO (and former CFO) are obliged to invest at least 25 per cent of their STV payout in Heineken N.V. shares (investment shares), to be
delivered by the Company; the maximum they can invest in Heineken N.V. shares is 50 per cent of their STV payout, at their discretion. These investment
shares are then blocked and cannot be sold under any circumstance, including resignation, for fi ve calendar years to link the value of the investment shares
to long-term Company performance. Withholding tax on the investment shares and on the cash part of the STV payout is settled with the cash part at the
time of payout. After the blocking period is completed after fi ve calendar years, the Company will match the investment shares 1:1 in the fi rst weeks of the
following year, i.e. one matching share is granted for each investment share. As from then, there are no holding requirements on these investment shares
anymore, and there are no holding requirements on the resulting matching shares that remain after withholding tax on these shares. According to plan
rules, matching entitlements will be forfeited in a case of dismissal by the Company for an urgent reason within the meaning of the law (‘dringende reden’),
or in a case of dismissal for cause (‘gegronde reden’) whereby the cause for dismissal concerns unsatisfactory functioning of the Executive Board member.
With this ‘deferral-and-matching’ proposition a signifi cant share ownership by the Executive Board is ensured, creating an increased alignment with the
interests of shareholders. The Supervisory Board has the power to revise the amount of the STV payout to an appropriate amount if the STV payout that
would have been payable in accordance with the agreed payment schedule would be unacceptable according to standards of reasonableness and
fairness. The Supervisory Board is entitled to claw back all or part of the STV payout (in cash, investment shares or matching shares) insofar as it has been
made based on incorrect information about achieving the performance conditions.
53 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
Long-term variable award
The long-term variable award (LTV) is designed to drive and reward sound business decisions for HEINEKEN’s long-term health, and to align the Executive
Board with shareholder interests. The target LTV opportunities for both 2015 and 2016 are 150 per cent of base salary for the CEO and 125 per cent of
base salary for the CFO.
Each year, a target number of performance shares is conditionally granted based on the aforementioned target LTV opportunity percentage
of that year, the base salary of that year, and the closing share price of 31 December of the preceding year. The vesting of these performance
shares is contingent on HEINEKEN’s performance over a period of three years on four fundamental fi nancial performance measures:
• Organic Revenue Growth (as of the 2014 plan) / Organic Gross Profi t beia Growth (for the 2013 plan) – to drive top-line growth
• Organic EBIT beia Growth – to drive operational effi ciency
• Earnings Per Share (EPS) beia Growth – to drive overall long-term Company performance
• Free Operating Cash Flow – to drive focus on cash.
These four performance measures have equal weights to minimise the risk that participants over-emphasise one performance measure to the
detriment of others. At the beginning of each performance period, the Supervisory Board establishes the corresponding numerical targets for these
performance measures based on HEINEKEN’s business priorities. These targets are not disclosed upfront as they are considered to be commercially
sensitive. In the fi rst weeks after the end of the performance period, the Supervisory Board reviews the Company’s performance against the pre-set
targets, and approves the LTV vesting based on the performance achieved. The performance on each of the measures is reported in qualitative terms
in the Remuneration Report after the performance period has been completed (cf. Part II).
For each performance measure, a threshold, target and maximum performance level is set with the following performance share vesting schedule:
• Threshold performance – 50 per cent of performance shares vests
• Target performance – 100 per cent of performance shares vests
• Maximum performance – 200 per cent of performance shares vests.
For each measure, vesting in between these performance levels is on a straight-line basis; below threshold performance the vesting is zero,
whereas beyond maximum performance it is capped at 200 per cent of vesting at target.
The Supervisory Board has the power to revise the amount of performance shares that will vest to an appropriate number if the number of performance
shares that would have vested under the agreed vesting schedule would be unacceptable according to standards of reasonableness and fairness.
The Supervisory Board is entitled to claw back all or part of the shares transferred to the Executive Board members upon vesting (or the value thereof)
insofar as vesting occurred based on incorrect information about achieving the performance conditions. The vested performance shares that remain
after withholding tax are subject to an additional holding restriction of two years, to arrive at a fi ve-year holding restriction after the date of the
conditional performance grant.
54 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
Pay mix
The mix between fi xed pay and variable pay for various levels of performance is illustrated below. In these charts, fi xed pay refers to base salary only,
excluding pensions and other emoluments, and variable pay consists of the aforementioned short-term variable pay and long-term variable award
opportunities, including the ‘deferral-and-matching’ proposition. Share price movements during performance and holding periods are hereby not
included since these are unknown in the context of target remuneration.
CEO target pay mix 2015 - 2016
Below threshold
performance
At threshold
performance
At target
performance
At/Beyond max
performance
100%
36%
22%
12%
64%
78%
88%
CFO target pay mix 2015 - 2016
Below threshold
performance
At threshold
performance
At target
performance
100%
27%
42%
58%
Fixed pay
Variable pay
At/Beyond max
performance
15%
73%
85%
Fixed pay
Variable pay
Pensions
The members of the Executive Board participate in a Capital Creation Plan. In such a plan the Executive Board member receives employer contributions,
for pension capital accrual, as taxable income. As of 2015, Dutch fi scal legislation introduced a cap of EUR100,000 on the pensionable salary for tax-
qualifi ed pension plans, implying that beyond this salary level pensions can no longer be accrued in a tax-qualifi ed way. As a consequence, the pension
plans for new top executives under Dutch employment contract below Executive Board have been changed into a taxable capital creation employer
contribution of 18% of base salary, minus the maximum tax-exempt employer contribution that can still be invested into a tax-qualifi ed defi ned-
contribution scheme (which contribution the employer provides as well). As of 2015, the same arrangement applies to new members of the Executive
Board as well, hence to our current CFO, with the understanding that as a non-Dutch national she receives the full 18% contribution in the form
of taxable income. For the CEO the same capital creation arrangement as for 2014 remained in force, since the existing top executives below the
Executive Board were compensated on an individual basis for the aforementioned fi scal salary cap on pensions as from 2015, thereby making
a change in the CEO’s capital creation scheme irrelevant.
Loans
HEINEKEN does not provide loans to the members of the Executive Board.
55 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
Part II – The Executive Board’s actual remuneration for performance ending in, or at year-end, 2015
The following table provides an overview of the Executive Board’s actual remuneration that became unconditional in, or at year-end, 2015.
For disclosures in line with IFRS reporting requirements, which are ‘accrual-based’ over earning/performance periods and partly depend on estimations/
assumptions, see note 35 ‘Related parties’ on page 127. The Supervisory Board conducted a scenario analysis with respect to possible outcomes of the
variable remuneration disclosed in this section.
Base salary
in EUR1
2015
Short-term
variable pay
in EUR2
1,150,000 2,930,200
832,650
394,333
Van Boxmeer
Debroux
421,151
Hooft Graafl and 201,233
2013-2015 Long-term
variable award
No. of
performance
shares
vesting3
58,447
–
27,530
Value of
performance
shares
vesting in
EUR4
4,603,870
–
2,168,538
Matching entitlements
Extraordinary Share Grants
No. of
matching
entitle-
ments
vesting5
16,125
–
t.b.d.
Value of
matching
entitlements
vesting in
EUR6
1,270,166
–
182,123
Pension
cost
in EUR
723,454
82,316
32,721
No. of
extraordinary
shares
vesting7
27,317
1,000
–
Value of
extraordinary
shares
vesting in
EUR8
1,995,780
73,640
–
Other
emoluments
in EUR9
21,210
134,146
2,006,937
1 The base salaries of Mrs. Laurence Debroux and Mr. René Hooft Graafl and are the actual base salaries paid for the period in 2015 in which they were a member of
the Executive Board. Although formally these periods are demarcated by the end of the AGM on 23 April 2015, a succession date of 24 April 2015 has been adopted
in the calculation of these pro-rated salary payments.
2 The short-term variable pay relates to the performance year 2015, and becomes payable in 2016. According to Plan Rules and Agreements, for Mrs. Laurence
Debroux and Mr. René Hooft Graafl and the short-term variable pay has been pro-rated by the number of months, rounded up to full months, in which they were a
member of the Executive Board, i.e. nine months for Mrs. Laurence Debroux and four months for Mr. René Hooft Graafl and. In line with policy, between 25 per cent
and 50 per cent of the short-term variable pay, at the participant’s discretion, is paid out in investment shares. For the 2015 payout the investment in shares is 50 per
cent for all three participants.
3 The long-term variable award relates to the performance period 2013-2015 and vests shortly after 10 February 2016, the publication date of these fi nancial
statements.
4 The value of performance shares vesting is based on the share price as of 31 December 2015 of EUR78.77.
5 For Mr. Jean-François van Boxmeer the matching entitlements relate to the investment shares that were acquired in 2011 for performance over 2010 and that were
held until year-end 2015. These matching entitlements vest, as common shares, immediately following year-end 2015 and are thus the fi rst batch of such shares
for him that vest after the launch of the ‘deferral-and-matching’ proposition following the AGM in 2011. For Mr. René Hooft Graafl and the matching entitlements
relate to the investment shares that are acquired in 2016 for performance over 2015, since given his resignation for other reasons than for cause these matching
entitlements vest, as share entitlements, immediately following year-end 2015. The number of investment shares and matching share entitlements is determined,
as per policy, by dividing the part of the STV payout that is invested in shares, i.e. 50 per cent, by the closing share price of the date of publication of these fi nancial
statements, i.e. 10 February 2016. These entitlements will be converted into common shares following year-end 2020, and will thus remain non-dividend bearing
until that date. The matching shares that given his agreed resignation vested already in 2014, as share entitlements, were disclosed in Part II of last year’s
Remuneration Report.
6 The value of matching shares vesting for Mr. Jean-François van Boxmeer is based on the share price as of 31 December 2015 of EUR78.77. The value of matching
share entitlements vesting for Mr. René Hooft Graafl and equals the part of the STV payout that he chose to invest in investment shares, i.e. 50 per cent, discounted
for the fact that the resulting entitlements will not be dividend bearing until year-end 2020.
7 On 26 April 2013, by approval of the AGM, Mr. Jean-François van Boxmeer received a Retention Share Award of 27,317 share entitlements, with a vesting date of
26 April 2015, conditionally on Executive Board membership at that date. These shares have vested per the latter date, and are blocked until 26 April 2018. Mrs.
Laurence Debroux received an extraordinary grant of 2,000 share entitlements upon her appointment as member of the Executive Board in April 2015, as
compensation for forfeited variable remuneration by her previous employer; 50 per cent of this grant vested immediately, which is thus included in the table above;
the other 50 per cent will vest next year, conditionally on Executive Board membership at that date.
8 The value of the Retention Share Award vesting for Mr. Jean-François van Boxmeer is based on the closing share price of EUR73.06 of 24 April 2015, i.e. the fi nal
closing price prior to the vesting date of 26 April 2015. The value of the Extraordinary Share Award vesting for Mrs. Laurence Debroux is based on the closing share
price of EUR73.64 of 23 April 2015, i.e. the fi nal closing price prior to the grant and vesting date of 24 April 2015.
9 The amount for Mr. Jean-François van Boxmeer involves his car benefi t-in-kind. The amount for Mrs. Laurence Debroux involves housing allowance (grossed-up),
a one-time commission for relocation support (grossed-up), schooling cost and car benefi t-in-kind. As per the agreement of 3 November 2014, and announced in
last year’s Remuneration Report, Mr. René Hooft Graafl and received a severance payment of EUR2,000,000 gross in May 2015, following the termination of his
employment contract as of 1 May 2015; the remaining amount involves his car benefi t-in-kind.
56 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Remuneration Report continued
Resignation of Mr. René Hooft Graafl and as member of the Executive Board and CFO in 2015 and appointment of Mrs. Laurence Debroux as
member of the Executive Board and CFO after the 2015 AGM
As mentioned in last year’s Remuneration Report, an agreement was reached on 3 November 2014 between Mr. René Hooft Graafl and and the
Supervisory Board, on his resignation from the Executive Board following the 2015 AGM on 23 April 2015, and on the termination of his employment
contract as of 1 May 2015. In fi nancial terms the agreement respects existing contractual obligations and includes that:
• A severance payment of EUR2,000,000 is made in May 2015, in the absence of dismissal for urgent cause; this amount aligns with the capitalised value
of his fi xed remuneration (i.e. base salary and Capital Creation payments) between his resignation date of 1 May 2015 and age 62 (i.e. two years and
fi ve months), which has been the directional retirement age in the Company’s pension plan design for Executive Board members at the time.
• This resignation is considered a retirement under the LTV Plan Rules. Given existing agreements from 2005 for a specifi c group of senior managers
(including the current Executive Board members), as a result of a transition from an annual variable pay plan to the three-year long-term variable award
plan as disclosed above at the time, this implies that unvested LTV awards as of 1 May 2015 will continue to be subject to vesting at their regular vesting
dates, insofar and to the extent that predetermined performance conditions are met. Shares that may vest under these plans will be subject to a
holding period of two years in accordance with the LTV Plan Rules, to arrive at a fi ve-year holding restriction after the date of the conditional
performance grant.
At the same AGM the Supervisory Board nominated Mrs. Laurence Debroux for appointment to the Executive Board, to hold the position of CFO.
The AGM supported the appointment.
2015 Short-term variable pay
The STV pay for 2015 was subject to four performance measures: Organic Revenue Growth, Organic Net Profi t beia Growth, Free Operating Cash Flow
and individual leadership measures, all with a weight of 25 per cent. The Supervisory Board determined the results against the pre-set targets on these
measures as follows:
• Organic Revenue Growth – between target and maximum performance
• Organic Net Profi t beia Growth – at maximum performance
• Free Operating Cash Flow – at maximum performance
• Individual leadership measures – at maximum performance
The resulting STV payout for 2015 is equal to 182 per cent of payout at target level for all three participants. In line with policy, between 25 per cent and
50 per cent of the STV pay, at the participant’s discretion, is paid out in investment shares, i.c. 50 per cent by all three participants, against the closing share
price of 10 February 2016, the publication date of these fi nancial statements. Revision and clawback provision apply to this award, including the related
matching share entitlement. The table below provides an overview, for the incumbent Executive Board members at year-end, of the investment shares at
year-end that were awarded as part of STV payouts in the past, but that remain blocked and await 1:1 matching by the Company, provided the conditions
thereto are met. Only when the holding period of the investment shares has been completed, will the matching share entitlements be converted into
shares and transferred to the recipient.
Van Boxmeer
Debroux
STV
payout for
2015
2014
2013
2012
2011
2015
% of STV
payout invested
in shares
50%
25%
50%
50%
50%
50%
No. of
investment
shares awarded1
t.b.d.
10,427
11,910
12,391
23,272
t.b.d.
Award date
10.02.2016
11.02.2015
12.02.2014
13.02.2013
15.02.2012
10.02.2016
Value of
investment
shares as of the
award date in
EUR
1,465,100
692,249
563,462
680,638
882,009
416,325
End of blocking
period
31.12.2020
31.12.2019
31.12.2018
31.12.2017
31.12.2016
31.12.2020
Value of
investment
shares as of
31.12.2015 in
EUR2
n.a.
821,335
938,151
976,039
1,833,135
n.a.
1 The number of investment shares awarded in relation to the STV payout for 2011 and beyond is determined by dividing the part of the STV payout that is invested
in shares by the closing share price of the date of publication of the fi nancial statements for that year.
2 The share price as of 31 December 2015 is EUR78.77.
57 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
2013-2015 Long-term variable award
After 2015, the conditional performance shares granted in 2013 are subject to vesting. The vesting of the LTV award for performance period 2013-2015
is subject to Heineken N.V. performance on four fi nancial measures with equal weights. The Supervisory Board determined the results against the pre-set
targets (as recalibrated early 2014) as follows:
• Organic Gross Profi t beia Growth – at maximum performance
• Organic EBIT beia Growth – between target and maximum performance
• Earnings Per Share (EPS) beia Growth – at maximum performance
• Free Operating Cash Flow – between target and maximum performance
As a result, the vesting of the LTV grant for performance period 2013-2015 will be equal to 171 per cent of the vesting at target level for both the CEO and
the former CFO. The resulting share awards are defi ned in gross terms (i.e. before deduction of withholding tax due); the net number of shares awarded
(i.e. after withholding tax due) remains blocked for an additional period of two years until 13 February 2018, also in case of resignation during that period,
and also for the former CFO. Revision and clawback provisions apply to this award. The table below provides an overview, for the incumbent Executive
Board members at year-end, of outstanding LTV awards (awards granted but not yet vested, or awards vested but still blocked) as of 31 December 2015:
No. of shares
conditionally
granted at
target level1
29,263
35,147
34,179
44,031
42,927
11,857
Value of shares
conditionally
granted as
of the grant
date in EUR
1,942,771
1,662,805
1,877,452
1,668,775
1,617,489
787,186
Grant date
2015
2014
2013
2012
2011
2015
No. of shares
vesting on the
vesting date3
(before tax)
t.b.d.
t.b.d.
58,447
57,681
16,098
t.b.d.
No. of shares
vesting on the
vesting date4
(after tax)
t.b.d.
t.b.d.
29,593
29,205
8,150
t.b.d.
End of
blocking period
02.2020
02.2019
02.2018
02.2017
02.2016
02.2020
Vesting
date2
02.2018
02.2017
02.2016
02.2015
02.2014
02.2018
Value of
unvested or
blocked shares
as of
31.12.20155
in EUR
1,167,056
1,401,712
2,331,041
2,300,478
641,976
618,345
Van Boxmeer
Debroux
1 Determined according to plan rules, using the closing share price of 31 December of the year preceding the grant date.
2 The vesting date is shortly after the publication of the fi nancial statements after completion of the performance period.
3 Vested shares are disclosed in gross terms (i.e. before deduction of withholding tax due).
4 Vested shares are disclosed in net terms (i.e. after deduction of withholding tax due).
5 The value for the grants in 2011, 2012 and 2013 is based on the actual number of shares vesting on the vesting date after tax withholding, i.e. after applying the
relevant income tax rate, whereas the value for the grants in 2014 and 2015 is based on the number of shares conditionally granted at target level (since the number
of shares vesting is yet unknown) after applying the relevant income tax rate. The share price as of 31 December 2015 is EUR78.77.
Extraordinary share awards and Retention share award
The table below provides an overview, for the incumbent Executive Board members at year-end, of the outstanding Extraordinary share awards and the
Retention share award as of 31 December 2015. The Retention share award to Mr. Jean-François van Boxmeer vested in April 2015; a further three-year
holding period will apply to this share award. The Extraordinary share award to Mr. Jean-François van Boxmeer vested at grant in 2013; to this share award
a fi ve-year holding period applies as from grant.
The Extraordinary share awards to Mrs. Laurence Debroux have been granted upon her appointment by the 2015 AGM as member of the Executive
Board, in the role of CFO, as compensation for unvested and forfeited awards at her previous employer. Half of the share grant, i.e. 1,000 shares, vested
immediately at grant date, whereas the other half will vest subject to her continued Executive Board membership one year later. Both share grants will
be blocked for fi ve years until 24 April 2020.
58 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Remuneration Report continued
Value of shares
conditionally
granted as of
the grant date
in EUR
No. of
shares
granted1
No. of shares
vesting on the
vesting date2
End of blocking
period
Vesting date
Value of
unvested or
blocked shares
as of
31.12.20153
in EUR
Award
Grant date
Van Boxmeer
Debroux
Extraordinary
share award
Retention
share award
Extraordinary
share award
Extraordinary
share award
26.04.2013
45,893
2,520,000
26.04.2013
24,373
26.04.2018
1,919,861
26.04.2013
27,317
1,500,000
26.04.2015
27,317
26.04.2018
2,151,760
24.04.2015
1,000
73,640
24.04.2015
681
24.04.2020
53,642
24.04.2015
1,000
73,640
24.04.2016
675
24.04.2020
53,170
1 The ‘Number of shares granted’ refers to the grant in gross terms (i.e. before tax withholding).
2 As the table reveals, income tax is withheld from the Extraordinary share awards themselves; the Retention share award to Mr. Jean-François van Boxmeer has
vested ‘gross’, i.e. withholding tax has been withheld and paid from other sources than the share award itself.
3 The value of the share awards is based on the ‘Number of shares vesting on the vesting date’.
Part III – Adjustments to the Executive Board target remuneration for 2016 within prevailing policy
The Supervisory Board reviewed the remuneration policy versus its implementation, and concluded that there were no reasons to recommend policy
adjustments to the 2016 Annual General Meeting. In regard of implementation, the Supervisory Board decided to increase the Executive Board base
salaries to the aspired policy levels, thereby bringing their target variable remuneration closer to the aspired policy levels as well.
For the CEO the base salary has been increased from EUR1,150,000 for 2015 to EUR1,200,000 for 2016, and for the CFO from EUR610,000 for 2015 to
EUR720,000 for 2016. The short- and long-term variable pay opportunities, as percentage of base salary, have remained unchanged. Hence, since only
base salaries changed, the pay mix as depicted on page 55 remains unchanged.
Supervisory Board Heineken N.V.
Amsterdam, 9 February 2016
59 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Financial statements
Consolidated Income Statement
For the year ended 31 December
In millions of EUR
Revenue
Other income
Raw materials, consumables and services
Personnel expenses
Amortisation, depreciation and impairments
Total expenses
Results from operating activities
Interest income
Interest expenses
Other net fi nance income/(expenses)
Net fi nance expenses
Share of profi t of associates and joint ventures and impairments thereof (net of income tax)
Profi t before income tax
Income tax expense
Profi t
Attributable to:
Equity holders of the Company (net profi t)
Non-controlling interests
Profi t
Weighted average number of shares – basic
Weighted average number of shares – diluted
Basic earnings per share (EUR)
Diluted earnings per share (EUR)
Note
2015
2014
5
8
9
10
11
12
12
12
16
13
23
23
23
23
20,511
19,257
411
93
(12,931)
(3,322)
(1,594)
(17,847)
3,075
60
(412)
(57)
(409)
172
2,838
(697)
2,141
1,892
249
2,141
(12,053)
(3,080)
(1,437)
(16,570)
2,780
48
(457)
(79)
(488)
148
2,440
(732)
1,708
1,516
192
1,708
572,292,454
572,944,188
3.31
3.30
574,945,645
576,002,613
2.64
2.63
60 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Consolidated Statement
of Comprehensive Income
For the year ended 31 December
In millions of EUR
Profi t
Other comprehensive income:
Items that will not be reclassifi ed to profi t or loss:
Actuarial gains and losses
Items that may be subsequently reclassifi ed to profi t or loss:
Currency translation diff erences
Recycling of currency translation diff erences to profi t or loss
Eff ective portion of net investment hedges
Eff ective portion of changes in fair value of cash fl ow hedges
Eff ective portion of cash fl ow hedges transferred to profi t or loss
Net change in fair value available-for-sale investments
Recycling of fair value of available-for-sale investments to profi t or loss
Share of other comprehensive income of associates/joint ventures
Other comprehensive income, net of tax
Total comprehensive income
Attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive income
Note
2015
2014
2,141
1,708
24
24
24
24
24
24
24
24
24
24
95
(43)
129
15
23
24
43
(16)
7
277
2,418
2,150
268
2,418
(344)
697
–
(5)
(99)
(3)
(1)
–
(7)
238
1,946
1,686
260
1,946
61 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Consolidated Statement
of Financial Position
As at 31 December
In millions of EUR
Assets
Property, plant and equipment
Intangible assets
Investments in associates and joint ventures
Other investments and receivables
Advances to customers
Deferred tax assets
Total non-current assets
Inventories
Other investments
Trade and other receivables
Prepayments
Income tax receivables
Cash and cash equivalents
Assets classifi ed as held for sale
Total current assets
Total assets
Equity
Share capital
Share premium
Reserves
Retained earnings
Equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Liabilities
Loans and borrowings
Tax liabilities
Employee benefi ts
Provisions
Deferred tax liabilities
Total non-current liabilities
Bank overdrafts and commercial papers
Loans and borrowings
Trade and other payables
Tax liabilities
Provisions
Liabilities classifi ed as held for sale
Total current liabilities
Total liabilities
Total equity and liabilities
62 Heineken N.V. Annual Report 2015
Note
2015
2014
14
15
16
17
18
19
17
20
21
7
22
22
22
25
28
30
18
21
25
31
30
7
9,552
18,183
1,985
856
266
958
31,800
1,702
16
2,873
343
33
824
123
5,914
37,714
922
2,701
(655)
10,567
13,535
1,535
15,070
10,658
3
1,289
320
1,858
14,128
542
1,397
6,013
379
154
31
8,516
22,644
37,714
8,718
16,341
2,033
737
254
661
28,744
1,634
13
2,743
317
23
668
688
6,086
34,830
922
2,701
(427)
9,213
12,409
1,043
13,452
9,499
3
1,443
398
1,503
12,846
595
1,671
5,533
390
165
178
8,532
21,378
34,830
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Consolidated Statement
of Cash Flows
For the year ended 31 December
In millions of EUR
Operating activities
Profi t
Adjustments for:
Amortisation, depreciation and impairments
Net interest expenses
Gain on sale of property, plant and equipment, intangible assets
and subsidiaries, joint ventures and associates
Investment income and share of profi t and impairments of associates and joint ventures
and dividend income on available-for-sale and held-for-trading investments
Income tax expenses
Other non-cash items
Cash fl ow from operations before changes in working capital and provisions
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Total change in working capital
Change in provisions and employee benefi ts
Cash fl ow from operations
Interest paid
Interest received
Dividends received
Income taxes paid
Cash fl ow related to interest, dividend and income tax
Cash fl ow from operating activities
Investing activities
Proceeds from sale of property, plant and equipment and intangible assets
Purchase of property, plant and equipment
Purchase of intangible assets
Loans issued to customers and other investments
Repayment on loans to customers
Cash fl ow (used in)/from operational investing activities
Free operating cash fl ow
Acquisition of subsidiaries, net of cash acquired
Acquisition of/additions to associates, joint ventures and other investments
Disposal of subsidiaries, net of cash disposed of
Disposal of associates, joint ventures and other investments
Cash fl ow (used in)/from acquisitions and disposals
Cash fl ow (used in)/from investing activities
Note
2015
2014
11
12
8
13
6
6/7
2,141
1,594
352
(411)
(182)
697
89
4,280
27
(59)
403
371
(165)
4,486
(446)
87
159
(797)
(997)
3,489
83
(1,638)
(92)
(195)
45
(1,797)
1,692
(757)
(543)
979
54
(267)
(2,064)
1,708
1,437
409
(93)
(158)
732
244
4,279
(104)
(325)
456
27
(166)
4,140
(522)
60
125
(745)
(1,082)
3,058
144
(1,494)
(57)
(117)
40
(1,484)
1,574
(159)
(7)
(27)
4
(189)
(1,673)
63 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Consolidated Statement of Cash Flows continued
For the year ended 31 December
In millions of EUR
Financing activities
Proceeds from loans and borrowings
Repayment of loans and borrowings
Dividends paid
Purchase own shares and shares issued
Acquisition of non-controlling interests
Other
Cash fl ow (used in)/from fi nancing activities
Net cash fl ow
Cash and cash equivalents as at 1 January
Eff ect of movements in exchange rates
Cash and cash equivalents as at 31 December
Note
2015
2014
1,888
(1,753)
(909)
(377)
(21)
(1)
(1,173)
252
73
(43)
282
858
(2,443)
(723)
(9)
(137)
1
(2,453)
(1,068)
1,112
29
73
21
64 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Consolidated Statement
of Changes in Equity
Note
Share
capital
Share
premium
Translation
reserve
Hedging
reserve
Fair
value
reserve
Other
legal
reserves
Reserve
for own
shares
Retained
earnings
Equity
attributable
to equity
holders
of the
Company
Non-
controlling
interests
Total
equity
922
–
2,701
–
(1,721)
–
2
–
97
–
805
174
(41)
–
8,637
1,342
11,402
1,516
954
192
12,356
1,708
24
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
624
(101)
(1)
–
624
(101)
(1)
174
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(236)
–
–
–
–
–
–
–
–
–
(33)
4
–
(352)
170
68
238
990
236
1,686
260
1,946
–
–
–
(512)
(512)
(224)
(736)
–
(4)
47
(33)
32
–
47
–
1
(1)
–
48
–
(181)
(181)
20
(161)
922
2,701
(1,097)
(99)
96
743
(70)
9,213
12,409
1,043
13,452
In millions of EUR
Balance as at
1 January 2014
Profi t
Other
comprehensive
income
Total
comprehensive
income
Transfer to
retained earnings
Dividends to
shareholders
Purchase/
reissuance own/
non-controlling
shares
Own shares
delivered
Share-based
payments
Acquisition of
non-controlling
interests without
a change in
control
Balance as at
31 December
2014
65 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Consolidated Statement in Changes of Equity continued
Note
Share
capital
Share
premium
Translation
reserve
Hedging
reserve
Fair
value
reserve
Other
legal
reserves
Reserve
for own
shares
Retained
earnings
Equity
attributable
to equity
holders
of the
Company
Non-
controlling
interests
Total
equity
922
–
2,701
–
(1,097)
–
(99)
–
96
–
743
186
(70)
–
9,213
1,706
12,409
1,892
1,043
249
13,452
2,141
24
22
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
80
52
26
–
80
52
26
186
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(210)
–
–
–
–
–
–
–
–
–
–
100
258
19
277
1,806
2,150
268
2,418
210
–
–
–
(676)
(676)
(248)
(924)
(384)
–
(384)
10
(374)
22
–
–
–
(22)
32
4
–
–
32
4
–
–
–
–
32
(2)
2
464
464
922
2,701
(1,017)
(47)
122
719
(432)
10,567
13,535
1,535
15,070
In millions of EUR
Balance as at
1 January 2015
Profi t
Other
comprehensive
income
Total
comprehensive
income
Transfer to
retained earnings
Dividends to
shareholders
Purchase/
reissuance own/
non-controlling
shares
Own shares
delivered
Share-based
payments
Acquisition of
non-controlling
interests without
a change in
control
Changes in
consolidation
Balance as at
31 December
2015
66 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated
Financial Statements
1. Reporting entity
Heineken N.V. (the ‘Company’) is a company domiciled in the Netherlands. The address of the Company’s registered offi ce is Tweede Weteringplantsoen
21, Amsterdam. The consolidated fi nancial statements of the Company as at and for the year ended 31 December 2015 comprise the Company, its
subsidiaries (together referred to as ‘HEINEKEN’ and individually as ‘HEINEKEN’ entities) and HEINEKEN’s interest in jointly controlled entities and
associates. The Company is registered in the Trade Register of Amsterdam No. 33011433.
Disclosures on subsidiaries, jointly controlled entities and associates are included in notes 16 and 36 respectively.
HEINEKEN is primarily involved in the brewing and selling of beer.
2. Basis of preparation
(a) Statement of compliance
The consolidated fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and also comply with the fi nancial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code. All standards and
interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee
(IFRIC) eff ective year-end 2015 have been adopted by the EU. Consequently, the accounting policies applied by the Company also comply fully with IFRS
as issued by the IASB.
The consolidated fi nancial statements have been prepared by the Executive Board of the Company and authorised for issue on 9 February 2016 and will
be submitted for adoption to the Annual General Meeting of Shareholders on 21 April 2016.
(b) Basis of measurement
The consolidated fi nancial statements have been prepared on the historical cost basis unless otherwise indicated.
The methods used to measure fair values are discussed further in notes 3 and 4.
(c) Functional and presentation currency
These consolidated fi nancial statements are presented in Euro, which is the Company’s functional currency. All fi nancial information presented in Euro has
been rounded to the nearest million unless stated otherwise.
(d) Use of estimates and judgements
The preparation of consolidated fi nancial statements in conformity with IFRS requires management to make judgements, estimates and assumptions
that aff ect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may diff er from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods aff ected.
In particular, information about assumptions and estimation uncertainties and critical judgements in applying accounting policies that have the most
signifi cant eff ect on the amounts recognised in the consolidated fi nancial statements are described in the following notes:
Note 6 Acquisitions and disposals of subsidiaries and non-controlling interests
Note 15 Intangible assets
Note 16 Investments in associates and joint ventures
Note 17 Other investments and receivables
Note 18 Deferred tax assets and liabilities
Note 28 Employee benefi ts
Note 30 Provisions
Note 32 Financial risk management and fi nancial instruments
Note 34 Contingencies
67 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
2. Basis of preparation continued
(e) Changes in accounting policies
HEINEKEN has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a
date of initial application of 1 January 2015:
• Amendments to IAS 19 Defi ned Benefi t Plans: Employee Contributions
• Amendments to IFRSs Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle
These changes had no signifi cant impact on the disclosures or amounts recognised in HEINEKEN’s consolidated fi nancial statements.
3. Signifi cant accounting policies
General
The accounting policies set out below have been applied consistently to all periods presented in these consolidated fi nancial statements and have been
applied consistently by HEINEKEN entities.
(a) Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to
HEINEKEN. HEINEKEN controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
aff ect those returns through its power over the entity.
HEINEKEN measures goodwill at the acquisition date as the fair value of the consideration transferred plus the fair value of any previously held equity
interest in the acquiree and the recognised amount of any non-controlling interests in the acquiree, less the net recognised amount (generally fair value) of
the identifi able assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profi t or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in
profi t or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that HEINEKEN incurs in connection with a business
combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classifi ed as equity, it is not
remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent considerations are
recognised in profi t or loss.
(ii) Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised
as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount
of the net assets of the subsidiary.
(iii) Subsidiaries
Subsidiaries are entities controlled by HEINEKEN. HEINEKEN controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to aff ect those returns through its power over the entity. The fi nancial statements of subsidiaries are included in the
consolidated fi nancial statements from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by HEINEKEN. Losses applicable to the non-controlling interests in a subsidiary
are allocated to the non-controlling interests, even if doing so causes the non-controlling interests to have a defi cit balance.
68 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
(iv) Loss of control
Upon the loss of control, HEINEKEN derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of
equity related to the subsidiary. Any resulting gain or loss is recognised in profi t or loss. If HEINEKEN retains any interest in the previous subsidiary, such
interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale
fi nancial asset, depending on the level of infl uence retained.
(v) Interests in equity-accounted investees
HEINEKEN’s investments in associates and joint ventures are accounted for using the equity method of accounting. Investments in associates are those
entities in which HEINEKEN has signifi cant infl uence, but no control or joint control, over the fi nancial and operating policies. Joint ventures are the
arrangements in which HEINEKEN has joint control, whereby HEINEKEN has rights to the net assets of the arrangement, rather than rights to its assets and
obligations for its liabilities.
Investments in associates and joint ventures are recognised initially at cost. The cost of the investment includes transaction costs.
The consolidated fi nancial statements include HEINEKEN’s share of the profi t or loss and other comprehensive income, after adjustments to align the
accounting policies with those of HEINEKEN, from the date that signifi cant infl uence or joint control commences until the date that signifi cant infl uence or
joint control ceases.
When HEINEKEN’s share of losses exceeds the carrying amount of the associate or joint venture, including any long-term investments, the carrying amount
is reduced to nil and recognition of further losses is discontinued except to the extent that HEINEKEN has an obligation or has made a payment on behalf
of the associate or joint venture.
(vi) Transactions eliminated on consolidation
Intra-HEINEKEN balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-HEINEKEN transactions, are
eliminated in preparing the consolidated fi nancial statements. Unrealised gains arising from transactions with equity-accounted associates and JVs are
eliminated against the investment to the extent of HEINEKEN’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
69 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
3. Signifi cant accounting policies continued
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of HEINEKEN entities at the exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the
exchange rate at that date. The foreign currency gain or loss arising on monetary items is the diff erence between amortised cost in the functional currency
at the beginning of the period, adjusted for eff ective interest and payments during the period, and the amortised cost in foreign currency translated at the
exchange rate at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured at cost are translated into the
functional currency using the exchange rate at the date of the transaction.
Foreign currency diff erences arising on retranslation are recognised in profi t or loss, except for diff erences arising on the retranslation of available-for-sale
(equity) investments and foreign currency diff erences arising on the retranslation of a fi nancial liability designated as a hedge of a net investment, which
are recognised in other comprehensive income.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Euro at exchange rates
at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinfl ationary economies, are translated to Euro
at exchange rates approximating to the exchange rates ruling at the dates of the transactions. Group entities, with a functional currency being the
currency of a hyperinfl ationary economy, fi rst restate their fi nancial statements in accordance with IAS 29, Financial Reporting in Hyperinfl ationary
Economies (see ‘Reporting in hyperinfl ationary economies’ below). The related income, costs and balance sheet amounts are translated at the foreign
exchange rate ruling at the balance sheet date.
Foreign currency diff erences are recognised in other comprehensive income and are presented within equity in the translation reserve. However, if the
operation is not a wholly owned subsidiary, the relevant proportionate share of the translation diff erence is allocated to the non-controlling interests.
When a foreign operation is disposed of such that control, signifi cant infl uence or joint control is lost, the cumulative amount in the translation reserve
related to that foreign operation is reclassifi ed to profi t or loss as part of the gain or loss on disposal. When HEINEKEN disposes of only part of its interest
in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling
interests. When HEINEKEN disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining
signifi cant infl uence or joint control, the relevant proportion of the cumulative amount is reclassifi ed to profi t or loss.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither
planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised in other
comprehensive income, and are presented within equity in the translation reserve.
70 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
The following exchange rates, for the most important countries in which HEINEKEN has operations, were used while preparing these consolidated
fi nancial statements:
In EUR
BRL
GBP
MXN
NGN
PLN
RUB
SGD
USD
VND in 1,000
Year-end
2015
0.2319
1.3625
0.0530
0.0046
0.2357
0.0124
0.6486
0.9185
0.0409
Year-end
2014
0.3105
1.2839
0.0560
0.0049
0.2340
0.0138
0.6227
0.8237
0.0387
Average
2015
0.2705
1.3772
0.0568
0.0047
0.2390
0.0147
0.6556
0.9011
0.0411
Average
2014
0.3202
1.2403
0.0566
0.0048
0.2389
0.0196
0.5943
0.7527
0.0355
(iii) Hedge of net investments in foreign operations
Foreign currency diff erences arising on the translation of a fi nancial liability designated as a hedge of a net investment in a foreign operation are
recognised in other comprehensive income to the extent that the hedge is eff ective and regardless of whether the net investment is held directly or through
an intermediate parent. These diff erences are presented within equity in the translation reserve. To the extent that the hedge is ineff ective, such diff erences
are recognised in profi t or loss. When the hedged part of a net investment is disposed of, the relevant amount in the translation reserve is transferred to
profi t or loss as part of the profi t or loss on disposal.
(c) Non-derivative fi nancial instruments
(i) General
Non-derivative fi nancial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and
borrowings, and trade and other payables.
Non-derivative fi nancial instruments are recognised initially at fair value plus, for instruments not at fair value through profi t or loss, any directly attributable
transaction costs. Subsequent to initial recognition, non-derivative fi nancial instruments are measured as described below.
If HEINEKEN has a legal right to off set fi nancial assets with fi nancial liabilities and if HEINEKEN intends either to settle on a net basis or to realise the asset
and settle the liability simultaneously, fi nancial assets and liabilities are presented in the statement of fi nancial position as a net amount. The right of
set-off is available today and not contingent on a future event and it is also legally enforceable for all counterparties in a normal course of business, as well
as in the event of default, insolvency or bankruptcy.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts and commercial papers 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 fl ows.
Accounting policies for interest income, interest expenses and other net fi nance income and expenses are discussed in note 3(r).
(ii) Held-to-maturity investments
If HEINEKEN has the positive intent and ability to hold debt securities to maturity, they are classifi ed as held-to-maturity. Debt securities are loans and
long-term receivables and are measured at amortised cost using the eff ective interest method, less any impairment losses. Investments held-to-maturity
are recognised or derecognised on the day they are transferred to or by HEINEKEN.
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3. Signifi cant accounting policies continued
(iii) Available-for-sale investments
HEINEKEN’s investments in equity securities and certain debt securities are classifi ed as available-for-sale. Subsequent to initial recognition, they are
measured at fair value and changes therein – other than impairment losses (see note 3i(i)) and foreign currency diff erences on available-for-sale monetary
items (see note 3b(i)) – are recognised in other comprehensive income and presented within equity in the fair value reserve. When these investments are
derecognised, the relevant cumulative gain or loss in the fair value reserve is transferred to profi t or loss.
Where these investments are interest-bearing, interest calculated using the eff ective interest method is recognised in profi t or loss. Available-for-sale
investments are recognised or derecognised by HEINEKEN on the date it commits to purchase or sell the investments.
(iv) Other
Other non-derivative fi nancial instruments are measured at amortised cost using the eff ective interest method, less any impairment losses. Included in
non-derivative fi nancial instruments are advances to customers. Subsequently, the advances are amortised over the term of the contract as a reduction
of revenue.
(d) Derivative fi nancial instruments (including hedge accounting)
(i) General
HEINEKEN uses derivatives in the ordinary course of business in order to manage market risks. Generally, HEINEKEN applies hedge accounting in order to
minimise the eff ects of foreign currency, interest rate or commodity price fl uctuations in profi t or loss.
Derivatives that can be used are interest rate swaps, forward rate agreements, caps and fl oors, commodity swaps, spot and forward exchange contracts
and options. Transactions are entered into with a limited number of counterparties with strong credit ratings. Foreign currency, interest rate and commodity
hedging operations are governed by internal policies and rules approved and monitored by the Executive Board.
Derivative fi nancial instruments are recognised initially at fair value, with attributable transaction costs recognised in profi t or loss as incurred. Derivatives
for which hedge accounting is not applied are accounted for as instruments at fair value through profi t or loss. When derivatives qualify for hedge
accounting, subsequent measurement is at fair value, and changes therein accounted for as described in 3b(iii), 3d(ii) or 3d(iii).
(ii) Cash fl ow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash fl ow hedge are recognised in other comprehensive income and
presented in the hedging reserve within equity to the extent that the hedge is eff ective. To the extent that the hedge is ineff ective, changes in fair value are
recognised in profi t or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is discontinued.
The cumulative unrealised gain or loss previously recognised in other comprehensive income and presented in the hedging reserve in equity is recognised in
profi t or loss immediately. When a hedging instrument is terminated, but the hedged transaction still is expected to occur, the cumulative gain or loss at
that point remains in other comprehensive income and is recognised in accordance with the above-mentioned policy when the transaction occurs. When
the hedged item is a non-fi nancial asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when it
is recognised. In other cases, the amount recognised in other comprehensive income is transferred to the same line of profi t or loss in the same period that
the hedged item aff ects profi t or loss.
(iii) Fair value hedges
Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in profi t or loss. The hedged item also is stated
at fair value in respect of the risk being hedged; the gain or loss attributable to the hedged risk is recognised in profi t or loss and adjusts the carrying
amount of the hedged item.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the eff ective interest
method is used is amortised to profi t or loss over the period to maturity.
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(iv) Separable embedded derivatives
Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and
the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the defi nition of a
derivative, and the combined instrument is not measured at fair value through profi t or loss. Changes in the fair value of separable embedded derivatives
are recognised immediately in profi t or loss.
(e) Share capital
(i) Ordinary shares
Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity,
net of any tax eff ects.
(ii) Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, is net of any tax
eff ects recognised as a deduction from equity. Repurchased shares are classifi ed as treasury shares and are presented in the reserve for own shares.
When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or defi cit on
the transaction is transferred to or from retained earnings.
(iii) Dividends
Dividends are recognised as a liability in the period in which they are declared.
(f) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment (P, P & E) are measured at cost less government grants received (refer to (q)), accumulated depreciation (refer to
(iv)) and accumulated impairment losses (3i(ii)).
Cost comprises the initial purchase price increased with expenditures that are directly attributable to the acquisition of the asset (such as transports and
non-recoverable taxes). The cost of self-constructed assets includes the cost of materials and direct labour and any other costs directly attributable to
bringing the asset to a working condition for its intended use (refer to an appropriate proportion of production overheads), and the costs of dismantling
and removing the items and restoring the site on which they are located. Borrowing costs related to the acquisition or construction of qualifying assets are
capitalised as part of the cost of that asset. Cost also may include transfers from equity of any gain or loss on qualifying cash fl ow hedges of foreign
currency purchases of P, P & E.
Spare parts that are acquired as part of an equipment purchase and only to be used in connection with this specifi c equipment or purchased software that
is integral to the functionality of the related equipment are capitalised and amortised as part of that equipment. In all other cases, spare parts are carried
as inventory and recognised in the income statement as consumed. Where an item of P, P & E comprises major components having diff erent useful lives,
they are accounted for as separate items (major components) of P, P & E.
Returnable bottles and kegs in circulation are recorded within P, P & E and a corresponding liability is recorded in respect of the obligation to repay
the customers’ deposits. Deposits paid by customers for returnable items are refl ected in the consolidated statement of fi nancial position within
current liabilities.
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3. Signifi cant accounting policies continued
(ii) Leased assets
Leases in terms of which HEINEKEN assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Upon initial recognition, P,
P & E acquired by way of fi nance lease is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments
at inception of the lease. Lease payments are apportioned between the outstanding liability and fi nance charges so as to achieve a constant periodic rate
of interest on the remaining balance of the liability.
Other leases are operating leases and are not recognised in HEINEKEN’s statement of fi nancial position. Payments made under operating leases are
charged to profi t 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.
(iii) Subsequent expenditure
The cost of replacing a part of an item of P, P & E is recognised in the carrying amount of the item or recognised as a separate asset, as appropriate, if it is
probable that the future economic benefi ts embodied within the part will fl ow to HEINEKEN and its cost can be measured reliably. The carrying amount of
the replaced part is derecognised. The costs of the day-to-day servicing of P, P & E are recognised in profi t or loss when incurred.
(iv) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
Land except for fi nancial leases on land over the contractual period is not depreciated as it is deemed to have an infi nite life. Depreciation on other P, P & E
is charged to profi t or loss on a straight-line basis over the estimated useful lives of items of P, P & E, and major components that are accounted for
separately, since this most closely refl ects the expected pattern of consumption of the future economic benefi ts embodied in the asset. Assets under
construction are not depreciated. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that
HEINEKEN will obtain ownership by the end of the lease term. The estimated useful lives for the current and comparative years are as follows:
• Buildings
• Plant and equipment
• Other fi xed assets
30 – 40 years
10 – 30 years
3 – 10 years
Where parts of an item of P, P & E have diff erent useful lives, they are accounted for as separate items of P, P & E.
The depreciation methods and residual value as well as the useful lives are reassessed, and adjusted if appropriate, at each fi nancial year-end.
(v) Gains and losses on sale
Net gains on sale of items of P, P & E are presented in profi t or loss as other income. Net losses on sale are included in depreciation. Net gains and losses are
recognised in profi t or loss when the signifi cant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable,
the associated costs can be estimated reliably, and there is no continuing management involvement with the P, P & E.
(g) Intangible assets
(i) Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the cost of the acquisition over HEINEKEN’s
interest in net fair value of the net identifi able assets, liabilities and contingent liabilities of the acquiree.
Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. Goodwill arising on the acquisition of associates and joint ventures is included in the
carrying amount of the associates and joint ventures.
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Goodwill is measured at cost less accumulated impairment losses (refer to accounting policy 3i(ii)). Goodwill is allocated to individual or groups of cash-
generating units (CGUs) for the purpose of impairment testing and is tested annually for impairment. Negative goodwill is recognised directly in profi t or
loss as other income.
(ii) Brands
Brands acquired, separately or as part of a business combination, are capitalised if they meet the defi nition of an intangible asset and the recognition
criteria are satisfi ed.
Strategic brands are well-known international/local brands with a strong market position and an established brand name. Strategic brands are amortised
on an individual basis over the estimated useful life of the brand. Other brands are amortised on a portfolio basis per country.
(iii) Customer-related, contract-based intangibles and reacquired rights
Customer-related and contract-based intangibles are capitalised if they meet the defi nition of an intangible asset and the recognition criteria are satisfi ed.
If the amounts are not material, these are included in the brand valuation. The relationship between brands and customer-related intangibles is carefully
considered so that brands and customer-related intangibles are not both recognised on the basis of the same cash fl ows.
Reacquired rights are identifi able intangible assets recognised in an acquisition that represent the right an acquirer previously has granted to the acquiree
to use one or more of the acquirer’s recognised or unrecognised assets.
Customer-related and contract-based intangibles acquired as part of a business combination are valued at fair value. Customer-related and contract-based
intangibles acquired separately are measured at cost.
Customer-related, contract-based intangibles and reacquired rights are amortised over the remaining useful life of the customer relationships or the period
of the contractual arrangements.
(iv) Software, research and development and other intangible assets
Purchased software is measured at cost less accumulated amortisation (refer to (vi)) and impairment losses (refer to accounting policy 3i(ii)).
Expenditure on internally developed software is capitalised when the expenditure qualifi es as development activities, otherwise it is recognised in profi t
or loss when incurred.
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in profi t or loss
when incurred.
Development activities involve a plan or design for the production of new or substantially improved products, software and processes. Development
expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future
economic benefi ts are probable, and HEINEKEN intends to and has suffi cient resources to complete development and to use or sell the asset.
The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for
its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profi t or loss when incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation (refer to (vi)) and accumulated impairment losses (refer to
accounting policy 3i(ii)).
Other intangible assets that are acquired by HEINEKEN and have fi nite useful lives are measured at cost less accumulated amortisation (refer to (vi)) and
impairment losses (refer to accounting policy 3i(ii)). Expenditure on internally generated goodwill and brands is recognised in profi t or loss when incurred.
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3. Signifi cant accounting policies continued
(v) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefi ts embodied in the specifi c asset to which it relates. All other
expenditure is expensed when incurred.
(vi) Amortisation
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Intangible assets with a fi nite life are
amortised on a straight-line basis over their estimated useful lives, other than goodwill, from the date they are available for use, since this most closely
refl ects the expected pattern of consumption of the future economic benefi ts embodied in the asset. The estimated useful lives are as follows:
• Strategic brands
• Other brands
• Customer-related and contract-based intangibles
•
• Software
• Capitalised development costs
Reacquired rights
40 – 50 years
15 – 25 years
5 – 20 years
3 – 12 years
3 – 7 years
3 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(vii) Gains and losses on sale
Net gains on sale of intangible assets are presented in profi t or loss as other income. Net losses on sale are included in amortisation. Net gains and losses
are recognised in profi t or loss when the signifi cant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is
probable, the associated costs can be estimated reliably, and there is no continuing management involvement with the intangible assets.
(h) Inventories
(i) General
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost formula, and includes
expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and
condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
(ii) Finished products and work in progress
Finished products and work in progress are measured at manufacturing cost based on weighted averages and taking into account the production stage
reached. Costs include an appropriate share of direct production overheads based on normal operating capacity.
(iii) Other inventories and spare parts
The cost of other inventories is based on weighted averages. Spare parts are valued at the lower of cost and net realisable value. Value reductions and
usage of parts are charged to profi t or loss. Spare parts that are acquired as part of an equipment purchase and only to be used in connection with this
specifi c equipment are initially capitalised and depreciated as part of the equipment.
(i) Impairment
(i) Financial assets
A fi nancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A fi nancial asset is considered
to be impaired if objective evidence indicates that one or more events have had a negative eff ect on the estimated future cash fl ows of that asset that can
be estimated reliably.
Evidence of impairment may include indications that the debtors or a group of debtors are experiencing signifi cant fi nancial diffi culty, default or
delinquency in interest or principal payments, the probability that they will enter bankruptcy or other fi nancial reorganisation, and where observable
data indicates that there is a measurable decrease in the estimated future cash fl ows, such as changes in arrears or economic conditions that correlate
with defaults.
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An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the diff erence between its carrying amount and the present
value of the estimated future cash fl ows discounted at the original eff ective interest rate. An impairment loss in respect of an available-for-sale fi nancial
asset is calculated by reference to its current fair value.
Individually signifi cant fi nancial assets are tested for impairment on an individual basis. The remaining fi nancial assets are assessed collectively in groups
that share similar credit risk characteristics.
All impairment losses are recognised in profi t or loss. Any cumulative loss in respect of an available-for-sale fi nancial asset recognised previously in other
comprehensive income and presented in the fair value reserve in equity is transferred to profi t or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For fi nancial assets
measured at amortised cost and available-for-sale fi nancial assets that are debt securities, the reversal is recognised in profi t or loss. For available-for-sale
fi nancial assets that are equity securities, the reversal is recognised in other comprehensive income.
(ii) Non-fi nancial assets
The carrying amounts of HEINEKEN’s non-fi nancial assets, other than inventories (refer to accounting policy (h)) and deferred tax assets (refer to
accounting policy (s)), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated. For goodwill and intangible assets that are not yet available for use, the recoverable amount is estimated each
year at the same time.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash
infl ows from continuing use that are largely independent of the cash infl ows of other assets or groups of assets (the cash-generating unit, ‘CGU’).
The recoverable amount of an asset or CGU is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money
and the risks specifi c to the asset or CGU.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the acquirer’s CGUs, or groups of CGUs expected
to benefi t from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity
at which the goodwill is monitored for internal management purposes. Goodwill is monitored on regional, sub-regional or country level depending on the
characteristics of the acquisition, the synergies to be achieved and the level of integration.
An impairment loss is recognised in profi t or loss if the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses
recognised in respect of CGU are allocated fi rst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying
amounts of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
Goodwill that forms part of the carrying amount of an investment in an associate and joint venture is not recognised separately, and therefore is not tested
for impairment separately. Instead, the entire amount of the investment in an associate and joint venture is tested for impairment as a single asset when
there is objective evidence that the investment in an associate may be impaired.
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3. Signifi cant accounting policies continued
(j) Assets or disposal groups classifi ed as held for sale
Assets or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use are
classifi ed as held for sale. Immediately before classifi cation as held for sale, the assets, or components of a disposal group, are measured at the lower of
their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is fi rst allocated to goodwill, and then to remaining assets and
liabilities on a pro rata basis, except that no loss is allocated to inventories, fi nancial assets, deferred tax assets and employee defi ned benefi t plan assets,
which continue to be measured in accordance with HEINEKEN’s accounting policies. Impairment losses on initial classifi cation as held for sale and
subsequent gains or losses on remeasurement are recognised in profi t or loss. Gains are not recognised in excess of any cumulative impairment loss.
Intangible assets and P, P & E once classifi ed as held for sale are not amortised or depreciated. In addition, equity accounting of equity-accounted investees
ceases once classifi ed as held for sale.
(k) Employee benefi ts
(i) Defi ned contribution plans
A defi ned contribution plan is a post-employment benefi t plan (pension plan) under which HEINEKEN pays fi xed contributions into a separate entity.
HEINEKEN has no legal or constructive obligations to pay further contributions if the fund does not hold suffi cient assets to pay all employees the benefi ts
relating to employee service in the current and prior periods.
Obligations for contributions to defi ned contribution pension plans are recognised as an employee benefi t expense in profi t or loss in the periods during
which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future
payments is available. Contributions to a defi ned contribution plan that are due more than 12 months after the end of the period in which the employee
renders the service are discounted to their present value.
(ii) Defi ned benefi t plans
A defi ned benefi t plan is a post-employment benefi t plan (pension plan) that is not a defi ned contribution plan. Typically, defi ned benefi t plans defi ne
an amount of pension benefi t that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service
and compensation.
HEINEKEN’s net obligation in respect of defi ned benefi t pension plans is calculated separately for each plan by estimating the amount of future benefi t
that employees have earned in return for their service in the current and prior periods; that benefi t is discounted to determine its present value. The fair
value of any defi ned benefi t plan assets is deducted. The discount rate is the yield at balance sheet date on AA-rated bonds that have maturity dates
approximating to the terms of HEINEKEN’s obligations and that are denominated in the same currency in which the benefi ts are expected to be paid.
The calculations are performed annually by qualifi ed actuaries using the projected unit credit method. When the calculation results in a benefi t to
HEINEKEN, the recognised asset is limited to the present value of economic benefi ts available in the form of any future refunds from the plan or
reductions in future contributions to the plan. In order to calculate the present value of economic benefi ts, consideration is given to any minimum
funding requirements that apply to any plan in HEINEKEN. An economic benefi t is available to HEINEKEN if it is realisable during the life of the plan,
or on settlement of the plan liabilities.
When the benefi ts of a plan are changed, the expense or benefi t is recognised immediately in profi t or loss.
HEINEKEN recognises all actuarial gains and losses arising from defi ned benefi t plans immediately in other comprehensive income and all expenses
related to defi ned benefi t plans in personnel expenses and other net fi nance income and expenses in profi t or loss.
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(iii) Other long-term employee benefi ts
HEINEKEN’s net obligation in respect of long-term employee benefi ts, other than pension plans, is the amount of future benefi t that employees have
earned in return for their service in the current and prior periods; that benefi t is discounted to determine its present value, and the fair value of any related
assets is deducted. The discount rate is the yield at balance sheet date on high-quality credit-rated bonds that have maturity dates approximating to the
terms of HEINEKEN’s obligations. The obligation is calculated using the projected unit credit method. Any actuarial gains and losses are recognised in profi t
or loss in the period in which they arise.
(iv) Termination benefi ts
Termination benefi ts are payable when employment is terminated by HEINEKEN before the normal retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these benefi ts.
Termination benefi ts are recognised as an expense when HEINEKEN is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal, or providing termination benefi ts as a result of an off er made to
encourage voluntary redundancy. Termination benefi ts for voluntary redundancies are recognised if HEINEKEN has made an off er encouraging
voluntary redundancy, it is probable that the off er will be accepted, and the number of acceptances can be estimated reliably.
Benefi ts falling due more than 12 months after the balance sheet date are discounted to their present value.
(v) Share-based payment plan (LTV)
As from 1 January 2005, HEINEKEN established a share plan for the Executive Board and, as from 1 January 2006, HEINEKEN also established a share
plan for senior management (refer to note 29).
The grant date fair value, adjusted for expected dividends, of the share rights granted is recognised as personnel expenses with a corresponding increase
in equity (equity-settled) over the period that the employees become unconditionally entitled to the share rights. The costs of the share plan for both the
Executive Board and senior management members are spread evenly over the performance period, during which vesting conditions are applicable subject
to continued services. The total amount to be expensed is determined taking into consideration the expected forfeitures.
At each balance sheet date, HEINEKEN revises its estimates of the number of share rights that are expected to vest, for the 100 per cent internal
performance conditions of the running share plans for the senior management members and the Executive Board. It recognises the impact of the revision
of original estimates (only applicable for internal performance conditions, if any) in profi t or loss, with a corresponding adjustment to equity.
(vi) Matching share entitlement
As from 21 April 2011, HEINEKEN established a matching share entitlement for the Executive Board. The grant date fair value of the matching shares
is recognised as personnel expenses in the income statement as it is deemed an equity-settled share-based payment.
(vii) Short-term employee benefi ts
Short-term employee benefi t obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability
is recognised for the amount expected to be paid under short-term benefi ts if HEINEKEN has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(l) Provisions
(i) General
A provision is recognised if, as a result of a past event, HEINEKEN has a present legal or constructive obligation that can be estimated reliably, and it is
probable that an outfl ow of economic benefi ts will be required to settle the obligation. Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax rate that refl ects current market assessments of the time value of money and the risks
specifi c to the obligation. The increase in the provision due to passage of time is recognised as part of net fi nance expenses.
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3. Signifi cant accounting policies continued
(ii) Restructuring
A provision for restructuring is recognised when HEINEKEN has approved a detailed and formal restructuring plan, and the restructuring has either
commenced or has been announced publicly. Future operating losses are not provided for. The provision includes the benefi t commitments in connection
with early retirement and redundancy schemes.
(iii) Onerous contracts
A provision for onerous contracts is recognised when the expected benefi ts to be derived by HEINEKEN from a contract are lower than the unavoidable
cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the contract and taking into consideration any reasonably obtainable sub-leases. Before a provision
is established, HEINEKEN recognises any impairment loss on the assets associated with that contract.
(iv) Other
The other provisions, not being provisions for restructuring or onerous contracts, consist mainly of surety and guarantees, litigation and claims and
environmental provisions.
(m) Loans and borrowings
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Loans and borrowings are subsequently stated at amortised
cost; any diff erence between the proceeds (net of transaction costs) and the redemption value is recognised in profi t or loss over the period of the
borrowings using the eff ective interest method. Loans and borrowings included in a fair value hedge are stated at fair value in respect of the risk
being hedged.
Loans and 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 classifi ed as non-current liabilities.
(n) Revenue
(i) Products sold
Revenue from the sale of products in the ordinary course of business is measured at the fair value of the consideration received or receivable, net of
sales tax, excise duties, returns, customer discounts and other sales-related discounts. Revenue from the sale of products is recognised in profi t or loss
when the amount of revenue can be measured reliably, the signifi cant risks and rewards of ownership have been transferred to the buyer, recovery of
the consideration is probable, the associated costs and possible return of products can be estimated reliably, and there is no continuing management
involvement with the products.
If it is probable that discounts will be granted and the amount can be measured reliably, the discount is recognised as a reduction of revenue as the sales
are recognised.
(ii) Other revenue
Other revenues are proceeds from royalties, rental income, pub management services and technical services to third parties, net of sales tax. Royalties are
recognised in profi t or loss on an accrual basis in accordance with the substance of the relevant agreement. Rental income, pub management services and
technical services are recognised in profi t or loss when the services have been delivered.
(o) Other income
Other income includes gains from sale of P, P & E, intangible assets and (interests in) subsidiaries, joint ventures and associates, net of sales tax. They are
recognised in profi t or loss when risks and rewards have been transferred to the buyer.
(p) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in profi t or loss on a straight-line basis over the term of the lease. Lease incentives received are
recognised in profi t or loss as an integral part of the total lease expense, over the term of the lease.
80 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
(ii) Finance lease payments
Minimum lease payments under fi nance leases are apportioned between the fi nance expense and the reduction of the outstanding liability. The fi nance
expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment
is confi rmed.
(q) Government grants
Government grants are recognised at their fair value when it is reasonably assured that HEINEKEN will comply with the conditions attaching to them and
the grants will be received.
Government grants relating to P, P & E are deducted from the carrying amount of the asset.
Government grants relating to costs are deferred and recognised in profi t or loss over the period necessary to match them with the costs that they are
intended to compensate.
(r) Interest income, interest expenses and other net fi nance income and expenses
Interest income and expenses are recognised as they accrue in profi t or loss, using the eff ective interest method unless collectability is in doubt.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profi t or loss using
the eff ective interest method.
Other net fi nance income and expenses comprises dividend income, gains and losses on the disposal of available-for-sale investments, changes in the fair
value of investments designated at fair value through profi t or loss and held for trading investments, changes in fair value of hedging instruments that are
recognised in profi t or loss, unwinding of the discount on provisions, impairment losses recognised on investments and interest on the net defi ned benefi t
obligation. Dividend income is recognised in the income statement on the date that HEINEKEN’s right to receive payment is established, which in the case
of quoted securities is the ex-dividend date.
Foreign currency gains and losses are reported on a net basis in the other net fi nance income and expenses.
(s) Income tax
Income tax comprises current and deferred tax. Current tax and deferred tax are recognised in the income statement except to the extent that it relates to
a business combination, or items recognised directly in equity, or in other comprehensive income.
(i) Current tax
Income tax expenses comprise corporate income tax due in countries of incorporation of the Company’s main subsidiaries and levied on actual profi ts.
Income tax expense also includes the corporate income taxes which are levied on a deemed profi t basis and revenue basis (withholding taxes). Current tax
is the expected income tax payable or receivable in respect of taxable income or loss for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to income tax payable in respect of previous years. Current tax payable also includes any tax liability arising from
the declaration of dividends. This presentation adequately refl ects the Company’s global tax return.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary diff erences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and
their tax bases.
Deferred tax is not recognised for:
• temporary diff erences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that aff ects neither
accounting nor taxable profi t or loss
• temporary diff erences related to investments in subsidiaries, associates and jointly controlled entities to the extent that the Company is able to control
the timing of the reversal of the temporary diff erences and it is probable that they will not reverse in the foreseeable future
• taxable temporary diff erences arising on the initial recognition of goodwill
81 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
3. Signifi cant accounting policies continued
The measurement of deferred tax assets and liabilities refl ects the tax consequences that would follow the manner in which the Company expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date and are expected to
apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets and liabilities are off set if there is a legally enforceable right to off set current tax liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable entity, or on diff erent taxable entities which intend either to settle current tax liabilities and assets on
a net basis or to realise the assets and settle the liabilities simultaneously.
Deferred tax is provided for on temporary diff erences arising on investments in subsidiaries and associates, except where the timing of the reversal of the
temporary diff erence is controlled by the Company and it is probable that the temporary diff erence will not reverse in the foreseeable future.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary diff erences, to the extent that it is probable that future
taxable profi ts will be available against which they can be utilised. Deferred tax assets are reviewed at each balance sheet date and are reduced to the
extent that it is no longer probable that the related tax benefi t will be realised.
(iii) Uncertain tax positions
In determining the amount of current and deferred income tax, the Company takes into account the impact of uncertain income tax positions and
whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about
future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact the income tax expense in the period that such a determination is made.
(t) Discontinued operations
A discontinued operation is a component of HEINEKEN’s business that represents a separate major line of business or geographical area of operations that
has been disposed of or is held for sale or distribution, or is a subsidiary acquired exclusively with a view to resale. Classifi cation as a discontinued operation
occurs upon disposal or when the operation meets the criteria to be classifi ed as held for sale, if earlier. When an operation is classifi ed as a discontinued
operation, the comparative statement of comprehensive income is re-presented as if the operation had been discontinued from the start of the
comparative year.
(u) Earnings per share
HEINEKEN presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profi t or loss attributable
to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for the weighted
average number of own shares purchased in the year. Diluted EPS is determined by dividing the profi t or loss attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding, adjusted for the weighted average number of own shares purchased in the year and for the
eff ects of all dilutive potential ordinary shares which comprise share rights granted to employees.
(v) Cash fl ow statement
The cash fl ow statement is prepared using the indirect method. Changes in balance sheet items that have not resulted in cash fl ows such as translation
diff erences, fair value changes, equity-settled share-based payments and other non-cash items have been eliminated for the purpose of preparing this
statement. Assets and liabilities acquired as part of a business combination are included in investing activities (net of cash acquired). Dividends paid to
ordinary shareholders are included in fi nancing activities. Dividends received are classifi ed as operating activities. Interest paid is also included in
operating activities.
82 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
(w) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Board, which is considered to be HEINEKEN’s
chief operating decision-maker. An operating segment is a component of HEINEKEN that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of HEINEKEN’s other components. All operating segments’
operating results are reviewed regularly by the Executive Board to make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete fi nancial information is available.
Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated
third parties.
Segment results, assets and liabilities that are reported to the Executive Board include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated result items comprise net fi nance expenses and income tax expenses. Unallocated assets comprise current
other investments and cash call deposits.
Segment capital expenditure is the total cost incurred during the period to acquire P, P & E, and intangible assets other than goodwill.
(x) Recently issued IFRS
New relevant standards and interpretations not yet adopted
A number of new standards and amendments to standards are eff ective for annual periods beginning after 1 January 2015, which HEINEKEN has not
applied in preparing these consolidated fi nancial statements.
IFRS 9, published in July 2014, replaces existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance
on classifi cation and measurement of fi nancial instruments, including a new expected credit loss model for calculating impairment on fi nancial assets, and
new general hedge accounting requirements. IFRS 9 is eff ective for annual reporting periods beginning on or after 1 January 2018 with early adoption
permitted. HEINEKEN is assessing the potential impact of IFRS 9 on its consolidated fi nancial statements.
IFRS 15, published in May 2014, establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces
existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is
eff ective on or after 1 January 2018, with early adoption permitted. HEINEKEN is assessing the potential impact on its consolidated fi nancial statements
resulting from the application of IFRS 15.
IFRS 16, published in January 2016, establishes a revised framework for determining whether a lease is recognised on the (Consolidated) Statement of
Financial Position. It replaces existing guidance on leases, including IAS 17. IFRS 16 is eff ective on or after 1 January 2019, with early adoption permitted.
HEINEKEN will assess the potential impact on its consolidated fi nancial statements resulting from the application of IFRS 16.
The following new or amended standards are not expected to have a signifi cant impact of HEINEKEN consolidated fi nancial statements:
• Applying the concept of materiality in practise (amendments to IAS 1 Disclosure Initiative)
• Regulatory Deferral Accounts (IFRS 14)
• Accounting for Acquisitions of Interests in Joint Operations (amendments to IFRS 11)
• Bearer Plants (amendments to IAS 16 and IAS 41)
• Classifi cation of Acceptable Methods of Depreciation and Amortisation (amendments to IAS 16 and IAS 38)
• Equity method in separate fi nancial statements (amendments to IAS 27)
• Sale or Contribution of Assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)
• Applying the consolidation exemption (amendments to IFRS 10, IFRS 11 and IAS 28)
• Annual Improvements to IFRSs 2012-2014 Cycle
83 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
4. Determination of fair values
General
A number of HEINEKEN’s accounting policies and disclosures require the determination of fair value, for both fi nancial and non-fi nancial assets and
liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further
information about the assumptions made in determining fair values or for the purpose of impairment testing is disclosed in the notes specifi c to that
asset or liability.
Fair value as a result of business combinations
(i) Property, plant and equipment
The fair value of P, P & E recognised as a result of a business combination is based on market prices for similar items when available and replacement cost
when appropriate.
(ii) Intangible assets
The fair value of brands acquired in a business combination is based on the ‘relief of royalty’ method or determined using the multi-period excess earnings
method. The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method,
whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash fl ows. The fair value of
reacquired rights and other intangible assets is based on the discounted cash fl ows expected to be derived from the use and eventual sale of the assets.
(iii) Inventories
The fair value of inventories acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the
estimated costs of completion and sale, and a reasonable profi t margin based on the eff ort required to complete and sell the inventories.
(iv) Trade and other receivables
The fair value of trade and other receivables is estimated at the present value of future cash fl ows, discounted at the market rate of interest at the reporting
date. This fair value is determined for disclosure purposes or when acquired in a business combination.
Fair value from normal business
(i) Investments in equity and debt securities
The fair value of fi nancial assets at fair value through profi t or loss, held-to-maturity investments and available-for-sale fi nancial assets is determined by
reference to their quoted closing bid price at the reporting date or, if unquoted, determined using an appropriate valuation technique. The fair value of
held-to-maturity investments is determined for disclosure purposes only. In case the quoted price does not exist at the date of exchange or in case the
quoted price exists at the date of exchange but was not used as the cost, the investments are valued indirectly based on discounted cash fl ow models.
(ii) Derivative fi nancial instruments
The fair value of derivative fi nancial 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 diff erence between the cash fl ows based on contractual price and the cash fl ows based on current price for the
residual maturity of the contact using observable interest yield curves, basis spread and foreign exchange rates.
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.
(iii) Non-derivative fi nancial 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 fl ows, discounted at the market rate of interest at the reporting date. For fi nance leases, the market rate of interest is determined
by reference to similar lease agreements.
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.
84 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
5. Operating segments
HEINEKEN distinguishes the following fi ve reportable segments:
• Africa, Middle East & Eastern Europe
•
•
•
•
Americas
Asia Pacifi c
Europe
Head Offi ce and Other/eliminations
The fi rst four reportable segments as stated above are HEINEKEN’s business regions. These business regions are each managed separately by a Regional
President. The Regional President is directly accountable for the functioning of the segment’s assets, liabilities and results of the region and reports regularly
to the Executive Board (the chief operating decision-maker) to discuss operating activities, regional forecasts and regional results. The Head Offi ce
operating segment falls directly under the responsibility of the Executive Board. For each of the fi ve reportable segments, the Executive Board reviews
internal management reports on a monthly basis.
Information regarding the results of each reportable segment is included in the table on the next page. Performance is measured based on EBIT (beia), as
included in the internal management reports that are reviewed by the Executive Board. EBIT (beia) is defi ned as earnings before interest and taxes and net
fi nance expenses, before exceptional items and amortisation of acquisition-related intangibles. Exceptional items are defi ned as items of income and
expense of such size, nature or incidence, that in the view of management their disclosure is relevant to explain the performance of HEINEKEN for the
period. EBIT and EBIT (beia) are not fi nancial measures calculated in accordance with IFRS. EBIT (beia) is used to measure performance as management
believes that this measurement is the most relevant in evaluating the results of these segments.
HEINEKEN has multiple distribution models to deliver goods to end customers. There is no reliance on major clients. Deliveries to end consumers are done
in some countries via own wholesalers or own pubs, in other markets directly and in some others via third parties. As such, distribution models are country-
specifi c and diverse across HEINEKEN. In addition, these various distribution models are not centrally managed or monitored. Consequently, the Executive
Board is not allocating resources and assessing the performance based on business type information and therefore no segment information is provided on
business type.
Inter-segment pricing is determined on an arm’s length basis. As net fi nance expenses and income tax expenses are monitored on a consolidated level
(and not on an individual regional basis) and regional presidents are not accountable for that, net fi nance expenses and income tax expenses are not
provided for the operating segments.
85 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
5. Operating segments continued
Information about reportable segments
In millions of EUR
Revenue
Third party revenue1
Interregional revenue
Total revenue
Other income
Results from operating activities
Net fi nance expenses
Share of profi t of associates and joint ventures and impairments thereof
Income tax expense
Profi t
Attributable to:
Equity holders of the Company (net profi t)
Non-controlling interests
EBIT reconciliation
EBIT2
Eia2
EBIT (beia)2
Current segment assets
Non-current segment assets
Investments in associates and joint ventures
Total segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total equity
Total equity and liabilities
Purchase of P, P & E
Acquisition of goodwill
Purchases of intangible assets
Depreciation of P, P & E
(Impairment) and reversal of impairment of P, P & E
Amortisation intangible assets
(Impairment) and reversal of impairment of intangible assets
Europe
Americas
Africa, Middle East
& Eastern Europe
Asia Pacifi c
Consolidated
Head Offi ce &
Other/eliminations
Note
2015
20143
2015
2014
2015
20143
2015
2014
2015
20143
2015
2014
9,510
717
10,227
34
9,077
684
9,761
76
5,154
5
5,159
6
4,626
5
4,631
7
3,260
3
3,263
51
3,186
3
3,189
10
2,480
3
2,483
(62)
2,087
2,088
1
–
107
(728)
(621)
382
281
(693)
(412)
–
20,511
19,257
–
20,511
411
19,257
–
93
1,039
1,054
807
660
487
620
417
407
325
39
3,075
2,780
16
33
74
60
52
28
30
29
–
(2)
1,055
159
1,214
3,155
10,605
190
13,950
1,087
42
1,129
3,257
10,070
301
13,628
881
97
978
1,802
5,877
1,098
8,777
720
121
841
1,668
5,382
792
7,842
4,956
5,431
1,342
1,195
1,294
1,107
748
600
506
421
548
51
22
(517)
(23)
(69)
(4)
504
100
13
(490)
(3)
(57)
–
369
132
14
(226)
–
(96)
–
291
–
13
(219)
–
(92)
–
(409)
172
(697)
2,141
1,892
249
2,141
3,247
311
3,558
5,898
28,855
1,985
36,738
976
37,714
8,846
13,798
15,070
37,714
1,640
619
93
(1,151)
(71)
(368)
(4)
(488)
148
(732)
1,708
1,516
192
1,708
2,928
340
3,268
6,073
26,050
2,033
34,156
674
34,830
8,754
12,624
13,452
34,830
1,519
100
57
(1,080)
(8)
(331)
(18)
37
(20)
17
(868)
845
66
43
14
–
28
(27)
(25)
–
–
539
92
631
1,412
3,186
217
4,815
432
44
4
(286)
(33)
(16)
–
648
51
699
1,264
2,872
253
4,389
447
288
735
1,042
8,107
417
9,566
436
146
582
752
6,881
621
8,254
325
(325)
–
(1,513)
1,080
63
(370)
467
–
2
(261)
(3)
(9)
(18)
284
392
2
(110)
(15)
(169)
–
243
–
1
(83)
(2)
(148)
–
7
–
–
–
51
(12)
(18)
8
12
16
13
27
14
15
15
14
14
15
15
1 Includes other revenue of EUR386 million in 2015 and EUR377 million in 2014.
2 For defi nition, see ‘Glossary’. Note that these are non-GAAP measures and therefore unaudited.
3 2014 numbers have been revised to refl ect the new regional segmentation.
86 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Africa, Middle East
& Eastern Europe
Asia Pacifi c
Head Offi ce &
Other/eliminations
Consolidated
2015
20143
2015
2014
2015
20143
2015
2014
3,260
3
3,263
51
3,186
3
3,189
10
2,480
3
2,483
(62)
2,087
1
2,088
–
107
(728)
(621)
382
281
(693)
(412)
–
20,511
–
20,511
411
19,257
–
19,257
93
487
620
417
407
325
39
3,075
2,780
52
28
30
29
–
(2)
539
92
631
1,412
3,186
217
4,815
648
51
699
1,264
2,872
253
4,389
447
288
735
1,042
8,107
417
9,566
436
146
582
752
6,881
621
8,254
325
(325)
–
(1,513)
1,080
63
(370)
37
(20)
17
(868)
845
66
43
1,294
1,107
748
600
506
421
432
44
4
(286)
(33)
(16)
–
467
–
2
(261)
(3)
(9)
(18)
284
392
2
(110)
(15)
(169)
–
243
–
1
(83)
(2)
(148)
–
7
–
51
(12)
–
(18)
–
14
–
28
(27)
–
(25)
–
(409)
172
(697)
2,141
1,892
249
2,141
3,247
311
3,558
5,898
28,855
1,985
36,738
976
37,714
8,846
13,798
15,070
37,714
1,640
619
93
(1,151)
(71)
(368)
(4)
(488)
148
(732)
1,708
1,516
192
1,708
2,928
340
3,268
6,073
26,050
2,033
34,156
674
34,830
8,754
12,624
13,452
34,830
1,519
100
57
(1,080)
(8)
(331)
(18)
87 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
6. Acquisitions and disposals of subsidiaries and non-controlling interests
Accounting for the acquisition of Lasko (Slovenia)
The acquisition of 53.43 per cent of the share capital of Pivovarna Lasko (‘Lasko’), the leading Slovenian brewer for EUR119.5 million completed on
15 October 2015.
Restructuring of South African and Namibian operations
On 1 December 2015, HEINEKEN along with Diageo plc and The Ohlthaver & List (‘O&L’) group of companies, the majority shareholder of Namibia
Breweries Limited (‘NBL’) restructured their respective joint venture operations in South Africa and Namibia as follows:
• HEINEKEN, Diageo and NBL closed their distribution joint venture, Brandhouse Beverages (Pty) Ltd.
• HEINEKEN’s shareholding in DHN Drinks (Pty) Limited (‘DHN’) increased to 75 per cent and as a result HEINEKEN obtained control over the South
African entities DHN and Sedibeng Brewery (Pty) Limited (‘Sedibeng’).
• HEINEKEN also acquired an additional 15 per cent stake in NBL from Diageo. NBL is continued to be accounted for as an associate.
HEINEKEN paid a total net cash consideration of ZAR1.9 billion (EUR138 million) to Diageo.
Prior to the restructuring, HEINEKEN had a 75 per cent stake in Sedibeng and a 42.25 per cent stake in DHN. Both were accounted for as joint ventures
because HEINEKEN had joint control over the entire South African structure. In accordance with IFRS, the Previously Held Equity Interest (PHEI) in the
acquired businesses is accounted for at fair value at the date of acquisition and amounts to EUR29 million for DHN and EUR137 million for Sedibeng.
The fair value compared to HEINEKEN’s carrying amount and the release of cumulative amounts recorded in OCI result in a non-cash exceptional gain
of EUR48 million in DHN and a non-cash exceptional loss of EUR5 million in Sedibeng, recognised in Other Income.
Accounting for the acquisition of Desnoes & Geddes (Jamaica) and GAPL Pte Ltd
On 7 October 2015, HEINEKEN announced that HEINEKEN and Diageo plc (‘Diageo’) have completed a transaction to bring increased focus to their
respective beer businesses and certain licensing arrangements in Jamaica, Malaysia, Singapore and Ghana. The transaction comprises:
• HEINEKEN obtained control of Desnoes & Geddes (‘D&G’) by acquiring Diageo’s 57.9 per cent shareholding in this company, taking its shareholding
to 73.3 per cent.
• HEINEKEN now has full ownership of GAPL Pte Ltd (‘GAPL’), having acquired Diageo’s shareholding, which was slightly lower than 50 per cent. GAPL
owns 51 per cent of the issued share capital of Guinness Anchor Berhad (‘GAB’), which is listed on the Malaysian Stock Exchange. GAPL is also the
licensee for Guinness and ABC Stout distribution for the Singapore market.
• HEINEKEN has sold its 20 per cent ownership stake in Guinness Ghana Breweries Limited (‘GGBL’) to Diageo through the sale of the holding entity
of the shares, Heineken Ghanaian Holdings B.V. (‘HGH’).
• HEINEKEN and Diageo have agreed to enter into licensing agreements for each other’s brands currently in the respective portfolios in Jamaica
and Ghana.
The total net cash consideration payable by HEINEKEN to Diageo for the Transaction was USD780.5 million (EUR707 million).
Prior to the acquisition, HEINEKEN owned a 15.4 per cent stake in D&G and a slightly higher than 50 per cent stake in GAPL. Prior to the acquisition, D&G
was accounted for as an available for sale investment and GAPL was accounted for as a joint venture. The PHEI in the acquired businesses is accounted for
at fair value at the date of acquisition and amounts to EUR26 million for D&G and EUR331 million for GAPL. The fair value of the PHEI of D&G has been
determined using Level 1 inputs (the quoted market price) of D&G shares as of the acquisition date. The fair value compared to HEINEKEN’s carrying
amount and the release of cumulative amounts recorded in OCI result in a non-cash exceptional gain of EUR18 million in D&G, recognised in Other net
fi nance income and expense and a non-cash exceptional loss of EUR61 million in GAPL, recognised in Other Income.
88 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
The following table summarises the major classes of consideration transferred and the recognised provisional amounts of assets acquired and liabilities
assumed at the acquisition date.
In millions of EUR
Cash and cash equivalents
Property, plant and equipment
Intangible assets
Inventories
Other assets
Assets acquired
Contingent liabilities
Short term liabilities
Long term liabilities
Liabilities assumed
Total net identifi able assets
In millions of EUR
Consideration transferred
Fair value of previously held equity interest in the acquiree
Non-controlling interests
Net identifi able assets acquired
Goodwill on acquisition (provisional)
Lasko
2
103
180
19
90
394
–
216
51
267
127
120
–
58
(127)
51
South Africa
16
257
2
55
186
516
–
94
191
285
231
52
165
58
(231)
44
D&G and GAPL
42
114
930
33
94
1,213
5
74
251
330
883
707
356
344
(883)
524
Acquisition-related costs of EUR7 million have been recognised in the income statement for the period ended 31 December 2015.
The goodwill in each of the transactions is attributable to earnings beyond the period over which intangible assets are amortised, workforce, expected
synergies and future customers. None of the goodwill amounts recognised are expected to be deductible for tax purposes. The goodwill related to D&G
and GAPL has been allocated to the group of CGU’s Americas (EUR132 million) and Asia Pacifi c (EUR392 million).
Non-controlling interests are measured based on their proportional interest in the recognised assets and liabilities of the acquired entities.
In accordance with IFRS 3, the amounts recorded for the transactions are provisional and are subject to adjustments during the measurement period if
new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have aff ected the measurement
of the amounts recognised as of that date. The amounts are provisional mainly because of the timing of the acquisitions in the fourth quarter of 2015.
The amount of revenue and profi t or loss for the acquired companies after obtaining control amounts to EUR177 million and EUR20 million respectively.
Would the acquisitions have taken place on 1 January 2015, revenue and profi t for HEINEKEN would have been EUR21,179 million and
EUR2,184 million respectively.
Mandatory General Off ers (‘MGO’) were announced for Lasko and D&G non-controlling interest holders on 16 October 2015 and 17 November 2015
respectively. The subscription periods ended 15 January 2016 for Lasko and 21 January 2016 for D&G. Please refer to subsequent events note for further
information on the acquired shares as part of the MGOs.
Disposals
Disposal of EMPAQUE
The disposal of the Mexican packaging business EMPAQUE completed on 18 February 2015 for the value of USD1.225 billion (EUR956 million). A post-tax
EUR379 million book gain on the disposal was recorded in Other Income.
Disposal of Ghana
As part of the transaction with Diageo to acquire their interest in D&G and GAPL, HEINEKEN sold its 20 per cent ownership in Heineken Ghanaian Holdings
B.V. on 7 October 2015. The disposal resulted in a non-cash exceptional gain of EUR7 million recognised in Other income.
89 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
7. Assets or disposal groups classifi ed as held for sale
The assets and liabilities below are classifi ed as held for sale following the commitment of HEINEKEN to a plan to sell these assets and liabilities. Eff orts to
sell the other assets and liabilities classifi ed as held for sale have commenced and are expected to be completed during 2016.
Assets and liabilities classifi ed as held for sale
In millions of EUR
Current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Assets classifi ed as held for sale
Current liabilities
Non-current liabilities
Liabilities classifi ed as held for sale
2015
53
67
–
3
123
(31)
–
(31)
2014
96
236
332
24
688
(103)
(75)
(178)
On 23 July 2015, Grupa Żywiec signed with Orbico Group a conditional agreement upon which Orbico Group will acquire 80 per cent of the shares in
Distribev Sp. z o.o (Grupa Żywiec’s sales and distribution company serving the traditional trade and horeca market). The enterprise value for an 80 per cent
stake amounted to PLN96 million (EUR23 million), and is subject to customary price adjustments. The assets and liabilities of Distribev were classifi ed as
assets held for sale as at 31 December 2015. Closing of the transaction occurred on 1 February 2016.
In 2014, the assets and liabilities held for sale mainly related to HEINEKEN’s packaging business EMPAQUE in Mexico. The sale was completed on
18 February 2015.
8. Other income
In millions of EUR
Gain on sale of property, plant and equipment
Gain on sale of subsidiaries, joint ventures and associates
2015
37
374
411
2014
41
52
93
Included in other income are the results of previously held equity interests in GAB and South African operations and the disposal gains in relation to
EMPAQUE and Ghana (refer to note 6).
9. Raw materials, consumables and services
In millions of EUR
Raw materials
Non-returnable packaging
Goods for resale
Inventory movements
Marketing and selling expenses
Transport expenses
Energy and water
Repair and maintenance
Other expenses
90 Heineken N.V. Annual Report 2015
2015
1,616
3,049
1,775
(141)
2,755
1,139
517
485
1,736
12,931
2014
1,782
2,551
1,495
(15)
2,447
1,050
548
458
1,737
12,053
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Other expenses mainly include rentals of EUR301 million (2014: EUR291 million), consultant expenses of EUR142 million (2014: EUR179 million), telecom
and offi ce automation of EUR206 million (2014: EUR199 million), distribution expenses of EUR135 million (2014: EUR122 million), travel expenses of
EUR151 million (2014: EUR143 million) and other taxes of EUR144 million (2014: EUR124 million).
10. Personnel expenses
In millions of EUR
Wages and salaries
Compulsory social security contributions
Contributions to defi ned contribution plans
Expenses/(income) related to defi ned benefi t plans
Expenses related to other long-term employee benefi ts
Equity-settled share-based payment plan
Other personnel expenses
Note
28
29
2015
2,178
346
47
78
3
33
637
3,322
2014
2,107
337
42
(31)
8
48
569
3,080
In other personnel expenses, restructuring costs are included for an amount of EUR90 million (2014: EUR101 million). In 2015, these costs are primarily
related to the restructuring of operations in the Netherlands, Poland and Portugal.
The average number of full-time equivalent (FTE) employees during the year was:
The Netherlands
Other Europe
Americas
Africa, Middle East and Eastern Europe
Asia Pacifi c
* 2014 numbers have been revised to refl ect the new regional segmentation.
11. Amortisation, depreciation and impairments
In millions of EUR
Property, plant and equipment
Intangible assets
2015
3,791
25,161
20,985
15,102
8,728
73,767
2015
1,222
372
1,594
2014*
3,897
24,739
22,610
16,212
8,678
76,136
2014
1,088
349
1,437
Note
14
15
91 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
12. Net fi nance income and expense
Recognised in profi t or loss
In millions of EUR
Interest income
Interest expenses
Dividend income from available-for-sale investments
Gain/(loss) on disposal of available-for-sale investments
Net change in fair value of derivatives
Net foreign exchange gain/(loss)
Unwinding discount on provisions
Interest on the net defi ned benefi t obligation
Other
Other net fi nance income/(expenses)
Net fi nance income/(expenses)
13. Income tax expense
Recognised in profi t or loss
In millions of EUR
Current tax expense
Current year
Under/(over) provided in prior years
Deferred tax expense
Origination and reversal of temporary diff erences
Previously unrecognised deductible temporary diff erences
Changes in tax rate
Utilisation/(benefi t) of tax losses recognised
Under/(over) provided in prior years
Total income tax expense in profi t or loss
2015
60
(412)
10
18
143
(179)
(3)
(44)
(2)
(57)
(409)
2015
799
(3)
796
(72)
(3)
20
(11)
(33)
(99)
697
2014
48
(457)
10
–
173
(205)
(5)
(49)
(3)
(79)
(488)
2014
666
(9)
657
21
(5)
10
32
17
75
732
Reconciliation of the eff ective tax rate
In millions of EUR
Profi t before income tax
Share of net profi t of associates and joint ventures and impairments thereof
Profi t before income tax excluding share of profi t of associates
and joint ventures (including impairments thereof)
2015
2,838
(172)
2,666
2014
2,440
(148)
2,292
92 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Income tax using the Company’s domestic tax rate
Eff ect of tax rates in foreign jurisdictions
Eff ect of non-deductible expenses
Eff ect of tax incentives and exempt income
Recognition of previously unrecognised temporary diff erences
Utilisation or recognition of previously unrecognised tax losses
Unrecognised current year tax losses
Eff ect of changes in tax rate
Withholding taxes
Under/(over) provided in prior years
Other reconciling items
%
25.0
2.1
4.2
(7.7)
(0.1)
(0.2)
0.8
0.8
1.9
(1.3)
0.7
26.2
2015
667
57
111
(205)
(3)
(4)
21
20
50
(36)
19
697
%
25.0
3.8
2.7
(4.0)
(0.2)
(0.1)
0.7
0.4
2.6
0.3
0.7
31.9
2014
573
87
61
(93)
(5)
(3)
17
10
60
8
17
732
The eff ective tax rate 2015 includes the gain on sale of EMPAQUE, which was tax exempt, while the eff ective tax rate 2014 included one-off tax items with
an overall negative tax impact. The line ‘eff ect of non-deductible expenses’ includes the impact of impairments for which no tax benefi t could be
recognised (refer to note 14).
Income tax recognised in other comprehensive income
In millions of EUR
Changes in fair value reserve
Changes in hedging reserve
Changes in translation reserve
Changes as a result of actuarial gains and losses
14. Property, plant and equipment
In millions of EUR
Cost
Balance as at 1 January 2014
Changes in consolidation
Purchases
Transfer of completed projects under construction
Transfer (to)/from assets classifi ed as held for sale
Disposals
Eff ect of movements in exchange rates
Balance as at 31 December 2014
Balance as at 1 January 2015
Changes in consolidation
Purchases
Transfer of completed projects under construction
Transfer (to)/from assets classifi ed as held for sale
Disposals
Eff ect of movements in exchange rates
Balance as at 31 December 2015
93 Heineken N.V. Annual Report 2015
Note
24
2015
(3)
14
77
(33)
55
Note
Land and
buildings
Plant and
equipment
Other
fi xed assets
Under
construction
4,934
9
83
91
(72)
(93)
37
4,989
4,989
256
84
240
(50)
(54)
15
5,480
6,905
2
279
383
(175)
(90)
1
7,305
7,305
280
99
607
(1)
(126)
(54)
8,110
4,616
1
471
149
7
(234)
41
5,051
5,051
132
428
206
(8)
(354)
(47)
5,408
705
–
686
(623)
(4)
(1)
30
793
793
22
1,029
(1,053)
–
(3)
–
788
2014
3
11
108
96
218
Total
17,160
12
1,519
–
(244)
(418)
109
18,138
18,138
690
1,640
–
(59)
(537)
(86)
19,786
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
14. Property, plant and equipment continued
In millions of EUR
Note
Land and
buildings
Plant and
equipment
Other
fi xed assets
Under
construction
Total
Depreciation and impairment losses
Balance as at 1 January 2014
Changes in consolidation
Depreciation charge for the year
Impairment losses
Transfer to/(from) assets classifi ed as held for sale
Disposals
Eff ect of movements in exchange rates
Balance as at 31 December 2014
Balance as at 1 January 2015
Changes in consolidation
Depreciation charge for the year
Impairment losses
Transfer to/(from) assets classifi ed as held for sale
Disposals
Eff ect of movements in exchange rates
Balance as at 31 December 2015
Carrying amount
As at 1 January 2014
As at 31 December 2014
As at 1 January 2015
As at 31 December 2015
11
11
11
11
(1,789)
4
(154)
(5)
2
30
6
(1,906)
(1,906)
(35)
(157)
(18)
14
29
(15)
(2,088)
3,145
3,083
3,083
3,392
(3,827)
11
(415)
(3)
42
79
14
(4,099)
(4,099)
(51)
(424)
(36)
–
136
22
(4,452)
3,078
3,206
3,206
3,658
(3,090)
3
(511)
–
(8)
210
(19)
(3,415)
(3,415)
(61)
(570)
(17)
5
332
32
(3,694)
1,526
1,636
1,636
1,714
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
705
793
793
788
(8,706)
18
(1,080)
(8)
36
319
1
(9,420)
(9,420)
(147)
(1,151)
(71)
19
497
39
(10,234)
8,454
8,718
8,718
9,552
Impairment losses
In 2015, a total impairment loss of EUR71 million (2014: EUR8 million) was charged to profi t or loss.
Due to diffi cult market circumstances, impairments of property, plant & equipment were recorded in Belgium (EUR26 million), Laos (EUR15 million) and
Tunisia (EUR33 million). These impairments have been recorded on the line ‘Amortisation, depreciation and impairments’ in the Income Statement. In
determining the recoverable amount of these assets the applied discount rates are 9.4 per cent for Belgium, based on a fair value less cost to sell valuation,
and 16.5 per cent for Laos and 12.2 per cent for Tunisia, based on value in use valuations. In the fair value less cost to sell valuation external beer market
development and infl ation assumptions were used in line with the goodwill impairment testing process.
Financial lease assets
HEINEKEN leases P, P & E under a number of fi nance lease agreements. At 31 December 2015, the net carrying amount of leased P, P & E was EUR15
million (2014: EUR15 million).
Security to authorities
Certain P, P & E amounting to EUR80 million (2014: EUR91 million) has been pledged to the authorities in a number of countries as security for the
payment of taxes, particularly import and excise duties on beers, non-alcoholic beverages and spirits. This mainly relates to the Netherlands and Brazil.
94 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Property, plant and equipment under construction
P, P & E under construction mainly relates to expansion of the brewing capacity in various countries.
Capitalised borrowing costs
During 2015, borrowing costs amounting to EUR3 million have been capitalised (2014: EUR5 million).
15. Intangible assets
Note
Goodwill
Brands
Customer-
related
intangibles
Contract-
based
intangibles
Software,
research and
development
and other
10,407
98
–
–
(259)
557
10,803
10,803
611
–
–
–
317
11,731
(391)
–
–
(16)
–
–
–
(407)
(407)
–
–
–
–
–
–
(407)
3,851
15
–
(2)
–
208
4,072
4,072
475
–
–
–
30
4,577
(359)
–
(98)
(2)
2
–
(5)
(462)
(462)
–
(108)
(3)
–
–
2
(571)
2,110
17
1
–
(85)
131
2,174
2,174
333
–
–
–
20
2,527
(511)
–
(147)
–
–
21
(13)
(650)
(650)
–
(165)
–
–
–
7
(808)
10,016
10,396
10,396
11,324
3,492
3,610
3,610
4,006
1,599
1,524
1,524
1,719
680
30
–
–
–
63
773
773
296
–
–
–
32
1,101
(71)
–
(43)
–
–
–
(29)
(143)
(143)
(1)
(44)
–
–
–
(14)
(202)
609
630
630
899
11
11
11
11
506
(47)
56
(2)
–
1
514
514
18
93
(18)
–
(2)
605
(288)
1
(43)
–
(1)
(1)
(1)
(333)
(333)
(1)
(51)
(1)
15
–
1
(370)
218
181
181
235
Total
17,554
113
57
(4)
(344)
960
18,336
18,336
1,733
93
(18)
–
397
20,541
(1,620)
1
(331)
(18)
1
20
(48)
(1,995)
(1,995)
(2)
(368)
(4)
15
–
(4)
(2,358)
15,934
16,341
16,341
18,183
In millions of EUR
Cost
Balance as at 1 January 2014
Changes in consolidation and other transfers
Purchased/internally developed
Disposals
Transfers to assets held for sale
Eff ect of movements in exchange rates
Balance as at 31 December 2014
Balance as at 1 January 2015
Changes in consolidation and other transfers
Purchased/internally developed
Disposals
Transfers to assets held for sale
Eff ect of movements in exchange rates
Balance as at 31 December 2015
Amortisation and impairment losses
Balance as at 1 January 2014
Changes in consolidation
Amortisation charge for the year
Impairment losses
Disposals
Transfers to assets held for sale
Eff ect of movements in exchange rates
Balance as at 31 December 2014
Balance as at 1 January 2015
Changes in consolidation
Amortisation charge for the year
Impairment losses
Disposals
Transfers to assets held for sale
Eff ect of movements in exchange rates
Balance as at 31 December 2015
Carrying amount
As at 1 January 2014
As at 31 December 2014
As at 1 January 2015
As at 31 December 2015
95 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
15. Intangible assets continued
Brands, customer-related and contract-based intangibles
The main brands capitalised are the brands acquired in various acquisitions such as Fosters, Strongbow, Dos Equis, Tiger and Bintang. The main customer-
related and contract-based intangibles relate to customer relationships with retailers in Mexico and Asia Pacifi c (constituted either by way of a contractual
agreement or by way of non-contractual relations) and reacquired rights.
Impairment tests for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill in respect of Europe, the Americas (excluding Brazil) and Asia Pacifi c is allocated and monitored on a
regional basis. For Brazil and subsidiaries within Africa, Middle East and Eastern Europe and Head Offi ce, goodwill is allocated and monitored on an
individual country basis.
The carrying amounts of goodwill allocated to each (group of) CGU(s) are as follows:
In millions of EUR
Europe
The Americas (excluding Brazil)
Brazil
Africa, Middle East and Eastern Europe (aggregated)
Asia Pacifi c
Head Offi ce
2015
5,060
2,124
62
508
3,090
480
11,324
2014*
4,876
1,862
83
491
2,604
480
10,396
* 2014 numbers have been revised to refl ect the new regional segmentation.
Throughout the year, goodwill increased mainly due to acquisitions and net foreign currency diff erences.
The recoverable amounts of the (group of) CGUs are based on value in use calculations. Value in use was determined by discounting the future cash fl ows
generated from the continuing use of the unit using a pre-tax discount rate.
The key assumptions used for the value in use calculations are as follows:
• Cash fl ows were projected based on actual operating results and the three-year business plan. Cash fl ows for a further seven-year period were
extrapolated using expected annual per country volume growth rates, which are based on external sources. Management believes that this forecast
period is justifi ed due to the long-term nature of the beer business and past experiences.
• The beer price growth per year after the fi rst three-year period is assumed to be at specifi c per country expected annual long-term infl ation, based on
external sources.
• Cash fl ows after the fi rst 10-year period were extrapolated using a perpetual growth rate equal to the expected annual long-term infl ation, in order to
calculate the terminal recoverable amount.
• A per CGU-specifi c pre-tax Weighted Average Cost of Capital (WACC) was applied in determining the recoverable amount of the units.
The values assigned to the key assumptions used for the value in use calculations are as follows:
In per cent
Europe
The Americas (excluding Brazil)
Brazil
Africa, Middle East and Eastern Europe
Asia Pacifi c
Head Offi ce
96 Heineken N.V. Annual Report 2015
Expected
annual
long-term
infl ation
2019-2025
1.8
3.1
4.8
3.0 – 8.9
4.5
1.8
Expected
volume
growth rates
2019-2025
0.6
2.0
2.0
1.7 – 8.5
3.3
0.6
Pre-tax WACC
9.4
13.5
14.1
12.4 – 24.7
14.1
9.4
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Sensitivity to changes in assumptions
The outcome of a sensitivity analysis of a 100 basis points adverse change in key assumptions (lower growth rates or higher discount rates respectively) did
not result in a materially diff erent outcome of the impairment test.
16. Investments in associates and joint ventures
HEINEKEN has interests in a number of individually insignifi cant joint ventures and associates.
Acquisition of 50 per cent stake in Lagunitas (US)
The acquisition of a 50 per cent shareholding in the Lagunitas Brewing Company was completed on 15 October 2015 and is accounted for as a joint
venture using the equity method.
Summarised fi nancial information for equity accounted joint ventures and associates
The following table includes, in aggregate, the carrying amount and HEINEKEN’s share of profi t and OCI of joint ventures and associates:
Joint ventures
Associates
In millions of EUR
Carrying amount of interests
Share of:
Profi t or loss from continuing operations
Other comprehensive income
17. Other investments and receivables
In millions of EUR
Non-current other investments and receivables
Available-for-sale investments
Non-current derivatives
Loans to customers
Loans to joint ventures and associates
Long-term prepayments
Held-to-maturity investments
Indemnifi cation receivable
Other receivables
Current other investments
Investments held for trading
2015
1,852
151
7
158
2014
1,964
135
(7)
128
Note
32
32
32
32
32
32
32
32
2015
133
21
–
21
2015
287
210
69
22
115
1
4
148
856
16
16
2014
69
13
–
13
2014
253
97
68
65
84
3
9
158
737
13
13
Eff ective interest rates on loans to customers range from 0.5 – 12 per cent.
The other receivables mainly originate from the acquisition of the beer operations of FEMSA and represent a receivable on the Brazilian authorities on
which interest is calculated in accordance with Brazilian legislation. Collection of this receivable is expected to be beyond a period of fi ve years.
HEINEKEN has interests in several entities where it has less than signifi cant infl uence. These are classifi ed as available-for-sale investments and valued
based on their share price when publicly listed. For investments that are not listed fair values are established using multiples. Debt securities (which are
interest-bearing) with a carrying amount of EUR15 million (2014: EUR14 million) are included in available-for-sale investments.
97 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Notes to the Consolidated Financial Statements continued
17. Other investments and receivables continued
Sensitivity analysis – equity price risk
As at 31 December 2015, an amount of EUR98 million (2014: EUR99 million) of available-for-sale investments and investments held for trading is listed
on stock exchanges. An increase or decrease of 1 per cent in the share price at the reporting date would not result in a material impact on HEINEKEN’s
fi nancial position.
18. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following items:
In millions of EUR
Property, plant and equipment
Intangible assets
Investments
Inventories
Loans and borrowings
Employee benefi ts
Provisions
Other items
Tax losses carry forward
Tax assets/(liabilities)
Set-off of tax
Net tax assets/(liabilities)
Assets
Liabilities
Net
2015
54
78
129
28
11
334
93
332
364
1,423
(465)
958
2014
80
83
131
20
1
366
112
288
177
1,258
(597)
661
2015
(607)
(1,507)
(5)
(2)
(23)
(3)
(42)
(134)
–
(2,323)
465
(1,858)
2014
(607)
(1,340)
(8)
(1)
(10)
(1)
(20)
(113)
–
(2,100)
597
(1,503)
2015
(553)
(1,429)
124
26
(12)
331
51
198
364
(900)
–
(900)
2014
(527)
(1,257)
123
19
(9)
365
92
175
177
(842)
–
(842)
Of the total net deferred tax assets of EUR958 million as at 31 December 2015 (2014: EUR661 million), EUR363 million (2014: EUR196 million) is
recognised in respect of subsidiaries in various countries where there have been tax losses in the current or preceding period. Management’s projections
support the assumption that it is probable that the results of future operations will generate suffi cient taxable income to utilise these deferred tax assets.
Tax losses carry forward
HEINEKEN has tax losses carry forward for an amount of EUR2,363 million as at 31 December 2015 (2014: EUR1,493 million), which expire in the
following years:
In millions of EUR
2015
2016
2017
2018
2019
2020
After 2020 respectively 2019 but not unlimited
Unlimited
Recognised as deferred tax assets gross
Unrecognised
2015
–
24
26
57
16
11
513
1,716
2,363
(1,564)
799
2014
30
40
14
33
51
–
277
1,048
1,493
(786)
707
The unrecognised losses relate to entities for which it is not probable that taxable profi t will be available to off set these losses. The increase in available tax
losses, compared to 2014, is driven by acquisitions in 2015.
98 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Movement in deferred tax balances during the year
In millions of EUR
Property, plant and equipment
Intangible assets
Investments
Inventories
Loans and borrowings
Employee benefi ts
Provisions
Other items
Tax losses carry forward
Net tax assets/(liabilities)
In millions of EUR
Property, plant and equipment
Intangible assets
Investments
Inventories
Loans and borrowings
Employee benefi ts
Provisions
Other items
Tax losses carry forward
Net tax assets/(liabilities)
19. Inventories
In millions of EUR
Raw materials
Work in progress
Finished products
Goods for resale
Non-returnable packaging
Other inventories and spare parts
Balance
1 January
2015
(527)
(1,257)
123
19
(9)
365
92
175
177
(842)
Balance
1 January
2014
(536)
(1,234)
119
19
1
315
101
59
220
(936)
Eff ect of
movements in
foreign
exchange
23
(3)
(7)
–
(13)
4
1
93
(14)
84
Eff ect of
movements in
foreign
exchange
9
(79)
1
–
(11)
7
2
98
(5)
22
Changes in
consolidation
(54)
(261)
7
(4)
–
–
2
(12)
125
(197)
Changes in
consolidation
–
(2)
–
–
–
–
–
–
(2)
(4)
Recognised
in income
6
91
2
10
1
(7)
(25)
10
11
99
Recognised
in income
(22)
40
1
–
(1)
(36)
(4)
(21)
(32)
(75)
Recognised
in equity
–
–
1
–
6
(33)
–
1
–
(25)
Recognised
in equity
–
–
–
–
–
96
–
14
–
110
Balance
31 December
2015
(553)
(1,429)
124
26
(12)
331
51
198
364
(900)
Balance
31 December
2014
(527)
(1,257)
123
19
(9)
365
92
175
177
(842)
2014
297
181
398
240
166
352
1,634
Transfers
(1)
1
(2)
1
3
2
(19)
(69)
65
(19)
Transfers
22
18
2
–
2
(17)
(7)
25
(4)
41
2015
247
223
479
197
195
361
1,702
During 2015 inventories were written down by EUR23 million to net realisable value (2014: nil).
99 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
20. Trade and other receivables
In millions of EUR
Trade receivables
Other receivables
Trade receivables due from associates and joint ventures
Derivatives
Note
32
2015
2,169
625
27
52
2,873
2014
2,017
580
24
122
2,743
A net impairment loss of EUR61 million (2014: EUR19 million) in respect of trade and other receivables was included in expenses for raw materials,
consumables and services.
21. Cash and cash equivalents
In millions of EUR
Cash and cash equivalents
Bank overdrafts and commercial papers
Cash and cash equivalents in the statement of cash fl ows
Note
32
25
2015
824
(542)
282
2014
668
(595)
73
HEINEKEN has a global cash pooling programme in place and reports net amounts in the statement of fi nancial position. Cash and bank overdrafts
subject to off set-arrangements under this programme have been netted for EUR1,962 million (2014: EUR1,910 million).
22. Capital and reserves
Share capital
As at 31 December 2015, the issued share capital comprised 576,002,613 ordinary shares (2014: 576,002,613). The ordinary shares have a par value of
EUR1.60. All issued shares are fully paid. The share capital as at 31 December 2015 amounted to EUR922 million (2014: EUR922 million).
The Company’s authorised capital amounts to EUR2,500 million, consisting of 1,562,500,000 shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the
Company. In respect of the Company’s shares that are held by HEINEKEN, rights are suspended.
During 2015, HEINEKEN purchased 5,229,279 shares for a total consideration of EUR365 million following the completion of the divestment of EMPAQUE
in February 2015. These shares have not been cancelled. As announced in the Q3 trading update, the share buy back plan was discontinued in light of the
acquisitions mentioned in note 6.
Share premium
As at 31 December 2015, the share premium amounted to EUR2,701 million (2014: EUR2,701 million).
Translation reserve
The translation reserve comprises foreign currency diff erences arising from the translation of the fi nancial statements of foreign operations of HEINEKEN
(excluding amounts attributable to non-controlling interests) as well as value changes of the hedging instruments in the net investment hedges. HEINEKEN
considers this a legal reserve.
Hedging reserve
This reserve comprises the eff ective portion of the cumulative net change in the fair value of cash fl ow hedging instruments where the hedged transaction
has not yet occurred. HEINEKEN considers this a legal reserve.
100 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Fair value reserve
This reserve comprises the cumulative net change in the fair value of available-for-sale investments until the investment is derecognised or impaired.
HEINEKEN considers this a legal reserve.
Other legal reserves
These reserves relate to the share of profi t of joint ventures and associates over the distribution of which HEINEKEN does not have control. The movement
in these reserves refl ects retained earnings of joint ventures and associates minus dividends received. In case of a legal or other restriction which means
that retained earnings of subsidiaries cannot be freely distributed, a legal reserve is recognised for the restricted part.
Reserve for own shares
The reserve for the Company’s own shares comprises the cost of the Company’s shares held by HEINEKEN. As at 31 December 2015, HEINEKEN held
6,318,958 of the Company’s shares (2014: 1,395,435).
LTV
During the period from 1 January to 31 December 2015, HEINEKEN acquired 270,000 shares for an amount of EUR19 million for delivery against LTV
and other share-based payment plans.
Dividends
The following dividends were declared and paid by HEINEKEN:
In millions of EUR
Final dividend previous year EUR0.74, respectively EUR0.53 per qualifying ordinary share
Interim dividend current year EUR0.44, respectively EUR0.36 per qualifying ordinary share
Total dividend declared and paid
2015
425
251
676
2014
305
207
512
As announced at the AGM of 21 April 2015, HEINEKEN widened the payout ratio for its annual dividend from 30-35 per cent to 30-40 per cent of net profi t
(beia). For 2015, a payment of a total cash dividend of EUR1.30 per share (2014: EUR1.10) will be proposed at the AGM. If approved, a fi nal dividend
of EUR0.86 per share will be paid on 4 May 2016, as an interim dividend of EUR0.44 per share was paid on 12 August 2015. The payment will be subject
to 15 per cent Dutch withholding tax.
After the balance sheet date, the Executive Board proposed the following dividends. The dividends, taking into account the interim dividends declared and
paid, have not been provided for.
In millions of EUR
Per qualifying ordinary share EUR1.30 (2014: EUR1.10)
2015
741
2014
632
Non-controlling interests
The non-controlling interests (NCI) relate to minority stakes held by third parties in HEINEKEN consolidated subsidiaries. The total non-controlling interest
as at 31 December 2015 amounted to EUR1,535 million (2014: EUR1,043 million). Refer to note 36 for the disclosure of material NCIs.
101 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
23. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the period ended 31 December 2015 is based on the profi t attributable to ordinary shareholders of the
Company (net profi t) of EUR1,892 million (2014: EUR1,516 million) and a weighted average number of ordinary shares – basic outstanding during the
year ended 31 December 2015 of 572,292,454 (2014: 574,945,645). Basic earnings per share for the year amounted to EUR3.31 (2014: EUR2.64).
Diluted earnings per share
The calculation of diluted earnings per share for the period ended 31 December 2015 is based on the profi t attributable to ordinary shareholders of
the Company (net profi t) of EUR1,892 million (2014: EUR1,516 million) and a weighted average number of ordinary shares – basic outstanding after
adjustment for the dilutive eff ect of share based payment plan obligations of 572,944,188 (2014: 576,002,613). Diluted earnings per share for the
year amounted to EUR3.30 (2014: EUR2.63).
Weighted average number of shares – basic and diluted
Total number of shares issued
Eff ect of own shares held
Weighted average number of basic shares for the year
Dilutive eff ect of share based payment plan obligations
Weighted average number of diluted shares for the year
24. Income tax on other comprehensive income
In millions of EUR
Other comprehensive income
Actuarial gains and losses
Currency translation diff erences
Recycling of currency translation diff erences
to profi t or loss
Eff ective portion of net investment hedges
Eff ective portion of changes in fair value
of cash fl ow hedges
Eff ective portion of cash fl ow hedges transferred
to profi t or loss
Net change in fair value available-for-sale investments
Recycling of fair value of available-for-sale investments to
profi t or loss
Share of other comprehensive income
of associates/joint ventures
2015
576,002,613
(3,710,159)
572,292,454
651,734
572,944,188
2014
576,002,613
(1,056,968)
574,945,645
1,056,968
576,002,613
Amount
before tax
128
(120)
129
15
(3)
36
46
(16)
7
222
2015
Amount
net of tax
Amount
before tax
95
(43)
129
15
23
24
43
(16)
7
277
(440)
590
–
(6)
(108)
(5)
(4)
–
(7)
20
Tax
(33)
77
–
–
26
(12)
(3)
–
–
55
2014
Amount
net of tax
(344)
697
–
(5)
(99)
(3)
(1)
–
(7)
238
Tax
96
107
–
1
9
2
3
–
–
218
102 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
25. Loans and borrowings
This note provides information about the contractual terms of HEINEKEN’s interest-bearing loans and borrowings. For more information about HEINEKEN’s
exposure to interest rate risk and foreign currency risk, refer to note 32.
Non-current liabilities
In millions of EUR
Unsecured bond issues
Unsecured bank loans
Secured bank loans
Finance lease liabilities
Other non-current interest-bearing liabilities
Non-current interest-bearing liabilities
Non-current derivatives
Non-current liabilities
Current interest-bearing liabilities
In millions of EUR
Current portion of unsecured bonds issued
Current portion of unsecured bank loans
Current portion of secured bank loans
Current portion of fi nance lease liabilities
Current portion of other non-current interest-bearing liabilities
Total current portion of non-current interest-bearing liabilities
Deposits from third parties (mainly employee loans)
Bank overdrafts and commercial papers
Current interest-bearing liabilities
Note
26
Note
26
21
2015
9,269
126
38
10
1,183
10,626
32
10,658
2015
400
354
8
5
35
802
595
1,397
542
1,939
2014
7,802
481
45
10
1,153
9,491
8
9,499
2014
967
3
11
5
121
1,107
564
1,671
595
2,266
103 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
25. Loans and borrowings continued
Net interest-bearing debt position
In millions of EUR
Non-current interest-bearing liabilities
Current portion of non-current interest-bearing liabilities
Deposits from third parties (mainly employee loans)
Bank overdrafts and commercial papers
Market value of cross-currency interest rate swaps
Cash, cash equivalents and current other investments
Net interest-bearing debt position
1 Restated to refl ect the revised net debt defi nition.
Note
21
32
17/21
2015
10,626
802
595
12,023
542
(215)
12,350
(840)
11,510
20141
9,491
1,107
564
11,162
595
(166)
11,591
(681)
10,910
HEINEKEN has amended its net debt defi nition to include derivative fi nancial instruments designated as cash fl ow hedges if these hedges are considered
to be inextricably linked to the underlying borrowings because they are used to mitigate the foreign currency exchange risk arising from foreign currency
borrowings. The change in this defi nition has resulted in a reduction in net debt of EUR215 million at 31 December 2015 (2014: EUR166 million).
Non-current liabilities
In millions of EUR
Balance as at 1 January 2015
Consolidation changes
Eff ect of movements in
exchange rates
Transfers to current liabilities
Charge to/(from) equity in relation
to derivatives
Proceeds
Repayments
Other
Balance as at 31 December 2015
Unsecured
bond issues
7,802
–
Unsecured
bank loans
481
133
Secured
bank loans
45
–
3
(390)
(69)
1,510
(10)
423
9,269
(26)
(364)
–
180
(278)
–
126
–
(4)
–
1
–
(4)
38
Other
non-current
interest-
bearing
liabilities
1,153
–
Finance
lease
liabilities
10
2
Non-
current
derivatives
8
–
–
(3)
–
1
(1)
1
10
(1)
(55)
100
9
(45)
22
1,183
(2)
(81)
24
827
(684)
(60)
32
Non-
current
non-
interest-
bearing
liabilities
–
–
(3)
(3)
–
2
(6)
10
–
Total
9,499
135
(29)
(900)
55
2,530
(1,024)
392
10,658
104 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Terms and debt repayment schedule
Terms and conditions of outstanding non-current and current loans and borrowings were as follows:
In millions of EUR
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Category
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under APB MTN
programme
issue under 144A/
RegS
issue under 144A/
RegS
Nominal
interest
rate %
Repayment
Carrying
amount
2015
Face value
2015
Carrying
amount
2014
Face value
2014
Currency
GBP
SGD
EUR
SGD
EUR
SGD
USD
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
7.3
2.7
4.6
1.5
1.3
2.2
1.3
2.5
2.1
2.0
1.3
3.3
1.7
3.5
1.5
2.9
2.0
3.5
3.3
2.6
3.5
SGD
3.0 – 4.0
USD
USD
0.8
1.4
2015
2015
2016
2017
2018
2018
2019
2019
2020
2021
2021
2022
2023
2024
2024
2025
2025
2029
2033
2033
2043
2020
– 2022
2015
–
–
400
64
100
62
183
845
997
497
497
183
140
497
454
742
224
199
179
91
75
25
–
–
–
400
65
100
62
184
850
1,000
500
500
184
140
500
460
750
225
200
180
100
75
25
–
508
47
399
61
99
59
164
844
996
497
–
–
–
497
–
741
–
199
179
91
75
24
411
508
47
400
62
100
59
165
850
1,000
500
–
–
–
500
–
750
–
200
180
100
75
24
412
2017
1,146
1,148
1,026
1,030
105 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
25. Loans and borrowings continued
In millions of EUR
Category
Currency
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bank loans
Unsecured bank loans
Unsecured bank loans
issue under 144A/
RegS
issue under 144A/
RegS
issue under 144A/
RegS
n.a.
bank facilities
bank facilities
German Schuldschein
notes
Unsecured bank loans
bank facilities
Repayment
Carrying
amount
2015
Face value
2015
Carrying
amount
2014
Face value
2014
Nominal
interest
rate %
3.4
2.8
4.0
3.5 – 4.5
4.8
15 – 17
USD
USD
USD
EUR
EUR
NGN
EUR
1.8 – 6.2
MYR
USD,
RWF
ZAR
PGK
various
GBP
HTG
ETB
various
3.5 – 4.5
4.5 – 13.5
8.0
4.7
various
1.8
8.5
10.0
various
USD
GBP
USD
GBP
USD
USD
5.9
7.3
2.8
7.2
4.6
6.3
2022
2023
2042
2020
2016
2016
2016
2016
– 2017
2017
– 2020
2018
2019
various
2016
2020
2021
various
2015
2016
2017
2018
2018
2018
685
915
450
19
207
14
111
19
17
71
38
3
6
13
22
5
–
34
83
44
665
357
17
18
689
919
459
19
207
16
111
19
17
71
38
3
6
14
22
5
–
34
83
44
666
358
17
18
614
819
402
17
207
121
110
–
–
–
35
11
8
16
20
12
43
32
74
41
597
321
150
16
618
824
412
17
207
121
111
–
–
–
35
11
8
16
20
12
43
32
74
41
597
321
150
16
595
15
12,023
595
15
12,093
564
15
11,162
564
15
11,227
facilities from JVs
EUR
various
various
various
various
various
various
n.a.
n.a.
various
various
various
various
various
various
bank facilities
bank facilities
bank facilities
various
bank facilities
bank facilities
bank facilities
various
2008 US private
placement
2011 US private
placement
2008 US private
placement
2008 US private
placement
2010 US private
placement
2008 US private
placement
Unsecured bank loans
Unsecured bank loans
Unsecured bank loans
Unsecured bank loans
Secured bank loans
Secured bank loans
Secured bank loans
Secured bank loans
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Deposits from third
parties
Finance lease liabilities
106 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Financing headroom1
As at 31 December 2015, no amounts were drawn on the existing revolving credit facility of EUR2,500 million. This revolving credit facility was extended by
one year and matures now in 2020. The committed fi nancing headroom at Group level was EUR2,333 million as at 31 December 2015 and consisted of an
undrawn revolving credit facility and centrally available cash, minus commercial paper in issue at Group level.
Incurrence covenant1
HEINEKEN has an incurrence covenant in some of its fi nancing facilities. This incurrence covenant is calculated by dividing net debt (excluding the market
value of cross-currency interest rate swaps) by EBITDA (beia) (both based on proportional consolidation of joint ventures and including acquisitions made
in 2015 on a pro-forma basis). As at 31 December 2015 this ratio was 2.4 (2014: 2.4). If the ratio would be beyond a level of 3.5, the incurrence covenant
would prevent HEINEKEN from conducting further signifi cant debt fi nanced acquisitions.
1 Non-GAAP measures: unaudited
26. Finance lease liabilities
Finance lease liabilities are payable as follows:
In millions of EUR
Less than one year
Between one and fi ve years
More than fi ve years
Future
minimum
lease
payments
2015
5
9
1
15
Present
value of
minimum
lease
payments
2015
5
9
1
15
Future
minimum
lease
payments
2014
5
8
2
15
Present
value of
minimum
lease
payments
2014
5
8
2
15
Interest
2014
–
–
–
–
Interest
2015
–
–
–
–
27. Non-GAAP measures
In the internal management reports, HEINEKEN measures its performance primarily based on EBIT and EBIT beia (before exceptional items and
amortisation of acquisition-related intangible assets). Both are non-GAAP measures not calculated in accordance with IFRS. Exceptional items are defi ned
as items of income and expense of such size, nature or incidence, that in the view of management their disclosure is relevant to explain the performance of
HEINEKEN for the period. Beia adjustments are also applied on operating profi t and net profi t metrics.
The table below presents the relationship between IFRS measures, being results from operating activities and net profi t, and HEINEKEN non-GAAP
measures, being EBIT, EBIT (beia), operating profi t (beia) and net profi t (beia).
In millions of EUR
Results from operating activities
Share of profi t of associates and joint ventures and impairments thereof (net of income tax)
EBIT
Exceptional items and amortisation of acquisition-related intangible assets included in EBIT
EBIT (beia)
Share of profi t of associates and joint ventures and impairments thereof (beia)
(net of income tax)
Operating profi t (beia)
Profi t attributable to equity holders of the Company (net profi t)
Exceptional items and amortisation of acquisition-related intangible assets included in EBIT
Exceptional items included in fi nance costs
Exceptional items included in income tax expense
Exceptional items included in non-controlling interest
Net profi t (beia)
1 Unaudited.
107 Heineken N.V. Annual Report 2015
20151
3,075
172
3,247
311
3,558
(177)
3,381
1,892
311
(18)
(124)
(13)
2,048
20141
2,780
148
2,928
340
3,268
(139)
3,129
1,516
340
(1)
(52)
(45)
1,758
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
27. Non-GAAP measures continued
The 2015 exceptional items included in EBIT contain the amortisation of acquisition-related intangibles for EUR321 million (2014:EUR291 million), the
disposal gain for EMPAQUE of EUR379 million, restructuring expenses of EUR106 million (2014: EUR111 million) and the impairment of intangible assets
and P, P & E of EUR78 million (2014: EUR21 million). Additional exceptional items included in EBIT are the write down of assets and recording of provisions
in DRC and Rwanda for an amount of EUR79 million and the combined loss on the Previously Held Equity Interests of GAB, DHN and Sedibeng of
EUR19 million.
The revaluation of the existing stake in D&G of EUR18 million resulted in an exceptional item in fi nance costs. The exceptional items in income tax
expense include the tax impact on amortisation of acquisition-related intangible assets of EUR75 million (2014: EUR72 million) and the tax impact
on other exceptional items included in EBIT and fi nance costs of EUR58 million (2014: EUR6 million). These items are partly off set by exceptional
income tax items with a negative impact amounting to EUR9 million (2014: EUR26 million negative impact).
EBIT and EBIT (beia) are not fi nancial measures calculated in accordance with IFRS. The presentation of these fi nancial measures may not be comparable
to similarly titled measures reported by other companies due to diff erences in the ways the measures are calculated.
28. Employee benefi ts
In millions of EUR
Present value of unfunded defi ned benefi t obligations
Present value of funded defi ned benefi t obligations
Total present value of defi ned benefi t obligations
Fair value of defi ned benefi t plan assets
Present value of net obligations
Asset ceiling items
Recognised liability for defi ned benefi t obligations
Other long-term employee benefi ts
2015
329
8,544
8,873
(7,661)
1,212
4
1,216
73
1,289
2014
358
8,551
8,909
(7,547)
1,362
2
1,364
79
1,443
HEINEKEN makes contributions to defi ned benefi t plans that provide pension benefi ts for employees upon retirement in a number of countries. The
defi ned benefi t plans in the Netherlands and the UK combined cover 88.4 per cent of the total defi ned benefi t plan assets (2014: 88.6 per cent), 83.9 per
cent of the present value of the defi ned benefi t obligations (2014: 83.0 per cent) and 55.2 per cent of the present value of net obligations (2014: 52.1 per
cent) as at 31 December 2015.
HEINEKEN provides employees in the Netherlands with an average pay pension plan based on earnings up to the legal tax limit. Indexation of accrued
benefi ts is conditional on the funded status of the pension fund. HEINEKEN pays contributions to the fund up to a maximum level agreed with the Board
of the pension fund and has no obligation to make additional contributions in case of a funding defi cit. In 2015, HEINEKEN’s cash contribution to the
Dutch pension plan was at the maximum level. The same level is expected to be paid in 2016.
HEINEKEN’s UK plan (Scottish & Newcastle pension plan ‘SNPP’) was closed to future accrual in 2010 and the liabilities thus relate to past service before
plan closure. Based on the triennial review fi nalised in early 2013, HEINEKEN has agreed a 10-year funding plan including base Company contributions of
GBP21 million per year, with a further Company contribution of between GBP15 million and GBP40 million per year, contingent on the funding level of the
pension fund. As at 31 December 2015, the IAS 19 present value of the net obligations of SNPP represents a GBP369 million (EUR502 million) defi cit. No
additional liability has to be recognised as the net present value of the minimum funding requirement does not exceed the net obligation. The next
triennial review will take place in 2016.
Other countries where HEINEKEN off ers a defi ned benefi t plan to (former) employees include: Austria (closed in 2007 to new entrants), Belgium, Greece
(closed in 2014 to new entrants), Ireland (closed in 2012 to all future accrual), Jamaica, Mexico (plan changed to hybrid defi ned contribution for majority
of employees in 2014), Nigeria (closed to new entrants in 2007), Portugal, Spain (closed to management in 2010) and Switzerland.
The vast majority of benefi t payments are from pension funds that are held in trusts (or equivalent); however, there is a small portion where HEINEKEN
meets the benefi t payment obligation as it falls due. Plan assets held in trusts are governed by Trustee Boards composed of HEINEKEN representatives and
independent and/or member representation, in accordance with local regulations and practice in each country. The relationship and division of
responsibility between HEINEKEN and the Trustee Board (or equivalent) including investment decisions and contribution schedules are carried out in
accordance with the plan’s regulations.
108 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
In other countries, retirement benefi ts are provided to employees via defi ned contribution plans.
Other long-term employee benefi ts mainly relate to long-term bonus plans, termination benefi ts, medical plans and jubilee benefi ts.
Movement in net defi ned benefi t obligation
The movement in the net defi ned benefi t obligation over the year is as follows:
Present value of
defi ned benefi t obligations
Fair value of defi ned
benefi t plan assets
Present value
of net obligations
Note
2015
8,909
2014
7,674
2015
(7,547)
2014
(6,553)
2015
1,362
10
12
83
(9)
–
(2)
72
258
330
(62)
(191)
(41)
–
259
(35)
75
(103)
–
(7)
(35)
326
291
12
1,185
(112)
–
–
6
–
6
(214)
(208)
–
–
–
–
166
257
1,342
(236)
(70)
–
–
4
–
4
(277)
(273)
–
–
–
(645)
(225)
(870)
2014
1,121
75
(103)
4
(7)
(31)
49
18
12
1,185
(112)
83
(9)
6
(2)
78
44
122
(62)
(191)
(41)
166
(645)
23
(105)
32
472
13
(86)
–
32
13
(54)
–
26
(370)
(331)
8,873
–
26
(338)
(398)
8,909
(180)
(26)
370
164
(7,661)
(195)
(26)
338
149
(7,547)
(180)
–
–
(167)
1,212
(195)
–
–
(249)
1,362
In millions of EUR
Balance as at 1 January
Included in profi t or loss
Current service cost
Past service cost/(credit)
Administration expense
Eff ect of any settlement
Expense recognised
in personnel expenses
Interest expense/(income)
Included in OCI
Remeasurement loss/(gain):
Actuarial loss/(gain) arising from
Demographic assumptions
Financial assumptions
Experience adjustments
Return on plan assets
excluding interest income
Eff ect of movements
in exchange rates
Other
Changes in consolidation
and reclassifi cation
Contributions paid:
By the employer
By the plan participants
Benefi ts paid
Balance as at 31 December
109 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
28. Employee benefi ts continued
Defi ned benefi t plan assets
In millions of EUR
Equity instruments:
Europe
Northern America
Japan
Asia other
Other
Debt instruments:
Corporate bonds – investment grade
Corporate bonds – non-investment grade
Derivatives
Properties and real estate
Cash and cash equivalents
Investment funds
Other plan assets
Balance as at 31 December
* Revised.
Quoted
Unquoted
746
511
212
153
249
1,871
2,791
131
2,922
16
253
195
1,219
4
1,687
6,480
–
–
–
–
1
1
1,355
178
1,533
(1,229)
267
47
292
270
(353)
1,181
2015
Total
746
511
212
153
250
1,872
4,146
309
4,455
(1,213)
520
242
1,511
274
1,334
7,661
Quoted
Unquoted
766
716
207
234
253
2,176
2,551
133
2,684
5
281
206
923
199
1,614
6,474
–
–
–
–
1
1
1,253
146
1,399
(924)
212
15
309
61
(327)
1,073
2014*
Total
766
716
207
234
254
2,177
3,804
279
4,083
(919)
493
221
1,232
260
1,287
7,547
The HEINEKEN pension funds monitor the mix of debt and equity securities in their investment portfolios based on market expectations. Material
investments within the portfolio are managed on an individual basis. Through its defi ned benefi t pension plans, HEINEKEN is exposed to a number of risks,
the most signifi cant which are detailed below:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this yield, this will create a
defi cit. Both the Netherlands and the UK plans hold a signifi cant proportion of equities, which are expected to outperform corporate bonds in the long
term, while providing volatility and risk in the short term.
In the Netherlands, an Asset-Liability Matching (ALM) study is performed at least on a triennial basis. The ALM study is the basis for the strategic
investment policies and the (long-term) strategic investment mix. This resulted in a strategic asset mix comprising 38 per cent equity securities, 40 per cent
bonds, 7 per cent property and real estate and 15 per cent other investments. The objective is to hedge currency risk on the US dollar, Japanese yen and
British pound for 50 per cent of the equity exposure in the strategic investment mix.
In the UK, an Asset-Liability Matching study is performed at least on a triennial basis. The ALM study is the basis for the strategic investment policies and
the (long-term) strategic investment mix. This resulted in a strategic asset mix comprising 29 per cent equity securities (including synthetic exposure from
derivatives), 35 per cent bonds (including synthetic exposure from derivatives), 5 per cent property and real estate and 31 per cent other investments. The
objective is to hedge currency risk on developed non-GBP equity market exposures for 70 per cent, with US dollar currency risk on other investments
hedged 100 per cent in the strategic investment mix.
Interest rate risk
A decrease in corporate bond yields will increase plan liabilities, although this will be partially off set by an increase in the value of the plans’ bond holdings.
In the Netherlands, interest rate risk is partly managed through fi xed income investments. These investments match the liabilities for 22.7 per cent (2014:
20.1 per cent). In the UK, interest rate risk is partly managed through the use of a mixture of fi xed income investments and interest rate swap instruments.
These investments and instruments match the liabilities for 24.7 per cent (2014: 24.7 per cent).
110 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Infl ation risk
Some of the pension obligations are linked to infl ation. Higher infl ation will lead to higher liabilities, although in most cases caps on the level of infl ationary
increases are in place to protect the plan against extreme infl ation. The majority of the plan assets are either unaff ected by or loosely correlated with
infl ation, meaning that an increase in infl ation will increase the defi cit.
HEINEKEN provides employees in the Netherlands with an average pay pension plan, whereby indexation of accrued benefi ts is conditional on the funded
status of the pension fund. In the UK, infl ation sensitivity is based on capped Consumer Price Infl ation for deferred members and capped Retail Price
Infl ation for pensions in payment.
Life expectancy
The majority of the plans’ obligations are to provide benefi ts for the life of the member, so increases in life expectancy will result in an increase in the plans’
liabilities. This is particularly signifi cant in the UK plan, where infl ation-linked increases result in higher sensitivity to changes in life expectancy. In 2015, the
Trustee of SNPP implemented a longevity hedge to remove the risk of a higher increase in life expectancy than anticipated for current pensioners.
Principal actuarial assumptions as at the balance sheet date
Based on the signifi cance of the Dutch and UK pension plans compared with the other plans, the table below only includes the major actuarial
assumptions for those two plans as at 31 December:
The Netherlands
UK*
In per cent
Discount rate as at 31 December
Future salary increases
Future pension increases
2015
2.3
2.0
0.9
* The UK plan closed for future accrual, leading to certain assumptions being equal to zero.
For the other defi ned benefi t plans, the following actuarial assumptions apply at 31 December:
In per cent
Discount rate as at 31 December
Future salary increases
Future pension increases
Medical cost trend rate
Europe
Americas
2015
0.8 – 2.3
0.0 – 3.5
0.0 – 1.2
0.0 – 4.5
2014
1.0 – 1.9
0.0 – 3.5
0.0 – 1.8
0.0 – 4.5
2015
7.0
4.5
3.5
5.1
2014
1.8
2.0
0.3
2014
7.3
4.5
3.5
5.1
2015
3.9
–
3.0
2014
3.6
–
2.9
Africa, Middle East
& Eastern Europe
2015
12.0
7.5
3.0
4.5
2014
15.0
8.4
3.2
6.8
Assumptions regarding future mortality rates are based on published statistics and mortality tables. For the Netherlands, the rates are obtained from the
‘AG-Prognosetafel 2014’, fully generational. Correction factors from Towers Watson are applied on these rates. For the UK, the rates are obtained from the
Continuous Mortality Investigation 2011 projection model.
The weighted average duration of the defi ned benefi t obligation at the end of the reporting period is 18 years.
HEINEKEN expects the 2016 contributions to be paid for the defi ned benefi t plans to be in line with 2015.
111 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
28. Employee benefi ts continued
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have aff ected
the defi ned benefi t obligation by the amounts shown below:
Eff ect in millions of EUR
Discount rate (0.5% movement)
Future salary growth (0.25% movement)
Future pension growth (0.25% movement)
Medical cost trend rate (0.5% movement)
Life expectancy (1 year)
31 December 2015
31 December 2014
Increase in
assumption
(677)
21
300
6
287
Decrease in
assumption
771
(20)
(292)
(5)
(290)
Increase in
assumption
(721)
45
301
5
285
Decrease in
assumption
825
(44)
(265)
(5)
(287)
Although the analysis does not take account of the full distribution of cash fl ows expected under the plan, it does provide an approximation of the
sensitivity of the assumptions shown.
29. Share-based payments – Long-Term Variable Award
HEINEKEN has a performance-based share plan (Long-Term Variable award (LTV)) for the Executive Board and senior management. Under this LTV plan,
share rights are conditionally awarded to incumbents on an annual basis. The vesting of these rights is subject to the performance of Heineken N.V. on
specifi c internal performance conditions and continued service over a three-year period.
The performance conditions for LTV 2013-2015, LTV 2014-2016 and LTV 2015-2017 are the same for the Executive Board and senior management and
comprise solely of internal fi nancial measures, being Organic Revenue Growth (Organic Gross Profi t beia growth up to LTV 2013-2015), Organic EBIT beia
growth, Earnings Per Share (EPS) beia growth and Free Operating Cash Flow. Essentially, the performance targets are also the same for the Executive Board
and senior management, although for LTV 2013-2015 the performance conditions for the Executive Board have been set at a higher target level as a result
of the recalibration that took place at the end of 2013.
At target performance, 100 per cent of the awarded share rights vest. At threshold performance, 50 per cent of the awarded share rights vest. At maximum
performance, 200 per cent of the awarded share rights vest for the Executive Board as well as senior managers contracted by the US, Mexico, Brazil and
Singapore, and 175 per cent vest for all other senior managers.
The performance period for the aforementioned plans are:
LTV
2013-2015
2014-2016
2015-2017
Performance period start
1 January 2013
1 January 2014
1 January 2015
Performance period end
31 December 2015
31 December 2016
31 December 2017
The vesting date for the Executive Board is shortly after the publication of the annual results of 2015, 2016 and 2017 respectively and for senior
management on 1 April 2016, 2017 and 2018 respectively.
As HEINEKEN will withhold the tax related to vesting on behalf of the individual employees, the number of Heineken N.V. shares to be received will be a net
number. The share rights are not dividend-bearing during the performance period. The fair value has been adjusted for expected dividends by applying a
discount based on the dividend policy and historical dividend payouts, during the vesting period.
112 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
The terms and conditions of the share rights granted are as follows:
Grant date/employees entitled
Share rights granted to Executive Board in 2013
Share rights granted to senior management in 2013
Share rights granted to Executive Board in 2014
Share rights granted to senior management in 2014
Share rights granted to Executive Board in 2015
Share rights granted to senior management in 2015
Number*
50,278
560,863
51,702
597,744
54,903
534,298
Based on
share price
50.47
50.47
49.08
49.08
58.95
58.95
* The number of shares is based on at target payout performance (100 per cent).
Under the LTV 2012-2014, a total of 87,438 (gross) shares vested for the Executive Board and 796,904 (gross) shares vested for senior management.
Based on the performance conditions, it is expected that approximately 765,841 shares of the LTV 2013-2015 will vest in 2016 for senior management
and the Executive Board.
The number, as corrected for the expected performance for the various awards, and weighted average share price per share under the LTV of senior
management and Executive Board are as follows:
Outstanding as at 1 January
Granted during the year
Forfeited during the year
Vested during the year
Performance adjustment
Outstanding as at 31 December
Weighted
average share
price 2015
44.42
58.95
50.95
35.89
–
52.26
Number of
share rights
2015
2,401,418
589,201
(235,289)
(891,409)
(9,139)
1,854,782
Weighted
average share
price 2014
42.41
49.08
44.80
36.69
–
44.42
Number of
share rights
2014
1,257,106
649,446
(112,593)
(216,229)
823,688
2,401,418
Under the extraordinary share plans for senior management 16,000 shares were granted and 40,425 (gross) shares vested. These extraordinary grants
only have a service condition and vest between one and fi ve years. The expenses relating to these additional grants are recognised in profi t or loss during
the vesting period. Expenses recognised in 2015 are EUR1.0 million (2014: EUR1.2 million).
Matching shares, extraordinary shares and retention share awards are granted to the Executive Board and are disclosed in note 35.
Personnel expenses
In millions of EUR
Share rights granted in 2012
Share rights granted in 2013
Share rights granted in 2014
Share rights granted in 2015
Total expense recognised in personnel expenses
113 Heineken N.V. Annual Report 2015
Note
10
2015
1
12
10
10
33
2014
20
17
11
–
48
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
30. Provisions
In millions of EUR
Balance as at 1 January 2015
Changes in consolidation
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Eff ect of movements in exchange rates
Unwinding of discounts
Balance as at 31 December 2015
Non-current
Current
Restructuring
162
–
83
(100)
(18)
2
3
132
68
64
Onerous
contracts
54
2
16
–
(21)
3
–
54
45
9
Claims and
litigation
179
6
17
(14)
(44)
(28)
6
122
113
9
Other
168
16
48
(24)
(48)
6
–
166
94
72
Total
563
24
164
(138)
(131)
(17)
9
474
320
154
Restructuring
The provision for restructuring of EUR132 million mainly relates to restructuring programmes in Spain and the Netherlands.
Claims and litigation
The provision for claims and litigation of EUR122 million mainly relates to the litigation inherited from the acquisition of the beer operations of FEMSA in
2010 (refer to note 34).
Other provisions
Included are, among others, surety and guarantees provided of EUR39 million (2014: EUR26 million) and provisions for other taxes of EUR42 million (2014:
EUR32 million).
Note
32
2015
2,797
1,270
806
606
131
89
46
268
6,013
2014
2,339
1,211
802
580
132
104
45
320
5,533
31. Trade and other payables
In millions of EUR
Trade payables
Accruals and deferred income
Taxation and social security contributions
Returnable packaging deposits
Interest
Derivatives
Dividends
Other payables
114 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments
Overview
HEINEKEN has exposure to the following risks from its use of fi nancial instruments, as they arise in the normal course of HEINEKEN’s business:
•
•
•
Credit risk
Liquidity risk
Market risk
This note presents information about HEINEKEN’s exposure to each of the above risks, and it summarises HEINEKEN’s policies and processes that are in
place for measuring and managing risk, including those related to capital management. Further quantitative disclosures are included throughout these
consolidated fi nancial statements.
Risk management framework
The Executive Board, under the supervision of the Supervisory Board, has overall responsibility and sets rules for HEINEKEN’s risk management and control
systems. They are reviewed regularly to refl ect changes in market conditions and HEINEKEN’s activities. The Executive Board oversees the adequacy and
functioning of the entire system of risk management and internal control, assisted by HEINEKEN Group departments.
The Global Treasury function focuses primarily on the management of fi nancial risk and fi nancial resources. Some of the risk management strategies
include the use of derivatives, primarily in the form of spot and forward exchange contracts and interest rate swaps, but options can be used as well. It is
HEINEKEN’s policy that no speculative transactions are entered into.
Credit risk
Credit risk is the risk of fi nancial loss to HEINEKEN if a customer or counterparty to a fi nancial instrument fails to meet its contractual obligations, and it
arises principally from HEINEKEN’s receivables from customers and investment securities.
Following the economic crisis, HEINEKEN placed particular focus on strengthening credit management and a Global Credit Policy was implemented.
All local operations are required to comply with the principles contained within the Global Credit Policy and develop local credit management procedures
accordingly. HEINEKEN annually reviews compliance with these procedures and continuous focus is placed on ensuring that adequate controls are in place
to mitigate any identifi ed risks in respect of both customer and supplier risk.
As at the balance sheet date, there were no signifi cant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying
amount of each fi nancial instrument, including derivative fi nancial instruments, in the consolidated statement of fi nancial position.
115 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments continued
Loans to customers
HEINEKEN’s exposure to credit risk is mainly infl uenced by the individual characteristics of each customer. HEINEKEN’s held-to-maturity investments
include loans to customers, issued based on a loan contract. Loans to customers are ideally secured by, among others, rights on property or intangible
assets, such as the right to take possession of the premises of the customer. Interest rates calculated by HEINEKEN are at least based on the risk-free rate
plus a margin, which takes into account the risk profi le of the customer and value of security given.
HEINEKEN establishes an allowance for impairment of loans that represents its estimate of incurred losses. The main components of this allowance are
a specifi c loss component that relates to individually signifi cant exposures, and a collective loss component established for groups of similar customers in
respect of losses that have been incurred but not yet identifi ed. The collective loss allowance is determined based on historical data of payment statistics.
In a few countries, the issuance of new loans is outsourced to third parties. In most cases, HEINEKEN issues guarantees to the third party for the risk of
default by the customer.
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 the credit policies,
all customers requiring credit over a certain amount are reviewed and new customers are analysed individually for creditworthiness before HEINEKEN’s
standard payment and delivery terms and conditions are off ered. HEINEKEN’s review includes external ratings, where available, and in some cases bank
references. Purchase limits are established for each customer and these limits are reviewed regularly. Customers that fail to meet HEINEKEN’s benchmark
creditworthiness may transact with HEINEKEN only on a prepayment basis.
In monitoring customer credit risk customers are, on a country basis, grouped according to their credit characteristics, including whether they are an
individual or legal entity, which type of distribution channel they represent, geographic location, industry, ageing profi le, maturity and existence of previous
fi nancial diffi culties. Customers that are graded as high risk are placed on a restricted customer list, and future sales are made on a prepayment basis only
with approval of management.
HEINEKEN has multiple distribution models to deliver goods to end customers. Deliveries are done in some countries via own wholesalers, in other
markets directly and in some others via third parties. As such distribution models are country-specifi c and diverse across HEINEKEN, the results and the
balance sheet items cannot be split between types of customers on a consolidated basis. The various distribution models are also not centrally managed
or monitored.
HEINEKEN establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and
investments. The components of this allowance are a specifi c loss component and a collective loss component.
116 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Advances to customers
Advances to customers relate to an upfront cash discount to customers. The advances are amortised over the term of the contract as a reduction
of revenue.
In monitoring customer credit risk, refer to the paragraph above relating to trade and other receivables.
Investments
HEINEKEN limits its exposure to credit risk by only investing available cash balances in liquid securities and only with counterparties that have strong credit
ratings. HEINEKEN actively monitors these credit ratings.
Guarantees
HEINEKEN’s policy is to avoid issuing guarantees where possible unless this leads to substantial benefi ts for HEINEKEN. In cases where HEINEKEN does
provide guarantees, such as to banks for loans (to third parties), HEINEKEN aims to receive security from the third party.
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 44 of the Company fi nancial statements.
Exposure to credit risk
The carrying amount of fi nancial assets and guarantees to banks for loans represents the maximum credit exposure. The maximum exposure to credit risk
at the reporting date was:
In millions of EUR
Cash and cash equivalents
Trade and other receivables, excluding derivatives
Current derivatives
Investments held for trading
Available-for-sale investments
Non-current derivatives and investments FVTPL
Loans to customers
Loans to joint ventures and associates
Held-to-maturity investments
Other non-current receivables
Guarantees to banks for loans (to third parties)
Note
21
20
20
17
17
17
17
17
17
17
34
2015
824
2,821
52
16
287
210
69
22
1
152
473
4,927
2014
668
2,621
122
13
253
97
68
65
3
167
354
4,431
The maximum exposure to credit risk for trade and other receivables (excluding current derivatives) at the reporting date by geographic region was:
2015
1,424
542
449
308
98
2,821
2014
1,433
470
357
223
138
2,621
In millions of EUR
Europe
Americas
Africa, Middle East & Eastern Europe
Asia Pacifi c
Head Offi ce and Other/eliminations
117 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments continued
Impairment losses
The ageing of trade and other receivables (excluding current derivatives) at the reporting date was:
In millions of EUR
Not past due
Past due 0 – 30 days
Past due 31 – 120 days
More than 120 days
Gross 2015
2,475
207
233
347
3,262
Impairment 2015
(54)
(13)
(64)
(310)
(441)
Gross 2014
2,296
185
197
347
3,025
Impairment 2014
(49)
(11)
(61)
(283)
(404)
The movement in the allowance for impairment in respect of trade and other receivables (excluding current derivatives) during the year was as follows:
In millions of EUR
Balance as at 1 January
Changes in consolidation
Impairment loss recognised
Allowance used
Allowance released
Eff ect of movements in exchange rates
Balance as at 31 December
The movement in the allowance for impairment in respect of loans to customers during the year was as follows:
In millions of EUR
Balance as at 1 January
Changes in consolidation
Impairment loss recognised
Allowance used
Allowance released
Eff ect of movements in exchange rates
Balance as at 31 December
2015
404
7
103
(29)
(42)
(2)
441
2015
135
1
–
–
(14)
(1)
121
2014
418
2
85
(38)
(66)
3
404
2014
150
–
10
(21)
(6)
2
135
Impairment losses recognised for trade and other receivables (excluding current derivatives) and loans to customers are part of the other non-cash items
in the consolidated statement of cash fl ows.
The income statement impact of EUR14 million gain (2014: EUR4 million expense) in respect of loans to customers and EUR61 million expense(2014:
EUR19 million expense) in respect of trade and other receivables (excluding current derivatives) were included in expenses for raw materials, consumables
and services.
The allowance accounts in respect of trade and other receivables and held-to-maturity investments are used to record impairment losses, unless HEINEKEN
is satisfi ed that no recovery of the amount owing is possible; at that point, the amount considered irrecoverable is written off against the fi nancial asset.
Liquidity risk
Liquidity risk is the risk that HEINEKEN will encounter diffi culty in meeting the obligations associated with its fi nancial liabilities that are settled by
delivering cash or another fi nancial asset. HEINEKEN’s approach to managing liquidity is to ensure, as far as possible, that it will always have suffi cient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to HEINEKEN’s reputation.
118 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
HEINEKEN has a clear focus on ensuring suffi cient access to capital markets to fi nance long-term growth and to refi nance maturing debt obligations.
Financing strategies, including the diversifi cation of funding sources are under continuous evaluation (information about borrowing facilities is presented in
Note 25). In addition, HEINEKEN seeks to align the maturity profi le of its long-term debts with its forecasted cash fl ow generation. Strong cost and cash
management and controls over investment proposals are in place to ensure eff ective and effi cient allocation of fi nancial resources.
Contractual maturities
The following are the contractual maturities of non-derivative fi nancial liabilities and derivative fi nancial assets and liabilities, including interest payments:
In millions of EUR
Financial liabilities
Interest-bearing liabilities
Trade and other payables (excluding interest payable,
dividends and derivatives and including non-current part)
Carrying
amount
Contractual
cash fl ows
Less than
1 year
1-2 years
2-5 years
2015
More than
5 years
(12,565)
(14,750)
(2,014)
(1,742)
(5,193)
(5,801)
(5,744)
(5,744)
(5,658)
(62)
(12)
(12)
Derivative fi nancial assets and (liabilities)
Interest rate swaps used for hedge
accounting (net)
Forward exchange contracts used for hedge
accounting (net)
Commodity derivatives used for hedge
accounting (net)
Derivatives not used for hedge
accounting (net)
In millions of EUR
Financial liabilities
Interest-bearing liabilities
Trade and other payables (excluding interest payable,
dividends and derivatives and including non-current part)
Derivative fi nancial assets and (liabilities)
Interest rate swaps used for hedge
accounting (net)
Forward exchange contracts used for hedge
accounting (net)
Commodity derivatives used for hedge
accounting (net)
Derivatives not used for hedge
accounting (net)
214
(2)
(70)
265
(16)
(70)
20
(12)
(42)
15
(4)
(20)
230
–
(8)
–
–
–
(1)
(18,168)
(1)
(20,316)
(1)
(7,707)
–
(1,813)
–
(4,983)
–
(5,813)
Carrying
amount
Contractual
cash fl ows
Less than
1 year
1-2 years
2-5 years
2014
More than
5 years
(11,757)
(14,202)
(2,831)
(876)
(4,269)
(6,226)
(5,252)
(5,252)
(5,252)
–
–
163
(64)
(11)
238
(66)
(10)
96
(60)
(7)
12
(6)
(3)
130
–
–
–
–
–
–
19
(16,902)
19
(19,273)
19
(8,035)
(3)
(876)
3
(4,136)
–
(6,226)
119 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments continued
The total carrying amount and contractual cash fl ows of derivatives are included in trade and other receivables (refer to note 20), other investments (refer
to note 17), trade and other payables (refer to note 31) and non-current non-interest-bearing liabilities (refer to note 25).
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices and equity prices, will adversely aff ect
HEINEKEN’s income or the value of its holdings of fi nancial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
HEINEKEN uses derivatives in the ordinary course of business, and also incurs fi nancial liabilities, in order to manage market risks. Generally, HEINEKEN
seeks to apply hedge accounting or make use of natural hedges in order to minimise the eff ects of foreign currency fl uctuations in profi t or loss.
Derivatives that can be used are interest rate swaps, forward rate agreements, caps and fl oors, commodity swaps, spot and forward exchange contracts
and options. Transactions are entered into with a limited number of counterparties with strong credit ratings. Foreign currency, interest rate and commodity
hedging operations are governed by internal policies and rules approved and monitored by the Executive Board.
Foreign currency risk
HEINEKEN is exposed to foreign currency risk on (future) sales, (future) purchases, borrowings and dividends that are denominated in a currency other than
the respective functional currencies of HEINEKEN entities. The main currencies that give rise to this risk are the US dollar, Mexican Peso, Nigerian Naira,
Vietnamese Dong and Euro.
In managing foreign currency risk, HEINEKEN aims to ensure the availability of these foreign currencies and to reduce the impact of short-term fl uctuations
on earnings. Over the longer term, however, permanent changes in foreign exchange rates and the availability of foreign currencies, especially in emerging
markets, will have an impact on profi t.
HEINEKEN hedges up to 90 per cent of its net US dollar export cash fl ows on the basis of rolling cash fl ow forecasts in respect to forecasted sales and
purchases. Cash fl ows in other foreign currencies are also hedged on the basis of rolling cash fl ow forecasts. HEINEKEN mainly uses forward exchange
contracts to hedge its foreign currency risk. The majority of the forward exchange contracts have maturities of less than one year after the balance
sheet date.
HEINEKEN has a clear policy on hedging transactional exchange risks, which postpones the impact on fi nancial results. Translation exchange risks are
hedged to a limited extent, as the underlying currency positions are generally considered to be long term in nature. The result of the net investment
hedging is recognised in the translation reserve, as can be seen in the consolidated statement of comprehensive income.
It is HEINEKEN’s policy to provide intra-HEINEKEN fi nancing in the functional currency of subsidiaries where possible to prevent foreign currency exposure
on a subsidiary level. The resulting exposure at Group level is hedged by means of foreign currency denominated external debts and by forward exchange
contracts. Intra-HEINEKEN fi nancing in foreign currencies is mainly in British pounds, US dollars, Swiss francs, South African Rand and Polish zloty. In some
cases, HEINEKEN elects to treat intra-HEINEKEN fi nancing with a permanent character as equity and does not hedge the foreign currency exposure.
The principal amounts of HEINEKEN’s US dollar, British pound, Nigerian naira, Singapore dollar bank loans and bond issues are used to hedge local
operations, which generate cash fl ows that have the same respective functional currencies or have functional currencies that are closely correlated.
Corresponding interest on these borrowings is also denominated in currencies that match the cash fl ows generated by the underlying operations of
HEINEKEN. This provides an economic hedge without derivatives being entered into.
In respect of other monetary assets and liabilities denominated in currencies other than the functional currencies of the Company and the various foreign
operations, HEINEKEN ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to
address short-term imbalances.
120 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Exposure to foreign currency risk
HEINEKEN’s transactional exposure to the US dollar and Euro was as follows based on notional amounts. The Euro column relates to transactional
exposure to the Euro within subsidiaries which are reporting in other currencies. Included in the amounts are intra-HEINEKEN cash fl ows. HEINEKEN’s
transactional exposure to the British pound was excluded from the sensitivity analysis as the net exposure is not material.
In millions
Financial assets
Trade and other receivables
Cash and cash equivalents
Intragroup assets
Financial liabilities
Interest-bearing liabilities
Non-interest-bearing liabilities
Trade and other payables
Intragroup liabilities
Gross balance sheet exposure
Estimated forecast sales next year
Estimated forecast purchases next year
Gross exposure
Net notional amount forward exchange contracts
Net exposure
Sensitivity analysis
Equity
Profi t or loss
EUR
27
79
18
(25)
–
(145)
(910)
(956)
168
(1,765)
(2,553)
406
(2,147)
(46)
(8)
2015
USD
61
101
4,873
(5,441)
–
(129)
(644)
(1,179)
1,353
(1,534)
(1,360)
748
(612)
(33)
(6)
EUR
14
98
14
(17)
(1)
(135)
(728)
(755)
186
(1,739)
(2,308)
99
(2,209)
(35)
(6)
2014
USD
44
93
4,727
(5,464)
(1)
(93)
(706)
(1,400)
1,373
(1,562)
(1,589)
950
(639)
(31)
(2)
Sensitivity analysis
A 10 per cent strengthening of the US dollar against the Euro or, in case of the Euro, a strengthening of the Euro against all other currencies as at
31 December would have aff ected the value of fi nancial assets and liabilities (related to transactional exposure) recorded on the balance sheet and
would have therefore decreased (increased) equity and profi t by the amounts shown above. This analysis assumes that all other variables, in particular
interest rates, remain constant.
A 10 per cent weakening of the US dollar against the Euro or, in case of the Euro, a weakening of the Euro against all other currencies as at 31 December
would have had the equal but opposite eff ect on the basis that all other variables remain constant.
Interest rate risk
In managing interest rate risk, HEINEKEN aims to reduce the impact of short-term fl uctuations on earnings. Over the longer term, however, permanent
changes in interest rates would have an impact on profi t.
HEINEKEN opts for a mix of fi xed and variable interest rates in its fi nancing operations, combined with the use of interest rate instruments. Currently,
HEINEKEN’s interest rate position is more weighted towards fi xed than fl oating. Interest rate instruments that can be used are interest rate swaps, forward
rate agreements, caps and fl oors.
Swap maturity follows the maturity of the related loans and borrowings which have swap rates for the fi xed leg ranging from 3.8 to 7.3 per cent (2014: from
3.8 to 7.3 per cent).
121 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments continued
Interest rate risk – profi le
At the reporting date, the interest rate profi le of HEINEKEN’s interest-bearing fi nancial instruments was as follows:
In millions of EUR
Fixed rate instruments
Financial assets
Financial liabilities
Net interest rate swaps
Variable rate instruments
Financial assets
Financial liabilities
Net interest rate swaps
2015
2014
93
(11,057)
(42)
(11,006)
1,023
(1,508)
42
(443)
99
(10,225)
56
(10,070)
917
(1,532)
(56)
(671)
Cash fl ow sensitivity analysis for variable rate instruments
HEINEKEN applies cash fl ow hedge accounting on certain fl oating rate fi nancial liabilities and designates derivatives as hedging instruments. A change of
100 basis points in interest rates constantly applied during the reporting period would have increased (decreased) equity and profi t 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 2014.
In millions of EUR
31 December 2015
Variable rate instruments
Net interest rate swaps
Cash fl ow sensitivity (net)
31 December 2014
Variable rate instruments
Net interest rate swaps
Cash fl ow sensitivity (net)
100 bp increase
100 bp decrease
100 bp increase
100 bp decrease
Profi t or loss
Equity
(4)
–
(4)
(5)
–
(5)
4
–
4
5
–
5
(4)
–
(4)
(5)
–
(5)
4
–
4
5
–
5
122 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Commodity price risk
Commodity price risk is the risk that changes in commodity prices will aff ect HEINEKEN’s income. The objective of commodity price risk management
is to manage and control commodity risk exposures within acceptable parameters, while optimising the return on risk. The main commodity exposure
relates to the purchase of cans, glass bottles, malt and utilities. Commodity price risk is in principle addressed by negotiating fi xed prices in supplier
contracts with various contract durations. So far, commodity hedging with fi nancial counterparties by HEINEKEN has been limited to aluminium
hedging and to a limited extent gas and grains hedging, which are done in accordance with risk policies. HEINEKEN does not enter into commodity
contracts other than to meet HEINEKEN’s expected usage and sale requirements. As at 31 December 2015, the market value of commodity swaps
was EUR70 million negative (2014: EUR10 million negative).
Sensitivity analysis for aluminium hedges
The table below shows an estimated pre-tax impact of 10 per cent change in the market price of aluminium.
In millions of EUR
31 December 2015
Aluminium hedges
10 per cent
increase
Equity
10 per cent
decrease
40
(40)
Cash fl ow hedges
The following table indicates the carrying amount of derivatives and the periods in which all the cash fl ows associated with derivatives that are cash fl ow
hedges are expected to occur:
In millions of EUR
Interest rate swaps
Assets
Liabilities
Cross-currency interest rate swaps
Assets
Liabilities
Forward exchange contracts
Assets
Liabilities
Commodity derivatives
Assets
Liabilities
Carrying
amount
Expected
cash fl ows
Less than
1 year
1-2 years
2-5 years
2015
More than
5 years
–
(1)
215
–
37
(39)
1
(71)
142
–
(2)
1,220
(953)
1,437
(1,453)
1
(70)
180
–
(2)
90
(68)
1,289
(1,301)
1
(42)
(33)
–
–
53
(38)
148
(152)
–
(20)
(9)
–
–
1,077
(847)
–
–
–
(8)
222
–
–
–
–
–
–
–
–
–
123 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments continued
In millions of EUR
Interest rate swaps
Assets
Liabilities
Cross-currency interest rate swaps
Assets
Liabilities
Forward exchange contracts
Assets
Liabilities
Commodity derivatives
Assets
Liabilities
Carrying
amount
Expected
cash fl ows
Less than
1 year
1-2 years
2-5 years
2014
More than
5 years
–
(3)
166
–
24
(88)
5
(15)
89
–
(4)
1,701
(1,459)
1,541
(1,607)
9
(19)
162
–
(2)
605
(507)
1,394
(1,454)
6
(13)
29
–
(2)
82
(68)
147
(153)
2
(5)
3
–
–
1,014
(884)
–
–
1
(1)
130
–
–
–
–
–
–
–
–
–
The periods in which the cash fl ows associated with forward exchange contracts that are cash fl ow hedges are expected to impact profi t or loss is typically
one or two months earlier than the occurrence of the cash fl ows as in the above table.
HEINEKEN has entered into several cross-currency interest rate swaps which have been designated as cash fl ow hedges to hedge the foreign exchange
rate risk on the principal amount and future interest payments of its US dollar and GBP borrowings. HEINEKEN has also entered into a few interest rate
swaps which have been designated as cash fl ow hedges to hedge the value of future interest cash fl ows payable on fl oating interest borrowings.
The borrowings are designated as the hedged item as part of the cash fl ow hedge. The borrowings and the interest rate and cross-currency interest
rate swaps have the same critical terms.
Net investment hedges
HEINEKEN hedges its investments in certain subsidiaries by entering into local currency denominated borrowings, which mitigate the foreign currency
translation risk arising from the subsidiaries net assets. These borrowings are designated as a net investment hedge. The fair value of these borrowings at
31 December 2015 was EUR536 million (2014: EUR520 million), and no ineff ectiveness was recognised in profi t and loss in 2015 (2014: nil).
Capital management
There were no major changes in HEINEKEN’s approach to capital management during the year. The Executive Board’s policy is to maintain a strong capital
base so as to maintain investor, creditor and market confi dence and to sustain future development of the business and acquisitions. Capital is herein
defi ned as equity attributable to equity holders of the Company (total equity minus non-controlling interests).
HEINEKEN is not subject to externally imposed capital requirements other than the legal reserves explained in note 22. Shares are purchased to meet the
requirements of the share-based payment awards, as further explained in note 29. In 2015, HEINEKEN also purchased shares following the completion of
the divestment of EMPAQUE in February 2015, as further explained in note 22.
Fair values
For bank loans and fi nance lease liabilities the carrying amount is a reasonable approximation of fair value. The fair value of the unsecured bond issues as
at 31 December 2015 was EUR10,025 million (2014: EUR9,296 million) and the carrying amount was EUR9,669 million (2014: EUR8,769 million). The fair
value of the other interest bearing liabilities as at 31 December 2015 was EUR1,870 million (2014: EUR1,829) and the carrying amount was EUR1,759
million (2014: EUR1,829 million).
Basis for determining fair values
The signifi cant methods and assumptions used in estimating the fair values of fi nancial instruments refl ected in the table above are discussed in note 4.
124 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Fair value hierarchy
The tables below present the fi nancial instruments accounted for at fair value and amortised cost by level of the following fair value
measurement hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2)
• Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
31 December 2015
Available-for-sale investments
Non-current derivative assets
Current derivative assets
Investments held for trading
Non-current derivative liabilities
Loans and borrowings
Current derivative liabilities
31 December 2014
Available-for-sale investments
Non-current derivative assets
Current derivative assets
Investments held for trading
Non-current derivative liabilities
Loans and borrowings
Current derivative liabilities
Level 1
98
–
–
16
114
–
(10,025)
–
(10,025)
Level 1
99
–
–
13
112
–
(9,296)
–
(9,296)
Level 2
105
210
52
–
367
(32)
(1,870)
(89)
(1,991)
Level 2
86
97
122
–
305
(8)
(1,829)
(104)
(1,941)
Level 3
84
–
–
–
84
–
–
–
–
Level 3
68
–
–
–
68
–
–
–
–
There were no transfers between level 1 and level 2 of the fair value hierarchy during the period ended 31 December 2015.
Level 2
HEINEKEN determines level 2 fair values for over-the-counter securities based on broker quotes. The fair values of simple over-the-counter derivative
fi nancial instruments are determined by using valuation techniques. These valuation techniques maximise the use of observable market data
where available.
The fair value of derivatives is calculated as the present value of the estimated future cash fl ows based on 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 refl ect the credit risk of the instrument and include adjustments to take into account the credit risk of HEINEKEN and
counterparty when appropriate.
125 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
32. Financial risk management and fi nancial instruments continued
Level 3
Details of the determination of level 3 fair value measurements as at 31 December 2015 are set out below:
In millions of EUR
Available-for-sale investments based on level 3
Balance as at 1 January
Fair value adjustments recognised in other comprehensive income
Disposals
Transfers
Balance as at 31 December
2015
2014
68
16
–
–
84
59
10
(1)
–
68
The fair values for the level 3 available-for-sale investments are based on the fi nancial performance of the investments and the market multiples of
comparable equity securities.
33. Off -balance sheet commitments
In millions of EUR
Operational lease commitments
Property, plant and equipment ordered
Raw materials purchase contracts
Marketing and merchandising commitments
Other off -balance sheet obligations
Off -balance sheet obligations
Total 2015
1,114
293
8,507
370
2,004
12,288
Less than
1 year
150
282
1,987
156
629
3,204
1-5 years
415
11
4,794
213
778
6,211
More than
5 years
549
–
1,726
1
597
2,873
Total 2014
993
158
3,400
402
1,606
6,559
Undrawn committed bank facilities
2,930
398
2,523
9
2,871
HEINEKEN leases buildings, cars and equipment in the ordinary course of business.
Raw material contracts include long-term purchase contracts with suppliers in which prices are fi xed or will be agreed based upon predefi ned price
formulas. These contracts mainly relate to malt, bottles and cans. The signifi cant increase of raw materials purchase commitments relates to purchase
contracts with EMPAQUE which has become a third party supplier after the disposal in 2015.
During the year ended 31 December 2015, EUR301 million (2014: EUR291 million) was recognised as an expense in profi t or loss in respect of operating
leases and rent.
Other off -balance sheet obligations mainly include distribution, rental 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.
34. Contingencies
Brazil
As part of the acquisition of the beer operations of FEMSA in 2010, HEINEKEN inherited existing legal proceedings with labour unions, tax authorities and
other parties of its, now wholly-owned, subsidiaries Cervejarias Kaiser Brasil and Cervejarias Kaiser Nordeste (jointly, Heineken Brasil). The proceedings have
arisen in the ordinary course of business and are common to the current economic and legal environment of Brazil. The proceedings have partly been
provided for (refer to note 30). The contingent amount being claimed against Heineken Brasil resulting from such proceedings as at 31 December 2015 is
EUR450 million. Such contingencies were classifi ed by legal counsel as less than probable of being settled against Heineken Brasil, but more than remote.
However, HEINEKEN believes that the ultimate resolution of such legal proceedings will not have a material adverse eff ect on its consolidated fi nancial
position or result of operations. HEINEKEN does not expect any signifi cant liability to arise from these contingencies. A part of the aforementioned
contingencies (EUR238 million) is tax-related and qualifi es for indemnifi cation by FEMSA (refer to note 17).
126 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
As is customary in Brazil, Heineken Brasil has been requested by the tax authorities to collateralise tax contingencies currently in litigation amounting to
EUR416 million by either pledging fi xed assets or entering into available lines of credit which cover such contingencies.
Guarantees
In millions of EUR
Guarantees to banks for loans (to third parties)
Other guarantees
Guarantees
Total 2015
473
564
1,037
Less than
1 year
285
224
509
1–5 years
178
280
458
More than
5 years
10
60
70
Total 2014
354
592
946
Guarantees to banks for loans relate to loans to customers, which are given to external parties in the ordinary course of business of HEINEKEN. HEINEKEN
provides guarantees to the banks to cover the risk related to these loans.
35. Related parties
Identifi cation of related parties
HEINEKEN’s parent company is Heineken Holding N.V. HEINEKEN’s ultimate controlling party is Mrs. de Carvalho-Heineken. Our shareholder structure is set
out in the section ‘Shareholder Information’.
In addition, HEINEKEN has related party relationships with its associates and joint ventures (refer to note 16), HEINEKEN pension funds (refer to note 28),
Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA), employees (refer to note 25) and with its key management personnel (the Executive Board and the
Supervisory Board).
Key management remuneration
In millions of EUR
Executive Board
Supervisory Board
Total
2015
13.9
0.9
14.8
2014
15.4
1.0
16.4
Executive Board
The remuneration of the members of the Executive Board comprises a fi xed component and a variable component. The variable component is made
up of a Short-Term Variable pay (STV) and a Long-Term Variable award (LTV). The STV is based on fi nancial and operational measures (75 per cent) and
on individual leadership measures (25 per cent) as set by the Supervisory Board. It is partly paid out in shares that are blocked for a period of fi ve calendar
years. After the fi ve calendar years, HEINEKEN will match the blocked shares 1:1, which is referred to as the matching share entitlement. For the LTV award
we refer to note 29. The separate Remuneration Report is stated on pages 51 – 59.
As at 31 December 2015, Mr. Jean-François van Boxmeer held 179,838 Company shares and Mrs. Laurence Debroux held 681 Company shares
(2014: Mr. Jean-François van Boxmeer 117,889).
127 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
35. Related parties continued
In thousands of EUR
Fixed salary
Short-Term Variable pay
Matching share entitlement
Long-Term Variable award
Extraordinary share award/Retention bonus
Pension contributions
Other emoluments
Termination benefi t
Total3
J.F.M.L. van
Boxmeer
1,150
2,930
1,353
2,706
236
723
21
–
9,119
L. Debroux1
421
833
385
158
124
82
134
–
2,137
D.R. Hooft
Graafl and2
201
394
182
1,825
–
33
7
–
2,642
2015
Total
1,772
4,157
1,920
4,689
360
838
162
–
13,898
J.F.M.L. van
Boxmeer
1,150
2,769
640
2,972
750
709
21
–
9,011
D.R. Hooft
Graafl and
650
1,118
517
1,690
–
387
21
2,000
6,383
2014
Total
1,800
3,887
1,157
4,662
750
1,096
42
2,000
15,394
1 Appointed on 23 April 2015
2 Resigned on 23 April 2015
3 In 2015, an estimated tax penalty of EUR2.8 million (2014: EUR1.5 million) to the Dutch tax authorities was recognised in relation to the remuneration of Mr. René
Hooft Graafl and. This tax was an expense to the employer and therefore not included in the table above.
The matching share entitlements for each year are based on the performance in that year. The CEO, and the two CFOs have all chosen to invest 50 per
cent of their STV for 2015 into Heineken N.V. shares (investment shares); in 2014 the CEO invested 25 per cent and the CFO invested 50 per cent. From an
accounting perspective the corresponding matching shares vest immediately and as such a fair value of EUR1.9 million was recognised in the 2015 income
statement. The matching share entitlements are not dividend-bearing during the fi ve calendar year holding period of the investment shares. Therefore, the
fair value of the matching share entitlements has been adjusted for missed expected dividends by applying a discount based on the dividend policy and
historical dividend payouts during the vesting period.
The Supervisory Board granted a retention share award to the CEO in 2013 to the value of EUR1.5 million (27,317 share entitlements gross). The share
award vested two years after the grant date and was converted into Heineken N.V. shares. A three-year holding restriction applies to these shares as from
the vesting date. In 2015, an expense of EUR236,000 is recognised for the retention award.
Resignation of Mr. René Hooft Graafl and as a member of the Executive Board and CFO in 2015
Mr. René Hooft Graafl and has resigned from the Executive Board following the Annual General Meeting on 23 April 2015 and his employment contract
ended 1 May 2015. A severance payment of EUR2 million has been made upon contract ending and has been recognised in the 2014 income statement.
This resignation is considered a retirement under the LTV plan rules, which implies that unvested LTV awards as of 1 May 2015 will continue to vest at their
regular vesting dates, insofar and to the extent that predetermined performance conditions are met.
As a result, the expenses for the LTV awards 2013-2015, 2014-2016 and 2015-2017 have been accelerated from their usual rate of one-third per year to a
rate which ensures full expensing on 1 May 2015 rather than on 31 December 2015, 2016 and 2017. The impact of this acceleration in expensing for Mr.
René Hooft Graafl and is approximately EUR0.5 million (2014: EUR0.2 million).
128 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Supervisory Board
The individual members of the Supervisory Board received the following remuneration:
In thousands of EUR
G.J. Wijers
J.A. Fernández Carbajal
M. Das
M.R. de Carvalho
J.M. de Jong1
A.M. Fentener van Vlissingen
M.E. Minnick
V.C.O.B.J. Navarre
J.G. Astaburuaga Sanjinés
H. Scheff ers
J.M. Huët2
1 Stepped down as at 24 April 2014.
2 Appointed as at 24 April 2014.
2015
160
105
85
104
–
85
80
70
96
80
75
940
2014
163
105
88
141
25
91
83
73
95
81
58
1,003
Mr. Michel de Carvalho held 100,008 shares of Heineken N.V. as at 31 December 2015 (2014: 100,008 shares). As at 31 December 2015 and 2014, the
Supervisory Board members did not hold any of the Company’s bonds or option rights. Mr. Michel de Carvalho held 100,008 ordinary shares of Heineken
Holding N.V. as at 31 December 2015 (2014: 100,008 ordinary shares).
Other related party transactions
In millions of EUR
Sale of products, services and royalties
To associates and joint ventures
To FEMSA
Raw materials, consumables and services
Goods for resale – joint ventures
Other expenses – joint ventures
Other expenses FEMSA
Transaction value
Balance outstanding
as at 31 December
2015
82
817
899
–
–
197
197
2014
75
857
932
–
–
201
201
2015
30
137
167
–
–
36
36
2014
21
136
157
–
–
46
46
Heineken Holding N.V.
In 2015, an amount of EUR1,047,479 (2014: EUR744,285) was paid to Heineken Holding N.V. for management services for HEINEKEN.
This payment is based on an agreement of 1977 as amended in 2001, providing that Heineken N.V. reimburses Heineken Holding N.V. for its costs. Best
practice provision III.6.4 of the Dutch Corporate Governance Code of 10 December 2008 has been observed in this regard.
129 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
35. Related parties continued
FEMSA
As consideration for HEINEKEN’s acquisition of the beer operations of Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA), FEMSA became a major
shareholder of Heineken N.V. Therefore, several existing contracts between FEMSA and former FEMSA-owned companies acquired by HEINEKEN have
become related party contracts.
36. HEINEKEN entities
Control of HEINEKEN
The shares and options of the Company are traded on Euronext Amsterdam, where the Company is included in the main AEX Index. Heineken Holding N.V.
Amsterdam has an interest of 50.005 per cent in the issued capital of the Company. The fi nancial statements of the Company are included in the
consolidated fi nancial statements of Heineken Holding N.V.
A declaration of joint and several liability pursuant to the provisions of Section 403, Part 9, Book 2, of the Dutch Civil Code has been issued with respect to
legal entities established in the Netherlands. The list of the legal entities for which the declaration has been issued is disclosed in the Heineken N.V.
stand-alone fi nancial statements.
Pursuant to the provisions of Article 17 (1) of the Republic of Ireland Companies (Amendment) Act 1986, the Company issued irrevocable guarantees in
respect of the fi nancial year from 1 January 2015 up to and including 31 December 2015 regarding the liabilities referred to in Article 5(c)(ii) of the Republic
of Ireland Companies (Amendment) Act 1986 of the wholly-owned subsidiary companies Heineken Ireland Limited, Heineken Ireland Sales Limited, The
West Cork Bottling Company Limited, Western Beverages Limited, Beamish & Crawford Limited and Nash Beverages Limited.
Signifi cant subsidiaries
Set out below are HEINEKEN’s signifi cant subsidiaries at 31 December 2015. The subsidiaries as listed below are held by the Company and the proportion
of ownership interests held equals the proportion of the voting rights held by HEINEKEN. The country of incorporation or registration is also their principal
place of business. The disclosed signifi cant subsidiaries represent the largest subsidiaries and represent an approximate total revenue of EUR14 billion and
total asset value of EUR19 billion and are structural contributors to the business.
There were no signifi cant changes to the HEINEKEN structure and ownership interests except those disclosed in note 6.
Country of incorporation
The Netherlands
The Netherlands
The Netherlands
Mexico
Brazil
France
Nigeria
United States
United Kingdom
Spain
Italy
Austria
Poland
Russia
Vietnam
Percentage of ownership
2015
100.0
100.0
100.0
100.0
100.0
100.0
54.3
100.0
100.0
99.8
100.0
100.0
65.2
100.0
60.0
2014
100.0
100.0
100.0
100.0
100.0
100.0
54.3
100.0
100.0
99.8
100.0
100.0
65.2
100.0
60.0
Heineken International B.V.
Heineken Brouwerijen B.V.
Heineken Nederland B.V.
Cuauhtémoc Moctezuma Holding, S.A. de C.V.
Cervejarias Kaiser Brasil S.A.
Heineken France S.A.S.
Nigerian Breweries Plc.
Heineken USA Inc.
Heineken UK Ltd
Heineken España S.A.
Heineken Italia S.p.A.
Brau Union Österreich AG
Grupa Zywiec S.A.
LLC Heineken Breweries
Vietnam Brewery Ltd.
130 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Consolidated Financial Statements continued
Summarised fi nancial information on subsidiaries with material non-controlling interests
Set out below is the summarised fi nancial information for Nigerian Breweries Plc. which has a non-controlling interest material to HEINEKEN. The fi nancial
information is based on HEINEKEN accounting policies and diff ers from local fi nancial reporting, mainly as a result of the Consolidated Breweries
acquisition in 2014. The NCI on Nigerian Breweries Plc is dispersed, no shareholder has an interest above 13 per cent.
In millions of EUR
Summarised Balance Sheet
Current
Assets
Liabilities
Total current net assets
Non-current
Assets
Liabilities
Total non-current net assets
In millions of EUR
Summarised Income Statement
Revenue
Profi t before income tax
Income tax
Net profi t from continuing operations
Net profi t from discontinuing operations
Other comprehensive income/(loss)
Total comprehensive income
Total comprehensive income attributable to NCI
Dividend paid to NCI
In millions of EUR
Summarised Cash Flow
Cash fl ow from operating activities
Interest paid
Income tax paid
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in fi nancing activities
Net change in cash and cash equivalents
Exchange diff erence
2015
2014
266
(629)
(363)
1,120
(194)
926
274
(554)
(280)
943
(303)
640
2015
2014
1,359
262
(82)
180
–
(45)
135
62
67
2015
432
(30)
(101)
301
(156)
(229)
(84)
1
1,281
297
(97)
200
–
1
201
92
82
2014
405
(13)
(115)
277
(162)
(145)
(30)
3
37. Subsequent events
Sale of Distribev SP. zo.o
On 1 February 2016, Grupa Żywiec closed the sale of 80 per cent of Distribev Sp. z o.o, Grupa Żywiec’s sales and distribution company serving the
traditional trade and horeca market, to Orbico Group.
Acquisition of non-controlling interest Pivovarna Lasko
After conclusion of the mandatory public takeover off er on 15 January 2016 and subsequent acquisitions of stakes from minority interest holders,
HEINEKEN increased its shareholding in Lasko by 44.1 per cent to 97.5 per cent.
Acquisition of non-controlling interest Desnoes & Geddes
After conclusion of the mandatory public takeover off er on 21 January 2016, HEINEKEN increased its shareholding in D&G by 22.4 per cent
to 95.8 per cent.
131 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Heineken N.V. Balance Sheet
Before appropriation of profi t
As at 31 December
In millions of EUR
Fixed assets
Financial fi xed assets
Investments in participating interests
Other investments
Deferred tax assets
Total fi nancial fi xed assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Shareholders’ equity
Issued capital
Share premium
Translation reserve
Hedging reserve
Fair value reserve
Other legal reserves
Reserve for own shares
Retained earnings
Net profi t
Total shareholders’ equity
Liabilities
Loans and borrowings
Total non-current liabilities
Loans and borrowings (current part)
Trade and other payables
Tax payable
Total current liabilities
Total liabilities
Total shareholders’ equity and liabilities
Note
2015
2014
38
39
40
40
24,522
210
72
24,804
19
5
24
24,828
922
2,701
(1,017)
(47)
122
719
(432)
8,675
1,892
13,535
10,369
10,369
782
136
6
924
11,293
24,828
22,618
97
40
22,755
69
1
70
22,825
922
2,701
(1,097)
(99)
96
743
(70)
7,697
1,516
12,409
8,933
8,933
1,349
121
13
1,483
10,416
22,825
Heineken N.V. Income Statement
For the year ended 31 December
In millions of EUR
Share of profi t of participating interests, after income tax
Other profi t after income tax
Net profi t
Note
39
2015
2,392
(500)
1,892
2014
2,215
(699)
1,516
132 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V.
Financial Statements
Reporting entity
The Company fi nancial statements of Heineken N.V. (the ‘Company’) are included in the consolidated fi nancial statements of Heineken N.V.
Basis of preparation
The Company fi nancial statements have been prepared in accordance with the provisions of Part 9, Book 2, of the Dutch Civil Code. The Company uses the
option of Article 362.8 of Part 9, Book 2, of the Dutch Civil Code to prepare the Company fi nancial statements, using the same accounting policies as in the
consolidated fi nancial statements. Valuation is based on recognition and measurement requirements of accounting standards adopted by the EU (i.e. only
IFRS that is adopted for use in the EU at the date of authorisation) as explained further in the notes to the consolidated fi nancial statements. The
Company presents a condensed income statement, using the facility of Article 402 of Part 9, Book 2, of the Dutch Civil Code.
Signifi cant accounting policies
Financial fi xed assets
Participating interests (subsidiaries, joint ventures and associates) are measured on the basis of the equity method.
Shareholders’ equity
The translation reserve and other legal reserves were previously formed under, and are still recognised in accordance with, the Dutch Civil Code.
Profi t of participating interests
The share of profi t of participating interests consists of the share of the Company in the results of these participating interests. Results on transactions,
where the transfer of assets and liabilities between the Company and its participating interests and mutually between participating interests, themselves,
are not recognised.
Participating
interests
13,662
2,215
(494)
627
(99)
(352)
(181)
(176)
–
15,202
15,202
2,392
(736)
79
70
100
4
45
–
17,156
Loans to
participating
interests
7,949
–
494
–
–
–
–
(1,027)
–
7,416
7,416
–
736
–
–
–
–
(786)
–
7,366
Total
21,611
2,215
–
627
(99)
(352)
(181)
(1,203)
–
22,618
22,618
2,392
–
79
70
100
4
(741)
–
24,522
38. Investments in participating interests
In millions of EUR
Balance as at 1 January 2014
Profi t of participating interests
Dividend payments by participating interests
Eff ect of movements in exchange rates
Changes in hedging and fair value adjustments
Actuarial gains/(losses)
Acquisition of non-controlling interests without a change in control
Investments/(repayments)
Other movements
Balance as at 31 December 2014
Balance as at 1 January 2015
Profi t of participating interests
Dividend payments by participating interests
Eff ect of movements in exchange rates
Changes in hedging and fair value adjustments
Actuarial gains/(losses)
Acquisition of non-controlling interests without a change in control
Investments/(repayments)
Other movements
Balance as at 31 December 2015
133 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
39. Shareholders’ equity
In millions of EUR
Balance as at 1 January 2014
Profi t
Other comprehensive income
Total comprehensive income
Transfer to retained earnings
Dividends to shareholders
Purchase/reissuance of own shares
Own shares granted
Share-based payments
Acquisition of non-controlling interests without a change in control
Balance as at 31 December 2014
Balance as at 1 January 2015
Profi t
Other comprehensive income
Total comprehensive income
Transfer to retained earnings
Dividends to shareholders
Purchase/reissuance of own shares
Own shares granted
Share-based payments
Acquisition of non-controlling interests without a change in control
Balance as at 31 December 2015
Share capital
922
–
–
–
–
–
–
–
–
–
922
922
–
–
–
–
–
–
–
–
–
922
Share
premium
2,701
–
–
–
–
–
–
–
–
–
2,701
2,701
–
–
–
–
–
–
–
–
–
2,701
Translation
reserve
(1,721)
–
624
624
–
–
–
–
–
–
(1,097)
(1,097)
–
80
80
–
–
–
–
–
–
(1,017)
Hedging
reserve
2
–
(101)
(101)
–
–
–
–
–
–
(99)
(99)
–
52
52
–
–
–
–
–
–
(47)
Fair value
reserve
97
–
(1)
(1)
–
–
–
–
–
–
96
96
–
26
26
–
–
–
–
–
–
122
134 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
In millions of EUR
Balance as at 1 January 2014
Profi t
Other comprehensive income
Total comprehensive income
Transfer to retained earnings
Dividends to shareholders
Purchase/reissuance of own shares
Own shares granted
Share-based payments
Acquisition of non-controlling interests without a change in control
Balance as at 31 December 2014
Balance as at 1 January 2015
Profi t
Other comprehensive income
Total comprehensive income
Transfer to retained earnings
Dividends to shareholders
Purchase/reissuance of own shares
Own shares granted
Share-based payments
Acquisition of non-controlling interests without a change in control
Balance as at 31 December 2015
Other legal
reserve
805
174
–
174
(236)
–
–
–
–
–
743
743
186
–
186
(210)
–
–
–
–
–
719
Reserve for
own shares
(41)
–
–
–
–
–
(33)
4
–
–
(70)
(70)
–
–
–
–
(384)
22
–
–
(432)
Retained
earnings
7,273
(174)
(352)
(526)
1,600
(512)
–
(4)
47
(181)
7,697
7,697
(186)
100
(86)
1,726
(676)
–
(22)
32
4
8,675
Net profi t
1,364
1,516
–
1,516
(1,364)
–
–
–
–
–
1,516
1,516
1,892
–
1,892
(1,516)
–
–
–
–
–
1,892
Shareholders’
equity
11,402
1,516
170
1,686
–
(512)
(33)
–
47
(181)
12,409
12,409
1,892
258
2,150
–
(676)
(384)
–
32
4
13,535
For more details on reserves, refer to note 22 of the consolidated fi nancial statements.
For more details on share-based payments, refer to note 29 of the consolidated fi nancial statements.
2015
9,625
106
237
1,183
11,151
–
11,151
2014
8,734
104
334
1,107
10,279
3
10,282
40. Loans and borrowings
Non-current and current liabilities
In millions of EUR
Unsecured bond issues
Unsecured bank loans
Bank overdrafts and commercial papers
Other interest-bearing liabilities
Total interest-bearing liabilities
Non-current derivatives
Loans and borrowings
135 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
40. Loans and borrowings continued
In millions of EUR
Balance as at 1 January 2015
Eff ects of movements of exchange rates
Charge from/to equity in relation to derivatives
Proceeds
Repayments
Other
Balance as at 31 December 2015
Terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
Unsecured
bond issues
8,734
5
(69)
1,506
(1,061)
510
9,625
Unsecured
bank loans
104
–
–
–
–
2
106
Bank
overdrafts
and
commercial
papers
334
–
–
6,625
(6,736)
14
237
Other
interest-
bearing
liabilities
1,107
(1)
100
–
(47)
24
1,183
Non-current
derivatives
3
–
(2)
562
(450)
(113)
–
Total
10,282
4
29
8,693
(8,294)
437
11,151
In millions of EUR
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Category
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
136 Heineken N.V. Annual Report 2015
Nominal
interest
rate %
Repayment
Carrying
amount
2015
Face value
2015
Carrying
amount
2014
Face value
2014
Currency
GBP
SGD
EUR
SGD
EUR
SGD
USD
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
7.3
2.7
4.6
1.5
1.3
2.2
1.3
2.5
2.1
2.0
1.3
3.3
1.7
3.5
1.5
2.9
2.0
2015
2015
2016
2017
2018
2018
2019
2019
2020
2021
2021
2022
2023
2024
2024
2025
2025
–
–
400
64
100
62
183
845
997
497
497
183
140
497
454
742
224
–
–
400
65
100
62
184
850
1,000
500
500
184
140
500
460
750
225
508
47
399
61
99
59
164
844
996
497
–
–
–
497
–
741
–
508
47
400
62
100
59
165
850
1,000
500
–
–
–
500
–
750
–
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
In millions of EUR
Category
Currency
Nominal
interest
rate %
Repayment
Carrying
amount
2015
Face value
2015
Carrying
amount
2014
Face value
2014
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bond
Unsecured bank loans
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
Other interest-bearing
liabilities
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under EMTN
programme
issue under 144A/
RegS
issue under 144A/
RegS
issue under 144A/
RegS
issue under 144A/
RegS
issue under 144A/
RegS
German Schuldschein
notes
2008 US private
placement
2011 US private
placement
2008 US private
placement
2008 US private
placement
2010 US private
placement
2008 US private
placement
EUR
EUR
EUR
EUR
USD
USD
USD
USD
USD
3.5
3.3
2.6
3.5
0.8
1.4
3.4
2.8
4.0
EUR
1.8 – 6.2
USD
GBP
USD
GBP
USD
USD
5.9
7.3
2.8
7.2
4.6
6.3
For fi nancial risk management and fi nancial instruments, refer to note 32.
2029
2033
2033
2043
2015
199
179
91
75
–
200
180
100
75
–
199
179
91
75
411
200
180
100
75
412
2017
1,146
1,148
1,026
1,030
2022
2023
2042
2016
2015
2016
2017
2018
2018
2018
685
915
450
111
–
34
83
44
689
919
459
111
–
34
83
44
614
819
402
110
43
32
74
41
618
824
412
111
43
32
74
41
665
666
597
597
357
10,919
358
10,986
321
9,946
321
10,011
137 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
41. Auditor fees
Other expenses in the consolidated fi nancial statements include EUR8.7 million of fees in 2015 for services provided by Deloitte Accountants B.V. and its
member fi rms and/or affi liates (2014: EUR12.4 million for services provided by KPMG Accountants N.V. and its member fi rms and/or affi liates). Fees for audit
services include the audit of the fi nancial statements of the Company and its subsidiaries. Fees for other audit services include review of interim fi nancial
statements, sustainability, subsidy and other audits. Fees for tax services include tax compliance and tax advice. Fees for other non-audit services include
agreed-upon procedures and advisory services.
In millions of EUR
Audit of HEINEKEN and its subsidiaries
Other audit services
Tax services
Other non-audit services
Total
42. Off -balance sheet commitments
In millions of EUR
Undrawn committed bank facility
Declarations of joint and several liability
Deloitte
Accountants
B.V.
KPMG
Accountants
N.V.
Other Deloitte
member
fi rms and
affi liates
Other KPMG
member
fi rms and
affi liates
2015
2.3
0.4
–
–
2.7
2014
1.9
0.5
–
0.1
2.5
2015
5.5
0.3
0.2
–
6.0
2014
7.4
0.5
1.5
0.5
9.9
Total
2015
7.8
0.7
0.2
–
8.7
2014
9.3
1.0
1.5
0.6
12.4
Total 2015
2,500
Less than
1 year
–
1 – 5 years
2,500
More than
5 years
–
Total 2014
2,500
2015
HEINEKEN
companies
1,953
Third parties
–
2014
HEINEKEN
companies
1,717
Third parties
–
Fiscal unity
The Company is part of the fi scal unity of HEINEKEN in the Netherlands. As a result, the Company is liable for the tax liability of the fi scal unity in the
Netherlands.
43. Subsequent events
For subsequent events, refer to note 37.
138 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
44. Participating interests
For disclosures of signifi cant direct and indirect participating interests, refer to notes 16 and 36 to the consolidated fi nancial statements.
A declaration of joint and several liability pursuant to the provisions of Section 403, Part 9, Book 2, of the Dutch Civil Code has been issued with respect to
the following legal entities established in the Netherlands:
Percentage of ownership
Country of incorporation
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
2015
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2014
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
Heineken Nederlands Beheer B.V.
Heineken Group B.V.
Heineken Brouwerijen B.V.
Heineken CEE Investments B.V.
Heineken Nederland B.V.
Heineken International B.V.
Heineken Supply Chain B.V.
Heineken Global Procurement B.V.
Heineken Mexico B.V.
HIBV Skopje Holdings B.V.
Heineken Beer Systems B.V.
Amstel Brouwerij B.V.
Vrumona B.V.
B.V. Beleggingsmaatschappij Limba
Brand Bierbrouwerij B.V.
Heineken CEE Holdings B.V.
Brasinvest B.V.
Heineken Asia Pacifi c B.V.
B.V. Handel- en Exploitatie Maatschappij Schoonhoven
Distilled Trading International B.V.
Premium Beverages International B.V.
De Brouwketel B.V.
Proseco B.V.
Roeminck Insurance N.V.
Heineken Americas B.V.
Heineken Export Americas B.V.
Amstel Export Americas B.V.
Horeca European Buying B.V.
Heineken Brazil B.V.
B.V. Panden Exploitatie Maatschappij PEM
Heineken Exploitatie Maatschappij B.V.
Hotel De L’Europe B.V.
Hotel De L’Europe Monumenten I B.V.
Hotel De L’Europe Monumenten II B.V.
Heineken Groothandel B.V.
Heineken Horeca Services B.V.
Heineken Namibia B.V.
139 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Notes to the Heineken N.V. Financial Statements continued
45. Other disclosures
Remuneration
Refer to note 35 of the consolidated fi nancial statements for the remuneration and incentives of the Executive Board and Supervisory Board. The Executive
Board members are the only employees or assignees of the Company.
Executive and Supervisory Board statement
The members of the Supervisory Board signed the fi nancial statements in order to comply with their statutory obligation pursuant to Article 2:101,
paragraph 2, of the Dutch Civil Code.
The members of the Executive Board signed the fi nancial statements in order to comply with their statutory obligation pursuant to Article 2:101, paragraph
2, of the Dutch Civil Code and Article 5:25c, paragraph 2 sub c, of the Financial Markets Supervision Act.
Amsterdam, 9 February 2016
Executive Board
Van Boxmeer
Debroux
Supervisory Board
Wijers
Fernández Carbajal
Das
de Carvalho
Fentener van Vlissingen
Minnick
Navarre
Astaburuaga Sanjinés
Scheff ers
Huët
140 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Appropriation of Profi t
Article 12, paragraph 7, of the Articles of Association stipulates:
“Of the profi ts, payment shall fi rst be made, if possible, of a dividend of six per cent of the issued part of the authorised share capital.
The amount remaining shall be at the disposal of the General Meeting of Shareholders.”
It is proposed to appropriate EUR741 million of the profi t for payment of a dividend and to add EUR1,151 million to the retained earnings.
Civil Code
Heineken N.V. is not a ‘structuurvennootschap’ within the meaning of Section 2: 152-164 of the Dutch Civil Code. Heineken Holding N.V.,
a company listed on the NYSE Euronext Amsterdam, holds 50.005 per cent of the issued shares of Heineken N.V.
Authorised capital
The Company’s authorised capital amounts to EUR2,500 million.
141 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Independent Auditor’s Report
To: The Annual General Meeting of Heineken N.V.
Report on the audit of the fi nancial statements 2015
Our opinion
We have audited the fi nancial statements 2015 of Heineken N.V. (‘the Company’), based in Amsterdam. The fi nancial statements include the consolidated
fi nancial statements and the company fi nancial statements.
In our opinion:
• The consolidated fi nancial statements give a true and fair view of the fi nancial position of Heineken N.V. as at 31 December 2015 and of its result and
its cash fl ows for 2015 in accordance with International Financial Reporting Standards as adopted by the European Union (‘EU-IFRS’) and with Part 9 of
Book 2 of the Dutch Civil Code.
• The company fi nancial statements give a true and fair view of the fi nancial position of Heineken N.V. as at 31 December 2015 and of its result for the
year 2015 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated fi nancial statements comprise:
• The consolidated statement of fi nancial position as at 31 December 2015.
• The following consolidated statements for 2015: the income statement, the statement of comprehensive income, the statement of cash fl ows and the
statement of changes in equity.
• The notes comprising a summary of the signifi cant accounting policies and other explanatory information.
The company fi nancial statements comprise:
• The company balance sheet as at 31 December 2015.
• The company income statement for 2015.
• The notes comprising a summary of the signifi cant accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further
described in the section “Our responsibilities for the audit of the fi nancial statements” of our report.
We are independent of Heineken N.V. in accordance with the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten” (‘ViO’)
and other relevant independence regulations in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en beroepsregels
accountants” (‘VGBA’).
We believe the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.
Materiality
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to infl uence
the economic decisions of users taken on the basis of these fi nancial statements. The materiality aff ects the nature, timing and extent of our audit
procedures and the evaluation of the eff ect of identifi ed misstatements on our opinion.
Based on our professional judgement we determined the materiality for the fi nancial statements as a whole at EUR100 million. The materiality is based on
consolidated profi t before taxation (4%). We have also taken into account misstatements and/or possible misstatements that in our opinion are material
for the users of the fi nancial statements for qualitative reasons.
Audits of group entities (components) were performed using materiality levels determined by the judgement of the Group audit team, having regard to
the materiality of the consolidated fi nancial statements as a whole. Component materiality did not exceed EUR40 million and for the majority of the
components, materiality is signifi cantly less than this amount.
We agreed with the Supervisory Board that misstatements in excess of EUR5 million, which are identifi ed during the audit, would be reported to them, as
well as smaller misstatements that, in our view, must be reported on qualitative grounds.
142 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Independent Auditor’s Report continued
Scope of the group audit
Heineken N.V. is at the head of a group of entities. The fi nancial information of this group is included in the fi nancial statements of Heineken N.V.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we
have determined the nature and extent of the audit procedures to be carried out for the components. Decisive were size and/or risk profi le of the
components. On this basis, we selected components for which an audit or review had to be carried out on the complete set of fi nancial information or
specifi c items.
Our group audit mainly concentrated on signifi cant components in terms of size and fi nancial interest or where signifi cant risks or complex activities were
present, leading to full scope audits performed for 27 components.
We have performed audit procedures ourselves at corporate entities and the operations in the Netherlands. Furthermore, we performed audit procedures
at group level on areas such as consolidation, disclosures, goodwill, intangible assets, joint ventures, fi nancial instruments, acquisitions and divestments.
Specialists were involved amongst others in the areas of treasury, IT, tax, accounting and valuation.
For selected component audit teams, the group audit team provided detailed written instructions, which, in addition to communicating the requirements
of component audit teams, detailed signifi cant audit areas and information obtained centrally relevant to the audit of individual components.
Furthermore, we developed a plan for overseeing each component audit team based on its relative signifi cance to the Company and certain other risk
characteristics. This included procedures such as visiting components during the transition period and throughout the year, performing fi le reviews, holding
conference calls, attending meetings and reviewing component audit team deliverables to gain suffi cient understanding of the work performed. For
smaller components we have performed review procedures or specifi c audit procedures.
By performing the procedures mentioned above we have been able to obtain suffi cient and appropriate audit evidence on the group’s fi nancial
information to provide an opinion on the fi nancial statements.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most signifi cance in our audit of the fi nancial statements. We have
communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive refl ection of all matters discussed.
These matters were addressed in the context of our audit of the fi nancial statements as a whole and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Revenue recognition – accruals for promotional allowances and volume rebates
Accounting for promotional allowances and volume rebates impacts the amounts of revenue recognized during the period. Signifi cant management
judgement is required to estimate the values of promotional allowances and volume rebates. This estimate is considered to be a key audit matter relevant
to our audit of the fi nancial statements.
Our audit procedures included, amongst others, evaluating controls relating to management’s process for determining the value of promotional allowances
and the volume rebates. In addition, we performed substantive testing and analytical procedures to test the accuracy and completeness of the underlying
calculation of the accruals. These procedures included challenging the appropriateness of management’s assumptions and estimates and agreeing input
data, including pricing and allowance data to underlying agreements with customers.
Returnable packaging – valuation of deposit liability
During the course of business the Company provides returnable packaging to its customers. In most instances the Company collects deposits for
returnable packaging. A particular area of judgement is involved in assessing the value of the deposit liability. There is a risk that the assumptions used in
the calculation of the liability for returnable packaging are unreasonable, which could result in an incorrect valuation of the liability for returnable
packaging. As a response to this risk we performed, amongst others, substantive procedures on the Company’s calculation of the returnable packaging
liability, focusing on the valuation and completeness of the deposit liability.
143 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Independent Auditor’s Report continued
Goodwill – management assessment of recoverability
Goodwill represents 30% of the balance sheet total and 75% of total equity. Procedures over management’s annual impairment test were signifi cant to our
audit because the assessment process is complex and the test relies on estimates and assumptions. Goodwill is allocated to Cash Generating Units (CGUs)
and groups of CGUs. The Company uses assumptions in respect of future market and economic conditions such as economic growth, expected infl ation
rates, demographic developments, expected market share, revenue and margin development. For our audit we assessed and tested the assumptions, the
discount rates, methodologies and data used by the Company, for example by comparing them to external data such as expected infl ation rates, external
market growth expectations and by analysing sensitivities in the Company’s valuation model. We included valuation specialists in our team to assist us in
these audit activities. We specifi cally focused on the sensitivity in the available headroom of CGUs and whether a reasonably possible change in
assumptions could cause the carrying amount to exceed its recoverable amount. We also assessed the historical accuracy of management’s estimates. We
assessed the adequacy of the Company’s disclosure note 15 in the fi nancial statements about those assumptions to which the outcome of the impairment
test is most sensitive.
Taxes – provisions for uncertain tax positions and valuation of deferred tax assets
The Company operates across a number of diff erent tax jurisdictions and is subject to periodic challenges by local tax authorities during the normal course
of business, including transaction-related taxes and transfer pricing arrangements. In those cases where the amount of tax payable or recoverable is
uncertain, the Company establishes provisions based on its judgement of the probable amount of the liability or recovery. Deferred tax assets for tax losses
carried forward are recognized by the Company to the extent that it is probable that future taxable income will be available against which unused tax
losses can be utilized. We focused on these areas because of the level of judgement that is applied in quantifying appropriate provisions for uncertain tax
positions and in determining assumptions about future market and economic conditions, as it relates to the recoverability of deferred tax assets. Using our
own tax specialists, we obtained a detailed understanding of the Company’s tax strategy including current transfer pricing arrangements. We assessed tax
risks, legislative developments and the status of ongoing local tax authority audits. We evaluated and challenged the Company’s judgements in respect of
estimates of tax exposures, recoverable amounts and contingencies. We considered correspondence with tax authorities and relevant historical and recent
judgements, and also assessed legal opinions from third party tax advisors. With regard to recorded deferred tax assets, we evaluated the Company’s
assumptions and estimates in relation to the likelihood of generating suffi cient future taxable income based on budgets and business plans. Finally we
considered the adequacy of the Company’s disclosures in notes 3 and 18 regarding uncertain tax positions and recognized deferred tax assets.
Initial audit engagement
There are additional considerations involved in performing initial audit engagements. After being appointed as the Company’s auditors in 2014, we
developed a comprehensive transition plan starting in August 2014 to ensure an eff ective transition from the predecessor auditor. In order to develop an
appropriate audit strategy and audit plan in the initial audit engagement at the Company, specifi c planning activities were necessary. These included, but
were not limited, to:
• Obtaining an initial understanding of the Company and its business including background information, strategy, business risks, IT landscape and its
fi nancial reporting and internal controls framework, to assist in performing risk assessment procedures;
• Obtaining suffi cient appropriate audit evidence regarding opening balances and the appropriate selection and consistent application of accounting
policies;
• Communicating with the predecessor auditor, including reviews of audit working papers for previous periods; and
• Attending closing meetings and Audit Committee meetings related to the previous audit year.
The foregoing has been used as a basis for our audit plan. We discussed and agreed our audit plan with the Audit Committee and Executive Board of
Heineken N.V. in December 2014 and have reported status updates, progress reports and key fi ndings from our audit process on a regular basis.
Internal controls over fi nancial reporting
The Company operates various processes and procedures, both centrally as well as locally, that are important for reliable fi nancial reporting. During 2015
the Company further deployed its test program for internal controls over fi nancial reporting. We considered the Company’s internal controls over fi nancial
reporting as a basis for designing audit procedures that are appropriate for our audit. We are however not required nor engaged to perform an audit of
internal controls over fi nancial reporting. Accordingly, we do not express an opinion on the eff ectiveness of the Company’s internal controls over
fi nancial reporting.
144 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Independent Auditor’s Report continued
We have tailored our procedures performed to the diverse IT landscapes and the locally established business processes of the Company. We have
performed walkthroughs to gain our detailed understanding of the entity and identify the relevant controls. Where eff ective for the audit we have tested
the operating eff ectiveness of controls. In cases of defi ciencies we have evaluated the compensating controls and measures of the Company and/or
carried out tailored procedures to address the risk.
Responsibilities of the Executive Board and the Supervisory Board for the Financial Statements
The Executive Board is responsible for the preparation and fair presentation of the fi nancial statements in accordance with EU-IFRS and Part 9 of Book 2 of
the Dutch Civil Code, and for the preparation of the Report of the Executive Board in accordance with Part 9 of Book 2 of the Dutch Civil Code.
Furthermore, the Executive Board is responsible for such internal control as the Executive Board determines is necessary to enable the preparation of the
fi nancial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the fi nancial statements, the Executive Board is responsible for assessing the Company’s ability to continue as a going
concern. Based on the fi nancial reporting frameworks mentioned, the Executive Board should prepare the fi nancial statements using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The
Executive Board should disclose events and circumstances that may cast signifi cant doubt on the Company’s ability to continue as a going concern in the
fi nancial statements.
The Supervisory Board is responsible for overseeing the Company’s fi nancial reporting process.
Our responsibilities for the audit of the fi nancial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain suffi cient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all errors and fraud.
For an overview of our responsibilities we refer to NBA’s website www.nba.nl (Standard texts auditor’s report).
Report on other legal and regulatory requirements
Report on the Report of the Executive Board and the other information
Pursuant to the legal requirements of Part 9 of Book 2 of the Dutch Civil Code (concerning our obligation to report about the Report of the Executive Board
and other information):
•
•
We have no defi ciencies to report as a result of our examination whether the Report of the Executive Board, to the extent we can assess, has been
prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code, and whether the information as required by Part 9 of Book 2 of the Dutch Civil
Code has been annexed.
We report that the Report of the Executive Board, to the extent we can assess, is consistent with the fi nancial statements.
Engagement
We were appointed by the Annual General Meeting as auditor of Heineken N.V. on 24 April 2014. The audit for year 2015 was our fi rst year audit.
Amsterdam, 9 February 2016
Deloitte Accountants B.V.
J. Dalhuisen
145 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Shareholder Information
Investor Relations
HEINEKEN takes a proactive role in maintaining an open dialogue with shareholders and bondholders, providing accurate and complete information in a
timely and consistent way. The Company does this through media releases, the Annual Report, presentations, webcasts, investor conferences and regular
briefi ngs with analysts, fund managers and shareholders.
Ownership structure
Heading the HEINEKEN Group, Heineken Holding N.V. is no ordinary holding company. Since its formation in 1952, the objective of Heineken Holding N.V.,
pursuant to its Articles of Association, has been to manage and/or supervise the HEINEKEN Group and to provide services for Heineken N.V. The role
Heineken Holding N.V. has performed for the HEINEKEN Group since 1952 has been to safeguard its continuity, independence and stability and create
conditions for controlled, steady growth of the activities of the HEINEKEN Group. The stability provided by this structure has enabled the HEINEKEN Group
to remain independent and to rise to its present position as the brewer with the widest international presence and one of the world’s largest brewing groups.
Every Heineken N.V. share held by Heineken Holding N.V. is matched by one share issued by Heineken Holding N.V. The dividend payable on the two shares
is identical. Historically, however, Heineken Holding N.V. shares have traded at a lower price due to technical factors that are market-specifi c. Heineken
Holding N.V. holds 50.005 per cent of the Heineken N.V. issued shares. On 31 December 2015, L’Arche Green N.V. held 51.709 per cent of the Heineken
Holding N.V. shares. The Heineken family holds 88.67 per cent of L’Arche Green N.V. The remaining 11.33 per cent of L’Arche Green N.V. is held by the Hoyer
family. Mrs. de Carvalho-Heineken also owns a direct 0.03 per cent stake in Heineken Holding N.V.
Heineken N.V. shares and options
Heineken N.V. shares are traded on Euronext Amsterdam, where the Company is included in the main AEX Index. The shares are listed under ISIN code
NL0000009165. Prices for the ordinary shares may be accessed on Bloomberg under the symbol HEIA.NA and on the Reuters Equities 2000 Service under
HEIA.AS. Options on Heineken N.V. shares are listed on Euronext Amsterdam.
In 2015, the average daily trading volume of Heineken N.V. shares was 873,567 shares.
Market capitalisation Heineken N.V.
On 31 December 2015, there were 569,683,655 shares of EUR1.60 nominal value outstanding (excluding own shares held by the company).
At a year-end price of EUR78.77 on 31 December 2015, the market capitalisation of Heineken N.V. on the balance sheet date was EUR44.9 billion.
Year-end price
Highest closing price
Lowest closing price
EUR78.77
EUR85.23
EUR56.81
31 December 2015
19 November 2015
6 January 2015
146 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Shareholder Information continued
Share distribution comparison
year-on-year Heineken N.V. shares*
Based on free float (excluding the holding of
Heineken Holding N.V. and FEMSA in Heineken N.V.)
2.4%
12.5%
4.5%
6.3%
14.3%
19.5%
Based on 215.8 million shares in free float
(cid:127) Americas
(cid:127) Rest of Europe
(cid:127) UK/Ireland
(cid:127) Rest of World
(cid:127) Netherlands
(cid:127) Retail
(cid:127) Unidentified
40.5%
19.5%
14.3%
6.3%
4.5%
2.4%
12.5%
* Source: CMi2i estimate based on available
information January 2016.
40.5%
0
10
20
30
40
50
60
70
80
90
Heineken N.V. share price
In EUR, Euronext Amsterdam
2015
2014
2013
2012
2011
2010
78.77
58.95
49.08
50.47
35.77
36.69
Share price range
Year-end price
Average trade in 2015: 873,567 shares per day
Dividend per share
In EUR
2015
2014
2013
2012
2011
2010
1.30
1.10
0.89
0.89
0.83
0.76
Heineken Holding N.V. shares
The ordinary shares of Heineken Holding N.V. are traded on Euronext Amsterdam. The shares are listed under ISIN code NL0000008977. Prices for the ordinary
shares may be accessed on Bloomberg under the symbol HEIO.NA and on the Reuters Equities 2000 Service under HEIO.AS.
In 2015, the average daily trading volume of Heineken Holding N.V. shares was 158,200 shares.
Market capitalisation Heineken Holding N.V.
On 31 December 2015, there were 288,030,168 ordinary shares of EUR1.60 nominal value in issue and 250 priority shares of EUR2.00 nominal
value in issue.
At a year-end price of EUR71.00 on 31 December 2015, the market capitalisation of Heineken Holding N.V. on balance sheet date was EUR20.5 billion.
Year-end price
Highest closing price
Lowest closing price
EUR71.00
EUR76.33
EUR50.62
31 December 2015
2 December 2015
5 January 2015
American Depositary Receipts (ADRs)
HEINEKEN’s shares are trading Over-the-Counter (OTC) in the US as American Depositary Receipts (ADRs). There are two separate Heineken ADR
programmes representing ownership respectively in: 1) Heineken N.V. and 2) Heineken Holding N.V. For both programmes, the ratio between HEINEKEN
ADRs and the ordinary Dutch (EUR denominated) shares is 2:1, i.e. two ADRs represent one HEINEKEN ordinary share. Deutsche Bank Trust Company
Americas acts as depositary bank for HEINEKEN’s ADR programmes.
Heineken N.V.
Ticker: HEINY
ISIN: US4230123014
CUSIP: 423012301
Structure: Sponsored Level I ADR
Exchange: OTCQX
Ratio (DR:ORD): 2:1
Heineken Holding N.V.
Ticker: HKHHY
ISIN: US4230081014
CUSIP: 423008101
Structure: Sponsored Level I ADR
Exchange: OTCQX
Ratio (DR:ORD): 2:1
147 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Shareholder Information continued
Share distribution comparison
year-on-year Heineken Holding N.V. shares*
Based on free float (excluding holding of l ‘Arche
Green N.V. and FEMSA in Heineken Holding N.V.)
19.2%
1.4%
4.7%
4.0%
18.7%
10.3%
Heineken Holding N.V. share price
In EUR, Euronext Amsterdam
2015
2014
2013
2012
2011
2010
71.00
51.93
45.99
41.44
31.62
32.53
41.7%
0
10
20
30
40
50
60
70
80
Share price range
Year-end price
Average trade in 2015: 158,200 shares per day
Based on 96.0 million shares in free float
(cid:127) Americas
(cid:127) Rest of Europe
(cid:127) UK/Ireland
(cid:127) Rest of World
(cid:127) Netherlands
(cid:127) Retail
(cid:127) Unidentified
41.7%
10.3%
18.7%
4.0%
1.4%
4.7%
19.2%
* Source: CMi2i estimate based on available
information January 2016.
ADR contact information
Deutsche Bank Trust Company Americas
c/o American Stock Transfer & Trust Company
Peck Slip Station
P.O. Box 2050
New York, NY 10272-2050
Email: DB@amstock.com
Shareholder Service (toll-free) Tel. +1 866 706 0509
Shareholder Service (international) Tel. +1 718 921 8124
www.amstock.com
Contact details for ADR brokers and institutional investors
US Tel: +1 212 250 9100
UK Tel: +44 207 547 6500
The Company ADR programmes are sponsored by Deutsche Bank Trust Company Americas (Deutsche Bank). As the depositary bank, Deutsche Bank
performs the following roles for ADR holders as further detailed in the Deposit Agreement:
• Records and maintains the register of ADR holders
• Is the stock transfer agent
• Distributes dividends in US dollars
• Facilitates the voting process and the exercise of the voting rights of ADR holders at any General Meeting of Shareholders if permitted by the Company
and the Deposit Agreement
• Issues and cancels HEINEKEN American Depositary Receipts (ADRs)
• Can distribute circulars and documentation in connection with any General Meeting of Shareholders if applicable.
For those holders who are not registered because their ADRs are held through a ‘Street name’ (nominee account), your nominee will receive Company
documents from time to time from Deutsche Bank to distribute to ADR holders. You need to make arrangements with your nominee if you wish to receive
such documents and to be able to exercise your vote through the depositary bank at General Meetings (if applicable).
148 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents
Shareholder Information continued
Financial calendar in 2016 for both Heineken N.V. and Heineken Holding N.V.
Announcement of 2015 results
Publication of Annual Report
Trading update fi rst quarter 2016
Annual General Meeting of Shareholders
Quotation ex-fi nal dividend 2015
Final dividend 2015 payable
Announcement of half-year results 2016
Quotation ex-interim dividend
Interim dividend 2016 payable
Trading update third quarter 2016
10 February
17 February
20 April
21 April
25 April
4 May
1 August
3 August
11 August
26 October
Dividend policy
The dividend policy of Heineken N.V. intends to preserve the independence of the Company, to maintain a healthy fi nancial structure and to retain
suffi cient earnings in order to grow the business both organically and through acquisitions.
The dividend payments are related to the annual development of the net profi t before exceptional items and amortisation of acquisition-related intangible
assets (net profi t beia).
Dividends are paid in the form of an interim dividend and a fi nal dividend. The interim dividend is fi xed at 40 per cent of the total dividend of the previous
year. Annual dividend proposals will remain subject to shareholder approval.
Contact Heineken N.V. and Heineken Holding N.V.
Further information on Heineken N.V. is available from the Investor Relations department, telephone + 31 20 523 95 90
or by email: investors@heineken.com.
Further information on Heineken Holding N.V. is available by telephone +31 20 622 11 52. Information is also available from
the Investor Relations department, telephone +31 20 523 95 90 or by email: investors@heineken.com.
Further shareholder information is available on the Company’s website: www.theHEINEKENcompany.com/investors.
149 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Bondholder Information
In 2008, HEINEKEN established a Euro Medium Term Note (EMTN) Programme, which was last updated in March 2015. The programme allows Heineken
N.V. to issue Notes for a total amount of up to EUR10 billion. Currently approximately EUR6.5 billion is outstanding under the programme.
Heineken N.V. was assigned solid investment grade credit ratings by Moody’s Investor Service and Standard & Poor’s in 2012. The ratings from both
agencies, Baa1/P-2 and BBB+/A-2 respectively, have ‘stable’ outlooks as per the date of the 2015 Annual Report.
On 10 September 2015, HEINEKEN issued 6-year Notes for a principal amount of EUR500 million with a coupon of 1.25%.
In October HEINEKEN privately placed EUR540 million of 7-year USD Notes, 8-year and 10-year EUR Notes, with a weighted average yield of approximately
2.4%. On 9 December 2015, 9-year Notes for a principal amount of EUR460 million were issued with a coupon of 1.50%.
All these Notes have been issued under HEINEKEN’s Euro Medium Term Note Programme.
In 2015, HEINEKEN has launched a EUR1.0 billion Euro Commercial Paper (ECP) programme to facilitate its cash management operations and to further
diversify its funding sources. EUR237 million was in issue as per 31st December 2015.
Traded
Heineken N.V. Notes
144A/RegS 2015
EUR EMTN 2016
144A/RegS 2017
EUR EMTN 2018
EUR EMTN 2019
EUR EMTN 2020
EUR EMTN 2021
EUR EMTN 2021
144A/RegS 2022
144A/RegS 2023
EUR EMTN 2023
EUR EMTN 2024
EUR EMTN 2024
EUR EMTN 2025
EUR EMTN 2025
EUR EMTN 2029
EUR EMTN 2033
EUR EMTN 2033
144A/RegS 2042
Issue date
10 October 2012
8 October 2009
10 October 2012
18 April 2013
19 March 2012
2 August 2012
4 April 2013
10 September 2015
3 April 2012
10 October 2012
23 October 2015
19 March 2012
7 December 2015
2 August 2012
20 October 2015
30 January 2014
15 April 2013
19 April 2013
10 October 2012
Total face value
USD 500 million
EUR 400 million
USD 1.25 billion
EUR 100 million
EUR 850 million
EUR 1 billion
EUR 500 million
EUR 500 million
USD 750 million
USD 1 billion
EUR 140 million
EUR 500 million
EUR 460 million
EUR 750 million
EUR 225 million
EUR 200 million
EUR 180 million
EUR 100 million
USD 500 million
Interest rate
0.800%
4.625%
1.400%
1.250%
2.500%
2.125%
2.000%
1.250%
3.400%
2.750%
1.700%
3.500%
1.500%
2.875%
2.000%
3.500%
3.250%
2.562%
4.000%
Maturity
1 October 2015
10 October 2016
1 October 2017
18 April 2018
19 March 2019
4 August 2020
6 April 2021
10 September 2021
1 April 2022
1 April 2023
23 October 2023
19 March 2024
7 December 2024
4 August 2025
20 October 2025
30 July 2029
15 April 2033
19 April 2033
1 October 2042
ISIN code
US423012AC71
XS0456567055
US423012AB98
XS0918766550
XS0758419658
XS0811554962
XS0911691003
XS1288852939
US423012AA16
US423012AD54
XS1310154536
XS0758420748
XS1330434389
XS0811555183
XS1309072020
XS1024136282
XS0916345621
XS0920838371
US423012AE38
The EMTN programme and the above Heineken N.V. Notes issued thereunder are listed on the Luxembourg Stock Exchange.
Traded Heineken Asia Pacifi c
Pte. Ltd.* Notes
SGD MTN 2020
SGD MTN 2022
Issue date
March 3, 2009
January 7, 2010
Total face value
SGD 22.25 million
SGD 16.25 million
Interest rate
3.780%
4.000%
Maturity
March 3, 2020
January 7, 2022
ISIN code
SG7V34954621
SG7U93952517
The above Heineken Asia Pacifi c Pte. Ltd.* Notes are listed on the Singapore Exchange.
* After a name change Heineken Asia Pacifi c Pte. Ltd is currently registered as Heineken Asia MTN Pte. Ltd.
150 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Historical Summary
Revenue and profi t
In millions of EUR
Revenue
Results from operating activities
Results from operating activities (beia)
as % of revenue
as % of total assets
Net profi t
Net profi t (beia)
as % of equity attributable to equity holders of the Company
Dividend proposed
as % of net profi t (beia)
Per share
In millions of EUR
Cash fl ow from operating activities
Net profi t (beia) basic
Net profi t (beia) diluted
Dividend proposed
Equity attributable to equity holders of the Company
Cash fl ow statement
In millions of EUR
Cash fl ow from operations
Cash fl ow related to interest, dividend and income tax
Cash fl ow from operating activities
Cash fl ow (used in)/from operational investing activities
Free operating cash fl ow
Cash fl ow (used in)/from acquisitions and disposals
Dividend paid
Cash fl ow (used in)/from fi nancing activities, excluding dividend
Net cash fl ow
2015
2014
2013
20121
2011
20,511
3,075
3,381
16.5
9.0
1,892
2,048
15.1
741
36.2
6.10
3.58
3.57
1.30
23.65
4,486
(997)
3,489
(1,797)
1,692
(267)
(909)
(264)
252
19,257
2,780
3,129
16.2
9.0
1,516
1,758
14.2
632
35.9
5.32
3.06
3.05
1.10
21.58
4,140
(1,082)
3,058
(1,484)
1,574
(189)
(723)
(1,730)
(1,068)
19,203
2,554
2,941
15.3
8.8
1,364
1,585
13.9
512
32.3
5.07
2.76
2.75
0.89
19.83
3,983
(1,069)
2,914
(1,396)
1,518
555
(710)
(1,042)
321
18,383
3,697
2,666
14.5
7.4
2,914
1,661
14.2
512
30.8
4.69
2.89
2.88
0.89
20.41
3,518
(823)
2,695
(1,210)
1,485
(4,415)
(604)
3,660
126
17,123
2,215
2,458
14.4
9.1
1,430
1,584
16.2
477
30.1
5.05
2.71
2.7
0.83
16.702
3,720
(809)
2,911
(818)
2,093
(937)
(580)
(454)
122
Cash conversion rate
Financing ratios
Net debt/EBITDA (beia)
73.3%
78.9%
84.0%
81.5%
122.1%
2.44
2.503
2.58
3.09
2.27
1 Restated for the revised IAS 19 as implemented in 2013 and fi nalisation of the purchase price allocation for APB.
2 Including the eff ect of the Allotted Share Delivery Instrument (ASDI) as included in the Annual Report 2011.
3 Revised for the change in defi nition of net debt in 2015.
151 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Historical Summary continued
EBIT (beia)/net interest expense
Free operating cash fl ow/net debt
Net debt/total equity
Financing
In millions of EUR
Share capital
Reserves and retained earnings
Equity attributable to equity holders of the Company
Non-controlling interest
Total equity
Employee benefi ts
Provisions (including deferred tax liabilities)
Non-current loans and borrowings
Other liabilities (excluding provisions)
Liabilities (excluding provisions and employee benefi ts)
Total equity and liabilities
Equity attributable to equity holders of the Company/
(employee benefi ts, provisions and liabilities)
Employment of capital
In millions of EUR
Property, plant and equipment
Intangible assets
Other non-current assets
Total non-current assets
Inventories
Trade and other current assets
Cash, cash equivalents and current other investments
Total current assets
Total assets
Total equity/total non-current assets
Current assets/current liabilities (excluding provisions)
2015
10.1
15%
0.82
922
12,613
13,535
1,535
15,070
1,289
2,332
10,658
8,365
19,023
37,714
2014
8.0
14%2
0.82
922
11,487
12,409
1,043
13,452
1,443
2,066
9,499
8,370
17,869
34,830
2013
5.8
14%
0.9
922
10,480
11,402
954
12,356
1,202
1,982
9,853
7,944
17,797
33,337
20121
6.0
12%
1.0
922
10,812
11,734
1,071
12,805
1,575
2,340
11,437
7,823
19,260
35,980
2011
6.4
25%
0.8
922
8,852
9,774
318
10,092
1,174
1,483
8,199
6,179
14,378
27,127
0.60
0.58
0.58
0.46
0.57
9,552
18,183
4,065
31,800
1,702
3,372
840
5,914
37,714
0.47
0.71
8,718
16,341
3,685
28,744
1,634
3,771
681
6,086
34,830
0.47
0.73
8,454
15,934
3,454
27,842
1,512
2,693
1,290
5,495
33,337
0.44
0.70
8,844
17,688
3,911
30,443
1,596
2,904
1,037
5,537
35,980
0.42
0.72
7,860
10,835
3,724
22,419
1,352
2,543
813
4,708
27,127
0.45
0.78
1 Restated for the revised IAS 19 as implemented in 2013 and fi nalisation of the purchase price allocation for APB.
2 Revised for the change in defi nition of net debt in 2015.
152 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Glossary
Acquisition-related intangible assets
Acquisition-related intangible assets are assets that HEINEKEN only recognises as part of a purchase price allocation following an acquisition.
This includes, among others, brands, customer-related and certain contract-based intangibles.
Beia
Before exceptional items and amortisation of acquisition-related intangible assets.
Cash conversion ratio
Free operating cash fl ow/net profi t (beia) before deduction of non-controlling interests.
Cash fl ow (used in)/from operational investing activities
This represents the total of cash fl ow from sale and purchase of property, plant and equipment and intangible assets, proceeds and receipts of loans
to customers and other investments.
Dividend payout
Proposed dividend as percentage of net profi t (beia).
Earnings per share
Basic
Net profi t divided by the weighted average number of shares – basic – during the year.
Diluted
Net profi t divided by the weighted average number of shares – diluted – during the year.
EBIT
Earnings before interest, taxes and net fi nance expenses. EBIT includes HEINEKEN’s share in net profi t of joint ventures and associates.
EBITDA
Earnings before interest, taxes, net fi nance expenses, depreciation and amortisation. EBITDA includes HEINEKEN’s share in net profi t of joint ventures
and associates.
Eff ective tax rate
Income tax expense expressed as a percentage of the profi t before income tax, adjusted for share of profi t of associates and joint ventures and
impairments thereof (net of income tax).
Eia
Exceptional items and amortisation of acquisition-related intangible assets.
Free operating cash fl ow
This represents the total of cash fl ow from operating activities and cash fl ow from operational investing activities.
Innovation rate
Revenues generated from innovations (introduced in the past 40 quarters for a new category, 20 quarters for a new brand and 12 quarters for all other
innovations, excluding packaging renovations) divided by total revenue.
153 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Glossary continued
Net debt
Non-current and current interest bearing loans and borrowings, bank overdrafts and commercial papers and market value of cross-currency interest rate
swaps less investments held for trading and cash.
Net profi t
Profi t after deduction of non-controlling interests (profi t attributable to equity holders of the Company).
Operating profi t
Results from operating activities.
Organic growth
Growth excluding the eff ect of foreign currency translational eff ects, consolidation changes, exceptional items and amortisation of acquisition-related
intangible assets.
Organic volume growth
Growth in volume, excluding the eff ect of consolidation changes.
Profi t
Total profi t of HEINEKEN before deduction of non-controlling interests.
®
All brand names mentioned in this report, including those brand names not marked by an ®, represent registered trademarks and are legally protected.
Region
A region is defi ned as HEINEKEN’s managerial classifi cation of countries into geographical units.
Volume
(Consolidated) beer volume
100 per cent of beer volume produced and sold by consolidated companies.
Group beer volume
Consolidated beer volume plus attributable share of beer volume from joint ventures and associates.
Heineken® volume in premium segment
Heineken® volume excluding Heineken® volume in the Netherlands.
Licensed & non-beer volume
HEINEKEN’s brands produced and sold under licence by third parties as well as cider, soft drinks and other non-beer volume sold in consolidated companies.
Third party products volume
Volume of third party products sold through consolidated companies.
Total volume
100 per cent of volume produced and sold by consolidated companies (including beer, cider, soft drinks and other beverages), volume of third party
products and volume of HEINEKEN’s brands produced and sold under licence by third parties.
154 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Glossary continued
Weighted average number of shares
Basic
Weighted average number of outstanding shares.
Diluted
Weighted average number of outstanding shares and the weighted average number of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares as a result of HEINEKEN’s share based payment plans.
155 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Reference Information
A Heineken N.V. publication
Heineken N.V.
P.O. Box 28
1000 AA
Amsterdam
The Netherlands
telephone +31 20 523 92 39
fax +31 20 626 35 03
The full Annual Report can be downloaded as a PDF at: www.theHEINEKENcompany.com
Production and editing
Heineken N.V. Global Corporate Relations
Text
HEINEKEN
Translation into Dutch
V V H Business Translations, the Netherlands
Photography
Sander Stoepker (pages 4 and 6)
Graphic design and electronic publishing
Addison Group, www.addison-group.net, with thanks to Mobilia.
An abbreviated version of this report is available in the Dutch language.
In the event of any discrepancy between language versions, the English version prevails.
Printing and binding
Boom + Verweij grafi services, the Netherlands
Distribution
Hexspoor, the Netherlands
Paper
Cocoon Silk 300 gsm cover
Cocoon Silk 135 gsm inside pages
Cocoon Silk 115 gsm inside fi nancial pages
Cocoon Silk is produced by an ISO 140001 accredited manufacturer and is certifi ed as an FSC® recycled product.
It is produced with 100 per cent recycled post-consumer fi bre in a chlorine-free process PCF (Process Chlorine Free).
More information from HEINEKEN online at: www.theHEINEKENcompany.com
156 Heineken N.V. Annual Report 2015
Financial StatementsReport of the Supervisory BoardReport of the Executive BoardOverviewOther InformationContents Disclaimer
This Annual Report contains forward-looking statements with regard to the financial position and results of HEINEKEN’s activities. These forward-
looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors that are beyond HEINEKEN’s ability to control or estimate precisely, such as future
market and economic conditions, the behaviour of other market participants, changes in consumer preferences, the ability to successfully integrate
acquired businesses and achieve anticipated synergies, costs of raw materials, interest rate and foreign exchange fluctuations, changes in tax rates,
changes in law, changes in pension costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in this
Annual Report. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report.
HEINEKEN does not undertake any obligation to update the forward-looking statements contained in this Annual Report. Market share estimates
contained in this Annual Report are based on outside sources, such as specialised research institutes, in combination with management estimates.