Heineken NV Annual Report 2012 Eng

Annual Report 2012
Contents
Overview 01 The Quick Read Report of the Executive Board 04 Chief Executives Statement 07 Outlook 2013 08 Executive Committee Operational Review 10 Our Business Priorities 12 Grow the Heineken brand 14 Consumer-inspired, customeroriented and brand-led 16 Capture the opportunities in emerging markets 18 Leverage the benefits of HEINEKENs global scale 20 Drive personal leadership 22 Brewing a Better Future Regional Review 24 Our Regions 26 Western Europe 28 Central and Eastern Europe 30 Americas 32 Africa and the Middle East 34 Asia Pacific 36 Risk Management 41 Financial Review 46 Corporate Governance Statement Report of the Supervisory Board 56 To the Shareholders 60 Remuneration Report Financial statements 67 Consolidated Income Statement 68 Consolidated Statement of Comprehensive Income 69 Consolidated Statement of Financial Position 70 Consolidated Statement of Cash Flows 72 Consolidated Statement of Changes in Equity 74 Notes to the Consolidated Financial Statements 143 Heineken N.V. Balance Sheet 143 Heineken N.V. Income Statement 144 Notes to the Heineken N.V. Financial Statements Other information 151 Statement of the Executive Board 152 Appropriation of Profit 153 Independent Auditors Report 154 Shareholder Information 160 Countries and Brands 168 Historical Summary 170 Glossary 172 Reference Information
Welcome to
We are
HEINEKEN is one of the worlds great brewers with its brands available in 178 countries around the world.
HEINEKEN
A proud, independent, global brewer committed to surprising and exciting consumers everywhere.
We value We want
A passion for quality, enjoyment of life, respect for people and respect for our planet.
To win in all markets with Heineken and with a full brand portfolio in markets where we choose.
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Overview
Report of the ExecutiveBoard
Report of the SupervisoryBoard
Financial statements
Other information
The Quick Read

Performance highlights
Revenue (in millions of EUR)
Key figures1
Results
In millions of EUR 2012 2011 Change in %
18,383m +7.4 per cent

2012 2011 2010 2009 2008
18,383 17,123 16,133 14,701 14,319
Consolidated beer volume (in millions of hectolitres)
Revenue EBIT2 EBIT (beia)2 Net profit Net profit (beia)2 EBITDA2 EBITDA (beia)2 Dividend (proposed)5 Free operating cash flow2 Balance sheet
In millions of EUR
18,383 3,904 2,912 2,949 1,696 5,220 3,979 512 1,485
17,123 2,455 2,697 1,430 1,584 3,623 3,682 477 2,093
7.4% 59.0% 8.0% 106.2% 7.1% 44.1% 8.1% 7.3% (29.0)%
171.7mhl +4.3 per cent

2012 2011 2010 2009 2008
171.7 164.6 145.9 125.2 125.8
Total assets Equity attributable to equity holders of the Company Net debt position Market capitalisation
35,979 11,691 12,311 29,071
27,127 9,7744 8,355 20,605
32.6% 19.6% 47.3% 41.1%
Heineken volume in premium segment (in millions ofhectolitres)
29.1mhl +6.2 per cent

2012 2011 2010 2009 2008
29.1 27.4 26.0 25.1 25.9
Results and balance sheet per share of EUR1.60 Weighted average number of shares basic 575,022,338 Net profit 5.13 Net profit (beia) 2.95 Dividend (proposed) 0.89 Free operating cash flow 2.58 Equity attributable to equity holders of the Company 20.33 Share price3 50.47 Employees
In numbers
585,100,3814 2.44 2.71 0.83 3.58 16.704 35.77
(1.7)% 110.2% 8.9% 7.2% (27.9)% 21.7% 41.1%
Average number of employees (FTE) Ratios EBIT as % of revenue EBIT as % of total assets Net profit as % of average equity attributable to equity holders of the Company3 Net debt/EBITDA (beia) Dividend % payout5 Cash conversion rate EBIT (beia)/Net interest expenses
1 2
76,191
71,7457
6.2%
EBIT (beia) (in millions of EUR)
2,912m +8.0 per cent

2012 2011 2010 2009 2008
21.2% 10.9%
14.3% 9.1%
48.3% 19.8%
2,912 2,697 2,623 2,095 1,932
27.5% 3.09 30.2% 80.0% 6.0
14.5% 2.27 30.1%6 122.1% 6.4
89.7% 36.1% 0.3% (34.5)% (6.3)%
Net profit (beia) (in millions of EUR)
1,696m +7.1 per cent

2012 2011 2010 2009 2008
1,696 1,584 1,456 1,055 1,013
Please refer to the Glossary fordefinitions. EBIT, EBIT (beia), net profit (beia), EBITDA, EBITDA (beia) and free operating cash flow are not financial measures calculated in accordance with IFRS. Accordingly, it should not be considered as an alternative to results from operating activities orprofit as indicators of our performance, or asan alternative to cash flow from operating activities as a measure ofour liquidity. However, we believe that EBIT, EBIT (beia), net profit (beia), EBITDA, EBITDA (beia) and free operating cash flow are measures commonly used by investors and as such useful for disclosure. The presentation on these financial measures may not becomparable to similarly titled measures reported by other companies due to differences in the ways the measures are calculated. For a reconciliation of results from operating activities, profit and cash flow from operating activities to EBIT, EBIT (beia), net profit (beia), EBITDA, EBITDA (beia) and free operating cash flow we refer to the financial review on pages 41 to 45. 3 As at 31 December. 4 Including the effect of the Allotted Share Delivery Instrument (ASDI). 5 Excluding the effect of the ASDI. 6 The percentage 33.1% stated in the Annual Report 2011 is incorrect, the correct dividend % payout for 2011 is 30.1%. 7 Updated.
Heineken N.V. Annual Report 2012
01
The Quick Read continued
HEINEKENyears
HEINEKEN is a proud, independent global brewer committed to surprising and exciting consumers everywhere.
UK and Ireland
through the
1985
2008
HEINEKEN acquires Scottish & Newcastles business adding Fosters, John Smiths, Strongbow and Bulmers brands to its portfolio.
HEINEKEN acquires the Irish brewery Murphys.
France
1875 1933
Heineken the first imported beer available in America after 13years of prohibition.
USA
Heineken wins the Medaille dOr in Paris.
1889
Italy
Heineken wins the Grand Prix in Paris.
1974
Majority stake acquired in the Dreher Group.
Africa Latin America
1900
HEINEKEN imports beer into Africa.
2010
HEINEKEN acquires the beerbusinesses (including itsUS and other export businesses) of FEMSA in Mexico and Brazil.
1946
HEINEKEN enters Nigeria.
2009 2011
The Heineken Africa Foundation is launched.
HEINEKEN acquires five breweries in Nigeria and twoin Ethiopia.
02
Overview
Other information
The Netherlands
1864
1873
Heinekens Bierbrouwerij Maatschappij is established.
1939
HEINEKEN is listed on the Dutch Stock Exchange.
1968
HEINEKEN acquires Amstel, its major rival in the Netherlands.
1975
Zoeterwoude, the largest modern brewery in Europe, is opened.
Gerard Adriaan Heineken acquires his first brewery inAmsterdam.
Germany
1993
Heineken exported to Berlin for the first time after the fall of the Wall.
Central and Eastern Europe
1991
Australia
2004
HEINEKEN and Lion Nathan establish a joint venture Heineken Lion to brew, market and distribute Heineken.
HEINEKEN acquires a majority stake in the Hungarian Komarom brewery.
1994
HEINEKEN acquires interest ywiec, Polands leading in Z premium beer brewer.
2002
India
HEINEKEN starts acquiring breweries in Russia.
2009
HEINEKEN enters into a joint venture with Vijay Mallya and assumes joint ownership of Indias No. 1 brewer UBL.
2003 2007 2012

HEINEKEN acquires full control of Asia Pacific Breweries, creating strong platform for growth across the region.
HEINEKEN acquires Brau Union in Austria, Romania, Hungary, Czech Republic and Poland.
Asia Pacific
1932
1937
First Heineken brewed outside the Netherlands, in former Dutch East Indies, now Indonesia.
HEINEKEN acquires the Krsovice Brewery in the Czech Republic.
HEINEKEN co-founds Malayan Breweries and starts to brew Tiger for the first time.
2008
HEINEKEN acquires Drinks Union in the Czech Republic and Bere Mures in Romania.
Beer is more than 90% water. Throughout history, beer was consumed not just because it was delicious, but because it helped make water more drinkable.
03
Report of the Executive Board
Chief Executives Statement

The
Magic ofHEINEKEN
Acquisition of Asia Pacific Breweries Ltd (APB) By gaining full control of APB and Asia Pacific Investment Pte Ltd (APIPL) we have strengthened our competitive position in one of the most exciting regions in the world. We are now ideally positioned to expand our presence across a number of growing markets and create long-term value for our shareholders. I would like to take this opportunity to thank again Chairman Lee and all the board members of Fraser and Neave, Limited who supported our offer and recommended it to their shareholders. Winning in other high growth markets Two years ago we acquired the beer operations of FEMSA in Mexico and Brazil. Now we are starting to benefit from the hard work of the teams in both markets. In Mexico we have generated strong volume growth by implementing our commercial strategy successfully. In Brazil we are driving the expansion of the premium segment. Africa continues to unfold as the most promising continent for growth in the beer category. In November we hosted more than 60 analysts, shareholders and investors in Lagos, Nigeria. We were able to share first-hand our passion for and our belief in the continent and demonstrate why Africa continues to be so important and exciting for our Company. The dynamic and positive changes that are taking place across the continent and the impact they are having on the lives of consumers are apparent for all to see. This is creating greater opportunities in both the mainstream beer and premium segments. By investing ahead of the curve in brands and production capacity we are well positioned to win. Coupled with the combined success of our joint-ventures in Africa, India and Latin America, our emerging market presence and performance bodes well for the future.
inancial performance For HEINEKEN, 2012 was an exciting year with significant strategic and operational progress being made in a challenging environment. Revenues and group beer volumes grew 7.4 per cent and 3.4 per cent respectively, driving a gain in global market share. It was also another year in which we again strengthened our platforms for future growth. The focus on our five business priorities is delivering results. The Heineken brand continues to outperform the beer market, the rest of our portfolio and the International Premium Segment (IPS). Our other global portfolio brands, led by Desperados, expanded into a number of new markets. Investment in our brands to drive profitable top-line growth was sustained, as was the focus on achieving greater efficiencies across every aspect of the business. Our Total Cost Management (TCM2) programme delivered EUR196 million of pre-tax savings in its first year. Innovation is paramount to build brands and the category. During the year we made good progress towards reaching our stated 2020 innovation rate of 6% of revenues. Through the continued roll-out of products like Radler, a refreshing mix of beer and natural juice, innovations introduced in the markets within the last three years now represent EUR1 billion or 5.3 per cent of revenues. The transformation of the Companys geographic footprint was taken to a new level in November 2012 with the acquisition of Asia Pacific Breweries Ltd (APB) in Singapore. On a pro-forma basis, emerging markets now account for 64 per cent of the Groups consolidated beer volume and 59 per cent of EBIT (beia). The shift towards high growth markets will have a positive impact on our business for the future.
Left Jean-Franois van Boxmeer Chairman of the Executive Board/CEO Right Ren Hooft Graafland Member of the Executive Board/CFO
04
Overview
Other information
05
Chief Executives Statement continued
The continued importance of Europe HEINEKEN is Europes largest brewer and Europe remains key to our future. The market dynamics are certainly challenging, and beer consumption across an ageing population is decreasing. This is the reality that we face. However, our teams are challenging this reality and as a result we continue to deliver year-on-year EBIT (beia) growth. This is being achieved by continued investment in brands and innovation, the creation of new categories and deepening relationships with key panEuropean retailers. Working together allows us to create mutual benefit and value for our partners and HEINEKEN. HEINEKEN Global Shared Services (HGSS) in Krakw, Poland Leveraging the benefits of HEINEKENs global scale is key to our ongoing success. An important step in the process came with the opening of HEINEKEN Global Shared Services (HGSS) in Krakw, Poland. The facility is now managing the transactional finance activities of six HEINEKEN operating companies with the aim of accommodating all European countries in scope in 2015. Brewing a Better Future (BABF) The first three-year commitments for BaBF came to an end in December. We are proud to be an organisation that embraces both the need for, and the practical application of, new ways of working that are better for our society and our planet. Sustainability is part of how we manage our business. 2012 saw us achieve our highest ever score in the SAM Dow Jones Sustainability Index and a significantly improved rating in terms of the Carbon Disclosure Project. However, we cannot be complacent. We continue to challenge ourselves and will announce new, focused targets later this year.
Addressing the issues associated with alcohol In October, we joined forces with other prominent international companies from the alcohol industry to back new global initiatives to reduce the harmful use of alcohol. As an industry, we have a proud record of being part of the solution on alcohol issues. But more needs to be done, especially in the areas of under-age drinking and the strengthening and expansion of marketing codes of practice. HEINEKEN will continue to play a leadership role, through working with governments, NGOs and with business partners to help find answers to reduce harmful drinking. Heineken 140 years young in 2013 In December we kicked off the 140th birthday celebrations for Heineken. The front cover of this years Annual Report is a birthday greeting as we say congratulations, or in Dutch gefeliciteerd, to our world-famous brand. This was a special year for Heineken with its involvement in the 2012 London Olympics in the summer and then in the latest James Bond film Skyfall. I expect 2013 to be equally as exciting and surprising for our consumers.
The Magic of Heineken In April we hosted the premiere of our film The Magic of Heineken. It was a special event, attended by the Heineken family, former and current employees. In a little over an hour it tells the story of this great company. Since then, national premieres have been held across the world and all our employees are committed to keep the magic going. Roll-out of the Company Rules Alongside the celebrating we also recognise that nothing is more important than ensuring that we all work in accordance with the values that have made this Company so successful. To help ensure this happens we reviewed, updated and launched our Company Code of Conduct and Company Rules during the year. By doing so we are ensuring that all employees are given guidance and are equipped to make the right decisions, whatever their role and wherever they may operate.
06
Overview
Other information
Outlook 2013
Thank you As I do every year, I want to thank all my colleagues around the world for their professionalism and commitment. We live in challenging times but this brings only greater resourcefulness. It is a privilege to work with such a dynamic and diverse group and to lead this exceptional Company. I would also like to thank every one of our consumers who make the choice to enjoy our brands, our business partners for their continuing support and all our stakeholders for their input into what we do and how we do it. In 2013, HEINEKEN anticipates continued volume and revenue growth momentum. The higher growth regions of Africa, Latin America and Asia Pacific are expected to more than offset volume weakness in European markets affected by continued economic uncertainty and government-led austerity measures. However, HEINEKEN will continue to seek opportunities in Europe to drive positive price and sales mix. The Heineken brand is expected to continue to outperform the international premium segment and overall beer market in 2013 by further leveraging HEINEKENs global marketing scale, superior brand campaigns and strong execution in the marketplace. In 2013, the continued growth and planned roll-out of HEINEKENs other premium global brands Desperados, Strongbow Gold, Amstel Premium Pilsner and Sol are expected to support top-line development. HEINEKEN expects marketing and selling (beia) expense as a percentage of revenue to remain broadly stable, reflecting improved marketing spend effectiveness from increased global scale (2012: 12.2 per cent). HEINEKEN forecasts a slight increase in input cost prices (excluding the effect of currency translation). HEINEKEN now expects to realise EUR525 million of cost savings under the TCM2 programme covering the period 2012-2014 (previously EUR500 million). The increase of EUR25 million reflects identified cost synergies under the acquisition of Asia Pacific Breweries (APB) and Asia Pacific Investment Pte Ltd (APIPL). HEINEKEN expects to incur approximately EUR100 million of further upfront GBS costs through to the end of 2014 (with around two thirds of this spend expected in 2013). As a result of on-going productivity initiatives, HEINEKEN expects an organic decline in the number of employees in 2013. HEINEKEN expects the effective tax rate (beia) in 2013 to be in the range of 27 per cent to 29 per cent (2012: 26.5 per cent). The higher tax rate can be primarily explained by the result of favourable outcomes with tax authorities in 2012 and the full year consolidation of APB and APIPL in 2013 which is subject to a higher effective tax rate. HEINEKEN forecasts an average interest rate of around 4.5 per cent in 2013 (2012: 5.4 per cent) reflecting lower coupons on bond issuances in 2012. Cash flow generation is expected to remain strong, further reducing the level of net debt. In 2013, capital expenditure related to property, plant and equipment is forecast to be EUR1.5 billion (2012: EUR1.2 billion) primarily reflecting the consolidation of APB and continued investment in higher growth markets to capture anticipated top-line growth. Increased investments in 2013 will be focused on brewing capacity expansions, the upgrading of existing production facilities and new commercial equipment. As a consequence, HEINEKEN expects a cash conversion ratio of below 100 per cent in 2013. The acquisition of APB and APIPL is expected to be marginally EPS accretive in the first year.
Jean-Franois van Boxmeer Chairman of the Executive Board/CEO Amsterdam, 12 February 2013
07
Executive Committee
1 2
10
he two members of the Executive Board, the five Regional Presidents and five Chief Officers together form the Executive Committee. The Executive Committee is the highest consultative body within HEINEKEN. The Executive Committee supports the development of policies and ensures the alignment and continuous implementation of key priorities and strategies across the organisation.
1. Jean-Franois 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 Affairs, Strategy, Internal Audit and Company Secretary.
3. Didier Debrosse (French; 1956) President Western Europe

In 2005, appointed President Western Europe. Joined HEINEKEN in France in 1997 as Sales and Marketing Manager, after having worked with Nivea and Kraft Jacobs Suchard, where he had various commercial positions. He was later appointed General Manager of Brasseries HEINEKEN in France. In 2003 he became Managing Director of HEINEKEN France.
4. Frans Eusman (Dutch; 1962) Chief Business Services Officer

In 2010, appointed Chief Business Services Officer. Joined HEINEKEN in 1987. He has worked in various finance 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.
2. Ren Hooft Graafland (Dutch; 1955) Member Executive Board/CFO

In 2002, appointed member of the Executive Board. Joined HEINEKEN in 1981 and held various management positions in Democratic Republic of Congo (Financial Director), the Netherlands (Marketing Director), Indonesia (General Manager) and the Netherlands (Director Corporate Marketing, Director HEINEKEN Export Group). Executive Board responsibility for Global functions: Strategic Planning & Business Control, Tax & Financial Markets, Business Development and Business Services.
5. Marc Gross (French; 1958) Chief Supply Chain Officer

In 2005, appointed Chief Supply Chain Officer. 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).
08
Overview
Other information
11
12
6. Siep Hiemstra (Dutch; 1955) President Africa and the Middle East
In 2011, appointed President Africa and the Middle East. Joined HEINEKEN in 1978. Between 1995 and 1998 he was Deputy Director Africa. In 1998, Siep was appointed Regional Director SEA/Oceania with Asia Pacific Breweries Ltd. in Singapore. In 2001, he was appointed Director of HEINEKEN Technical Services in the Netherlands and Regional President HEINEKEN Asia Pacific in 2005, based in Singapore.
8. Alexis Nasard (Lebanese; 1966) Chief Commercial Officer

In 2010, joined HEINEKEN and appointed Chief Commercial Officer. He spent 17 years with Procter and Gamble (P&G) in senior marketing and management roles. From 2006, Alexis was General Manager of the Personal Care business for Central and Eastern Europe, the Middle East and Africa.
11. Sean ONeill (British; 1963) Chief Corporate Relations Officer

In 2005, appointed Chief Corporate Relations Officer. 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 affairs and communication consultancy.
7. Jan Derck van Karnebeek (Dutch; 1967) President Central and Eastern Europe
In 2012, appointed President Central and Eastern Europe. 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.
9. John Nicolson (British; 1953) President Americas

In 2008, appointed President Americas. John started his career at Imperial Chemical Industries (ICI) and spent 16 years at Unilever. He entered the beer industry in 1993 through Fosters Brewing Group as Group Executive Director of the Courage business. In 1995, Scottish & Newcastle acquired the Courage business and he took up the role of Group Marketing Director. In 1998 John became Corporate Development Director. From 2000 until April 2008, he was an Executive Board member of Scottish & Newcastle plc.
12. Theo de Rond (Dutch; 1954) President Asia Pacific

In 2011, appointed President Asia Pacific. Joined HEINEKEN in 1978. From 1994 to 2001, he was responsible for sales and marketing at HEINEKEN Netherlands. In 2001, he became HEINEKENs Corporate Marketing Director. From 2003 to 2007, Theo managed the Companys joint venture Guinness Anchor Berhad in Malaysia. In 2007, he was appointed General Manager of HEINEKENs joint venture Compaia Cervecerias Unidad (CCU) in Chile.
10. Michael OHare (Irish; 1967) Chief Human Resources Officer

In May 2009 joined HEINEKEN and appointed Chief HR Officer. He spent 13 years at PepsiCo, two of them as Chief Personnel Officer Asia. Between 1998 and 2004, he was based in the US both within Head Office and operating business units. From 2004 to 2007, he held the function of Chief Personnel Officer/VP Greater China. Prior to this, he spent five years in Finance.
09
Operational Review HEINEKEN is focused on five business priorities. Each one helps us to achieve our goal of winning in all markets with Heineken and with a full brand portfolio in markets where we choose.
1. Grow the Heineken brand

The Heineken brand is a key strategic asset and is the undisputed leader in the international premium segment.
3. Capture the opportunities in emerging markets

HEINEKEN has transformed its emerging market presence in recent years through a clear acquisition strategy, strong organic growth and our excellent joint venture partnerships.
p16-17
p12-13
2. Consumer-inspired, customer-oriented and brand-led

HEINEKEN is committed to being part of the conversation with consumers and being recognised as the preferred partner for its customers.
p14-15
10
Overview
Other information
5. Drive personal leadership

HEINEKEN employs more than 85,000 people in over 70 countries. As our business continues to grow in scale and complexity people are our main source of competitive advantage.
p20-21
4. Leverage the benefits of HEINEKENs global scale

As the worlds most international brewer, HEINEKEN is investing in new business initiatives aimed at leveraging the scale of our global operations.
p18-19
Brewing a Better Future

Brewing a Better Future is about creating real sustainable value for all our stakeholders. It is integral to enabling the Company to achieve its business objectives.
p22-23
Barley is a cereal grain with a rich, nutty flavour and is the most commonly used grain in brewing. Malted barley influences the aroma, flavour, foam, mouth feel and colour of the beer.
11
Operational Review continued
1. Grow the Heineken brand

The Heineken brand is a key strategic asset and the undisputed leader in the international premium segment (IPS).
Heineken has consistently outperformed the overall beer market, the international premium segment, and our own portfolio over the past several years. We aim to excite our consumers with effective global marketing platforms, such as the current Open Your World campaign. We continue to explore opportunities to introduce Heineken in new markets in response to the growing consumer demand for high quality, premium beer brands around the world.
n 2012, the Heineken brand in the premium segment delivered solid organic volume growth of 5.3 per cent, outperforming the total Beer category as well as the international premium segment. This has led to additional share growth in key geographies. Brand performance was strong both in developed (e.g. US, France, UK) and emerging markets. It was particularly noticeable in Brazil, Russia, India, China and Nigeria where Heineken enjoyed double digit growth. This development was largely due to a global approach to brand management and to effective marketing.
A major highlight for Heineken in2012 was the sponsorship of the most successful ever James Bond film, Skyfall.
Heineken outperforming IPS and beer market

(Volume growth CAGR 2005-2012F)
5.4% 4.7%
3.0%
Beer market
IPS
Heineken
12
Overview
Other information
Throughout the year we continued to leverage our global scale and implemented our global positioning in multiple markets. Our new iconic green brand bottle has been successfully launched in Nigeria, Poland, Malaysia, Chile and Argentina. In 2013, further roll-out of the bottle is planned in Vietnam, Thailand, the Netherlands and the United States. Open Your World Design has created an opportunity for Heineken to be part of our consumers digital conversations. The Open Your World Limited Edition bottle range pays tribute to key milestones in the brands rich history, and in 2012 we invited consumers from around the world to imagine and design our future bottle. This digital-led contest generated thousands of design proposals, and continues to be part of the conversation in the media and on blogs in more than 50 countries. Our Open Your World campaign was further expanded with the online film The Date, being aired in more than 30 countries. In conjunction with the film, we ran a significant social media programme inviting consumers to Serenade their Date through Facebook on Valentines Day. More than 1.7 million consumers took part in Serenade. James Bond A major highlight for Heineken during the year was the latest partnership with the most successful ever James Bond film Skyfall. To support this we launched a new global campaign The Express. Skyfall marked the 50th birthday of the Bond franchise and the 16th year that Heineken has been associated with James Bond. To celebrate, for the first time ever, Bond was seen enjoying a Heineken in the film, and the actor Daniel Craig appeared as Bond in our ad. To date, this campaign has been watched online by more than 22 million consumers worldwide, with the largest number of views coming from the US, Brazil, Germany and Mexico. Beyond this huge digital visibility, more than 50 markets utilised the campaign on both television and in cinemas. The campaign was supported by an
interactive marketing programme called Crack the Case which invited consumers in major cities around the world to demonstrate online their own James Bond qualities. In total, more than 800,000 consumers took part and shared their experience with friends on their favourite social media channels. Limited edition bottles and special promotional programmes were activated in on- and off-premise outlets all around the world, transforming this large marketing programme into an enormously effective driver of sales. UEFA Champions League 2012 was also a strong year for our sport partnerships. The campaigns to support our largest single sponsorship, the UEFA Champions League (UCL), have again proved successful in building brand equity, especially in emerging markets. Enjoy Responsibly It is our responsibility to inform consumers that beer should be enjoyed in moderation. Since 2009 Heineken has been utilising its UCL sponsorship to deliver Enjoy Responsibly messaging. 20 per cent of marketing assets are dedicated to Enjoy Responsibly and one of every three of our advertising boards in the stadia carry the message. In 2012, one billion unique viewers in 200 territories worldwide watched the UCL matches. Research shows that more than 500 million people are aware of our partnership with the UCL. Of these, 33 per cent recognise the Enjoy Responsibly message. In all our key international events music, sport and entertainment we deliver a strong Enjoy Responsibly message. 2012 London Olympics A few weeks after Chelseas Champions League success in Munich, Heineken was a sponsor of the sporting event of the year in the UK, the 2012 London Olympic Games. Our involvement generated high visibility for our brand and strong sales in all venues. In addition, the Holland
Heineken House was voted the Gold Medal Winner for being the best party location in London during the Games. 140 Years Young In December, we closed the year with the kick-off of our 140th Heineken birthday festivities. In 2013, this important milestone will be an opportunity to delight more of our consumers at points of sale with inventive and congruent marketing activities. In the year ahead, we will once again follow our motto of being consistent in delivering gold-standard quality, to surprise our consumers and stay part of their conversation.
13
2. Consumer-inspired, customer-oriented and brand-led

HEINEKEN is committed to being part of the conversation with consumers and being recognised as the preferred partner for its customers.
We have more than 250 international, regional, local and specialty brands and other beverages meeting a diverse range of consumer tastes and preferences. In addition to our flagship Heineken brand we are investing in the expansion of our other global brands including Desperados, Strongbow Gold, Amstel Premium Pilsener and Sol and are increasing the rate of innovation to drive top-line growth. Strong customer management capabilities and world-class in-store execution enables us to create value for customers and drive long-term business success.
o further develop the premiumisation of our portfolio, we have made strong and steady progress in the development of our other global brands Desperados, Sol, Strongbow Gold and Amstel Premium Pilsener supporting each of them with world-class marketing programmes. Innovation Innovation remains a strategic focus area for HEINEKEN and we are well on track to reach our target innovation rate of 6 per cent of annual revenues by 2020. At the end of 2012, the innovation rate was 5.3 per cent, corresponding to innovation revenue growth of EUR1 billion. This reflects the roll-out of both local innovations as well as an accelerated roll-out of global innovations Desperados was launched for the first time in Africa and South America, Sol in Finland and Greece with a new marketing mix, Amstel Premium Pilsener in Serbia and Argentina and Strongbow Gold in Hungary. Significant progress has been made across all regions.
Roll-out of Radler beer Radler is an innovative mix of beer and natural juice. Launched in eight countries in 2012, it has lower alcohol content and taps into new consumption occasions for beer.
Other global brands Amstel Premium Pilsener

A heritage that dates back to 1870, the Premium Pilsener brand extension continues to prove popular with consumers who understand that you need time for quality.
Desperados
A tequila flavoured beer. The brand positioning of turning good moments into unforgettable experiences has driven strong performance in many markets.
14
Overview
Other information
Capabilities The Building Winning Portfolio brand reviews continue to be the foundation of successful brand and portfolio development in markets. In 2012, reviews were completed and updated for the Democratic Republic of Congo, Russia, Poland, US, Greece, UK and Egypt. We are step-changing our common understanding and analysis of consumer and market metrics transferring incompatible tools and methods into single, state-of-the-art approaches to innovation testing, advertising protocols, brand health measures and market measures. These actions are critical to take full advantage of the global scale and broad footprint of the Company. This One version of the truth will help us to speed up the roll-out of winning ideas, to accelerate powerful advertising for core markets, and to focus management attention on areas of underperformance. The Consumer & Market Intelligence function has been re-designed, aligning central and local teams for core deliverables and accountability. The launch of the global Market Research sharing tool has created greater efficiency in the function through enhancing capabilities and improving organisational alignment. This in turn
ensures that the consumer and market perspective remains at the heart of our decision making process. The Global Commerce University (GCU) was established in 2010 to support business capability building across the commercial function. In 2012, thousands of commerce professionals were trained across marketing, sales and general management positions. Six masterclasses are running at the GCU Campus: Portfolio and Revenue (where to play), Consumer and Brand Strategy (how to win) and Advertising and Digital Marketing (what to do). All courses focus on developing stronger brands with the consumer perspective at the centre.
The GCU sales module is all about winning with Consumers, Shoppers and Customers. In 2011, our focus was on designing a number of priority programmes, while in 2012 we deployed the programme globally. During the year, 19 Sales NAVIGATOR capability assessments were made globally, enabling us to prioritise three-year capability development roadmaps for our main operating companies. These ranged from strategic programmes, including Category Vision, Channel Strategy and Route-to-Market, to Planning and Execution programmes such as Shopper Insights, Channel Activation, Customer Planning, Draught Beer Management, Distributor Management and Sales Execution Excellence.
Sol
A brand born in Mexico in 1899 that has a premium proposition based on resisting the pressure to conform. A new marketing campaign was launched in Finland during 2012 with exciting results.
Strongbow Gold
Made from 100 per cent apples and nothing else, Strongbow Gold provides a refreshing alternative to beer. The global roll-out continued during 2012.
We have made strong and steady progress in the development of our other global brands.
15
3. Capture the opportunities in emerging markets

HEINEKEN has transformed its emerging market presence in recent years through a clear acquisition strategy, strong organic growth and our excellent joint venture partnerships.
The acquisition of APB and APIPL in November 2012 is a continuation of our strategy. It gives the Company direct access to a number of important beer markets in South East Asia, the Pacific Islands and China. In Africa, we have operations in 20 countries and export to virtually all countries on the continent. We have strengthened our emerging market footprint in the Americas following the earlier expansion into Mexico and Brazil. We continue to target future profit growth through taking full advantage of the enormous potential offered in emerging markets.
EINEKEN has continued to strengthen its platforms for future growth through a clear acquisition strategy and solid organic growth. On a full year 2012 pro-forma basis, the proportion of consolidated beer volume and EBIT (beia) generated from emerging markets was 64 per cent and 59 per cent, respectively. Asia Pacific The acquisition of APB and APIPL brings the iconic Tiger brand into the HEINEKEN portfolio and provides direct access to two of the most exciting growth regions for beer South East Asia & the Pacific Islands and China.
Heineken and Tiger account for more than one-third of the international premium segment (IPS) in the Asia Pacific region.
Consolidated beer volume from emerging markets Pro-Forma 20121 versus 2007
105mhl Emerging markets Developed markets 51% 64% 184mhl
49% 36%
1
ro-Forma includes the contribution P of APB for the whole of 2012
2007
2012
16
Overview
Other information
Tiger benefits from strong consumer recognition both within Asia and in many other markets around the world. This will enable HEINEKEN to further maximise the international potential of the brand. APB is the leading brewer in South East Asia and the Pacific Islands and enjoys number one or number two positions in ten markets. Its success has been built on the growth of Heineken, Tiger and established local premium brands including Biere Larue in Vietnam, Bintang in Indonesia, SP in Papua New Guinea and Tui in New Zealand.
A focus on innovation is helping us to drive volume and market share growth at both a market and regional level. In August, aluminium neck foil was introduced on the Star bottle, the market leading brand by volume in Nigeria. It is the only mainstream brand in the country to have this feature and has helped build the brands premium credentials and is a strong confirmation of quality.
PET packaging has been launched through brands including Primus and Turbo King, enhancing consumer convenience and tapping into relevant consumer occasions. We continued to invest ahead of the anticipated growth curve The acquisition has also reinforced HEINEKENs in Africa to enable us to seize the opportunity. position in China where premium beer represents Capacity expansion programmes were a profitable growth opportunity. Our strategy in implemented in Algeria, the Democratic Republic China is based on premium segment leadership of Congo, Nigeria, Rwanda and Tunisia. with the Heineken and Tiger brands and a relentless focus on premium quality. This In addition, we invested in upgrading the two strategy is yielding encouraging results. In 2012, breweries that we acquired in Ethiopia in 2011 the Heineken and Tiger brands grew. and in reinvigorating the local brands. The results have been encouraging. We have also made The Heineken brand is an important part good progress in the development of a of APBs existing business. Since 2001 average green-field brewery close to Addis Ababa that annual brand growth has been more than 10 per will brew Heineken. cent, with Vietnam now well-established as the second-largest market globally for Heineken Mexico by volume. Combined, Heineken and Tiger In Mexico, we continue to benefit from the account for more than one-third of the successful implementation of our value growth international premium segment (IPS) in the strategy following the acquisition in 2010. Asia Pacific region. Focused brand investment behind new marketing campaigns and upgraded packaging have Africa supported growth of the Carta Blanca, Tecate, For more than a century HEINEKEN has been Dos Equis, Sol and Indio brands. In addition, present in Africa and passionate about the increased outlet distribution and targeted continents huge potential for growth. The activation programmes resulted in the combination of growing populations, strong Heineken brand volume more than doubling expected economic growth, improved political in 2012. stability and in many markets an emerging, brand-conscious middle class creates attractive growth opportunities. These trends in 2012 benefited Heineken, the clear leading IPS brand in Africa, and our regional blockbuster brands such as Primus, Star, Gulder, Mtzig, Maltina and Turbo King.
17
4. Leverage the benefits of HEINEKENs global scale

As the worlds most international brewer, HEINEKEN is investing in new business initiatives aimed at better leveraging the scale of our global operations across commerce, supply chain, purchasing, information services (IS), human resources and finance.
Within Global Business Services (GBS), the opening of the HEINEKEN Global Shared Services centre (HGSS) in Krakw and the establishment of HEINEKEN Global Procurement (HGP) Company in the Netherlands are recent examples of this. These initiatives will enable HEINEKEN to deliver high quality services to the business, while also delivering operational cost efficiencies.
uilding on the progress made in 2011, Global Business Services (GBS) has continued to leverage HEINEKENs increased scale across Finance, Procurement and IS. The GBS organisation is delivering bottom-line benefits, supporting operating companies and global strategic initiatives. In 2012 the GBS ways of working were embedded in HEINEKEN operating companies. Global Shared Services Following the establishment of the HEINEKEN Global Shared Services (HGSS) centre in Krakw, Poland in 2012, six HEINEKEN operating companies successfully migrated their transactional finance activities to the centre UK, Romania, France, Ireland, Hungary and HGP. These operating companies are served by more than 200 HGSS-based employees, representing nine different nationalities and 18 spoken languages, delivering high quality services to the business. The HGSS and operating companies work co-operatively with each other, governed
GBS Driving greater efficiencies across the Company
Global Procurement
GBS
Global Shared Services
Enabling Infrastructure
In 2012 the GBS ways of working were embedded in HEINEKEN operating companies.
18
Overview
Other information
by a Service Management agreement. Drawing on LEAN and Six Sigma practices the HGSS and operating companies employees are focused on Continuous Process Improvement, a key component to unlock the End-to-End Finance benefits. As an example of this success, Ireland has achieved 100 per cent accuracy on the monthly reporting process only six weeks after migrating to HGSS. Global Procurement Company Based in the Netherlands, the HEINEKEN Global Procurement (HGP) Company is leveraging scale benefits to drive operational cost savings, improve working capital and reduce cost price volatility risk. As part of HEINEKENs focus on operational cost saving, approximately 30 global initiatives were activated in 2012 on raw materials and packaging expenses and over 2,000 on nonproduct related spend areas by the HGP team. HEINEKEN is also working with suppliers to secure win-win benefits, of which the Supplier Finance initiative is an example. In the third quarter of 2012, the UK went live with the Supplier Finance programme, to improve the working capital efficiency of both HEINEKEN and its suppliers. The HGP is instrumental in the global implementation of HEINEKENs Supplier Code, a key element in our approach to sustainable business.
Global Information Services HEINEKENs Information Services strategy is focused on supporting the business, through centrally coordinated IS assistance for global strategic initiatives and implementation of common IS solutions in the operating companies. Delivery of this agenda will increase both global uniformity in the ways of working and drive local efficiencies. HEINEKEN continues to focus on the effective and efficient use of Information Services by reducing complexity in the infrastructure and applications landscape. In 2012, a new HEINEKEN standard Enterprise Resource Planning (ERP) system for brewing operations and sales force key accounts was implemented in the Poland operating company. Outside of Europe, HEINEKEN IS has supported the business through the roll-out of solutions to Sierra Leone, Nigeria and Ethiopia. Global Commerce Starcom MediaVest was appointed in July 2012 as HEINEKENs first global media agency. HGP played an important role in negotiating the agreement. By consolidating 14 agencies into one global partner, we are able to leverage the scale of our global footprint in a number of ways. Scale efficiency generates cash savings in media
investment and scale effectiveness leads to better ways of working. Going forward, we are confident that successful media innovations can be identified, spread and embedded faster. Global Supply Chain We continue to leverage our global scale by centrally developing programmes which are implemented across all regions. HEINEKEN IS is supporting Global Supply Chain across a number of these projects. In production and logistics, we continued improvement initiatives to achieve sustainable results via our Total Productive Management (TPM) programme. This was supported by global training initiatives, twice yearly audits and we further strengthened the customer focus via End-to-End Supply Chain Mapping. In order to meet demand in growing markets, HEINEKEN invested heavily in the expansion of its production capacity. By leveraging this scale we have been able to reduce the Total Cost of Ownership, achieve higher equipment reliability and shorten time-to-market. We continue to leverage our unique global brewery network by getting better insights in the total Supply Chain from source to customer. This allows us to innovate within a shorter time. Our Supply Chain structure has been re-organised to support the Companys innovation agenda. We continue to accelerate our knowledge sharing through our global Knowledge Management system, which drives best practices by exchanging knowledge from all our production units around the globe.
19
5. Drive personal leadership

HEINEKEN employs more than 85,000 people in over 70 countries.
As our business grows in scale and complexity, people are our main source of competitive advantage. We need them to think globally, work collaboratively, inspire others and develop themselves and their teams. By ensuring that we all speak a common language and build our capabilities in a systemic way from marketing and sales to finance and human resources we are increasingly harnessing the power of a geographically diverse team to ensure we win consistently.
ur Strategy to Win sets out clear priorities for achieving sustainable, long-term success. These priorities help us to build on our unique strengths and assets: our heritage, our scale, our brands and especially our people, who remain our primary source of competitive advantage. Our culture, how we behave and how we work together, defines our ability to win. We have continued to invest in building a high-performance learning culture that fosters personal leadership, interdependence and disciplined professionalism among more than 85,000 employees worldwide. We have done this through a number of inter-related areas including leadership and functional capability, talent management, performance management and reward. Leadership and Functional Capability A key step in building leadership capability is to clearly frame what we expect from leaders in order to execute our strategy. In 2012, we launched six new HEINEKEN Leadership Competencies in order to equip our leaders with a common understanding of what is expected of them in their roles. The new framework is complemented by an online Leadership Academy which contains further tools and
The HEINEKEN Leadership model
20
Overview
Other information
an updated leadership 360 feedback process with structured coaching and follow-up. Our flagship development programmes for HEINEKEN talents, the INSEAD-based HEINEKEN International Management Development Excellence Course (HIMDEC) and the HEINEKEN International Management Course (HIMAC) were updated to align with the new leadership competencies and our current strategic challenges. In 2012, we developed more than 140 nominated leaders through these programmes, and our Executive Committee played an active role in teaching the courses. In addition, we continued the deployment of our comprehensive development programme for First Line Managers (FLM). By the end of 2012, nearly 700 FLM in 32 operating companies took part in this initiative. Regional talent events in Africa and the Middle East and Central and Eastern Europe provided cross-regional skill building and networking opportunities for leadership talents and senior managers. In order to develop functional capability and competencies, we have implemented common language, processes and systems across all our global functions. These competency frameworks are linked to a range of blended
Performance Management Performance management has been a key focus across HEINEKEN in 2012. Specifically, we have implemented a new performance management Talent Management structure for senior managers creating a clear Over the last year, significant steps have been distinction between the short-term variable taken to create and improve processes to manage pay agreement for bonus calculation and the talents of our organisation. The Resource an Annual Performance Agreement which Committees, which oversee Senior Management rewards an individual based on how they resourcing and succession planning, have been achieve their objectives. In addition, we linked restructured and operate consistently across all the achievements of defined targets to key functions. In addition, we have continued to behaviours aligned with our HEINEKEN embed Personnel Development Plans (PDP) Leadership Competencies. across the Company and developed a career framework definition which will be deployed Following a calibration of performance ratings further in the coming year. for senior managers in 2011, we created the foundation to extend the process beyond senior We also expanded participation in the HEINEKEN managers in 2012. We will roll out the consistent International Graduate Programme (IGP), our 18 performance management process worldwide month experience-based acceleration programme. during the coming years. We also introduced In 2012, 19 graduates representing 14 nationalities enhanced variable compensation levels (STI/LTI) were selected from approximately 18,000 for all senior managers, along with stretch applicants. A total of 37 graduates working targets. These initiatives foster sustained on assignments across all regions are now part performance and support the culture of this programme. shift towards our ambition to be a highperformance organisation. In the coming years, we will continue our focus on various Talent Management initiatives Reward (including work currently under way to ensure Finally, we educated all HR managers on the key global consistency in our talent identification drivers of personnel cost management and we process) to leverage the benefits of our global increased the focus on effective senior manager talent scale and to realise our ambition of having rewards, sales compensation schemes and pension world-class talents in all our key positions. plans. Key achievements include monthly reporting on personnel cost developments, an updated senior manager reward policy, comparisons of sales compensation schemes and a mapping of pension plans of the 20 largest operating companies. learning offers via a new integrated e-learning platform for all HEINEKEN functional and leadership academies. HEINEKEN will continue to ensure we develop the required individual and organisational capabilities to drive the personal leadership necessary for the successful execution of our Strategy to Win.
Our culture, how we behave and how wework together, defines our ability towin.
21
Brewing a Better Future, our approach to building a sustainable business.

In 2010, we created Brewing a Better Future (BaBF), a new framework to enable us to deliver on our responsibilities to our employees, to the communities in which we operate and to the environment.
BaBF is built around three strategic imperatives: Continuously improve the environmental impact of our brands and business Empower our people and the communities in which we operate Positively impact the role of beer in society.
hroughout the year we have continued to deliver our BaBF goals and progress on our journey towards becoming a truly sustainable business. 2012, the year of delivery We have made good progress against our goals, including: Further reduction in specific energy consumption Roll-out of eco-design methodology for packaging Reduction in production-related accidents Almost all of our nearly 500 global suppliers and 34,000 local suppliers have signed the Supplier Code. BaBF is also embedded in our operating companies. Each of our businesses has its own sustainability committee and three-year sustainability plan integrated within the strategy of the business unit. In 2012, there were some notable achievements and actions by our markets to deliver against local plans and targets: HEINEKEN Italy installed more than 8,000 solar panels on the roof of a bottling plant, packaging plant and warehouse, covering in total over 27,500m2 (equivalent to 4.5 football fields). HEINEKEN Spain signed a five-year agreement with the Andalusian Government and a leading supplier of malt to protect biodiversity covering 13,000 hectares of land used to produce barley. HEINEKEN UK received the highest ranking of Platinum Plus in the Corporate Responsibility (CR) Index. It was also voted Best Company in the Food and Drink Sector. The CR Index is the UKs leading voluntary Corporate Responsibility benchmark. Benchmarking our performance We continue to benchmark our performance against that of our peers and leading companies in the sustainability arena. This is important as we strive for constant improvement in what we
GBCHealth Business Leadership Award In May, HEINEKEN received the prestigious GBCHealth Business Leadership Award for our enduring commitment to and excellence in our support for health-related programming for employees, their dependants and the communities in which we operate.
www.sustainabilityreport. HEINEKEN.com
Brewing a Better Future To be the Worlds Greenest Brewer Improve

Continuously improve the environmental impact of our brands and business
Empower
Empower our people and the communities in which we operate
Impact
Positively impact the role of beer in society
Green Brewer
Green Commerce
Engaging Employees
HEINEKEN Cares
Responsible Consumption
Partnerships for Progress
Governance, Senior management incentives, Reporting and transparency, Supplier Code, Communication and engagement
22 Heineken N.V. Annual Report 2012
Overview
Other information
do. The good progress that we are making is Partnerships and round tables. We continued highlighted by the increased external recognition to participate in important conferences and that we received during the year: fora, including UN Global Compact LEAD, SAM Dow Jones Sustainability Index we CEO Water Mandate, Beverage Industry received our highest ever score in Environmental Round Table (BIER), World the assessment. Economic Forum, the European Alcohol and Investors CDP we received a B for Health Forum, the Dutch Sustainable Growth performance and 88 out of 100 for disclosure. Coalition, and the Sustainable Agriculture FTSE4Good we have again met the criteria Initiative (SAI). for inclusion in this ethical investment index. Engagements with stakeholders across the value chain included working with suppliers to Engaging with stakeholders support their implementation of our Supplier Maintaining an open and two-way dialogue Code and working with our customers to with stakeholders is a crucial element in establish a dialogue about how we can best embedding sustainability. work together to drive our sustainability agenda. In 2012 it has taken on added significance as we sought our stakeholders views on what our focus and targets should be for the coming three years. Their input was invaluable and means that our new three-year targets will be rooted in reality and materiality. During the year, we engaged our stakeholders in various ways, including: Reputation research. An in-depth study across 31 markets and 4,000 stakeholders to give us feedback on a number of issues, including how they view HEINEKEN as a responsible and sustainable company. Global expert meetings. We organised three global meetings with experts from different stakeholder groups and our own internal specialists. The meetings were based on water and agriculture, the environmental impact of our value chain, and people. Ongoing stakeholder dialogue and local stakeholder meetings. We met with many stakeholders during the year at a global level to exchange views and discuss developments. Several of our operating companies also have structured plans in place to regularly meet with stakeholders. Transparency is key In our interaction with stakeholders, we recognise the need for clarity about our performance. In order to achieve this, we publish both global and local sustainability reports. In 2012, we published a total of 33 local markets reports, all of which are accessible through our website. A brief overview of our global results and activities can be viewed at www.theHEINEKENcompany.com. For full details please go to our online Sustainability Report (sustainabilityreport.HEINEKEN.com). The report for 2012 will be published in April 2013. Continuing the responsible consumption journey Launched at the end of 2011 and implemented throughout January 2012 the global Sunrise campaign reinforced the importance of staying in control and made drinking in moderation a positive, aspirational behaviour. Consumers found the campaign both credible and effective in promoting responsible drinking. Based on the campaign HEINEKENs credibility in promoting this message, amongst those exposed to the commercial, jumped by 22 per cent (from 64 per cent to 86 per cent).
On 9 October, Jean-Franois van Boxmeer joined other alcohol industry leaders in the Global Alcohol Producers Group to back new initiatives aimed at reducing the harmful use of alcohol. Specific focus will be on addressing under-age drinking and strengthening and expanding marketing codes of practice. Looking ahead to 2015 Having reached the end of the first three years of Brewing a Better Future, we have reviewed our progress and identified our priorities for the next three years. We have assessed global trends and their impact on our operations. Issues such as water scarcity, climate change, food security, the increasing importance of corporations in emerging markets and the responsible consumption agenda are key elements in defining where we need to take our next steps. This process has led to a revised agenda which will form the platform for our ongoing commitment to sustainability. More on our commitments for 2013-2015 will be disclosed with the launch of our Sustainability Report in April 2013.
Seeking an open dialogue with stakeholders is a crucial element in challenging ourselves to embed sustainability.
Customers Consumers
From Barley to Bar we target improvements throughout the value chain.

Agriculture Malting Brewing Packaging materials Distribution of beer
Growing crops
Malting barley
Brewing beer
Producing bottles, cans and kegs
Distribution
Cooling and recycling
Responsible consumption
23
Regional Review The worlds most international brewer
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. Our principal global brand is Heineken, the worlds most valuable international premium beer brand. In our global portfolio Heineken sits alongside a number ofinternational premium, regional, local and specialty beers and ciders.
Western Europe
HEINEKEN is Europes leading brewer. We have operating companies in 10 countries and an Export and Duty Free business.
p26-27
Africa and the Middle East

HEINEKEN first imported beer into Africa in 1900. Today we have operating companies in 20 countries in the region and brew a number of blockbuster brands.
p32-33
24
Overview
Other information

HEINEKEN has a rich product portfolio of leading brands. We have operating companies in 14 countries and we own and operate more than 50 breweries across the region.
Americas
We operate 20 majority-owned breweries and seven joint venture breweries in a region characterised by attractive, growing and profitable markets.
p28-29
p30-31
Asia Pacific
The acquisition of Asia Pacific Breweries means we now have a presence in 19 countries in the region and operate 25 breweries. In India our joint venture company is UBL. It is the market leader and has 18 breweries.
p34-35
Hops were first used in brewing in the Middle Ages for their flavour and natural preservative qualities.
25
Regional Review continued
Western Europe
Through product innovation, continued brand investment and forging strong partnerships with modern-trade retailers we have further reinforced our leadership positions across the region.
Didier Debrosse President Western Europe
roup beer volume declined organically by 2 per cent. Beer markets in the region were adversely impacted by challenging economic conditions, rising VAT and beer excise rates in several markets and declining consumer spending in on-premise channels. Despite these challenges, regional volume performance was resilient, contributing to share gains in the UK, France, Ireland and Belgium and stable market share in the Netherlands. In December 2012, the French government approved a 160 per cent increase in the beer excise tax rate, effective from 1 January 2013. The effect of stock building in France in the fourth quarter of 2012 (ahead of the planned excise duty increase), is estimated to have increased regional group beer volume by 0.5 per cent in 2012. There was a corresponding 0.5 per cent negative impact to 2012 regional beer volumes following the planned withdrawal of a product in the high-promotion discounter channel in Finland.
Revenue
7,785 million
42.3%
EBIT
740 million
Consolidated beer volume
44.3 million hectolitres

EBIT (beia)
Key brands
964 million
Heineken volume in premium segment

Consolidated beer volume as % of Group
25.8 per cent
26
Overview
Other information
Revenue on an organic basis was in line with the prior year as the benefit of higher pricing and improved sales mix offset lower volumes. EBIT (beia) includes a EUR57 million positive contribution from the first-time consolidation of Galaxy pubs. The appreciation of the British pound added a 1 per cent positive currency impact. On an organic basis, the decline in EBIT (beia) primarily reflects higher input costs and an adverse trade channel mix. Profit grew in the UK, Italy and Ireland and was lower in the Netherlands, France, Spain, Portugal and Finland. Beer volume in the UK outperformed a declining market and contributed to a share gain of around 60 basis points. Fosters extended its mainstream beer leadership in the off-premise channel, whilst the Heineken brand grew strongly, benefiting from premium brand building activities including the London 2012 Olympic Games and the James Bond Skyfall partnership. Gains in the off-premise channel mostly offset reduced consumption in the on-premise channel, due to poor summer weather and the challenging economic environment. 2012 saw the launch of both new Strongbow packaging and Strongbow Pear alongside continued growth of Bulmers, but overall cider volumes declined in low single digits. Business performance was further supported by
Volume of domestic beer sold in Italy was in line with the prior year. This volume performance reflects declining consumer confidence and price increases taken ahead of competition. Volume of Birra Moretti remained broadly stable, Domestic beer volume in France grew in the mid-single digits, including the benefit of inventory while slight growth of the Heineken brand contributed to further share gains in the stock build by retailers ahead of the planned premium segment. excise duty increase from 1 January 2013. Excluding this positive impact, volume would Volume in the Netherlands declined in the have been in line with prior year. HEINEKEN low-single digits, in line with the beer market. again outperformed the market, resulting in volume and value market share leadership in the A VAT increase from October 2012 and declining consumer confidence adversely impacted spending country. Excluding the impact of stock building, in on-premise channels, with increased demand the key brands of Heineken, Pelforth and for lower priced beer brands in the off-premise Desperados all grew in 2012. channel. A reorganisation of the wholesale operations in the fourth quarter of 2012 is Volume in Spain declined by low-single digits. expected to lead to improved sales effectiveness The effect of rising unemployment and and operating efficiencies. government austerity measures (including a higher VAT rate in on-premise outlets) continued to impede consumer confidence and erode household incomes, leading to lower volume in on-premise outlets. Volume in off-premise outlets was stable despite growth in private label brands and a consumer shift towards the discounter channel. The challenging economic circumstances contributed to a mid-single digit volume decline in the fourth quarter of 2012. Various innovations including Amstel Extra, Sol and Desperados were successfully introduced during the year. continued growth of Fosters Gold and Desperados as well as the consolidation of the Galaxy Pub Estate.
Regional volume performance was resilient, contributing to share gains in the UK, France, Ireland and Belgium and stable market share in the Netherlands.
Heineken N.V. Annual Report 2012 27

Strong sales execution has helped drive market share gains across a number of markets and supports our strategy of driving future value growth.
Jan Derck van Karnebeek President Central and Eastern Europe
roup beer volume grew 3.8 per cent organically, led by solid gains across most markets in the region, partly offset by lower volume in Greece and at the BHI joint venture operation in Germany. Organic revenue increased 3.9 per cent, reflecting higher volume and a slight improvement in revenue per hectolitre. The depreciation of local currencies (i.e. Russian rouble, Belarusian rouble and the Romanian lei) versus the euro reporting currency limited reported revenue growth to 1.6 per cent. On an organic basis, EBIT (beia) increased by 0.9 per cent, as higher revenue was partly offset by substantially higher input costs and increased fixed costs. Profit was higher in Russia, Austria and Romania and lower in Poland and Greece. Despite an accelerated shift toward the off-trade channel, the implementation of selected price increases across the region resulted in improved revenue per hectolitre and a marked recovery in profitability in the second half of the year. HEINEKEN remains committed to driving continued value growth in the region, particularly in markets with strong positions. This will be achieved through a renewed strategic focus on pricing, brand equity building and leveraging regional scale across innovation and commercial capabilities.
Revenue
3,280 million
17.8%
EBIT
337 million

EBIT (beia)
Key brands
349 million

27.5 per cent
28
Overview
Other information
Volume in Russia, grew in the low-double digits, resulting in a volume market share gain of 170 basis points to 13.4 per cent at the end of 2012 (based on Russian beer production data). Volume growth was led by the Heineken, Amstel Premium Pilsener, Okskoye and Three Bears brands. The new Radler flavour brand extensions for Zlaty Bazant and Doctor Diesel also contributed to the strong volume performance in Russia.
Volume in Austria increased in the low-single digits in a broadly flat market, underpinned by solid gains in the off-premise channel. Gsser and Zipfer grew volume and share, owing to the successful launch of Radler brand extensions. Additionally, Heineken and Desperados enjoyed solid growth, improving overall sales mix.
Volume in Romania grew by high-single digits, confirming market leadership in both volume Volume in Poland increased in the low-single and value terms. The key strategic national digits, resulting in stable market share. This brands of Bucegi and Ciuc, as well as the global growth was led by the higher margin Desperados brands Heineken and Amstel all grew volume and Paulaner brands, as well as Tatra and Warka, and value in the double digits. ywiec was stable. Consumer whilst volume of Z confidence remains low, contributing to a In December 2012, HEINEKEN and Efes continued consumer shift from traditional trade Breweries International (EBI) agreed to unwind towards the discounter channel. Innovations their partnerships in Kazakhstan and Serbia, such as Warka Radler and Desperados Red were a success in 2012. In Greece, the effect of a weak economic backdrop was compounded by the implementation of new austerity measures and rising unemployment. This impacted consumer purchasing power and resulted in a low-double digit volume decline in 2012. The economy segment continued to grow, contributing to strong growth of the Alfa brand, whilst volumes of the Heineken and Amstel brands were lower.
resulting in a net consideration for HEINEKEN of USD161 million and full ownership of the Serbian operations. Under the agreement, HEINEKEN agreed to sell its 28 per cent stake in Efes Kazakhstan to EBI and acquire EBIs 28 per cent stake in Central Europe Beverages, the holding company for the Serbian operations, thereby obtaining full ownership. The transaction related to the Serbian operations closed on 27 December 2012, while the Kazakhstan disposal was completed on 8 January 2013. In December 2012, Brau Union Austria, signed an agreement with Eckes Granini to divest the soft drink operations of Pago International. The transaction is expected to complete in the first quarter of 2013.
HEINEKEN remains committed to driving continued value growth in the region, particularly in markets with strong positions.
Americas
The strong performances of our businesses in both the US and Mexico are the direct result of our sound strategy, continued investment in our brands and excellent execution.
John Nicolson President Americas
roup beer volume grew organically by 3.5 per cent, reflecting higher volume in the US, Mexico, Brazil, the Caribbean, and a stable performance at CCU, the joint venture business in Chile and Argentina. Adjusting for the higher rate of shipments growth (versus depletions) in the US, group beer volume grew organically by 3.1 per cent. Revenue grew 12 per cent, including a positive contribution from the first-time consolidation of Brasserie Nationale dHaiti (BraNa) and a favourable net currency impact following the appreciation of the Mexican peso and US dollar, slightly offset by depreciation of the Brazilian real. On an organic basis, revenue grew 8.2 per cent led by higher volume, strong price and sales mix in Mexico and Brazil and improved pricing in the US EBIT (beia) includes a positive contribution from the first-time consolidation of BraNa with favourable currency movements. On an organic basis, EBIT (beia) grew 7.9 per cent, as higher revenue was partly offset by increased input costs. Profit grew substantially in Mexico and was also higher in Brazil and the Caribbean and Canada. Profit remained broadly stable in the U.S market.
Revenue
4,523 million
24.6%
EBIT
662 million

EBIT (beia)
Key brands
748 million

30.9 per cent
30
Overview
Other information
In Mexico, successful execution of the Companys value growth strategy and a supportive economic environment contributed to strong profit growth. Investment in new marketing campaigns, the renewal of packaging for the Sol and Indio brands and strong performances of the Tecate and Dos Equis brands contributed to mid-single digit volume growth. Increased outlet distribution and strong activation supported solid growth of the Heineken brand. In Brazil, group beer volume grew in the low-single digits, outperforming beer market growth. Volume of the Kaiser and Bavaria brands was in line with the prior year, while the Heineken brand grew by over 40 per cent, gaining further market share in the international premium segment.
In the US, depletions (sales to retailers) increased by 2.2 per cent in a broadly stable beer market, resulting in market share gains. This volume performance reflects an improved trend for the Heineken brand, accelerated growth of the Mexican brand portfolio and successful innovation. The success of the global Open Your World campaign, underpinned by strong activation of the James Bond Skyfall sponsorship drove higher Heineken brand equity. Dos Equis Lager, one of the fastest growing import beers in the US, grew 25 per cent, with Tecate Light also growing strongly.
On an organic basis, revenue grew 8.2 per cent led by higher volume, strong price and sales mix in Mexico and Brazil and improved pricing in the US.
31

Africa offers huge potential. Our portfolio of leading international and domestic brands, investment in production capacity and leading commercial capabilities are our drivers of growth today and in the future.
Siep Hiemstra President Africa and the Middle East
roup beer volume increased 5.6 per cent, including a 1.6 per cent positive consolidation impact related to the acquired Ethiopian breweries. Organic volume grew 4 per cent with growth in all key markets with the exception of the Democratic Republic of Congo where volumes were adversely impacted by volatility in parts of the country. The Heineken brand achieved strong growth of 16 per cent, reaching 3.5 million hectolitres, primarily driven by growth in Nigeria, Algeria, Tunisia and South Africa. Organic revenue grew by 12 per cent, reflecting both the solid volume performance as well as the benefit of strong pricing and favourable sales mix from premium brand growth and innovation. On a reported basis, revenue grew 19 per cent, including a positive consolidation impact of 1.2 per cent related to the acquisition in Ethiopia and favourable foreign exchange impact of 5.2 per cent, primarily reflecting appreciation of the Nigerian naira and the Congolese franc.
Revenue
2,639 million
14.4%
EBIT
614 million

EBIT (beia)
Key brands
652 million

13.6 per cent
32
Overview
Other information
EBIT (beia) grew 9.8 per cent organically as higher revenue was partially offset by increased input costs and higher depreciation charges following investment in new brewing capacity in several markets. Profit grew strongly in Nigeria, Egypt, Burundi, Rwanda, whilst profit was lower in the Democratic Republic of Congo and South Africa. In Nigeria, volume grew in the low-single digits led by growth of the Heineken, Maltina, 33 Export and Star brands. An increase in consumer price inflation reduced purchasing power and contributed to slower beer market growth in 2012. However, increased product availability, investment in new capacity and strong marketing and sales execution contributed to higher market share.
Whilst some social unrest in Egypt remains, volume rebounded strongly in 2012, reflecting a partial recovery in tourism and an improved performance of non-alcoholic beverages. The Brandhouse joint venture operation in South Africa continued to outperform the market, with an improved volume performance
in the second half of the year driving a midsingle digit growth versus the prior year. This performance was led by the Windhoek, Heineken and Strongbow brands. Upgraded packaging and the introduction of a new marketing campaign in the fourth quarter of 2012 resulted in a trend improvement for the Amstel brand and improved brand equity.
Organic revenue grew by 12 per cent, reflecting both the solid volume performance as well as the benefit of strong pricing and favourable sales mix from premium brand growth and innovation.
Asia Pacific
Asia Pacific offers one of the worlds most exciting growth opportunities for beer, supported by favourable demographics and economic growth. The acquisition of APB has given us direct access to a number of high growth markets and strengthened HEINEKENs brand portfolio.
Theo de Rond President Asia Pacific Revenue
roup beer volume grew organically by 6.2 per cent, reflecting solid volume growth in Vietnam, Indonesia, South Korea and our UBL joint venture operation in India. Strong reported revenue growth primarily reflects a first time consolidation impact related to the acquired operations of APB and APIPL (+EUR287 million) and a small positive currency benefit (+EUR17 million). Higher consolidated volume and solid pricing in Taiwan, Hong Kong and Australia drove solid organic revenue growth. EBIT (beia), on a reported basis, grew by 52 per cent, reflecting a positive first time net consolidation impact of EUR83 million for APB and APIPL and a favourable currency impact. EBIT (beia) declined organically by 0.9 per cent, reflecting a net impairment of EUR11 million in 2012 related to HEINEKENs share of an investment in Jiangsu Dafuhao Breweries in China and a EUR19 million gain on the disposal of HEINEKENs share in Kingway Brewery Holdings Limited in China in 2011.
527 million
2.9%
EBIT
1,655 million

EBIT (beia)
Key brands
267 million

2.2 per cent
34
Overview
Other information
Volume of APB and APIPL increased 6.7 per cent, driven by strong growth in Vietnam, Indonesia and the export business. Tiger brand volume increased 32 per cent driven by solid growth in Vietnam, China and export markets. In China, volume grew 27 per cent, led by growth of the Tiger and Heineken brands in the international premium segment. Volume in UBL, the Companys joint venture in India, increased 6 per cent, driven by the continued success of the Kingfisher brand family. HEINEKENs share of net profit of UBL increased by 20 per cent largely due to strong pricing, lower bottle costs and reduced interest costs. Reported financials reflect the first time consolidation of APB and APIPL from 15 November 2012. Prior to consolidation, APB and APIPL financials were reflected in HEINEKENs EBIT (beia) as share of profit from associates and joint ventures, with a 3-month delay. Since 15 November 2012, HEINEKEN no longer reports the results of APB and APIPL with a delay. HEINEKENs share of net profit of APB and APIPL from 15 August to 14 November 2012 (3-month
catch up period) is reported as a pre-tax exceptional item in the Other Income line. For comparison purposes, the EBIT (beia) organic growth calculation is based on 12 months of APB and APIPL share of net profit, assuming HEINEKENs joint venture share of 41.9 per cent of APB and APIPL from the beginning of the year is maintained. This includes corrections for accounting changes and fair value adjustments. The 3-month catch up period is excluded from the calculation of organic volume and EBIT (beia) growth.
Group beer volume grew organically by 6.2 per cent, reflecting solid volume growth in Vietnam, Indonesia, South Korea and our UBL joint venture operation inIndia.
Risk Management
This section presents an overview of HEINEKENs risk management and control systems including a description of the most important risks, HEINEKENs exposure and its main risk mitigation efforts. Managing risks is explicitly on the managements agenda and embedded in the HEINEKEN Company Rules. Our aim with the Risk Management and Control Systems is to meet our strategic objectives as well as effectively protecting the Company and its brands against reputational and financial damage. Continuity and sustainability of the business are as important to the Company as growing and operating the business. As a business, we balance our financial sustainability with playing a role in society. Social responsibility and sustainability underpin everything we do. Risk Management and Control System The HEINEKEN Risk Management and Control System aims to ensure that the risks of the Company are identified and managed effectively, and that the operational and financial objectives are met in compliance with applicable laws and regulations at a reasonable level of assurance. The systems also protect the safety and health of our employees, customers and consumers. A system of controls that ensures adequate financial reporting is in place. HEINEKENs internal control system is based on the COSO Internal Control Framework. Risk appetite The Company is recognised for its drive for quality, consistency and financial discipline. Entrepreneurial spirit is encouraged across the Group in order to seek opportunities that support continuous growth, such as business development and brand building, while taking controlled risks. The international spread of the country portfolio geographically and between mature and emerging markets, the robust balance sheet and strong cash flow form the context of the risk appetite of the Company. Risk profile HEINEKEN is a predominantly single-product company operating in the alcohol business with a high level of commonality in its worldwide business operations. The worldwide activities are exposed to varying degrees of risk and uncertainty. Some of these risks may result in a material impact on the level of a particular operating company if not identified or effectively managed, but may not have material impact at Group level. As both the Company and its most valuable brand carry the same name, reputation management is of utmost importance. The image of our sector and products is of key importance to maintain our licence to operate and to grow the beer category in a responsible manner. This is especially relevant in markets where beer has a less favourable image. Compared to other leading beer companies, HEINEKEN has a significantly wider spread of its businesses across the globe, and does not depend on a limited number of markets. Latin America, Africa and Asia Pacific are important developing regions for HEINEKEN as its global organic volume
growth is largely driven by growth in these regions. The risk of political instability in part of these regions could adversely affect earnings and cash flow. Part of the Companys results are realised by joint ventures and via license agreements. HEINEKEN may face the risk that joint ventures do not always act in the best interests of the Company. The acquisition of Asia Pacific Breweries, previously a joint venture, did not lead to a change in the risk profile of HEINEKEN. After reviewing the risk related to Asia Pacific Breweries, it was concluded that there was no need to add new risks to the list of main risks for the Company. Risk management HEINEKEN strives to be a sustainable and performance-driven company. This is achieved by doing business, which by nature involves taking risks and managing those risks. Structured risk assessments are integrated in change projects, business planning, performance monitoring processes, common processes and system implementations, and acquisitions and business integration activities. The Risk Management and Control Systems are considered to be in balance with HEINEKENs risk profile and appetite, although such systems can never provide absolute assurance. HEINEKENs Risk Management and Control Systems are subject to continuous review and adaptations in order to remain in balance with its growing business size and the changes in its risk profile. Responsibilities The Executive Board has overall responsibility for HEINEKENs Risk Management and Control Systems. It is responsible for resource allocation and risk management policy setting. Its overall effectiveness is subject to review by the Audit Committee. Regional, operating company and global functional management are responsible for managing performance, identifying and managing related risks and the effectiveness of operations within the rules set by the Executive Board. A Risk Committee, chaired by HEINEKENs CFO, supports the Executive Board with their responsibility for risk management. The Risk Committee met three times in 2012 to discuss the results of the risk assessment and management process, the developments of existing risks, the identification of emerging new risks and the progress of risk mitigating actions. Prioritisation of HEINEKENs main risks is based on the potential level of financial impact on the Company, on its reputation and that of its brands, on the achievement of the Companys strategic objectives, on the safety and health of its people, and on the safeguarding of its assets. HEINEKEN Company Rules The HEINEKEN Company Rules are a key element of risk management and are in place to set the boundaries within which operating companies should conduct their business. A governance procedure and activities to ensure continuous awareness, compliance and follow-up are in place. In 2012, the HEINEKEN Company Rules were thoroughly reviewed and
36
Overview
Other information
updated to ensure that our way of working meets our high standards and is consistent across our key governance areas. The annual internal Letter of Representation process provides additional comfort on financial reporting and compliance with the HEINEKEN Company Rules. After completion of a risk control self-assessment process, regional presidents, heads of global functional departments and general and finance managers of the operating companies sign for compliance on behalf of their management teams on an annual basis. Governance HEINEKENs governance cycle consists of strategic planning, annual business planning and operational planning and performance monitoring. Strategies, business plans, key risks and quarterly performance of our operating companies are discussed between regional management and the Executive Board. The approved three-year business plans from regions and global functions include clear objectives, target setting and performance indicators that provide the basis for monitoring performance compared to the business plan. These plans also contain an annual assessment of the main risks, mitigation plans and financial sensitivity analysis.
During 2012, a new Code of Business Conduct was developed covering personal, commercial and company integrity. The Code is supported by a number of policies that deal with expected behaviour in a large number of fields. The new Code became effective on 1 January 2013. Supervision The Executive Board oversees the adequacy and functioning of the entire system of risk management and internal control, assisted by the global functions. Internal Audit provides independent assurance and advice on the risk management and internal control systems. Assurance meetings on both local and regional level oversee the adequacy and operating effectiveness of the risk management and internal control systems in their respective environments. Regional management and Internal Audit participate in the local meetings in order to ensure effective dialogue and transparency. The outcome and effectiveness of the risk management and internal control systems are evaluated by the Executive Board and the Audit Committee.
Financial reporting The risk management and control systems for financial reporting include clear accounting policies, a standard chart of accounts and Letters of Internal control in operating companies Representation signed by regional, functional and local management. Best-practice processes are continuously developed and implemented on The HEINEKEN common systems and embedded control frameworks are a Group-wide basis, supported by common IT systems with embedded key implemented in a large number of the operating companies and support control frameworks. This ensures the integrity of information processing in common accounting and regular financial reporting in standard forms. supporting the day-to-day transactions and financial and management Testing of key controls relevant for financial reporting is part of the reporting. The HEINEKEN Common Systems are continuously rolled out to Common Internal Audit Approach in operating companies on common more operating companies and are already being implemented within our systems. The external audit activities provide additional assurance on most recent acquisitions. Internal Audit is strongly involved in monitoring the financial reporting. Within the scope of the external auditors financial key controls embedded in main business processes and assessing their audit assignment, they also report on internal control issues through their effectiveness based on a common audit approach. management letters, and they attend the regional and certain local assurance meetings. Code of Business Conduct The Code of Business Conduct procedure is applicable to all majorityThe internal risk management and control systems, as described in this owned subsidiaries, regional offices and head office and is in the process section, provide a reasonable assurance that the financial reporting does of being introduced within our recent acquisitions. Compliance is supported not contain any errors of material importance. The risk management and through continuous monitoring of effectiveness and compliance reviews. control systems worked properly in the year under review. Employees may report suspected cases of serious misconduct to their direct superior, the local Trusted Representative or anonymously to an This statement cannot be construed as a statement in accordance with independently run confidential hotline. The Integrity Committee oversees the requirements of Section 404 of the US Sarbanes-Oxley Act, which the functioning of the Whistleblowing procedure and reports quarterly is not applicable to Heineken N.V. to the Executive Board and Audit Committee on reported cases and effectiveness of the procedure. Ongoing training is being performed at operating company level to further increase awareness and understanding.
37
Risk Management continued
HEINEKEN Business Framework
We are a Proud, Independent, Responsible, Global Brewer
HEINEKEN
What we stand for
Values
Shaping our future

Our Global Priorities
How we govern internally
One HEINEKEN
Code of Business Conduct

How we behave Policies
HEINEKEN Company Rules

How we work Standards and Procedures
Risk Management
How we reduce risk Monitoring and Assurance
People
Systems
Processes
Main risks Under the explicit understanding that this is not an exhaustive list, HEINEKENs main risks and related mitigation measures are described below. The main Company risks have been discussed with the Supervisory Board and are annually reviewed. The finance risks are separately enclosed as note 32 to the financial statement.
Risk category Risk description Mitigation
Non-Compliance
Increasing risk of non-compliance to laws and regulations due to strong growth in many new (emerging) markets leading to fines, claims, reputational and brand damage. Specific risks are: Non-compliance with competition law Non-compliance to local tax regulations Targeting under legal drinking age consumers.
Alcohol
Alcohol abuse remains a serious concern in many markets and prompts legislators to take further restrictive measures including restrictions and/or bans on advertising, sponsorship, point-of-sale, and increased taxes leading to lower revenues and profit. Specific risks are: Increased restrictions on commercial freedoms Increased taxes and duties Increased restrictions in availability.
Implementation and assessment of compliance with HEINEKEN Company Rules and HEINEKEN Code of Business Conduct Standards & procedures and training Legal control framework Tax control framework. Support to WHO on responsible consumption Work through EU Alcohol & Health Forum to reduce alcohol-related harm HEINEKEN Company Rule regarding responsible commercial communication Improving relations and co-operation with governments and NGOs.
38
Overview
Other information
Risk category
Risk description
Mitigation
Quality and integrity of our products
Safety, Health and Environment (SHE)
Poor quality products or integrity of our products may result in reputational and brand damage, resulting in lower volumes and financial claims. Specific risks are: Insufficient quality of products Recalls. Incidents and accidents in the supply chain and in our route-to-market. Specific risks are: Physical injuries Incidents and accidents Fatalities. We may not be successful in attracting, developing and retaining talented staff with the required capabilities. Specific risks are: Less than required number of talented staff employed to fill current and future positions Lower than required quality of staff in key positions.
Production controls Business continuity plans Recall procedures.
Management Capabilities
Availability and volatility in prices of raw materials, commodities, energy and water
Risk of limited availability of raw materials, commodities, energy and water. Volatility in prices of raw materials and commodities may impact our profit. Specific risks are: Limited availability Failure to pass on price increases Business disruption.
Industry consolidation
Marketing and Brand Management
We might fail to successfully participate in industry consolidation and miss opportunities to acquire target companies. Specific risks are: Missed opportunities Overpaying Unsuccessful business integration. Inability to further build our brands due to lack of consumer insight, unsuccessful innovations and ineffective use of social media. The Company may not be able to defend its intellectual property rights. Specific risks are: Limited or unsuccessful innovations Failure to use opportunities of social media.
Strengthen global SHE organisation, processes and procedures Tracking, monitoring and evaluation of accidents and fatalities. Develop and increase our management talent pipeline Implementation of appraisal and evaluation processes Strengthening management development programmes Functional Succession Committees. Leveraging scale by making use of flexibility in contracts Active hedging policy Implementation of a Global Purchasing organisation Improvement of our knowledge of the market and our suppliers Water sustainability strategy and plan. Strengthen the M&A activities and organisation Strong due diligence processes Implementation of a common business integration process. Strengthened Commercial Organisation Central marketing academy Investments in consumer and market intelligence Strengthened innovation organisation Increased use of social media. Business continuity plans Implementation of back-up scenarios.
Disruptions in the supply chain
Disruptions in the supply chain may lead to inability to deliver key products to key customers, leading to lower volumes. Specific risks are: Failure of IT systems.
39
Risk Management continued
Risk category
Risk description
Mitigation
Economic environment
Information security
The current economic and financial uncertainties, including those around the Eurozone, could impact our business and those of our customers, especially in on-trade business. This may lead to lower volumes, pressure on selling prices and increased credit risk. Weak economies may impact the solvency of our suppliers. Specific risks are: Declining on-trade market Downtrading Increasing credit risk Increasing taxes Discontinuity of our supply due to solvency problems of our critical suppliers Impairment of goodwill related to acquisitions Pension plan shortfalls due to the development of the financial markets. Loss of confidential information and disruption of processes due to unavailability of IT systems may cause financial damage. Specific risks are: Failure of IT systems Disruption of processes outsourced to shared service centres Cyber crime.
Additional monitoring and mitigating actions related to customers solvency Implementation of a Global Credit Policy Supplier selection process Evaluation of the financial position of critical suppliers.
Business improvement and transformation
Risk that benefits of strategic transformation programmes will not be realised, of significant cost overruns and of lower than required quality of the deliverables. Specific risks are: Estimated benefits too ambitious Ineffective or inefficient programme execution.
Strengthen the Companys information security policy Implementation and testing of continuity measures with our outsourcing partners Implementation of measures to secure confidentiality and integrity of data. Selection and prioritisation of business improvement projects Involvement of top management in all major projects Planning of projects and monitoring of project costs and benefits Improved project governance organisation including project management and progress reporting.
There may be current risks that do not have a significant impact on the business but which could at a later stage develop into a risk that may have a material impact on the Companys business. The Companys risk management systems are also focused on timely discovery of such risks.
40
Overview
Other information
Financial Review
Results from operating activities

In millions of EUR 2012 2011
Revenue Other income Raw materials, consumables and services Personnel expenses Amortisation, depreciation and impairments Total expenses Results from operating activities Share of profit of associates and joint ventures and impairments thereof (net of income tax) EBIT
18,383 1,510 (11,849) (3,037) (1,316) (16,202) 3,691 213 3,904
17,123 64 (10,966) (2,838) (1,168) (14,972) 2,215 240 2,455
Consolidation impact The main consolidation scope changes having an impact on financial results in 2012 include: the acquisition of the Harar and Bedele breweries in Ethiopia, consolidated from 4 August 2011; the acquisition of the Galaxy Pub Estate in the UK, consolidated from 2 December 2011; the acquisition of a controlling stake (from 22.5 per cent to 95 per cent) in Brasserie Nationale dHaiti S.A in Haiti, consolidated from 17 January 2012; and the acquisition of a direct and indirect stake of 39.7 per cent in APB (to raise our total stake to 95.3 per cent), and the acquisition of APIPL (from 50 per cent to 100 per cent) (the Acquired Businesses), both consolidated from 15 November 2012. HEINEKEN has consolidated the acquired APB and APIPL businesses under its Asia Pacific reporting region from 15 November 2012. The Acquired Businesses contributed EUR287 million of revenue and EUR93 million of EBIT (beia) during the period 15 November 2012 to 31 December 2012. Assuming the first-time consolidation of APB and APIPL from 1 January 2012, pro forma 2012 revenue and EBIT (beia) of the Acquired Businesses would have amounted to EUR1,698 million and EUR425 million respectively. HEINEKENs 2012 EBIT (beia) already includes EUR93 million related to its share of net profit of the Acquired Businesses before consolidation. HEINEKENs 2012 revenue includes EUR29 million related to intercompany transactions before consolidation. Revenue Revenue increased 7.4 per cent to EUR18,383 million, reflecting revenue growth of 3.9 per cent on an organic basis, a positive net consolidation effect of 2 per cent (+EUR336 million) and a favourable foreign currency effect of 1.5 per cent (+EUR254 million), largely driven by the Nigerian naira, the Mexican peso and the British pound. Organic revenue growth of 3.9 per cent is made up of total consolidation volume growth of 1.5 per cent and a 2.4 per cent increase in revenue per hectolitre. The 2.4 per cent is net of a negative country mix effect of 0.6 per cent. Total consolidated volume increased 3.9 per cent to 202 million hectolitre. The organic increase amounted to 1.5 per cent led by consolidated beer volume growth of 2.4 per cent and higher soft drinks volume. This was only partly offset by lower volume of cider and third-party products. Other income Prior to the acquisition of APB and APIPL, HEINEKEN owned a 50 per cent stake in APIPL, a combined direct and indirect stake in APB of (55.6) per cent as well as a direct stake in PT Multi Bintang of 6.78 per cent. Together these stakes are referred to as the Previously Held Equity Interest (PHEI). Prior to the acquisition HEINEKEN did not have control over APB as 64.8 per cent of the shares were held by APIPL, the joint venture between Fraser & Neave, Limited (F&N) and HEINEKEN. In accordance with IFRS, the PHEI in the Acquired Businesses is accounted for at fair value at the date of acquisition and amounts to EUR2,975 million. HEINEKENs carrying amount consists of the book value of the original investment as well as the price paid for shares bought up to 15 November 2012. The fair value compared to HEINEKENs carrying amount results in a non-cash exceptional gain of EUR1,486 million, recognised in Other Income. Expenses Total expenses (beia) increased 4.7 per cent on an organic basis. Input costs increased organically by 11 per cent and by 8.3 per cent on a per hectolitre basis, primarily reflecting higher malted barley prices.
Financial Review continued
Our Total Cost Management 2 (TCM2) programme realised EUR196 million of pre-tax cost savings in its first year. Supply Chain and Global Support functions have contributed 60 per cent and 21 per cent, respectively, of realised global cost savings, which were largely generated in Europe (62 per cent). Pre-tax exceptional costs related to TCM2 in the period were EUR97 million. In 2012, upfront costs related to the set-up of the Global Business Services (GBS) organisation were EUR70 million (including capitalised IT infrastructure costs of EUR17 million). This brings the cumulative amount of upfront GBS costs to EUR102 million as at the end of 2012, of which EUR82 million has been expensed (primarily under Head Office and Eliminations) and EUR20 million capitalised. Energy and water costs were EUR562 million, up 4.9 per cent organically. Personnel costs increased 4.9 per cent organically, reflecting an increase in employee numbers in higher growth markets. The reported increase in personnel costs of 7.0 per cent is mainly driven by the consolidation of APB and APIPL and Brasserie Nationale dHaiti S.A in Haiti as well as unfavourable foreign currency movements. Marketing and selling (beia) expenses increased organically by 0.3 per cent to EUR2,250 million, representing 12.2 per cent of revenues (2011: 12.8 per cent). Improved effectiveness of marketing spend, combined with brand equity building activities and innovation, contributed to global volume market share gains in 2012. The 2012 exceptional items included in EBIT contain the amortisation of acquisition-related intangibles for EUR198 million (2011: EUR170 million). Additional exceptional items included in EBIT relating to the APB and APIPL acquisition are the gain on PHEI for EUR1,486 million, the reversal of the inventory fair value adjustment in cost of goods sold for EUR76 million and acquisition-related costs of EUR28 million. Other exceptional items include restructuring activities in wholesale for EUR97 million, impairment of assets for EUR37 million and adjustments to an acquisition of EUR20 million outside the provisional period. Share of profits of associates and joint ventures Share of profits of our associates and joint ventures contains HEINEKENs share of a one-off expense item of EUR36 million following a write-off of deferred tax assets in an associate. Furthermore it includes HEINEKENs share of a net impairment in Jiangsu Dafuhao Breweries Co. Ltd in China for EUR11 million. Results (beia)
Result from operating activities Share of profit of associates and joint ventures and impairments thereof (net of income tax) EBIT Amortisation acquisition-related intangibles Exceptional items EBIT (beia)
3,691 213 3,904 198 (1,190) 2,912
2,215 240 2,455 170 72 2,697
In millions of EUR
2012
2011
Net profit Amortisation acquisition related intangibles Exceptional items Net profit (beia)
2,949 145 (1,398) 1,696
1,430 123 31 1,584
EBIT (beia) and Net profit (beia)

In millions of EUR EBIT beia Net profit beia
2011 Organic growth Changes in consolidation Effects of movement in exchange rates 2012
2,697 (12) 164 63 2,912
1,584 26 36 50 1,696
Overview
Other information
EBIT to profit
EBIT Net interest expenses Other net finance income/(expenses) Profit before income tax Income tax expenses Profit
3,904 (489) 219 3,634 (525) 3,109
2,455 (424) (6) 2,025 (465) 1,560
On reported basis, interest expenses increased by EUR65 million, reflecting higher interest expense related to financing raised for the acquisition of APB and APIPL. On an organic basis, net interest costs declined by EUR23 million. The average interest rate on net interest-bearing debt (including interest rate swaps) in 2012 was 5.4 per cent, compared with 5.2 per cent in 2011, mainly due to Nigeria representing a higher proportion of total group interest expense. On a reported basis, other net finance income/ (expense) includes a EUR20 million capital gain related to the revaluation of HEINEKENs existing 22 per cent interest in Brasserie dHaiti and a EUR175 million gain related to the sale of a 9.3 per cent interest in a brewery in the Dominican Republic. The effective tax rate (beia) was 26.5 per cent, slightly below the 2011 (beia) tax rate of 26.8 per cent. Similar to 2011, the effective tax rate (beia) in 2012 includes the favourable outcome of discussions with tax authorities in certain markets. The lower reported tax rate in 2012 of 15.3 per cent (2011: 26.1 per cent) can be explained by the tax exempt revaluation of HEINEKENs PHEI in APB and APIPL, prior to consolidation. Earnings per share diluted increased from EUR2.44 to EUR5.12 impacted by exceptional items. Earnings per share diluted (beia) increased by 8.9 per cent from EUR2.70 to EUR2.94. Cash flow
Cash flow from operations before changes in working capital and provisions Total change in working capital Change in provisions and employee benefits Cash flow from operations Cash flow related to interest, dividend and income tax Cash flow from operating activities Cash flow (used in)/from operational investing activities Free operating cash flow Cash flow (used in)/from acquisitions and disposals Cash flow (used in)/from financing activities Net cash flow Cash conversion ratio
3,581 101 (164) 3,518 (823) 2,695 (1,210) 1,485 (4,415) 3,056 126 80%
3,545 251 (76) 3,720 (809) 2,911 (818) 2,093 (937) (1,034) 122 122%
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Financial Review continued
Cash flow and investments Free operating cash flow declined to EUR1,485 million from EUR2,093 million. A positive cash flow impact from working capital was more than offset by increased by capital expenditure in high growth markets. Cash flow used for acquisitions and disposals is primarily driven by the acquisition of APB and APIPL. Prior to the acquisition date, HEINEKEN obtained additional APB shares in the market for EUR1,194 million. On 15 November 2012, HEINEKEN paid F&N a cash consideration of EUR3,584 million. The total cash flow used for acquisitions and disposals, net of cash acquired, amounts to EUR4,415 million. In addition, in the cash flow (used in)/from financing activities an amount of EUR252 million is included for the Mandatory General Offer (MGO) for the purchase of the remaining minority shares in APB. The decrease of our cash conversion ratio to 80 per cent reflects higher capital investments to drive future growth. Financing structure
In millions of EUR 2012 % 2011 %
Total equity Deferred tax liabilities Employee benefits Provisions Interest bearing loans and borrowings Other liabilities Total equity and liabilities
12,762 1,790 1,632 547 13,359 5,889 35,979
35 5 5 1 37 17 100
10,092 894 1,174 589 9,183 5,195 27,127
37 3 3 2 34 21 100
Total equity
2008 2009 2010 2011 2012
as a percentage of total assets

23.1 28.0 38.3 37.2 35.5
Net debt/EBITDA (beia) ratio

2008 2009 2010 2011 2012 2.3 2.3 3.1 2.6 3.3
In millions of EUR
2012
2011
EBIT Depreciation and impairments of plant, property & equipment Amortisation and impairment of intangible assets Impairment on available-for-sale assets EBITDA Exceptional items EBITDA (beia)
3,904 1,061 254 1 5,220 (1,241) 3,979
2,455 936 232 3,623 59 3,682
Financing and liquidity Equity attributable to equity holders of the Company increased by EUR1,917 million to EUR11,691 million, mainly driven by the strong reported net profit performance (including the exceptional gain on the PHEI in APB and APIPL partly offset by dividends paid (EUR494 million) and actuarial losses (EUR439 million). Interest bearing loans and borrowings increased to EUR13,359 million (from EUR9,183 million as at 31 December 2011), due to the acquisition of APB and APIPL .
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Overview
Other information
Currency split of Net Debt This currency breakdown includes the effect of derivatives, which are used to hedge intercompany lending denominated in currencies other than euro. Of total net interest-bearing debt, approximately 61 per cent is denominated in euro and 27 per cent is US dollar denominated. This is including the effect of cross-currency interest rate swaps on non-euro denominated debt such as the GBP bond and the US private placements at both Heineken N.V. and HEINEKEN UK. The fair value of these swaps does not form part of net debt. Currency split of Net Debt
2% 1% 5% 1% 0% 2% 2%
Obligatory debt repayments
27% 61%
EUR USD MXN NGN GBP PLN CHF SGD Other
in millions of EUR
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2025 379 500
1,366 1,872 1,147 1,022 1,467 842 850 1,025
593 758
750
For the first time in the Companys 148 year history, HEINEKEN was assigned public credit ratings on 7 March 2012. HEINEKEN received solid investment grade credit ratings by Moodys Investor Service (Baa1) and Standard & Poors (BBB+). Both ratings have a stable outlook as per the date of this annual report. The assignment of the credit ratings has allowed the Company to further diversify its funding base. On 19 March 2012, HEINEKEN issued EUR1.35 billion of Notes under its EMTN Programme comprising EUR850 million of 7-year Notes with a coupon of 2.5 per cent and EUR500 million of 12-year Notes with a coupon of 3.5 per cent. On 3 April 2012, HEINEKEN issued USD750 million of 10-year 144A/ RegS US Notes with a coupon of 3.4 per cent. On 2 August 2012, HEINEKEN issued EUR1.75 billion of Notes under its EMTN Programme, consisting of 8-year Notes for a principal amount of EUR1 billion with a coupon of 2.125 per cent and 13-year Notes for a principal amount of EUR750 million with a coupon of 2.875 per cent. On 3 October 2012, HEINEKEN announced that it had successfully priced 144A/RegS US Notes for a principal amount of USD3.25 billion. This comprised USD500 million of 3-year Notes at a coupon of 0.8 per cent, USD1.25 billion of 5-year Notes at a coupon of 1.4 per cent, USD1 billion of 10.5-year Notes at a coupon of 2.75 per cent and USD500 million of 30-year Notes at a coupon of 4.0 per cent. The proceeds of the Notes have been mainly used for the financing of the acquisition of APB and APIPL and the repayment of debt facilities. The issues have enabled HEINEKEN to further improve the currency and maturity profile of its long-term debt. Financing ratios HEINEKEN has an incurrence covenant in some of its financing facilities. The incurrence covenant is calculated by dividing net debt (calculated in accordance with the consolidation method of the 2007 Annual Accounts) by EBITDA (beia) (also calculated in accordance with the consolidation method of the 2007 Annual Accounts and including the pro-forma full-year EBITDA of any acquisitions made in 2012). As at 31 December 2012 this ratio was 2.8 (2011: 2.1). If the ratio would be beyond a level of 3.5 the incurrence covenant would prevent us from conducting further significant debt-financed acquisitions. Profit appropriation Heineken N.V.s profit (attributable to shareholders of the Company) in 2012 amounted EUR2,949 million. In accordance with Article 12, paragraph 7, of the Articles of Association, the Annual General Meeting of Shareholders will be invited to appropriate an amount of EUR512 million for distribution as dividend. This proposed appropriation corresponds to a dividend of EUR0.89 per share of EUR1.60 nominal value, on account of which an interim dividend of EUR0.33 was paid on 4 September 2012. The final dividend thus amounts EUR0.56 per share. Netherlands withholding tax will be deducted from the final dividend at 15 per cent.
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Corporate Governance Statement
Dutch Corporate Governance Code On 10 December 2008 the current Dutch Corporate Governance Code (the Code) was introduced. The Code can be downloaded at www.commissiecorporategovernance.nl. Heineken N.V. has prepared a Comply or Explain report on the basis of the Code. The Comply or Explain report is available at www.theHEINEKENcompany.com. 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-specific situation and therefore that non-application of individual provisions by a company may be justified. HEINEKEN endorses the Codes principles and applies virtually all best practice provisions. However, in particular, the structure of the HEINEKEN Group and specifically the relationship between Heineken Holding N.V. and Heineken N.V., prevents Heineken N.V. from applying a small number of best practice provisions. In particular this pertains to the following best practice provisions which are not (fully) applied or applied with an explanation: II.2.8: severance payment Executive Board members; III.2.1, III.2.2 a, c and e, III.2.3 and III.5.1: independence of Supervisory Board members; III.3.5: appointment period Supervisory Board members; III.4.1 (g): contact with Central Works Council; III.5.11: chairman Remuneration Committee; III.6.6: delegated Supervisory Board member. Other best practice provisions, which are not applied, relate to the fact that these principles and/or best practice provisions are not applicable to Heineken N.V.: II.2.4, II.2.6 and II.2.7: HEINEKEN does not grant options on shares; III.8: HEINEKEN does not have a one-tier management structure; IV.1.2: HEINEKEN has no financing preference shares; IV.2: HEINEKEN has no depositary receipts of shares, nor a trust office; IV.3.11: HEINEKEN has no anti-takeover measures; IV.4: The principle and best practice provisions relate to shareholders; V.3.3: HEINEKEN has an internal audit function.
Contrary to what is stated in the Comply or Explain report, HEINEKEN does not fully apply best practice provision III.5.1, as the regulations of the Audit Committee, the Remuneration Committee and the Selection & Appointment Committee permit that more than one committee member is not independent within the meaning of best practice provision III.2.2. Risk Management and Control Systems for financial reporting The risk management and control systems for financial reporting include clear accounting policies, a standard chart of accounts and Letters of Representation signed by regional, functional and local management. The HEINEKEN common systems and embedded control frameworks are implemented in a large number of the operating companies and support common accounting and regular financial reporting in standard forms. Testing of key controls relevant for financial reporting is part of the Common Internal Audit Approach in operating companies on common systems. The external audit activities provide additional assurance on the financial reporting. Within the scope of the external auditors financial audit assignment, they also report on internal control issues through their management letters, and they attend the regional and certain local assurance meetings. The internal risk management and control systems, as described in this section, provide a reasonable assurance that the financial reporting does not contain any errors of material importance. The risk management and control systems worked properly in the year under review. This statement cannot be construed as a statement in accordance with the requirements of Section 404 of the US Sarbanes-Oxley Act, which is not applicable to Heineken N.V. General Meeting of Shareholders Annually, within six months after the end of the financial year, the Annual General Meeting of Shareholders 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 financial 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 profits. General Meetings of Shareholders shall be held in Amsterdam. Convocation Pursuant to the law, the Executive Board or the Supervisory Board shall convene the General Meetings of Shareholders with a convocation period of at least 42 days (excluding the date of the meeting, but including the convocation date).
The General Meeting of Shareholders of 22 April 2010 discussed the way HEINEKEN deals with the Code and that Heineken N.V. does not (fully) apply the above best practice provisions. At the General Meeting of Shareholders of 20 April 2005, the departure from similar best practice provisions of the 2003 corporate governance code was put to the vote and approved.
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Record date For each General Meeting of Shareholders, 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 Right to include items on the agenda meeting can be registered and the manner in which they may exercise If the Executive Board has been requested in writing not later than 60 days their rights. prior to the date of the General Meeting of Shareholders to address an item by one or more shareholders who solely or jointly (i) represent at least Only persons that are shareholder on the record date may participate 1 per cent of the issued capital or (ii) at least represent a value of EUR50 and vote in the General Meeting of Shareholders. 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 Participation in person, by proxy or through electronic communication on the agenda of the General Meeting of Shareholders needs to be Each shareholder is entitled, either personally or by proxy authorised in substantiated. The principle of reasonableness and fairness may allow writing, to attend the General Meeting of Shareholders, to address the the Executive Board to refuse the request. meeting and to exercise his voting rights. The Executive Board and the Supervisory Board are obliged to convene a General Meeting of Shareholders 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. The Dutch Corporate Governance Code of 10 December 2008 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 companys 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 addressed. 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. Best practice provision IV.4.4 is written for shareholders and they are free to deviate from the recommendation of the best practice provision to respect this response time. The Executive Board may determine that the powers set out in the previous sentence may also be exercised by means of electronic communication. The Executive Board may subject the use of electronic communications to conditions which will then be indicated in the convocation notice. If a shareholder wants to exercise his 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 website, the Company generally facilitates that shareholders can give electronic voting instructions. Attendance list Each person entitled to vote or otherwise entitled to attend a meeting or such persons representative shall have to sign the attendance list, stating the number of shares and votes represented by such person. Chairman of the General Meeting All General Meetings of Shareholders shall be presided 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.
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Corporate Governance Statement continued
Voting All resolutions of the General Meeting of Shareholders 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.
(xv) (xvi) (xvii) (xviii)
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 General Meeting of Shareholders. This would at least include (a) the transfer of the enterprise The Executive Board may determine in the convocation notice that any or the transfer of practically the entire enterprise of the Company to a third vote cast prior to the General Meeting of Shareholders by means of party, (b) the entering into or the termination of a lasting co-operation electronic communication shall be deemed to be a vote cast in the General of the Company or a subsidiary with another legal entity or company Meeting of Shareholders. Such a vote may not be cast prior to the record or as fully liable partner in a limited partnership or general partnership, date. A shareholder who has cast his vote prior to the General Meeting if such co-operation or termination is of fundamental importance to the of Shareholders by means of electronic communication remains entitled, Company and (c) acquiring or disposing of a participation in the capital whether or not represented by a holder of a written power of attorney, of a company by the Company or a subsidiary amounting to at least to participate in the General Meeting of Shareholders. one-third of the amount of assets according to the Companys consolidated balance sheet plus explanatory notes as laid down in the last adopted Minutes financial statements of the Company. The proceedings in the General Meeting of Shareholders shall be recorded in minutes taken by a secretary to be designated by the chairman of the Provision of information meeting, which minutes shall be signed by the chairman of the meeting The Executive Board and the Supervisory Board shall provide the General and the secretary. If, in deviation of the above, a notarial record of the Meeting of Shareholders with all requested information, unless this would proceedings of the General Meeting of Shareholders is drawn up, the be contrary to an overriding interest of the Company. If the Executive chairman of the meeting shall countersign the notarial record. Upon request Board and the Supervisory Board invoke an overriding interest, they shall the record of the proceedings of the General Meeting of Shareholders shall give reasons. be submitted to shareholders ultimately within three months after the conclusion of the meeting. Executive Board Composition and role of the Executive Board Resolutions to be adopted by the General Meeting Executive Board members are appointed by the General Meeting The General Meeting of Shareholders has authority to adopt resolutions of Shareholders from a non-binding nomination drawn up by the concerning, inter alia, the following matters: Supervisory Board. (i) Issue of shares by the Company or rights on shares (and authorise the Executive Board to resolve that the Company issues shares or rights on shares) Authorise 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 financial statements Granting discharge to Executive and Supervisory Board members The profit reservation and distribution policy Dividend distributions The Executive Board currently consists of two members, Chairman/CEO Jean-Franois (J.F.M.L.) van Boxmeer and CFO Ren (D.R.) Hooft Graafland. Information on these Executive Board members is provided hereunder. Jean-Franois (J.F.M.L.) van Boxmeer (1961) Belgian nationality; male. Appointed in 2001. Chairman/CEO (2005). No supervisory board seats (or non-executive board memberships) in Large Dutch Entities**. Other positions***: Mondelez International, US, The Dutch Opera.
(ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv)
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Ren (D.R.) Hooft Graafland (1955) Dutch nationality; male. Appointed in 2002; re-appointment in 2011* CFO (2005). Supervisory board seats (or non-executive board memberships) in Large Dutch Entities**: Wolters Kluwer N.V. Other positions***: Royal Theater Carr, Amsterdam (Chairman).
* 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; (ii) The net turnover exceeds EUR35 million; (ii) 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.
for complying with all primary and secondary legislation, for managing the risks associated with the Companys activities and for financing the Company. 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 conflict of interest with the Company. Supervisory Board Composition of the Supervisory Board The Supervisory Board consists of ten members: Cees van Lede (Chairman), Jos Antonio Fernndez Carbajal (Vice-Chairman), Maarten Das (Delegated Member), Michel de Carvalho, Jan Maarten de Jong, Annemiek Fentener van Vlissingen, Mary Minnick, Christophe Navarre, Javier Astaburuaga Sanjins and Hans Wijers. Information on these Supervisory Board members is provided hereunder. Cees (C.J.A.) van Lede (1942) Dutch nationality; male. Appointed in 2002; latest reappointment in 2010*. Chairman (2004). Will step down as member and Chairman on 25 April 2013. Profession: Company Director. Supervisory board seats (or non-executive board memberships) in Large Dutch Entities**: Royal Philips Electronics N.V. , D.E. Master Blenders 1753 N.V. Other positions***: Air Liquide S.A., Air France/KLM, Senior Advisor Europe JP Morgan Plc., London. Jos Antonio (J.A.) Fernndez Carbajal (1954) Mexican nationality; male. Appointed in 2010*. Vice-Chairman (2010). Profession: Chairman & CEO Fomento Econmico 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), Tecnolgico de Monterrey (Chairman), Fundacin Femsa (Chairman); participates on Boards of Televisa, Aerolneas Volaris, Industrias Peoles, Grupo Financiero BBVA Bancomer.
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 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. The Annual General Meeting of Shareholders of 21 April 2011 resolved to re-appoint D.R. Hooft Graafland for a period of four years. A non-binding nomination for the re-appointment of J.F.M.L. van Boxmeer for a period of four years will be submitted to the Annual General Meeting of Shareholders of 25 April 2013. The Supervisory Board appoints one of the Executive Board members as Chairman/CEO. The General Meeting of Shareholders 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. The role of the Executive Board is to manage the Company, which means, amongst other things, that it is responsible for setting and achieving the operational and financial 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 financial ratios), the associated risk profile, the development of results and corporate social responsibility issues that are relevant to the enterprise. The Executive Board is accountable for this to the Supervisory Board and to the General Meeting. In discharging its role, the Executive Board shall be guided by the interests of the Company and its affiliated enterprises, taking into consideration the interests of the Companys stakeholders. The Executive Board is responsible
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Maarten (M.) Das (1948) Dutch nationality; male. Appointed in 1994; latest reappointment in 2009*. 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 ) Other positions***: LArche 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 2011*. Profession: Banker, Investment Banking, Citi Inc.,UK (Vice-Chairman) and Citi Private Bank Europe, Middle East and Africa (Chairman). No supervisory board seats (or non-executive board memberships) in Large Dutch Entities**. Other positions***: LArche Green N.V. Jan Maarten (J.M.) de Jong (1945) Dutch nationality; male. Appointed in 2002; latest reappointment in 2010*. Profession: Banker. Supervisory board seats (or non-executive board memberships) in Large Dutch Entities**: Nutreco N.V. (Chairman), AON Groep Nederland B.V. (Chairman), Theodoor Gilissen Bankiers N.V. Other positions***: Onderlinge Levensverz-Mij. s-Gravenhage U.A. (Chairman), CRH plc, Ireland, Kredietbank S.A. Luxembourgeoise, Luxembourg. Annemiek (A.M.) Fentener van Vlissingen (1961) Dutch nationality; female. Appointed in 2006; latest reappointment in 2010*. Profession: Company Director. Supervisory board seats (or non-executive board memberships) in Large Dutch Entities**: SHV Holdings N.V. (Chairman), De Nederlandsche Bank N.V., University Medical Center Utrecht (UMC Utrecht). Other positions***: Lhoist, Belgium. 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*. Profession: Chairman & CEO Mot Hennessy, LVMH Wines & Spirits Brands. No supervisory board seats (or non-executive board memberships) in Large Dutch Entities**. Javier (J.G.) Astaburuaga Sanjins (1959) Mexican nationality; male. Appointed in 2010*. Profession: CFO Fomento Econmico Mexicano S.A.B. de C.V. (FEMSA) No supervisory board seats (or non-executive board memberships) in Large Dutch Entities**. Other positions***: Coca-Cola Femsa S.A.B. de C.V. Hans (G.J.) Wijers (1951) Dutch nationality; male. Appointed in 2012. Will be appointed Chairman on 25 April 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), Natuurmonumenten (Chairman), Concertgebouw N.V.
* 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 EUR 17.5 million; (ii) The net turnover exceeds EUR 35 million; (ii) 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.
The Supervisory Board members are appointed by the General Meeting of Shareholders from a non-binding nomination drawn up by the Supervisory Board. The General Meeting of Shareholders 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. 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 and any particular interests. Five members of the Supervisory Board (Messrs. de Carvalho, de Jong, Das, Fernndez Carbajal and Astaburuaga Sanjins) do not meet the applicable criteria for being independent within the meaning of best practice provision III.2.2 of the Dutch Corporate Governance Code of 10 December 2008.
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A person may be appointed to the Supervisory Board for a maximum of three 4-year terms. However, given the structure of the Heineken Group, the maximum appointment period will not be applied to members 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 www.theHEINEKENcompany.com. Profile The Supervisory Board has prepared a profile 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 profile deals with the aspects of diversity in the composition of the Supervisory Board that are relevant to the Company and states what specific objective is pursued by the Supervisory Board in relation to diversity. Each Supervisory Board member shall be capable of assessing the broad outline of the overall policy. At least one member of the Supervisory Board shall be a financial expert with relevant knowledge and experience of financial 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 profile is available on www.theHEINEKENcompany.com. Role The role of the Supervisory Board is to supervise the management of the Executive Board and the general affairs of the Company and its affiliated 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 affiliated enterprises and shall take into account the relevant interest of the Companys stakeholders. The supervision of the Executive Board by the Supervisory Board includes the achievement of the Companys objectives, the corporate strategy and the risks inherent in the business activities, the design and effectiveness of the internal risk and control systems, the financial reporting process, compliance with primary and secondary legislation, the Companyshareholder 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 the main risks of the business, the result of the assessment by the Executive Board of the design and effectiveness of the internal risk management and control systems, as well as any significant changes thereto.
The division of duties within the Supervisory Board and the procedure of the Supervisory Board is laid down in the Regulations for the Supervisory Board, which are available on www.theHEINEKENcompany.com. 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 conflict of interest with the Company. The Executive Board provides the Supervisory Board with all information necessary for the exercise of the duties of the Supervisory Board. The Supervisory Board evaluates at least once a year, without the Executive Board being present, its own functioning, the functioning of its committees and its individual members and the conclusions that must be drawn on the basis thereof. The Supervisory Board also evaluates the desired profile, composition and competence of the Supervisory Board. Moreover, the Supervisory Board evaluates at least once a year without the Executive Board being present both the functioning of the Executive Board as an organ of the Company and the performance of its individual members and the conclusions that must be drawn on the basis thereof. 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 financial 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 financial 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 conflicts of interest that are of material significance 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 of the Company, which contains a list of resolutions of the Executive Board that require Supervisory Board approval. Chairman The Supervisory Board appoints from its members a Chairman (currently C.J.A. van Lede). The Chairman of the Supervisory Board may not be a former member of the Executive Board. The Chairman of the Supervisory Board ensures the proper functioning of the Supervisory Board and its committees 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 and Supervisory Board members.
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Vice-Chairman The Supervisory Board appoints from its members a Vice-Chairman (currently J.A. Fernndez 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. Delegated Member The General Meeting of Shareholders may appoint one of the Supervisory Board members as Delegated Member (currently M. Das). The delegation of powers to the Delegated Member does not exceed the duties of the Supervisory Board and does not comprise the management of the Company. It intends to effect 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. Committees The Supervisory Board has five committees, the Preparatory Committee, the Audit Committee, the Remuneration Committee, the Selection & Appointment Committee and the Americas Committee. 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. These regulations are available on www.theHEINEKENcompany.com. 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 financial expert with relevant knowledge and experience of financial 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 systems, including the enforcement of the relevant primary and secondary legislation and supervising the operation of codes of conduct, (ii) the provision of financial 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, his independence, remuneration and any non-audit services for the Company, (vii) the financing 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 he discovers irregularities in the content of the financial 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 Remuneration Committee may be chaired by a Supervisory Board member who is a member of the Board of Directors of Heineken Holding N.V. (as currently is the case with Mr. M. Das). 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.
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Overview
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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 profile 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 and (v) supervises the policy of the Executive Board on the selection criteria and appointment procedures for senior management. 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. Decree Article 10 Take-Over Directive Shares The issued share capital of Heineken N.V. 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 hereunder). Shares repurchased by Heineken N.V. for the share-based long-term variable 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 General Meetings of Shareholders. The record date for the Annual General Meeting of Shareholders of 25 April 2013 is 28 days before the Annual General Meeting of Shareholders, i.e. on 28 March 2013. Substantial shareholdings Pursuant to the Financial Supervision Act (Wet op het financieel toezicht) and the Decree on Disclosure of Major Holdings and Capital Interests in Issuing Institutions (Besluit melding zeggenschap en kapitaalbelang in uitgevende instellingen), the Financial Markets Authority has been notified about the following substantial shareholding regarding Heineken N.V.:
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 2012 CB Equity LLP holds 12.53 per cent Massachusetts Financial Services Company (a capital interest of 2.12 per cent and a voting interest of 5.00 per cent of which 2.94 per cent is held directly and 2.06 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 Econmico 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 Heineken N.V., Heineken Holding N.V., LArche 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 beneficially owned by it, if and to the extent such shares are in excess of the applicable Voting Ownership Cap. FEMSA, CB Equity and any member of the FEMSA group may not sell any shares in Heineken N.V. (and in Heineken Holding N.V.) for a five-year period, subject to certain exceptions, including amongst others, (i) beginning in year three, the right to sell up to 1 per cent of all outstanding shares of each of Heineken N.V. and Heineken Holding N.V. in any calendar quarter and (ii) beginning in year three, the right to sell any Heineken N.V. shares and/or any Heineken Holding N.V. shares in any private block sale outside the facilities of a stock exchange so long as Heineken Holding N.V. (as to Heineken N.V. shares) respectively LArche Green N.V. (as to Heineken Holding N.V. shares) is given first the opportunity to acquire such shares at the market price thereof. Unless FEMSAs 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 Heineken N.V. 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.
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Share plans There is a share-based Long-Term Variable Award (LTV) for both the Executive Board members and senior management. Eligibility for participation is based on objective criteria. Each year, performance shares are awarded to the participants. Depending on the fulfilment 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 Long-Term Variable Award are subject to a holding period of five 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 fulfilment 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 Heineken N.V.; the maximum they can invest in Heineken N.V. shares is 50 per cent of their STV payout (at their discretion). 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 five 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 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 non-recurring 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 Heineken N.V. The transfer of shares to the participants under the LTV, to the Executive Board members under the STV and the recipients of extraordinary share entitlements requires the approval of the Supervisory Board of Heineken N.V.
Change of control There are no important agreements to which Heineken N.V. is a party and that will automatically come into force, be amended or be terminated under the condition of a change of control over Heineken N.V. as a result of a public offer. However, in the situation of a change control over Heineken N.V. (as defined in the respective agreement), the contractual conditions of most of Heineken N.V.s important financing agreements and the terms and conditions of Heineken N.V.s bond issues after 2003 entitle the banks and bondholders respectively to claim early repayment of the amounts borrowed by Heineken N.V. Also some of HEINEKENs important joint venture agreements provide that in case of a change of control over HEINEKEN (as defined in the respective agreement), the other party to such agreement may exercise its right to purchase HEINEKENs shares in the joint venture, as a result of which the respective joint venture agreement will terminate. Compensation rights on termination of employment agreements There are no agreements of Heineken N.V. with Executive Board members or other employees that specifically entitle them to any compensation rights upon termination of their employment after completion of a public offer on Heineken N.V. shares. If Heineken N.V. gives notice of termination of the employment agreement for a reason which is not an urgent reason (dringende reden) within the meaning of the law, Heineken N.V. shall pay severance compensation to the Executive Board member on expiry of the 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 Heineken N.V. 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 the Executive Board member, the severance compensation cannot exceed one years base salary, including holiday allowance. Appointment and dismissal of Supervisory and Executive Board members Members of the Supervisory Board and the Executive Board are appointed by the General Meeting of Shareholders on the basis of a non-binding nomination by the Supervisory Board. The General Meeting of Shareholders 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.
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Overview
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Amendment of the Articles of Association The Articles of Association can be amended by resolution of the General Meeting of Shareholders 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 19 April 2012, the Annual General Meeting of Shareholders 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 Heineken N.V. 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 Official Price List (Officile Prijscourant) of Euronext Amsterdam on the date of the transaction or, in the absence of such a price, the latest price quoted therein. c. Transactions may be executed on the stock exchange or otherwise. 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. A new authorisation will be submitted for approval to the Annual General Meeting of Shareholders of 25 April 2013. Issue of shares On 19 April 2012, the Annual General Meeting of Shareholders 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 Heineken N.V.s issued share capital, as at 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 Annual General Meeting of Shareholders of 25 April 2013. Executive Board J.F.M.L. van Boxmeer D.R. Hooft Graafland Amsterdam, 12 February 2013
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Report of the Supervisory Board
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 profit appropriation The Supervisory Board hereby submits to the shareholders the financial statements and the report of the Executive Board for the financial year 2012, as prepared by the Executive Board and approved by the Supervisory Board in its meeting of 12 February 2013. The financial statements of this Annual Report can be found under the financial statements section of this Annual Report. KPMG Accountants N.V. audited the financial statements. Their report can be found on page 153 in the Other information section. The Supervisory Board recommends that shareholders, in accordance with the Articles of Association, adopt these financial statements and, as proposed by the Executive Board, appropriate EUR512 million for payment of dividend. The underlying principle of the dividend policy is that 30-35 per cent of net profit before exceptional items and amortisation of brands (net profit beia) is placed at the disposal of shareholders for distribution as dividend. The proposed dividend amounts to EUR0.89 per share of EUR1.60 nominal value, of which EUR0.33 was paid as an interim dividend on 4 September 2012. Supervisory Board composition, independence and remuneration Composition The Annual General Meeting of Shareholders on 19 April 2012 appointed Mr. G.J. Wijers as member of the Supervisory Board for a period of four years. Mr. Wijers became member of the Audit Committee. As announced in 2012, Mr. Wijers will succeed Mr. C.J.A. van Lede as Chairman of the Supervisory Board after the General Meeting of Shareholders on 25 April 2013. Mrs. M.E. Minnick was reappointed as member of the Supervisory Board for a period of four years. Mr. J.M. Hessels stepped down from the Supervisory Board as at 19 April 2012. The Supervisory Board has a diverse composition in terms of experience, gender, nationality and age. Two out of ten members are women and five out of ten members are non-Dutch. There are five nationalities (American, Belgian, British, Dutch and Mexican) and the age ranges between 51 and 70. The Supervisory Board is of the opinion that the present composition reflects a broad selection of society and industry and markets HEINEKEN operates in.
In line with the Dutch Act on Management and Supervision (Wet bestuur en toezicht), the profile 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. Messrs. Das and Navarre will resign by rotation from the Supervisory Board at the Annual General Meeting of Shareholders on 25 April 2013. Messrs. Das and Navarre are eligible for re-appointment for a period of four years. It is also proposed to re-appoint Mr. Das as delegated member of the Supervisory Board. Non-binding nominations for their re-appointment will be submitted to the Annual General Meeting of Shareholders. Furthermore a non-binding nomination will be submitted to the Annual General Meeting of Shareholders for the appointment of Mr. H. Scheffers as member of the Supervisory Board as at 25 April 2013 for a period of four years. It is the intention that Mr. Scheffers will become a member of the Audit Committee succeeding Mr. Wijers in the Audit Committee. The Notes to the agenda contain further information on the appointment. Mr. Van Lede will step down as member and Chairman at the Annual General Meeting of Shareholders on 25 April 2013. Mr. Van Lede has been member of the Supervisory Board since 2002 and Chairman since 2004. The Supervisory Board is grateful for the way he fulfilled his role as Chairman and for his commitment over ten years and the Supervisory Board appreciates his contributions to the Supervisory Board and the Committee meetings. His experience and his personality were of utmost value to the Company. 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. Astaburagua Sanjins, de Carvalho, Das, Fernndez Carbajal and De Jong 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. Astaburagua Sanjins, de Carvalho, Das, Fernndez Carbajal and De Jong in fact act critically and independently.
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Overview
Other information
Remuneration The General Meeting of Shareholders determines the remuneration of the members of the Supervisory Board. In 2011 the Annual General Meeting of Shareholders resolved to adjust the remuneration of the Supervisory Board effective 1 January 2011. The detailed amounts are stated in the Notes to the financial statements. Meetings and activities of the Supervisory Board During 2012 the Supervisory Board held 12 meetings with the Executive Board. The agenda included subjects such as the Companys strategy, the financial position of the Group, the results of the Regions and Operating Companies, acquisitions, large investment proposals, the yearly budget, management changes and the internal risk management and control systems. The external auditor attended the meeting in which the annual results were discussed. In 2012 specific attention was given to: The proposal from the Executive Board to acquire APB in Asia. Many extra meetings were called to discuss strategy, price and tactics and to inform the members on the developments. The Supervisory Board had a one-day meeting with the Executive Board to discuss the Companys strategic priorities. Several members of the Executive Committee presented their strategic topics. The Supervisory Board visited Lagos, Nigeria where local management of Nigerian Breweries and Consolidated Breweries presented developments. The Supervisory Board met with the Management Teams of both companies as well as with the members of the Board of Directors of both companies. Also an external guest was invited to inform the Supervisory Board on general developments in Nigeria. The brewery in Lagos was visited as well as outlets (on-and-off premise). During the year several representatives of Senior Management were invited to give presentations to the Supervisory Board. In 2012 the following subjects were presented in more detail: The sustainability agenda Human Resources and succession planning. Since mid-2012 a start was made with regular Executive Sessions (without the Executive Board being present). In these sessions, subjects such as remuneration and evaluation of the meetings are discussed. One Executive Session was solely dedicated to the evaluation of the Supervisory Board relating to performance, working methods, procedures and functioning of the Supervisory Board, its committees and its members as well as the functioning of the Executive Board, based on the individual interviews with the Supervisory Board and Executive Board members conducted by Mr. Wijers, in his role as future Chairman of the Supervisory Board. The main conclusions and actions were discussed in a joint meeting with the Executive Board and related to planning and processes.
An induction programme was set up for Mr. Wijers. As part of the programme Mr. Wijers attended, next to his membership of the Audit Committee, many Committee meetings as a guest. Furthermore, he had meetings with several Senior Executives and conducted the assessment of the Supervisory Board and Executive Board. The Chairman of the Supervisory Board met frequently with the CEO, amongst others, to prepare the Supervisory Board meetings and to monitor progress. The Supervisory Board confirms that all Supervisory Board members have adequate time available to give sufficient attention to the concerns of the Company. The attendance rate as a whole was 91 per cent. In 2012, primarily in view of the many extra (TelCo) meetings which were scheduled at short notice, not everyone was able to join all meetings and as a consequence two Supervisory Board members were frequently absent (HEINEKEN considers an absence of twice or more as frequent). One of these members was absent twice and one member was absent four times, out of 12 meetings. However, in case of absence, members are fully informed in advance, enabling to provide input for the meeting and they are also updated on the meeting outcomes. Committees The Supervisory Board has five 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 Companys website. Preparatory Committee Composition: Messrs. Van Lede (Chairman), de Carvalho, Das and Fernndez Carbajal. The Preparatory Committee met 13 times. The Committee prepares decision-making by the Supervisory Board. Audit Committee Composition: Messrs. De Jong (Chairman), Astaburuaga Sanjins, Navarre and Wijers. The Audit Committee met four times. The members collectively have the experience and financial expertise to supervise the financial statements and the risk profile of Heineken N.V. The CFO attended all meetings, as well as the external auditor and the Executive Director Global Audit. The CEO and the Chief Control & Accounting Officer attended three out of four meetings. Other members of the Executive Committee and other Executive Directors attended as required.
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To the Shareholders continued
The Executive Director Global Audit has direct access to the Audit Committee, primarily through its chairman. During the year, the Audit Committee met in a private meeting once with the external auditors and once with the Executive Director Global Audit without management being present. The Audit Committee discussed regular topics, such as the annual and interim financial statements, the effectiveness and the outcome of the risk management process and the adequacy of internal control policies. The Audit Committee also discussed the effectiveness of the internal audit function and the matters arising from the internal audit reports, the scope of the external auditor, approach and fees, as well as reports from the external auditor. As part of the selection process of the external auditor, the Audit Committee discussed the policy on auditor independence and non-audit services, and took consideration of the nature, scope and appropriateness of non-audit services supplied by the external auditor. In the Annual General Meeting of Shareholders of 2012 the external auditor, KPMG Accountants N.V. was reappointed for a four-year period (financial statements 2012-2015). Twice a year presentations are given by the Chief Global Business Services (GBS) on the developments of GBS, including the IT programmes, Global Procurement and Financial Shared Services. Yearly, as part of the functional updates, litigation and risk management were discussed in the presence of the Executive Director Global Legal Affairs. HEINEKENs governance, risk and compliance (GRC) activities were discussed including the updated and revitalised HEINEKEN Company Rules and the HEINEKEN Code of Business Conduct. The Audit Committee discussed the outcome of the annual Letter of Representation process and the reports from the Integrity Committee related to fraud reporting and whistle-blowing reporting. The Chairman of the Audit Committee assessed the functioning of the Audit Committee through individual meetings with the members of the Audit Committee and management. The outcome was included in the Supervisory Board assessment and discussed with management. Selection & Appointment Committee Composition: Messrs. Van Lede (Chairman), de Carvalho Das, Fernndez Carbajal, and Mrs. Fentener van Vlissingen. The Selection & Appointment Committee met twice. In the meetings, proposals for the composition of the Supervisory Board were developed and the rotation schedule of the Supervisory Board was discussed for approval by the Supervisory Board.
Remuneration Committee Composition: Messrs. Das (Chairman), de Carvalho, Van Lede and Mrs. Fentener van Vlissingen. The Remuneration Committee met six times. In 2012 the Remuneration Committee finalised a proposal for the replacement of two companies in HEINEKENs Global Labour Market Peer Group for Executive Board remuneration. Replacement was inevitable since the two companies ceased to exist in their previous forms by spinning-off part of their business. The Committee also proposed recommendations to the Supervisory Board on target setting and payout levels for the short-term variable pay and long-term variable awards for the Executive Board as well as aligning the CEOs base salary with peer group median level, a retention share award for the CEO and an extraordinary share grant for the Executive Board. Details are described in the Remuneration Report. The Remuneration Committee received a presentation on trends in Executive Remuneration and Executive Remuneration Governance in order to fulfil its remuneration governance responsibilities. The presentation aimed, amongst others, to review alignment of HEINEKENs remuneration practices with its remuneration principles, to provide an overview of HEINEKENs competitive positioning versus the market and to update the Committee on executive compensation trends and on regulatory developments. A copy of the report was also submitted to the full Supervisory Board. Americas Committee Composition: Messrs. Fernndez Carbajal (Chairman), de Carvalho and Mrs. Minnick. The committee advises the Supervisory Board on the overall strategic direction of the Americas Region and reviews and evaluates the performance, the organization and the management in the Americas Region. The Chairman of the Executive Board and the Regional President Americas also attend the Americas Committee meetings. The Committee met twice in 2012 and paid attention to specific developments in the region, presented by the Regional President Americas.
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Overview
Other information
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. Mr. van Boxmeer was appointed in 2001 for an indefinite term and will be re-appointed for a period of four years as at 25 April 2013. A non-binding nomination will be submitted to the Annual General Meeting of Shareholders in this respect. Mr. Hooft Graafland was initially appointed for an indefinite term in 2002 and he was re-appointed in 2011 for a period of four years. 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. Currently, there are no female members on the Executive Board. With reference thereto, a global Diversity and Inclusion initiative targets to fill HEINEKENs talent pipeline with diversity through a variety of activities in order to ensure and monitor equal opportunities in recruitment, career development, promotion, training and reward for all employees. Furthermore, HEINEKEN promotes the placement of women in nonexecutive director and supervisory board positions through initiatives driven by the European Round Table and Professional Boards Forum.
Remuneration In 2011 the Annual General Meeting of Shareholders approved the current remuneration policy for the Executive Board. For 2012 the policy remained unchanged. Details of the policy, the proposals and its implementation are described in the Remuneration Report. 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 2012. Supervisory Board Heineken N.V. Van Lede Fentener van Vlissingen Fernndez Carbajal Minnick Das Navarre de Carvalho Astaburuaga Sanjins De Jong Wijers Amsterdam, 12 February 2013
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Remuneration Report
The Executive Boards remuneration policy reflects 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 2012 the Remuneration Committee has reviewed the remuneration policy versus its implementation, and its outcome versus performance. As a result, the Supervisory Board has decided, subject to approval by the 2013 Annual General Meeting of Shareholders, to reward the members of the Executive Board with an extraordinary share award for their excellent performance in the successful acquisition of Asia Pacific Breweries Limited this year. This acquisition truly signified a landmark achievement since it complemented a process of significantly growing HEINEKENs footprint in all regions of the world, none excluded, thus consolidating a very solid position in its home markets while simultaneously becoming an even stronger player with high exposure in growth markets. Secondly, the Supervisory Board has decided to realign the CEOs base salary with peer group median level. Finally, to foster the intended re-appointment of the CEO and to ensure the CEO is retained for HEINEKEN for a number of years ahead, the Supervisory Board has also decided, subject to approval by the 2013 Annual General Meeting of Shareholders, to grant a retention share award to him. Introduction The Remuneration Report includes three sections: Part I Describes the current Executive Boards remuneration policy, as adopted by the Annual General Meeting of Shareholders in 2005 and subsequently adjusted in 2007, 2010 and 2011 Part II Provides details of the Executive Boards actual remuneration for 2012 Part III Outlines proposals for approval to the 2013 Annual General Meeting of Shareholders to reward the members of the Executive Board with an extraordinary share award and to grant a retention share award to the CEO. Part I Executive Board remuneration policy Remuneration principles The Executive Boards 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 financial 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; and 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.
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Overview
Other information
Summary overview of remuneration elements The Executive Boards remuneration policy is simple and transparent in design, and consists of the following key elements:
Remuneration element Description Strategic role
Base salary Short-term variable pay
Long-term variable award
Pensions
involves fixed cash compensation attraction aims for the median of the labour market peer group. reward for performance of day-to-day activities. is based on achievements of annual measures, drive and reward annual of which a weighted 75 per cent relate to financial HEINEKEN performance measures for Heineken N.V. and 25 per cent to drive and reward sound business decisions individual leadership measures for the long-term health of HEINEKEN aims, at target level, for the median of the labour align Executive Board and shareholder interests. market peer group is partly paid in cash, and partly in investment shares with a holding restriction of five calendar years: the part paid in shares is between 25-50 per cent of the full gross pay, depending on the individuals 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. is based on achievements of three-year financial drive and reward sound business decisions targets for Heineken N.V. for the long-term health of HEINEKEN aims, at target level, for the median of the align Executive Board and shareholder labour market peer group interests is awarded through the vesting of shares, net of support Executive retention. 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 five-year holding restriction after the date of the conditional performance grant. Defined Contribution Pension Plan or Capital provide for employee welfare and Creation Plan. retirement needs.
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Remuneration Report continued
Labour market peer group A new global labour market peer group was adopted by the Annual General Meeting of Shareholders in 2011. 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 when needed. For 2011 and 2012, the peer group consisted of the following companies: Anheuser-Busch InBev (BE) Carlsberg (DK) Coca-Cola (US) Colgate-Palmolive (US) Danone (FR) Diageo (UK) Henkel (DE) Kimberley-Clark (US) Kraft Foods (US) LOral (FR) Pepsico (US) Philips (NL) SABMiller (UK) Sara Lee (US) Unilever (NL)
In 2012, two companies from the labour market peer group, Kraft Foods and Sara Lee, have each split into two independent publicly traded companies. Based on our selection criteria established in 2011 (sector, revenue and geographic spread), the Supervisory Board has decided to replace Kraft Foods with its spin-off Mondelez International (US) and Sara Lee with Pernod Ricard (FR) as from 2013. Base salary Base salaries are determined by reference to the median base salary level 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 external peer group data and internal pay relativities. The base salaries for 2012 were EUR1,050,000 for the CEO and EUR650,000 for the CFO. To realign with the peer group median, the Supervisory Board has decided to increase the CEOs base salary to EUR1,150,000 as from 2013. The base salary for the CFO does not require realignment and will thus remain unchanged. Short-term variable pay The short-term variable pay (STV) is designed to drive and reward the achievements of HEINEKENs annual performance targets. Through its pay-out in both cash and investment shares it also drives and rewards sound business decisions for HEINEKENs long-term health whilst aligning Executive Board and shareholder interests at the same time. The target STV opportunities for both 2012 and 2013 are 140 per cent of base salary for the CEO and 100 per cent of base salary for the CFO. These opportunities are well aligned with the global labour market peer group medians. The STV opportunities are for a weighted 75 per cent based on financial and operational measures, 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 HEINEKENs business priorities for that year. The measures and their relative weights are reported in the Remuneration Report up front; the targets themselves are not reported as they are considered to be commercially sensitive. The STV awards for 2013 will be subject to four performance measures, viz Organic Net Profit beia Growth (25 per cent), Free Operating Cash Flow (25 per cent), Organic Gross Profit beia Growth (25 per cent) and Individual Leadership Targets (25 per cent). The financial performance measures for 2013 have thus remained the same as for 2012, although their relative weights have levelled out (cf. Part II).
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Overview
Other information
At the end of the year, the Supervisory Board reviews the Companys and individual performance against the pre-set targets, and approves the STV pay-out 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). For threshold, target and maximum performance the following STV pay-out, as a percentage of target pay-out, applies: Threshold performance 50 per cent of target Target performance 100 per cent of target Maximum performance 200 per cent of target Pay-out in-between these performance levels is on a straight-line basis. Below threshold performance pay-out is zero, whereas beyond maximum performance it is capped to 200 per cent of pay-out at target. The CEO and CFO are obliged to invest at least 25 per cent of their STV pay-out 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 pay-out (to their discretion). These investment shares will then be blocked and cannot be sold under any circumstance, including resignation, for five calendar years to link the value of the investment shares to long-term Company performance. After the blocking period the company will match the investment shares 1:1, i.e. one matching share is granted for each investment share. Matching entitlements will be forfeited in case of dismissal by the Company for an urgent reason within the meaning of the law (dringende reden), or in 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 significant share ownership by the Executive Board is ensured, creating an increased alignment of interests with shareholders. The Supervisory Board may, at its sole discretion in determining the final pay-out, adjust the STV amount, downwards or upwards, that would have been payable under the plan rules if the pay-out based on plan rules would produce an unfair result due to extraordinary circumstances. The Supervisory Board can also recover from the Executive Board any STV pay-out in cash, investment shares or matching shares made on the basis of incorrect financial or other data (clawback provision). Long-term variable award The long-term variable award (LTV) is designed to drive and reward sound business decisions for HEINEKENs long-term health and to align the Executive Board and shareholder interests. The Remuneration Committees review in 2012 reconfirmed that the CEOs LTV opportunities are significantly below peer group median. At the time in 2011 when the current peer group was introduced and the Executive Boards remuneration was adjusted accordingly, it was felt that a full alignment of the CEOs LTV opportunities with peer group median needed to be postponed to a later stage to maintain a certain gradation in the progression of remuneration over time. It has now been decided to further postpone full alignment of the CEOs LTV opportunities with peer group median. The CFOs LTV opportunities are still well aligned with peer group median. As a result, the target LTV opportunities for 2012 are, and for 2013 remain, 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 and the closing share price of 31 December of the preceding year; the vesting of these performance shares is, since the grant of 2010, contingent on HEINEKENs performance on four fundamental financial performance measures. Organic Gross Profit beia Growth a measure to drive top-line growth the key measure of Company strength, Organic EBIT beia Growth a measure to drive operational efficiency, Earnings Per Share (EPS) beia Growth a measure of overall long-term Company performance, Free Operating Cash Flow a measure 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 targets on these performance measures based on HEINEKENs business priorities. These targets are not reported in the Remuneration Report as they are considered to be commercially sensitive.
63
At the end of the performance period, the Supervisory Board reviews the Companys 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 end of the performance period (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 vest Target performance 100 per cent of performance shares vest Maximum performance 200 per cent of performance shares vest Vesting in-between these performance levels is on a straight-line basis. Below threshold performance vesting is zero, whereas beyond maximum performance it is capped to 200 per cent of vesting at target. The Supervisory Board may, at its sole discretion, adjust the number of shares, downwards or upwards, that would have vested under the aforementioned vesting schedule if this would produce an unfair result due to extraordinary circumstances. The Supervisory Board can also recover from the Executive Board any shares which vested on the basis of incorrect financial or other data (clawback provision). The vested performance shares that remain after income tax withholding are subject to an additional holding restriction of two years. Pensions The members of the Executive Board can either participate in a Defined Contribution Pension Plan or in a Capital Creation Plan. In the Capital Creation Plan the Executive Board member elects to receive as taxable income the contribution amounts from the Defined Contribution Pension Plan, less an amount equivalent to the employee contribution in that plan. Both CEO and CFO participate in the Capital Creation Plan. As from 2012 the Defined Contribution Pension Plan and the Capital Creation Plan for Executive Board members have been fully aligned with the corresponding plans for the Top Executives under Dutch employment contract below the Executive Board. Part II The Executive Boards actual remuneration for 2012 The following table provides an overview of the Executive Boards actual remuneration for 2012. The Supervisory Board conducted a scenario analysis with respect to possible outcomes of the variable remuneration for 2012.
Long-term variable award2 Short-term variable pay1 in EUR Value as of 31.12.12 of performance shares vesting in EUR
Base salary in EUR
No. of performance shares vesting
Pension Cost in EUR
Van Boxmeer Hooft Graafland

1
1,050,000 650,000
1,361,220 601,900
24,539 13,432
1,238,483 677,913
495,797 317,815
The short-term variable pay relates to the performance year 2012 and becomes payable in 2013. Both CEO and CFO have chosen to invest 50 per cent of this value in Heineken N.V. shares (investment shares). Matching entitlements on these investment shares are not included in the numbers. The long-term variable awards relate to the performance period 2010-2012 and vest within five business days after the publication of the financial statements on 13 February 2013; the awards are disclosed in gross terms (i.e. before deduction of withholding tax due).
Realisation 2012 Short-term variable pay The STV pay for 2012 was subject to four performance measures: Organic Net Profit beia Growth (20 per cent), Free Operating Cash Flow (20 per cent), Organic Gross Profit beia Growth (35 per cent) and individual leadership targets (25 per cent). The Supervisory Board determined the results against the pre-set targets on these measures as follows: Organic Net Profit beia Growth above target performance Free Operating Cash Flow above target performance Organic Gross Profit beia Growth below threshold performance Individual leadership targets above target performance
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Overview
Other information
The resulting STV pay-out for 2012 is equal to 92.6 per cent of pay-out at target level for both CEO and CFO. The table below provides an overview of the investment shares that were awarded as part of STV pay-outs in the past, but that are blocked and awaiting 1:1 matching by the Company, provided the conditions thereto are met:
Value of investment shares as of the award date in EUR Value of investment shares as of 31.12.2012 in EUR
STV pay-out for
% of STV pay-out invested in shares
No. of investment shares awarded
End of blocking period
Van Boxmeer
Hooft Graafland
2012 2011 2010 2012 2011 2010
50% 50% 50% 50% 50% 50%
t.b.d.1 23,272 16,1252 t.b.d.1 10,291 8,2742
680,610 882,009 653,125 300,950 390,029 335,157
31.12.2017 31.12.2016 31.12.2015 31.12.2017 31.12.2016 31.12.2015
n.a. 1,174,538 813,829 n.a. 519,387 417,589
The number of shares awarded in relation to the STV pay-out for 2011 and beyond is determined by dividing the part of the STV pay-out that is invested in shares by the closing share price of the date of publication of the financial statements for that year and subsequent rounding. For the STV pay-out for 2012 this date is 13 February 2013; for the STV pay-out for 2011 this date was 15 February 2012. 2 The number of shares awarded in relation to the STV pay-out for 2010 was determined by dividing the part of the STV pay-out that is invested in shares by the closing share price of 21 April 2011, the date on which the AGM approved the Executive Board remuneration policy 2011.
1
Realisation 2010-2012 Long-term variable award After 2012 the conditional performance shares granted in 2010 are subject to vesting. The vesting of the LTV award for 2010-2012 is subject to Heineken N.V. performance on four financial measures with equal weights. The Supervisory Board determined the results against the pre-set targets on these measures as follows: Organic Gross Profit beia Growth below threshold performance Organic EBIT beia Growth below threshold performance Earnings Per Share (EPS) beia Growth above target performance Free Operating Cash Flow above target performance
As a result, the vesting of the LTV grant for 2010-2012 will be equal to 68.75 per cent of the vesting at target level for both CEO and CFO. The table below provides an overview of outstanding LTV awards (awards made but not yet vested as of 31 December 2012):
No. of shares conditionally granted at target level1 Value of shares conditionally granted as of the grant date in EUR Value of unvested shares as of 31.12.20124 in EUR
Grant date
Vesting date2
No. of shares vesting on the vesting date3
End of blocking period
Van Boxmeer
2012 2011 2010 2012 2011 2010
44,031 42,927 35,692 22,715 22,145 19,537
1,668,775 1,617,489 1,323,102 860,899 834,424 724,237
02.2015 02.2014 02.2013 02-2015 02.2014 02.2013
24,539 13,432
02.2017 02.2016 02.2015 02.2017 02.2016 02.2015
2,222,245 2,166,526 1,238,483 1,146,426 1,117,658 677,913
Hooft Graafland
Determined according to plan rules, using the closing share price of 31 December of the year preceding the grant. Within five business days immediately following the publication of the financial statements, to occur after completion of the performance period. The long-term variable award related to the performance period 2010-2012 is disclosed in gross terms (i.e. before deduction of withholding tax due). 4 The value for the 2010 grant is based on the number of shares vesting on the vesting date, whereas for the 2011 and 2012 grants the values are based on the number of shares conditionally granted at target level.
1 2 3
As per 31 December 2012 there are no vested LTV awards subject to the two year blocking period, as the conditional target grants made in 2008 and 2009 did not result in any shares being vested in 2011 and 2012 respectively.
Part III Proposals for approval to the 2013 Annual General Meeting of Shareholders to reward the members of the Executive Board with an extraordinary share award and to grant a retention share award to the CEO. As a result of the Remuneration Committees review of the Executive Boards remuneration policy versus its implementation, and its outcome versus performance, the Supervisory Board has decided to submit the following proposals for approval to the 2013 Annual General Meeting of Shareholders. The Supervisory Board conducted a scenario analysis with respect to possible outcomes of the variable remuneration for 2013. Extraordinary share awards for the CEO and CFO The acquisition of Asia Pacific Breweries Limited this year signified a landmark achievement; it complemented a process of significantly growing HEINEKENs footprint in all regions of the world, none excluded, thus consolidating a very solid position in its home markets while simultaneously becoming an even stronger player with high exposure in growth markets. To recognise the excellent achievements of the CEO and CFO in the successful acquisition of Asia Pacific Breweries Limited, the Supervisory Board has decided to reward the CEO and CFO with an extraordinary share award to the value of their 2012 base salary plus short-term variable pay opportunity at target level, amounting to EUR2.52 million for the CEO (gross) and EUR1.3 million for the CFO (gross). The share awards will be granted after the close of the 2013 Annual General Meeting, subject to its approval, against the closing share price of that day, and net of taxes (i.e. after deduction of withholding tax due on the full gross award). In accordance with best practice provision II.2.5 of the Dutch Corporate Governance Code, the awarded Heineken N.V. shares will remain blocked for a period of five years, also in case of resignation during that period. Clawback provisions will apply to these awards. HEINEKEN does not comply with best practice provision II.2.5 in the sense that these share awards are not dependent on targets specified beforehand. Retention share award to the CEO To foster the intended re-appointment of the CEO and to ensure the CEO is retained for HEINEKEN for a number of years ahead, the Supervisory Board has decided to grant a retention share award to the CEO. This retention share award will be granted immediately after the close of the 2013 Annual General Meeting, subject to its approval, to the value of EUR1.5 million (gross), against the closing share price of that day. After two years the share award will vest and will be converted into Heineken N.V. shares, provided the CEO is still in service at that time. After vesting, a three year holding restriction will apply to these shares also in case of resignation during that period, to align with shareholder interests, while complying with best practice provision II.2.5 of the Dutch Corporate Governance Code at the same time. HEINEKEN does not comply with best practice provision II.2.5 in the sense that this share award is not dependent on targets specified beforehand. This retention share award will be forfeited in case of dismissal by the Company for an urgent reason within the meaning of the law (dringende reden), or in case of dismissal for cause (gegronde reden) whereby the cause for dismissal concerns unsatisfactory functioning of the CEO. In addition, clawback provisions will apply to this award. Supervisory Board Heineken N.V. Amsterdam, 12 February 2013
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Overview
Other information
Consolidated Income Statement
Note
2012
2011
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 finance income/(expenses) Net finance expenses Share of profit of associates and joint ventures and impairments thereof (net of income tax) Profit before income tax Income tax expense Profit Attributable to: Equity holders of the Company (net profit) Non-controlling interests Profit Weighted average number of shares basic Weighted average number of shares diluted Basic earnings per share (EUR) Diluted earnings per share (EUR)
5 8 9 10 11
18,383 1,510 (11,849) (3,037) (1,316) (16,202) 3,691 62 (551) 219 (270) 213 3,634 (525) 3,109 2,949 160 3,109
17,123 64 (10,966) (2,838) (1,168) (14,972) 2,215 70 (494) (6) (430) 240 2,025 (465) 1,560 1,430 130 1,560 585,100,381 586,277,702 2.44 2.44
12 12 12
16 13
23 23 23 23
575,022,338 576,002,613 5.13 5.12
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Consolidated Statement of Comprehensive Income

Note 2012 2011

In millions of EUR
Profit Other comprehensive income: Foreign currency translation differences for foreign operations Effective portion of change in fair value of cash flow hedges Effective portion of cash flow hedges transferred to profit or loss Ineffective portion of cash flow hedges (transferred to profit or loss) Net change in fair value available-for-sale investments Net change in fair value available-for-sale investments transferred to profit or loss Actuarial gains and losses 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
3,109 24 24 24 24 24 24 24/28 24 24 45 14 41 135 (148) (439) (1) (353) 2,756
1,560 (493) (21) (11) 71 (1) (93) (5) (553) 1,007
2,608 148 2,756
884 123 1,007
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Overview
Other information
Consolidated Statement of Financial Position

Note 2012 2011
As at 31 December
In millions of EUR
Assets Property, plant & 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 and accrued income Cash and cash equivalents Assets classified as held for sale Total current assets Total assets Equity Share capital Share premium Reserves Allotted Share Delivery Instrument Retained earnings Equity attributable to equity holders of the Company Non-controlling interests Total equity Liabilities Loans and borrowings Tax liabilities Employee benefits Provisions Deferred tax liabilities Total non-current liabilities Bank overdrafts Loans and borrowings Trade and other payables Tax liabilities Provisions Liabilities classified as held for sale Total current liabilities Total liabilities Total equity and liabilities
14 15 16 17 32 18 19 17 20 21 7
8,792 17,725 1,950 1,099 312 564 30,442 1,596 11 2,537 232 1,037 124 5,537 35,979 922 2,701 365 7,703 11,691 1,071 12,762 11,437 140 1,632 418 1,790 15,417 191 1,863 5,273 305 129 39 7,800 23,217 35,979
7,860 10,835 1,764 1,129 357 474 22,419 1,352 14 2,260 170 813 99 4,708 27,127 922 2,701 498 5,653 9,774 318 10,092 8,199 160 1,174 449 894 10,876 207 981 4,624 207 140 6,159 17,035 27,127
6/22 22 25 28 30 18 21 25 31 30 7
69
Consolidated Statement of Cash Flows
Note
2012
2011

In millions of EUR
Operating activities Profit Adjustments for: Amortisation, depreciation and impairments Net interest expenses Gain on sale of property, plant & equipment, intangible assets and subsidiaries, joint ventures and associates Investment income and share of profit and impairments of associates and joint ventures and dividend income on AFS and HFT investments Income tax expenses Other non-cash items Cash flow 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 benefits Cash flow from operations Interest paid Interest received Dividends received Income taxes paid Cash flow related to interest, dividend and income tax Cash flow from operating activities Investing activities Proceeds from sale of property, plant & equipment and intangible assets Purchase of property, plant & equipment Purchase of intangible assets Loans issued to customers and other investments Repayment on loans to customers Cash flow (used in)/from operational investing activities Free operating cash flow Acquisition of subsidiaries, net of cash acquired Acquisition/additions of associates, joint ventures and other investments Disposal of subsidiaries, net of cash disposed of Disposal of associates, joint ventures and other investments Cash flow (used in)/from acquisitions and disposals Cash flow (used in)/from investing activities
3,109 11 12 8 1,316 489 (1,510) (238) 525 (110) 3,581 (52) (64) 217 101 (164) 3,518 (490) 82 184 (599) (823) 2,695
1,560 1,168 424 (64) (252) 465 244 3,545 (145) (21) 417 251 (76) 3,720 (485) 65 137 (526) (809) 2,911
13
14 15
131 (1,170) (78) (143) 50 (1,210) 1,485 (3,311) (1,246) 142 (4,415) (5,625)
101 (800) (56) (127) 64 (818) 2,093 (806) (166) (9) 44 (937) (1,755)
6 6
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Overview
Other information
Note
2012
2011
For the year ended 31 December 2012

In millions of EUR
Financing activities Proceeds from loans and borrowings Repayment of loans and borrowings Dividends paid Purchase own shares Acquisition of non-controlling interests Disposal of interests without a change in control Other Cash flow (used in)/from financing activities Net cash flow Cash and cash equivalents as at 1 January Effect of movements in exchange rates Cash and cash equivalents as at 31 December
6,837 (2,928) (604) (252) 3 3,056 126 606 114 846
1,782 (1,587) (580) (687) (11) 43 6 (1,034) 122 478 6 606
21
71
Consolidated Statement of Changes in Equity

Fair value reserve Other legal reserves Reserve for own shares Equity attributable to equity holders of the Company Noncontrolling interests
In millions of EUR
Note
Share capital
Share Premium
Translation reserve
Hedging reserve
ASDI
Retained earnings
Total equity
Balance as at 1 January 2011 Other comprehensive income 12/24 Profit Total comprehensive income Transfer to retained earnings Dividends to shareholders Purchase/reissuance own/ non-controlling shares Allotted Share Delivery Instrument Own shares delivered Share-based payments Share purchase mandate Acquisition of non-controlling interests without a change in control Disposal of interests without a change in control Balance as at 31 December 2011
922
2,701
(93) (482) (482)
(27) (42) (42)
90 69 69
899 253 253 (126)
(55) (687) 694 5
666 (666)
4,829 (91) 1,177 1,086 126 (474) (28) (5) 11 96
9,932 (546) 1,430 884 (474) (687) 11 96
288 10,220 (7) (553) 130 1,560 123 (97) (1) 1,007 (571) (688) 11 96
(21)
(21)
(1)
(22)
922
2,701
(575)
(69)
159
1,026
(43)
33 5,653
33 9,774
39
318 10,092
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Overview
Other information
In millions of EUR
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
Noncontrolling interests
Total equity
Balance as at 1 January 2012 Other comprehensive income Profit Total comprehensive income Transfer to retained earnings Dividends to shareholders Purchase/reissuance own/ non-controlling shares Own shares delivered Share-based payments Share purchase mandate Acquisition of non-controlling interests without a change in control Disposal of interests without a change in control Balance as at 31 December 2012
922 12/24
2,701
(575) 48 48
(69) 58 58
159 (9) (9)
1,026 4 222 226 (473)
(43) 17
5,653 (442) 2,727 2,285 473 (494) (17) 15
9,774 (341) 2,949 2,608 (494) 15
318 10,092 (12) (353) 160 3,109 148 2,756 (110) (604) 15
(212)
(212)
715
503
922
2,701
(527)
(11)
150
779
(26)
7,703
11,691
1,071 12,762
73
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 Companys registered office is Tweede Weteringplantsoen 21, Amsterdam. The consolidated financial statements of the Company as at and for the year ended 31 December 2012 comprise the Company, its subsidiaries (together referred to as HEINEKEN or the Group and individually as HEINEKEN entities) and HEINEKENs interest in jointly controlled entities and associates. A summary of the main subsidiaries, jointly controlled entities and associates is included in note 36 and 16 respectively. The APIPL/APB acquisition has been included in the consolidated financial statements from 15 November 2012. HEINEKEN is primarily involved in the brewing and selling of beer. 2. Basis of preparation (a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and also comply with the financial 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) effective year-end 2012 have been adopted by the EU, except that the EU carved out certain hedge accounting provisions of IAS 39. The Company does not utilise this carve-out permitted by the EU, as it is not applicable. Consequently, the accounting policies applied by the Company also comply fully with IFRS as issued by the IASB. The consolidated financial statements have been prepared by the Executive Board of the Company and authorised for issue on 12 February 2013 and will be submitted for adoption to the Annual General Meeting of Shareholders on 25 April 2013. (b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated. The methods used to measure fair values are discussed further in note 3 and 4. (c) Functional and presentation currency These consolidated financial statements are presented in euro, which is the Companys functional currency. All financial information presented in Euro has been rounded to the nearest million unless stated otherwise. (d) Use of estimates and judgements The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ 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 affected.
74
Overview
Other information
In particular, information about assumptions and estimation uncertainties and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial 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 benefits Note 29 Share-based payments Long-Term Variable award (LTV) Note 30 Provisions Note 32 Financial risk management and financial instruments Note 34 Contingencies. (e) Changes in accounting policies There were no changes made to the HEINEKEN accounting policies in 2012, the changes in standards and interpretations effective from 1 January 2012 had no significant impact on the company. 3. Significant accounting policies General The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial 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 the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The Group 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 identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group 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 classified 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 profit 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.
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Notes to the consolidated financial statements continued
3. Significant accounting policies continued (iii) Subsidiaries Subsidiaries are entities controlled by HEINEKEN. Control exists when HEINEKEN has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial 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 deficit balance. (iv) Special Purpose Entities (SPEs) An SPE is consolidated if, based on an evaluation of the substance of its relationship with HEINEKEN and the SPEs risks and rewards, HEINEKEN concludes that it controls the SPE. SPEs controlled by HEINEKEN were established under terms that impose strict limitations on the decision-making powers of the SPEs management and that result in HEINEKEN receiving the majority of the benefits related to the SPEs operations and net assets, being exposed to the majority of risks incident to the SPEs activities, and retaining the majority of the residual or ownership risks related to the SPEs or their assets. (v) 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 surplus or deficit arising on the loss of control is recognised in profit or loss. If HEINEKEN retains any interest in the previous subsidiary, then 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 financial asset depending on the level of influence retained. (vi) Investments in associates and joint ventures Investments in associates are those entities in which HEINEKEN has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 per cent of the voting power of another entity. Joint ventures are those entities over whose activities HEINEKEN has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in associates and joint ventures are accounted for using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investment includes transaction costs. The consolidated financial statements include HEINEKENs share of the profit or loss and other comprehensive income, after adjustments to align the accounting policies with those of HEINEKEN, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When HEINEKENs share of losses exceeds the carrying amount of the associate, 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. (vii) 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 financial statements. Unrealised gains arising from transactions with equity-accounted associates and JVs are eliminated against the investment to the extent of HEINEKENs 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.
76
Overview
Other information
(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 difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective 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 in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale (equity) investments and foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment, which are recognised in other comprehensive income. Non-monetary assets and liabilities denominated in foreign currencies that are measured at cost remain translated into the functional currency at historical exchange rates. (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 hyperinflationary economies, are translated to euro at exchange rates approximating the exchange rates ruling at the dates of the transactions. Group entities, with a functional currency being the currency of a hyperinflationary economy, first restate their financial statements in accordance with IAS 29, Financial Reporting in Hyperinflationary Economies (see Reporting in hyperinflationary 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 differences are recognised in other comprehensive income and are presented within equity in the translation reserve. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit 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 significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit 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.
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3. Significant accounting policies continued The following exchange rates, for the most important countries in which HEINEKEN has operations, were used while preparing these consolidated financial statements:
Year-end In EUR 2012 Year-end 2011 Average 2012 Average 2011
BRL GBP MXN NGN PLN RUB SGD VND in 1,000 USD
0.3699 1.2253 0.0582 0.0049 0.2455 0.0248 0.6207 0.0364 0.7579
0.4139 1.1972 0.0554 0.0049 0.2243 0.0239 0.5946 0.0367 0.7729
0.3987 1.2332 0.0592 0.0050 0.2390 0.0250 0.6229 0.0373 0.7783
0.4298 1.1522 0.0578 0.0047 0.2427 0.0245 0.5718 0.0348 0.7184
(iii) Reporting in hyperinflationary economies When the economy of a country in which we operate is deemed hyperinflationary and the functional currency of a Group entity is the currency of that hyperinflationary economy, the financial statements of such Group entities are adjusted so that they are stated in terms of the measuring unit current at the end of the reporting period. This involves restatement of income and expenses to reflect changes in the general price index from the start of the reporting period and, restatement of non-monetary items in the balance sheet, such as P, P & E to reflect current purchasing power as at the period end using a general price index from the date when they were first recognised. Comparative amounts are not adjusted. Any differences arising were recorded in equity on adoption. (iv) Hedge of net investments in foreign operations Foreign currency differences arising on the retranslation of a financial 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 effective and regardless of whether the net investment is held directly or through an intermediate parent. These differences are presented within equity in the translation reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of a net investment is disposed of, the relevant amount in the translation reserve is transferred to profit or loss as part of the profit or loss on disposal. (c) Non-derivative financial instruments (i) General Non-derivative financial 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 financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described hereafter. If HEINEKEN has a legal right to offset financial assets with financial liabilities and if HEINEKEN intends either to settle on a net basis or to realise the asset and settle the liability simultaneously then financial assets and liabilities are presented in the statement of financial position as a net amount. Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts form an integral part of HEINEKENs cash management and are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Accounting policies for interest income, interest expenses and other net finance income and expenses are discussed in note 3r. (ii) Held-to-maturity investments If HEINEKEN has the positive intent and ability to hold debt securities to maturity, they are classified as held-to-maturity. Debt securities are loans and long-term receivables and are measured at amortised cost using the effective 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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Overview
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(iii) Available-for-sale investments HEINEKENs investments in equity securities and certain debt securities are classified 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 differences 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 profit or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the profit or loss. Available-for-sale investments are recognised or derecognised by HEINEKEN on the date it commits to purchase or sell the investments. (iv) Investments at fair value through profit or loss An investment is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Investments are designated at fair value through profit or loss if HEINEKEN manages such investments and makes purchase and sale decisions based on their fair value in accordance with HEINEKENs documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss as incurred. Investments at fair value through profit or loss are measured at fair value, with changes therein recognised in profit or loss as part of the other net finance income/(expenses). Investments at fair value through profit and loss are recognised or derecognised by HEINEKEN on the date it commits to purchase or sell the investments. (v) Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. Included in non-derivative financial instruments are advances to customers. Subsequently, the advances are amortised over the term of the contract as a reduction of revenue. (d) Derivative financial instruments (including hedge accounting) (i) General HEINEKEN uses derivatives in the ordinary course of business in order to manage market risks. Generally HEINEKEN seeks to apply hedge accounting in order to minimise the effects of foreign currency, interest rate or commodity price fluctuations in profit or loss. Derivatives that can be used are interest rate swaps, forward rate agreements, caps and floors, 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 financial instruments are recognised initially at fair value, with attributable transaction costs recognised in profit or loss as incurred. Derivatives for which hedge accounting is not applied are accounted for as instruments at fair value through profit or loss. When derivatives qualify for hedge accounting, subsequent measurement is at fair value, and changes therein accounted for as described in 3b(iv), 3d(ii) and 3d(iii). (ii) Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised in other comprehensive income and presented in the hedging reserve within equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued and the cumulative unrealised gain or loss previously recognised in other comprehensive income and presented in the hedging reserve in equity, is recognised in profit or loss immediately, or 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-financial 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 profit or loss in the same period that the hedged item affects profit or loss.
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3. Significant accounting policies continued (iii) Fair value hedges Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in profit 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 profit 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 effective interest method is used is amortised to profit or loss over the period to maturity. (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 definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. Changes in the fair value of separable embedded derivatives are recognised immediately in profit or loss. (e) Share capital (i) Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects. (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 effects recognised as a deduction from equity. Repurchased shares are classified 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 inequity, and the resulting surplus or deficit 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 (P, P & E) (i) Owned assets Items of P, P & E are measured at cost less government grants received (refer (q)), accumulated depreciation (refer (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 (like 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 (like 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 flow 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 specific equipment are capitalised and amortised as part of the equipment. For example, purchased software that is integral to the functionality of the related equipment is capitalised 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 different 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 reflected in the consolidated statement of financial position within current liabilities.
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(ii) Leased assets Leases in terms of which HEINEKEN assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition P, P & E acquired by way of finance 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 finance 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 HEINEKENs statement of financial position. Payments made under operating leases are charged to profit or loss on a straight-line basis over the term of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. (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 benefits embodied within the part will flow 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 profit 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 financial leases on land over the contractual period, is not depreciated as it is deemed to have an infinite life. Depreciation on other P, P & E is charged to profit 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 reflects the expected pattern of consumption of the future economic benefits 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 reasonable 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 fixed assets 30 40 years 10 30 years 3 10 years
Where parts of an item of P, P & E have different useful lives, they are accounted for as separate items of P, P & E. The depreciation methods, residual value as well as the useful lives are reassessed, and adjusted if appropriate, at each financial year-end. (v) Gains and losses on sale Net gains on sale of items of P, P & E are presented in profit or loss as other income. Net losses on sale are included in depreciation. Net gains and losses are recognised in profit or loss when the significant 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 HEINEKENs interest in net fair value of the net identifiable 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 associate, respectively the joint ventures. In respect of acquisitions prior to 1 October 2003, goodwill is included on the basis of deemed cost, being the amount recorded under previous GAAP. Goodwill on acquisitions purchased before 1 January 2003 has been deducted from equity.
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3. Significant accounting policies continued Goodwill arising on the acquisition of a non-controlling interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of exchange. Goodwill is measured at cost less accumulated impairment losses (refer accounting policy 3i(ii)). Goodwill is allocated to individual or groups of cashgenerating units (CGUs) for the purpose of impairment testing and is tested annually for impairment. Negative goodwill is recognised directly in profit or loss as other income. (ii) Brands Brands acquired, separately or as part of a business combination, are capitalised if they meet the definition of an intangible asset and the recognition criteria are satisfied. 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 definition of an intangible asset and the recognition criteria are satisfied. 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 flows. Reacquired rights are identifiable 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 acquirers 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 contractbased 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 (vi)) and impairment losses (refer accounting policy 3i(ii)). Expenditure on internally developed software is capitalised when the expenditure qualifies as development activities, otherwise it is recognised in profit or loss when incurred. Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in profit 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 benefits are probable, and HEINEKEN intends to and has sufficient 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 profit or loss when incurred. Capitalised development expenditure is measured at cost less accumulated amortisation (refer (vi)) and accumulated impairment losses (refer accounting policy 3i(ii)). Other intangible assets that are acquired by HEINEKEN and have finite useful lives, are measured at cost less accumulated amortisation (refer (vi)) and impairment losses (refer accounting policy 3i(ii)). Expenditure on internally generated goodwill and brands is recognised in profit or loss when incurred.
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(v) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific 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 finite 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 reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives are as follows: Strategic brands Other brands Customer-related and contract-based intangibles Reacquired rights Software Capitalised development costs 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 profit or loss as other income. Net losses on sale are included in amortisation. Net gains and losses are recognised in profit or loss when the significant 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 takes 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 profit or loss. Spare parts that are acquired as part of an equipment purchase and only to be used in connection with this specific equipment are initially capitalised and depreciated as part of the equipment.
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3. Significant accounting policies continued (i) Impairment (i) Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in other comprehensive income and presented in the fair value reserve in equity is transferred to profit 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 financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For availablefor-sale financial assets that are equity securities, the reversal is recognised in other comprehensive income. (ii) Non-financial assets The carrying amounts of HEINEKENs non-financial assets, other than inventories (refer accounting policy (h) and deferred tax assets (refer accounting policy (s)), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets 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. The recoverable amount of an asset or CGU is the higher of an assets fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the CGU). For the purpose of impairment testing, goodwill acquired in a business combination, is allocated to each of the acquirers CGUs, or groups of CGUs, that is expected to benefit 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.
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An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its recoverable amount. A CGU is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGU are allocated first 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 assets 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. (j) Non-current assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification 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 first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee defined benefit plan assets, which continue to be measured in accordance with HEINEKENs accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Intangible assets and P, P & E once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity-accounted investees ceases once classified as held for sale or distribution. (k) Employee benefits (i) Defined contribution plans A defined contribution plan is a post-employment benefit plan (pension plan) under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit 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 defined 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.
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3. Significant accounting policies continued (ii) Defined benefit plans A defined benefit plan is a post-employment benefit plan (pension plan) that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. HEINEKENs net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any defined benefit plan assets are deducted. The discount rate is the yield at balance sheet date on AA-rated bonds that have maturity dates approximating the terms of HEINEKENs obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculations are performed annually by qualified actuaries using the projected unit credit method. When the calculation results in a benefit to HEINEKEN, the recognised asset is limited to the net total of any unrecognised past service costs and the present value of economic benefits 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 benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss. HEINEKEN recognises all actuarial gains and losses arising from defined benefit plans immediately in other comprehensive income and all expenses related to defined benefit plans in personnel expenses in profit or loss. (iii) Other long-term employee benefits HEINEKENs net obligation in respect of long-term employee benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit 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 the terms of HEINEKENs obligations. The obligation is calculated using the projected unit credit method. Any actuarial gains and losses are recognised in other comprehensive income in the period in which they arise. (iv) Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Termination benefits 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 benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised if HEINEKEN has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.
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(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 (see note 29). The grant date fair value 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. 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 share plans 2010-2012, 2011-2013 and 2012-2014 of 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 profit 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 incentive. (vii) Short-term employee benefits Short-term employee benefit 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 benefits if the Group 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 outflow of economic benefits will be required to settle the obligation. Provisions are measured at the present value of the expenditures to be expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as part of the net finance expenses. (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 benefit commitments in connection with early retirement and redundancy schemes. (iii) Onerous contracts A provision for onerous contracts is recognised when the expected benefits 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. 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.
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3. Significant accounting policies continued (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 difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective 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 the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date, are classified as non-current liabilities. (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 profit or loss when the amount of revenue can be measured reliably, the significant 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, then 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 profit 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 profit or loss when the services have been delivered. (o) Other income Other income are 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 profit or loss when ownership has been transferred to the buyer. (p) Expenses (i) Operating lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. (ii) Finance lease payments Minimum lease payments under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance 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 confirmed. (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 profit or loss over the period necessary to match them with the costs that they are intended to compensate.
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(r) Interest income, interest expenses and other net finance income and expenses Interest income and expenses are recognised as they accrue in profit or loss, using the effective 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 profit or loss using the effective interest method. Other net finance 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 profit or loss and held for trading investments, changes in fair value of hedging instruments that are recognised in profit or loss, unwinding of the discount on provisions and impairment losses recognised on investments. Dividend income is recognised in the income statement on the date that HEINEKENs 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 finance 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 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. (ii) Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax is not recognised for: temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; temporary differences 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 differences and it is probable that they will not reverse in the foreseeable future; and taxable temporary differences arising on the initial recognition of goodwill. The measurement of deferred tax assets and liabilities reflects 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 offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different 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. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits 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 benefit will be realised.
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3. Significant accounting policies continued (iii) Tax exposures In determining the amount of current and deferred income tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Company to change its judgment 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 the Groups 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. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is represented 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 profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period including the weighted average of outstanding ASDI, adjusted for the weighted average of own shares purchased in the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding including weighted average of outstanding ASDI, adjusted for the weighted average of own shares purchased in the year, for the effects of all dilutive potential ordinary shares, which comprise share rights granted to employees. (v) Cash flow statement The cash flow statement is prepared using the indirect method. Changes in balance sheet items that have not resulted in cash flows such as translation differences, 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 financing activities. Dividends received are classified as operating activities. Interest paid is also included in operating activities. (w) Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Board, who is considered to be the Groups 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 HEINEKENs 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 financial 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 finance 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.
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(x) Emission rights Emission rights are related to the emission of CO2, which relates to the production of energy. These rights are freely tradable. Bought emission rights and liabilities due to production of CO2 are measured at cost, including any directly attributable expenditure. Emission rights received for free are also recorded at cost, i.e. with a zero value. (y) Recently issued IFRS (i) Standards effective in 2012 and reflected in these consolidated financial statements Standards and interpretations effective from 1 January 2012 did not have a significant impact on the Company. (ii) New relevant standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Company are set out below, however HEINEKEN does not expect these changes to have a significant effect on the consolidated financial statements. IAS 19 Employee Benefits was amended. The standard is effective for annual periods beginning on or after 1 January 2013 and was endorsed by the EU. HEINEKEN has evaluated the impact of the applicability of this new standard. The prescribed calculation method to determine the return on net assets would result in an estimated increase in total pension costs of EUR99 million for 2012. This amount represents the variance between expected return on net assets and the prescribed application of the discount rate. Previously, total pension costs were reported within personnel expenses. With effect from 1 January 2013 HEINEKEN will present the interest expense on its net pension liability, an estimated EUR60 million, in Other net finance income and expenses. IFRS 9 Financial Instruments introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge accounting. The standard is effective for annual periods beginning on or after 1 January 2015, but has not yet been endorsed by the EU. HEINEKEN is in the process of evaluating the impact of the applicability of the new standard. IFRS 10 Consolidated Financial Statements establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. This IFRS supersedes IAS 27 Consolidated and separate financial statements and SIC-12 Consolidation Special purpose entities and is effective for annual periods beginning on or after 1 January 2014. IFRS 11 Joint arrangements establishes principles for financial reporting by parties to a joint arrangement. This IFRS supersedes IAS 31 Interest in Joint Ventures and SIC-13 Jointly Controlled Entities Non-monetary contributions by ventures and is adopted by the EU for annual periods beginning on or after 1 January 2014. Under IFRS 11 the structure of the arrangement is no longer the only determinant for the accounting treatment and entities do no longer have a choice in accounting treatment. IFRS 12 Disclosure of interests in other entities applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. The EU has adopted this IFRS for annual periods beginning on or after 1 January 2014. This IFRS integrates and makes consistent the disclosure requirements for all entities mentioned above. IFRS 13 Fair value measurement defines fair value; sets out in a single IFRS a framework for measuring fair value; and requires disclosures about fair value measurements. The EU has adopted this IFRS for annual periods beginning on or after 1 January 2014. The IFRS explains how to measure fair value for financial reporting. It does not require fair value measurements in addition to those already required or permitted by other IFRSs and is not intended to establish valuation standards or affect valuation practices outside financial reporting. HEINEKEN has the intention to early adopt IFRS 10, 11, 12 and 13 to align with the IASB effective date of 1 January 2013.
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4. Determination of fair values General A number of HEINEKENs accounting policies and disclosures require the determination of fair value, for both financial and non-financial 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 specific 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 the quoted 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 flows. The fair value of reacquired rights and other intangible assets is based on the discounted cash flows 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 profit margin based on the effort 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 flows, 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 general business operations (i) Investments in equity and debt securities The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial 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 flow models. (ii) Derivative financial instruments The fair value of derivative financial instruments is based on their listed market price, if available. If a listed market price is not available, then fair value is in general estimated by discounting the difference between the cash flows based on contractual price and the cash flows based on current price for the residual maturity of the contract using a risk-free interest rate (based on inter-bank interest rates). Fair values include the instruments credit risk and adjustments to take account of the credit risk of the Group entity and counterparty when appropriate. (iii) Non-derivative financial instruments Fair value, which is determined for disclosure purposes or when fair value hedge accounting is applied, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements. Fair values include the instruments credit risk and adjustments to take account of the credit risk of the Group entity and counterparty when appropriate.
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5. Operating segments HEINEKEN distinguishes the following six reportable segments: Western Europe Central and Eastern Europe The Americas Africa and the Middle East Asia Pacific Head Office and Other/eliminations.
The first five reportable segments as stated above are the Groups business regions. These business regions are each managed separately by a Regional President. The Regional President is directly accountable for the functioning of the segments 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 Office operating segment falls directly under the responsibility of the Executive Board. For each of the six 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 defined as earnings before interest and taxes and net finance expenses, before exceptional items and amortisation of acquisition related intangibles. Exceptional items are defined as items of income and expense of such size, nature or incidence, that in view of management their disclosure is relevant to explain the performance of HEINEKEN for the period. EBIT and EBIT (beia) are not financial 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 specific and on consolidated level diverse. 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 arms-length basis. As net finance 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 finance expenses and income tax expenses are not provided per reportable segment.
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5. Operating segments continued Information about reportable segments

Western Europe In millions of EUR Note 2012 2011 Central and Eastern Europe 2012 2011 The Americas 2012 2011
Revenue Third party revenue1 Interregional revenue Total revenue Other income Results from operating activities Net finance expenses Share of profit of associates and joint ventures and impairments thereof Income tax expenses Profit Attributable to: Equity holders of the Company (net profit) Non-controlling interest EBIT reconciliation EBIT Eia2 EBIT (beia)2 Beer volumes2 Consolidated beer volume Joint Ventures volume Licences Group volume Current segment assets Other non-current segment assets Investment 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
1 2
7,140 645 7,785 13 739
7,158 594 7,752 48 820
3,255 25 3,280 9 313
3,209 20 3,229 7 318
4,507 16 4,523 2 581
4,002 27 4,029 1 493
24
17
81
77
27
740 224 964
823 139 962
337 12 349
335 11 346
662 86 748
570 85 655
44,288 288 44,576 2,007 8,015 22 10,044
45,380 300 45,680 1,843 8,186 23 10,052
47,269 7,578 54,847 1,082 3,423 196 4,701
45,377 7,303 52,680 985 3,365 165 4,515
53,124 9,611 74 62,809 1,193 5,649 835 7,677
50,497 9,663 65 60,225 1,045 5,619 711 7,375
4,178
3,723
1,347
1,160
1,072
1,068
260 7 26 (344) (36) (86) (7)
215 11 (343) (100)
197 12 (247) 15 (16)
170 1 9 (234) (2) (18) (3)
250 36 14 (201) (17) (103)
199 4 20 (183) 5 (93)
Includes other revenue of EUR433 million in 2012 and EUR463 million in 2011. For definition see Glossary. Note that these are both non-GAAP measures and therefore unaudited.
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Africa and the Middle East 2012 2011
Asia Pacific 2012 2011
Head Office and Other/eliminations 2012 2011
Consolidated 2012 2011
2,639 2,639 613
2,223 2,223 3 533
527 527 1,486 1,546
216 216 5 64
315 (686) (371) (101)
315 (641) (326) (13)
18,383 18,383 1,510 3,691 (270)
17,123 17,123 64 2,215 (430) 240 (465) 1,560 1,430 130 1,560 2,455 242 2,697
35
109
112
(3)
(4)
213 (525) 3,109 2,949 160 3,109
614 38 652
568 2 570
1,655 (1,388) 267
176 176
(104) 36 (68)
(17) 5 (12)
3,904 (992) 2,912
23,289 6,002 1,149 30,440 959 2,073 281 3,313
22,029 5,706 1,093 28,828 854 1,867 272 2,993
3,742 24,297 675 28,714 913 7,151 534 8,598
1,309 24,410 769 26,488 91 2 536 629
(157) 1 (156) (629) 1,619 82 1,072
(124) 1,143 57 1,076
171,712 47,331 2,187 221,230 5,525 27,930 1,950 35,405 574 35,979 8,093 15,124 12,762 35,979 1,170 3,280 78 (1,017) (44) (247) (7)
164,592 47,082 2,227 213,901 4,694 20,182 1,764 26,640 487 27,127 7,148 9,887 10,092 27,127 800 287 56 (936) (229) (3)
760
653
498
36
238
508
395 2 (176) (8) (6)
202 282 (140) (3) (6)
20 2,757 (11) (24)
48 480 24 (38) 2 (12)
14 16 (36) (12)
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6. Acquisitions and disposals of subsidiaries and non-controlling interests Acquisition of the beer operations in Asia Pacific Breweries On 17 August 2012, HEINEKEN announced that, through its wholly owned subsidiary Heineken International B.V., it had signed the definitive agreements with Fraser & Neave, Limited (F&N) regarding the acquisition of control of Asia Pacific Investment Pte. Ltd (APIPL) and Asia Pacific Breweries Ltd. (APB) and their subsidiaries (together referred to as the Acquired Businesses, the Transaction or APIPL/APB acquisition). For this Transaction, Heineken agreed to pay SGD53.00 per share for F&Ns entire (direct and indirect) 39.7 per cent effective stake in APB for a total consideration of EUR3,480 million and a total consideration of EUR104 million for F&Ns interest in the non-APB assets held by APIPL. The Transaction has been approved by F&Ns Extraordinary General Meeting on 28 September 2012 and was completed, after regulatory approvals, on 15 November 2012. Between 17 August 2012 and 15 November 2012, HEINEKEN purchased an additional 13.7 per cent stake in APB (including an 8.6 per cent stake it acquired from Kindest Place Group Limited on 24 September 2012) for a total consideration of EUR1,194 million. Prior to the Acquisition, HEINEKEN owned a 50 per cent stake in APIPL, a combined direct and indirect stake in APB of 55.6 per cent as well as a direct stake in PT Multi Bintang of 6.78 per cent. Together these stakes are referred to as the Previously Held Equity Interests (PHEI). Prior to the acquisition HEINEKEN did not have control over APB as 64.8 per cent of the shares were held by APIPL, the joint venture between F&N and HEINEKEN. In accordance with IFRS, the PHEI in the Acquired Businesses is accounted for at fair value at the date of acquisition and amounts to EUR2,975 million. The fair value of the PHEI has been determined using valuation techniques, based on the Acquired Businesses equity value and the undisturbed share price. HEINEKENs carrying amount consists of the book value of the original investment as well as the price paid for shares bought up to 15 November 2012. The fair value compared to HEINEKENs carrying amount results in a non-cash exceptional gain of EUR1,486 million, recognised in Other Income. After completion of the Transaction, HEINEKEN, in aggregate, owns a 95.3 per cent stake in APB, wholly owns APIPL and also has a combined direct and indirect stake of 83.6 per cent in PT Multi Bintang. From 15 November 2012 onwards these entities are consolidated by HEINEKEN. On 15 November 2012, Heineken announced a Mandatory General Offer (MGO) for all shares of APB that Heineken does not already own (i.e. the remaining 4.7 per cent APB free-float shares), in accordance with the Singapore Code on Take-overs and Mergers. HEINEKEN expects to delist APB around 18 February 2013. The total consideration for all remaining shares will be EUR398 million. Non-controlling interests are measured based on their proportional interest in the recognised amounts of the assets and liabilities of the Acquired Businesses. HEINEKEN recognised EUR797 million of non-controlling interests of which EUR645 million represents the APIPL/APB non-controlling stakes. 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*
Property, plant & equipment Intangible assets Investments in associates & joint ventures Other investments and non-current receivables Deferred tax assets Inventories Trade and other receivables Assets held for sale Cash and cash equivalents Assets acquired
In millions of EUR*
731 3,809 473 82 4 187 296 17 377 5,976
Loans and borrowings, current and non-current Employee benefits Provisions Deferred tax liabilities Tax liabilities
296 12 3 1,001 95
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In millions of EUR*
Trade and other current liabilities Liabilities assumed Total net identifiable assets Consideration paid in cash for the transaction on 15 November 2012 Fair value of previously held equity interest in the acquiree Non-controlling interests Settlement of pre-existing relationship Net identifiable assets acquired Goodwill on acquisition (provisional)
* Amounts were converted to euros at the rate of EUR/SGD1.5622 for the statement of financial position
455 1,862 4,114 3,584 2,975 797 (5) (4,114) 3,237
The majority of the goodwill has been allocated to the Asia Pacific region and it is attributable to a number of factors such as the future growth platform and synergies that can be achieved. To properly account for the currency impact (in accordance with IAS21) on goodwill, the provisional amount of EUR2,757 million allocated to the Asia Pacific region is held in the following currencies. In alphabetical order; Chinese Yuan Renminbi (CNY), Indonesian Rupiah (IDR), Mongolian Tugrik (MTN), New Zealand Dollar (NZD), Papua New Guinea Kina (PGK), New Solomon Island Dollar (SBD), Singapore Dollar (SGD), Vietnamese Dong (VND), New Caledonian Franc (XPF) and Cambodia in USD. The remaining part of the provisional goodwill (EUR480 million) has been allocated to the Heineken Global Commerce cash-generating unit (CGU) in Head office and Others and reflects the benefit to HEINEKEN for safeguarding the position of Heineken as a global brand and future royalty streams. Prior to the acquisition, HEINEKEN accounted for its investment in the Acquired Businesses with a three-month delay with any identified specific large, material events being recognised immediately. At the acquisition date, HEINEKEN discontinued the use of equity method accounting. Included within the revaluation gain of the PHEI is the catch up on the three-month lagging period. This gain amounts to EUR23 million and is embedded within the PHEI gain presented as Other Income. The Acquired Businesses contributed revenue of EUR287 million and results from operating activities of negative EUR9 million (including the reversal of the EUR76 million fair value lift up on inventory) for the six-week period from 15 November 2012 to 31 December 2012. Amortisation of identified intangible assets for the six-week period amounts to EUR24 million. Had the acquisition occurred on 1 January 2012, pro-forma revenue and pro-forma results from operating activities for the 12-month period ended 31 December 2012 would have amounted to EUR1,698 million and EUR159 million, respectively. The pro-forma amortisation of identified intangible assets would have amounted to EUR191 million. This pro-forma information does not purport to represent what HEINEKENs actual results would have been had the acquisition actually occurred on 1 January 2012, nor are they necessarily indicative of future results of operations. In determining the contributions, management has assumed that the fair value adjustments that arose on the date of the acquisition would have been the same as if the acquisition had occurred on 1 January 2012. Acquisition-related costs of EUR28 million have been recognised in the income statement for the period ended 31 December 2012. In accordance with IFRS 3R, the amounts recorded for the Transaction 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 affected the measurement of the amounts recognised as of that date. Other Acquisitions During 2012 HEINEKEN completed transactions to increase its shareholding in Brasserie Nationale dHaiti S.A. (BraNa), the countrys leading brewer, from 22.5 per cent to 95 per cent. HEINEKEN also acquired 100 per cent of the Belgian cider innovation company Stassen in 2012. The acquisition of BraNa and Stassen contributed revenue of EUR113 million, results from operating activities of EUR19 million (EBIT) and amortisation of identified intangible assets amounts to EUR nil million. The following summarises the major classes of consideration transferred, and the recognised provisional amounts of assets acquired and liabilities assumed at the acquisition date of BraNa and Stassen.
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6. Acquisitions and disposals of subsidiaries and non-controlling interests continued

In millions of EUR*
Property, plant & equipment Intangible assets Inventories Trade and other receivables Cash and cash equivalents Assets acquired
In millions of EUR*
64 9 22 9 9 113
Loans and borrowings, current and non-current Deferred tax liabilities Other long term liabilities Tax liabilities (current) Trade and other current liabilities Liabilities assumed Total net identifiable assets
In millions of EUR*
13 5 1 3 22 44 69
Consideration transferred Fair value of previously held equity interest in the acquiree Non-controlling interests Net identifiable assets acquired Provisional goodwill on acquisition
88 21 3 (69) 43
* TheBraNa amounts were converted into EUR at the rate of EUR/HTG 54.2613. Additionally, certain amounts provided in US dollar were converted into EUR based at the rate of EUR/USD1.3446.
The amounts recorded for the acquired businesses are prepared on a provisional basis. Goodwill has been allocated to Haiti in the Americas region which is held in HTG (Haitian Gourde) and for Stassen to the Western Europe region held in EUR. The entire amounts of goodwill are not expected to be tax deductible. The fair value of the previously held 22.5 per cent in BraNa is recognised at EUR21 million. The revaluation to fair value of the Groups existing 22.5 per cent in BraNa resulted in a net profit of EUR20 million that has been recognised in the income statement in other net finance income (note12). Non-controlling interests are recognised based on their proportional interest in the recognised amounts of the assets and liabilities of BraNa of EUR3 million. Acquisition related costs are not material and have been recognised in the income statement for the period ended 31 December 2012. Acquisition of non-controlling interest As part of the unwinding of their partnerships in Kazakhstan and Serbia with Efes Breweries International N.V. (EBI) HEINEKEN acquired EBIs 28 per cent stake in the Serbian operations and since 27 December wholly owns Central Europe Beverages (CEB). On 8 January 2013 HEINEKEN sold its 28 per cent stake in Efes Kazakhstan which is reported in the subsequent events note 37. Selling the cross-holdings to each other will result in a net consideration to be paid by EBI to HEINEKEN of USD161 million.
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Overview
Other information
Disposals Disposal of our minority shareholding in Cervecera Nacional Dominicana S.A. On 16 April 2012 HEINEKEN sold its 9.3 per cent minority shareholding in Cervecera Nacional Dominicana S.A. (CND) in the Dominican Republic for USD237 million, ultimately to AmBev Brasil Bebidas S.A. (AmBev Brasil), a subsidiary of Companhia de Bebidas das Amricas AmBev. A pre-tax EUR175 million gain on disposal of the available for sale investment was recorded under other net finance income. 7. Assets and liabilities (or disposal groups) classified as held for sale Other assets classified as held for sale represent: Our associate in Efes Kazakhstan. The transaction to sell our stake in Kazakhstan closed on 8 January 2013. HEINEKENs share in the Chinese joint venture Jiangsu Dafuhao Breweries Co. Ltd. resulting from the acquisition of APIPL/APB. The joint venture was included as available for sale in the opening balance sheet of this acquisition. The sale of our share in Jiangsu Dafuhao Breweries has been completed on 9 January 2013. Assets and liabilities following the commitment of HEINEKEN to sell our wholly-owned subsidiary Pago International GmbH to Eches-Granini Group. The transaction is expected to close in the first quarter of 2013. Assets and liabilities classified as held for sale
Current assets Non-current assets Current liabilities Non-current liabilities
38 86 (36) (3) 85
99 99
8. Other income
Net gain on sale of property, plant & equipment Net gain on sale of intangible assets Net gain on sale of subsidiaries, joint ventures and associates
22 2 1,486 1,510
35 24 5 64
Included in other income is the fair value gain of HEINEKENs previously held equity interest in APB amounting to EUR1,486 million (refer to note 6).
99
9. Raw materials, consumables and services

Raw materials Non-returnable packaging Goods for resale Inventory movements Marketing and selling expenses Transport expenses Energy and water Repair and maintenance Other expenses
1,892 2,376 1,616 (85) 2,250 1,029 562 458 1,751 11,849
1,576 2,075 1,498 (8) 2,186 1,056 525 417 1,641 10,966
Other expenses include rentals of EUR264 million (2011: EUR241 million), consultant expenses of EUR191 million (2011: EUR166 million), telecom and office automation of EUR179 million (2011: EUR159 million), travel expenses of EUR155 million (2011: EUR137 million) and other fixed expenses of EUR962 million (2011: EUR938 million). 10. Personnel expenses
In millions of EUR Note 2012 2011
Wages and salaries Compulsory social security contributions Contributions to defined contribution plans Expenses related to defined benefit plans Increase in other long-term employee benefits Equity-settled share-based payment plan Other personnel expenses
28 29
2,078 352 39 28 11 12 517 3,037
1,891 333 24 56 11 11 512 2,838
Restructuring costs related to the restructuring of wholesale operations across Western Europe are included in other personnel expenses for an amount of EUR35 million. These costs are primarily related to the Netherlands and Italy. The average number of full-time equivalent (FTE) employees during the year was:
2012 2011*
The Netherlands Other Western Europe Central and Eastern Europe The Americas Africa and the Middle East Asia Pacific Heineken N.V. and subsidiaries
* Updated
4,053 14,410 16,835 25,035 14,604 1,254 76,191
3,991 14,749 17,424 23,906 11,396 279 71,745
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Overview
Other information
11. Amortisation, depreciation and impairments

Property, plant & equipment Intangible assets Impairment on available-for-sale assets
14 15
1,061 254 1 1,316
936 232 1,168
12. Net finance income and expenses Recognised in profit or loss

Interest income Interest expenses Dividend income on available-for-sale investments Dividend income on investments held for trading Net gain/(loss) on disposal of available-for-sale investments Net change in fair value of derivatives Net foreign exchange gain/(loss) Impairment losses on available-for-sale investments Unwinding discount on provisions Other net financial income/(expenses) Other net finance income/(expenses) Net finance income/(expenses)
62 (551) 2 23 192 (7) 15 (7) 1 219 (270)
70 (494) 2 11 1 96 (107) (7) (2) (6) (430)
Included in other net finance income on the line Net gain/(loss) on disposal of available-for-sale investments are the sale of our 9.3 per cent minority shareholding in Cervecera Nacional Dominicana S.A. in the Dominican Republic leading to a gain on disposal of the available-for-sale investment of pre-tax EUR175 million and the revaluation of HEINEKENs existing 22.5 per cent interest in Brasserie dHaiti of EUR20 million. Recognised in other comprehensive income
Foreign currency translation differences for foreign operations Effective portion of changes in fair value of cash flow hedges Effective portion of cash flow hedges transferred to profit or loss Ineffective portion of cash flow hedges transferred to profit or loss Net change in fair value of available-for-sale investments Net change in fair value available-for-sale investments transferred to profit or loss Actuarial (gains) and losses Share of other comprehensive income of associates/joint ventures Recognised in: Fair value reserve Hedging reserve Translation reserve Other
45 14 41 135 (148) (439) (1) (353) (9) 58 48 (450) (353)
(493) (21) (11) 71 (1) (93) (5) (553) 69 (42) (482) (98) (553)
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13. Income tax expense Recognised in the income statement

Current tax expense Current year Under/(over) provided in prior years Deferred tax expense Origination and reversal of temporary differences Previously unrecognised deductible temporary differences Changes in tax rate Utilisation/(benefit) of tax losses recognised Under/(over) provided in prior years Total income tax expense in the income statement
639 (6) 633 (90) (28) 4 (6) 12 (108) 525
502 (26) 476 17 (9) 1 (19) (1) (11) 465
Reconciliation of the effective tax rate

Profit before income tax Share of net profit of associates and joint ventures and impairments thereof Profit before income tax excluding share of profit of associates and joint ventures (including impairments thereof)
3,634 (213) 3,421
2,025 (240) 1,785
2012
2011
Income tax using the Companys domestic tax rate Effect of tax rates in foreign jurisdictions Effect of non-deductible expenses Effect of tax incentives and exempt income Recognition of previously unrecognised temporary differences Utilisation or recognition of previously unrecognised tax losses Unrecognised current year tax losses Effect of changes in tax rate Withholding taxes Under/(over) provided in prior years Other reconciling items
25.0 1.8 1.9 (13.8) (0.8) (0.5) 0.7 0.1 0.8 0.2 (0.1) 15.3
855 63 64 (472) (28) (17) 25 4 27 6 (2) 525
25.0 3.5 3.2 (6.0) (0.5) (0.3) 1.0 0.1 1.5 (1.5) 0.1 26.1
446 62 58 (107) (9) (5) 18 1 26 (27) 2 465
The lower reported tax rate in 2012 of 15.3 per cent (2011: 26.1 per cent) can be explained by the tax exempt remeasurement of HEINEKENs PHEI in APIPL/APB, prior to consolidation. Income tax recognised in other comprehensive income
Changes in fair value Changes in hedging reserve Changes in translation reserve Other 24
(24) (18) (22) 123 59
13 11 16 40
Overview
Other information
14. Property, plant and equipment

Land and buildings Plant and equipment Other fixed assets Under construction
In millions of EUR
Note
Total
Cost Balance as at 1 January 2011 Changes in consolidation Purchases Transfer of completed projects under construction Transfer (to)/from assets classified as held for sale Disposals Effect of hyperinflation Effect of movements in exchange rates Balance as at 31 December 2011 Balance as at 1 January 2012 Changes in consolidation Purchases Transfer of completed projects under construction and other Transfer (to)/from assets classified as held for sale Disposals Effect of hyperinflation Effect of movements in exchange rates Balance as at 31 December 2012 Depreciation and impairment losses Balance as at 1 January 2011 Changes in consolidation Depreciation charge for the year Impairment losses Reversal impairment losses Transfer to/(from) assets classified as held for sale Disposals Effect of movements in exchange rates Balance as at 31 December 2011 Balance as at 1 January 2012 Changes in consolidation Depreciation charge for the year Impairment losses Reversal impairment losses Transfer to/(from) assets classified as held for sale Disposals Effect of movements in exchange rates Balance as at 31 December 2012 Carrying amount As at 1 January 2011 As at 31 December 2011 As at 1 January 2012 As at 31 December 2012
4,397 505 55 82 (65) (35) 2 (71) 4,870 4,870 245 38 58 (37) (19) 1 59 5,215 (1,526) (128) 3 18 11 (1,622) (1,622) (142) (10) 4 26 5 (14) (1,753) 2,871 3,248 3,248 3,462
6,207 89 99 90 (92) 11 (127) 6,277 6,277 385 105 235 (21) (81) 4 23 6,927 (3,124) 4 (356) 3 92 42 (3,339) (3,339) (2) (399) (36) 12 15 80 (9) (3,678) 3,083 2,938 2,938 3,249
3,939 (31) 320 150 (255) 2 (73) 4,052 4,052 91 365 270 (24) (284) 1 23 4,494 (2,536) 14 (452) (8) 5 224 43 (2,710) (2,710) (1) (476) (19) 5 20 261 (19) (2,939) 1,403 1,342 1,342 1,555
330 3 326 (322) (6) 2 (1) 332 332 77 662 (540) (1) (4) 526 330 332 332 526
14,873 566 800 (65) (388) 17 (272) 15,531 15,531 798 1,170 23 (82) (385) 6 101 17,162 (7,186) 18 (936) (8) 8 3 334 96 (7,671) (7,671) (3) (1,017) (65) 21 61 346 (42) (8,370) 7,687 7,860 7,860 8,792
11 11 11
6 11 11 11
Impairment losses In 2012 a total impairment loss of EUR65 million (2011: EUR8 million) was charged to the income statement.
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14. Property, plant and equipment continued Financial lease assets The Group leases P, P & E under a number of finance lease agreements. At 31 December 2012 the net carrying amount of leased P,P & E was EUR39 million (2011: EUR39 million). During the year, the Group acquired leased assets of EUR5 million (2011: EUR6 million). Security to authorities Certain P, P & E for EUR142 million (2011: EUR137 million) has been pledged to the authorities in a number of countries as security for the payment of taxation, particularly excise duties on beers, non-alcoholic beverages and spirits and import duties. This mainly relates to Brazil (see note 34). Property, plant and equipment under construction P, P & E under construction mainly relates to expansion of the brewing capacity in, Mexico, Nigeria, Democratic Republic of Congo, UK, Vietnam and Russia. Capitalised borrowing costs During 2012 no borrowing costs have been capitalised (2011: EUR nil). 15. Intangible assets
Customerrelated intangibles Contractbased intangibles Software, research and development and other
In millions of EUR
Note
Goodwill
Brands
Total
Cost Balance as at 1 January 2011 Changes in consolidation Purchases/internally developed Disposals Effect of movements in exchange rates Balance as at 31 December 2011 Balance as at 1 January 2012 Changes in consolidation Purchased/internally developed Disposals Transfers to assets held for sale Effect of movements in exchange rates Balance as at 31 December 2012 Amortisation and impairment losses Balance as at 1 January 2011 Changes in consolidation Amortisation charge for the year Impairment losses Disposals Effect of movements in exchange rates Balance as at 31 December 2011
7,592 287 (70) 7,809 7,809 3,280 (11) (1) 11,077
2,321 8 (57) 2,272 2,272 2,069 (9) 4,332
1,284 18 (74) 1,228 1,228 1,077 (5) 4 2,304
222 38 6 (91) (13) 162 162 624 7 (4) (9) 780
344 50 (6) (10) 378 378 48 71 (1) 6 502
11,763 351 56 (97) (224) 11,849 11,849 7,098 78 (20) (1) (9) 18,995
11 11
(279) (279)
(163) (59) (1) (1) 3 (221)
(163) (110) 5 (268)
(60) 1 (24) 91 (11) (3)
(208) (1) (36) (2) 1 3 (243)
(873) (229) (3) 91 (1,014)
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Overview
Other information
In millions of EUR
Note
Goodwill
Brands
Customerrelated intangibles
Contractbased intangibles
Software, research and development and other
Total
Balance as at 1 January 2012 Changes in consolidation Amortisation charge for the year Impairment losses Disposals Transfers to assets held for sale Effect of movements in exchange rates Balance as at 31 December 2012 Carrying amount As at 1 January 2011 As at 31 December 2011 As at 1 January 2012 As at 31 December 2012
6 11 11
(279) (7) (11) (297)
(221) (68) (289)
(268) (121) 7 (382)
(3) (11) (9) (23)
(243) (47) 1 10 (279)
(1,014) (247) (7) 1 (3) (1,270)
7,313 7,530 7,530 10,780
2,158 2,051 2,051 4,043
1,121 960 960 1,922
162 159 159 757
136 135 135 223
10,890 10,835 10,835 17,725
Brands, customer-related and contract-based intangibles The main brands capitalised are the brands acquired in 2008: Scottish & Newcastle (Fosters and Strongbow), 2010: Cervecera Cuauhtmoc Moctezuma (Dos Equis, Tecate and Sol) and 2012: Asia Pacific Breweries (Tiger, Anchor and Bintang). The main customer-related and contract-based intangibles were acquired in 2010 and 2012 and are related to customer relationships with retailers in Mexico and Asia Pacific (constituting 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 Western Europe, Central and Eastern Europe (excluding Russia), the Americas (excluding Brazil) and Asia Pacific is allocated and monitored by management on a regional basis. In respect of less integrated Operating Companies such as Russia, Brazil, Africa, the Middle East and Head Office and Other, goodwill is allocated and monitored by management on an individual country basis. The aggregate carrying amounts of goodwill allocated to each CGU are as follows:
Western Europe Central and Eastern Europe (excluding Russia) Russia The Americas (excluding Brazil) Brazil Africa and the Middle East (aggregated) Asia Pacific Head Office and Other
3,428 1,445 106 1,778 99 507 2,674 743 10,780
3,396 1,394 102 1,743 111 528 256 7,530
Throughout the year total goodwill mainly increased due to the acquisition of APIPL/APB, BraNa and net foreign currency differences. Goodwill is tested for impairments annually. The recoverable amounts of the CGUs are based on value-in-use calculations. Value in use was determined by discounting the future cash flows generated from the continuing use of the unit using a pre-tax discount rate.
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15. Intangible assets continued The key assumptions used for the value-in-use calculations are as follows: Cash flows were projected based on actual operating results and the three-year business plan. Cash flows 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 forecasted period is justified due to the long-term nature of the beer business and past experiences. The beer price growth per year after the first three-year period is assumed to be at specific per country expected annual long-term inflation, based on external sources. Cash flows after the first ten-year period were extrapolated using a perpetual growth rate equal to the expected annual long-term inflation, in order to calculate the terminal recoverable amount. A per CGU-specific 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:
Expected annual long-term inflation 2016-2022 Expected volume growth rates 2016-2022
Pre-tax WACC
Western Europe Central and Eastern Europe (excluding Russia) Russia The Americas (excluding Brazil) Brazil Africa and the Middle East Asia Pacific Head Office and Other
10.1% 12.2% 13.8% 10.0% 12.6% 13.7% 21.9% 15.7% 10.1% 13.2%
2.0% 2.4% 4.1% 3.0% 4.1% 2.6% 8.6% 5.3% 2.0% 3.8%
(0.4)% 0.9% 1.1% 1.4% 2.9% 1.5% 7.1% 5.4% (0.4)% 2.4%
The values assigned to the key assumptions represent managements assessment of future trends in the beer industry and are based on both external sources and internal sources (historical data). HEINEKEN applied its methodology to determine CGU specific WACCs to perform its annual impairment testing on a consistent basis. The trend and outcome of several WACCs, for amongst others the Western Europe CGU, turned out lower than expected based on the current economic climate and associated outlooks. HEINEKEN does not believe the risk profile in Western Europe is significantly lower than in prior years. HEINEKEN decided to adjust the risk-free rates for this observation. Sensitivity to changes in assumptions Limited headroom is available in some of our CGUs in the region Africa and Middle East, however the outcome of the sensitivity analysis of a 100 basis points adverse change in key assumptions (lower growth rates and higher discount rates respectively) would not result in a materially different outcome of the impairment test.
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Overview
Other information
16. Investments in associates and joint ventures HEINEKEN has the following (direct and indirect) significant investments in associates and joint ventures:
Ownership 2012 Ownership 2011
Country
Joint ventures Brau Holding International GmbH & Co KgaA Zagorka Brewery A.D. Pivara Skopje A.D. Brasseries du Congo S.A. Compania Cervecerias Unidas S.A. Tempo Beverages Ltd. Heineken Lion Australia Pty. Sirocco FZCo Diageo Heineken Namibia B.V. United Breweries Limited DHN Drinks (Pty) Ltd. Sedibeng Brewery Pty Ltd.* Asia Pacific Investment Pte. Ltd.*** Asia Pacific Breweries Ltd.*** Guinness Anchor Berhad **** Thai Asia Pacific Brewery **** Associates Cerveceria Costa Rica S.A. JSC FE Efes Kazakhstan**
Germany Bulgaria FYR Macedonia Congo Chile Israel Australia Dubai Namibia India South Africa South Africa Singapore Singapore Malaysia Thailand
49.9% 49.4% 48.2% 50.0% 33.1% 40.0% 50.0% 50.0% 50.0% 37.4% 44.6% 75.0% 25.2% 36.4%
49.9% 49.4% 48.2% 50.0% 33.1% 40.0% 50.0% 50.0% 50.0% 37.5% 44.5% 75.0% 50.0% 41.9% 10.7% 15.4%
Costa Rica Kazakhstan
25.0% 28.0%
25.0% 28.0%
* HEINEKEN has joint control as the contract and ownership details determine that for certain main operating and financial decisions unanimous approval is required. As a result this investment is not consolidated. ** This entity is classified as Held for Sale (see note 7). *** These entities are consolidated from 15 November 2012 following the APIPL/APB acquisition. **** The ownership percentages have changed following the APIPL/APB acquisition on 15 November 2012.
Reporting date The reporting date of the financial statements of all HEINEKEN entities and joint ventures disclosed are the same as for the Company except for: (i) Heineken Lion Australia Pty which has a 30 September reporting date; (ii) DHN Drinks (Pty) Ltd. which has a 30 June reporting date; (iii) United Breweries Limited which has a 31 March reporting date; (iv) Guinness Anchor Berhad which has a 30 June reporting date; and (v) Thai Asia Pacific Brewery which has a 30 September reporting date. The results of (ii), (iii), (iv) and (v) have been adjusted to include numbers for the full financial year ended 31 December 2012. Share of profit of associates and joint ventures and impairments thereof
Income associates Income joint ventures Impairments
34 179 213
25 215 240
The income associates contain a HEINEKENs share in the write off in deferred tax assets in an associate of EUR36 million (see note 27). Included in the income joint ventures is HEINEKENs share of the net impairment in Jiangsu Dafuhao Breweries Co. Ltd in China of EUR11 million.
16. Investments in associates and joint ventures continued Summary financial information for equity accounted joint ventures and associates
Joint ventures 2012 Joint ventures 2011 Associates 2012 Associates 2011
In millions of EUR
Non-current assets Current assets Non-current liabilities Current liabilities Revenue Expenses
1,270 683 (512) (477) 2,234 (1,851)
1,708 1,005 (581) (725) 2,313 (1,914)
65 50 (18) (30) 203 (161)
73 52 (25) (30) 153 (117)
In the above table HEINEKEN represents its share of the aggregated amounts of assets, liabilities, revenues and expenses for its Joint Ventures and Associates for the year ended 31 December. The revenue and expenses of Joint Ventures in 2012 contain 10.5 months of APIPL/APB and 1.5 months of Guinness Anchor Berhad and Thai Asia Pacific Brewery. Both Guinness Anchor Berhad and Thai Asia Pacific Brewery are included in the joint ventures 2012 ending balances. 17. Other investments and receivables
Non-current other investments Loans and advances to customers Indemnification receivable Other receivables Held-to-maturity investments Available-for-sale investments Non-current derivatives Current other investments Investments held for trading
32 32 32 32 32 32
368 136 148 4 327 116 1,099 11 11
384 156 178 5 264 142 1,129 14 14
32
Included in loans are loans to customers with a carrying amount of EUR108 million as at 31 December 2012 (2011: EUR120 million). Effective interest rates range from 6 to 12 per cent. EUR60 million (2011: EUR72 million) matures between one and five years and EUR48 million (2011: EUR48 million) after five years. The indemnification receivable represents the receivable on FEMSA and Lewiston investments and is a mirroring of the corresponding indemnified liabilities originating from the acquisition of the beer operations of FEMSA and Sona. 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 five years. The main available-for-sale investments are Caribbean Development Company Ltd., S.A. Des Brasseries du Cameroun, Consorcio Cervecero de Nicaragua S.A., Desnoes & Geddes Ltd. and Sabeco Ltd. As far as these investments are listed they are measured at their quoted market price. For others the value in use or multiples are used. Debt securities (which are interest-bearing) with a carrying amount of EUR21 million (2011: EUR20 million) are included in available-for-sale investments. Sensitivity analysis equity price risk An amount of EUR193 million as at 31 December 2012 (2011: EUR95 million) of available-for-sale investments and investments held for trading is listed on stock exchanges. An impact of 1 per cent increase or decrease in the share price at the reporting date would not result in a material impact on a consolidated Group level.
Overview
Other information
18. Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following items:
Assets In millions of EUR 2012 2011 Liabilities 2012 2011 2012 Net 2011
Property, plant & equipment Intangible assets Investments Inventories Loans and borrowings Employee benefits Provisions Other items Tax losses carry forward Tax assets/(liabilities) Set-off of tax Net tax assets/(liabilities)
136 75 134 20 2 399 125 242 238 1,371 (807) 564
93 51 91 16 3 252 150 146 237 1,039 (565) 474
(756) (1,608) (12) (7) (2) (17) (195) (2,597) 807 (1,790)
(590) (733) (6) (5) 12 1 (138) (1,459) 565 (894)
(620) (1,533) 122 13 2 397 108 47 238 (1,226) (1,226)
(497) (682) 85 11 3 264 151 8 237 (420) (420)
Of the total net deferred tax assets of EUR564 million at 31 December 2012 (2011: EUR474 million), EUR301 million (2011: EUR246 million) is recognised in respect of OpCos in various countries where there have been tax losses in the current or preceding period. Managements projections support the assumption that it is probable that the results of future operations will generate sufficient taxable income to utilise these deferred tax assets. The increase in deferred tax liabilities in 2012 is mainly related to the APIPL/APB acquisition. Tax losses carry forward HEINEKEN has tax losses carry forward for an amount of EUR2,011 million as at 31 December 2012 (2011: EUR1,920 million), which expire in the following years:
2012 2013 2014 2015 2016 2017 After 2017 respectively 2016 but not unlimited Unlimited Recognised as deferred tax assets gross Unrecognised
11 17 32 29 27 292 1,603 2,011 (989) 1,022
5 6 28 23 36 372 1,450 1,920 (859) 1,061
The unrecognised losses relate to entities for which it is not probable that taxable profit will be available to offset these losses. The majority of the unrecognised losses were acquired as part of the beer operations of FEMSA in 2010.
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18. Deferred tax assets and liabilities continued Movement in deferred tax balances during the year
Balance 1 January 2011 Effect of movements in foreign exchange Balance 31 December 2011
In millions of EUR
Changes in consolidation
Recognised in income
Recognised in equity
Transfers
Property, plant & equipment Intangible assets Investments Inventories Loans and borrowings Employee benefits Provisions Other items Tax losses carry forward Net tax assets/(liabilities)
(464) (727) 78 27 (1) 265 134 26 213 (449)
(41) (18) 1 7 (51)
20 38 (7) 2 (5) (2) 46

Effect of movements in foreign exchange
(10) 25 14 (16) 2 (17) 13 (19) 19 11
16 8 24
(2) 3 (2) (1)
(497) (682) 85 11 3 264 151 8 237 (420)
In millions of EUR
Balance 1 January 2012
Changes in consolidation
Recognised in income
Recognised in equity
Transfers
Balance 31 December 2012
Property, plant & equipment Intangible assets Investments Inventories Loans and borrowings Employee benefits Provisions Other items Tax losses carry forward Net tax assets/(liabilities) 19. Inventories
In millions of EUR
(497) (682) 85 11 3 264 151 8 237 (420)
(66) (921) (4) (18) 6 (9) 9 1 (1,002)
(5) 6 4 1 (2) 6 3 (9) 4 8
(54) 59 37 22 2 (34) 70 6 108
(2) 123 (40) 81
2 5 2 (3) 1 (4) (3) 9 (10) (1)
(620) (1,533) 122 13 2 397 108 47 238 (1,226)
2012
2011
Raw materials Work in progress Finished products Goods for resale Non-returnable packaging Other inventories and spare parts
320 176 407 207 191 295 1,596
263 150 354 205 143 237 1,352
During 2012 and 2011 no write-down of inventories to net realisable value was required.
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Overview
Other information
20. Trade and other receivables

Trade receivables due from associates and joint ventures Trade receivables Other receivables Derivatives 32
27 1,944 529 37 2,537
42 1,657 524 37 2,260
A net impairment loss of EUR38 million (2011: EUR57 million) in respect of trade and other receivables was included in expenses for raw materials, consumables and services. 21. Cash and cash equivalents
Cash and cash equivalents Bank overdrafts Cash and cash equivalents in the statement of cash flows
32 25
1,037 (191) 846
813 (207) 606
22. Capital and reserves Share issuance On 30 April 2010 HEINEKEN issued 86,028,019 ordinary shares with a nominal value of EUR1.60, as a result of which the issued share capital consists of 576,002,613 shares. To these shares a share premium value was assigned of EUR2,701 million based on the quoted market price value of 43,009,699 shares HEINEKEN and 43,018,320 shares Heineken Holding N.V. combined being the share consideration paid to Fomento Econmico Mexicano, S.A.B. de C.V. (FEMSA) for its beer operations. Allotted Share Delivery Instrument In addition to the shares issued to FEMSA, HEINEKEN also committed itself to deliver 29,172,504 additional shares to FEMSA (the Allotted Shares) over a period of no longer than five years. This financial instrument was classified as equity as the number of shares was fixed. HEINEKEN had the option to accelerate the delivery of the Allotted Shares at its discretion. Pending delivery of the Allotted Shares, HEINEKEN paid a coupon on each undelivered Allotted Share such that FEMSA was compensated, on an after tax basis, for dividends FEMSA would have received had all such Allotted Shares been delivered to FEMSA on or prior to the record date for such dividends. On 3 October 2011, HEINEKEN announced that the share repurchase programme in connection with the acquisition of FEMSA had been completed. During the period of 1 January through 31 December 2011 HEINEKEN acquired 18,407,246 shares with an average quoted market price of EUR36.67. All shares were delivered in 2011. Share capital
On issue as at 1 January Issued On issue as at 31 December
922 922
922 922
As at 31 December 2012 the issued share capital comprised 576,002,613 ordinary shares (2011: 576,002,613). The ordinary shares have a par value of EUR1.60. All issued shares are fully paid.
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22. Capital and reserves continued The Companys authorised capital amounts to EUR2.5 billion, comprising 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 Companys shares that are held by HEINEKEN (see below), rights are suspended. Translation reserve The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations of the Group (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 effective portion of the cumulative net change in the fair value of cash flow hedging instruments where the hedged transaction has not yet occurred. HEINEKEN considers this a legal reserve. 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 profit of joint ventures and associates over the distribution of which HEINEKEN does not have control. The movement in these reserves reflects retained earnings of joint ventures and associates minus dividends received. In case of a legal or other restriction which causes 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 Companys own shares comprises the cost of the Companys shares held by HEINEKEN. As at 31 December 2012, HEINEKEN held 891,561 of the Companys shares (2011: 1,265,140). The coupon paid on the ASDI in 2011 amounts to EUR15 million. LTV During the period of 1 January through 31 December 2012 HEINEKEN acquired no shares for LTV delivery. Dividends The following dividends were declared and paid by HEINEKEN:
Final dividend previous year EUR0.53, respectively EUR0.50 per qualifying ordinary share Interim dividend current year EUR0.33, respectively EUR0.30 per qualifying ordinary share Total dividend declared and paid
305 189 494
299 175 474
The Heineken N.V. dividend policy is to pay-out a ratio of 30 per cent to 35 per cent of full-year net profit (beia). The interim dividend is fixed at 40 per cent of the total dividend of the previous year. 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.
per qualifying ordinary share EUR0.89 (2011: EUR0.83)
512
477
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Overview
Other information
Non-controlling interests The non-controlling interests (NCI) relate to minority stakes held by third parties in HEINEKEN consolidated subsidiaries. Due to the APIPL/APB acquisition HEINEKEN recognised additional NCIs for a total of EUR797 million. An amount of EUR645 million represents the share of third parties in subsidiaries of the APIPL/APB Group. An amount of EUR152 million represents the APB shares that HEINEKEN did not yet acquire on 15 November 2012. These shares are subject to the Mandatory General Offer. Both NCIs are valued at their share in net assets acquired. Due to purchases of APB shares between 15 November 2012 and 31 December 2012, the NCI decreased with EUR91 million and as at 31 December 2012 HEINEKEN owns 98.7 per cent of APB. 23. Earnings per share Basic earnings per share The calculation of basic earnings per share as at 31 December 2012 is based on the profit attributable to ordinary shareholders of the Company (net profit) of EUR2,949 million (2011: EUR1,430 million) and a weighted average number of ordinary shares basic outstanding during the year ended 31 December 2012 of 575,022,338 (2011:585,100,381). Basic earnings per share for the year amounted to EUR5.13 (2011: EUR2.44). Weighted average number of shares basic
2012 2011
Number of shares basic 1 January Effect of own shares held Effect of undelivered ASDI shares Effect of new shares issued Weighted number of basic shares for the year
576,002,613 (980,275) 575,022,338
576,002,613 (1,177,321) 10,275,089 585,100,381
ASDI The Allotted Share Delivery Instrument (ASDI) represented HEINEKENs obligation to deliver shares to FEMSA, either through issuance and/or purchasing of its own shares in the open market, which was concluded in 2011. EPS in 2011 was impacted by ASDI as in the formula calculating EPS the net profit is divided by the weighted average number of ordinary shares. In this weighted average number of ordinary shares, the weighted average of outstanding ASDI is included. This means that the ASDI has led to a lower basic EPS until all shares had been repurchased in 2011. Diluted earnings per share The calculation of diluted earnings per share as at 31 December 2012 is based on the profit attributable to ordinary shareholders of the Company (net profit) of EUR2,949 million (2011: EUR1,430 million) and a weighted average number of ordinary shares basic outstanding after adjustment for the effects of all dilutive potential ordinary shares of 576,002,613 (2011: 586,277,702). Diluted earnings per share for the year amounted to EUR5.12 (2011: EUR2.44). Weighted average number of shares diluted
2012 2011
Weighted number of basic shares for the year Effect of own shares held Weighted average diluted shares for the year
575,022,338 980,275 576,002,613
585,100,381 1,177,321 586,277,702
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24. Income tax on other comprehensive income

2012 In millions of EUR Amount before tax Tax Amount net of tax Amount before tax Tax 2011 Amount net of tax
Other comprehensive income Foreign currency translation differences for foreign operations Effective portion of changes in fair value of cash flow hedge Effective portion of cash flow hedges transferred to profit or loss Ineffective portion of cash flow hedges transferred to profit or loss Net change in fair value available-for-sale investments Net change in fair value available-for-sale investments transferred to profit or loss Actuarial gains and losses Share of other comprehensive income of associates/joint ventures Total other comprehensive income
67 16 57 203 (192) (562) (1) (412)
(22) (2) (16) (68) 44 123 59
45 14 41 135 (148) (439) (1) (353)
(504) (31) (14) 71 (1) (109) (5) (593)
11 10 3 16 40
(493) (21) (11) 71 (1) (93) (5) (553)
The difference between the income tax on other comprehensive income and the deferred tax reported in equity (note 18) can be explained by current tax on other comprehensive income. 25. Loans and borrowings This note provides information about the contractual terms of HEINEKENs interest-bearing loans and borrowings. For more information about HEINEKENs exposure to interest rate risk and foreign currency risk, see note 32. Non-current liabilities
Secured bank loans Unsecured bank loans Unsecured bond issues Finance lease liabilities Other non-current interest-bearing liabilities Non-current interest-bearing liabilities Non-current derivatives Non-current non-interest-bearing liabilities
26
28 1,221 8,206 22 1,828 11,305 111 21 11,437
37 3,607 2,493 33 1,825 7,995 177 27 8,199
Current interest-bearing liabilities

Current portion of secured bank loans Current portion of unsecured bank loans Current portion of unsecured bonds issues Current portion of finance 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
26
21
13 740 600 16 12 1,381 482 1,863 191 2,054
13 329 6 184 532 449 981 207 1,188
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Overview
Other information
Net interest-bearing debt position

Non-current interest-bearing liabilities Current portion of non-current interest-bearing liabilities Deposits from third parties (mainly employee loans) Bank overdrafts Cash, cash equivalents and current other investments Net interest-bearing debt position 21
11,305 1,381 482 13,168 191 13,359 (1,048) 12,311
7,995 532 449 8,976 207 9,183 (828) 8,355
Non-current liabilities
Other non-current interestbearing liabilities Non-current noninterestbearing liabilities
In millions of EUR
Secured bank loans
Unsecured bank loans
Unsecured bond issues
Finance lease liabilities
Non-current derivatives
Total
Balance as at 1 January 2012 Consolidation changes Effect of movements in exchange rates Transfers to current liabilities Charge to/(from) equity i/r derivatives Proceeds Repayments Other Balance as at 31 December 2012
37 (1) (11) 6 (3) 28
3,607 11 7 (1,020) 517 (1,895) (6) 1,221
2,493 228 (7) (600) 6,112 (20) 8,206
33 1 (12) 22
1,825 (21) 104 (62) (18) 1,828
177 6 32 (29) (68) (7) 111
27 1 1 3 1 (12) 21
8,199 241 (15) (1,611) (29) 6,742 (2,027) (63) 11,437
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25. Loans and borrowings continued Terms and debt repayment schedule Terms and conditions of outstanding non-current and current loans and borrowings were as follows:
Nominal interest rate % Carrying amount 2012 Carrying amount 2011
In millions of EUR
Category
Currency
Repayment
Face value 2012
Face value 2011
Secured bank loans Secured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans 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 issues
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Bank facilities Various 2008 Syndicated Bank Facility Bank Facility German Schuldschein notes German Schuldschein notes German Schuldschein notes 2008 Syndicated Bank Facility Bank Facilities 2011 Syndicated Bank Facility 2011 Syndicated Bank Facility 2011 Syndicated Bank Facility Bank Facilities Bank Facilities Bank facilities Various Issue under EMTN programme Eurobond on Luxembourg Stock Exchange 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 Issue under 144A/RegS Issue under 144A/RegS Issue under 144A/RegS n/a
GBP various EUR EUR EUR EUR EUR GBP PLN USD GBP EUR USD MXN NGN various GBP EUR EUR EUR EUR EUR EUR EUR SGD USD USD USD USD USD various
1.8 various 0.8 5.1 1.0-6.2 1.0-6.0 1.0-6.0 1.2 5.2-5.5 0.8 0.9 0.6 0.7 4.9 12.5 various 7.3 5.0 7.1 4.6 2.5 2.1 3.5 2.9 1.0-4.0 0.8 1.4 3.4 2.8 4.0 various
2016 various 2013 2016 2016 2013 2014 2013 2013-2014 2017 2017 2017 2013 2013 2013-2016 various 2015 2013 2014 2016 2019 2020 2024 2025 2014-2022 2015 2017 2022 2023 2042 various
13 28 198 207 111 102 207 291 81 196 180 30 36 276 45 488 600 1,001 398 841 995 496 740 220 377 941 563 753 369 24
13 28 200 207 111 102 207 294 81 196 180 30 36 276 45 490 600 1,000 400 850 1,000 500 750 220 379 947 568 758 379 24
17 33 1,305 329 111 102 207 287 72 450 422 107 93 183 228 40 476 599 1,000 398 20
17 33 1,313 329 111 102 207 287 72 450 422 107 93 176 228 40 479 600 1,000 400 20
Overview
Other information
In millions of EUR
Category
Currency
Nominal interest rate %
Repayment
Carrying amount 2012
Face value 2012
Face value 2011
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
2010 US private placement 2002 S&N US private placement 2005 S&N US private placement 2008 US private placement 2011 US private placement 2008 US private placement various n/a n/a
USD USD USD USD USD EUR various various various
4.6 5.6 5.4 5.9-6.3 2.8 7.3 various various various
2018 2014 2015 2015-2018 2017 2016 various various various
548 491 248 335 68 31 120 482 38 13,168
549 455 227 336 69 31 120 482 38 13,178
559 632 258 341 69 30 120 449 39 8,976
561 580 232 342 70 30 120 449 39 8,909
As at 31 December 2012 an amount of EUR376 million was drawn on the existing revolving credit facility of EUR2 billion. This revolving credit facility matures in 2017. Financial structure For the first time in the Companys 148 year history, HEINEKEN was assigned investment grade credit ratings in 2012 by the worlds two leading credit agencies, Moodys Investor Service and Standard & Poors. Both long-term credit ratings, were solid Baa1 and BBB+, respectively and both have a stable outlook per the date of this Annual Report. New Financing On 19 March 2012, HEINEKEN issued EUR1.35 billion of Notes under its EMTN Programme comprising EUR850 million of 7-year Notes with a coupon of 2.5 per cent and EUR500 million of 12-year Notes with a coupon of 3.5 per cent. On 3 April 2012, HEINEKEN issued USD750 million of 10-year 144A/ RegS US Notes with a coupon of 3.4 per cent. On 2 August 2012, HEINEKEN issued EUR1.75 billion of Notes under its EMTN Programme, consisting of 8-year Notes for a principal amount of EUR1 billion with a coupon of 2.125 per cent and 13-year Notes for a principal amount of EUR750 million with a coupon of 2.875 per cent. On 3 October 2012, HEINEKEN successfully priced 144A/RegS US Notes for a principal amount of USD3.25 billion. This comprised USD500 million of 3-year Notes at a coupon of 0.8 per cent, USD1.25 billion of 5-year Notes at a coupon of 1.4 per cent, USD1 billion of 10.5-year Notes at a coupon of 2.75 per cent and USD500 million of 30-year Notes at a coupon of 4.0 per cent. The proceeds of the Notes have been mainly used for the financing of the acquisition of APB and APIPL and the repayment of debt facilities. The issues have enabled HEINEKEN to further improve the currency and maturity profile of its long-term debt. The EMTN Programme and the notes issued thereunder are listed on the Luxembourg Stock Exchange. HEINEKEN still has a capacity of EUR5 billion under this programme. HEINEKEN is in the process of updating the programme. Incurrence covenant HEINEKEN has an incurrence covenant in some of its financing facilities. This incurrence covenant is calculated by dividing net debt (calculated in accordance with the consolidation method of the 2007 Annual Accounts) by EBITDA (beia) (also calculated in accordance with the consolidation method of the 2007 Annual Accounts and including the pro-forma full-year EBITDA of any acquisitions made in 2012). As at 31 December 2012 this ratio was 2.8 (2011: 2.1). If the ratio would be beyond a level of 3.5, the incurrence covenant would prevent us from conducting further significant debt financed acquisitions.
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26. Finance lease liabilities Finance lease liabilities are payable as follows:
Present value of minimum lease payments 2012 Present value of minimum lease payments 2011
In millions of EUR
Future minimum lease payments 2012
Interest 2012
Future minimum lease payments 2011
Interest 2011
Less than one year Between one and five years More than five years
16 21 2 39
(1) (1)
16 20 2 38
7 27 7 41
(1) (1) (2)
6 26 7 39
27. Non-GAAP measures In the internal management reports HEINEKEN measures its performance primarily based on EBIT and EBIT (beia), these are non-GAAP measures not calculated in accordance with IFRS. A similar non-GAAP adjustment can be made to the IFRS profit or loss as defined in IAS 1 paragraph 7 being the total of income less expense. Exceptional items are defined 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. The table below presents the relationship with IFRS measures, the results from operating activities and profit and HEINEKEN non-GAAP measures being EBIT, EBIT (beia) and profit (beia) for the financial year 2012. HEINEKEN updated its non-GAAP measure definition to properly present the future impact of intangibles recognised in the APIPL/APB acquisition. Two specific types of contract based intangible assets (beer licences and reacquired rights), that are similar to brands and customer relations, were added and HEINEKEN now refers to this group as acquisition related intangible assets. The update of the definition has no impact on prior years.
In millions of EUR 2012* 2011*
Results from operating activities Share of profit of associates and joint ventures and impairments thereof (net of income tax) HEINEKEN EBIT Exceptional items and amortisation of acquisition related intangible assets included in EBIT HEINEKEN EBIT (beia) Profit attributable to equity holders of the Company Exceptional items and amortisation of acquisition related intangible assets included in EBIT Exceptional items included in finance costs Exceptional items included in tax expense HEINEKEN net profit beia
* unaudited
3,691 213 3,904 (992) 2,912 2,949 (992) (206) (55) 1,696
2,215 240 2,455 242 2,697 1,430 242 (14) (74) 1,584
The 2012 exceptional items included in EBIT contain the amortisation of acquisition related intangibles for EUR198 million (2011: EUR170 million). Additional exceptional items included in EBIT relating to the APIPL/APB acquisition are the gain on PHEI for EUR1,486 million, the reversal of the inventory fair value adjustment in cost of goods sold for EUR76 million and acquisition related costs of EUR28 million. The remainder of EUR192 million primarily relates to restructuring activities in wholesale in Western Europe for EUR97 million, impairment of assets for EUR37 million, HEINEKENs share in the write-off of deferred tax assets in an associate for EUR36 million and adjustments to an acquisition of EUR20 million outside the provisional period. Exceptional items in other net financing costs contain a pre-tax gain of EUR175 million for the sale of a minority stake in a brewery in the Dominican Republic, a book gain of the existing stake in BraNa of EUR20 million and fair value changes of interest rate swaps of Scottish & Newcastle for EUR11 million that do not qualify for hedge accounting.
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Overview
Other information
The exceptional items in the tax expense are EUR53 million (2011: EUR47 million) related to acquisition related intangibles and the remainder of EUR2 million represents the net impact of other exceptional items included in EBIT and finance cost. EBIT and EBIT (beia) are not financial measures calculated in accordance with IFRS. The presentation on these financial measures may not be comparable to similarly titled measures reported by other companies due to differences in the ways the measures are calculated. 28. Employee benefits
Present value of unfunded obligations Present value of funded obligations Total present value of obligations Fair value of defined benefit plan assets Present value of net obligations Asset ceiling items Recognised liability for defined benefit obligations Other long-term employee benefits
113 7,788 7,901 (6,401) 1,500 1 1,501 131 1,632
96 6,804 6,900 (5,860) 1,040 14 1,054 120 1,174
Defined benefit plan assets comprise:

Equity securities Government bonds Properties and real estate Other plan assets
2,867 2,726 429 379 6,401
2,520 2,534 410 396 5,860
The primary goal of the Heineken pension funds is to monitor the mix of debt and equity securities in its investment portfolio based on market expectations. Material investments within the portfolio are managed on an individual basis. Liability for defined benefit obligations HEINEKEN makes contributions to a number of defined benefit plans that provide pension benefits for employees upon retirement in a number of countries being mainly the Netherlands and the UK (82 per cent of the total DBO). Other countries with a defined benefit plan are: Ireland, Greece, Austria, Italy, France, Spain, Mexico, Belgium, Switzerland, Portugal and Nigeria. In other countries the pension plans are defined contribution plans and/or similar arrangements for employees. In Ireland the defined benefit scheme for employees (actives) was closed in 2012 and was replaced by a defined contribution scheme. Other long-term employee benefits mainly relate to long-term bonus plans, termination benefits, medical plans and jubilee benefits.
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28. Employee benefits continued Movements in the present value of the defined benefit obligations
Defined benefit obligations as at 1 January Changes in consolidation and reclassification Effect of movements in exchange rates Benefits paid Employee contributions Current and past service costs and interest on obligation Effect of any curtailment or settlement Actuarial (gains)/losses in other comprehensive income Defined benefit obligations as at 31 December
6,900 (1) 99 (326) 26 391 (41) 853 7,901
6,643 75 (307) 24 406 (35) 94 6,900
Movements in the present value of defined benefit plan assets

Fair value of defined benefit plan assets as at 1 January Changes in consolidation and reclassification Effect of movements in exchange rates Contributions paid into the plan Benefits paid Expected return on defined benefit plan assets Actuarial gains/(losses) in other comprehensive income Fair value of defined benefit plan assets as at 31 December Actual return on defined benefit plan assets
5,860 (1) 73 182 (326) 322 291 6,401 610
5,646 76 145 (307) 315 (15) 5,860 307
Expense recognised in profit or loss

Current service costs Interest on obligation Expected return on defined benefit plan assets Past service costs Effect of any curtailment or settlement 10
63 330 (322) (2) (41) 28
71 340 (315) (5) (35) 56
Actuarial gains and losses recognised in other comprehensive income

Amount accumulated in retained earnings at 1 January Recognised during the year Amount accumulated in retained earnings at 31 December
519 562 1,081
410 109 519
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Overview
Other information
Principal actuarial assumptions as at the balance sheet date The defined benefit plans in the Netherlands and the UK cover 87.4 per cent of the present value of the defined benefit plan assets (2011: 87.2 per cent), 82.2 per cent of the present value of the defined benefit obligations (2011: 82.8 per cent) and 60.1 per cent of the present value of net obligations (2011: 57.8 per cent) as at 31 December 2012. For the Netherlands and the UK the following actuarial assumptions apply as at 31 December:
The Netherlands 2012 2011 2012 UK* 2011
Discount rate as at 31 December Expected return on defined benefit plan assets as at 1 January Future salary increases Future pension increases Medical cost trend rate
* The UK plan closed for future accruals leading to certain assumptions being equal to zero.
3.0 5.5 2.0 1.0
4.6 5.5 3.0 1.0
4.4 6.1 2.9
4.7 6.2 3.0
For the other defined benefit plans the following actuarial assumptions apply at 31 December:
Other Western, Central and Eastern Europe 2012 2011 2012 Africa and the Middle East 2012 2011
The Americas 2011
Discount rate as at 31 December Expected return on defined benefit plan assets as at 1 January Future salary increases Future pension increases Medical cost trend rate
2.0-3.2 2.4-4.9 1.0-10.0 1.0-2.5 3.4-4.5
2.9-4.8 3.3-7.3 1.0-10.0 1.0-2.1 3.5
6.7 6.7 3.8 2.8 5.1
7.6-10.7 7.6 3.8 2.9 5.1
14.0 10.8 10.0
13.0 12.0
Assumptions regarding future mortality rates are based on published statistics and mortality tables. For the Netherlands the rates are obtained from the AG-Prognosetafel 2012-2062, fully generational. Correction factors from TowersWatson are applied on these. For the UK the rates are obtained from the ContinuousContinuous Mortality Investigation 2012 projection model. The overall expected long-term rate of return on assets is 5.6 per cent (2011: 5.5 per cent), which is based on the asset mix and the expected rate of return on each major asset class, as managed by the pension funds. Assumed healthcare cost trend rates have no effect on the amounts recognised in profit or loss. A one percentage point change in assumed healthcare cost trend rates would not have any effect on profit or loss neither on the statement of financial position as at 31 December 2012. Based on the tri-annual review finalised in early 2010, HEINEKEN has agreed a 12-year plan aiming to fund the recovery of the Scottish & Newcastle Pension Plan through additional Company contributions. These could total GBP504 million of which GBP65 million has been paid to December 2012. As at 31 December 2012 the IAS 19 present value of the net obligations of the Scottish & Newcastle Pension Plan represents a GBP331 million (EUR405 million) deficit. 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 review of the funding position and the recovery plan commenced in October 2012 and is expected to be finalised during 2013. The Group expects the 2013 contributions to be paid for the defined benefit plan to be in line with 2012.
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28. Employee benefits continued Historical information

In millions of EUR 2012 2011 2010 2009 2008
Present value of the defined benefit obligation Fair value of defined benefit plan assets Deficit in the plan Experience adjustments arising on plan liabilities, losses/(gains) Experience adjustments arising on defined benefit plan assets, (losses)/gains
7,901 (6,401) 1,500 (170) 291
6,900 (5,860) 1,040 (30) (15)
6,643 (5,646) 997 (24) 320
5,936 (4,858) 1,078 (116) 313
4,963 (4,231) 732 71 (817)
29. Share-based payments Long-Term Variable Award As from 1 January 2005 HEINEKEN established a performance-based share plan (Long-Term Variable award; LTV) for the Executive Board. As from 1 January 2006 a similar plan was established for senior management. Under this LTV share rights are awarded to incumbents on an annual basis. The vesting of these rights is subject to the performance of Heineken N.V. on specific performance conditions over a three year period. The performance conditions for LTV 2010-2012, LTV 2011-2013 and LTV 2012-2014 are the same for the Executive Board and senior management and comprise solely of internal financial measures, being Organic Gross Profit beia growth, Organic EBIT beia growth, Earnings Per Share (EPS) beia growth and Free Operating Cash Flow. At target performance, 100 per cent of the awarded share rights vest. At threshold performance, 50 per cent of the awarded share rights vest. As from LTV 2011-2013 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 and Brazil, and 175 per cent vest for all other senior managers. For LTV 2010-2012 the maximum vesting is 150 per cent of target vesting for all participants. The performance period for share rights granted in 2010 was from 1 January 2010 to 31 December 2012. The performance period for share rights granted in 2011 is from 1 January 2011 to 31 December 2013. The performance period for the share rights granted in 2012 is from 1 January 2012 to 31 December 2014. The vesting date for the Executive Board is within five business days, and for senior management the latest of 1 April and 20 business days after the publication of the annual results of 2012, 2013 and 2014 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 by the Executive Board and senior management will be a net number. The terms and conditions of the share rights granted are as follows:
Based on share price Contractual life of rights
Grant date/employees entitled
Number*
Vesting conditions
Share rights granted to Executive Board in 2010 Share rights granted to senior management in 2010 Share rights granted to Executive Board in 2011 Share rights granted to senior management in 2011 Share rights granted to Executive Board in 2012 Share rights granted to senior management in 2012
55,229 516,765 65,072 730,090 66,746 703,382
33.27 33.27 36.69 36.69 35.77 35.77
Continued service, 100% internal performance conditions Continued service, 100% internal performance conditions Continued service, 100% internal performance conditions Continued service, 100% internal performance conditions Continued service, 100% internal performance conditions Continued service, 100% internal performance conditions
3 years 3 years 3 years 3 years 3 years 3 years
* The number of shares is based on target performance.
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Overview
Other information
No vesting occurred under the 2009-2011 LTV of the Executive Board. A total of 615,967 (gross) shares vested under the 2009-2011 LTV of senior management. Based on internal performance, it is expected that approximately 328,346 shares of the 2010-2012 LTV will vest in 2013 for senior management and 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:
Weighted average share price 2012 Number of share rights 2012 Weighted average share price 2011 Number of share rights 2011
Outstanding as at 1 January Granted during the year Forfeited during the year Vested during the year Performance adjustment Outstanding as at 31 December
29.14 35.77 35.44 21.90 35.42
1,546,514 770,128 (99,391) (615,967) (243,458) 1,357,826
30.11 36.69 31.73 44.22 29.14
1,575,880 795,162 (119,856) (234,485) (470,187) 1,546,514
Under the extraordinary share plans 16,700 shares were granted and 2,192 (gross) shares vested. These extraordinary grants only have a service condition and vest between 1 and 5 years. The expenses relating to these expected additional grants are recognised in profit or loss during the vesting period. Expenses recognised in 2012 are EUR1.1 million (2011: EUR0.4 million). Personnel expenses
Share rights granted in 2009 Share rights granted in 2010 Share rights granted in 2011 Share rights granted in 2012 Total expense recognised as personnel expenses
10
5 2 5 12
5 1 5 11
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30. Provisions
In millions of EUR Note Restructuring Onerous contracts Other Total
Balance as at 1 January 2012 Changes in consolidation Provisions made during the year Provisions used during the year Provisions reversed during the year Effect of movements in exchange rates Unwinding of discounts Balance as at 31 December 2012 Non-current Current
151 1 50 (57) (11) 4 138 86 52 138
42 6 (10) (4) 1 35 24 11 35
396 2 70 (29) (58) (16) 9 374 308 66 374
589 3 126 (96) (73) (15) 13 547 418 129 547
Restructuring The provision for restructuring of EUR138 million mainly relates to restructuring programmes in Spain, the Netherlands and Italy. Other provisions Included are, amongst others, surety and guarantees provided EUR23 million (2011: EUR27 million) and litigation and claims EUR202 million (2011: EUR207 million). 31. Trade and other payables
Trade payables Returnable packaging deposits Taxation and social security contributions Dividend Interest Derivatives Other payables Accruals and deferred income 32
2,244 512 751 47 204 53 299 1,163 5,273
2,009 490 665 33 100 164 243 920 4,624
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Overview
Other information
32. Financial risk management and financial instruments Overview HEINEKEN has exposure to the following risks from its use of financial instruments, as they arise in the normal course of HEINEKENs business: Credit risk Liquidity risk Market risk. This note presents information about HEINEKENs exposure to each of the above risks, and it summarises HEINEKENs 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 financial statements. Risk management framework The Executive Board, under the supervision of the Supervisory Board, has overall responsibility and sets rules for HEINEKENs risk management and control systems. They are reviewed regularly to reflect changes in market conditions and the Groups activities. The Executive Board oversees the adequacy and functioning of the entire system of risk management and internal control, assisted by Group departments. The Global Treasury function focuses primarily on the management of financial risk and financial 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 the Group policy that no speculative transactions are entered into. Credit risk Credit risk is the risk of financial loss to HEINEKEN if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from HEINEKENs receivables from customers and investment securities. The economic crisis has impacted our regular business activities and performance, in particular in consumer spending and solvency. However, the business impact differed across the regions and operations. Local management has assessed the risk exposure following Group instructions and is taking action to mitigate the higher than usual risks. Intensified and continuous focus is being given in the areas of customers (managing trade receivables and loans) and suppliers (financial position of critical suppliers). As at the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial instrument, including derivative financial instruments, in the consolidated statement of financial position. Loans to customers HEINEKENs exposure to credit risk is mainly influenced by the individual characteristics of each customer. HEINEKENs held-to-maturity investments includes loans to customers, issued based on a loan contract. Loans to customers are ideally secured by, amongst 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 profile 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 specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar customers in respect of losses that have been incurred but not yet identified. 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 sureties (guarantees) to the third party for the risk of default by the customer.
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32. Financial risk management and financial instruments continued Trade and other receivables HEINEKENs 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 HEINEKENs standard payment and delivery terms and conditions are offered. HEINEKENs 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. As a result of the deteriorating economic circumstances since 2008, certain purchase limits have been redefined. Customers that fail to meet HEINEKENs benchmark creditworthiness may transact with HEINEKEN only on a prepayment basis. In monitoring customer credit risk, customers are, on a country base, 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 profile, maturity and existence of previous financial difficulties. 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 specific and on consolidated level diverse, as such 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 specific loss component and a collective loss component. 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 a credit rating of at least single A or equivalent for short-term transactions and AA- for long-term transactions. HEINEKEN actively monitors these credit ratings. Guarantees HEINEKENs policy is to avoid issuing guarantees where possible unless this leads to substantial benefits for the Group. 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.
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Overview
Other information
Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Loans and advances to customers Indemnification receivable Other long-term receivables Held-to-maturity investments Available-for-sale investments Non-current derivatives Investments held for trading Trade and other receivables, excluding current derivatives Current derivatives Cash and cash equivalents
17 17 17 17 17 17 17 20 20 21
368 136 148 4 327 116 11 2,500 37 1,037 4,684
384 156 178 5 264 142 14 2,223 37 813 4,216
The maximum exposure to credit risk for trade and other receivables (excluding derivatives) at the reporting date by geographic region was:
Western Europe Central and Eastern Europe The Americas Africa and the Middle East Asia Pacific Head Office/eliminations
978 502 225 448 214 133 2,500
1,038 448 405 166 19 147 2,223
Impairment losses The ageing of trade and other receivables (excluding derivatives) at the reporting date was:
In millions of EUR Gross 2012 Impairment 2012 Gross 2011 Impairment 2011
Not past due Past due 0 30 days Past due 31 120 days More than 120 days
2,052 323 213 373 2,961
(49) (14) (67) (331) (461)
1,909 233 210 349 2,701
(67) (17) (83) (311) (478)
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32. Financial risk management and financial instruments continued The movement in the allowance for impairment in respect of trade and other receivables (excluding derivatives) during the year was as follows:
Balance as at 1 January Changes in consolidation Impairment loss recognised Allowance used Allowance released Effect of movements in exchange rates Balance as at 31 December
478 1 104 (60) (66) 4 461
446 104 (17) (47) (8) 478
The movement in the allowance for impairment in respect of loans during the year was as follows:
Balance as at 1 January Changes in consolidation Impairment loss recognised Allowance used Allowance released Effect of movements in exchange rates Balance as at 31 December
170 38 (53) 3 158
171 10 (3) (9) 1 170
Impairment losses recognised for trade and other receivables (excluding derivatives) and loans are part of the other non-cash items in the consolidated statement of cash flows. The income statement impact of EUR15 million (2011: EUR1 million) in respect of loans and the income statement impact of EUR38 million (2011: EUR57 million) in respect of trade receivables (excluding 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 satisfied that no recovery of the amount owing is possible, at that point the amount considered irrecoverable is written off against the financial asset. Liquidity risk Liquidity risk is the risk that HEINEKEN will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. HEINEKENs approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to HEINEKENs reputation. Recent times have proven the credit markets situation could be such that it is difficult to generate capital to finance long-term growth of the Company. Although currently the situation is more stable, the Company has a clear focus on ensuring sufficient access to capital markets to finance long-term growth and to refinance maturing debt obligations. Financing strategies are under continuous evaluation. In addition, the Company focuses on a further fine-tuning of the maturity profile of its long-term debts with its forecasted operating cash flows. Strong cost and cash management and controls over investment proposals are in place to ensure effective and efficient allocation of financial resources.
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Overview
Other information
Contractual maturities The following are the contractual maturities of non-derivative financial liabilities and derivative financial assets and liabilities, including interest payments and excluding the impact of netting agreements:
2012 In millions of EUR Carrying amount Contractual cash flows Less than 1 year 1-2 years 2-5 years More than 5 years
Financial liabilities Interest-bearing liabilities Non-interest-bearing liabilities Trade and other payables, excluding interest dividends and derivatives Derivative financial 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
(13,360) (21) (4,969)
(15,900) (47) (4,969)
(2,683) (8) (4,969)
(2,277) (22)
(4,192) (13)
(6,748) (4)
12 10 (22) (11) (18,361)
46 7 (21) (17) (20,901)
33 4 (20) (16) (7,659)
(114) 3 (1) (1) (2,412)
85 (4,120)
42 (6,710)
The total carrying amount and contractual cash flows of derivatives are included in trade and other receivables (note 20), other investments (note 17) and trade and other payables (note 31) and non-current non-interest bearing liabilities (note 25).
2011 In millions of EUR Carrying amount Contractual cash flows Less than 1 year 1-2 years 2-5 years More than 5 years
Financial liabilities Interest-bearing liabilities Non-interest-bearing liabilities Trade and other payables, excluding interest, dividends and derivatives Derivative financial 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
(9,183) (27) (4,327)
(10,287) (20) (4,327)
(1,543) 7 (4,327)
(2,864) (16)
(4,794) (5)
(1,086) (6)
12 (46) (26) (102) (13,699)
9 (43) (26) (97) (14,791)
(42) (35) (22) (86) (6,048)
26 (8) (4) (10) (2,876)
(42) (1) (4,842)
67 (1,025)
The total carrying amount and contractual cash flows of derivatives are included in trade and other receivables (note 20), other investments (note 17), trade and other payables (note 31) and non-current non-interest-bearing liabilities (note 25).
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32. Financial risk management and financial instruments continued 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 affect HEINEKENs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilst optimising the return on risk. HEINEKEN uses derivatives in the ordinary course of business, and also incurs financial 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 effects of foreign currency fluctuations in profit or loss. Derivatives that can be used are interest rate swaps, forward rate agreements, caps and floors, 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 sales, purchases and borrowings 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, euro and British pound. In managing foreign currency risk, HEINEKEN aims to reduce the impact of short-term fluctuations on earnings. Over the longer term, however, permanent changes in foreign exchange rates would have an impact on profit. HEINEKEN hedges up to 90 per cent of its mainly intra-HEINEKEN US dollar cash flows on the basis of rolling cash flow forecasts in respect to forecasted sales and purchases. Cash flows in other foreign currencies are also hedged on the basis of rolling cash flow 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. The Company has a clear policy on hedging transactional exchange risks, which postpones the impact on financial 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 HEINEKENs policy to provide intra-HEINEKEN financing in the functional currency of subsidiaries where possible to prevent foreign currency exposure on subsidiary level. The resulting exposure at Group level is hedged by means of forward exchange contracts. Intra-HEINEKEN financing in foreign currencies is mainly in British pounds, US dollars, Swiss franc and Polish zloty. In some cases HEINEKEN elects to treat intra-HEINEKEN financing with a permanent character as equity and does not hedge the foreign currency exposure. The principal amounts of HEINEKENs British pound, Nigerian naira, Singapore dollar, Polish zloty and Mexican peso bank loans and bond issues are used to hedge local operations, which generate cash flows that have the same respective functional currencies. Corresponding interest on these borrowings is also denominated in currencies that match the cash flows 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.
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Overview
Other information
Exposure to foreign currency risk HEINEKENs transactional exposure to the British pound, 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.
2012 In millions EUR GBP USD EUR GBP 2011 USD
Financial Assets Trade and other receivables Cash and cash equivalents Intragroup assets Financial Liabilities Interest bearing borrowings 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 Profit or loss
12 72 10 (6) (1) (74) (298) (285) 71 (780) (994) (507) (1,501) 11
455 (858) (403) 10 (1) (394) 483 89 7 (1)
10 92 4,788 (6,285) (61) (33) (715) (2,204) 1,476 (1,360) (2,088) 1,216 (872) 36 (3)
14 52 4 (50) (61) (314) (355) 119 (442) (678) (851) (1,529) 15
1 60 455 (1,050) (534) 16 (518) 535 17
12 21 1,384 (3,082) (75) (34) (502) (2,276) 1,041 (723) (1,958) 1,161 (797) 14
Included in the US dollar amounts are intra-HEINEKEN cash flows. Within the net notional amount forward exchange contracts, the cross-currency interest rate swaps of HEINEKEN UK form the largest component. Sensitivity analysis A 10 per cent strengthening of the euro against the British pound and US dollar or, in case of the euro, a strengthening of the euro against all other currencies as at 31 December would have increased (decreased) equity and profit by the amounts shown above. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis as for 2011. A 10 per cent weakening of the euro against the British pound and US dollar 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 effect 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 fluctuations on earnings. Over the longer term, however, permanent changes in interest rates would have an impact on profit. HEINEKEN opts for a mix of fixed and variable interest rates in its financing operations, combined with the use of interest rate instruments. Currently HEINEKENs interest rate position is more weighted towards fixed rather than floating. Interest rate instruments that can be used are interest rate swaps, forward rate agreements, caps and floors. Swap maturity follows the maturity of the related loans and borrowings which have swap rates for the fixed leg ranging from 1.0 to 8.1 per cent (2011: from 1.0 to 8.1 per cent).
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32. Financial risk management and financial instruments continued Interest rate risk Profile At the reporting date the interest rate profile of HEINEKENs interest-bearing financial instruments was as follows:
Fixed rate instruments Financial assets Financial liabilities Interest rate swaps floating to fixed
97 (11,133) (9) (11,045)
95 (5,253) (1,051) (6,209)
Variable rate instruments Financial assets Financial liabilities Interest rate swaps fixed to floating
1,430 (2,054) 9 (615)
431 (3,177) 1,051 (1,695)
Fair value sensitivity analysis for fixed rate instruments During 2012, HEINEKEN opted to apply fair value hedge accounting on certain fixed rate financial liabilities. The fair value movements on these instruments are recognised in profit or loss. The change in fair value on these instruments was EUR(30) million in 2012 (2011: EUR(30) million), which was offset by the change in fair value of the hedge accounting instruments, which was EUR18 million (2011: EUR36 million). A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below (after tax).
Profit or loss In millions of EUR 100 bp increase 100 bp decrease 100 bp increase Equity 100 bp decrease
31 December 2012 Instruments designated at fair value Interest rate swaps Fair value sensitivity (net) 31 December 2011 Instruments designated at fair value Interest rate swaps Fair value sensitivity (net)
11 (6) 5
(11) 6 (5)
20 (9) 11
(20) 9 (11)
29 (20) 9
(29) 21 (8)
29 (2) 27
(29) 2 (27)
As part of the acquisition of Scottish & Newcastle in 2008, HEINEKEN took over a portfolio of euro floating-to-fixed interest rate swaps of which currently EUR400 million is still outstanding. Although interest rate risk is hedged economically, it is not possible to apply hedge accounting on this portfolio. A movement in interest rates will therefore lead to a fair value movement in the profit or loss under the other net financing income/(expenses). Any related non-cash income or expenses in our profit or loss are expected to reverse over time.
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Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates constantly applied during the reporting period would have increased (decreased) equity and profit 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. The analysis is performed on the same basis as for 2011.
Profit or loss In millions of EUR 100 bp increase 100 bp decrease 100 bp increase Equity 100 bp decrease
31 December 2012 Variable rate instruments Net interest rate swaps fixed to floating Cash flow sensitivity (net) 31 December 2011 Variable rate instruments Net interest rate swaps fixed to floating Cash flow sensitivity (net)
(4) (4)
4 4
(4) (4)
4 4
(20) 8 (12)
20 (8) 12
(20) 8 (12)
20 (8) 12
Commodity price risk Commodity price risk is the risk that changes in commodity prices will affect HEINEKENs income. The objective of commodity price risk management is to manage and control commodity risk exposures within acceptable parameters, whilst 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 fixed prices in supplier contracts with various contract durations. So far, commodity hedging with financial counterparties by the Company is limited to the incidental sale of surplus CO2 emission rights, aluminium hedging and, to a limited extent, gas hedging, which are done in accordance with risk policies. HEINEKEN does not enter into commodity contracts other than to meet HEINEKENs expected usage and sale requirements. As at 31 December 2012, the market value of commodity swaps was EUR(22) million (2011: EUR(25) million). Cash flow hedges The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges, are expected to occur.
2012 In millions of EUR Carrying amount Expected cash flows Less than 1 year 1-2 years 2-5 years More than 5 years
Interest rate swaps: Assets Liabilities Forward exchange contracts: Assets Liabilities Commodity derivatives: Assets Liabilities
96 (26) 28 (16) 1 (23) 60
1,752 (1,632) 1,296 (1,288) 1 (23) 106
85 (89) 1,150 (1,145) 1 (22) (20)
82 (79) 146 (143) (1) 5
696 (617) 79
889 (847) 42
The periods in which the cash flows associated with forward exchange contracts that are cash flow hedges are expected to impact profit or loss is on average two months earlier than the occurrence of the cash flows as in the above table.
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32. Financial risk management and financial instruments continued

Interest rate swaps: Assets Liabilities Forward exchange contracts: Assets Liabilities Commodity derivatives: Assets Liabilities
170 (48) 15 (49) 11 (36) 63
1,904 (1,786) 1,078 (1,111) 11 (36) 60
120 (136) 871 (896) 11 (32) (62)
107 (108) 207 (215) (4) (13)
726 (658) 68
951 (884) 67
Fair value hedges/net investment hedges The following table indicates the periods in which the cash flows associated with derivatives that are fair value hedges or net investment hedges are expected to occur.
Interest rate swaps: Assets Liabilities Forward exchange contracts: Assets Liabilities
19 (77) (2) (60)
780 (849) 181 (183) (71)
48 (6) 181 (183) 40
492 (609) (117)
240 (234) 6
Interest rate swaps: Assets Liabilities Forward exchange contracts: Assets Liabilities
27 (136) (12) (121)
967 (1,059) 177 (187) (102)
171 (180) 177 (187) (19)
49 (22) 27
747 (857) (110)
Capital management There were no major changes in HEINEKENs approach to capital management during the year. The Executive Boards policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of business and acquisitions. Capital is herein defined 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 under the Long and Short-Term Incentive Plan and the extraordinary share plan as further explained in note 29.
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Overview
Other information
Fair values The fair values of financial assets and liabilities that differ from the carrying amounts shown in the statement of financial position are as follows:
Carrying amount 2012 Carrying amount 2011
In millions of EUR
Fair value 2012
Fair value 2011
Bank loans Unsecured bond issues Finance lease liabilities Other interest-bearing liabilities
(2,002) (8,806) (38) (1,840)
(2,002) (9,126) (38) (1,840)
(3,986) (2,493) (39) (2,009)
(4,017) (2,727) (39) (2,039)
Basis for determining fair values The significant methods and assumptions used in estimating the fair values of financial instruments reflected in the table above are discussed in note 4. Fair value hierarchy IFRS 7 requires disclosure of fair value measurements 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 2012 Level 1 Level 2 Level 3
Available-for-sale investments Non-current derivative assets Current derivative assets Investments held for trading
193 11 204
116 37 153 111 53 164
134 134
Non-current derivative liabilities Current derivative liabilities
31 December 2011
Level 1
Level 2
Level 3
Available-for-sale investments Non-current derivative assets Current derivative assets Investments held for trading
81 14 95
142 37 179 177 164 341
183 183
Non-current derivative liabilities Current derivative liabilities
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32. Financial risk management and financial instruments continued

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
183 1 (50) 134
120 61 2 183
33. Off-balance sheet commitments

Less than 1 year More than 5 years
In millions of EUR
Total 2012
1-5 years
Total 2011
Lease & operational lease commitments Property, plant & equipment ordered Raw materials purchase contracts Other off-balance sheet obligations Off-balance sheet obligations Undrawn committed bank facilities
618 136 3,806 2,139 6,699 1,832
143 133 1,416 400 2,092 121
302 3 2,227 1,129 3,661 1,711
173 163 610 946
503 50 3,843 2,589 6,985 1,274
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 fixed or will be agreed based upon predefined price formulas. These contracts mainly relate to malt, bottles and cans. During the year ended 31 December 2012 EUR265 million (2011: EUR241 million) was recognised as an expense in profit or loss in respect of operating leases and rent. Other off-balance sheet obligations mainly include distribution, rental, service and sponsorship contracts. Committed bank facilities are credit facilities on which a commitment fee is paid as compensation for the banks requirement to reserve capital. For the details of these committed bank facilities see note 25. The bank is legally obliged to provide the facility under the terms and conditions of the agreement.
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34. Contingencies Netherlands On 19 December 2012 the European Court of Justice in Luxembourg confirmed the fine imposed on HEINEKEN for their participation in a cartel on the Dutch market from 1996 to 1999. This judgement is not subject to appeal. The fine was paid in 2007 and was treated as an expense in the 2007 Annual Report. Brazil As part of the acquisition of the beer operations of FEMSA, HEINEKEN also inherited existing legal proceedings with labour unions, tax authorities and other parties of its, now wholly-owned, subsidiaries Cervejarias Kaiser and Cervejarias Kaiser Nordeste (jointly, Heineken Brasil). The proceedings have arisen in the ordinary course of business and are common in the current economic and legal environment of Brazil. The proceedings have partly been provided for, see note 30. The contingent amount being claimed against Heineken Brasil resulting from such proceedings as at 31 December 2012 is EUR663 million. Such contingencies were classified by legal counsel as less than probable but more than remote of being settled against Heineken Brasil. However, HEINEKEN believes that the ultimate resolution of such legal proceedings will not have a material adverse effect on its consolidated financial position or result of operations. HEINEKEN does not expect any significant liability to arise from these contingencies. A significant part of the aforementioned contingencies (EUR367 million) are tax related and qualify for indemnification by FEMSA, see note 17. As is customary in Brazil, Heineken Brasil has been requested by the tax authorities to collateralise tax contingencies currently in litigation amounting to EUR292 million by either pledging fixed assets or entering into available lines of credit which cover such contingencies. Guarantees
Less than 1 year More than 5 years
In millions of EUR
Total 2012
1-5 years
Total 2011
Guarantees to banks for loans (to third parties) Other guarantees Guarantees
300 358 658
194 63 257
95 5 100
11 290 301
339 372 711
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.
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35. Related parties Identification of related parties HEINEKEN has a related party relationship with its associates and joint ventures (refer to note 16), Heineken Holding N.V., Heineken pension funds (refer to note 28), Fomento Econmico Mexicano, S.A.B. de C.V. (FEMSA), employees (refer to note 25) and with its key management personnel (Executive Board and the Supervisory Board). For our shareholder structure reference is made to the section Shareholder Information. Key management remuneration
Executive Board Supervisory Board Total
6.8 0.9 7.7
7.5 0.9 8.4
Executive Board The remuneration of the members of the Executive Board comprises of a fixed component and a variable component. The variable component is made up of a Short-Term Variable pay and a Long-Term Variable award. The Short-Term Variable pay is based on financial and operational measures and on individual leadership measures as set by the Supervisory Board. It is partly paid out in shares that are blocked for a period of five calendar years. After the five calendar years HEINEKEN will match the blocked shares 1:1 which we refer to as the matching share entitlement. For the Long-Term Variable award see note 29. The separate remuneration report is stated on page 60-66. As at 31 December 2012, J.F.M.L. van Boxmeer held 48,641 Company shares and D.R. Hooft Graafland 25,109. (2011: J.F.M.L. van Boxmeer 25,369 and D.R. Hooft Graafland 14,818 shares). D.R. Hooft Graafland held 3,052 shares of Heineken Holding N.V. as at 31 December 2012 (2011: 3,052 shares). Executive Board
Short-Term Variable Pay 2012 2011 Matching Share Entitlement** 2012 2011 Long-Term Variable award* 2012 2011
Fixed Salary In thousands of EUR 2012 2011
Pension Plan 2012 2011 2012
Total 2011*
J.F.M.L. van Boxmeer D.R. Hooft Graafland Total
1,050 650 1,700
1,050 650 1,700
1,361 602 1,963
1,764 780 2,544
681 301 982
882 390 1,272
912 477 1,389
669 355 1,024
496 318 814
590 399 989
4,500 2,348 6,848
4,955 2,574 7,529
* The remuneration reported as part of LTV is based on IFRS accounting policies and does not reflect the value of vested performance shares. ** T he matching share entitlement for 2011 is based on 2011 performance. The matching share entitlement for 2012 is based on 2012 performance. The matching share entitlement vests immediately and as such EUR1.0 million was recognised in the 2012 income statement.
The Dutch government has introduced a one-off additional tax levy of 16 per cent over 2012 taxable income, as a liability for the employer. This tax levy related to remuneration over 2012 for the Executive Board is EUR 754 (in thousands) and is not included in the table above.
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Supervisory Board The individual members of the Supervisory Board received the following remuneration:
In thousands of EUR 2012 2011
C.J.A. van Lede J.A. Fernndez Carbajal M. Das M.R. de Carvalho J.M. Hessels* J.M. de Jong A.M. Fentener van Vlissingen M.E. Minnick V.C.O.B.J. Navarre J.G. Astaburuaga Sanjins G.J. Wijers** Total
* Stepped down as at 19 April 2012. ** Appointed as at 19 April 2012.
160 85 85 135 23 80 80 70 75 75 52 920
160 85 85 135 75 80 80 70 75 75 920
In the Annual General Meeting of Shareholders held on 21 April 2011 it was resolved to increase the remuneration of our Supervisory Board. The fees initially established on 1 January 2006 were updated as per 1 January 2011 to reflect the increased size and global footprint of HEINEKEN and also to align to the market practice in Europe (excluding UK). M.R. de Carvalho held 8 shares of Heineken N.V. as at 31 December 2012 (2011: 8 shares). As at 31 December 2012 and 2011, the Supervisory Board members did not hold any of the Companys bonds or option rights. C.J.A. van Lede held 2,656 and M.R. de Carvalho held 8 ordinary shares of Heineken Holding N.V. as at 31 December 2012 (2011: C.J.A. van Lede 2,656 and M.R. de Carvalho 8 ordinary shares). Other related party transactions
Balance outstanding as at 31 December 2011 2012 2011
Transaction value In millions of EUR 2012
Sale of products, services and royalties To associates and joint ventures To FEMSA
107 649 756
98 572 670
31 114 145
35 77 112
Raw materials, consumables and services Goods for resale joint ventures Other expenses joint ventures Other expenses FEMSA
175 175
2 128 130
27 27
13 13
139
35. Related parties continued Heineken Holding N.V. In 2012, an amount of EUR694,065 (2011: EUR586,942) was paid to Heineken Holding N.V. for management services for the HEINEKEN Group. 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. FEMSA As consideration for HEINEKENs acquisition of the beer operations of Fomento Econmico 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. The total revenue amount related to these related-party relationships amounts to EUR649 million. 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 financial statements of the Company are included in the consolidated financial 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 marked with a below. Significant subsidiaries
Ownership interest Country of incorporation 2012 2011
Heineken Nederlands Beheer 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. Amstel Brouwerij B.V. Amstel Internationaal B.V. Vrumona B.V. Invebra Holland B.V. B.V. Beleggingsmaatschappij Limba Brand Bierbrouwerij B.V. Heineken CEE Holdings B.V. Brasinvest B.V. Heineken Beer Systems B.V. Heineken Asia Pacific B.V. Central Europe Beverages B.V. Mouterij Albert N.V. Ibecor S.A. N.V. Brouwerijen Alken-Maes Brasseries S.A. Heineken France S.A.S. Oy Hartwall Ab. Heineken Ireland Ltd.1 Heineken Italia S.p.A. Sociedade Central de Cervejas et Bebidas S.A.
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 Belgium Belgium Belgium France Finland Ireland Italy Portugal
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 99.9% 100% 100% 100% 100% 98.7%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 72% 100% 100% 99.9% 100% 100% 100% 100% 98.7%
140
Overview
Other information
Heineken Espaa S.A. Heineken Switzerland AG Heineken UK Ltd. Brau Union AG Brau Union sterreich AG FCJSC Heineken Breweries OJSC, Rechitsapivo Karlovacka Pivovara d.o.o. Heineken Cesk republika a.s. Athenian Brewery S.A. Heineken Hungria Sorgyrak Zrt. Grupa Zywiec S.A. Heineken Romania S.A. LLC Heineken Breweries United Serbian Breweries EUC LLC United Serbian Breweries Zajecarsko JSC Heineken Slovensko a.s. Commonwealth Brewery Ltd. Cervejarias Kaiser Brasil S.A. Brasserie Nationale d Haiti Brasserie Lorraine S.A. Cuauhtmoc Moctezuma Holding, S.A. de C.V. Fabricas Monterrey, S.A. de C.V. Silices de Veracruz, S.A. de C.V. Cervecerias Baru-Panama S.A. Windward & Leeward Brewery Ltd. Surinaamse Brouwerij N.V. Heineken USA Inc. Tango s.a.r.l. Brasseries et Limonaderies du Burundi Brarudi S.A. Brasseries, Limonaderies et Malteries Bralima S.A.R.L. Al Ahram Beverages Company S.A.E. Bedele Brewery Harar Brewery Brasserie Almaza S.A.L. Nigerian Breweries Plc. Consolidated Breweries Ltd. Brasseries de Bourbon S.A. Brasseries et Limonaderies du Rwanda Bralirwa S.A. Sierra Leone Brewery Ltd. Socit Nouvelle des Boissons Gazeuses S.A. (SNBG) Socit Nouvelle de Brasserie S.A. Sonobra Cambodia Brewery Ltd. Shanghai Asia Pacific Brewery Co. Ltd. Hainan Asia Pacific Brewery Co. Ltd. Guangzhou Asia Pacific Brewery Co. Ltd PT Multi Bintang Indonesia Tbk. Lao Asia Pacific Breweries Ltd. MCS Asia Pacific Brewery LLC.
Spain Switzerland United Kingdom Austria Austria Belarus Belarus Croatia Czech Republic Greece Hungary Poland Romania Russia Serbia Serbia Slovakia Bahamas Brazil Haiti Martinique Mexico Mexico Mexico Panama St Lucia Surinam United States Algeria Burundi D.R. Congo Egypt Ethiopia Ethiopia Lebanon Nigeria Nigeria Runion Rwanda Sierra Leone Tunisia Tunisia Cambodia China China China Indonesia Laos Mongolia
98.7% 100% 100% 100% 100% 100% 96.4% 100% 100% 98.8% 100% 61.9% 98.4% 100% 100% 73% 100% 75% 100% 94.8% 100% 100% 100% 100% 74.9% 72.7% 76.2% 100% 100% 59.3% 95.0% 99.9% 100% 100% 67.0% 54.1% 53.6% 85.7% 75.0% 83.1% 74.5% 49.9% 79.0% 99.3% 99.3% 99.3% 86.4% 67.1% 54.3%
98.7% 100% 100% 100% 100% 100% 96.2% 100% 100% 98.8% 100% 61.9% 98.4% 100% 72% 52.5% 100% 75% 100% 22.5% 100% 100% 100% 100% 74.9% 72.7% 76.2% 100% 100% 59.3% 95.0% 99.9% 100% 100% 67.0% 54.1% 50.5% 85.7% 75.0% 83.1% 74.5% 49.9% 33.5% 46.0% 46.0% 46.0% 40.6% 28.5% 23.1%
141
36. HEINEKEN entities continued

Grande Brasserie de Nouvelle Caldonie S.A. DB Breweries Ltd. DB South Island Brewery Ltd. South Pacific Brewery Ltd. Asia Pacific Investments Pte. Ltd. Asia Pacific Breweries Ltd. Asia Pacific Breweries (Singapore) Pte. Ltd. Solomon Breweries Ltd. Asia Pacific Breweries (Lanka) Ltd. Vietnam Brewery Ltd. Asia Pacific Breweries (Hanoi) Ltd. VBL Da Nang Co. Ltd. VBL Tien Giang Ltd. VBL Quang Nam Ltd
1
New Caldonia New Zealand New Zealand Papua New Guinea Singapore Singapore Singapore Solomon Islands Sri Lanka Vietnam Vietnam Vietnam Vietnam Vietnam
86.3% 98.7% 54.3% 75.4% 100% 98.7% 98.7% 96.4% 59.2% 59.2% 98.7% 59.2% 59.2% 47.4%
36.6% 41.9% 23.1% 31.8% 50% 41.9% 41.9% 40.9% 25.2% 25.2% 41.9% 25.2% 25.2% 20.1%
In accordance with Article 17 of the Republic of Ireland Companies (Amendment) Act 1986, the Company issued an irrevocable guarantee for the year ended 31 December 2012 and 2011 regarding the liabilities of Heineken Ireland Ltd., Heineken Ireland Sales Ltd., West Cork Bottling Ltd., Western Beverages Ltd., Beamish and Crawford Ltd. and Nash Beverages Ltd as referred to in Article 5(l) of the Republic of Ireland Companies (Amendment) Act 1986.
37. Subsequent events Share of stake in Kazakhstan On 21 December 2012 HEINEKEN announced its intentions to sell its 28 per cent stake in Efes Kazakhstan JSC FE to majority shareholders Efes Breweries International N.V. The transaction closed on 8 January 2013 and resulted in an estimated post tax book gain of EUR80 million. Sale of Jiangsu Dafuhao Breweries Co. Ltd On 9 January 2013 HEINEKENs Asian subsidiary that holds a 49 per cent stake in Jiangsu Dafuhao Breweries Co. Ltd entered into a conditional share transfer agreement whereby Nantong Fuhao Alcohol Co. Ltd. will purchase HEINEKENs shareholding interests for USD24.5 million. The transaction closed on 15 January 2013 when the funds were received in full. Sale of Pago International GmbH On 17 December 2012 HEINEKEN announced the sale of its wholly-owned subsidiary Pago International GmbH to Eckes-Granini Group. The transaction is expected to close in the first quarter of 2013. Mandatory unconditional cash offer (Offer for APB shares) On 17 January 2013 HEINEKEN announced that the final closing date of its Offer for all of the issued and paid-up ordinary APB shares other than those already owned or controlled by HEINEKEN is 31 January 2013. On 16 January 2013 the required acceptance level of 90 per cent of the APB shares in the open market was reached. As such, HEINEKEN was entitled to exercise its right of compulsory acquisition of the remaining APB shares. The total cash consideration in relation to the acquisition of the remaining shares after 31 December 2012 amounts to approximately EUR146 million. Strategic review of Hartwall in Finland On 4 February 2013 HEINEKEN announced that it had started a strategic review of its Hartwall business in Finland. During this review, HEINEKEN evaluates strategic options for Hartwall to drive continued growth for the business, within or outside of HEINEKEN. The strategic review is expected to be finalised before the end of the year.
142
Overview
Other information
Heineken N.V. Balance Sheet
Before appropriation of profit As at 31 December

Fixed assets Financial fixed assets Investments in participating interests Other investments Deferred tax assets Total financial fixed 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 profit Total shareholders equity Liabilities Loans and borrowings Deferred tax liability 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
38
22,461 219 87 22,767 34 2 36 22,803
16,233 247 28 16,508 2 2 16,510
39 40
922 2,701 (527) (11) 150 779 (26) 4,754 2,949 11,691 9,692 9,692 1,195 206 19 1,420 11,112 22,803
922 2,701 (575) (69) 159 1,026 (43) 4,223 1,430 9,774 6,553 6,553 50 110 23 183 6,736 16,510
Heineken N.V. Income Statement

Share of profit of participating interests, after income tax Other profit after income tax Net profit
39
3,015 (66) 2,949
1,613 (183) 1,430
143
Notes to the Heineken N.V. Financial Statements

Reporting entity The financial statements of Heineken N.V. (the Company) are included in the consolidated statements of Heineken N.V. Basis of preparation The Company financial 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 financial statements, using the same accounting policies as in the consolidated financial 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 financial statements. The Company presents a condensed income statement, using the facility of Article 402 of Part 9, Book 2, of the Dutch Civil Code. Significant accounting policies Financial fixed 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 still recognised in accordance with the Dutch Civil Code. Profit of participating interests The share of profit 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. 38. Investments in participating interests
Loans to participating interest
In millions of EUR
Participating interests
Total
Balance as at 1 January 2011 Profit of participating interests Dividend payments by participating interests Effect 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) Balance as at 31 December 2011 Balance as at 1 January 2012 Profit of participating interests Dividend payments by participating interests Effect 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 2012
10,326 1,613 (216) (475) 13 (93) 12 76 11,256 11,256 3,015 (397) 71 40 (438) (212) 6 13,341
5,520 216 (759) 4,977 4,977 397 3,746 9,120
15,846 1,613 (475) 13 (93) 12 (683) 16,233 16,233 3,015 71 40 (438) (212) 3,746 6 22,461
144
Overview
Other information
39. Shareholders equity

Share Premium Translation reserve Hedging reserve Fair value reserve
In millions of EUR
Share capital
Balance as at 1 January 2011 Other comprehensive income Profit Total comprehensive income Transfer to retained earnings Dividends to shareholders Shares issued Purchase/reissuance own shares ASDI Own shares granted Share-based payments Share purchase mandate Acquisition of non-controlling interests without a change in control Disposal of interests without a change in control Balance as at 31 December 2011 Balance as at 1 January 2012 Other comprehensive income Profit Total comprehensive income Transfer to retained earnings Dividends to shareholders Shares issued Purchase/reissuance own shares ASDI Own shares granted Share-based payments Share purchase mandate Acquisition of non-controlling interests with a change in control Acquisition of non-controlling interests without a change in control Disposal of interests without a change in control Balance as at 31 December 2012
922 922 922 922
2,701 2,701 2,701 2,701
(93) (482) (482) (575) (575) 48 48 (527)
(27) (42) (42) (69) (69) 58 58 (11)
90 69 69 159 159 (9) (9) 150
145
Notes to the Heineken N.V. financial statements continued
39. Shareholders equity continued

Other legal reserve Reserve for own shares Retained earnings Shareholders equity
In millions of EUR
ASDI
Net profit
Balance as at 1 January 2011 Other comprehensive income Profit Total comprehensive income Transfer to retained earnings Dividends to shareholders Shares issued Purchase/reissuance own shares ASDI Own shares granted Share-based payments Share purchase mandate Acquisition of non-controlling interests without a change in control Disposal of interests without a change in control Balance as at 31 December 2011 Balance as at 1 January 2012 Other comprehensive income Profit Total comprehensive income Transfer to retained earnings Dividends to shareholders Shares issued Purchase/reissuance own shares ASDI Own shares granted Share-based payments Share purchase mandate Disposal of interests without a change in control Acquisition of non-controlling interests without a change in control Disposal of interest without a change in control Balance as at 31 December 2012
899 253 253 (126) 1,026 1,026 4 222 226 (473) 779
(55) (687) 694 5 (43) (43) 17 (26)
666 (666)
3,382 (91) (253) (344) 1,573 (474) (28) (5) 11 96 (21) 33 4,223 4,223 (442) (222) (664) 1,903 (494) (17) 15 (212) 4,754
1,447 1,430 1,430 (1,447) 1,430 1,430 2,949 2,949 (1,430) 2,949
9,932 (546) 1,430 884 (474) (687) 11 96 (21) 33 9,774 9,774 (341) 2,949 2,608 (494) 15 (212) 11,691
For more details on reserves, please see note 22 of the consolidated financial statements. For more details on LTV, please see note 29 of the consolidated financial statements.
146
Overview
Other information
40. Loans and borrowings Non-current liabilities

Unsecured bank loans Unsecured bond issues Other Non-current interest-bearing liabilities Non-current non-interest-bearing liabilities Non-current derivatives
687 7,962 1,021 9,670 22 9,692
2,991 2,473 1,048 6,512 41 6,553
Non-current liabilities
Other non-current interestbearing liabilities Non-current non-interest bearing liabilities
In millions of EUR
Unsecured bank loans
Unsecured bond issues
Non-current derivatives
Total
Balance as at 1 January 2012 Charge from/to equity i/r derivatives Effects of movements of exchange rates Proceeds Repayments Transfers (to)/from current Other Balance as at 31 December 2012
2,991 (4) 379 (1,556) (1,118) (5) 687
2,473 1 6,108 (587) (33) 7,962
1,048 (1) (4) (6) (16) 1,021
41 (22) (3) 6 22
6,553 (22) (4) 6,483 (1,562) (1,708) (48) 9,692
147
40. Loans and borrowings continued Terms and debt repayment schedule Terms and conditions of outstanding loans were as follows:
Nominal interest rate % Carrying amount 2012 Carrying amount 2011
In millions of EUR
Category
Currency
Repayment
Face value 2012
Face value 2011
Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bank loans Unsecured bond
Unsecured bond Unsecured bond Unsecured bond Unsecured bond Unsecured bond Unsecured bond
Unsecured bond Unsecured bond Unsecured bond Unsecured bond Unsecured bond
German Schuldschein notes German Schuldschein notes 2008 Syndicated Bank Facility German Schuldschein notes 2008 Syndicated Bank Facility 2011 Syndicated Bank Facility 2011 Syndicated Bank Facility 2011 Syndicated Bank Facility Issue under EMTN programme Eurobond on Luxembourg Stock Exchange 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 144A/RegS Issue under 144A/RegS Issue under 144A/RegS Issue under 144A/RegS Issue under 144A/RegS
EUR EUR EUR EUR GBP USD GBP EUR GBP
1.0 6.0 1.0 6.2 0.8 1.0 6.0 1.2 0.8 0.9 0.6 7.3
2013 2016 2013 2014 2013 2017 2017 2017 2015
102 111 198 207 291 196 180 488
102 111 200 207 294 196 180 490
102 111 1,305 207 287 450 422 107 476
102 111 1,313 207 287 450 422 107 479
EUR EUR EUR EUR EUR EUR EUR USD USD USD USD USD
5.0 7.1 4.6 2.5 2.1 3.5 2.9 0.8 1.4 3.4 2.8 4.0
2013 2014 2016 2019 2020 2024 2025 2015 2017 2022 2023 2042
600 1,001 398 841 995 496 740 377 941 563 753 369
600 1,000 400 850 1,000 500 750 379 947 568 758 379
599 1,000 398
600 1,000 400
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In millions of EUR
Category
Currency
Nominal interest rate %
Repayment
Face value 2012
Face value 2011
Other interest-bearing liabilities Other interest-bearing liabilities Other interest-bearing liabilities Other interest-bearing liabilities Other interest-bearing liabilities
2010 US private placement 2008 US private placement 2011 US private placement 2008 US private placement various
USD USD USD EUR various
4.6 5.9-6.3 2.8 7.3 various
2018 20152018 2017 2016 various
548 335 68 31 36 10,865
549 336 69 31 36 10,932
559 341 69 79 6,512
561 342 70 78 6,529
For financial risk management and financial instruments, see note 32. 41. Audit fees Other expenses in the consolidated financial statements include EUR14.5 million of fees in 2012 (2011: EUR13.5 million) for services provided by KPMG Accountants N.V. and its member firms and/or affiliates. Fees for audit services include the audit of the financial statements of HEINEKEN and its subsidiaries. Fees for other audit services include sustainability, subsidy and other audits. Fees for tax services include tax compliance and tax advice. Fees for other non-audit services include due diligence related to mergers and acquisitions, review of interim financial statements, agreed upon procedures and advisory services.
Other KPMG member firms and affiliates 2012 2011 2012
KPMG Accountants N.V. 2012 2011
Total 2011
Audit of HEINEKEN and its subsidiaries Other audit services Tax services Other non-audit services Total
2.4 0.3 0.4 3.1
1.9 0.2 0.2 2.3
7.5 0.3 2.1 1.5 11.4
6.8 0.6 1.8 2.0 11.2
9.9 0.6 2.1 1.9 14.5
8.7 0.8 1.8 2.2 13.5
42. Off-balance sheet commitments

Less than 1 Year More than 5 Years
In millions of EUR
Total
1 5 Years
Total 2011
Undrawn committed bank facility
1,625
1,625
1,041
2012 Third parties HEINEKEN companies Third parties
2011 HEINEKEN companies
Declarations of joint and several liability
2,049
2,248
Fiscal unity The Company is part of the fiscal unity of HEINEKEN in the Netherlands. Based on this the Company is liable for the tax liability of the fiscal unity in the Netherlands.
149
43. Subsequent events For subsequent events, see note 37. 44. Other disclosures Remuneration We refer to note 35 of the consolidated financial statements for the remuneration and the incentives of the Executive Board members and the Supervisory Board. The Executive Board members are the only employees of the Company. Participating interests For the list of direct and indirect participating interests, we refer to notes 16 and 36 to the consolidated financial statements. Executive and Supervisory Board statement The members of the Supervisory Board signed the financial statements in order to comply with their statutory obligation pursuant to Article 2:101 paragraph 2 Civil Code. The members of the Executive Board signed the financial statements in order to comply with their statutory obligation pursuant to Article 2:101 paragraph 2 Civil Code and Article 5:25c paragraph 2 sub c Financial Markets Supervision Act.
Amsterdam, 12 February 2013 Executive Board Supervisory Board
Van Boxmeer Hooft Graafland
Van Lede Fernndez Carbajal Das de Carvalho De Jong Fentener van Vlissingen Minnick Navarre Astaburuaga Sanjins Wijers
150
Overview
Other information
Other information
Statement of the Executive Board
Statement ex Article 5:25c Paragraph 2 sub c Financial Supervision Act (Wet op het Financieel Toezicht) To our knowledge, 1. the Financial Statements give a true and fair view of the assets, liabilities, financial position and profit of Heineken N.V. and its consolidated companies; 2. the Report of the Executive Board gives a true and fair view of the position as at 31 December 2012 and the developments during the financial year 2012 of Heineken N.V. and its related companies included in its Financial Statements; and 3. the Report of the Executive Board describes the material risks Heineken N.V. is facing. Executive Board J.F.M.L. van Boxmeer D.R. Hooft Graafland Amsterdam, 12 February 2013
151
Appropriation of Profit
Article 12, paragraph 7, of the Articles of Association stipulates: Of the profits, payment shall first 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 EUR512 million of the profit for payment of dividend and to add EUR2,437 million to the retained earnings. Civil code Heineken N.V. is not a structuurvennootschap within the meaning of Sections 2: 152-164 of the Netherlands 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 Companys authorised capital amounts to EUR2.5 billion.
152
Overview
Other information
Independent Auditors Report
To: The Annual General Meeting of Shareholders of Heineken N.V. Report on the financial statements We have audited the accompanying financial statements 2012 of Heineken N.V., Amsterdam. The financial statements include the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2012, the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of the significant accounting policies and other explanatory information as included on page 67 to 142. The company financial statements comprise the company balance sheet as at 31 December 2012, the company income statement for the year then ended and the notes, comprising a summary of the accounting policies and other explanatory information as included on page 143 to 150. Managements responsibility Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code, and for the preparation of the report of the Executive Board in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Furthermore, management is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of Heineken N.V. as at 31 December 2012 and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code. Opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of Heineken N.V. as at 31 December 2012 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Report on other legal and regulatory requirements Pursuant to the legal requirements under Section 2:393 sub 5 at e and f of the Netherlands Civil Code, we have no deficiencies to report as a result of our examination whether the report of the Executive Board as included on page 4 to 55, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and if the information as required under Section 2:392 sub 1 at b h has been annexed. Further, we report that the report of the Executive Board, to the extent we can assess, is consistent with the financial statements as required by Section 2:391 sub 4 of the Netherlands Civil Code. Amsterdam, 12 February 2013 KPMG Accountants N.V. E.J.L. van Leeuwen RA
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, an annual Financial Markets Conference and regular briefings 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 worlds 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 net asset value of one Heineken Holding N.V. share is therefore identical to the net asset value of one Heineken N.V. share. 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-specific. Heineken Holding N.V. holds 50.005 per cent of the Heineken N.V. issued shares. On 31 December 2012, LArche Green N.V. held 51.083 per cent of the Heineken Holding N.V. shares. The Heineken family holds 88.55 per cent of LArche Green N.V. The remaining 11.45 per cent of LArche 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 NV.
FEMSA
LArche Green N.V. 51.083%
Public 33.982% Public
14.935%
Heineken Holding N.V. Board of Directors 50.005%
37.463%
Gong ceremony on 11 January 2013 at the NYSE Euronext Amsterdam to mark HEINEKEN Investor Relations winning two awards at the Dutch IR Awards 2013.
12.532%
Heineken N.V.
Supervisory Board Executive Board Regional Management Operating Companies December 2012 Group Departments Legal Entities Public shareholders Management
Pursuant to the Financial Supervision Act (Wet op het financieel toezicht) and the Decree on Disclosure of Major Holdings and Capital Interests in Issuing Institutions (Besluit melding zeggenschap en kapitaalbelang in uitgevende instellingen), the Financial Markets Authority has been notified about the following other substantial shareholdings.
154
Overview
Other information
As regards Heineken N.V.: Massachusetts Financial Services Company a capital interest of 2.12 per cent a voting interest of 5.00 per cent (2.94 per cent held directly and 2.06 per cent held indirectly). As at 31 December 2012, FEMSA (through its affiliate CB Equity LLP) holds a 14.94 per cent shareholding in Heineken Holding N.V. and a 12.53 per cent shareholding in Heineken N.V. All FEMSAs Heineken Holding N.V. and Heineken N.V. shares represent a 20 per cent economic interest in the HEINEKEN Group. Heineken N.V. shares and options Heineken N.V. shares are traded on NYSE 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. Liffe. Additional information is available on the website: www.theHEINEKENcompany.com In 2012, the average daily trading volume of Heineken N.V. shares was 811,248 shares. Market capitalisation Heineken N.V. On 31 December 2012, there were 576, 002,613 shares of EUR1.60 nominal value in issue. At a year-end price of EUR50.47 on 31 December 2012, the market capitalisation of Heineken N.V. on the balance sheet date was EUR29.1 billion. Year-end price Highest closing price Lowest closing price EUR50.47 EUR51.43 EUR35.02 31 December 2012 29 November 2012 16 January 2012 Heineken N.V. share price
2012 2011 2010 2009 2008 2007 0 Share price range Year-end price Average trade in 2012: 811,248 shares per day 10 20 30 40 50 60
Share distribution comparison year-on-year Heineken N.V. shares*
In EUR, NYSE Euronext Amsterdam

50.47 35.77 36.69 33.27 21.90 44.22
Based on Free oat (excluding the holding of Heineken Holding N.V. and FEMSA in Heineken N.V.)
Based on 215.8 million shares in free oat
Dividend per share (proposed)

In EUR
2012 2011 2010 2009 2008 0.65 0.62 0.76 0.83 0.89
Americas UK/Ireland Netherlands Rest of Europe (ex. Netherlands) Rest of the world Retail Unidentied
37.0% 13.1% 3.0% 25.2% 4.4% 5.5% 11.8%
* Source: Capital Precision, estimate based on available information January 2013.
Heineken Holding N.V. shares The ordinary shares of Heineken Holding N.V. are traded on NYSE 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 2012, the average daily trading volume of Heineken Holding N.V. shares was 169,956 shares.
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Shareholder Information continued
Market capitalisation Heineken Holding N.V. On 31 December 2012, 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 EUR 41.44 on 31 December 2012 the market capitalisation of Heineken Holding N.V. on balance sheet date was EUR11.9 billion. Year-end price Highest closing price Lowest closing price EUR41.44 EUR42.47 EUR30.73 31 December 2012 10 December 2012 27 January 2012 Heineken Holding N.V. share price
In EUR, NYSE Euronext Amsterdam
2012 2011 2010 2009 2008 2007 0 Share price range Year-end price Average trade in 2012: 169,956 shares per day 10 20 30 40 50 41.44 31.62 32.53 29.24 20.41 38.73
Based on Free oat (excluding the holding of LArche Green N.V. and FEMSA in Heineken Holding N.V.)
Share distribution comparison year-on-year Heineken Holding N.V. shares*
Based on 97.9 million shares in free oat
Americas UK/Ireland Netherlands Rest of Europe (ex. Netherlands) Rest of the world Retail Unidentied
39.7% 15.3% 4.6% 9.2% 2.5% 4.6% 24.1%
* Source: Capital Precision, estimate based on available information January 2013.
American Depositary Receipts-ADRs On 11 December 2012 HEINEKEN announced that it has established a sponsored Level 1 American Depository Receipt (ADR) programme. The transition from a previously unsponsored to new sponsored ADR programme is aimed at better facilitating the trading of Heineken N.V. and Heineken Holding N.V. stock in the US. HEINEKENs 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 represents one HEINEKEN ordinary share. Deutsche Bank Trust Company Americas acts as depositary bank for HEINEKENs ADR programme. Heineken N.V. Ticker: HEINY ISIN: US4230123014 CUSIP: 423012301 Structure: Sponsored Level I ADR Exchange: OTC Ratio (DR:ORD): 2:1 Heineken Holding N.V. Ticker: HKHHY ISIN: US4230081014 CUSIP: 423008101 Structure: Sponsored Level I ADR Exchange: OTC Ratio (DR:ORD): 2:1
156
Overview
Other information
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: [email protected] 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 programme is 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 Company General Meeting if permitted by the Company and the Depositary Agreement, Issues and cancels HEINEKEN American Depositary Receipts (ADRs), Can distribute Company circulars and General Meetings (including Annual General Meeting) documentation, 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). Financial calendar in 2013 for both Heineken N.V. and Heineken Holding N.V. Announcement of 2012 results 13 February Publication of Annual Report 1 March Trading update first quarter 2013 24 April Annual General Meeting of Shareholders 25 April Quotation ex-final dividend 2012 29 April Final dividend 2012 payable 8 May Announcement of half-year results 2013 21 August Quotation ex-interim dividend 23 August Interim dividend 2013 payable 3 September Trading update third quarter 2013 23 October Dividend policy The dividend policy of Heineken N.V. intends to preserve the independence of the Company, to maintain a healthy financial structure and to retain sufficient earnings in order to grow the business both organically and through acquisitions. The dividend payments are related to the annual development of the net profit before exceptional items and amortisation of brands (net profit beia), which results in a dividend payout ratio in the range of 30-35 per cent. Dividends are paid in the form of an interim dividend and a final dividend. The interim dividend is fixed at 40 per cent of the total dividend of the previous year. Annual dividend proposals will remain subject to shareholder approval.
Shareholder Information continued
Bondholder information For the first time in the Companys 148 year history, HEINEKEN was assigned investment grade credit ratings in 2012 by the worlds two leading credit agencies, Moodys Investor Service and Standard & Poors. Both long term credit ratings, were solid Baa1 and BBB+, respectively and both have a stable outlook per the date of this Annual Report. The assignment of the credit ratings has allowed the Company to further diversify its funding base. On 19 March 2012, HEINEKEN issued EUR1.35 billion of Notes under its EMTN Programme comprising EUR850 million of 7-year Notes with a coupon of 2.5 per cent and EUR500 million of 12-year Notes with a coupon of 3.5 per cent. On 3 April 2012, HEINEKEN issued USD750 million of 10-year 144A/ RegS US Notes with a coupon of 3.4 per cent On 2 August 2012, HEINEKEN issued EUR1.75 billion of Notes under its EMTN Programme, consisting of 8-year Notes for a principal amount of EUR1 billion with a coupon of 2.125 per cent and 13-year Notes for a principal amount of EUR750 million with a coupon of 2.875 per cent. On 3 October 2012, HEINEKEN successfully priced 144A/RegS US Notes for a principal amount of USD3.25 billion. This comprised USD500 million of 3-year Notes at a coupon of 0.8 per cent, USD1.25 billion of 5-year Notes at a coupon of 1.4 per cent, USD1 billion of 10.5-year Notes at a coupon of 2.75 per cent and USD500 million of 30-year Notes at a coupon of 4.0 per cent. The proceeds of the Notes have been used for various corporate purposes including the financing of the acquisition of Asia Pacific Breweries Limited and the repayment of debt facilities. The issues have enabled HEINEKEN to further improve the currency and maturity profile of its long-term debt.
Traded Heineken N.V. Notes
Issue date
Total face value
Interest rate
Maturity
ISIN code
EUR Note 2013 EUR EMTN 2014 144A/RegS 2015 GBP EMTN 2015 EUR EMTN 2016 144A/RegS 2017 EUR EMTN 2019 EUR EMTN 2020 144A/RegS 2022 144A/RegS 2023 EUR EMTN 2024 EUR EMTN 2025 144A/RegS 2042
November 4, 2003 April 6, 2009 October 10, 2012 March 10, 2009 October 8, 2009 October 10, 2012 March 19, 2012 August 2, 2012 April 3, 2012 October 10, 2012 March 19, 2012 August 2, 2012 October 10, 2012
EUR 600 million EUR 1 billion USD 500 million GBP 400 million EUR 400 million USD 1.25 billion EUR 850 million EUR 1 billion USD 750 million USD 1 billion EUR 500 million EUR 750 million USD 500 million
5.00% 7.125% 0.800% 7.25% 4.625% 1.400% 2.500% 2.125% 3.400% 2.750% 3.500% 2.875% 4.000%
November 4, 2013 April 7, 2014 October 1, 2015 March 10, 2015 October 10, 2016 October 1, 2017 March 19, 2019 August 4, 2020 April 1, 2022 April 1, 2023 March 19, 2024 August 4, 2025 October 1, 2042
XS0179266753 XS0421464719 US423012AC71 XS0416081296 XS0456567055 US423012AB98 XS0758419658 XS0811554962 US423012AA16 US423012AD54 XS0758420748 XS0811555183 US423012AA16
In September 2008, HEINEKEN established a Euro Medium Term Note (EMTN) Programme which was subsequently updated in September 2009, September 2010, March 2012 (and March 2013). The programme allows Heineken N.V. from time to time to issue Notes up to EUR10 billion. Currently approximately EUR5.0 billion of Notes is outstanding under the programme. The EMTN Programme and all Notes issued thereunder are listed on the Luxembourg Stock Exchange.
HEINEKEN was awarded the Corporate Issuer of the Year 2012 Award by IFR Magazine for successfully issuing over EUR6 billion of bonds in various markets on the back of the credit ratings obtained earlier in the year.
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Overview
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Long Term Debt Maturity Prole

EUR min 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
Bank nancing
Schuldschein
USPP
Traded Bonds
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2042
Division of Long Term Debt 2012
Division of Long Term Debt 2011
Traded Bonds USPP Schuldschein Bank nancing
69% 14% 3% 14%
Traded Bonds USPP Schuldschein Bank nancing
30% 22% 5% 43%
Contacting 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: [email protected] Further information on Heineken Holding N.V. is available by phone +31 20 622 11 52 or by fax +31 20 625 22 13. Information is also available from the Investor Relations department, telephone + 31 20 523 95 90 or by email: [email protected]. Our website www.theHEINEKENcompany.com also carries further information about both Heineken N.V. and Heineken Holding N.V.
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Countries and Brands

History HEINEKEN Today
The Heineken story began almost 150 years ago in 1864 when Gerard Adriaan Heineken acquired a small brewery in the heart ofAmsterdam. Since 1886, the unique Heineken A-yeast has guaranteed the pure, premium taste of Heineken beer. The quality of Heineken was recognised in Paris in 1889 when it received the Grand-Prix prize for the worlds best beer. The journey to becoming the worlds most international brewer began in 1900 when its beer was sold first in Africa. In 1933, Heineken was the first imported beer to reach the shores of America, marking the end of prohibition. In 1937, Heineken beer was brewed outside the Netherlands for the first time, in what was then the Dutch East Indies. Over the ensuing years, growth and acquisitions substantially expanded the Company, firstly in Western Europe and Africa followed by acquisitions in Central and Eastern Europe and Russia. Since 2008, the Company has made a number of major acquisitions. In 2008 it acquired Scottish & Newcastle, consolidating its position as Europes largest brewer. In 2010 it acquired the beer operations of FEMSA in Mexico (including its US and other export business) and Brazil, strengthening its position in Latin America. And in 2012, HEINEKEN acquired full control of Asia Pacific Breweries creating a strong platform for growth across the region. Four generations of the Heineken family have been passionately involved in the expansion of Heineken and the HEINEKEN Company throughout the world.
Established in 1864 by the Heineken family, HEINEKEN has a long and proud history and heritage as an independent global brewer. We brew quality beers, build award-winning brands and are committed to enthusing consumers everywhere. Four key factors make us unique: 1. Heineken was the first and remains the only truly global beer brand, enjoyed in 178 countries around the world 2. We have a unique, worldwide footprint with operations in over 70 countries, which means we have a broader reach for our brandsthan any other brewer 3. We have an internationally diverse, dynamic, committed and entrepreneurial team of more than 85,000 employees 4. The passion of the Heineken family remains as strong today as it was in 1864 when we first started brewing beer. Today, HEINEKEN is the number one brewer in Europe and the number three brewer by volume in the world. With recent acquisitions in Africa, India, South East Asia and Latin America, we are continuing to increase our presence within emerging markets, which will contribute to our ongoing growth. 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. Our principal global brand is Heineken, the worlds most valuable international premium beer brand. Other international premium, regional, local and specialty beers include Amstel, Anchor, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Fosters, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Tecate, Tiger, Zlaty Bazant and ywiec. Our leading joint venture brands include Cristal and Kingfisher. In addition to our global beer portfolio, HEINEKEN is also the worldsbiggest cider maker with brands such as Strongbow andBulmers.
Where we operate
HEINEKEN is the worlds most international brewer, thanks to our global network of distributors and more than 165 breweries in over 70 countries. We achieve our global coverage through a combination of whollyowned companies, licence agreements, affiliates and strategic partnerships and alliances. Some of our wholesalers also distribute wine, spirits and soft drinks. In Europe, we are the largest brewer and cider maker and our brands are well established in these profitable markets. Due to our acquisitions and joint ventures in India, Africa, Asia and Latin America we have a strong platform for current and future growth from these emerging beer markets.
160
Overview
Other information
Western Europe
Country Company Production location Key brands
Belgium
Alken-Maes (99.9%)
Alken, Kobbegem, Opwijk, Stassen
Finland
Hartwall (100%)
Lahti, Karijoki
France
Heineken France (100%)
Marseille, Mons-en-Baroeul, Schiltigheim
Ireland
Heineken Ireland (100%)
Cork
Italy
Heineken Italia (100%)
Pollein (Aosta), Comun Nuovo (Bergamo), Massafra, Assemini (Cagliari)
Netherlands
Heineken Nederland (100%)
Zoeterwoude, s Hertogenbosch
Brand Bierbrouwerij (100%) Vrumona (100%) Portugal Spain Sociedade Central de Cervejas et Bebidas (98.7%) Heineken Espaa (98.7%)
Wijlre Bunnik Vialonga, Luso, Cruzeiro Seville, Madrid, Valencia, Jaen
Switzerland
Heineken Switzerland (100%)
Chur, Lucerne
United Kingdom
Heineken UK (100%)
Manchester, Tadcaster, Edinburgh, Hereford, Ledbury
Affligem, Cristal, Ciney, Judas, Hapkin, Brugs, Op-Ale, Watneys, Heineken, Mort Subite, Maes, Desperados, Grimbergen, Postel Lapin Kulta, Karjala, 1836 Classic Gourmet, URHO, Aura, Sininen, Heineken, Newcastle Brown Ale, Krusovice, Murphys, Buckler, Tiger, Sol, Fosters Pelforth, Fischer, 33 Export, Panach, Adelscott, Georges Killians, Buckler, Heineken, Desperados, Fosters, Strongbow, Amstel, Affligem, Murphys, Edelweiss Murphys, Beamish Stout, Heineken, Amstel, Affligem, Fosters, Birra Moretti, ywiec, Desperados, Tiger, Coors Light, Paulaner, Sol Birra Moretti, Dreher, Ichnusa, Jennas, Messina, Heineken, Amstel, Buckler, Henninger, McFarland, Murphys, Sans Souci, Von Wunster, Prinz, Desperados, Affligem, Brand, Fischer, Wieckse Witte, Erdinger, Golden Fire, Fosters, Strongbow Gold Heineken, Amstel, Wieckse Witte, Jillz, Strongbow, Desperados, Lingens Blond, Murphys, Sol, Maes Brand Crystal Clear, Royal Club, Sisi, Sourcy, Vitamin Water, Pepsi, 7-Up, Rivella Sagres, Cergal, Imperial, Jansen, Heineken, Desperados, Fosters, Bulmers, John Smiths Cruzcampo, Amstel, Heineken, Desperados, Sol, Buckler, Paulaner, Affligem, Birra Moretti, Latino, Fosters , Legado de Yuste, Maes, John Smith, Judas, Mort Subite, Newcastle, Strongbow Heineken, Eichhof, Calanda, Desperados, Ittinger, Haldengut, Ziegelhof, Erdinger, Clausthaler, Amstel, Desperados, Murphys, Fosters, Miller Fosters, Strongbow, John Smiths, Kronenbourg, Bulmers, Heineken, Newcastle Brown Ale, Amstel, Sol, Woodpecker, Tiger, Jacques, Deuchars IPA
Yeast is a one celled wonder responsible for the fermentation of beer. Before Louis Pasteur made the scientific link between yeast and fermentation, brewing was thought to be a magical process.
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Countries and Brands continued

Austria
Brau Union sterreich (100%)
Leoben-Gss, Graz-Puntigam, Schladming, Schwechat, Wieselburg, Zipf, Linz, Bobruisk, Rechitsa Stara Zagora Karlovac Kruovice, Brno, Velk Bezno, Krsn Bezno
Belarus Bulgaria Croatia Czech Republic
Heineken Breweries (100%) Rechitsapivo (96.4%) Zagorka Brewery (49.4%) Karlovacka Pivovara (100%) Heineken esk Republika, a.s. (100%)
Germany
Heineken Deutschland (100%) Paulaner Brauerei (25%) AuerBru (25%) Weissbierbrauerei Hopf (25%) Kulmbacher Brauerei (31.8%) Sternquell Brauerei (31.8%) Braustolz (31.4%) Scherdel (31.8%) Wrzburger Hofbru (31.8%) Frstlich Frstenbergische Brauerei (49.9%) Privatbrauerei Hoepfner (49.9%) Privatbrauerei Schmucker (49.9%) Athenian Brewery (98.8%)
Berlin* Mnchen Rosenheim Miesbach Kulmbach Plauen Chemnitz Hof Wrzburg Donaueschingen Karlsruhe Mossautal Athens, Patras, Thessaloniki, Lamia
Heineken, Zipfer, Gsser, Puntigamer, Desperados, Edelweiss, Schlossgold, Kaiser, Schwechater, Wieselburger, Reininghaus, Schladminger Heineken, Zlat Bazant, Rechitskoe, Bobrov, Doctor Diesel, Pit, Heineken, Zagorka, Desperados, Ariana, Amstel, Stolichno, Starobrno, Kaiser Heineken, Karlovako, Desperados, Edelweiss, Gsser, Kaiser Heineken, Kruovice, Starobrno, Affligem, Edelweiss, Clausthaler, Zlatopramen, Breznak, FRII, Zlat Bazant, Hostan, Dacicky, Louny, Baron Trenck Heineken, Desperados, Fosters Paulaner Weissbier, Paulaner, Hacker-Pschorr, Thurn & Taxis Auer Hopf Weisse Kulmbacher, Mnchshof, EKU, Kapuziner Sternquell Braustolz Scherdel Wrzburger Hofbru, Keiler Frstenberg, Riegeler Hoepfner, Grape Schmucker Heineken, Amstel, Alfa, Fischer, Sol, Buckler, McFarland, Murphys, Desperados, Kruovice, Moretti, Newcastle Brown Ale, Fosters, John Smiths, Strongbow, VIOS 5 , Zorbas, Carib, Erdinger, Kirin, Konig, Chimay, Duvel, Ioli Heineken, Gsser, Strongbow Gold, Soproni, Kaiser, Zlat Bazant, Edelweiss, Schlossgold, Steffl, Buckler, Arany Facan, Adambrau Heineken, Amstel, Skopsko, Gorsko Heineken, Desperados, Paulaner, Murphys, ywiec, Warka, Tatra, Strong, Specjal, Z Krlewskie, Lezajsk, Brackie Heineken, Tian Shan, Efes, Beliy Medved, Stary Melnick, Sokol, Gold Mine
Greece
Hungary
Heineken Hungaria (100%)
Martf, Sopron
Macedonia Poland
Pivara Skopje (48.2%) ywiec (61.9%) Grupa Z
Skopje Cieszyn, Elblag, Lezajsk, ywiec Warka, Z Almaty, Karaganda
Kazakhstan
Efes Kazakhstan1 (28%)
* sales office 1 sold in January 2013
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Overview
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Central and Eastern Europe continued

Romania
Heineken Romania (98.4%)
Constanta, Craiova, Miercurea Ciuc, Targu Mures
Russia
Heineken Breweries (100%)
St. Petersburg, Khabarovsk, Ekaterinburg, Irkutsk, Nizhnyi Novgorod, Novosibirsk, Sterlitamak, Kaliningrad
Serbia
Slovakia
United Serbian Breweries (100%) United Serbian Breweries Zajecarsko (73%) Heineken Slovensko (100%)
Novi Sad Zajecar Hurbanovo
Amstel, Strongbow, Sol, Kruovice Imperial, Birra Moretti, Fosters, Zipfer, Schlossgod, Gsser, Ciuc, GoldenBrau, Silva, Bucegi, Neumarkt, Gambrinus, Harghita, Hategana, Desperados, Edelweiss, Heineken Heineken, Amstel, Bochkarev, Ochota, Zlat Bazant, Krusovice, Desperados, Tiger, Birra Moretti, John Smith, New Castle, Guinness, Kilkenny, Stepan Razin, PIT, Edelweiss, Doctor Diesel, Tri Medvedya, Gsser, Amur-Pivo, Zhigulevskoye, Patra, Strelets, Bereg Baikala, Kalinkin, Krepkoe, Okskoe, Rusich,Volnaya Sibir, Sedoy Ural, Shikhan, Ostmark, Kenigsberg, Heineken, MB, Master, Amstel, PilsPlus, Zajecarsko, Weifert Heineken, Zlat Bazant, Krusovice, Corgon, Kelt, Starobrno, Gemer, Martiner, Desperados, Edelweiss
163
The Americas
Argentina
Companias Cerveceras Unidas Argentina (33.1%)
Salta, Santa Fe, Lujan, Buenas Aires
Bahamas Brazil
Commonwealth Brewery (75%) Cervejarias Kaiser (100%)
Nassau Araraquara, Cuibab, Feira de Santana, Gravata, Jacare, Manaus, Pacatuba, Ponta Grossa Antofagasta, Santiago, Temuco, Punta Arenas, Valdiva San Jos Port-au-Prince Kingston Lamentin Monterrey, Tecate, Orizaba, Guadalajara, Toluca, Navojoa Managua Panama City Vieux-Fort Paramaribo Port of Spain White Plains*
Chile Costa Rica Haiti Jamaica Martinique Mexico
Companias Cerveceras Unidas (33.1%) Cervecera Costa Rica (25%) Brasserie Nationale dHati (94.8%) Desnoes & Geddes (15.5%) Brasserie Lorraine (100%) Cervecera Cuauhtmoc Moctezuma (100%) Consorcio Cervecero Centroamericano (12.5%) Cerveceras Bar-Panama (74.9%) Windward & Leeward Brewery (72.7%) Surinaamse Brouwerij (76.2%) Carib Development Corporation (20%) Heineken USA (100%)
Heineken, Budweiser, Paulaner, Birra Moretti, Guinness, Corona, Negra Modelo, 023Salta, Santa Fe, Cordoba, Kunstmann, Palermo, Biecker, Schneider, Imperial, Otro Mundo Heineken, Guinness, Kalik, Vitamalt Kaiser, Bavaria, Sol, Summer Draft, Gold, Heineken, Kaiser Bock, Xing, Dos Equis, Amstel Pulse, Birra Moretti, Edelweis, Murphys, Santa Cerva, Desperados Heineken, Cristal, Escudo, Royal, Kunstmann Heineken, Bavaria, Imperial, Pilsen, Rock Ice, Bohemia Guinness, Malta H, Prestige Heineken, Dragon Stout, Guinness, Red Stripe Heineken, Lorraine, Malta, Porter, Amstel, Vitamalt, Desperados, Lorraine Tecate, Sol, Dos Equis, Bohemia, Coors Light, Indio, Carta Blanca, Superior, Kloster, Noche Buena, Soul Citric, Strongbow Gold Heineken, Bufalo, Tona, Victoria Heineken, Tecate, Guinness, Panama, Soberana, Budweiser Heineken, Guinness, Piton, Desperados, Strongbow Heineken, Parbo, Kaiser, Vitamalt Carib, Stag, Heineken, Guinness Heineken, Amstel, Dos Equis, Tecate, Sol, Carta Blanca, Bohemia, Newcastle Brown Ale, Indio, Strongbow
Nicaragua Panama St. Lucia Suriname Trinidad USA
* sales office
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Overview
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Algeria Burundi Cameroon Congo Democratic Republic of Congo Egypt Ethiopia
Tango (100%) Brarudi (59.3%) Brasseries du Cameroun (8.8%) Brasseries du Congo (50%) Bralima (95%)
Algiers Bujumbura, Gitega Bafoussam, Douala, Garoua, Yaound Brazzaville, Pointe Noire Boma, Bukavu, Kinshasa, Kisangani, Mbandaka, Lubumbashi Badr, El Obour, Shark, Gianaclis, El Gouna Bedele Harar Accra, Kumasi Netanya Zerka Beirut Casablanca, Fs, Tanger Windhoek Aba, Ama, Ibadan, Kaduna (2), Lagos, Onitsha, Sango-Ota Jjebu Ode, Awa-Omamma, Makurdi, Lagos, Uyo Saint Denis Gisenyi, Kigali Freetown Johannesburg (Sedibeng), Cape Town Grombalia, Ksar Lemsa, Grombalia Softdrinks
Tango, Samba, Fiesta, Heineken, Amstel Amstel, Primus, Heineken, Mtzig Amstel, Mtzig, Heineken Guinness, Maltina, Mtzig, Ngok, Primus, Turbo King, Heineken Amstel, Maltina, Mtzig, Primus, Turbo King, Heineken, Legend , NTay, Fayrouz Heineken, Birell, Fayrouz, Meister Max, Sakara, Stella, Amstel ZeroLuxor Bedele, Heineken Harar, Hakim Stout, Harar SoJi Amstel Malta, Guinness, Gulder, Star, Heineken, Malta, Guinness Heineken, GoldStar, Maccabi, Nesher Malt, Newcastle Brown Ale Amstel, Heineken, Rex Almaza, Laziza, Amstel, Heineken, Rex Heineken, Fayrouz Heineken, Guinness, Windhoek, Amstel, Tafel Heineken, Amstel Malta, Gulder, Legend, Maltina, Star, Fayrouz, Life Continental Lager, Goldberg Lager, Malta Gold 33 Export, Hi-malt, Maltex, Turbo King, More Lager, Williams, Champion Lager Bourbon, Dynamalt, Heineken Amstel, Guinness, Mtzig, Primus, Turbo King, Heineken Heineken, Guinness, Maltina, Star Heineken, Amstel, Windhoek, Strongbow, Guinness Heineken, Golden Brau, Fayrouz
Ghana Israel Jordan Lebanon Morocco Namibia Nigeria
Al Ahram Beverages Company (99.9%) Bedele Brewery Share Company (100%) Harar Brewery Share Company (100%) Guinness Ghana Breweries Ltd. (20%) Tempo Beverages Limited (40%) General Investment (10.8%) Almaza (67%) Brasseries du Maroc (2.2%) Namibia Breweries (14.6%) Nigerian Breweries Plc (54.1%)
Consolidated Breweries (53.6%) Runion Rwanda Sierra Leone South Africa Tunisia Brasseries de Bourbon (85.7%) Bralirwa (75%) Sierra Leone Brewery (83.1%) Sedibeng Brewery (75%) DHN Drinks (44.6%) Nouvelle de Brasserie Sonobra (49.99%)
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Asia Pacific
Cambodia China
India
Cambodia Brewery (79.0%) Shanghai Asia Pacific Brewery (99.3%) Hainan Asia Pacific Brewery (99.3%) Guanghzhou Asia Pacific Brewery (99.3%) United Breweries Limited (37.4%)
Phnom Penh Shanghai Haikou Guanghzhou Cherthala, Palakkad, Hyderabad, Hyderabad Golc, Ludhiana, Chopanki, Mangalore, Calcutta, Goa, Aurangabad UBL, Andhra Pradesh, Karnataka, Chennai, Dharuhera, Mumbai, Orissa Sampang Agung, Tangerang Vientiane Kuala Lumpur Ulaan Baatar Nouma
ABC Extra Stout, Anchor, Gold Crown, Tiger Heineken, Reeb, Tiger, Strongbow, Murphys Irish Stout, Anchor, Aoke, Tiger
Heineken, Kingfisher, Kalyani, UB, London Pilsener
Indonesia Laos Malaysia Mongolia New Caledonia
Multi Bintang Indonesia (86.4%) Lao Asia Pacific Breweries (67.1%) Guinness Anchor Berhad (25.2%) MCS Asia Pacific Brewery (54.3%) Grande Brasserie de Nouvelle Caldonie (86.3%)
Heineken, Bintang, Guinness, Bintang Zero, Green Sands Tiger, Heineken, Namkong Heineken, Anchor, Barons, Guinness, Strongbow, Kilkenny, Tiger Tiger, Sengur Heineken, Number One, Desperados
166
Overview
Other information
Asia Pacific continued

New Zealand
DB Breweries (98.7%)
Mangatainoka, Otahuhu
DB South Island Brewery (54.3%)
Timaru
Papua New Guinea Singapore
South Pacific Brewery (75.4%) Asia Pacific Breweries (Singapore) (98.7%) Solomon Breweries (96.4%) Asia Pacific Brewery (Lanka) (59.2%) Thai Asia Pacific Brewery (36.4%) Vietnam Brewery (59.2%) Asia Pacific Breweries (Hanoi) (98.7%) VBL Da Nang Co (59.2%) VBL Tien Giang (59.2%) VBL Quang Nam (47.4%)
Lae, Port Moresby Singapore
Solomon Islands Sri Lanka Thailand Vietnam
Honiara Mawathagama Bangkok Ho Chi Minh City Hanoi Da Nang Tien Giang Guang Nam
Heineken, Amstel, DB Draught, Export Gold, Export Dry, Tiger, Monteiths, Tui, Fuse, Barrel 51, Murphys Irish Stout Murphys Irish Red, Double Brown, Bushmans Draught, DB Draught, Export 33, Export Dry, Export Gold, Flame, Monteiths, Skippers Draught, Tui Niugini Ice Beer, South Pacific Export Lager, SP Lager, SP Gold Heineken, ABC Extra Stout, Anchor, Barons, Tiger, Strongbow, Bulmers, Newcastle Brown Ale, John Smith Sol Brew Archipelago, Bison, Kings Stout, Barons Lager, Barons Strong Brew Heineken, Tiger, Cheers Heineken, Bivina, Tiger, Coors Light Heineken, Anchor Draft, Tiger Coors Light, Fosters, Bire Larue
167
Historical Summary
2012
2011
2010*
2009
2008
Revenue and profit

In millions of EUR
Revenue Results from operating activities Results from operating activities (beia) as % of revenue as % of total assets Net profit Net profit (beia) as % of equity attributable to equity holders of the Company Dividend proposed as % of net profit (beia) Per share of EUR1.60
In millions of EUR
18,383 3,691 2,699 14.7 7.5 2,949 1,696 14.5 512 30.2
17,123 2,215 2,458 14.4 9.1 1,430 1,584 16.2 477 30.11
16,133 2,298 2,430 15.1 9.1 1,447 1,456 14.7 438 30.1
14,701 1,630 1,968 13.4 9.8 1,018 1,055 19.7 318 30.1
14,319 1,182 181 1.3 0.9 209 1,013 22.7 304 30.0
Cash flow from operating activities Net profit (beia) Dividend proposed Equity attributable to equity holders of the Company Cash flow statement
In millions of EUR
4.69 2.95 0.89 20.33
5.05 2.71 0.83 16.702
4.61 2.59 0.76 17.67
4.87 2.16 0.65 10.95
3.39 2.07 0.62 9.14
Cash flow from operations Cash flow related to interest, dividend and income tax Cash flow from operating activities Cash flow (used in)/from operational investing activities Free operating cash flow Cash flow (used in)/from acquisitions and disposals Dividend paid Cash flow (used in)/from financing activities, excluding dividend Net cash flow Cash conversion rate Financing ratios Net debt/EBITDA (beia)
3,518 (823) 2,695 (1,210) 1,485 (4,415) (604) 3,660 126 80.0%
3,720 (809) 2,911 (818) 2,093 (937) (580) (454) 122 122.1%
3,548 (891) 2,657 (664) 1,993 257 (483) (1,689) 78 125.6%
3,029 (650) 2,379 (638) 1,741 (149) (392) (1,445) (245) 147.7%
2,168 (508) 1,660 (1,110) 550 (3,634) (485) 3,794 225 47.8%
3.09
2.27
2.26
2.62
3.28
* Comparatives have been adjusted due to the accounting policy change in employee benefits (see note 2e of the 2011 Financial statements)
1 2
The percentage 33.1% stated in the Annual Report 2011 is incorrect, the correct dividend proposed as percentage of net profit (beia) for 2011 is 30.1 per cent Including the effect of the Allotted Share Delivery Instrument (ASDI).
168
Overview
Other information
2012
2011
2010*
2009
2008
EBIT (beia)/Net interest expense Free operating cash flow/Net debt Net debt/Equity Financing
In millions of EUR
6.0 12% 1.0
6.4 25% 0.8
5.4 25% 0.8
3.9 23% 1.4
5.1 6% 1.9
Share capital Reserves and retained earnings Equity attributable to equity holders of the Company Non-controlling interest Total equity Employee benefits Provisions (including deferred tax liabilities) Non-current loans and borrowings Other liabilities (excluding provisions) Liabilities (excluding provisions) Total equity and liabilities Equity attributable to equity holders of the Company/ (employee benefits, provisions, and liabilities) Employment of capital
In millions of EUR
922 10,769 11,691 1,071 12,762 1,632 2,337 11,437 7,811 19,248 35,979
922 8,852 9,774 318 10,092 1,174 1,483 8,199 6,179 14,378 27,127
922 9,010 9,932 288 10,220 1,097 1,589 8,078 5,678 13,756 26,662
784 4,567 5,351 296 5,647 634 1,304 7,401 5,194 12,595 20,180
784 3,687 4,471 281 4,752 688 1,163 9,084 4,900 13,984 20,587
0.50
0.57
0.60
0.37
0.28
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)
8,792 17,725 3,925 30,442 1,596 2,904 1,037 5,537 35,979 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
7,687 10,890 3,767 22,344 1,206 2,502 610 4,318 26,662 0.46 0.79
6,017 7,135 2,875 16,027 1,010 2,623 520 4,153 20,180 0.35 0.80
6,314 7,030 2,494 15,838 1,246 2,805 698 4,749 20,587 0.30 0.97
* Comparatives have been adjusted due to the accounting policy change in employee benefits (see note 2e of the 2011 Financial statements)
169
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 amongst others brands, customer-related and certain contract-based intangibles. ASDI Allotted share delivery instrument (ASDI) representing HEINEKENs obligation to deliver Heineken N.V. shares, either through issuance and/or purchasing of its own shares. Beia Before exceptional items and amortisation of acquisition related intangible assets. Cash conversion ratio Free operating cash flow/Net profit (beia) before deduction of non-controlling interests. Depletions Sales by distributors to the retail trade. Dividend payout Proposed dividend as percentage of net profit (beia). Earnings per share Basic Net profit divided by the weighted average number of shares basic during the year. Diluted Net profit divided by the weighted average number of shares diluted during the year. EBIT Earnings before interest and taxes and net finance expenses. EBIT includes HEINEKENs share in net profit of associates and joint ventures. EBITDA Earnings before interest and taxes and net finance expenses before depreciation and amortisation. Effective tax rate Income tax expense expressed as a percentage of the profit before income tax, adjusted for share of profit of associates and joint ventures and impairments thereof (net of income tax). Eia Exceptional items and amortisation of acquisition-related intangible assets. Fixed costs Fixed costs include personnel costs, depreciation and amortisation, repair and maintenance costs, energy and water, and other fixed costs. Exceptional items are excluded from these costs. Free operating cash flow This represents the total of cash flow from operating activities, and cash flow from operational investing activities. Innovation Rate The Innovation Rate is calculated as revenues generated from innovations launched / introduced in the past twelve quarters divided by revenue Net debt Non-current and current interest-bearing loans and borrowings and bank overdrafts less investments held for trading and cash.
170
Overview
Other information
Net debt/EBITDA (beia) ratio The ratio is based on a twelve month rolling calculation for EBITDA (beia). Net profit Profit after deduction of non-controlling interests (profit attributable to equity holders of the Company). Organic growth Growth excluding the effect of foreign currency translational effects, consolidation changes, exceptional items, amortisation of acquisition-related intangible assets. Organic volume growth Increase in volume, excluding the effect of the first time consolidation of acquisitions. Operating profit Results from operating activities. Profit Total profit of the Group 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 defined as HEINEKENs managerial classification of countries into geographical units. Revenue Net realised sales proceeds in euros. Top-line growth Growth in net revenue. Volume Amstel volume The group beer volume of the Amstel brand. Consolidated beer volume 100 per cent of beer volume produced and sold by fully consolidated companies (excluding the beer volume produced and sold by joint venture companies). Group beer volume 100 per cent of beer volume produced and sold by fully consolidated companies and joint venture companies as well as the volume of HEINEKENs brands produced and sold under license by third parties. Heineken volume The Group beer volume of the Heineken brand. Heineken volume in premium segment The Group beer volume of the Heineken brand in the premium segment (Heineken volume in the Netherlands is excluded). Total Consolidated volume Volume produced and sold by fully consolidated companies (including beer, cider, soft drinks and other beverages), volume of third party products and volume of HEINEKENs brands produced and sold under license by third parties. Weighted average number of shares Basic Weighted average number of issued shares including the weighted average of outstanding ASDI, adjusted for the weighted average of own shares purchased in the year. Diluted Weighted average number of issued shares including the weighted average of outstanding ASDI.
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 Copies of the Annual Report and further information are obtainable from the Global Corporate Relations department via 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 Fred Vergeer (page 154) John Wildgoose, UK (pages 5, 8 and 9) The Packshot Company Ltd, UK Thomson Reuters, UK (page 158) Heineken Brouwerijen B.V. Graphic design and electronic publishing Addison, www.addison.co.uk 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 Boom & van Ketel grafimedia, the Netherlands Binding and distribution Hexspoor, the Netherlands Paper Cocoon Silk 300 gsm cover Cocoon Silk 135 gsm inside pages Cocoon Silk 115 gsm inside financial pages Cocoon Silk is produced by an ISO 140001 accredited manufacturer and is certified as an FSC recycled product.
It is produced with 100 per cent recycled post consumer fibre in a chlorine free process PCF (Process Chlorine Free). More information from HEINEKEN online: www.theHEINEKENcompany.com www.HEINEKEN.com www.enjoyHEINEKENresponsibly.com
Disclaimer This Annual Report contains forward-looking statements with regard to the financial position and results of HEINEKENs 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 HEINEKENs 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 exchange-rate fluctuations, changes in tax rates, changes in law, pension costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in HEINEKENs publicly filed Annual Reports. You are cautioned not to place undue reliance on these forward-looking statements, which are only relevant as of the date of this Annual Report. HEINEKEN does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these forward-looking statements. Market share estimates contained in this Annual Report are based on outside sources, such as specialised research institutes, in combination with management estimates.
Celebrating 140 years young
Amsterdam 1873 Paris 1889

Our premium beer was first brewed from our home in Amsterdam. Gerard Adriaan Heineken had an ambition to share our beer with the planet. He would open the world to the great taste of Heineken and we continue to do sotoday. A remarkable World Exhibition. The Eiffel Tower was born and our lager beer received the grand-Prix for the worlds best beer. To this day, the award is proudly displayed on our bottle just as the Eiffel Tower still stands tall on the Champ deMars.
Amsterdam 1931 New York 1933

A symbol of quality was born the Heineken red star. Each of the five points represents a natural ingredient of the beer: barley, hops, water, our unique A-yeast, and the magic touch of the brewer. Although few of our drinkers wear clogs these days, our recipe remains unchanged since 1873. We became the first imported beer to reach the shores of America, marking the end of prohibition. Heineken now available in 178 countries worldwide and our adventures continue to this day.
World 2013
Born in Amsterdam, raisedby the world. Weve discovered that when youre open to the world, the world is open to you. Thats whyour beer is at home everywhere around the globe. With 140 years of history, Heineken still has the mindset of an explorer. It feels like we just started.
The Future
For 140 years weve been bringing people together. Call us the worlds oldest social network. We asked you to team up on facebook to design the Heineken bottle of the future. A design that symbolizes connecting in the future. This is the winning design connection by Lee Dunford and Rodolfo Kusulas.

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The Quick Read

18,383m +7.4 per cent

18,383 17,123 16,133 14,701 14,319

Consolidated beer volume (in millions of hectolitres)

18,383 3,904 2,912 2,949 1,696 5,220 3,979 512 1,485

17,123 2,455 2,697 1,430 1,584 3,623 3,682 477 2,093

7.4% 59.0% 8.0% 106.2% 7.1% 44.1% 8.1% 7.3% (29.0)%

171.7mhl +4.3 per cent

171.7 164.6 145.9 125.2 125.8

35,979 11,691 12,311 29,071

27,127 9,7744 8,355 20,605

32.6% 19.6% 47.3% 41.1%

Heineken volume in premium segment (in millions ofhectolitres)

29.1mhl +6.2 per cent

29.1 27.4 26.0 25.1 25.9

585,100,3814 2.44 2.71 0.83 3.58 16.704 35.77

(1.7)% 110.2% 8.9% 7.2% (27.9)% 21.7% 41.1%

EBIT (beia) (in millions of EUR)

2,912m +8.0 per cent

2,912 2,697 2,623 2,095 1,932

27.5% 3.09 30.2% 80.0% 6.0

14.5% 2.27 30.1%6 122.1% 6.4

89.7% 36.1% 0.3% (34.5)% (6.3)%

Net profit (beia) (in millions of EUR)

1,696m +7.1 per cent

1,696 1,584 1,456 1,055 1,013