Supervisory Board

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Supervisory Board
Contents
This is an English translation of the original Dutch language report.
Both the Dutch and English versions
can be downloaded from www.heinekeninternational.com
2 Profile
3 Key Figures 2003
5 Executive Board
6 Supervisory Board
7 Report of the Supervisory Board
9 Corporate Governance Code
REPORT OF THE EXECUTIVE BOARD
12 Foreword by the Chairman
15 Outlook for 2004
16 2003 in Retrospect
16 Brand Policy
16 Heineken
18 Amstel
19 Research and Development
20 Investor Relations
20 Safety, Health and Environment
21 Alcohol and Society
22 Personnel and Organisation
25 Risk Profile and Internal Governance
26 Regional Review
26 Europe
36 The Americas
40 Africa/Middle East
44 Asia/Pacific
Charts
Net profit
12
Total beer volume
13
Total Heineken sales
16
Total Amstel sales
19
Geographical distribution of personnel
23
Group volume Europe
27
Group volume in Europe 2003
27
Beer consumption in Europe 2002
27
Group volume Americas
37
Group volume Africa/Middle East
41
Group volume Asia/Pacific
45
Net turnover
47
Operating profit
49
Tangible fixed assets,
net investments and depreciation
49
Group equity
50
Dividend per share
87
Heineken N.V. share price
87
Heineken Holding N.V. share price
88
47 Financial Review
F I N A N C I A L S TAT E M E N T S 2 0 0 3
52 Consolidated Balance Sheet
53 Consolidated Profit and Loss Account
54 Consolidated Cash Flow Statement
55 Notes to the Consolidated Balance Sheet, Profit and Loss Account
and Cash Flow Statement for 2003
58 Notes to the Consolidated Balance Sheet
68 Notes to the Consolidated Profit and Loss Account
72 Segmented Information
75 Notes to the Consolidated Cash Flow Statement
76 Participating Interests
78 Balance Sheet of Heineken N.V.
79 Profit and Loss Account of Heineken N.V.
80 Notes to the Balance Sheet and Profit and Loss Account
of Heineken N.V. for 2003
O T H E R I N F O R M AT I O N
86 Auditors’ Report
86 Appropriation of Profit
86 Special Rights pursuant to the Articles of Association
86 Authorised Capital
86 Events after Balance Sheet Date
S U P P L E M E N TA R Y I N F O R M AT I O N
87 Information for Shareholders
90 Historical Summary
92 Operating Companies and Participating Interests
Profile
Innovation
Heineken is one of the world’s largest and
• fulfil its corporate social responsibility,
most advanced brewers and the Heineken
particularly with regard to policy on
Heineken works constantly to meet the
brand is the most valuable international
alcohol abuse, social and environmental
consumer’s changing needs and improve
beer brand. Operating in over 170 coun-
issues.
the quality and safety of its processes
and products, its cost structure and its
tries, through its own breweries and
through export and licensing partners,
Shareholders
environmental performance. For a leading
Heineken has the widest global presence
Heineken seeks to secure long-term profit
company like Heineken, innovation in
of all the international brewers. Europe
growth for its shareholders by expanding
marketing, communication, packaging,
accounts for over half of Heineken’s sales
in existing markets and entering new
brewing technology and supply chain
volume. At the end of 2003, Heineken
markets. Heineken’s strategy creates add-
management is important, especially in
owned over 115 breweries in more than 65
ed value for shareholders and generates
reinforcing the competitive position
countries* and employed 61,271 people.
returns which are above the average for
of the international Heineken and Amstel
the brewing sector.
brands.
Heineken has its roots in Amsterdam,
Brands
Ownership structure and stock
where Gerard Adriaan Heineken purchas-
Heineken has built its strong international
exchange listing
ed a brewery in 1864. In the ensuing
and local market positions by developing
Heineken Holding N.V. holds 50.005% of
decades, under the leadership of three
and regularly updating its cohesive
the Heineken N.V. shares. Heineken
generations of the Heineken family and
portfolio of strong brands which offer high
Holding N.V. has no operational activities:
pursuing a policy of measured expansion
added value for its customers and
these are carried on by Heineken N.V.
and consistent brand development,
consumers.
and its related companies. Heineken N.V.
Origins
Heineken has grown into one of the world’s
The group’s principal international
leading brewing groups. Core values within brands are Heineken and Amstel.
is responsible for the development and
implementation of the strategy. Heineken
the company include respect, enjoyment
Heineken has the widest global presence
Holding N.V. is concerned primarily with
and a passion for quality.
of any international beer brand. In virtually
safeguarding the long-term continuity,
all markets, Heineken is positioned in the
independence and stability of Heineken’s
Goal and stra tegy
premium segment. Heineken is the largest
activities. The net asset value and dividend
Heineken’s goal at all times is to defend
beer brand in Europe and Amstel the third
policy of the two companies are identical.
and strengthen its leading global market
largest. Amstel is generally positioned in
The shares and options on the shares
position and preserve its independence.
the mid-priced mainstream segment, the
of both companies are traded on Euronext
Heineken’s strategy for attaining this
largest segment of the market. The group
Amsterdam.
goal is to:
has a very limited presence in the low-
• achieve a level of sales and profitability
priced segment. As well as lagers, our
which makes it one of the world’s largest
international and local brands also include
and financially best-performing brewing
speciality beers, light beers (low-calorie
groups
beers) and alcohol-free beers.
• maintain a strong portfolio of beer
brands, with Heineken as the leading
Distribution
international premium beer
Heineken seeks to achieve comprehensive
• maintain strong local market positions,
coverage in each market, through allian-
a good sales mix and an efficient cost
ces with independent distributors or via its
structure by combining the sale and
own beverage wholesalers. Heineken owns
distribution of the international
numerous wholesalers in Europe which, in
Heineken premium brand with that of
addition to beer, also supply a supporting
strong local brands
range of soft drinks, wines and spirits to
the on-trade. Some of the soft drinks are
produced by Heineken.
* The full list of breweries
and operating companies can
be found on pages 92- 95.
2
Key Figures 2003
2003
2002*
Change (%)
Results in millions of euros
Net turnover
9,255
8,482
9.1
Operating profit
1,222
1,282
– 4.7
EBITDA 1
1,866
1,811
3.0
Net profit
798
795
0.4
Dividend
157
157
–
1,637
1,184
38.3
Cash flow from operating activities
Balance sheet in millions of euros
10,897
7,781
40.0
Group equity
3,899
3,030
28.7
Shareholders’ equity
3,167
2,637
20.1
784
784
–
391,979,675
391,979,675
–
Total assets
Issued capital
Per share of €2.00
Number of shares issued
Cash flow from operating activities
4.18
3.02
38.3
Net profit
2.04
2.03
0.4
EBITDA 1
4.76
4.62
3.0
CEPS 2
2.11
2.03
3.9
Dividend
0.40
0.40
–
Shareholders’ equity
8.08
6.73
20.1
Western Europe
6,560
6,232
5.3
Central/Eastern Europe
1,145
898
27.5
The Americas
1,501
1,361
10.3
Net turnover in millions of euros
(including interregional sales)
Africa/Middle East
876
819
7.0
Asia/Pacific
467
489
– 4.5
Investments less disposals
611
696
– 12.2
Depreciation and value adjustments
560
481
16.4
61,271
48,237
27.0
5,256
5,527
– 4.9
Tangible fixed assets in millions of euros
Staf f in numbers
Average number of employees
of whom employed by Dutch operating companies
Ratios
Operating profit as % of net turnover
13.2
15.1
Operating profit as % of total assets
11.2
16.5
Net profit as % of shareholders’ equity
25.2
30.1
Dividend as % of net profit
19.7
19.7
Group equity/other borrowed capital
0.56
0.64
Group equity/fixed assets
0.54
0.61
Current assets/current liabilities
1.25
1.10
9.5
12.2
Interest coverage ratio
1
Operating profit plus amortisation,
depreciation and value adjustments.
3
2
Net profit per share before
amortisation of goodwill.
* The 2002 figures are restated
for comparison purposes.
Executive Board
as at 24 February 2004
A . R uys ( 19 47 )
J . F. M . L . v a n B o x m e e r ( 1 9 6 1 )
Dutch nationality
Belgian nationality
1993 Member of the Executive Board
2001 Member of the Executive Board
1996 Vice-Chairman
2002 Chairman
Joined Heineken N.V. in 1984 and has held
various positions in the Netherlands and
Joined Heineken N.V. in 1993 after a career
abroad.
with Unilever N.V. in the Netherlands and
Areas of Responsibility
abroad.
• Corporate Production, Policy & Control
Areas of Responsibility
• Heineken Technical Services
• Corporate Human Resources
• Brau Union AG
& Organisation Development
• North-West Europe
• Corporate Communication
• Sub-Saharan Africa
• Corporate Affairs
• Heineken Brouwerijen
• Corporate Legal & Business Affairs
• Heineken Nederland Supply
• Group Internal Audit
• Heineken Nederlands Beheer and
• Corporate Secretariat
Heineken Nederland Business Services
• Proseco
• Vrumona
• Asia/Pacific
• Heineken Brewery Russia
• Athenian Brewery
Supervisory Directorships 1
• CIS Countries and Kazakhstan
• Gtech Holdings Corporation, USA
• Robeco Groep N.V., Netherlands
(until mid-2004)
• Sara Lee/DE International B.V.,
Netherlands
D . R . H o of t G ra a f l a n d ( 19 5 5 )
Dutch nationality
2002 Member of the Executive Board
Joined Heineken N.V. in 1981 and has held
M . J . B o l l a n d ( 19 5 9 )
various positions in the Netherlands and
Dutch nationality
abroad.
2001 Member of the Executive Board
Areas of Responsibility
Joined Heineken N.V. in 1986 and has held
• Corporate Finance
various positions in the Netherlands and
• Corporate Control & Accounting
abroad.
• Corporate Information Technology
• Corporate Business Development
Areas of Responsibility
• Corporate Internal Services
• Corporate Brands
• Corporate Commercial Excellence
Supervisory Directorships2
• Latin & Central America
McGregor Fashion Group N.V.,
• Caribbean
Netherlands
• Middle East & North Africa
• Heineken USA (incl. Canada)
1
Executive Board may not in principle accept
• Heineken España
(incl. Portugal and Canary Islands)
• Heineken France
• Heineken Italia
• Beer Systems
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
5
Under the current by-laws, members of the
more than two external Supervisory Directorships.
2
No Supervisory Directorships may be accepted
by members of the Executive Board for the first three
years after their appointment. Mr. Hooft Graafland
already held this Supervisory Directorship at the time
of his appointment.
Superv isory Board
as at 24 February 2004
J . M . d e J o n g ( 19 4 5 )
H . d e R u i te r ( 19 3 4 )
J . M . H e s s e l s ( 19 4 2 )
Dutch nationality
Dutch nationality
Dutch nationality
Appointed in 2002
Appointed in 1993
Appointed in 2001
Chairman
Last reappointed 2001
Member of the Audit Committee
Chairman of the Preparatory Committee
Chairman of the Audit Committee
Profession: Company Director
Profession: Banker
Profession: Engineer
Supervisory Directorships
Supervisory Directorships
• Euronext N.V. (Chairman)
• Nutreco Holding N.V.
• Wolters Kluwer N.V. (Chairman)
• Royal Philips Electronics N.V.
• Cementbouw B.V. (Chairman)
• Univar N.V. (Chairman)
• Fortis N.V.
• Dura Vermeer Groep N.V.
• Aegon N.V. (Vice-Chairman)
• Royal Vopak N.V.
• Daimler Chrysler International
• Koninklijke Nederlandse Petroleum
• Laurus N.V.
Supervisory Directorships
Finance B.V.
Maatschappij N.V.
• Amsterdam Schiphol Group N.V.
• Barnesandnoble.com, USA
• Volkswagen Financial Services N.V.
• Volkswagen International Finance N.V.
• BASF Nederland B.V.
M . R . d e C a r va l h o ( 19 4 4 )
• N.V. Verzekering-Maatschappij
British nationality
C . J . A . va n L e d e ( 19 4 2 )
Appointed in 1996
Dutch nationality
Last reappointed in 2003
Appointed in 2002
Member of the Preparatory Committee
Member of the Preparatory Committee
• Banca Antonveneta SpA, Italy
Profession: Banker
Profession: Company Director
• Kredietbank Luxembourgeoise S.A.,
Investment Banking (Vice-Chairman)
‘Neerlandia van 1880’
• Onderlinge Levensverzekering-Mij.
’s-Gravenhage U.A.
Luxembourg
Citigroup Inc., United Kingdom
Supervisory Directorships
• De Nederlandsche Bank (Chairman)
• CRH Plc, Ireland
• Royal Philips Electronics N.V.
A . H . J . R i s s e eu w ( 19 3 6 )
• Akzo Nobel N.V.
M . D a s ( 19 4 8 )
Dutch nationality
• KLM N.V.
Dutch nationality
Appointed in 2000
• Scania AB
Appointed in 1994
Member of the Audit Committee
• Sara Lee Corporation
Last reappointed 2001
Profession: Company Director
• Reed Elsevier Group
• Air Liquide
Delegated Member
Secretary of the Preparatory Committee
Supervisory Directorships
Profession: Lawyer
• KPN N.V. (Chairman)
Partner in Loyens & Loeff
• AOT N.V. (Chairman)
• Samas-Groep NV (Chairman)
Supervisory Directorships
• NPM Capital N.V.
• Greenfee B.V. (Chairman)
• Blokker Holding B.V.
• Intergamma B.V. (Chairman)
Other posts*
• Groeneveld B.V. (Chairman)
• Heineken Holding N.V. (Chairman)
• Stichting Administratiekantoor Priores
• LAC B.V.
* Where relevant to performance
of the duties of Supervisory Director.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
6
Two members of the Supervisory Board retire each
year according to a rota which is determined annually.
Report of the Superv isory Board
To the shareholders
Committee. The Supervisory Board
provisions. This is explained in greater
The Executive Board has submitted its
proposes to reappoint Mr. Risseeuw and
detail in the chapter on the Dutch
financial statements for 2003 to the Super-
a binding nomination for his appointment
Corporate Governance Code on page 9
visory Board. These financial statements,
will be submitted to the Annual General
of this report.
which can be found on pages 52-84 of this
Meeting on 29 April 2004. After Mr. De
annual report, have been audited by KPMG
Ruiter’s departure, the Supervisory Board
Consultation and decision-making
Accountants N.V., whose report appears
will have six members.
The Supervisory Board held seven joint
on page 86.
With effect from 30 April 2004, chair-
meetings with the Executive Board
manship of the Supervisory Board will
in 2003. The agenda of these meetings
that the shareholders adopt these finan-
pass to Mr. C.J.A. van Lede. At the time of
included a number of regular items,
cial statements and, as proposed by the
his appointment as a member of the
such as consideration of the company’s
Executive Board, appropriate €157 million
Supervisory Board in 2002, Mr. De Jong
strategy, financial position and results,
of the profit as dividend and add the
agreed to take on the chairmanship to
the operating companies’ policies and
remainder, amounting to €641 million, to
enable Mr. Van Lede, who had been
business plans, acquisitions and other
the retained profits. The proposed divi-
appointed at the same time as Mr. De Jong,
investment proposals and management
dend amounts to €0.40 per share of €2.00
to combine his former duties as Chairman
development. Other items on the agenda
nominal value, of which €0.16 was paid as
and CEO of Akzo Nobel with his member-
included evaluation of completed
interim dividend on 22 September 2003.
ship of the Supervisory Board. As from
investment projects, interest-rate and
The dividend for 2002 was €0.40.
30 April 2004, Mr. De Jong will assume
exchange-rate risks, financing, pensions
A proposal to split the shares by issuing
the vice-chairmanship of the Supervisory
and internal risk management and control
five new shares of €1.60 nominal value for
Board and chairmanship of the Audit
systems. Meetings convened to consider
every four existing shares of €2.00 nom-
Committee.
the year’s results were attended by the
inal value will be presented to the General
Mr. Van Lede will chair the Preparatory
external auditors.
Meeting of Shareholders. The new shares
Committee as from the same date.
Particular attention was devoted in
will carry full entitlement to dividend as
The Supervisory Board proposes to
2003 to the new International Financial
from 1 January 2004.
appoint Mr. K. Büche as a member of the
Reporting Standards. An extra meeting
Executive Board with effect from 1 May
was convened to approve the acquisition
Executive and Supervisory Board changes
2004. A binding nomination for his
of BBAG (Austria). One meeting was
Messrs. J. Loudon and M.R. de Carvalho
appointment will be submitted to the
held at the brewery in ’s-Hertogenbosch,
retired by rotation from the Supervisory
Annual General Meeting of Shareholders
where new developments within the
Board at the Annual General Meeting
on 29 April 2004.
brewery and product innovations were
The Supervisory Board recommends
discussed. A meeting was also held in
of Shareholders on 24 April 2003. Mr. de
Carvalho was eligible for immediate
Corporate Governance
Strasbourg, where the Heineken France
reappointment and was duly reappointed.
The Dutch Corporate Governance Code
management team gave a presentation for
We thank Mr. Loudon, who chose not to
was discussed at length in 2003 (in its
the Supervisory Board on developments in
seek reappointment, for his many years
draft form) and early in 2004 (in its final
France.
of service to the Board.
form). At the meeting on 24 February
At two of the meetings, the Executive
2004, the Supervisory Board discussed
Board withdrew while the Supervisory
are due to retire by rotation from the
the final Code and its underlying principles
Board discussed the functioning
Supervisory Board at the Annual General
in relation to the structure of the Heineken
and composition of the Executive and
Meeting of Shareholders on 29 April 2004.
group. The timetable for dealing with the
Supervisory Boards.
Mr. Risseeuw will be eligible for immediate
various issues was also discussed. While
reappointment, but Mr. De Ruiter will not,
the company endorses the code’s princi-
Committees
having reached the age limit of 70 stipulat-
ples, the structure of the Heineken group,
The Supervisory Board has two com-
ed in the Supervisory Board’s by-laws.
and in particular the relationship between
mittees, the Audit Committee and
The Supervisory Board thanks Mr. De Ruiter
Heineken Holding N.V. and Heineken N.V.,
Preparatory Committee. Six meetings
for his contribution to its work, including
prevents Heineken N.V. from complying
were held last year by the Preparatory
his service as Chairman of the Audit
with a small number of the best-practice
Committee, which is responsible
Messrs. H. de Ruiter and A.H.J. Risseeuw
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
7
Report of the Supervisory Board
for preparing decision-making by the
The Supervisory Board takes this oppor-
Supervisory Board, including decisions
tunity to thank the Executive Board
relating to the remuneration of the
and all the employees for their efforts
members of the Executive Board.
in 2003.
The Audit Committee, whose responsibilities include evaluation of the financial
Amsterdam, 24 February 2004
statements, the annual report, the internal
financial reporting and the internal control
Supervisory Board
systems, held two meetings last year,
one of which was attended by the external
De Jong
Risseeuw
auditors. After this meeting, the Audit
Das
Hessels
Committee held discussions with the
De Ruiter
Van Lede
company’s auditors in the absence of the
de Carvalho
Executive Board.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
8
Corporate Governance Code
The Dutch Corporate Governance Code
performed for the Heineken group since
Given the nature and traditions of the
(the ‘Code’) of the Corporate
1952 has been to safeguard its continuity,
Heineken group, the Executive Board and
Governance Committee (the ‘Tabaksblat
independence and stability and create
Supervisory Board do not consider this
Committee’)
conditions for controlled, steady growth
as an impediment to Messrs. De Jong, Das
of the Heineken group’s activities. This
and de Carvalho in being independent.
Under the Code, Dutch listed companies
has allowed Heineken N.V. consistently to
are expected to include in their annual
pursue a long-term policy which serves
Delegated Supervisory Board member
report, starting with the 2004 edition,
the interests of the entire Heineken group,
Best-practice provision III.6.6 defines a
a chapter outlining their Corporate
its shareholders, employees and other
delegated Supervisory Board member as
Governance structure and compliance
stakeholders.
a member to whom a special task is
with the Code and disclosing any depar-
The stability provided by this structure
assigned. Such delegation may not go
tures from defined best-practice
has enabled the Heineken group to rise
beyond the duties of the Supervisory
provisions.
to its present position as the brewer with
Board itself and may not include manage-
the widest international presence and one
ment of the company. It may entail more
of the world’s largest brewing groups.
intensive supervision and advice and more
The Tabaksblat Committee also recommends that companies indicate, in their
2003 annual report, in a separate chapter,
Within the Heineken group, the primary
regular consultation with the Executive
how they intend to ensure compliance
duties of Heineken N.V.’s Executive Board
Board. Delegation may only be temporary
with the Code and any problems
are to initiate and implement corporate
and may not detract from the duties
they foresee. This chapter is Heineken’s
strategy and to manage Heineken N.V. and
and powers of the Supervisory Board.
response to that recommendation.
its related companies. It is supervised in
The delegated person remains a member
the performance of its tasks by Heineken
of the Supervisory Board.
While Heineken N.V. endorses the Code’s
principles and will apply virtually all of
N.V.’s Supervisory Board.
As regulated by the Articles of Association of Heineken N.V., the post of delegat-
the best-practice provisions, the structure
of the Heineken group, and in particular
Independence of the Supervisory Board
ed Supervisory Board member – a position
the relationship between Heineken
Heineken N.V. endorses principle III.2 of
currently held by Mr. Das, who is also
Holding N.V. and Heineken N.V., prevents
the Code, which states that the Super-
Chairman of the Management Board of
Heineken N.V. from complying with a small
visory Board should be constituted such
Heineken Holding N.V. – is consistent with
number of the best-practice provisions,
that the members are able to act object-
the best-practice provision, except in so
as set out below.
ively and independently of one another, of
far as the position is not temporary and is
the Executive Board and of any particular
held for the term for which the member
Structure of the Heineken group
interests. Best-practice provision III.2.1,
concerned is appointed by the general
A 50.005% interest in Heineken N.V. is held
which is derived from it, states that all
meeting of shareholders of Heineken N.V.
by Heineken Holding N.V. Both companies
the members of the Supervisory Board,
are listed on the Euronext Amsterdam
with the exception of not more than one
Board consider that, as regulated by the
stock exchange. L’Arche Holding S.A.,
person, shall be independent. In a strictly
Articles of Association of Heineken N.V.,
a Swiss company owned by the Heineken
formal sense, three members of the
the post of delegated Supervisory Board
family, in turn holds a 50.005% interest
Supervisory Board do not meet the
member, which has been in existence
in Heineken Holding N.V.
applicable dependence criteria as set out
since 1952, is consistent with the structure
in best-practice provision III.2.2:
of the Heineken group.
Standing at the head of the Heineken
group, Heineken Holding N.V. is not an
The Executive Board and Supervisory
• Mr. De Jong was a member of Heineken
ordinary holding company. Since its
Holding N.V. in 2002, the year before his
Term of office of Supervisory
formation in 1952, Heineken Holding N.V.’s
appointment to the Supervisory Board.
Board members
objective pursuant to its Articles of
• Mr. Das was a partner in a firm which
According to best-practice provision
Association has been to manage or
was appointed as a consultant to
III.3.5, a member may not be appointed
supervise the management of the
Heineken N.V. in 1994, the year before
to the Supervisory Board for more than
Heineken group and to provide services
his appointment to the Supervisory
three terms of four years.
for Heineken N.V.
Board.
The role Heineken Holding N.V. has
• Mr. de Carvalho is married to
Mrs. C.L. de Carvalho-Heineken.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
9
The Executive Board and Supervisory
Board take the view that, given the
Corporate Governance Code
structure of the Heineken group, this limit
Dutch listed companies, with chairman-
will be applied to the extent that it is
should not apply to members who are
ships counting double.
consistent with it.
related by blood or marriage to the
Any departures from best-practice
Heineken N.V. expects to be able to
Heineken family or who are members of
provision III.3.4 will be disclosed and
apply the other best-practice provisions
the Management Board of Heineken
explained in the 2004 annual report.
without difficulty.
Holding N.V.
The Executive Board and Supervisory
Where they are not already in existence,
Board take the view that Heineken N.V.’s
the Supervisory Board committees
Other provisions
decision on whether to apply best-practice
envisaged by the Code will be appointed.
We expect the study of the remuneration
provision III.3.4 should also be guided
The by-laws and other documents to which
of Executive Board members, which was
by the company’s interests in terms of its
the Code relates will be posted, after
started in 2003, to be completed in 2004.
ability to attract and retain skilled Super-
adoption or amendment, on the corporate
Remuneration policy will be determined
visory Board members.
website (www.heinekeninternational.com)
on the basis of the study’s findings. It will
According to best-practice provision
together with the other information
prescribed by the Code.
not be possible until then to determine
IV.3.8, the minutes of the general meeting
the extent to which Heineken will apply
of shareholders should be made available
all the best-practice provisions of Chapter
on request within three months of the
the extent to which amendment of the
II of the Code.
meeting, after which the shareholders
Articles of Association may be necessary
should be given three months to comment
or desirable in order to comply with the
Board are still considering the question
on them. The minutes should then be
Code. If it results in a proposal to amend
whether and, if so, to what extent
adopted in the manner stipulated in the
the Articles of Association, such a
best-practice provisions II.2.6 and III.7.3,
Articles of Association.
proposal will probably be put to the
The Executive Board and Supervisory
relating to the holding of and transactions
It is customary, as provided in Article 14,
A study will be undertaken to establish
general meeting of shareholders in 2005.
in securities other than those of the com-
paragraph 7, of the Articles of Association,
pany by members of the Executive Board
to have a notarial record made of the
and Supervisory Board, respectively, are
proceedings of the general meeting of
to be applied.
shareholders of Heineken N.V. The
Supervisory Board
Best-practice provision III.3.4 states that
Executive Board and Supervisory Board
Executive Board
no individual may be a member of the
consider it desirable to continue this
Heineken N.V.
Supervisory Boards of more than five
practice and best-practice provision IV.3.8
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
10
Amsterdam, 24 February 2004
Report of the Executive Board
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
11
Foreword by the Chairman
O p erating profit
Net p rofit
N et prof i t
€1,222 million , – 4.7%
€798 million, + 0.4%
€806 million, + 1.4%
Net turnover
Total beer sales
Heineken beer sales
€9.3 billion, + 9.1%
109.0 million hectolitres, + 0%
22.1 million hectolitres, + 4.3%
(excl. exceptional items and amortisation of goodwill)
Net profit, excluding exceptional items and amortisation of goodwill, turned
out 1.4% higher at €806 million. Organic growth* in net profit amounted to 7%.
Contributory factors in our organic growth were the improved sales mix
(reflecting the strong performance of the Heineken brand), higher selling
* Growth in operating profit excluding
prices, increased sales and strict cost control. The acquisition of BBAG, the
the effects of first-time consolidations,
amortisation of goodwill, exchange-rate
largest purchase in Heineken’s history, has significantly strengthened the base
movements and exceptional items.
from which we shall pursue earnings growth in the medium and long term.
N et p rof i t
That Heineken is firmly on course is clear
working methods and cost savings. Higher
not only from the organic growth in our
beer sales also contributed to profit
profit, but also from the rapid progress of
growth in some markets. Sales of Heineken
BBAG’s integration activities in Central
beer in the premium segment increased to
Europe, the strengthening of our market
18.5 million hectolitres (+6.1%), with volume
positions and brand portfolios in many
rising fastest in Italy, Poland, Spain, France
countries and the advances we are making
and the Far East. Global sales of Heineken
in cost control and innovation.
beer, including the Netherlands, increased
The external factor which affected our
in millions of euros
700
798
795
767
800
profits were the sharp decline of the US
sales were also up slightly (+1.8%), despite
dollar and several other currencies. This
the decline in the mainstream segment,
was compounded by economic weakness
with Africa and Spain accounting for most
in many countries, which depressed on-
of this growth.
trade sales and favoured the growth of
621
600
445
516
500
400
345
297
274
300
297
301
200
100
States, where we generate almost 40%
branded beers in the mainstream seg-
of our North American volume, were
ment. Furthermore we experienced reper-
depressed by very poor weather.
cussions of the Sars epidemics and the
This flattened our growth curve in the US,
Iraq war.
although sales in the rest of the country
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
12
continued to grow. The Heineken brand
premium beers continued to grow in many
is well positioned for further growth,
of our markets, as did the speciality beer
supported by our closer relationships
segment in most countries. Our operating
with supermarket chains, our sustained
companies’ local brand portfolios, in which
focus on the on-trade, an expanded
the Heineken brand plays a prominent
sales force and innovative packaging.
role, were able to profit from this trend.
0
Sales in the North-East of the United
low-priced beer volume at the expense of
Demand for international and national
300
to 22.1 million hectolitres (+4.3%). Amstel
Our growth strategy for the East Coast
Many reported an improved local-currency
is to concentrate on extending the market
operating profit, helped by a better sales
share and for the West Coast to work on
mix, effective knowledge transfer, efficient
expanding the distribution.
(from left to right)
Thony Ruys
Marc Bolland
Jean François van Boxmeer
René Hooft Graafland
Sales of Amstel Light improved a little.
whole, but also by allowing the national
In addition to the external factors referred
and international premium segment to
to above, Amstel Light also faced increas-
develop more rapidly.
Total beer volume
ing competition from low-carbohydrate
in millions of hectolitres
beers in the United States.
N ew grow t h m ar ket for
draught beer
84
90.9
109.0
105.1
96
97.9
108
108.9
120
72
60
48
36
24
Extended lead in Europe
Profit growth in our mature markets
No brewer has secured strong market
depends primarily on our ability to
positions in as many countries as Heineken
improve our sales mix and reduce our
and no beer brand is as successful as
costs. It is essential that we create extra
Heineken in so many countries. The acqui-
value for the consumer, which is why
sition of Brau-Beteiligungs A.G. (BBAG)
we introduce innovations and improve-
in Austria has significantly extended our
ments every year in our packaging,
lead in Europe, where we were already
marketing and communication. This
the biggest brewer. Heineken is now also
ensures that our brands stay in the lead,
market leader in Austria, Romania and
with the Heineken brand in the vanguard.
Hungary. We have consolidated our
The BeerTender®, which we tested
leading position in Poland and acquired a
extensively on the Swiss market in 2003
regional position in the Czech Republic.
and introduced to the Dutch market in
In Central Europe, Heineken was already
February 2004, is without doubt a major
the market leader in Slovakia, Bulgaria
packaging innovation.
and Macedonia. The integration of our
In countries with a draught beer culture,
activities is proceeding according to plan.
this advanced dispensing system for
With several countries poised to join
12
2003
2002
2001
2000
1999
0
REPORT OF THE EXECUTIVE BOARD
13
everyday use will create new opportuni-
the European Union, the outlook for faster
ties for growth on the take-home market.
economic growth and rising purchasing
The added value for the consumer,
power in Central Europe is good. This
in terms of flavour and in the drawing and
will benefit the beer market, not only by
serving ritual, is expected to generate
boosting sales of branded beers as a
higher net sales margins than beer in a
Foreword by the Chairman
bottle or can. Heineken is the first brewer
our debt position, growth through new
with one another. This will enable us to
in the world to launch a dispensing system
alliances and acquisitions will still be an
introduce more swiftly the innovations
of this kind for the take-home market.
option. Heineken applies strict profitability
needed to maintain our appeal to the
conditions in assessing potential candi-
consumer. In some cases, professional-
Improved market positions
dates. Important criteria which we con-
isation also means rationalisation or
in grow th markets
sider when contemplating brewery
even compulsory redundancies, as was
Vigorous sales growth in emerging
acquisitions, apart from market position
the case last year in the Netherlands and
markets such as Poland, Russia, Egypt and
and acquisition price, are a strong brand
elsewhere. Sadly, this is unavoidable.
Nigeria are making a major contribution to
portfolio, distribution opportunities for
Increasingly heavy demands are being
safeguarding our long-term profit growth.
the Heineken brand and potential for cost
made on our organisation and our per-
For the same reason, it is essential for us
savings. As well as China and other parts
sonnel. Consumer behaviour is becoming
to continue building our positions in
of Asia, Russia and South America are also
more diverse, international competition is
developing markets. In China, we formed a
attractive markets in which Heineken has
growing and many mature beer markets
closer alliance with Asia Pacific Breweries,
scope to advance its position.
are under pressure, but my confidence in
the future is strengthened by the commit-
with the result that local production of
Heineken beer is to start in April 2004.
Resu lt refl e c t s advers e
ment and understanding with which our
Heineken also undertook a new venture in
exchange rates
people are facing these changes. For that,
China with the acquisition, via Heineken
Heineken has substantial revenue in the
and for the contribution they have made
Asia Pacific China, of a minority interest in
US dollar, which lost 17% of its value
to our predominantly good performance
Guangdong Brewery Holdings in January
against the euro over the course of 2003.
in 2003, I thank them most sincerely.
2004. In Guangdong province, which has
Fortunately, our hedging policy enabled
a population of 85 million, the Heineken
us to postpone the negative effect of
Th o ny R uys
brand will benefit from the distribution
the weaker dollar to 2004 and 2005.
Chairman of the Executive Board
network operated by Guangdong Brewery
Our result in 2003 was also adversely
and inclusion in its brand portfolio. We are
affected by movements in other curren-
seeking to further extend our position in
cies, such as the Nigerian naira, the
the Chinese market.
Russian rouble, the Polish zloty and the
The opening of a new, ultramodern
brewery boosted brewing capacity in
Singapore dollar.
A significant factor in this context was
Nigeria by 3.4 million hectolitres per year
that most Heineken beer for export is
and sales gained 23%. A new brewery
produced at our Dutch breweries, where
was also opened near Hanoi, to meet the
major reorganisation exercises have been
rapidly rising demand in Vietnam. In Chile
carried out. This meant that we were able
and Argentina, the production and
to compensate for part of the negative
distribution of Heineken beer was trans-
exchange effect by lower production
ferred to our new partner CCU, following
costs.
our acquisition in 2003 of a 50% interest in
CCU’s holding company. Al Ahram Bever-
Professionalisation
ages Company in Egypt, which we acquir-
We may be a leading international brewer
ed in 2002, performed exceptionally well
on the global beer market, but our internal
and sales of Fayrouz, a fruit-flavoured non-
organisation still has ample room for
alcoholic malt drink, increased sharply.
improvement. Our ‘Taking Heineken to the
Al Ahram will work on expanding exports
Next Level’ project is designed to achieve
of Fayrouz in 2004.
greater professionalism, which will enable
Although, after the major acquisitions in
us more accurately to measure, compare
2002 and 2003, Heineken is concentrating
and improve our own performance and
primarily on making synergy gains within
exchange information on the most suc-
the new operations and improving
cessful working methods more frequently
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
14
Outlook for 2004
With structural growth in the premium beer market expected to continue,
P rof i t fore c as t
Heineken’s sales mix can improve even further. We see opportunities for grow-
The structural volume growth in the pre-
ing our sales and improving our selling prices in a number of markets, and
mium segment of the world beer market
we shall work unceasingly to reduce our costs. Heineken is confident of profit
will continue, enabling Heineken to further
growth in the long term and, barring unforeseen circumstances, we are looking
improve its sales mix. There is scope for
forward to sustained organic growth in earnings in 2004, to which our new
expanding our sales and raising our selling
acquisitions, before amortisation of goodwill, are expected to make a positive
prices in several markets, and we shall
contribution. The adverse exchange rates for the dollar and other currencies
keep cutting our costs wherever possible.
will, however, cancel out this profit growth.
Barring unforeseen circumstances,
Heineken therefore expects to achieve
With the economy showing signs of recov-
Our successful bid in January and February
further organic profit growth* in 2004.
ery, we predict a modest increase in the
2004 for the remaining shares in BBAG
Our recent acquisitions will also make a
imported beer segment in the United
and Brau Union in Austria costs €742 mil-
positive contribution to the result, before
States, in which we expect to increase
lion and will be financed from available
amortisation of goodwill. At the current
our market share.
cash reserves and a credit facility negotia-
exchange rates for the dollar and other
ted in 2003. Our acquisition of an interest
currencies against the euro relative to
the beer market benefits from the
in the Guangdong brewery in China in
the basis on which hedging contracts have
economic recovery. The gradual down-
early 2004 involves a net cash outflow of
been entered into, Heineken’s net profit
ward trend in the beer market in Western
€28.5 million, which will be financed from
will again be severely affected by currency
Europe due to demographic factors will
existing cash reserves.
movements. These effects will outweigh
In Europe, it will be some time before
Heineken will continue to seek cost
the predicted organic profit growth and
market will remain stable or grow a little.
savings and efficiency gains. Excluding
the contributions to earnings in 2004 by
The growth in the premium beer segment
new acquisitions, we expect the downward
our new acquisitions. If the exchange rates
throughout Europe will continue. Our
trend in the number of employees to con-
stay the same, the weaker dollar will still
operating companies will focus mainly on
tinue, helped by the continuous improve-
have a significant impact on our results in
improving the sales mix by expanding
ment in our business processes and the
2005. Heineken’s long-term profit forecast
sales of premium and speciality beers,
integration of activities in Central Europe.
is positive, given the strength of our brand
continue, but the Southern European
optimising our brand portfolio and
portfolio, our distribution structure and
reducing our costs. Beer consumption is
the opportunities for efficiency gains.
rising in parts of Central Europe and,
having strengthened Heineken’s position
in the region through BBAG, we are well
placed to benefit from this trend. We also
have scope for significantly reducing costs
through the integration and reorganisation of various activities within BBAG.
Sales of the Heineken brand will continue
to grow.
Investments
Investments in tangible fixed assets in
2004 are expected to total around €750
million. These investments will in principle
be financed from cash flow, supplemented
where necessary with available credit
facilities.
* Profit growth excluding foreign
exchange effects, acquisitions, exceptional items
and amortisation of goodwill.
REPORT OF THE EXECUTIVE BOARD
15
2003 in Retrospect
Brand policy
growing demand for variety. Although
Heineken
While resources and processes for optimis-
sales of these beers are modest in relation
The Heineken brand achieved sustained
ing the operating companies’ commercial
to Heineken’s total volume, they are grow-
growth in most of its markets, particu-
policy are developed centrally within
ing year on year at a substantial rate
larly those in Southern Europe and
Heineken, the operating companies them-
and are helping to improve the sales mix.
Asia/Pacific and the emerging markets
selves decide how to deploy these uniform
For the Heineken and Amstel brands,
in Eastern Europe. Sales of Heineken beer
sales, distribution, marketing and com-
the company develops and maintains
in the premium segment in 2003 increas-
munication tools in the best possible way.
central guidelines and standards for brand
ed 6.1% to 18.5 million hectolitres, with
Each operating company is responsible for
style, brand value and brand development.
Italy, Poland, Spain, France and the Far
its own performance.
At the global level, central support and
East accounting for most of the growth.
benchmarking programmes are used
Worldwide sales of Heineken beer were
ing and refining the systems and defi-
to optimise local marketing, sales and
4.3% higher at 22.1 million hectolitres,
nitions used in formulating commercial
distribution.
excluding Heineken Cold Filtered, a beer
Progress was made in 2003 in harmonis-
policy and developing and improving our
brewed to a different recipe in the United
brand performance indicators.
Kingdom, production and sale of which
were discontinued in 2003.
The objective of this harmonisation and
improvement process is threefold: firstly
Sales of the Heineken brand grew fastest
to improve the quality and comparability
of our analyses of the performance and
Total Heineken sales
in Spain, Italy, France and the Far East,
vitality of our brands, brand portfolios and
in millions of hectolitres
developed markets in which Heineken was
able to consolidate its leading position
brand portfolio management methods,
secondly to ensure more efficient deploy-
as an international premium brand. Other
24
important growth markets in Europe were
munication more efficient and effective.
20
This process will be instrumental in adding
new momentum to the company’s organic
20.4
22.9
sations, and thirdly to make brand com-
22.1
22
21.6
operating companies’ commercial organi-
22.4
ment of people and resources within the
premium segment, as in the rest of the
world. With the start of local production of
18
Heineken beer in Russia, substantial savings on import duties have been made
16
and the brand’s growth potential has been
the operating companies as early as 2004.
greatly increased. In the US, the histo-
14
rically strong growth trend slowed sharply,
Brand portfolios
Total beer volume 2 in 2003 was made up
the principal causes being the slow
12
economic recovery, poor weather in the
as follows: Heineken brand 20.3%, Amstel
10.1% and other beer brands 69.6%. The
North-East (the most important region for
10
Heineken) and the outbreak of the Iraq
operating companies’ brand portfolios
consist of a mix of local and international
war early in the year. Heineken was able to
8
sustain the previous year’s growth in other
beer brands. As well as a carefully judged
brand portfolio, securing a strong position
6
parts of the US and Canada.
4
region was achieved in Australia, Vietnam,
The fastest growth in the Asia/Pacific
in local markets also requires an efficient
distribution network with good coverage.
Thailand, Singapore and Taiwan. Sales
In addition to Heineken and Amstel, the
international brands comprise a collection
growth in China was less rapid, however,
2
due in particular to the Sars epidemic in
of speciality beers, including Desperados,
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
16
2003
2002
2001
Irish Red, to satisfy the consumer’s
the first half of the year. Local production
2000
beer, Murphy’s Irish Stout and Murphy’s
0
1999
Paulaner Hefe Weisse, Affligem abbey
In 2003 the Heineken brand was
relaunched in the UK and positioned in the
growth. Improved analysis and management tools will be put into use by some of
Poland and Croatia.
of Heineken in China will start in 2004,
which will yield valuable savings on import
2003 in Retrospect
duties and improve the brand’s growth
Heineken seeks to connect with the world
particularly in Austria, Hungary and
potential.
of the young adult. Our music sponsorship
Romania. The first effects of Heineken’s
programmes, such as Thirst, were more
stronger presence in these countries
Nigeria and South Africa. In Latin America,
precisely tailored to the needs of the
became apparent in 2003, and we are
the Heineken brand strengthened its
target group and proved very popular in
looking forward to increasing opportu-
position in Chile and sales started to grow
many countries. The new can and
nities for growth in the coming years.
again in Argentina, after a difficult period
the stylish aluminium bottle, developed
in the wake of the country’s serious
specially for exclusive clubs and other
Marketing and communication
economic crisis. Sales were lower in Brazil,
venues, which were introduced in 2002,
Thanks to improved cooperation, coor-
the largest beer market in South America,
were also well received. In France and
dination and efficiency in the area of
due to a major price increase.
Greece, sales of canned Heineken beer
marketing, the globally available platforms
rose 10% in the period after the introduc-
for sponsorship, special packaging and
Increased brand value
tion of the new packaging. Beer in PET
marketing campaigns for the sales chan-
The main driver of Heineken’s growth is
bottles, introduced in the United States
nels were used in a growing number of
the added value attributed by consumers
and the Netherlands, is only sold at events
markets. The uniform use of marketing
to the brand. Their perception of this value
where the sale of beer in cans and glass
tools also ensures greater consistency
is enhanced through relevant and appeal-
bottles is prohibited. For brands other
in advertising communications and better
ing advertising, sponsorship, packaging
than Heineken, beer in PET bottles is also
integration of activities on behalf of
and presentation within the sales channels.
distributed via the regular sales channels.
international and local brands, so that new
In Africa, the fastest growth was in
initiatives in local markets take effect
Growing preference for Heineken was
more quickly.
confirmed by the regular consumer
Availability
surveys which we conduct in many local
The availability of the Heineken brand
markets.
was improved through acquisitions and
ing expertise continued to expand in 2003,
new distribution partnerships. In Central
encouraged by Heineken’s many awards.
successful in a number of areas, such as
and Eastern Europe, the Heineken brand
These included prizes for the Green Room
the Beacon programme through which
benefited from the acquisition of BBAG,
Music programme, the Heineken Cup,
New marketing approaches were
The exchange of best-practice market-
2003
2002
Western Europe
44,727
42,242
5.9
Central/Eastern Europe
20,611
15,671
31.5
The Americas
12,511
8,380
49.3
Africa/Middle East
12,706
10,558
20.3
8,413
7,997
5.2
Group volume 1
98,968
84,848
16.6
Affiliated companies
10,000
24,101
– 58.5
108,968
108,949
0.0
Change (%)
Geographical distribution of Group volume
in thousands of hectolitres
Asia/Pacific
Total beer volume 2
1
Group volume = volume sold by consolidated companies
and Heineken beers brewed under licence by third parties.
2
Total beer volume = Group volume plus volume produced
by affiliated breweries Kaiser and Quilmes.
REPORT OF THE EXECUTIVE BOARD
17
2003 in Retrospect
the European rugby tournament for club
keen music fans, music is an ideal vehicle
Other sponsorship
teams and the launch campaign for the
for communicating the Heineken brand’s
Heineken sponsored the Hollywood
new international can.
core values. This is confirmed by regular
movie The Matrix Reloaded, one of the
As a result of the high priority which
brand image surveys within the target
major international film events of 2003.
Heineken gives to devising new ways of
group.
Film sponsorship supports the Heineken
reaching the consumer, the internet and
Thirst, the worldwide series of dance
brand’s international stature.
The most important sporting event
other new (mobile) media, such as SMS,
events was expanded in 2003 to cover
MMS and, in Japan, the very popular
40 markets. Since they started in 2002,
sponsored by Heineken in 2003 was
i-mode, are playing an increasingly im-
Thirst events have been held in 110 clubs
undoubtedly the finals of the Rugby World
portant role.
and other venues, featuring top DJs such
Cup in Australia, which attracted two
as Paul Oakenfold and Daniele Davoli.
million foreign visitors. The final between
tary communication media was further
Over 2,300 aspiring DJs have taken part
Australia and England was watched by
refined, enabling us to tailor our market-
in the local Thirst DJ competitions so far.
14 million TV viewers in the UK alone.
ing communication more closely to the
An appearance by Tiësto, voted the
As in previous years, Heineken also spon-
stage of development of the Heineken
world’s best DJ for the second year run-
sored the Heineken Rugby Cup, the annual
brand in each particular market and to the
ning, contributed to the Thirst success
tournament for European clubs.
local culture. It also enables our operating
story in 2003. Heineken also continued
companies to prioritise their investments
to sponsor various local music festivals
other sporting events, including the
in advertising, sponsorship, promotions
in Europe, the Asia/Pacific region, the US
Australian Open and US Open tennis
and packaging programmes.
and Latin America.
tournaments and various regional and
Our model of separate but complemen-
Heineken continued to sponsor many
local golf and sailing events.
As global competition for brand attention
becomes ever more intense, centrally
developed international campaigns are
Amstel
increasingly being used to create
Amstel brand sales increased from
persuasive advertising with a strong
10.8 million hectolitres to 11.0 million
impact. Heineken is making greater use
hectolitres, despite the persistent weak-
of prominent international personalities
ness of the mainstream segment in
in its advertising. In 2003, for example,
Europe. Africa and Spain accounted for
a TV campaign featuring Jennifer Aniston,
most of the improvement.
star of the US series Friends, was run in
thirteen countries spread over several
The Amstel brand profited greatly from
continents. The international campaigns
the economic growth in a number of
supplement local activities by operating
emerging markets, including South Africa,
companies to support Heineken’s position
Cameroon and Kazakhstan. Amstel is
as a leading international premium brand.
available in over 90 countries and is the
third largest beer brand in Europe. Sales
on the European market remained stable.
Heineken’s sponsorship activities are also
Amstel performed extremely well in Spain,
being more precisely attuned to the stage
one of the largest markets in Europe, but
of the brand’s development in each mark-
the mainstream beer segment of the other
et and to the local culture. The number
major European markets was depressed
of markets in which Heineken is involved
and sales of Amstel were down slightly.
in international music sponsorship was
expanded rapidly in 2003.
The www.HeinekenMusic.com music
platform plays a key role in coordinating
and integrating these activities. Since our
consumers in practically every market are
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
18
Rugby World Cup 2003
Music sponsorship
The current strategy for Amstel is being
evaluated in the light of these trends on
the large European markets, and decisions
will be taken in 2004 on what changes are
necessary to foster the growth of the
Amstel brand.
2003 in Retrospect
Amstel, one of the top ten international
Marketing and communication
the development of new products and
beer brands, markets a selection of other
As with Heineken, increased use was
packaging. On many projects, Heineken
beers in addition to lager, including low-
made of uniform tools for marketing and
works closely with other companies,
calorie Amstel Light and speciality beers
communication for the Amstel brand.
suppliers, research institutes and univer-
Amstel Gold, Amstel 1870, Amstel Bright
In many of its major markets, such as
sities around the world.
and Amstel Bockbier. This makes the
Spain, the Netherlands, Greece and the
brand attractive to a broad target group
US, Amstel is known for its powerful,
An important strategic priority at present
and it is successful in many markets.
high-impact advertising campaigns.
is the introduction of new draught beer
dispensing systems. Heineken foresees
Amstel Light has built a strong position
in the US, where growth in the beer mark-
Amstel sponsorship
good opportunities in the coming years to
et slowed in 2003 due to poor weather,
Practically all of Amstel’s sponsorship
increase the share of draught beer in both
the economic downturn and the war in
activities are sports-related. Through its
the on-trade and take-home segments.
Iraq. At the end of the year, Amstel Light
sponsorship of the UEFA Champions
The added value of draught beer, in terms
was launched in New Zealand, where the
League, the most prestigious tournament
of flavour and in the drawing and serving
evolving light beer segment offers good
for European football clubs, Amstel
ritual, generates higher net sales margins
opportunities.
reached a massive audience: the final
than beer in bottle or can.
alone was watched by a TV audience of
Working in conjunction with partners,
500 million. At a major PR event linked to
Heineken was the first brewer in the world
Total Amstel sales
the final between Juventus and AC Milan,
to develop systems to make draught beer
in millions of hectolitres
Amstel welcomed thousands of fans to
at home an attractive option for many
‘The World’s Largest Living Room’,
10
11.0
10.8
standard lamp. In this giant living room in
10.8
11
10.8
complete with a chair 8m tall, a sofa 18m
long, a TV with a 32m2 screen and a 10m
10.5
12
the centre of Manchester, Amstel did its
best to make the fans feel at home as they
tensely awaited the kick-off. A special
tour was laid on for 1,500 journalists, which
9
ensured that the event generated plenty
8
of publicity in important markets.
7
Amstel also sponsors the Amstel Gold
As well as the UEFA Champions League,
Race, a international classic cycle race
run each year in the Netherlands.
6
Amstel’s sponsorship of major football
and cycling events reinforce its image
5
mainstream segment.
3
Research and Development
Research and development are the basis
of innovation and therefore have stra-
2
tegic importance for Heineken. Much of
the R&D activity is carried out locally,
1
but coordination is centralised. The R&D
programme covers the entire supply
2003
2002
2001
2000
1999
0
REPORT OF THE EXECUTIVE BOARD
19
chain, from the evaluation of new and
improved strains of barley and hops to
‘The World’s Largest Living Room’
as a popular European beer in the
4
2003 in Retrospect
consumers, in the form of the ingenious
Investor Relations
presentations at several major internation-
BeerTender® and Tapvat dispensers.
Heineken pursues an active investor rela-
al conferences for institutional investors,
tions programme. Based on an overview
the largest of which were also relayed via
The BeerTender®
of current and potential shareholders,
the website.
The BeerTender® system, which was test-
Heineken gives a number of presentations
ed on the Swiss market in 2003, involves
each year for institutional investors and
for private shareholders, the majority of
the one-off purchase of a dispenser tap.
financial analysts, both in Amsterdam,
whom are from the Netherlands. In
This is used with a returnable 4-litre keg,
where our head office is located, and in
addition to the Annual General Meeting of
in which the beer will stay fresh for three
the major financial centres in other
Shareholders, a number of presentations
weeks after opening, even if only one glass
countries.
and brewery visits were arranged in 2003.
Separate activities are organised
Heineken also took part in several meet-
a day is drawn off, making it ideal for
everyday use. The temperature and
More than twenty presentations were
ings for private shareholders which had
pressure are controlled automatically by
given in 2003. The analysts’ meetings at
been organised by third parties.
the BeerTender®. The system will also be
the time of publication of the full-year
launched in the Netherlands in early 2004.
and half-year results were broadcast
second half of 2003, steps were taken
via the Heineken website www.heineken-
to include bondholders in the investor
international.com. Heineken also gave
relations programme.
The Tapvat
With the issue of the bond loan in the
The Tapvat, a non-returnable 5-litre keg,
was launched in the Netherlands at the
Safet y, Health and Env ironment
end of 2003. The Tapvat, which features
Heineken’s centrally formulated princi-
an integral dispenser, was specially
ples and objectives in the field of safety,
developed for parties, barbecues and
health and the environment are trans-
other occasions when beer drinkers
lated by our operating companies into
gather. The Tapvat will also be introduced
local policy. Heineken reports its central
in other countries in 2004.
policy and the results achieved by
David, a user-friendly draught beer
the operating companies in a special,
system for the on-trade introduced by
two-yearly report. The next report, to
Heineken in 2002, is particularly suitable
be published in the second half of 2004,
for retail outlets with a relatively low beer
will also address certain social issues.
turnover. David, the BeerTender® and
the Tapvat are innovative beer-dispensing
Safety and health
systems on which patents are held by
Heineken makes every effort to prevent
Heineken and its suppliers.
circumstances arising at its breweries and
distribution centres which might jeopar-
The FBI (Full Bottle Inspector) system,
which was developed in 2002, was tested
dise the health and safety of its employees
extensively in 2003. FBI is a new system
and third parties such as suppliers and
which enables us to detect glass frag-
people living close to its plants. Heineken
ments and other foreign objects in bottles
develops and applies its own standards,
after filling. Long-term testing failed to
even where local statutory requirements
produce the desired result, however,
and rules do not exist or are deficient.
Heineken is now working on the develop-
Training, information and awareness
ment of a better system.
are essential to prevent employees being
The BeerTender®
exposed to unsafe and unhealthy
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
20
conditions.
Thanks to the initiatives we took in
Africa, some progress was made in
reducing the time lost due to illness and
accidents. The figures will be published in
2003 in Retrospect
the report later in 2004. Significantly more
The ‘Aware of Energy’ project features new
reporting to include social aspects of its
accidents occur in Heineken’s operating
energy-saving and waste-management
corporate policy, particularly in regard
companies in Africa than in its European
programmes. The target last year was a
to alcohol policy and codes of conduct.
operating companies, the effect partly of
10% saving within two years, but we now
cultural differences and partly of differ-
consider a three-year horizon more
Alcohol and Society
ences in the technology used.
realistic. This goal can only be achieved
Most people use alcohol sensibly, as one
by promoting energy-aware behaviour
of the pleasures of life, but a small minori-
an active medical policy. A key element
and introducing new technologies such as
ty abuse it, and that can lead to problems,
of this policy is the HIV/Aids programme,
heat recovery and biogas. Savings of 3%
including drink-driving. Heineken initiates
which was extended from Burundi and
on electricity and 5% on fossil fuels were
and supports – in some cases working
Rwanda to Nigeria, Congo, the Democratic
achieved in 2003.
with the European trade organisation –
In Africa in particular, Heineken pursues
Republic of Congo and Ghana and also to
Since our new brewery in Nigeria, which
information and education projects to
Cambodia. Heineken entered into a num-
came on stream in 2003, is equipped
combat alcohol abuse. As part of its
ber of new public-private partnerships
with the latest technology and our existing
policy, Heineken imposes its own internal
so that anti-retroviral treatment could be
breweries in Nigeria have been updated,
rules on its marketing communication,
provided. Although Heineken’s policy
water and energy consumption and
with a view to promoting sensible alcohol
relates primarily to its own employees and
hydrocarbon emissions are low at both
use and preventing its misuse.
their families, it is to be hoped that it will
locations. In the new brewery, sustainable
serve as an example in the outside world
energy is produced by the combustion
for other companies. Heineken also
(with heat recovery) of the brewers grains
coordinates, via central policy, the sharing
which are a by-product of the brewing
and dissemination of knowledge about
process. In many countries, spent grains
prevention of and treatment methods for
are used in animal feed, but, where this is
other diseases, such as infectious dis-
not an option, burning spent grains is
eases, malaria and occupational diseases.
an alternative which is preferable on both
economic and environmental grounds to
Environmental policy plays an integral
disposal via landfill.
Heineken has been pursuing an inten-
part in Heineken’s operations. Our environ-
sive water-saving campaign, known as the
mental policy addresses all links in the
‘Aware of Water’ project, for several years.
supply chain, from procurement of materi-
In 2001 and 2002, our breweries reduced
als and services, through the production,
their specific water consumption
packaging, distribution and consumption
(usage per hectolitre of beer) by 8.2%
of our products to the processing of by-
and a further reduction of 4% in 2003 is
products and waste. High priority is given
estimated. New breweries with anaerobic
to efficient use of raw materials, water and
waste-water treatment facilities came on
energy. The performance figures for 2003
stream in Enugu in Nigeria and Hatay in
given here are estimates; the final 2003
Vietnam. A treatment installation is under
figures will be presented in the report to
construction at the brewery in Kinshasa
be published later this year.
in Congo.
The ‘Aware of Energy’ project, under
Heineken was not chosen for inclusion
which Heineken is implementing new
in the Dow Jones STOXX Sustainability
waste and energy management program-
Indexes in 2003, because preference was
mes, was launched in mid-2003. This was
given to a number of other companies in
slightly later than announced in last year’s
the beverage sector which had expanded
annual report, because it took longer
their reporting to cover social aspects
than expected to organise the workshops
of their corporate policy. Heineken also
on how to prepare energy-saving plans.
intends to widen the coverage of its
REPORT OF THE EXECUTIVE BOARD
21
AMA brewery, Nigeria
Environment
2003 in Retrospect
In 2003, Heineken tightened up the
concerned. In countries which have no
link between alcohol and driving, working
requirements with which its operating
such law, Heineken targets consumers
or dealing with hazardous situations), the
companies’ alcohol policies must comply.
aged 18 and over.
use of communication media, the timing
of advertising and the age of the target
They are required to pursue a pro-active
group being addressed.
policy, with regard to both their own
Information
employees and the consumers, to engage
Heineken is a founder member of The
in active dialogue with public authorities
Amsterdam Group, an organisation
Personnel and Organisation
and social organisations and to take
of international producers of beers, wines
The average number of people employed
initiatives to prevent alcohol abuse. More
and spirits which exists to develop
by Heineken increased by 13,034 to 61,271,
rigorous reporting requirements relating
information and education programmes
mainly due to the acquisition of BBAG.
to alcohol policy were also introduced,
at European level to promote responsible
On a like-for-like basis, excluding acquisi-
which make it easier to decide whether
alcohol use and prevent alcohol abuse.
tions, the number of employees increased
support is justified and facilitate the
As an active member of The Amsterdam
by 174.
exchange of information between oper-
Group, Heineken is committed to intro-
ating companies on successful approach-
ducing information campaigns which have
Central personnel policy is involved
es. The requirements for alcohol policy
proved to be effective. The ‘Sober Bob’
primarily with the recruitment, develop-
respect regional differences in society’s
campaign, which was developed in
ment and retention of managers for senior
tolerance of alcohol misuse. The require-
Belgium and has been running successfully
international positions. Initiatives to har-
ments for the European and American
in the Netherlands for several years, has
monise personnel recruitment and devel-
markets are more demanding than those
been introduced in Greece with the
opment around the world are also taken
for the other markets.
financial support of The Amsterdam Group
and supported at central level.
and similar campaigns are operating in
To facilitate this harmonisation process,
Heineken is going further than imposing
France, Spain, Portugal, the UK and
which makes it easier for operating
internal rules to prevent our marketing
Denmark. The campaign encourages the
companies to exchange information and
communications encouraging the misuse
practice of naming one member of the
measure and compare their own perform-
of alcohol. In the US, the Netherlands,
party as the designated driver, who agrees
ance in personnel policy with that of
Ireland, Italy and a number of markets in
to stay ‘on the wagon’ for the evening and
others, a uniform ICT system will be built in
South America and Asia/Pacific,
can drive his or her friends home safely
2004. In all other respects, the operating
Heineken’s advertising carries warnings
at the end. The ‘Sober Bob’ campaign is
companies pursue their own personnel
against alcohol abuse.
supported in the Netherlands by the Dutch
policies, which take account of the local
brewers, the Ministry of Transport, Public
labour market, regulations and practices.
In a growing number of countries,
Young people
Works & Water Management and Stichting
It is Heineken’s policy to avoid aiming our
Verantwoord Alcoholgebruik, a foundation
Management
marketing communications specifically at
which promotes responsible alcohol use.
Because the ‘Taking Heineken to the Next
people under the legal drinking age,
Heineken also plays an active part within
Level’ project aims to implement improve-
because they are not always able to make
the Brewers of Europe trade organisation
ments on many fronts, it has repercussions
appropriate choices in their drinking
in the area of alcohol and society, partic-
for the standards required by Heineken
behaviour or foresee its consequences,
ularly with regard to the introduction of
in terms of the qualities of its managers.
and are thus vulnerable. Heineken also
self-regulation in the countries of Central
Decisions are increasingly informed by
seeks to disseminate this policy externally,
and Eastern Europe. Programmes and
detailed analyses and comparisons with
both within the industry and in society at
information material have been developed
other methods and processes, both inside
large. We proceed from the principle that
on the initiative of Brewers of Europe for
and outside Heineken. Managers are being
all advertisements, events and campaigns
companies in these countries to help them
required to adopt a more entrepreneurial
should address an adult target group. In
introduce their own rules to support the
approach. As well as professional expert-
practice, this means that Heineken targets
promotion of responsible alcohol use and
ise in their own field, they are expected to
consumers who are over the minimum age
the prevention of alcohol abuse. These
keep pace with innovation around the
at which the consumption of alcohol is
rules should relate to the content of the
world, within their particular discipline and
permitted by the law of the country
message (which must avoid establishing a
beyond. Managers are also expected to
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
22
2003 in Retrospect
inspire their employees to be pro-active.
performance of our brands, to increase
Training
The current leadership development
the effectiveness and efficiency of our
Heineken as an organisation is committed
programmes, processes and criteria,
distribution and to promote a culture in
to continuous learning. A comprehensive
including selection and remuneration,
which there is scope for entrepeneurship,
and flexible training programme is vitally
were reviewed in 2003 in the light of the
innovation and diversity.
important in enabling us to respond
As far as possible, management deci-
demands of the ‘Taking Heineken to the
quickly and effectively to developments
Next Level’ project and the necessary
sions are taken at local level, where local
in the market and maintain our lead in the
changes will be implemented in 2004 on
market knowledge is concentrated.
international beer sector. The Heineken
that basis.
Partly for that reason, the export oper-
University, which provides programmes
ations which were previously directed
to supplement our regular local and
national talent is crucially important to
from Amsterdam have now been trans-
international training courses, celebrated
Heineken. To support the company’s global
ferred to the operating companies, making
its fifth birthday in 2003. The object of the
growth and the changes to the organisa-
it easier for them to optimise their local
Heineken University is to promote the
tion which it is currently implementing,
brand portfolios. The tasks of many other
development, sharing, dissemination and
highly-trained staff are needed who are
central departments have been redefined,
use of strategic expertise within Heineken,
willing to take responsibility and do not
with some tasks being transferred to
such that it can be applied in practice
shrink from international challenges,
operating companies to improve effec-
immediately. The Heineken University is
a profile which fits well with the needs of
tiveness and some combined with other
constantly seeking new ways of supporting
today’s generation of recent graduates.
central services to achieve synergy gains
learning and development processes via
and cost savings.
the internet. Programmes are regularly
Recruiting and developing top inter-
The operating companies have started
Organisation
updated to reflect the changing demands
‘Taking Heineken to the Next Level’ has
work on harmonising and refining their
of management and leadership, the
resulted in many changes in the organi-
financial reporting, so that their perform-
effectiveness of virtual teams and learning
sation. The purpose of these changes is to
ance can be evaluated more accurately on
processes in different cultures.
create win-win situations in joint ventures,
the basis of performance indicators and
E-learning platforms are organised on a
to make Heineken more effective in
appropriate action can be taken where
regular basis. The content of the training
takeover situations, to improve the
necessary.
programmes is consistent with the
Geographical distribution of personnel
in numbers
Africa/Middle East
11,941
Central/Eastern Europe
15,791
Western Europe (excluding Netherlands)
18,024
Americas
5,435
Asia/Pacific
4,824
Netherlands
5,256
REPORT OF THE EXECUTIVE BOARD
23
2003 in Retrospect
principles underlying the ‘Taking Heineken
European works council on the group’s
to the Next Level’ project.
strategy and the year’s financial results.
The council was also informed of the
European works council
acquisition of BBAG, the potential reper-
Pursuant to the current regulations, the
cussions of that acquisition for the orga-
Executive Board informs the European
nisation and personnel in Central Europe
works council, via an open dialogue, of all
and the transnational consequences
relevant transnational issues in Europe.
of the ‘Taking Heineken to the Next Level’
In 2003, the Executive Board briefed the
project.
Remuneration policy for Executive
and Superv isory Board members
The remuneration paid to the members of the Executive Board
of the dividend distribution, it is related to the actual net profit in
consists of a fixed fee, an annual profit-sharing bonus and
the period to which the bonus refers (in the past, therefore,
a long-term bonus. The fixed fee and the sums which form the
generally three years). One-third of the net profit is expressed as
basis of calculation of the annual bonus and long-term bonus
a percentage of the nominal share capital (share splits being
were redefined by the Supervisory Board with effect from the
treated as recapitalisations) and the basic sum is multiplied
1999 financial year.
by the number of percentage points by which this exceeds 6%.
The annual bonus is related to the dividend distribution,
expressed as a percentage of the nominal value of the shares.
A basic sum – €32,521 for the chairman and €19,780 for each
The annual bonuses paid in the period concerned are deducted
from the figure calculated on this basis.
A revised remuneration policy for the members of the Super-
member of the Executive Board – is multiplied by the number of
visory Board was adopted by the General Meeting of Share-
percentage points by which the dividend exceeds 6%.
holders with effect from the 2002 financial year. The application
The long-term bonus is paid whenever Heineken N.V. makes an
issue of bonus shares or undertakes a share split, which in the
past has averaged once every three years. It is calculated
on the same basic sums as for the annual bonus but, instead
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
24
of this policy in practice in 2003 is discussed in the notes to the
balance sheet and profit and loss account (page 80).
A new remuneration policy for the members of the Executive
and Supervisory Boards will be developed in the course of 2004.
Risk Profile and Internal Governance
Risk profile
impact on the overall business. Production
of uniform group-wide processes and
Heineken is a single-product company,
and logistics are subject to rigorous quality
systems, in order to ensure consistency
with a high level of commonality in its
standards and monitoring procedures.
and standardisation based on best
practices.
worldwide business operations and systems. The resulting consistency, compay-
Currency risk
The Executive Board, under the super-
ability and standardisation has a positive
Heineken has operations in over 170 coun-
vision of the Supervisory Board and more
impact on Heineken’s overall risk profile.
tries and reports in euros. Exchange-rate
particularly its Audit Committee, oversees
However, Heineken operating companies
movements can have a material impact
the effectiveness of internal governance,
work in many different environments,
on Heineken’s financial results, which are
including managing risks and monitoring
markets and cultures. Heineken’s activities
particularly sensitive to the exchange
the effectiveness of internal controls.
worldwide are exposed to varying degrees
rate between the euro and the US dollar
Group Internal Audit, together with local
of risk and uncertainty, each of which may
and related currencies. Heineken’s policy
internal audit departments, plays a critical
result in a material impact on a particular
on hedging exchange risks is explained
role in the objective and independent
operating company but may not materially
on page 66.
assessment of business processes and the
effectiveness of internal control.
affect the group as a whole. Some of these
risks may also cancel one another out
Taxation risk
within the group.
Heineken and its operating companies
In pursuit of further expansion, Heineken
are subject to a variety of local excise and
seeks to strike a balance between organic
other tax regulations. In principle,
growth and growth through acquisitions,
Heineken’s sales prices are adjusted to
within the limits of a conservative financing
reflect changes in the rate of excise duty,
policy.
but increased rates may have a negative
Some of the key risks, as identified by
impact on sales volume.
Heineken, are discussed below.
Internal governance
Reputational risk
Internal governance is based on the un-
As the group and its most valuable brand
derlying principle of local management’s
both carry the same name, the manage-
accountability for managing performance
ment of the reputation of the group
and the underlying risks, within the
and the brand is of utmost importance.
boundaries set by the Executive Board.
Heineken enjoys a sound corporate
Local management is responsible for
reputation and most, if not all, of our
implementing, operating and monitoring
operating companies are well respected
an effective internal control system, which
in their region. Constant management
is designed to provide reasonable assur-
attention is directed towards enhancing
ance of achieving the business objectives
Heineken’s social and environmental
and prevent or ensure early identification
reputation.
of potential material errors and losses and
A set of standards and regular monitoring
misrepresentation of circumstances.
procedures have been put in place or are
Policies for the control of worldwide risks
being established to achieve this. Further
in areas such as marketing, production,
information can be found in Heineken’s
human resources, finance, IT, environ-
environmental and social report.
mental and social responsibility and legal
The Heineken brand is key to Heineken’s
affairs are in place or are being reviewed.
growth strategy. Anything that adversely
These elements are part of the reporting
affects consumer confidence in the
cycle. Heineken is making good progress
Heineken brand could have a negative
with the development and implementation
REPORT OF THE EXECUTIVE BOARD
25
Regional Review
Europe
W E ST E R N E U R O P E
hardly represented) and declining
Sales in Europe increased from 42.4
on-trade volume, were largely offset
million hectolitres to 44.7 million
by the exceptional summer weather.
hectolitres, with Spain and Italy con-
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
26
tributing most of the growth. Higher
Starting with this 2003 report, the review
sales of the Heineken brand and spe-
of Heineken’s European operations has
ciality beers improved the sales mix.
been divided into a section on Western
The effects of the weak economy,
Europe and a section on Central and
including rising demand for low-priced
Eastern Europe. This change has been
beers (a segment in which Heineken is
prompted by the acquisition of BBAG,
Regional Review
Western Europe
Group volume in Europe 2003
Beer consumption in Europe 2002
in millions of hectolitres
per capita in litres
10.8
77
Spain
Poland
9.4
70
Group volume
Germany
8.0
123
Europe
France
7.4
35
in millions of hectolitres
Italy
6.0
28
Netherlands
6.0
81
Greece
3.4
42
Russia
3.3
49
Slovakia
2.1
93
Bulgaria
1.3
51
Ireland
1.1
146
Austria
1.1
112
65.3
66
50.7
55.4
54
45.4
48
42
57.9
60
36
Croatia
0.8
78
Hungary
0.8
78
Switzerland
0.8
59
Romania
0.7
52
Macedonia
0.5
31
Czech Republic
0.2
160
30
24
18
leader in the Netherlands, Spain, Italy and
Netherlands
Greece, is in second place in France,
Lower sales in a gradually contracting
Ireland and Switzerland and has a modest
market
position in the German market. In several
12
other Western European countries, the
Despite a good summer, demographic
Heineken brand (and in some cases Amstel) factors and a weak economy again caused
6
is either brewed under licence or imported. the Dutch beer market to contract slightly.
The West European beer market is one
2003
2002
2001
2000
1999
0
The share of lager beers in the total beer
of the most profitable in the world, but
market held steady at around 92%.
offers little scope for volume growth, due
Heineken Brouwerijen’s sales decreased
to the ageing of the population. Growing
from 6.3 million hectolitres to 6.0 million
consumer preference for premium and
hectolitres and its market share declined
speciality beers is, however, creating ample a little, but cost savings generated an
which has significantly strengthened our
opportunities for Heineken to further
market position and has helped to bring
improve its performance. Heineken has
our operations in Central and Eastern
strong brands in both segments, which
Europe together in a more cohesive
yield relatively high margins, and has brand creases applied to all brands in February
structure.
portfolios which cover all segments of the
2003, the better sales mix and lower
market, except the unattractive low-priced
staffing levels. The reorganisation also
Operations
segment. Heineken also adds value in
yielded improvements in the cost
Heineken, by far the largest brewer in
Western Europe by working constantly to
structure. A supermarket price war, which
Europe, is also Western Europe’s pre-emi-
cut costs.
broke out in the last quarter of the year,
nent beer producer. Heineken is market
REPORT OF THE EXECUTIVE BOARD
27
improved result.
The result benefited from the price in-
resulted in the prices of all premium
Regional Review
Western Europe
brands being cut by the retailers. Sales of
with built-in tap for the take-home market,
carton-filling line. The varieties launched
higher-priced beers did not benefit from
was launched in December 2003. The new
in 2002 and 2003 already account for
the focus on price engendered by the
12-pack of non-returnable 25-cl green
almost 10% of total volume. The reorganis-
many discounting campaigns.
bottles was chosen by retailers as the best
ation on which Vrumona embarked
new product on their shelves last year.
in 2003 will involve a 15% reduction in
Heineken Brouwerijen’s loss of market
staffing levels in 2004.
share was due to the brand’s relatively
Amstel sales were virtually static. The
strong position in the on-trade, where
brand consolidated its second position in
sales fell more sharply than the rest of the
the Netherlands, helped by the ‘Three
France
beer market, and the growing competition
Friends’ campaign which was highly rated
Improved result in a slightly
from low-priced canned beer brands in
by the public. One of the spots was chosen
firmer market
the take-home segment.
by viewers as the best TV commercial of
Heineken Brouwerijen implemented a
the year.
The exceptionally good weather brought
drastic restructuring of its on-trade sales
The timing of the relaunch of Brand
organisation, the most significant change
Pilsener and Brand Urtyp as premium
Heineken France’s sales remained stable
being that both sales and advisory
beers was unfortunate, coming only three
at 7.4 million hectolitres. Home-market sales
functions are now more clearly focused
weeks before the outbreak of the super-
grew in line with the market, so that the
on particular types of on-trade establish-
market price war. Brand Pilsener lost
market share remained unchanged,
ment, thereby enabling Heineken to tailor
ground, but Brand Urtyp (formerly Brand
and export sales were lower. The result
its services even more closely to the
Up) developed extremely well.
improved, mainly due to the growth of the
customer’s needs.
More fortunate, in that it benefited
modest growth in the beer market.
Heineken brand.
from the good summer sales, was the
Brands
timing of Heineken Brouwerijen’s relaunch
Growth in the beer market was tempered
Heineken brand sales were down. The
of speciality beer Wieckse Witte and low-
by the downward trend in beer consump-
brand was supported by the popular
calorie Wieckse Lichte, with sales of the
tion, the marked decrease in the number
‘Biertje’ campaign and the fashionable
Wieckse beers up 30% on 2002. Wieckse
of tourists from countries outside the euro
new ‘Six Pack’ TV series. Major music
Brut, a modern beer brewed with cham-
zone and the government’s campaign to
events sponsored by Heineken included
pagne yeast, was launched in 2003. While
combat drink-driving. Most of the growth
Pink Pop, the Fast Forward Dance Parade
Desperados recorded healthy growth,
potential in the French beer market is in
and Dance Valley. Heineken launched a
sales of Amstel Bright were lower.
the premium and speciality beer
33-cl PET bottle which had been specially
The anti-litter campaign launched by
segments. With the economy remaining
designed for events of this kind. The David
Heineken in partnership with other parties
weak, the low-priced segment also grew
dispensing system for the on-trade, which
in the brewing sector has been shown to
last year.
uses small 17-litre kegs, is proving a great
have had a significant effect.
success and over 1,500 are now in use in
the Netherlands. The Tapvat, a 5-litre keg
Tapvat
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
28
Brands
Soft drinks
The Heineken brand increased its share
Despite the good summer, sales of Vru-
of the premium segment, helped by
mona were lower. The traditional carbon-
the launch of the new international can,
ated soft drinks, including cola, lemon/
the wider availability of the exclusive
lime and orange, continued to decline in
aluminium bottle in clubs and dance
popularity and Vrumona responded by
venues and the new print-media and
expanding its range of still and low-carbo-
billboard advertising campaigns.
nated drinks. From the summer onwards,
Sales of Amstel, which is only distributed
Vrumona started building a position in the
via the on-trade, were slightly lower, in line
carton-packed drinks segment, with the
with the on-trade market for mainstream
successful launch of several products
beers, but sales of “33” Export, the local
including Sisi Fruitmania, Crystal Clear and
mainstream beer, improved a little.
JOY, a new tooth-friendly children’s drink.
Desperados consolidated its leading
Vrumona started work in late 2003 on a
position in the speciality beers segment by
Regional Review
Western Europe
expanding its distribution. Sales of
Affligem abbey beer rose sharply, helped
by the effective ‘Bière-de-Lumière’ advertising campaign which brought together
elements of spirituality, sensuality and
supreme quality. The shandy segment
grew strongly and Panach’ Peche, a new
peach-flavoured addition to the Panach’
range of shandies, was successfully
Artist’s impression of an Amstel themed bar in Spain
launched. Pelforth Ambrée, a newcomer to
the Pelforth speciality beer range, was also
Brands
on which Heineken España embarked
well received. Kriska, a vodka-flavoured
Consistent with the market trend,
after the enforced sale of breweries
speciality beer which was introduced
Heineken España’s sales grew fastest in
in 2001, is proceeding according to plan.
in 2002, performed exceptionally well. “33”
the take-home segment. The Heineken
A further cost-reduction programme
Export Demi-Rondelle, the lemon-flavoured
brand again posted double-digit growth,
was developed in 2003 and will be
beer introduced in 2002, did not come up
as did Buckler, the alcohol-free beer,
implemented in 2004.
to expectations and was withdrawn.
helped by the launch of a new alcohol-free
variant and an ambitious advertising cam-
Italy
Spain
paign which positioned it as the alcohol-
Higher sales and result
Higher sales and higher result
free beer with the best flavour. The mainstream Amstel and Cruzcampo beers also
The Italian beer market in 2003 showed
After a disappointing 2002, the Spanish beer
achieved significant growth. The brand
a marked improvement on 2002, with
market picked up in 2003, thanks to the
portfolio was strengthened with the
Heineken Italia’s sales up from 5.7 million
improving economic conditions, including
addition of Paulaner, the speciality beer.
hectolitres to 6.0 million hectolitres.
An enforced change in the portfolio of
relatively low inflation, and the high temperatures. Heineken España’s sales increased
Marketing
speciality beers resulted in a slight loss of
from 10.1 million hectolitres to 10.8 million
Amstel was supported by a new
market share, but the sales mix improved
hectolitres. Both the sales mix and the result
advertising campaign and local events in
and the result was higher.
improved significantly.
the main regions. Amstel beer in the 1-litre
Champions PET bottle, which was intro-
Despite lower consumer confidence,
The take-home segment continued to
duced in 2003, sold extremely well.
reduced purchasing power and smaller
grow and now accounts for 42% of the
Distribution of Legado de Yuste, the first
tourist numbers than in 2002, the Italian
Spanish beer market. Price competition
Spanish abbey beer, was much expanded
beer market posted growth of over 7%,
among the supermarket chains’ own-label
and this speciality brew is now available
due entirely to the exceptionally good
beers is an important factor in this market
nationwide in the on-trade and on a
summer.
and the price gap with beers in the main-
limited scale in the take-home segment.
stream segment is widening. The premium
The themed bar designs developed by
Brands
and speciality beer segments advanced at
Heineken España for on-trade establish-
The principal brands – Heineken, Birra
the expense of the mainstream segment
ments continued to play a significant part
Moretti and Ichnusa – gained market
and interest in alcohol-free beers contin-
in stimulating growth in this segment.
share, but sales of our other mainstream
ued to grow.
These themed outlets are also helping to
beers, with the exception of Dreher,
establish a beer culture and strengthen
were lower. Interbrew decided to bring
on selling its own brands in preference
our relationship with our customers.
the distribution of its beers in-house and
to brewing own-label products for third
A new concept, the Amsteleria, was
terminated its licensing agreement for
parties translated into significant growth
devised in 2003 which takes as its theme
several of its beers prematurely. The Inter-
in own-brand sales and profitability and
the world of the Amstel brand. The first
brew portfolio was replaced by the
a stable market share.
Amsteleria opened in January 2004.
Heineken brands Fischer Blond, Brand,
Heineken España’s strategy of focusing
The multi-year cost-cutting programme,
REPORT OF THE EXECUTIVE BOARD
29
Wieckse Witte and Affligem. Having also
Regional Review
Western Europe
entered into a licensing agreement with
to 3.4 million hectolitres, but its market
end of 2002. Amstel Big, a wide-necked
US brewer Anheuser-Busch at the end
share remained stable.
33-cl bottle, was successfully introduced at
a select group of on-trade outlets. Amstel,
of 2003 for production and distribution of
the Budweiser brand, Heineken Italia now
In contrast to many other European
which is market leader in the mainstream
has a balanced range of complementary
countries, Greece had a relatively poor
segment, was supported by various
beer brands once again.
summer. Consumer spending and tourism
promotions in the take-home channel and
were down and inflation was above the
TV commercials based on the theme of
Marketing
EU average, which depressed sales par-
friendship.
The introduction of Heineken’s aluminium
ticularly in the on-trade.
beer bottle was a success. A great deal of
Athenian Breweries’ result benefited
publicity, including media attention, was
from price increases and an improved
generated by the more than one thousand
sales mix.
Halloween parties held all over the
Germany
Higher sales in a declining market
While the German beer market contracted
country. Heineken is increasingly profiling
Brands
by 4%, under pressure from new govern-
itself as the driving force behind this
The decrease in Heineken brand sales was
ment packaging regulations and a weak
event. Sponsorship of music festivals, such
relatively small. The brand was supported
economy, growth was reported by most of
as the Heineken Jammin’ Festival and the
with new packaging variants, such as the
the brands produced by the Paulaner and
Umbria Jazz Festival, still provides valuable
new international can and the Magnum
Kulmbacher breweries, which are part of
marketing support for the Heineken brand.
bottle, in 1.5-litre and 3-litre sizes, which
BrauHolding International, our joint venture
Birra Moretti continued its sponsorship of
were launched in time for the December
with the Schörghuber group. Total sales
soccer tournaments, including the Trofeo
holiday season. The XLN (Extra Long Neck)
increased to 8.0 million hectolitres and the
Birra Moretti competition for the top
bottle, which is proving very popular with
result was sharply higher, helped by the
Italian clubs. Heineken Italia has expanded
consumers, is helping the brand’s penetra-
proportional consolidation with effect
Birra Moretti’s marketing support in the
tion in the on-trade and sales have grown
from 1 January 2003 of the BrauHolding
countries to which it exports, especially
rapidly since its introduction in 2002.
International’s 45% interest in Karlsberg
the United States and United Kingdom
As one of the ‘grand sponsors’ of the 2004
International Brand GmbH.
which are the most important markets.
Olympic Games in Athens, Heineken has
Changes were made to the commercial
already launched numerous marketing
The mandatory introduction of a charge
organisation in 2003 to improve customer-
and advertising campaigns in the media
on non-returnable packaging resulted
management efficiency and effectiveness.
and at point of sale. These are being
in a dramatic drop in sales of beer in cans
expanded in 2004, based around the cen-
and one-way bottles which was not fully
distribution organisation, reported higher
tral theme of celebration of this spectac-
compensated by higher sales of beer in
sales and an improved result, reflecting
ular event.
returnable bottles.
Partesa, Heineken Italia’s wholesale
both acquisitions and organic growth.
Sales of both Amstel and Alfa, a Greek
Home-market sales of Paulaner beer,
Partesa is integrating its businesses in
brand, were significantly lower, in the case
the eponymous brewery’s leading brand,
order to achieve critical mass and hence
of Amstel mainly due to stockpiling at the
were 1% higher. Paulaner Weissbier sales
greater efficiency at the operating level.
advanced strongly, despite the decline in
A start was made in late 2003 on increas-
canned-beer sales. Hacker-Pschorr and
ing the capacity at the Massafra brewery
Auerbräu were also able to increase their
and making the modifications needed for
sales volume in the contracting market.
brewing Budweiser.
Paulaner exports were up by over 5%, due
in part to utilisation of Heineken’s existing
Greece
distribution channels. Paulaner has
Stable share of a softer beer market
embarked on a restructuring programme
with a view to improving its financial
The Greek beer market was lower in 2003.
In line with the market, Athenian Brewery’s
sales were down from 3.7 million hectolitres
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
30
performance.
The Kulmbacher brewery’s sales turned
out 7% higher, with Mönchshof, Sternquell
Regional Review
Western Europe
The BeerTender®, a dispenser for home
use, was launched on a trial basis and
Other Western
European countries
more David dispensing systems were
installed at on-trade outlets. Draught beer
Heineken beer with a 5% alcohol content
volume increased at the expense of other
was launched in the premium segment in
packaging variants.
the United Kingdom in 2003, and
The modernisation of the fully automat-
Heineken Cold Filtered, a beer brewed to
ed distribution centres in Domat Ems was
a different recipe, was withdrawn. As a
completed in the third quarter of 2003 and
consequence, sales in the UK decreased
the wholesalers which had been acquired
from 2.1 million hectolitres to 0.6 million
by Heineken Switzerland earlier in the year
hectolitres.
were fully integrated into the organisation.
While the UK beer market overall showed
little growth, lager beers continued to gain
and Braustolz performing well. The activities of the Scherdel brewery, which oper-
Ireland
in popularity and now account for 39% of
ates in the same region and was acquired
The Irish beer market, which contracted
the total beer market. In this segment,
in October 2003, will be integrated into
significantly in 2003, is expected to continue
the premium lagers recorded the fastest
Kulmbacher’s organisation.
on its downward trend, in the light of the
growth, at 2.4%. For historical reasons, the
government’s plans for a more restrictive
position of Heineken beer in the UK, which
relatively strong position in the canned-
alcohol policy and a smoking ban in pubs,
is available worldwide, is still modest.
beer segment, but managed to hold the
bars and restaurants. Despite the shrinking
loss of sales volume at 9%, by introducing
market, Heineken Ireland’s sales remained
given intensive marketing support. In the
new packaging and other measures.
stable at 1.1 million hectolitres and it
‘Heineken, you have changed’ PR
Karlsberg nevertheless made a satisfac-
increased its market share.
campaign, UK celebrities posed for a top
Karlsberg had a difficult year, due to its
The relaunch of the Heineken brand was
photographer in barely recognisable
tory contribution to earnings in the first
The worsening economy, waning
guises. The advertising campaign, which
consumer confidence and the public
emphasised that the ‘new’ Heineken beer
speciality beer, which had grown strongly
debate on alcohol and health all brought
has a 5% alcohol content, had as its theme
in Germany in 2002, fell back abruptly
pressure to bear on the beer market.
‘Heineken: tested around the world, now
last year as a result of the new packaging
Lager volume was down a little, while stout
ready for the UK.’ Various promotions,
charges, coupled with strong competition
sales again declined sharply. Lager now
local sponsorship, on-trade support to
from ready-to-drink mixes.
accounts for over half of total beer sales.
ensure optimum draught beer quality and
The Heineken brand strengthened its
the new international can and aluminium
Switzerland
leading market position in the lager beer
bottle contributed to the successful
Higher sales and an improved result
segment. Sales of Murphy’s Stout were
relaunch. The marketing strategy is fully
down, following the trend in the stout
focused on sustainable brand
Profiting from the very hot summer, the
segment, but Coors Light, which is brewed
development.
Swiss beer market recorded modest growth.
under licence, and Amstel recorded
Heineken Switzerland’s beer sales were up
vigorous growth.
year of its inclusion in the consolidation.
Sales of Desperados, our international
from 760,000 hectolitres to 805,000 hecto-
The Heineken brand was supported by
Amstel was positioned in the mainstream segment, as in other markets
around the world. Amstel is now available
litres and the result improved slightly, mainly
sponsorship of the Green Energy music
only on draught in the on-trade, which
due to cost savings.
event and the Green Room Sessions. There
enables Heineken to offer its on-trade
was also a tie-in with Heineken’s
customers a more cohesive brand port-
Growth in the beer market was restrained
sponsorship of the European Rugby Cup
folio. Sales of Amstel developed well, but
by the continuing weakness of the econo-
and the Rugby World Cup in Australia,
sales of Murphy’s Irish Stout and Murphy’s
my and on-trade sales declined. Heineken
in which there was exceptionally strong
Irish Red, which are brewed under licence
Switzerland maintained its market share.
interest in Ireland.
and distributed by a partner, were lower.
Heineken brand sales remained stable and
The Affligem brewery in Belgium
the local brands achieved modest growth.
reported sustained sales growth, with
REPORT OF THE EXECUTIVE BOARD
31
Regional Review
Central and Eastern Europe
exports to the important Italian and
Rising purchasing power in Central and
French markets performing particularly
Eastern Europe will translate mainly into
well. After the expansion of the production
growth in the premium segment, par-
capacity in 2003, investment in 2004
ticularly in the Central European countries
will focus primarily on efficiency improve-
which are soon to join the EU. In some
ments, mainly through automation.
countries, such as Poland, Russia, Hungary,
Because Mouterij Albert, our malt-house
Romania, Bulgaria and Macedonia, per
in Belgium, was undergoing renovation,
capita beer consumption is below the
it was only able to produce 230,000 tonnes
European average, so there is potential
Heineken brand’s growth potential,
in 2003, instead of its maximum output
there for volume growth as well.
especially in Austria, Romania, Hungary
and the Czech Republic. Heineken beer
of 250,000 tonnes. Mouterij Albert, which
exports to some 40 Heineken breweries
Acquisition of BBAG
sales in the countries of Central Europe
around the globe, is one of the largest and
In BBAG, Heineken has acquired a large
are expected to grow to at least 500,000
most efficient malt-houses in the world.
European brewer with leading market
hectolitres by 2008, an increase of over
Mouterij Albert is involved in several
positions in Austria, Romania and Hungary
72% compared with the volume sold in this
sustainable-agriculture projects.
and regional positions in Poland and the
region in 2003.
Heineken’s distribution partner in
Czech Republic, in which it owns 22 brew-
Denmark opened a local filling plant for
eries and sells around 13 million hectolitres
Poland
Heineken beer and Heineken sales rose
of beer. It also exports from virtually all
Higher sales, higher result and growth
strongly. Marketing support via sponsor-
of these countries. Like Heineken, BBAG
through BBAG acquisition
ship of music and dance events was
combines strong local market positions,
extended.
a close affinity with local cultures and
expertise in international brand portfolios.
The Polish beer market grew by around
.
4% and Grupa Z ywiec grew faster than the
where it is brewed under licence, were
Its most important brands are premium
market. Like-for-like pro-forma sales rose
higher.
beers Kaiser and Gösser and Schlossgold
from 8.4 million hectolitres to 9.2 million
alcohol-free beer, which are on sale in
hectolitres and total sales, including the
several European countries.
BBAG activities which had been acquired,
Sales of Heineken beer in Sweden,
In Norway, where production of
Heineken beer under licence started in
2003, sales grew strongly. High priority
The acquisition of the BBAG operations
was given to sponsorship and promotional
has made Heineken market leader in
amounted to 9.4 million hectolitres.
.
Grupa Z ywiec, the largest brewer in Poland,
activities.
eight Central European countries: Austria,
returned a greatly improved result.
Poland, Romania, Hungary, Slovakia,
C E N T RA L A N D EA ST E R N
EUROPE
Bulgaria, Macedonia and Albania. The
Although it profited from the very good
existing and newly acquired activities will
summer and inflation remained low, the
be integrated and grouped under Brau
Polish beer market advanced at a more
Sales in Central and Eastern Europe
Union, the new central European oper-
modest pace than in 2002. The weakness
increased from 15.7 million hectolitres
ating company. This will generate signifi-
of the economy favoured the growth of
to 20.6 million hectolitres. Most of this
cant cost synergy, greater growth poten-
the mainstream segment, mainly at the
growth was due to the acquisition in
tial and more efficient and effective brand
expense of Polish premium beers. As well
2003 of BBAG, whose activities have
portfolio management.
as the mainstream segment, there was
been included in the consolidation as
The acquisition of BBAG will enhance the
also growth in international premium beer
from 1 October 2003. Pro-forma sales
sales. Although the sales mix worsened,
excluding BBAG were 15% higher at
a price increase and better procurement
18.0 million hectolitres, with Poland
terms translated into a substantial
and Russia accounting for most of the
improvement in the result. Cost savings
improvement.
also contributed to the improved result.
The investment made in 2003 in a new
brew-house at the Warka brewery will
double production capacity to 4 million
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
32
Regional Review
Central and Eastern Europe
hectolitres. The decision taken at the end
The Russian economy grew 5% and,
lower, but Bochkarov Light’s volume
of 2002 to sell the brewery in Braniewo
notwithstanding a relatively high inflation
increased. The Bochkarov brand is now the
has been implemented. The new owner
rate, the growth in the beer market was
official partner of the UEFA Champions
plans to produce non-alcoholic beverages
sustained, albeit at a slightly more modest
League in Russia. Sales of Ochota, which
at the site and hopes to employ a large
pace than the year before. With many
is positioned in the mainstream segment,
proportion of the current workforce.
international brewers already active on
grew strongly and a new PET bottling
the Russian beer market, there is scope
line has been built to meet the increased
Brands
for further consolidation, and Heineken
demand. Ochota was promoted with a
Sales of Heineken, the leading internation-
intends to remain alert to opportunities
national TV campaign for the first time.
al premium beer in Poland, posted strong
for it to play a part.
Sales of Löwenbräu, which is brewed
growth, as did sales of Tatra, the Polish
Consumers’ willingness to try new beers
under licence, also recorded significant
growth.
mainstream brand, and the regional
was undiminished, and brewers responded
Specjal brand, both of which benefited
with many new product launches. With a
The sales and distribution organisation
from the rising demand for lower-priced
combination of organic growth and new
was expanded and existing relationships
brands. Warka and Warka Strong per.
formed well and sales of Z ywiec, the Polish
brands, the fastest growth was recorded in
with distributors were developed.
the international premium beer segment,
Considerable savings were made in
premium beer, held steady. The oppor-
whose share of the total beer market
procurement, particularly of packaging.
tunities for effective marketing support
increased from 2.3% to 4.1%.
improved with the relaxation of the
The share of beer in PET bottles in total
alcohol laws, in particular the extension of
sales rose to over 30%, while that of beer
the hours during which beer commercials
in cans increased slightly. The heavy
can be broadcast on TV.
pressure on prices was maintained, one
contributory factor being a 25% increase
The BBAG brand portfolio
in excise duty on beer in early 2003.
The principal brands in BBAG’s Polish
Our prices rose by less than the average
portfolio are Krȯlewskie, which is position-
inflation rate of 13%.
ed at the higher end of the mainstream
segment, and the Czech brand Starobrno.
Brands
Kaiser, the premium brand sold in several
Locally produced Heineken beer went on
countries, is targeted mainly at the on-
sale in March 2003, resulting in consider-
trade. Kujawiak and Bractwo are regional
able savings in import duties. The event
Hungary
brands with strong regional positions.
was accompanied by substantial market-
Position greatly strengthened
ing investments. Sales of Heineken beer
in a competitive market
Russia
may still be modest, but they increased
Growing sales and expanding
sixfold from 2002 to 2003. Sales of Boch-
Amstel Brewery Hungary’s sales were down
market share
karov, our Russian premium beer, were
from 486,000 hectolitres to 465,000 hectolitres. Total sales by Amstel Brewery Hungary
The Russian beer market grew 6%, with
and (since 1 October 2003) Brau Union
Russian mainstream beers and international
Hungária, which is part of BBAG, amounted
premium beers, in which Heineken Brewery
to 0.8 million hectolitres. The effect of the
Russia has a strong presence, making most
lower sales on Amstel Brewery Hungary’s
of the running. Sales were up from 2.8
result was mitigated by cost savings.
million hectolitres to 3.3 million hectolitres
and the market share increased. The volume
The Hungarian beer market contracted,
growth generated a higher result, despite
largely as a consequence of the cold
the rouble’s weakness against the euro.
and protracted winter, and margins were
under pressure from intense competition.
Sales of Heineken beer increased slightly,
REPORT OF THE EXECUTIVE BOARD
33
Regional Review
Central and Eastern Europe
however, which meant further growth
fastest-growing beer markets for some
network provides good opportunities for
in market share. Sales of the Amstel and
years. Regional beer brands account for
growing the Heineken brand in Austria.
Talleros brands were lower.
one-third of the market.
The integration of Heineken’s and
Brau Union Romania’s portfolio com-
Bulgaria
BBAG’s activities boosted the market share
prises local brands Silva, Ciuc and Golden-
Expanding market share
sufficiently to secure market leadership.
bräu, supplemented with international
in fast-growing market
Although competition on the Hungarian
brands Gösser and Zipfer and speciality
market is still intense, due to the presence
beer Edelweiss. International premium
In a fast-growing Bulgarian beer market,
of three major international brewers, the
beers are rapidly gaining in popularity,
the Zagorka brewery boosted sales from
significant strengthening of Brau Union
and the addition of Heineken beer and
1.0 million hectolitres to 1.3 million hecto-
Hungária’s market position and the
other Heineken brands at this stage in the
litres, further consolidating its market
economies of scale which have been
market’s development will provide rapid
leadership. The result improved and the
achieved are creating new opportunities
reinforcement for Brau Union Romania’s
market share increased.
for growth and improved profitability.
market position.
The premium segment in particular offers
Brau Union Romania has seven breweries
After the setback suffered in 2002 in the
good growth potential.
which, because of their strategic location,
form of higher excise duties, the Bulgarian
suffer little inconvenience from the short-
beer market reverted to its growth trend.
rian portfolio are Gösser and Kaiser in
comings of the transport infrastructure.
With good prospects of economic growth,
the premium segment, Soproni Ászok in
It was decided in 2003 to close the brew-
the market still has great potential.
the mainstream segment and Schlossgold
ery in Rehgin on efficiency grounds.
The principal brands in BBAG’s Hunga-
alcohol-free beer.
Mainstream brand Zagorka performed
well. The brand benefits from various kinds
Austria
of marketing support, including extensive
efficiency grounds to close the Komárom
High and stable volume
local sponsorship activities focusing main-
brewery.
in a stable market
ly on soccer. Sales of Amstel, which is posi-
At the end of 2003 it was decided on
tioned at the upper end of the mainstream
In a slowly growing beer market, Brau Union
segment, were higher. Brand support will
Österreich, which has been included in
be provided in 2004 by a new communica-
the consolidation with effect from 1 October
tion concept, better utilisation of the
2003, reported a stable sales volume at
sponsorship of the international UEFA
1.1 million hectolitres.
Champions League and wider distribution,
for which preparations were made in
With an average per capita consumption
2003. The Ariana brand, the market leader
of 112 litres per year, the Austrians are beer
by a wide margin in the low-priced seg-
Romania
enthusiasts. Brau Union Österreich, which
ment, performed very well. The introduc-
Higher sales in a fast-growing market
has a stable market share, is by far the
tion of PET bottles was a major con-
largest brewer in Austria.
tributory factor in Ariana’s growth. Beer
The Romanian beer market grew 12% and
Its principal brands are premium beers
in PET bottles now accounts for almost
sales by Brau Union Romania, which was
Zipfer and Gösser, mainstream beers
a quarter of the total Bulgarian market.
included in the consolidation as from
Kaiser and Puntigamer, speciality beers
The Heineken brand was successfully
1 October 2003, rose to 0.7 million hecto-
such as Edelweiss and alcohol-free beer
launched in early 2003.
litres. The market share decreased slightly
Schlossgold. Zipfer and Gösser each have
in 2003, reflecting the growing international
a market share of around 10%. Brau Union
Slovakia
competition.
Österreich is well represented in all seg-
Market depressed by weak economy
ments of the Austrian beer market, with
and higher excise duties
The very hot summer and the introduction
a portfolio which also includes ready-to-
of new beer brands translated into rapid
drink mixes and international beers brew-
The Slovakian beer market shrank 3.5%,
growth in the Romanian beer market.
ed under licence. The broad coverage of
reflecting the effects of diminishing pur-
Romania has been among the region’s
the Brau Union Österreich distribution
chasing power and sharply higher excise
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
34
Regional Review
Central and Eastern Europe
Because low-priced beers still account for
brand in Macedonia, were 22% higher.
a large share of the Slovakian beer market,
The Heineken brand also performed well.
it should be possible over the longer term
April 2003 saw the successful launch of
to improve the sales mix as purchasing
Gorsko Lisec, a new beer brand in the low-
power rises.
priced segment, which has proved very
With planned capacity of 160,000 tonnes
in 2004, Heineken Slovensko will be one
of the largest malt producers in Europe.
popular in rural areas where purchasing
power is well below the average.
The extension to the brewery, which
also incorporates facilities for local pro-
duties. Heineken Slovensko’s sales declined
Czech Republic
from 2.2 million hectolitres to 2.1 million
Strong regional position
Croatia
hectolitres, but its market share showed
little change.
duction of Amstel, was completed in 2003.
Starobrno A.S., which was included in the
Improved position in a slowly
consolidation with effect from 1 October
rising market
The introduction of a number of unpopular
2003, reported total sales of 172,000 hecto-
economic measures in the course of the
litres, representing growth of 4% or double
Thanks to the good summer, the Croatian
year and a substantial rise in excise duties
that of the total Czech beer market.
beer market recorded significant growth.
on alcoholic beverages and fuel in August
The Karlovacka Pivovara brewery, in which
2003 eroded consumer purchasing power,
With a per capita beer consumption of
we acquired a 94.4% stake in 2003 and
which depressed the Slovakian beer mar-
160 litres, the Czechs are the most enthu-
which was included in the consolidation as
ket. The rise in fuel excise duty also made
siastic beer drinkers in the world. Despite
from 1 April 2003, posted sales of 775,000
transporting beer more expensive.
the presence of several international
hectolitres. The result was positive and in
brewers, small regional brewers still hold
line with expectations.
One of the four breweries, in Martiner,
was closed in November 2003 in order
to improve the cost structure by allowing
over 20% of the market.
Starobrno A.S., which owns two brew-
Croatia started investing heavily in its
the other breweries to operate at opti-
eries in Brno and Znojmo, secured fifth
tourism infrastructure some time ago,
mum capacity.
place in the Czech market in 2003.
and the rising visitor numbers have
The Starobrno brand, which is positioned
benefited the local beer market in particu-
Slovakian beer brand, were held back by
in the mainstream segment, accounts
lar. Although growth in the beer market
the decline in purchasing power and
for over 70% of its sales. Starobrno’s sales
was held back by higher excise duties, the
Amstel sales were also down. In these
and distribution facilities will significantly
Karlovacka Pivovara brewery’s sales were
market conditions, however, the Corgon
enhance the Heineken brand’s growth
up and its market share increased, mainly
brand performed well and took the lead
potential.
due to growth in the sales of Karlovacka,
Sales of Zlatý Bažant, the leading
as the country’s best-selling beer. The low-
the local mainstream beer, and the
priced Gemer brand also achieved higher
Macedonia
Heineken brand. Karlovacka Pivovara is
volume.
Higher sales and a better result
the second largest brewery in Croatia
and has a substantial export business to
While beer consumption in Macedonia rose
4%, sales by our Pivara Skopje brewery
Bosnia.
As well as local mainstream beer Karlo-
remained stable at 0.5 million hectolitres.
vacka, the brand portfolio includes
Its result improved despite the deteriorating
Heineken brand beer and speciality beers
economic conditions and growing competi-
Murphy’s and Desperados. Good progress
tion from low-priced beers. Pivara Skopje’s
was achieved in improving operational
market share decreased slightly.
efficiency.
Sales of Skopsko, the country’s leading
Croatian beer market will offer good
beer brand, were down 7%, but sales
growth prospects, especially in the
of Amstel, by far the largest international
premium and speciality beer segments.
With the development of tourism, the
REPORT OF THE EXECUTIVE BOARD
35
Regional Review
The Americas
Heineken’s sales in the Americas
growth. The results in all markets
increased from 8.4 million hectolitres
were adversely affected by the
to 12.5 million hectolitres, mainly due
strength of the euro, especially those
to the proportional consolidation,
into which Heineken beer is imported
via our interest in CCU, of our busi-
from Europe.
nesses in Chile and Argentina as from
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
36
1 April 2003. The businesses in the
Heineken has built a strong position in
United States, Central America and
the Americas, with exports to the United
the Caribbean also contributed to the
States, Central and South America and
Regional Review
The Americas
Argentina. Heineken also owns a number
but this was made up by strong growth in
of breweries in the Caribbean and Central
the rest of the US, especially in the West.
America and has interests in and licensing
The Heineken and Amstel Light brands
Group volume
agreements with several brewers in Cen-
occupy fundamentally strong market
Americas
tral and South America. The beer market
positions which provide a good basis for
in millions of hectolitres
in this region showed modest growth
further growth. Heineken USA’s main
in 2003. On the basis of the predicted
strategic objective in the years ahead will
economic and demographic trends,
be to build even closer relationships with
Central and South America offer good
the major retail chains, while continuing
growth prospects in the longer term.
to focus on the higher end of the on-trade
12.5
13
12
segment. The growth strategy for the
11
United States
East Coast is to concentrate on extending
Modest growth in a virtually flat market
the market share and for the West Coast to
work on expanding the distribution.
10
While the US beer market contracted
8.4
9
6
6.6
7
7.8
7.4
8
by around 1%, the imported beer segment
Marketing and distribution
showed modest growth. Heineken and
With the launch of Heineken’s new
Amstel Light increased their shares of the
aluminium bottle and 16-ounce PET bottle,
imported beer market slightly and sales
which are helping to broaden the
rose to just over 6 million hectolitres, but
availability of Heineken and Amstel Light,
the weaker dollar meant that the result
further progress was made in creating
was substantially lower.
more relevant packaging variants for a
wider range of venues.
Against the background of the weakness
5
Heineken was again a principal sponsor
of the economy, the war in Iraq, a cold
of the Grammy Awards, the Latin Grammy
winter in the North-East and the introduc-
Awards and the Latin Billboard Awards,
tion of a smoking ban in bars and restau-
and its involvement in the production of
rants in some states, the US beer market
the Red Star Sounds CD, created to
had its worst year for a decade in terms of
support new young talent, was a great
sales volume. As in previous years, the
success. Much publicity was also gained
take-home segment grew at the expense
from sponsorship of major events such as
1
of the on-trade.
the US Open tennis tournament and the
0
growing, largely due to the rising demand
4
3
2
2003
2002
2001
2000
1999
The light beer segment carried on
Amstel Light, positioned as ‘the beer
for low-carbohydrate beers. Heineken
drinker’s light beer’, is market leader in the
USA is well placed to profit both from the
imported light beer segment. The brand
sustained popularity of light beers and
was supported through sponsorship of
from the emergence of the low-carb
sports events and summer activities.
segment, because Amstel Light sells in
the Caribbean. The production, sale and
movie The Matrix Reloaded.
both markets.
A significant development in this area
was the appointment of Amstel Light as
the official beer of the Professional
distribution of Heineken beer in Chile and
Argentina was transferred from former
Performance
Golfers’ Association (PGA). Through the
partner Quilmes to CCU, in which Heineken
Mainly due to the very bad weather, the
brand’s sponsorship of the Iceland Open,
had acquired an indirect interest in 2003,
beer market in the North-East of the US
Amstel Light drinkers were offered a
via its 50% stake in IRSA. The latter in turn
was weaker than in the rest of the country.
chance to take part in a unique round-the-
has a majority interest in CCU, which is by
Sales of Heineken and Amstel Light, both
clock tournament by the light of the
far the largest brewer and beverage
of which have a relatively strong presence
midnight sun.
supplier in Chile and owns breweries in
in this region, were adversely affected,
REPORT OF THE EXECUTIVE BOARD
37
Regional Review
The Americas
Class action lawsuit
Operations
In late 2003 and early 2004, class action
Through its interest in CCU, Heineken has
lawsuits were filed against Heineken and
secured a very strong position in Chile,
market in Chile grew strongly. Our sales
a number of other producers and
and a good position in Argentina. As well
rose to 4.0 million hectolitres, reflecting
distributors of alcoholic beverages,
as beer, CCU also produces and markets a
the consolidation of CCU’s Chilean
claiming that their advertising and
wide range of wines and soft drinks. Its
activities. Heineken beer volume remained
marketing of certain drinks, were directed
modern breweries in Chile and Argentina
stable.
at under-age consumers. We shall defend
have a combined annual capacity of
ourselves energetically against these
6 million hectolitres of beer and sell 4.3
down, despite growth of the premium
accusations. Heineken USA’s advertising
million hectolitres of soft drinks and
segment.
and marketing activities are responsible
1 million hectolitres of Chilean wine, of
and are addressed specifically to con-
which about half is exported. CCU markets
and Boliv ia were depressed by the strong
sumers over the legal minimum age for
a number of lager brands and speciality
euro, compounded in Colombia by
consumption of alcohol of 21. Moreover,
beers in Chile and Argentina. CCU started
increases in local tax and import duties.
the Federal Trade Commission, which
brewing Heineken beer in April 2003.
regulates advertising in the US, concluded
relationships with our customers.
As the economy revived, the beer
Heineken brand sales in Brazil were
Sales of imported beer in Colombia
Strategically, Heineken and CCU
after its most recent study in 2003 that
complement one another perfectly, and
there was no evidence whatever of the
their alliance has enhanced the Heineken
alcoholic beverage industry targeting
brand’s growth potential in both Argentina
under-age consumers with its advertising.
and Chile. In Argentina in particular, the
addition of the Heineken brand to CCU’s
Canada
portfolio is creating good opportunities for
Heineken brand sales markedly higher
expanding the distribution, which will
benefit the growth of the other brands as
While the Canadian beer market overall
well as Heineken.
Central America
remained static, partly due to the Sars
In Brazil, Heineken has a 20% stake in
epidemic, the imported beer segment
Cervejarias Kaiser Brasil, the third largest
a little and our sales in the region increased
posted substantial growth of close to 9%.
brewer in Brazil with a market share of 12%.
from 0.8 million hectolitres to 1.5 million
The other South American markets are
hectolitres, due to the consolidation of
The Heineken brand outperformed the
supplied with imported Heineken beer.
the interest in Cervecerias Barú-Panama
import segment by a small margin, with
Sales in these countries, of which
and Cerveceria Costa Rica with effect from
sales of canned beer growing fastest,
Colombia is the largest import market,
1 October 2002. Sales of Heineken beer
thanks to various promotions.
are still modest.
were up slightly.
South America
Performance review by country
Operations
Beer consumption remained relatively
With the economy picking up, the beer
Heineken operates in Central America in
stable, with the lower sales in Brazil, which
market in Argentina improved greatly.
alliance with FIFCO. In Costa Rica,
accounts for over half of the South
Heineken’s sales rose to 1.9 million hecto-
Heineken has had a 25% interest in Cerve-
American market, being balanced by higher
litres, reflecting the consolidation of CCU’s
ceria Costa Rica, the country’s only brew-
demand in Argentina and Chile. All of the
Argentinean activities. Heineken beer
er, since 2002. The majority shareholder
growth in our sales, from 0.4 million hecto-
volume held steady despite the transfer
is FIFCO. In Panama, Heineken has had
litres to 4.2 million hectolitres, reflects the
of the distribution licence for Heineken
a majority interest in Cervecerias Barú-
consolidation of our interest in CCU as from
beer from former partner Quilmes to CCU.
Panama, one of the country’s two brewers,
1 April 2003. Sales of Heineken beer in South
Ensuring sales continuity involved a major
since 2002. FIFCO is the minority share-
America held steady at 0.5 million hecto-
operation in which CCU and Heineken
holder. Via its alliance with FIFCO,
litres.
worked closely together, not only to get
Heineken has an indirect 8% interest in
the brewing and distribution facilities
Nicaragua in COCECA, the country’s only
ready on time, but also to maintain
brewer.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
38
Central American beer consumption rose
Regional Review
The Americas
Operations
2003 in training to improve the commer-
Heineken has a total of five breweries in
cial skills both of the employees of our
the region, in the Bahamas, St. Lucia,
companies and those of our affiliated
Surinam, Curaçao and Martinique, two of
distributors.
which brew Heineken beer as well as local
The Commonwealth Brewery on the
brands. The brewery in Curaçao produces
Bahamas reported stable sales, but
Amstel. Heineken beer is available in all
the result was lower due to distribution
33 markets which constitute this region,
problems.
in which distribution is organised by
Antilliaanse Brouwerij on Cura çao had
Performance review by country
various routes in conjunction with several
a difficult year, despite good performance
While volume in Costa Ric a remained
partners. The highest sales in the
by the Heineken brand, with the local
stable, the result was lower, mainly due to
Caribbean were on Puerto Rico and in the
market contracting and imports from
losses on soft-drink sales and low prices.
Bahamas. The well developed tourist
South America rising.
A reorganisation was implemented at the
sector, the growing population and the
Surinaamse Brouwerij in Surinam
end of 2003 to improve effectiveness
relative political and economic stability
reported stable sales and an improved
and reduce costs. With separate business
make the Caribbean an attractive region.
result, in spite of the continued weakness
of the local currency and the resultant
units for beer, soft drinks and distribution,
inflation.
Cerveceria Costa Rica is seeking to
Market conditions
increase the effectiveness of its marketing
Tourist numbers in the region remained
and sales function. Heineken brand sales
low in the first half of 2003, which placed a
had a disappointing year, with lower sales
were lower.
heavy strain on purchasing power in many
volume and a slightly lower result.
Sales in Panama were slightly lower.
countries. Promising signs of recovery
Brasserie Lorraine on Martinique
The beer market on Puerto Rico
The focus in 2003 was on upgrading the
became apparent in the second half, and
contracted by almost 10%, reflecting the
entire portfolio, including investment in
beer consumption was only slightly down
higher import duties introduced in 2002,
the Soberana and Panama brands. Intense
by the end of the year. While imports of
but sales only declined slightly. The
competition kept prices in Panama low.
beers from Europe were lower in 2003,
Heineken brand performed quite well.
Heineken brand imports were up 20%.
mainly due to the strength of the euro,
Sales of imported beers were higher on
movements in the exchange rates for
Trinidad, Aruba, Cuba and the
Caribbean
other currencies in the region also
Cay man Islands and in F re nch
In a slightly smaller beer market, our sales
resulted in heightened competition from
Guyana, but lower on Guadeloupe and
increased slightly to 1.4 million hectolitres,
low-priced South American beers.
Haiti .
of which Heineken beer accounted for
Results in the markets into which we
approximately 70%. Despite good perform-
import were depressed by the weakness of
ance in most markets, the result in euros
the dollar, to which the currencies of some
was lower. This was largely due to the
of our largest markets are linked. Although
weakness of the dollar, to which the local
our sales in local currency developed
currencies are tied, but other factors were
satisfactorily, this did not translate into our
the growing competitive pressures and our
result in euros. The strong euro also
increased investment in marketing to
increased the cost of raw materials and
counter them.
packaging, most of which our breweries
import from the euro zone.
Performance review by country
Heineken and our other brands were
supported by sponsorship of many local
music events, and on St . Maarten we
sponsored the St. Maarten Regatta.
Substantial investments were made in
REPORT OF THE EXECUTIVE BOARD
39
Africa/Middle East
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
40
Sales in Africa and the Middle East
largely dependent on the value of the
advanced strongly, with our breweries
US currency, this affected consumer
in Nigeria and Egypt performing espe-
purchasing power in many countries
cially well. The results of the operating
in the region. Despite a good perform-
companies suffered from the weak-
ance by most of the operating com-
ness of the dollar, the Nigerian naira
panies, the overall result in euros was
and the Egyptian pound. Because the
lower. The war in Iraq also had a nega-
economies of many countries are
tive effect on the beer market in
Regional Review
Africa/Middle East
Africa
December 2003 on the merger of Ghana
Breweries, in which Heineken has a major-
Operations
ity interest, and Guinness Ghana, in which
Group volume
Heineken owns a total of 26 breweries in
Diageo holds a majority shareholding.
Africa/Middle East
11 African countries and is active in other
The combined company, Guinness Ghana
in millions of hectolitres
countries via its own sales and distribution
Breweries, in which Heineken will have
organisations or through distribution
a 20% stake, is expected to be more
partners. The Heineken breweries in
profitable. The merger is still awaiting
several African countries have substantial
a number of approvals.
12.7
13
12
market shares. As well as local brands,
Amstel beer is brewed in some countries,
Market conditions
and most of the operating companies also
Although most countries were more
produce and market soft drinks. In several
politically stable, the position remained
countries, the Heineken, Amstel and
vulnerable. The aid and bilateral aid
Mützig brands are brewed under licence
programmes for the Central African
and marketed by third parties. Heineken
countries were resumed by the World
beer is imported on a modest scale.
Bank, the IMF and private-sector organi-
The Heineken brand has good growth
sations. Slight to modest economic growth
potential particularly in Nigeria and South
was achieved in the countries in the
7
Africa.
south of the continent, but private-sector
6
acquired a 28.9% stake in Namibia Brew-
meant no improvement in consumer
eries, the country’s only brewer, which has
purchasing power. In addition, a large
been distributing imported Heineken beer
share of disposable income is now being
in the region since May 2003. Namibia
spent on mobile phones, which are gaining
Breweries, which also has an excellent
rapidly in popularity.
10.6
11
8.8
9
9.2
9.9
10
8
In 2003 Heineken and Diageo together
5
4
investment generally was lower, which
distribution network in South Africa, is to
3
2
1
2003
2002
2001
2000
1999
0
the Middle East. Beer sales in Africa
and the Middle East increased from
10.6 million hectolitres to 12.7 million
hectolitres. Sales of Heineken beer
in Africa and the Middle East were up
5% and Amstel beer sales were 15%
higher. Heineken brand sales recorded
the fastest growth in South Africa.
REPORT OF THE EXECUTIVE BOARD
41
start brewing Heineken under licence for
Performance review by country
the South African market. Heineken’s
In Nigeria the sales volume reported by
licensing agreement with SAB for the
Nigerian Breweries was sharply higher, up
production and distribution of Heineken
from 4.6 million hectolitres to 5.7 million
beer in South Africa was terminated in
hectolitres, but the result was lower due to
2003. The new arrangement will provide
the weakness of the naira against the euro,
a good basis on which to build sales of the
lower prices reflecting a healthier balance
Heineken brand in South Africa.
between supply and demand, higher
Agreement in principle was reached in
pension charges, non-recurring write-
Regional Review
Africa/Middle East
downs and higher depreciation charges
treaty and the appointment of a tran-
due to the entry into service of the new
sitional government give some hope of a
brewery. With the opening of the ultra-
more flourishing market in 2004.
modern AMA brewery in Enugu, brewing
effects of a two-week strike.
In Ghana , sales were higher at Ghana
Breweries, which increased its market
In Rwanda , Brasseries et Limonaderies
share and returned a significantly better
capacity in Nigeria increased by 3.4 million
du Rwanda (Bralirwa) reported a substan-
result, mainly due to capacity problems
hectolitres per year. Following the
tially lower result, partly due the weakness
experienced by its competitors.
announcement of a ban on imported beer
of the currency. Sales were severely hit by
in mid-2003, the AMA brewery will be
a sharp increase in excise duties.
equipped in 2004 for brewing and bottling
Beer consumption in Chad was higher,
but Brasseries de Logone’s sales were
The beer market in Burundi posted
down and it lost some market share.
Heineken beer. We are looking forward to
double-digit growth. Purchasing power
Sales volume was higher at Nocal and
sustained sales growth in Nigeria in 2004,
improved as the cost of living fell. The
EKA in Angola and both breweries posted
but the pace of growth will be slower than
security situation in the country improved
an improved result.
in 2003, owing to the lack of improvement
a little, which enabled Brasseries et
in purchasing power and increasing
Limonaderies du Burundi (Brarudi) to
Leone is still unable to meet demand due
competition in the low-priced segment.
return a higher result despite adverse
mainly to technical problems in the
Consolidated Breweries, in which Heineken
exchange rate movements.
bottling plant. A new filling line is being
has a minority interest, reported 10% sales
Sierra Leone Breweries in Si e r ra
In Congo , Brasseries du Congo was
able to match the good result it achieved
growth.
installed and scheduled to enter service
in April 2004.
In the Democratic Republic of
in 2002, despite the more difficult market
In Cameroon , sales of Amstel and
Congo , where the economic situation
conditions. Consumer purchasing power
Mützig, which are brewed under licence,
showed no improvement, Brasseries,
declined, partly as a consequence of tax
were significantly higher.
Limonaderies et Malteries (Bralima)
changes.
reported slightly higher sales and in-
In Morocco , sales of Heineken and
In a static beer market, Brasseries de
were down slightly.
creased its market share. The result was
Bourbon on Ile de la Réunion
much improved, reflecting lower oper-
reported slightly lower sales and an
ating expenses. The signature of a peace
unchanged result, despite the adversely
Brewery in Gisenyi, Rwanda
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
42
Amstel, which are brewed under licence,
Billboard campaign in Lebanon
Regional Review
Middle East
Africa/Middle East
Brewery in Jordan, which brews Amstel
numbers in Is rae l kept the beer market
beer under licence. The most attractive
weak and Tempo Beer Industries returned
Operations
export markets in the region are the Gulf
a lower result. Further cost savings were
Heineken has fully consolidated breweries
states.
made.
in those countries. Al Ahram Beverages
Performance review by country
result were slightly down on the year
Company, which is market leader in Egypt,
In Eg y pt , although consumer purchasing
before.
also has an extremely successful product
power was impaired by increased prices
in Fayrouz, a non-alcoholic malt drink.
caused by the steep decline in the value
the most attractive export markets in
The brewery started producing Heineken
of the Egyptian pound, the beer market
the region, softened a little, mainly due to
beer in December 2003. As well as gener-
grew appreciably and Al Ahram Bev-
the lack of tourists and the negative effect
ating major cost savings, local production
erages Company’s sales kept pace. Sales
on purchasing power of the strong euro
will also enhance the Heineken brand’s
of Fayrouz, a non-alcoholic malt drink
in making imports more expensive.
growth potential in Egypt.
available in a range of fruit flavours, were
As a consequence, our sales were slightly
up by almost 50%, which translated into
lower.
In Jordan , Jordan Brewery’s sales and
in Egypt and Lebanon, the only breweries
After substantially increasing its interest
in the Almaza brewery in Lebanon in
dramatic growth in the brand’s share
2002, Heineken also acquired the distri-
of the soft-drinks segment. Despite an
bution operation in 2003. In addition,
excellent performance by Al Ahram
Almaza secured the worldwide rights to
Beverages Company, the result in euros
Laziza, the Lebanese beer brand, which
was down slightly, due to the decrease of
has given it a strong position on the
almost 40% in the value of the Egyptian
home market. As a result of an exchange
pound.
of shares, Heineken’s interest in Almaza
S.A.L. decreased from 81% to 67%.
Heineken has minority interests in
Tempo Beer Industries in Israel and Jordan
REPORT OF THE EXECUTIVE BOARD
43
The beer market in Lebanon was static
and sales of Heineken and Amstel were
satisfactory.
The unstable situation and low tourist
The beer market in the G u l f s t a te s,
Asia / Pac i f i c
After a difficult first half year,
Operations
economic growth picked up in most
Heineken has built a good position in
markets. Our sales in the Asia/Pacific
this region. The main pillar supporting
region increased from 8.0 million
that position is Asia Pacific Breweries, a
hectolitres to 8.4 million hectolitres.
Singapore-based joint venture between
Sales of Heineken beer developed
Heineken and Fraser & Neave, which has
well, especially in Thailand and
interests in many breweries in the region.
Vietnam.
Heineken beer is brewed in several Asia
Pacific breweries. Heineken has its own
operating companies in Indonesia and on
New Caledonia.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
44
Regional Review
Asia/Pacific
on the Chinese mainland as from 1 April
Market conditions
2004. The new company, Heineken Asia
In the first half of 2003, the economy of
Pacific Breweries China (HAPBC), will com-
the Asia/Pacific region suffered several
bine all operations relating to the brewing
setbacks, in the form of terrorist attacks
and marketing of beer and other strategic
on Bali and in Jakarta and the outbreak
activities, such as investments, mergers
of Sars. The impact of this epidemic was
and acquisitions. Heineken will have a
mainly on China, Hong Kong, Taiwan,
46.1% indirect interest and Fraser & Neave
Vietnam and Singapore, but it also had a
a 43.9% indirect interest in HAPBC. This
negative effect on a number of other
Group volume
will make HAPBC more efficient and its
countries. The economic situation improv-
A s i a / Pa c i f i c
commercial policy more effective and will
ed a little from July 2003 onwards, but
in millions of hectolitres
achieve synergy gains in marketing and
growth rates for most of the countries
distribution. HAPBC will start producing
were lower than in recent years, ranging
Heineken beer locally from the first day,
between 2% and 5%. Economic growth in
1 April 2004. This will yield cost savings
China, however, turned out at around 8%.
8.4
7.0
7
7.8
7.5
8
8.0
9
on import duties, create greater growth
potential for the Heineken brand and
Performance review by country
ensure better utilisation of the available
Beer sales in China were down. Our brew-
brewing capacity.
eries are relatively strongly represented in
Via HAPBC, Heineken reached agree-
6
5
4
3
2
1
2003
2002
2001
2000
1999
0
Imported Heineken beer is also available
in several countries in the region and in
some it is brewed under licence. Heineken
beer has already secured a strong market
position in Thailand, Vietnam, Hong Kong
and Taiwan. Heineken has its own sales
offices in Hong Kong, Taiwan, China, South
Korea, Japan, Singapore and Australia.
In January 2004, Heineken and Asia
Pacific Breweries reached agreement
on the amalgamation of their operations
REPORT OF THE EXECUTIVE BOARD
45
the south of the country and in entertain-
ment in January 2004 on the acquisition of
ment districts, where the impact of Sars
a minority interest in Guangdong Brewery
was most marked. Hainan Asia Pacific
Holdings, one of the most profitable listed
Brewery’s sales and result were slightly
Chinese brewers. Guangdong has two
lower and Shanghai Asia Pacific Brewery,
breweries and a third is under construc-
whose portfolio includes the Reeb Light
tion. Kingway, its principal brand, is sold
and Tiger brands, also reported lower
not only in the province of Guangdong,
volume, but sales of imported Heineken
which has a population of 85 million and is
beer were stable.
one of China’s most prosperous provinces,
The process of consolidation in the
but also in Hong Kong, Macau and Taiwan.
Chinese beer market continued in 2003,
The Heineken brand will benefit from the
and interests in Chinese breweries were
distribution network operated by Guang-
acquired by several international brewers.
dong Brewery, which is making prepara-
The acquisition of a minority interest
tions to produce Heineken beer.
in Guangdong Breweries in early 2004
Regional Review
Asia/Pacific
and the planned start of local production
In Cambodia , both sales volume and
attacks on Bali and in Jakarta. Multi Bintang
of Heineken beer this year will significantly
result were sharply higher.
Indonesia lost only a little of its market
strengthen Heineken’s position in the fast-
In Malaysia , Guinness Anchor Berhad
share and the result improved, thanks to
growing Chinese market and will improve
achieved higher sales and an improved
cost control at the Surabaya brewery.
both Heineken brand sales and profit mar-
result. The brewery was able to maintain
Further cost savings are still needed.
gins. Heineken’s position in China, which it
its market share, after having been under
sees primarily as a long-term growth
pressure in recent years. Guinness Anchor
de Nouvelle-Caledonie posted significantly
market, is still modest. Further expansion
Berhad’s good performance was due
reduced sales and a lower result. As a
in China will be pursued via local brew-
largely to the Tiger, Heineken and Anchor
consequence of a new law introduced in
eries, with their own brands and distribu-
Ice brands.
January 2003 which prohibits the sale of
On New Caledonia , Grande Brasserie
tion networks in combination with the
refrigerated beer, the total beer market
Heineken brand.
has shrunk 20%.
Sales of Heineken beer in Australia
Heineken returned a weak performance
in Hong Kong, where the economy has
witnessed rapid growth. Heineken’s
deteriorated over the past two years.
sponsorship of the Australian Open tennis
Both sales volume and result were lower,
tournament and the Rugby World Cup
reflecting the reduced purchasing power,
– both major and very popular events –
increased competition from low-priced
made a valuable contribution to brand
Chinese beers and the stronger euro.
awareness and brand value. We are con-
The Hong Kong beer market was also
fident that the growth of the Heineken
comparatively hard hit by the Sars
In Vietnam , Vietnam Brewery’s sales and
brand will continue to benefit from this
epidemic.
result were significantly higher, with
momentum in 2004.
In Taiwan, sales increased significantly.
Heineken and Tiger performing
Sales in Japan were down slightly.
The premium segment, led by the
particularly well. The beer market again
The Japanese beer market was under
Heineken brand, grew strongly.
recorded vigorous growth, adding 8%.
pressure from the growing sales of low-
Hatay Brewery, a new facility in the north
priced Happoshu, a low-malt beer which
Singapore reported higher sales but a
owned by Asia Pacific Breweries, started
attracts a lower rate of excise duty. The
lower result.
production in October, with an initial
Heineken brand strengthened its position
In Singa p ore, Asia Pacific Breweries
capacity of 400,000 hectolitres. To com-
in prime on-trade locations. Heineken
sales and result moved ahead strongly.
plement Heineken and Tiger, Hatay
launched Buckler, a non-alcoholic beer,
The Thai economy performed well and
Brewery also introduced Anchor draught
which has proved very successful.
the beer market grew 14%. Sales volume in
beer. The draught segment accounts for
the mainstream segment stabilised after
70% of the total Vietnamese beer market.
a protracted decline over several years.
In New Zealand , DB Group reported
In Thailand , Thai Asia Pacific Brewery’s
In So u t h Korea, Heineken opened
a sales office in Seoul, which started
operating in September 2003. Sales had
The premium segment, in which Heineken
slightly higher sales in a stable beer mark-
previously been outsourced. We are
is market leader by a considerable margin,
et and posted an improved result thanks to
convinced that, with our own sales and
continued to grow. Production capacity
a better sales mix and cost control.
marketing team, we shall be better
was expanded to meet the rising demand.
Heineken and Monteith, the local premium
equipped to utilise the Heineken brand’s
beer, add permanent value to DB Group.
growth potential in South Korea.
In Papua New Guinea , the economy
remained weak and the beer market
continued to grow and the Dinal LPP
contracted a little. South Pacific Brewery’s
brewery, in which Heineken’s interest was
sales were also down slightly, but cost
increased to 51% in 2002, reported slightly
control yielded an improved result.
higher sales. Dinal’s sales and result have
Sales in Indonesia were down. The
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
46
The beer market in Kazakhstan
been included in the consolidation since
beer market shrank 8%, due to the eco-
1 January 2003. Amstel brand sales showed
nomic situation and the drop in tourist
strong growth, but sales of the local Tian
numbers in the wake of the terrorist
Shan brand were down slightly.
Financial Rev iew
Net turnover a nd cost of sa les
Net turnover
with the new brewery in Nigeria. Non-
Net turnover rose by €773 million in 2003
in billions of euros
recurring reorganisation costs of €74
million were incurred in the Netherlands.
to €9,255 million, an increase of 9%, of
which first-time consolidations accounted
for 8%. Organic growth in net turnover,
reflecting improvements in the sales mix,
higher selling prices and higher volume,
amounted to 5%. This was offset by a 4%
reduction in turnover due to lower
exchange rates against the euro for the US
dollar, the Nigerian naira, the Polish zloty
Operating expenses also increased by
Beer
7.3
€31 million by the first-time amortisation
Other income
0.3
of goodwill.
Soft drinks
1.0
Operating prof it and net profit
Wines and spirits
0.6
at €1,222 million, compared with €1,282
The operating profit was 5% lower in 2003
million in 2002, mainly due to the amortisation of goodwill and the non-recurring
and the Singapore dollar in particular.
result. As from 2003, goodwill is capi-
reorganisation expenses in the Nether-
in the consolidation for the first time in
talised and amortised. Goodwill of €1,124
lands. The operating profit as a proportion
2003. Karlsberg in Germany and Dinal in
million was capitalised and amortisation of
of net turnover decreased from 15.1% to
Kazakhstan were consolidated as from
€31 million was charged against the result.
13.2%.
A number of companies were included
1 January. CCU in Chile and Karlovacka in
Operating expenses rose 12% to €8,033
New acquisitions made a positive
Croatia were consolidated (CCU
million, over half of this increase being
contribution to operating profit of €45
proportionally and Karlovacka fully) as
accounted for by first-time consolidations.
million, before amortisation of goodwill
from 1 April. The BBAG group in Austria,
The cost-reducing effect of lower
of €31 million.
which has businesses in Austria, Romania,
exchange rates was offset by a modest rise
The negative effect of exchange rate
Poland, Hungary and the Czech Republic,
in raw material and packaging costs and a
movements on operating profit amounted
was consolidated as from 1 October.
7% increase in marketing and selling
to €88 million.
A number of beverage wholesalers were
expenses, the latter amounting to 12.2% of
Income from non-consolidated participat-
acquired in Italy, Poland and Switzerland.
net turnover in 2003, compared with 12.4%
ing interests increased by €53 million to
in 2002.
€101 million, mainly due to extraordinary
ing rules in 2003 which affect the profit
Staff costs were higher, reflecting the first-
net income of €71 million from the sale of
and loss account. Net turnover is reported
time consolidations and growth in the
the 15% interest in Argentinean brewing
excluding excise duties and all discounts
number of employees. The reduction in
group Quilmes.
directly attributable to turnover. The
staff costs in Europe due to the lower
Net interest charges rose €31 million to
comparative figures for 2002 have been
staffing levels in the Netherlands was
€140 million, largely reflecting additional
restated accordingly.
offset to some extent by rises in other
interest expense in connection with loans
This change has no effect on the reported
regions, especially in Africa in connection
raised to finance acquisitions, the debts
There were two changes in the report-
Operating profit and net profit
Operating profit
Net profit
1,282
795
88
55
in millions of euros
2002
Organic growth
First-time consolidations
45
0
Amortisation of goodwill
– 31
– 31
Exchange effects
– 88
– 44
Reorganisation costs in the Netherlands
– 74
– 48
–
71
1,222
798
Book profit on Quilmes
2003
REPORT OF THE EXECUTIVE BOARD
47
Financial Review
2003
2002
Change (%)
Net turnover
9,255
8,482
9
Raw materials, consumables and services
5,557
5,029
10
Staff costs
1,832
1,642
12
644
529
22
Total operating expenses
8,033
7,200
12
Operating profit
1,222
1,282
–5
Turnover and costs
in millions of euros
Amortisation/depreciation and value adjustments
of these acquisitions which have been
amortisation charges and a significant
in 2002. This related to BBAG (60%) in
included in the consolidation and lower
improvement in working capital manage-
Austria, CCU (31%) in Chile, via the IRSA
interest income on the reduced cash
ment.
joint venture, the interest in Karlsberg
position.
Net investments in tangible fixed assets
(22.5%) in Germany, via the Brau Holding
Net profit rose by 0.4% to €798 million and
in 2003 amounted to €611 million, com-
International joint venture, and Karlovacka
net profit per share increased from €2.03
pared with €696 million in 2002. In 2003,
(94%) in Croatia and the acquisition of
to €2.04.
in addition to the substantial expenditure
several beverage wholesalers in Europe.
The average tax burden decreased from
on the new brewery in Nigeria in 2002,
Heineken N.V. advanced a subordinated
31.0% in 2002 to 29.5% in 2003, due mainly
another €95 million was invested.
loan of €160 million to Stichting Heineken
to several non-recurring tax assets in
Furthermore major investments were
Pensioenfonds to enable it to comply with
Greece and elsewhere.
made in Poland (€52 million), the Nether-
the more onerous funding ratio require-
lands (€77 million), Spain (€75 million),
ments imposed by the Pensions and
France (€74 million) and Italy (€39 million).
Insurance Supervisory Authority (PVK)
Cash fl ow a nd investm en ts
The cash flow from operating activities
A total of €1,344 million was invested
increased sharply from €1,184 million to
in new acquisitions and expanding existing
€1,637 million, the net effect of higher
interests, compared with €1,222 million
in the Netherlands.
2003
2002
1,222
1,282
–5
101
48
110
Change (%)
Operating profit and net profit
in millions of euros
Operating profit
Income of non-consolidated participating interests
Interest
– 140
– 109
28
Profit before tax
1,183
1,221
–3
Taxation
– 319
– 364
4
Profit after tax
864
857
1
Minority interests
– 66
– 62
6
Net profit
798
795
0
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
48
Financial Review
2003
2002
1,637
1,184
Cash flow
in millions of euros
Cash flow from operating activities
Dividends paid
Cash flow from investing activities
– 241
– 187
– 2,080
– 1,973
– 684
– 976
Borrowings
1,501
484
Repayments on loans
– 271
– 56
3
–1
549
– 549
Other financing
Financing and liquidity
less exchange effects of €152 million and
Group equity increased from €3,030
dividend of €157 million. As from 2003,
million as at 31 December 2002 to €3,899
goodwill is no longer charged against
million as at 31 December 2003.
shareholders’ equity.
Shareholders’ equity increased by €530
Tangible fixed assets,
Minority interests in group equity
net investments
million, consisting of net profit of €798
increased significantly, from €393 million
and depreciation
million and revaluations of €41 million,
to €732 million, largely due to the first-time
in millions of euros
consolidation of BBAG in Austria and CCU
in Chile.
There was also a sharp increase in the
in millions of euros
net debt position in 2003, which rose €951
depreciation
700
696
O p e ra t i n g p rof i t
investments
million to €2,341 million, mainly reflecting
the issue of two bond loans for a total
300
interest rate of 0.225 points over Euribor,
611
560
578
490
350
465
445
418
441
420
659
which will expire in December 2008.
As at 31 December 2003, none of this
280
credit facility had been drawn down.
210
459
274
406
297
457
450
November 2013 and the other for €500
also agreed with a syndicate of banks at an
546
600
560
with a coupon of 5.00% maturing in
in November 2010. A credit facility was
799
750
4 November 2003, one for €600 million
million with a coupon of 4.375% maturing
921
900
of €1,100 million. Both loans were issued on
386
1,050
630
481
1,125
1,200
1,222
1,282
1,350
P rofit a ppro pr i at i o n
Heineken N.V.’s net profit in 2003 amount-
140
ed to €798 million. In accordance with
Article 12 of the Articles of Association, the
150
70
Annual General Meeting of Shareholders
49
2003
2002
2001
This proposed appropriation corresponds
0
2000
2003
2002
2001
2000
1999
1998
1997
1995
1996
1994
REPORT OF THE EXECUTIVE BOARD
of €157 million for distribution as dividend.
1999
will be invited to appropriate an amount
0
Financial Review
2003
%
2002
%
3,899
36
3,030
39
Deferred taxation
415
4
381
5
Other provisions
952
9
600
8
5,631
51
3,770
48
10,897
100
7,781
100
Financing structure
in millions of euros
Group equity
Liabilities
Group equity
as a percentage of
total assets
43.6
40.7
40
value, will be presented to the General
nominal value, out of which an interim
Meeting of Shareholders. The new shares
dividend of €0.16 was paid on 22 Septem-
will participate fully in the profits as from
ber 2003. The final dividend thus amounts
1 January 2004.
tax at 25% will be deducted from the final
35.8
35
to a dividend of €0.40 per share of €2.00
to €0.24 per share. Dutch withholding
38.9
45
47.9
50
Amsterdam, 24 February 2004
dividend. It is proposed to add the remaining amount of €641 million to the retained
Ruys
Van Boxmeer
30
profits.
Bolland
Hooft Graafland
25
Share split
Heineken N.V. has maintained a consistent
dividend policy over many years, carrying
20
out a review every three years to ascertain
whether there is scope for increasing the
297
15
dividend paid to shareholders by
increasing the number of shares in issue
10
by 25%. Consequently, a proposal to split
the Heineken shares, by issuing five new
5
shares of €1.60 nominal value for every
four existing shares of €2.00 nominal
2003
2002
2001
2000
1999
0
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
50
Financial Statements 2003
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
51
Consolidated Balance Sheet
before appropriation of profit
in millions of euros
31 December
2003
31 December
2002
Assets
Fixed assets
Intangible fixed assets
1,151
39
Tangible fixed assets
4,995
4,094
Financial fixed assets
1,122
835
7,268
4,968
Current assets
Stocks
Receivables
Securities
834
765
1,379
1,270
76
98
1,340
Cash
680
3,629
2,813
10,897
7,781
Equity and liabilities
Group equity
Shareholders’ equity
Minority interests in other group companies
3,167
2,637*
732
Provisions
393
3,899
3,030
1,367
981
Liabilities
Long-term borrowings
2,721
Current liabilities
2,910
* Restated for comparison purposes
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
52
1,215
2,555*
5,631
3,770
10,897
7,781
Consolidated Profit and Loss Account
in millions of euros
2003
2002
9,255
Net turnover
8,482*
Raw materials, consumables and services
5,557
5,029*
Staff costs
1,832
1,642
Amortisation/depreciation and value adjustments
644
529
Total operating expenses
8,033
7,200
Operating profit
1,222
1,282
101
48
Interest
– 140
– 109
Profit before tax
1,183
1,221
Taxation
– 319
– 364
Results of non-consolidated participating interests
Group profit after tax
864
857
Minority interests
– 66
– 62
Net profit
798
795
391,979,675
391,979,675
2.04
2.03
Number of shares in issue
Net profit per share
* Restated for comparison purposes
F I N A N C I A L S TAT E M E N TS 2 0 0 3
53
Consolidated Cash Flow Statement
in millions of euros
2003
2002
Cash flow from operating activ ities
1,222
1,282
Results of non-consolidated participating interests
30
48
Amortisation/depreciation and value adjustments
644
529
Operating profit
Movements in provisions
95
–8
Movements in working capital
92
– 223
Cash flow from operations
2,083
1,628
Interest paid and received
– 132
– 103
Taxation paid on profits
– 314
– 341
Cash flow from operating activities
1,637
1,184
Dividends paid
– 241
– 187
1,396
997
Cash flow from operating activities
less dividends paid
Cash flow from investing activ ities
Intangible fixed assets
Tangible fixed assets
Consolidated participating interests
Non-consolidated participating interests
Result on participating interests disposed of
Other financial fixed assets
– 26
– 35
– 611
– 696
– 1,339
– 799
–5
– 423
71
–
– 170
– 20
– 2,080
– 1,973
Cash flow from financing activ ities
Long-term borrowings
1,501
484
Repayment of long-term borrowings
– 271
– 56
3
–1
Share issue by group companies
Net cash flow
1,233
427
549
– 549
Other cash movements
– 32
– 88
Exchange differences
15
– 36
Movement in net cash
532
– 673
1,340
680
Changes in the consolidation
The net cash position consists of
Cash
Securities
Bank overdrafts
Position as at 31 December
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
54
76
98
– 679
– 573
737
205
Notes to the Consolidated Balance Sheet,
Profit and Loss Account and Cash Flow Statement for 2003
General
been hedged, they are translated at the exchange rate of the
The financial statements and the report of the Executive Board
hedge. Recognition of results arising from hedging operations
have been prepared in accordance with the provisions of Part 9,
relating to future foreign currency cash flows is deferred until
Book 2, of the Netherlands Civil Code.
the relevant cash flows are accounted for. Other foreign curren-
There were a number of changes in the scope of the
cy transactions in the profit and loss account are recognised
consolidation during the year. The most significant changes with
at spot rates unless forward contracts have been entered into
regard to the financial statements are mentioned below.
in connection with these transactions, in which case the forward
rate applies.
Consolidated from
The financial statements of non-euro zone companies are
Karlsberg International Brand GmbH, Germany
1 January 2003
translated into euros. Assets and liabilities are translated at
Dinal LLP, Kazakhstan
1 January 2003
exchange rates on the balance sheet date. Profit and loss
Compania de Cervecerias Unidas S.A. (CCU), Chile
1 April 2003
account items are translated at the average monthly exchange
Karlovacka Pivovara, Croatia
1 April 2003
rates. The difference between the net profit based on average
exchange rates and the net profit based on the exchange rates
Brau-Beteiligungs-Aktiengesellschaft (BBAG),
as at balance sheet date is accounted for in shareholders’ equity.
Austria, with operations in Austria, Poland,
Romania, Hungary and the Czech Republic
1 October 2003
The profit and loss accounts of companies in hyperinflation
countries are translated at exchange rates prevailing on the
These changes in the consolidation led to an increase in net
balance sheet date.
turnover of €686 million.
Differences in book value arise from translation into euros of
The financial information relating to Heineken N.V. has been
the opening balance of the shareholders’ equity of the non-
included in the consolidated balance sheet and profit and loss
euro zone consolidated companies plus intra-group long-term
account. Accordingly, the abridged presentation permitted by
loans granted to these companies. These differences are treated
Section 402, Part 9, Book 2, of the Netherlands Civil Code has
as revaluations and are credited or debited directly to group
been used for the Heineken N.V. profit and loss account.
equity, with due allowance for taxation. Other differences due to
The amounts disclosed in the notes are in millions of euros
exchange rate movements are accounted for directly in the
unless otherwise indicated.
profit and loss account.
Consolidation
Changes in accounting policies
Heineken N.V. and the subsidiaries with which it forms a group
With effect from the beginning of the 2003 financial year,
are fully consolidated in the consolidated balance sheet and
goodwill is capitalised and amortised. Goodwill paid up to
profit and loss account. Minority interests in group equity and
31 December 2002 has been charged directly to shareholders’
group profits are presented separately.
equity. If the goodwill had been charged to shareholders’ equity
Proportional consolidation is applied in the case of companies
in 2003 as in previous years, it would have been €1,124 million
in which the Heineken group has a direct interest and exercises
lower as at 31 December 2003 and the net profit would have
a controlling influence on management decisions in partnership
been €31 million higher.
with other shareholders.
With effect from the beginning of the 2003 financial year,
In the analyses of movements in various assets and liabilities,
the consolidated balance sheet is presented before profit
disclosures of ‘changes in the consolidation’ relate to increases
appropriation, following changes in the Dutch reporting rules.
or decreases in the group’s interests in consolidated companies.
Only the dividends paid during the year are charged to shareholders’ equity. In 2003, the final dividend for 2002 and the
Foreign currency
interim dividend for the current year were charged to
Hedging transactions to limit exchange risks are entered into
shareholders’ equity.
only in respect of actual amounts receivable and payable
With effect from the beginning of the 2003 financial year,
and highly probable future cash flows in foreign currencies.
following changes in the Dutch reporting rules concerning the
The instruments used are forward contracts and options. Before
determination of net turnover, all discounts and excise duties
such contracts are entered into, inward and outward cash flows
directly attributable to the turnover are deducted from net
in a particular currency are netted off at group level as far as
turnover.
possible. Where foreign currency balance sheet positions have
F I N A N C I A L S TAT E M E N TS 2 0 0 3
55
Notes to the Consolidated Balance Sheet, Profit and Loss Account and Cash Flow Statement for 2003
Comparative figures
experience gained in the construction of breweries throughout
The comparative figures in the consolidated profit and loss
the world. Grants received in respect of investments in tangible
account have been restated to facilitate comparison, following
fixed assets are deducted from the amount of the investment.
the changes in accounting policies. The changes do not affect
Projects under construction are included at cost.
the reported net profit.
The presentation of the consolidated balance sheet before
Financial fixed assets
appropriation of profit also means restating shareholders’ equity
Non-consolidated participating interests where the group has
in the 2002 figures. Shareholders’ equity as at 31 December 2002
a significant influence are stated at the Heineken share of the
has been increased by €94 million, which was the amount of the
net asset value, which is determined on the basis of the Heineken
final dividend for 2002 paid in 2003. Current liabilities have been
accounting policies as far as possible. Other non-consolidated
reduced by the same amount.
participating interests are stated at cost less any necessary
As a result of the above changes, the reported net turnover
in 2002 has been reduced by €1,811 million to €8,482 million,
provisions.
Loans to non-consolidated companies and other financial fixed
with the same reduction in operating expenses.
assets are carried at face value, less provisions for credit risks.
Valuation of assets and liabilities
Impairment of assets
Regular assessments are made for any indications that intangible
Intangible fixed assets
and tangible fixed assets might be impaired. If any such indica-
Goodwill is calculated as the difference between the cost of
tions exist, the net realisable value is determined by taking
an acquisition and its net asset value. In the case of acquisition
into account the future cash flows. If the net realisable value of
of beverage wholesalers, the acquisition cost is almost entirely
an asset is less than its book value, the difference is deducted
determined by the customer base, and this element is treated
from the carrying amount as an impairment loss and charged
as goodwill.
to the profit and loss account.
Goodwill is carried at cost less accumulated amortisation
and impairment. Amortisation is calculated by the straight-line
Current assets
method based on the expected economic life of the assets
Stocks purchased from third parties are stated at replacement
concerned, subject to a maximum of 20 years.
cost, based on prices from current purchase contracts and latest
Other intangible fixed assets satisfying the applicable criteria
prices as at balance sheet date. Finished products and work in
are capitalised and amortised by the straight-line method
progress are stated at manufactured cost based on replacement
over three years. If the net realisable value of intangible fixed
cost and taking into account the production stage reached.
assets is less than the carrying amount, a diminution in value
Stocks of spare parts are depreciated on a straight-line basis
is applied. Costs of internally developed brands, patents and
taking account of obsolescence. If the recoverable amount or
licences and research and development are expensed.
net realisable value of stocks is less than their replacement cost,
Brands, patents and licences purchased with acquisitions
are treated as part of the goodwill paid.
provisions are formed in respect of the difference. Advance
payments on stocks are included at face value.
Receivables are carried at face value less a provision for credit
risks and less the amount of deposits on returnable packaging.
Tangible fixed assets
Except for land, which is not depreciated, tangible fixed assets
Securities are carried at the lower of historical cost and
are stated at replacement cost less accumulated depreciation.
quoted price, or estimated market value in the case of unlisted
The following average useful lives are used for depreciation
securities.
Cash is included at face value.
purposes:
Buildings
30 – 40 years
Plant and equipment
10 – 30 years
Other fixed assets
5 – 10 years
Revaluations
Differences in carrying amounts due to revaluations are credited
or debited to group equity, less an amount in respect of deferred
The replacement cost is based on appraisals by internal and
external experts, taking into account technical and economic
developments. Other factors taken into account include the
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
56
tax liabilities where applicable.
Notes to the Consolidated Balance Sheet, Profit and Loss Account and Cash Flow Statement for 2003
Provisions
cost and Heineken’s share of the net profits of companies carried
The provision for deferred tax liabilities is formed in respect of
at net asset value. The share of the results of companies carried
timing differences between valuation for tax purposes and
at net asset value is calculated as far as possible in accordance
valuation according to the accounting policies for reporting
with group accounting policies for the determination of results,
purposes. A taxation provision is also formed for the withholding
taking account of taxation and minority interests.
tax to be deducted from undistributed profits of foreign group
Interest expenses are allocated to the periods to which they
companies. The liabilities are calculated at the standard tax rates
relate. Results arising from operations involving interest rate
on balance sheet date and are stated at face value. Deferred tax
hedging instruments are also accounted for as interest. Such
assets are netted off against deferred tax liabilities of the same
instruments are used to hedge the risk of a reduction in interest
kind over matching periods. A net deferred tax asset is not
income on surplus funds temporarily invested in bank deposits
recognised unless future realisation is reasonably certain.
due to falling interest rates and higher interest charges on
The provisions for pension liabilities and similar schemes are
interest-bearing liabilities due to interest rate rises. Interest rate
calculated at net present value according to actuarial principles
hedging instruments are not used without a corresponding
based on current pay levels. Full provision is made for pension
underlying position.
liabilities in respect of accrued benefit rights. Prior-service
Taxation on profits is calculated on the profit shown in the
liabilities resulting from improvements in remuneration
financial statements by applying the standard tax rates, taking
packages and pension plans are added to the provision for
into account tax payable by the group on profit distributions by
pension liabilities and charged directly to the result.
participating interests and applicable tax facilities. Differences
Provisions connected with reorganisation plans are calculated at
between the amount thus calculated and the tax actually
the net present value of the benefit commitments in connection
payable for the year are accounted for in the provision for
with early retirement, relocation and redundancy schemes.
deferred tax liabilities.
Where applicable, the expected degree of employee participation in the schemes concerned is taken into account.
Long-term borrowings
Long-term interest-bearing loans are included at face value
taking into account any discounts or premiums and associated
transaction costs. Discounts and premiums plus costs are
charged to the profit and loss account as interest expenses over
the period of the loan. Other long-term borrowings are stated at
face value.
Current liabilities
Current liabilities are stated at face value.
Determination of results
Income and expenses are accounted for in the profit and loss
account at the time of supply of the relevant goods or services.
Net turnover means the proceeds from sales of products and
services supplied to third parties, net of sales taxes direct,
customer discounts and excise duties.
Raw materials and consumables are stated at replacement
cost in the profit and loss account.
Depreciation charges based on replacement cost are calculated on a straight-line basis according to the estimated useful
lives of the assets concerned.
The results of non-consolidated participating interests consist
of dividends received during the year from companies carried at
F I N A N C I A L S TAT E M E N TS 2 0 0 3
57
Notes to the Consolidated Balance Sheet
Intangible fixed assets
Commencing in 2003, goodwill is capitalised and amor-
to the expansion of existing interests and acquisitions of
tised over a maximum period of 20 years. The invest-
beverage wholesalers. Software and other investments
ment in goodwill in 2003 relates to the acquisitions of
in major ICT projects and in technical innovations
Karlsberg in Germany, Dinal in Kazakhstan, CCU in Chile,
satisfying the applicable criteria are capitalised and
Karlovacka in Croatia and the BBAG group in Austria and
amortised in three years.
Intangible fixed assets
Total
Software
Goodwill
and other
Position as at 1 January 2003
39
39
–
Changes in the consolidation
12
12
–
1,150
26
1,124
–1
–1
–
– 49
– 18
– 31
1,151
58
1,093
1,215
91
1,124
– 64
– 33
– 31
1,151
58
1,093
Investments less disposals
Exchange differences
Amortisation
Position as at 31 December 2003
This book value is made up as follows:
Historical cost
Accumulated amortisation
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
58
Notes to the Consolidated Balance Sheet
Tangible fixed assets
Total
Land and
Plant and
Other
Projects under
Buildings
equipment
fixed assets
construction
212
Position as at 1 January 2003
4,094
1,250
1,817
815
Changes in the consolidation
1,074
553
314
191
16
611
71
192
212
136
–
27
86
40
– 153
– 263
– 64
– 134
– 45
– 20
39
7
23
9
–
Depreciation and value adjustments
– 560
– 72
– 248
– 240
–
Position as at 31 December 2003
4,995
1,772
2,050
982
191
11,678
3,406
5,470
2,611
191
– 6,683
– 1,634
– 3,420
– 1,629
–
4,995
1,772
2,050
982
191
575
236
306
33
–
Investments less disposals
Completed projects
Exchange differences
Revaluations
This book value is made up as follows:
Replacement cost
Accumulated depreciation
The aggregate amount of revaluations included
in the book value as at 31 December 2003 is:
Other fixed assets includes vehicles, office equipment and
returnable packaging. Projects under construction also
includes advance payments on tangible fixed assets on
order.
F I N A N C I A L S TAT E M E N TS 2 0 0 3
59
Notes to the Consolidated Balance Sheet
Financial fixed assets
Total
Non-consolidated participating interests
Shares
Other financial
Loans
fixed assets
423
Position as at 1 January 2003
835
410
2
Changes in the consolidation
124
20
2
102
Additions/loans granted
363
27
1
335
– 259
– 93
–1
– 165
–6
Disposals/loan repayments
– 16
– 10
–
Share in net profit/sale proceeds
84
84
–
–
Dividends received
–9
–9
–
–
1,122
429
4
689
Revaluations
Position as at 31 December 2003
Other financial fixed assets includes €339 million (2002:
€295 million) in respect of loans to customers and €18
million (2002: €22 million) in respect of deferred tax
assets. In 2003, a subordinated loan of €160 million was
granted to Stichting Heineken Pensioenfonds.
2003
2002
Stocks
Raw materials
140
112
71
58
Finished products
215
184
Goods for resale
147
125
Work in progress
Non-returnable packaging
Other stocks
Advance payments on stocks
68
72
175
159
18
55
834
765
Receivables
Amounts falling due within one year:
Trade debtors
1,306
1,111
Packaging deposits
– 316
– 266
990
845
21
44
Other amounts receivable
215
221
Prepayments and accrued income
153
160
1,379
1,270
Non-consolidated participating interests
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
60
Notes to the Consolidated Balance Sheet
2002*
2003
Securities
Listed securities
63
83
Unlisted securities
13
15
76
98
Cash
Cash in hand and at bank
494
324
Short-term cash deposits
846
356
1,340
680
Total cash not freely disposable amounts to €194 million,
mainly relating to letters of credit.
Shareholders’ equity
Position as at 1 January
2,637
2,852
Exchange differences
– 152
– 107
41
32
–
– 778
Revaluations
Goodwill
Net profit for the year
Dividend
Position as at 31 December
Dividend relates to the final dividend for 2002 of €94
million and the interim dividend for 2003 of €63 million.
For an analysis of shareholders’ equity, reference is made
to the balance sheet of Heineken N.V. as at 31 December
2003 on pages 82-83.
* The 2002 figures have been restated for comparison purposes
F I N A N C I A L S TAT E M E N TS 2 0 0 3
61
798
795
– 157
– 157
3,167
2,637
Notes to the Consolidated Balance Sheet
2003
2002
Minority interests
Position as at 1 January
393
381
Changes in the consolidation
400
25
Exchange differences
– 65
– 55
Revaluations
19
12
Minority interests in group profit
66
62
– 83
– 31
2
–1
Dividends payable to minority shareholders
Share issue
732
Position as at 31 December
Prov isions
393
Deferred tax
Pension
Other
liabilities
liabilities
provisions
Total
Position as at 1 January 2003
381
352
248
981
Changes in the consolidation
111
183
72
366
Revaluations/exchange differences
– 50
–5
–3
– 58
Added/released
– 13
80
91
158
The movements were:
–
– 33
– 30
– 63
Other movements
– 14
– 51
48
– 17
Position as at 31 December 2003
415
526
426
1,367
Utilised
The provision for pension liabilities relates to pensions
provided and for current lawsuits. Additions due
and annuities which have not been insured with third
to planned and announced restructuring programmes
parties. The average rate of interest used in calculating
are charged to the profit and loss account, with the
the net present value of the provision for pension
exception of restructuring programmes relating
liabilities, based on current applicable interest rates
to recently acquired companies, which are taken into
in the countries concerned, is 4% (2002: 4%).
account in the calculation of goodwill.
The other provisions comprise reorganisation
provisions, provisions formed for receivables from
participating interests, for contracts of suretyship
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
62
€1,258 million of the provisions (2002: €939 million)
has a term in excess of one year.
Notes to the Consolidated Balance Sheet
2003
Long-term borrowings
2002
Total
More than 5 years
Total
More than 5 years
497
497
–
–
596
596
–
–
387
160
337
110
26
–
1
–
158
–
162
–
506
–
427
–
75
17
–
–
20
–
–
–
Amounts falling due after more than
one year relate to:
Bond loan from credit institutions, in €,
average effective interest rate 4.375%
Bond loan from credit institutions, in €,
average effective interest rate 5%
Loans from credit institutions, in €,
average effective interest rate 5.3%
(2002: 5.2%)
Loans from credit institutions, in PLN,
average interest rate 5.97% (2002: 3.62%)
Loans from credit institutions, in €,
average interest rate 4% (2002: 4%)
Loans from credit institutions, in €,
average interest rate 4.1% (2002: 4.3%)
Loans from credit institutions, in CLP,
average interest rate 3.66%
Loans from credit institutions, in €,
average interest rate 2.56%
Loans from credit institutions, in €,
202
–
–
–
Private loan, in EGP, interest rate 12% (2002: 12%)
19
–
37
37
Private loan, in €, interest rate 5.8%
68
–
68
–
114
16
118
20
53
18
65
26
2,721
1,304
1,215
193
average interest rate 5.01%
Other private loans, in €,
average interest rate 4.86% (2002: 5.2%)
Other loans, interest free
Fina ncing ac tiv ities
Among other loans issued in 2003 were two bond loans
A credit facility for €1,200 million was also contracted
totalling €1,100 million. The bond loans were issued on
with a syndicate of banks at an interest rate of 0.225%
4 November 2003, one for €500 million with a coupon
over Euribor, maturing in December 2008. As at
interest rate of 4.375%, maturing in February 2010,
31 December 2003, this credit facility had not been
and one for €600 million with a coupon interest rate
drawn on. A number of other loans was also contracted,
of 5.00%, maturing in November 2013. The interest-
mainly at variable interest rates.
bearing loans are carried at face value plus any
Security in the form of mortgages totalling €108
premiums and less associated costs. The other liabilities
million (2002: €116 million) has been provided in
are carried at face value.
respect of the other private loans.
F I N A N C I A L S TAT E M E N TS 2 0 0 3
63
Notes to the Consolidated Balance Sheet
2003
2002
Net interest-bearing debt position
2,669
1,150
Current portion of long-term borrowings
153
185
Bank overdrafts
679
573
Short-term deposits
260
Long-term borrowings
261
3,761
Loans to non-consolidated partipating interests
Securities
4
1
76
98
1,340
Cash
Net interest-bearing debt position
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
64
2,169
680
1,420
779
2,341
1,390
Notes to the Consolidated Balance Sheet
2003
2002
Current liabilities
Amounts falling due within one year relate to:
Repayment commitments on long-term
borrowings
174
205
Bank overdrafts
679
573
Suppliers
745
629
Taxation and social security contributions
392
322
16
Dividend
11*
260
261
4
1
Other creditors
223
250
Accruals and deferred income
417
303
Short-term deposits
Amounts owed to non-consolidated participating
interests
2,910
Tangible fixed assets totalling €135 million (2002: €140
million) have 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.
* Restated for comparison purposes
F I N A N C I A L S TAT E M E N TS 2 0 0 3
65
2,555
Notes to the Consolidated Balance Sheet
2003
2002
98
48
Off-balance-sheet commitments
Tenancy and operating leases
Capital expenditure commitments, unless already
60
53
Long-term raw material purchase contracts
155
176
Declarations of joint and several liability
519
398
56
29
included in tangible fixed assets
Other off-balance-sheet commitments
Commitment to acquire the remaining
GeBAG shares
Loan to Stichting Heineken Pensioenfonds
112
–
–
150
The commitment to acquire the remaining GetränkeBeteiligungs-Aktiengesellschaft (‘GeBAG’) shares is persuant to the agreement of 6 June 2003 between Heineken
and (the trustee of ) shareholders of GeBAG.
Financial instruments
Hedging policy
Financial instruments, accounted for as assets and
Exchange rate and interest rate hedging operations are
liabilities in the balance sheet, are used in the normal
governed by a precisely defined policy and strict rules.
course of business and use is also made of financial
Because of the historically low interest rates in 2003,
derivatives. The financial instruments included in the
Heineken opted to fix the interest rates on a large
balance sheet are made up almost entirely of financial
proportion of the contracted loans. Heineken is also
fixed assets, trade debtors, other amounts receivable,
exposed to translation and transaction risks. Translation
cash, long-term borrowings and current liabilities.
risks are limited to a certain extent by financing in local
Heineken is exposed to interest rate, exchange rate and
currencies. Transaction risks arise mainly on cash flows
credit risks on these financial instruments. To limit the
in foreign currencies generated by export activities.
risks, use is made of interest rate derivatives, such as
The most important foreign currency cash flow is in US
interest rate swaps, forward rate agreements, caps and
dollars. After deduction of dollar-denominated costs,
floors, to minimise the effects of interest rate
a net cash flow in US dollars remains. This cash flow
fluctuations on results. In addition, forward exchange
is hedged well in advance by means of a combination
contracts are used to limit the effects of exchange rate
of forward contracts and options. This policy reduces
movements on results.
the volatility of export results due to short-term
fluctuations in the value of the US dollar against the
euro. Transactions are entered into with a limited
number of counterparties with excellent credit ratings.
The activities are closely monitored, independently
of implementation.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
66
Notes to the Consolidated Balance Sheet
2003
2002
649
904
Financial instruments
Contract value as at 31 December
Currency hedging instruments in US dollars
Currency hedging instruments in other currencies
Interest-hedging instruments
101
114
1,414
1,029
Exchange risks
Market value
The foreign exchange hedging operations in 2003
The market value of interest rate and exchange rate
produced an average exchange rate of 0.96 US dollars
instruments is the amount for which the financial
to the euro on a total of 795 million US dollars.
instruments concerned can be bought or sold in a free
The expected net cash flow in 2004 amounts to approx-
market. The market value of the financial instruments
imately 800 million US dollars. As at 31 December 2003,
amounts to €117 million (2002: €83 million). The maturity
544 million US dollars of the expected 2004 cash flow
of the exchange rate hedging instruments is less than
had been hedged at an average exchange rate of
one year. Interest rate hedging instruments maturing
1.09 US dollars to the euro. The expected cash flow for
after one year amount to €1,335 million. The market
2005 has not yet been hedged as at 31 December 2003.
value of long-term loans may differ from the amount
at which they are carried in the balance sheet.
Interest ra te risk s
Heineken attempts to hedge results and cash flows
against interest rate fluctuations as far as possible by
financing either at fixed rates or at variable rates
combined with the use of interest rate instruments,
namely interest rate swaps, forward rate agreements,
caps and floors.
F I N A N C I A L S TAT E M E N TS 2 0 0 3
67
Notes to the Consolidated Profit and Loss Account
2003
2002
Raw materials, consumables and serv ices
625
525
Packaging
1,072
949
Goods for resale
1,137
1,080
Marketing and selling expenses
1,131
1,056*
Raw materials
Transport costs
454
402
Energy and water
163
147
Repair and maintenance
205
185
Other expenses
770
685
5,557
5,029
The movement in work in progress and finished products
(increase of €26 million, excluding revaluations and
changes in the consolidation) is included in the appropriate component of production costs, i.e. raw materials,
packaging materials, excise duties and, with regard to the
fixed cost element of stocks, other expenses.
Staf f costs
Salaries and wages
1,200
1,069
Pension costs
118
111
Other social security costs
259
275
Other staff costs
260
193
1,837
1,648
–5
–6
1,832
1,642
Staff costs capitalised in connection with
production of tangible fixed assets for use
by the group
Other staff costs includes amounts added to other provisions in respect of reorganisations.
* Restated for comparison purposes
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
68
Notes to the Consolidated Profit and Loss Account
2002*
2003
Number of employees
The average number of employees was:
Netherlands
5,256
5,527
Central/Eastern Europe
14,829
8,507
Rest of Europe
14,820
13,933
The Americas
Africa/Middle East
Asia/Pacific
1,534
1,451
11,378
10,462
1,316
1,377
Heineken N.V. and fully consolidated
49,133
participating interests
41,257
962
944
Rest of Europe
3,204
1,933
The Americas
3,901
–
563
631
Central/Eastern Europe
Africa/Middle East
Asia/Pacific
3,508
Proportionally consolidated participating interests
3,472
12,138
6,980
61,271
48,237
Heineken N.V. and consolidated
participating interests
Amortisation/depreciation and value
adjustments
Depreciation of tangible fixed assets
Other value adjustments to tangible fixed assets
553
476
7
5
Amortisation of capitalised goodwill
31
–
Amortisation of other intangible fixed assets
18
10
Value adjustments to other assets
Other value adjustments to tangible fixed assets includes
the balance of reductions in the book values of production assets to their net realisable value. The value adjustments to other assets relate mainly to provisions for
stocks of finished products and spares held by various
operating companies.
* The 2002 figures have been restated for comparison purposes
F I N A N C I A L S TAT E M E N TS 2 0 0 3
69
609
491
35
38
644
529
Notes to the Consolidated Profit and Loss Account
2003
2002
Results of non- consolidated participating
interests
Share in net result of participating interests
carried at net asset value
13
15
17
33
71
–
Dividends received from participating interests
carried at cost
Book profit on sale of 15% interest in Quilmes
101
48
Interest
Interest paid
Interest received
– 180
– 146
40
37
– 140
– 109
– 319
– 364
1,082
1,173
Taxation
Taxation
The taxation amounts to 29.5% (2002: 31.0%) of the profit
before tax, excluding the results of non-consolidated
participating interests.
The main components of the taxation charge are:
Profit before taxation excluding the results
of non-consolidated participating interests
Taxation charge at the tax rate prevailing in
34.5%
373
34.5%
405
– 3.8%
– 41
– 0.9%
– 11
3.3%
36
1.7%
20
– 1.6%
– 17
– 1.2%
– 14
0.9%
10
– 0.1%
–1
Overprovided in prior years
– 1.6%
– 18
– 0.8%
–9
Tax incentives and other differences
– 2.2%
– 24
– 2.2%
– 26
Effective tax burden
29.5%
319
31.0%
364
the Netherlands
Effect of tax rates outside the Netherlands
Non-allowable expenses
Utilisation of tax losses carried forward
Tax losses not recognised
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
70
Notes to the Consolidated Profit and Loss Account
2003
Tax losses
As at 31 December 2003, the group
had tax losses totalling €108 million,
expiring as follows:
12
2004
2005
7
2006
10
2007
10
2008
20
Later than 2008 but not indefinite
49
108
Total
An amount of €18 million relating to these tax losses has
been recognised as a deferred tax asset and included in
financial fixed assets. Due to the uncertainty regarding
the ability to realise the remaining tax losses, they have
not been recognised.
F I N A N C I A L S TAT E M E N TS 2 0 0 3
71
Segmented Information
Information by g eog ra p hic a l a rea
acquisition of the Brau Union group in Austria,
As almost the entire net turnover of the group is
we have decided to revise the basis of segmentation.
accounted for by just one product group, namely beer,
The following five regions are distinguished: Western
the financial information is segmented by geographical
Europe, Central/Eastern Europe, the Americas,
area only. The remaining activities are not reported
Africa/Middle East and Asia/Pacific. Revenues and
on a segmented basis. Partly as a consequence of the
results are allocated to the region where the product
Results by region
Western Europe
Central/Eastern
The Americas 1
Europe
2003
2002*
2003
2002*
2003
2002*
Net turnover
Third party sales proceeds
5,140
4,833
1,129
891
1,496
Interregional sales proceeds
1,264
1,282
1
–
1
1,355
–
Total sales proceeds
6,404
6,115
1,130
891
1,497
1,355
Proceeds from services
156
117
15
7
4
5
Net turn over by region
6,560
6,232
1,145
898
1,501
1,360
593
553
93
78
369
416
–9
–
– 10
–
– 11
–
584
553
83
78
358
416
3
12
1
–
87
23
40,245 37,844
19,680
14,887
10,128
7,885
Operating profit before amortisation of goodwill
Amortisation of goodwill
Operating profit by region
Results of non-consolidated participating interests
Interest
Taxation
Minority interests
Net profit
Beer volumes
Consolidated volume
Minority interests
Licences
Interregional volume
Group volume
* The 2002 figures have been restated for comparison purposes
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
72
1
4,012
2,244
931
784
1,964
–
470
2,154
–
–
419
495
8,918
8,871
7
–
13
–
53,645
51,113
20,618
15,671
12,524
8,380
Including Caribbean
Segmented Information
is sold to the consumer. Export revenues and results
are also allocated to the regions. Most of the export
production facilities are located in Western Europe.
Sales to the other regions are charged at transfer
prices which include a surcharge for cost of capital.
Africa/Middle East
2003
2002*
Asia/Pacific
2003
2002*
Eliminations
2003
–
2002*
Consolidated
2003
2002*
8,315
822
752
462
484
–
9,049
1
–
–
–
– 1,267 – 1,282
–
–
823
752
462
484
– 1,267 – 1,282
9,049
8,315
53
67
5
5
876
819
467
489
150
188
48
47
–
–1
–
–
–
–
149
188
48
47
–
4
6
6
7
–
10,433
– 34
206
167
– 1,294 – 1,316
– 27
9,255
8,482
–
1,253
1,282
–
– 31
–
–
1,222
1,282
–
101
48
– 140
– 109
– 319
– 364
– 66
– 62
798
795
8,593
4,751
4,629
85,237
73,838
330
331
2,733
2,501
9,970
5,860
1,943
1,634
929
867
3,761
5,150
22
–
–
–
– 8,960 – 8,871
–
–
12,728
10,558
8,413
7,997
– 8,960 – 8,871
98,968
84,848
F I N A N C I A L S TAT E M E N TS 2 0 0 3
73
Segmented Information
Assets as per balance sheet
Western Europe
The Americas 1
Central/Eastern
Africa/Middle East
Asia/Pacific
Consolidated
Europe
Operating assets
2003
2002* 2 0 0 3
2002* 2 0 0 3
2002* 2 0 0 3
2002* 2 0 0 3
2002*
2003
2002*
5,565
4,272
2,109
925
628
350
928
1,029
392
420
9,622
6,996
32
22
36
11
283
317
61
42
17
18
429
410
5,597
4,294
2,145
936
911
667
989
1,071
409
438
10,051
7,406
846
375
10,897
7,781
6,998
4,751
6,998
4,751
3,899
3,030
Non-consolidated
participating interests
Total assets by region
Invested cash
Total assets as per
balance sheet
Total provisions and
liabilities by region
4,228
3,118
1,306
380
616
340
669
731
179
182
Total liabilities as per
balance sheet
Group equity
Investments in intangible
fixed assets
12
28
4
6
9
1
1
–
–
–
26
35
324
360
99
100
23
10
139
208
26
18
611
696
9
–
10
–
11
–
1
–
–
–
31
–
12
8
4
2
2
–
–
–
–
–
18
10
358
333
113
86
31
10
43
33
15
19
560
481
Investments in tangible
fixed assets
Amortisation of and value
adjustments to goodwill
Amortisation of and value
adjustments to other
intangible fixed assets
Depreciation of and value
adjustments to tangible
fixed assets
* The 2002 figures have been restated for comparison purposes
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
74
1
Including Caribbean
Notes to the Consolidated Cash Flow Statement
The consolidated cash flow statement has been drawn
(excluding bank overdrafts and repayment commit-
up using the indirect method. The various consolidated
ments on long-term borrowings). The cash flow from
profit and loss account and balance sheet items have
investing activities relates to the net amount of invest-
been adjusted for changes which have no effect on the
ments and disposals. The net cash position consists
receipts and payments during the year. Working capital
of cash in hand and at bank, securities and bank
comprises stocks, receivables and current liabilities
overdrafts.
Provisions
Long-term
Repayment
borrowings
commitments
Position as at 1 January 2003
981
1,215
205
Revaluation/exchange differences
– 58
– 20
– 11
Changes in the consolidation
366
235
32
Other non-cash-flow movements
– 17
– 210
219
95
1,501
– 271
1,367
2,721
174
Cash flow movements
Position as at 31 December 2003
Working capital
Position as at 1 January 2003
400
Revaluations/exchange differences
– 36
Changes in the consolidation
88
Other non-cash-flow movements
– 57
Cash flow movements
– 92
Position as at 31 December 2003
303
F I N A N C I A L S TAT E M E N TS 2 0 0 3
75
Participating Interests
of significance for the true and fair view required by law
A declaration of joint and several liability pursuant to the provisions of Section 403, Part 9, Book 2, of the Netherlands
Civil Code has been issued with respect to the legal entities established in the Netherlands marked with a • below.
Fully consolidated participating interests
% interest
• Heineken Nederlands Beheer B.V.
Amsterdam
• Heineken Brouwerijen B.V.
Amsterdam
100.0
100.0
• Heineken Nederland B.V.
Amsterdam
100.0
• Heineken International B.V.
Amsterdam
100.0
• Heineken Technical Services B.V.
Amsterdam
100.0
• Amstel Brouwerij B.V.
Amsterdam
100.0
• Amstel Internationaal B.V.
Amsterdam
100.0
• Vrumona B.V.
Bunnik
100.0
• Invebra Holland B.V.
Amsterdam
100.0
• B.V. Beleggingsmaatschappij Limba
Amsterdam
100.0
• Brand Bierbrouwerij B.V.
Wijlre
100.0
• Beheer- en Exploitatiemaatschappij Brand B.V.
Wijlre
100.0
Heineken France
Paris (France)
100.0
Heineken España S.A.
Seville (Spain)
98.1
Heineken Italia S.p.A.
Pollein (Italy)
100.0
Athenian Brewery S.A.
Athens (Greece)
98.8
Brau Union AG 1
.
Brewery Z ywiec S.A.
Linz (Austria)
.
Z ywiec (Poland)
60.3
Heineken Ireland Ltd. 2
Cork (Ireland)
100.0
Amstel Brewery Hungary Inc.
Komárom (Hungary)
100.0
Heineken Slovensko A.S.
Nitra (Slovakia)
100.0
Heineken Switzerland A.G.
Chur (Switzerland)
100.0
Mouterij Albert N.V.
Ruisbroek (Belgium)
100.0
Ibecor S.A.
Brussels (Belgium)
100.0
Affligem Brouwerij BDS N.V.
Opwijk (Belgium)
100.0
LLC Heineken Brewery
St. Petersburg (Russia)
100.0
Dinal LLP
Almaty (Kazakhstan)
61.8
51.0
Heineken USA Inc.
White Plains (United States)
Antilliaanse Brouwerij N.V.
Willemstad (Netherlands Antilles)
100.0
Karlovacka Pivovara d.d.1
Karlovac (Croatia)
94.4
Commonwealth Brewery Ltd.
Nassau (Bahamas)
53.2
Windward & Leeward Brewery Ltd.
Vieux Fort (St. Lucia)
72.7
Cervecerias Baru-Panama S.A.
Panama City (Panama)
74.5
56.3
Nigerian Breweries Plc.
Lagos (Nigeria)
54.2
Al Ahram Beverages Company
Cairo (Egypt)
99.9
Brasserie Almaza S.A.L.
Beirut (Lebanon)
67.0
Brasseries, Limonaderies et Malteries ‘Bralima’ S.A.R.L.
Kinshasa (D.R. Congo)
94.3
Brasseries et Limonaderies du Rwanda ‘Bralirwa’ S.A.
Kigali (Rwanda)
70.0
Brasseries et Limonaderies du Burundi ‘Brarudi’ S.A.
Bujumbura (Burundi)
59.3
Brasseries de Bourbon S.A.
St. Denis (Réunion)
85.6
Ghana Breweries Ltd.
Kumasi (Ghana)
75.6
Brasseries du Logone S.A.
Moundou (Chad)
100.0
P.T. Multi Bintang Indonesia Tbk.
Jakarta (Indonesia)
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
76
84.5
Participating Interests
Proportionally consolidated participating interests
The companies listed below are proportionally consolidated because control of these companies is exercised
jointly and directly by virtue of an agreement with the other shareholders.
% interest
BrauHolding International AG
Munich (Germany)
49.9
Zagorka Brewery A.D.
Stara Zagora (Bulgaria)
48.6
Pivara Skopje A.D.
Skopje (Macedonia)
27.6
Brasseries du Congo S.A.
Brazzaville (Congo)
50.0
Asia Pacific Breweries (Singapore) Pte. Ltd.
Singapore
42.2
Shanghai Asia Pacific Brewery Co. Ltd.
Shanghai (China)
40.9
Hainan Asia Pacific Brewery Ltd.
Haikou (China)
42.2
South Pacific Brewery Ltd.
Port Moresby (Papua New Guinea)
31.9
Vietnam Brewery Ltd.
Ho Chi Minh City (Vietnam)
25.3
Cambodia Brewery Ltd.
Phnom Penh (Cambodia)
33.7
DB Breweries Ltd.
Auckland (New Zealand)
32.5
Compania Cervecerias Unidas S.A.1
Santiago (Chile)
30.8
Cervecerias Costa Rica S.A.
San José (Costa Rica)
25.0
Guinness Anchor Berhad
Petaling Jaya (Malaysia)
10.7
Thai Asia Pacific Brewery Co. Ltd.
Bangkok (Thailand)
14.8
Non- consolidated participating interests
carried a t n et a sset va lu e
Other non- consolidated participating
interests ca rried a t cost
1
2
Namibia Breweries Ltd.1
Windhoek (Namibia)
14.5
Cervecerias Kaiser Brasil S.A.
São Paulo (Brazil)
20.0
Acquired in 2003
In accordance with the provisions of Section 17 of the Republic of Ireland Companies (Amendment) Act 1986,
Heineken N.V. has given irrevocable guarantees for the financial year from 1 January 2003 to 31 December 2003
in respect of the liabilities, as referred to in Section 5(c) of that Act, of the subsidiary companies
Heineken Ireland Limited and Heineken Ireland Sales Limited.
F I N A N C I A L S TAT E M E N TS 2 0 0 3
77
Balance Sheet of Heineken N.V.
before proposed appropriation of profit
in millions of euros
31 December
2003
31 December
2002
Assets
Fixed assets
3,832
Financial fixed assets
2,550
Current assets
Receivables
Cash
8
2
574
216
582
218
4,414
2,768
Equity and liabilities
Shareholders’ equity
Issued share capital
784
784
Legal reserve
114
103*
Revaluation reserve
398
414*
Retained profit
1,871
1,336*
3,167
2,637
Liabilities
Long-term borrowings
Current liabilities
* Restated for comparison purposes
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
78
1,161
68
86
63*
1,247
131
4,414
2,768
Profit and Loss Account of Heineken N.V.
in millions of euros
2003
2002
Net profit of group companies
819
792
Other revenues and expenses
– 21
3
Net profit according to the consolidated
profit and loss account
F I N A N C I A L S TAT E M E N TS 2 0 0 3
79
798
795
Notes to the Balance Sheet and Profit and Loss Account
of Heineken N.V. for 2003
General
S h are s
The amounts disclosed in the notes are in millions of
As at 31 December 2003, the members of the Executive
euros unless otherwise indicated. The aggregate
Board did not hold any of the company’s shares,
amounts referred to in Section 383, subsection 1, Part 9,
convertible bonds or option rights. One of the Executive
Book 2, of the Netherlands Civil Code, in respect of the
Board members held 632 shares of Heineken Holding
remuneration, pensions etc. of existing and former
N.V. as at 31 December 2003.
members of the Executive Board and of existing and
former members of the Supervisory Board disbursed
Superv isory Board
by the company were as follows:
The individual members of the Supervisory Board
received the following remuneration:
2003
2002
2003
2002
J.M. de Jong 1
45
31
M. Das
38
38
J. Loudon 3
12
38
Remuneration
H. de Ruiter
38
38
The remuneration of the members of the Executive
M.R. de Carvalho
38
38
Board comprises a fixed component and a variable
A.H.J. Risseeuw
38
38
component, made up of an annual profit-sharing bonus
J.M. Hessels
38
38
38
26
in thousands of euros
Executive Board members
3.4
7.5
Supervisory Board members
0.3
0.3
and a long-term bonus. The profit-sharing bonus is
C.J.A. van Lede
determined individually by the Supervisory Board.
R. Hazelhoff 2
–
14
The long-term bonus is linked to the issue of bonus
A. Maas 2
–
12
shares or recapitalisation by Heineken N.V., which, in
L. van Vollenhoven 2
–
12
1
the past, has occurred on average once every three
years.
Pensions
1
Appointed 25 April 2002
2
Retired 25 April 2002
3
Retired 24 April 2003
The pensions of the Executive Board members are
As at 31 December 2003, the Supervisory Board
administered by Stichting Heineken Pensioenfonds.
members did not hold any of the company’s shares,
In 2003, €470,000 (2002: €68,000) was charged
convertible bonds or option rights. Two Supervisory
to the company in respect of pension contributions.
Board members together held 7,600 shares of Heineken
Holding N.V. as at 31 December 2003.
Executive Board remuneration
Fixed
Annual
in thousands of euros
Long-term
bonus
Pension
bonus
Total
plan
2003
2002
2003
2002
2003
2002
2003
2002
2003
2002
A. Ruys
543
506
455
426
–
–
–
–
998
932
M.J. Bolland
358
358
277
277
–
–
–
–
635
635
J.F.M.L. van Boxmeer
358
358
277
277
–
–
–
–
635
635
D.R. Hooft Graafland 1
358
239
277
185
–
–
–
–
635
–
–
–
1,856
2,626
804
2,137
S.W.W. Lubsen 2
358
412
K. Vuursteen 3
181
152
1
Remuneration since appointment as member of the Executive Board on 2 May 2002
2
Retired on 31 December 2002
3
Retired on 25 April 2002
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
80
1,000
424
Notes to the Balance Sheet and Profit and Loss Account of Heineken N.V. for 2003
Accounting policies for the valuation
Other assets and liabilities
of assets and liabilities and for the
Amounts receivable from group companies are stated
determination of results
at face value. Also stated at face value are other
With effect from the beginning of the 2003 financial
amounts receivable, cash, long-term borrowings and
year, goodwill is capitalised and amortised. Goodwill
current liabilities.
paid up to 31 December 2002 has been charged direct
to shareholders’ equity. If the goodwill had been
Goodwill
charged to shareholders’ equity in 2003 as in previous
Goodwill arising on acquisitions is calculated as the
years, shareholders’ equity would have been €1,124
difference between the cost of the acquisition and its
million lower as at 31 December 2003 and the net profit
net asset value. Goodwill is carried at cost less accu-
would have been €31 million higher.
mulated amortisation and impairment. Amortisation
is calculated by the straight-line method based on
With effect from the beginning of the 2003 financial
year, the balance sheet is presented before profit
the expected economic life of the assets concerned,
appropriation, following changes in the Dutch reporting
subject to a maximum of 20 years.
rules. Only the dividends paid during the year
S h are h o l de rs’ e qu i t y
are charged to shareholders' equity. In 2003, the final
dividend for 2002 and the interim dividend for the
Exchange differences
current year were charged to shareholders' equity.
Movements in exchange rates which affect foreign
Comparative figures
investments are accounted for in the statutory reserve,
The presentation of the balance sheet before profit
the revaluation reserve or the retained profit reserve.
appropriation also means restating shareholders' equity
in the 2002 figures. Shareholders' equity as at
Statutory reserve
31 December 2002 has been increased by €94 million,
This reserve relates to the net profit of participating
which was the amount of the final dividend for 2002
interests over the distribution of which Heineken does
paid in 2003. Current liabilities have been reduced by
not have control. The movement in the statutory
the same amount.
reserve reflects retained profits of participating
interests, exchange differences and dividends received.
Financial fixed assets
Shares in group companies are carried at net asset
value calculated in accordance with the accounting
policies for the valuation of assets and liabilities.
Financial fixed assets
Group companies
Total
Shares
Receivables
Position as at 1 January 2003*
2,550
603
1,947
Revaluations
– 112
– 112
–
–
Net profit of group companies
Dividend payments by group companies
Other movements
Position as at 31 December 2003
* Restated for comparison purposes
F I N A N C I A L S TAT E M E N TS 2 0 0 3
81
819
819
– 315
– 315
–
890
–
890
3,832
995
2,837
Notes to the Balance Sheet and Profit and Loss Account of Heineken N.V. for 2003
2003
2002
8
2
574
216
784
784
Receivables
Amounts receivable
Of the amounts receivable, €6 million falls due within
one year.
Cash
Short-term cash deposits
Shareholders’ equity
Issued capital
The issued share capital comprises 391,979,675
shares of €2.00 nominal value and the authorised
share capital is €2.5 billion.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
82
Notes to the Balance Sheet and Profit and Loss Account of Heineken N.V. for 2003
Shareholders’ equity
Issued
Statutory
Revaluation
Retained
capital
reserve
reserve
profits
Total*
784
79
426
1,563
Exchange differences
–
–8
– 17
– 82
– 107
Goodwill
–
–
–
– 778
– 778
Revaluations
–
–
32
–
32
Realised revaluations
–
–
– 27
27
–
Net profit for the year
–
45
–
750
795
Released
–
– 13
–
13
–
Dividend
–
–
–
– 157
– 157
Position as at 31 December 2002
784
103
414
1,336
2,637
Position as at 1 January 2003
Position as at 1 January 2002
2,852
784
103
414
1,336
2,637
Exchange differences
–
– 14
– 22
– 116
– 152
Revaluations
–
–
41
–
41
Realised revaluations
–
–
– 35
35
–
Net profit for the year
–
37
–
761
798
Released
–
– 12
–
12
–
Dividend
–
–
–
– 157
– 157
784
114
398
1,871
3,167
Position as at 31 December 2003
The dividend figure in both years relates to a final dividend
of €94 million and an interim dividend of €63 million.
* The 2002 figures have been restated for comparison purposes
F I N A N C I A L S TAT E M E N TS 2 0 0 3
83
Notes to the Balance Sheet and Profit and Loss Account of Heineken N.V. for 2003
2003
Long-term borrowings
2002
Total
More than 5 years
Total
More than 5 years
68
–
68
–
497
497
596
596
1,161
1,093
68
–
Amounts falling due after more than one year
relate to:
Private loan, in €, interest rate 5.84%
redeemable 2 June 2006
Bond loan from credit institutions, in €,
average effective interest rate 4.375%
Bond loan from credit institutions, in €,
average effective interest rate 5%
Current liabilities
Amounts falling due within one year relate to:
Taxation
69
59
Other creditors
17
4
86
Off-balance-sheet commitments
Third parties
Group companies
Third parties
Group companies
–
836
–
780
Declarations of joint and several liability
Amsterdam, 24 February 2004
Supervisory Board
84
Executive Board
De Jong
Risseeuw
Ruys
Das
Hessels
Bolland
de Carvalho
Van Lede
Van Boxmeer
De Ruiter
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
63
Hooft Graafland
Other Information
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
85
Other Information
Auditors’ Report
Introduction
policies used and significant estimates made by man-
We have audited the 2003 financial statements of
agement, as well as evaluating the overall presentation
Heineken N.V., Amsterdam, as included on pages 52–84
of the financial statements. We believe that our audit
of this report. The financial statements are the responsi-
provides a reasonable basis for our opinion.
bility of the company’s management. Our responsibility
is to express an opinion on these financial statements
Opinion
based on our audit.
In our opinion, the financial statements give a true
and fair view of the financial position of the company
Scope
as at 31 December 2003 and of the result for the year
We conducted our audit in accordance with auditing
then ended in accordance with accounting policies
standards generally accepted in the Netherlands. These
generally accepted in the Netherlands and comply with
standards require that we plan and perform the audit
the financial reporting requirements included in Part 9,
to obtain reasonable assurance that the financial state-
Book 2, of the Netherlands Civil Code.
ments are free of material misstatement. An audit
includes examining, on a test basis, evidence support-
Amsterdam, 24 February 2004
ing the amounts and disclosures in the financial state-
KPMG Accountants N.V.
ments. An audit also includes assessing the accounting
Appropriation of Profit
Authorised Capital
Article 12, paragraph 4, of the Articles of Association
The company’s authorised capital amounts to
stipulates:
€2.5 billion.
‘From the net profit there shall first be distributed,
if possible, six per cent dividend on the issued part of
Events af ter Balance Sheet Date
the authorised share capital. The amount then remain-
Since the balance sheet date, Heineken has acquired
ing shall be at the disposal of the General Meeting of
the remaining 28.65% of the outstanding shares of
Shareholders.’
Brau-Beteiligungsgesellschaft (BBAG), 70.53% of the
It is proposed to appropriate €157 million of the net
outstanding BBAG participation certificates and 30.36%
profit for payment of dividend and to add €641 million
of the outstanding shares of Brau Union Aktiengesell-
to the retained profits.
schaft (BUAG) for a total of €720 million.
Special Rights pursuant to the Articles of
operations in China were being combined with those
Association
of its participating interest Asia Pacific Breweries
Article 7, paragraph 2, of the Articles of Association
and would continue as Heineken Asia Pacific Breweries
reads:
China Pte. Ltd. (HAPBC) as from 1 April 2004.
On 9 January 2004, Heineken announced that its
‘The appointment of the members of the Executive
On 28 January 2004, Heineken signed an agreement
Board and of the Supervisory Board shall be made by
to acquire an interest of approximately 21% in Guang-
the General Meeting of Shareholders from a binding
dong Brewery Holdings Ltd. (Guangdong Brewery) via
nomination of at least two persons to be drawn up for
its participating interest in Heineken Asia Pacific
each appointment by the Supervisory Board.’
Breweries China Pte. Ltd. This transaction amounts to
Heineken N.V. is not a ‘structuurvennootschap’ within
the meaning of Sections 152–164 of the Netherlands
€28.5 million.
On 28 January 2004, Heineken announced that it had
Civil Code.
signed heads of agreement on the sale of its wholly
Heineken Holding N.V., a company listed on Euro-
owned subsidiary Glas Moerdijk, debt-free, to Rexam
next Amsterdam, holds 50.005% of the shares of
Beverage Packaging Euro Holding B.V., for €43 million.
Heineken N.V.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
86
Information for Shareholders
Heineken N.V.
Year-end price
€30.19
Heineken N.V. shares and options are traded on
High
€38.27
Euronext Amsterdam, where the company is included in
Low
€28.74
31 December 2003
7 January 2003
24 June 2003
the main AEX index. In 2003, the average daily volume
of trade was 1,046,706 shares. Heineken N.V. is not a
Rules concerning insider dealing
‘structuurvennootschap’ within the meaning of the
Within Heineken N.V. there are established rules
Netherlands Civil Code. Consequently, decisions on all
governing the disclosure of transactions in shares of
important matters are taken by the General Meeting of
Heineken N.V. and Heineken Holding N.V. that are
Shareholders.
applicable to the members of the Supervisory Board
and the Executive Board, to other managers and staff
Market capitalisation
who might be in possession of price-sensitive infor-
On 31 December 2003, there were 391,979,675 shares
mation and to a number of external parties.
of €2.00 nominal value in issue. At a closing price
of €30.19, the market capitalisation of Heineken N.V.
on balance sheet date was €11.8 billion
Heineken N.V. share price
in euros
Euronext Amsterdam
after restatement for
recapitalisation and share split
Div i dend per share
in euro cents
share price range
closing price
after restatement for
recapitalisation and share split
Average trade in 2003:
1,046,706 shares per day
40
40
60
40
40
32
48
42
24
36
25
28
20
20
30
20
20
30.19
32
54
32
36
24
16
16
297
S U P P L E M E N TA R Y I N F O R M AT I O N
87
2003
2002
2001
2000
1999
1998
1997
1996
2003
2002
2001
2000
1999
1998
1997
0
1996
0
1995
6
1994
4
1995
12
1994
8
18
274
12
Information for Shareholders
Major Holdings in Listed Companies Disclosure Act
Rules concerning insider dealing
Pursuant to the Major Holdings in Listed Companies
Within Heineken Holding N.V. there are established
Disclosure Act, Heineken Holding N.V., Amsterdam,
rules governing the disclosure of transactions in shares
has disclosed an interest of 50.005% in Heineken N.V.
of Heineken N.V. and Heineken Holding N.V. that are
applicable to the members of the Management
Right to add agenda items
Board and to a number of permanent advisers and
Shareholders who, alone or together, represent at least
employees.
1% of Heineken N.V.’s issued capital or hold shares with
a market value of €50 million have the right to request
Major Holdings in Listed Companies Disclosure Act
items to be placed on the agenda of the General
Pursuant to the Major Holdings in Listed Companies
Meeting of Shareholders. Requests to place items on
Disclosure Act, l’Arche Holding S.A., has disclosed
the agenda must be received by Heineken N.V. at least
an interest of 50.005% and Greenfee B.V. has disclosed
60 days before the date of the General Meeting of
an interest of 6.8% in Heineken Holding N.V.
Shareholders. Heineken N.V. reserves the right to refuse
to place an item on the agenda if its inclusion would be
contrary the company’s material interest.
Heineken Holding N.V. share price
in euros
Heineken Holding N.V.
Euronext Amsterdam
The A shares of Heineken Holding N.V. are traded on
after restatement for recapitalisation
Euronext Amsterdam. Options on A shares of Heineken
and share split
Holding N.V. are traded on the Euronext.Liffe options
exchange. In 2003, the average daily volume of trade
share price range
closing price
was 197,175 shares. Heineken Holding N.V. is not a
‘structuurvennootschap’ within the meaning of the
Average trade in 2003:
Netherlands Civil Code. Consequently, decisions on all
important matters are taken by the General Meeting
197,175 shares per day
40
of Shareholders.
36
Market capitalisation
On 31 December 2003, the following numbers of shares
32
were in issue:
193,384,478 A shares of €2.00 nominal value
28
250 priority shares of €2.00 nominal value.
27.13
2,625,000 B shares of €2.00 nominal value
24
The B shares confer the same voting rights as the
A shares.
20
At a year-end price of €27.13, the market capitalisation
of Heineken Holding N.V. was €5.3 billion as at balance
16
sheet date.
12
Year-end price
€27.13
High
€30.22
31 December 2003
3 September 2003
Low
€22.94
13 February 2003
8
4
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
88
2003
2002
2001
2000
1999
1998
1997
1995
1996
1994
0
Information for Shareholders
Right to add agenda items
Shareholders who, alone or together, represent at least
1% of Heineken Holding N.V.’s issued capital or hold
shares with a market value of €50 million have the right
to request items to be placed on the agenda of the
General Meeting of Shareholders. Requests to place
items on the agenda must be received by Heineken
Holding N.V. at least 60 days before the date of the
General Meeting of Shareholders. Heineken Holding N.V.
reserves the right to refuse to place an item on the
agenda if its inclusion would be contrary the company’s
material interest.
Financial calendar in 2004 for both
Heineken N.V. and Heineken Holding N.V.
Announcement of figures for 2003
25 February
Publication of annual report
26 March
Annual General Meeting of
Shareholders, Amsterdam
Quotation ex final dividend
29 April
3 May
Final dividend payable
7 May
Announcement of half-year results
8 September
Quotation ex interim dividend
9 September
Interim dividend payable
21 September
Contacting Heineken N.V.
and Heineken Holding N.V.
Further information on Heineken N.V. is obtainable
from the Corporate Communication and/or Investor
Relations Department, telephone +31 20 5239239,
or by e-mail: [email protected]
Further information on Heineken Holding N.V.
is obtainable by: telephone +31 20 622 11 52,
or fax +31 20 625 22 13. Information is also obtainable
from the Investor Relations department, telephone
020-523 92 39 or by e-mail: [email protected]
The website www.heinekeninternational.com also
carries further information about both Heineken N.V.
and Heineken Holding N.V.
S U P P L E M E N TA R Y I N F O R M AT I O N
89
Historical Summary
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Net turnover
9,255
8,482
7,637
6,766
5,973
5,347
5,174
4,646
3,830
3,674
Operating profit
1,222
1,282
1,125
921
799
659
546
459
457
406
1,327
1,282
1,125
921
799
659
546
459
457
406
as % of net turnover
14.3
15.1
14.7
13.6
13.4
12.3
10.6
9.9
11.9
11.1
as % of total assets
12.2
16.4
15.6
14.6
13.3
12.4
10.7
9.5
10.4
10.0
9.5
12.2
16.5
14.8
20.8
63.1
46.9
40.9
–
–
798
795
767
621
516
445
345
297
301
300
Turnover and profit in millions of euros
Operating profit BEIA*
Interest cover ratio
Net profit
Net profit BEIA*
806
795
715
621
516
445
345
297
301
274
as % of shareholders’ equity
25.4
30.1
25.9
25.9
19.7
19.4
14.9
14.5
14.0
13.9
157
157
157
125
125
100
80
80
80
64
19.7
19.7
20.5
20.1
24.2
22.4
23.1
26.8
26.4
21.3
Increase in share capital
–
–
73
–
–
142
–
–
114
–
Cash payment
–
–
–
–
–
16
–
–
13
–
Distribution from reserves
–
–
73
–
–
158
–
–
127
–
Percentage increase
–
–
10
–
–
25
–
–
25
–
Cash flow from operating activities
4.18
3.02
2.97
2.64
2.39
2.25
1.92
1.38
1.63
1.79
Net profit BEIA*
2.06
2.03
1.82
1.58
1.32
1.14
0.88
0.76
0.77
0.70
Dividend
0.40
0.40
0.40
0.32
0.32
0.25
0.20
0.20
0.20
0.16
Shareholders’ equity
8.08
6.73
7.04
6.11
6.68
5.87
5.91
5.23
5.48
5.04
Bonus shares (nominal value)
–
–
0.23
–
–
0.57
–
–
0.57
–
Cash payment
–
–
–
–
–
0.06
–
–
0.06
–
1,638
1,184
1,165
1,035
935
882
753
539
640
703
241
187
168
160
112
114
94
93
93
77
Investments
2,081
1,973
783
1,503
527
728
439
840
344
334
Financing
1,223
427
– 39
335
– 13
80
36
111
– 70
– 179
549
– 549
175
– 293
283
120
255
– 283
133
113
Dividend
as % of net profit
Bonus shares in millions of euros
Per share of € 2.00 in euros
Cash flow statement in millions of euros
Cash flow from operating activities
Dividend
Net cash flow
* Before exceptional items and amortisation of goodwill
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
90
Historical Summary
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
784
784
784
711
711
711
569
569
569
455
Reserves
2,383
1,853
1,974
1,685
1,907
1,588
1,747
1,479
1,579
1,521
Shareholders’ equity
3,167
2,637
2,758
2,396
2,618
2,299
2,316
2,048
2,148
1,976
Financing in millions of euros
Share capital
732
393
381
124
248
256
182
186
157
160
Group equity
3,899
3,030
3,139
2,520
2,866
2,555
2,498
2,234
2,305
2,136
Provisions
1,367
981
1,024
976
770
733
769
734
637
619
Long-term borrowings
2,721
1,215
797
875
490
522
412
359
192
228
Current liabilities
2,910
2,555
2,235
1,892
1,860
1,460
1,384
1,462
1,187
1,010
Liabilities
5,631
3,770
3,032
2,767
2,350
1,982
1,796
1,821
1,379
1,238
10,897
7,781
7,195
6,263
5,986
5,270
5,063
4,789
4,321
3,993
0.56
0.64
0.77
0.67
0.92
0.94
0.97
0.87
1.14
1.15
Minority interests
Total equity and liabilities
Group equity/borrowed capital
Employ ment of capital in millions of euros
Intangible fixed assets
1,151
39
13
–
–
–
–
–
–
–
Tangible fixed assets
4,995
4,094
3,592
3,250
2,964
2,605
2,521
2,452
2,086
2,076
Financial fixed assets
1,122
835
531
615
422
490
429
380
335
293
Fixed assets
7,268
4,968
4,136
3,865
3,386
3,095
2,950
2,832
2,421
2,369
834
765
692
550
490
452
466
447
360
312
Receivables
1,379
1,270
1,192
1,024
903
775
799
771
563
522
Cash and securities
1,416
778
1,175
824
1,207
948
848
739
977
790
Current assets
3,629
2,813
3,059
2,398
2,600
2,175
2,113
1,957
1,900
1,624
10,897
7,781
7,195
6,263
5,986
5,270
5,063
4,789
4,321
3,993
Group equity/fixed assets
0.54
0.61
0.76
0.65
0.85
0.83
0.85
0.79
0.95
0.90
Current assets/current liabilities
1.25
1.10
1.37
1.27
1.40
1.49
1.53
1.34
1.60
1.61
Stocks
Total assets
S U P P L E M E N TA R Y I N F O R M AT I O N
91
Operating Companies and Participating Interests
as at 27 February 2004
Export offices are not shown
Europe
Country
Company
Location
Brands
Austria
Brau Union Österreich (93.4%)
Schwechat, Wieselburg, Göss, Zipf,
Zipfer, Gösser, Kaiser, Puntigamer, Schlossgold, Edelweiss
Puntigam, Kaltenhauser, Falkenstein
Belgium
Affligem Brouwerij BDS (100%)
Opwijk
Affligem
Bulgaria
Zagorka Brewery (48.6%)
Stara Zagora, Sofia
Zagorka, Amstel, Ariana
Croatia
Karlovacka Pivovara (94.4%)
Karlovac
Karlovačko
Czech Republic
Starobrno (91.2%)
Brno, Znojmo
Starobrno
France
Heineken France (100%)
Marseilles, Mons-en-Baroeul,
Heineken, Amstel, Buckler, Pelforth, Murphy’s Irish Stout, Kriska,
Schiltigheim, St. Omer
“33“ Export, Fischer, Desperados, Adelscott, St. Omer, Doreleï
Germany
Paulaner Brauerei (25%)
Munich, Rosenheim
Paulaner, Paulaner Weissbier, Hacker-Pschorr
Germany
Kulmbacher Brauerei (31%)
Kulmbach, Plauen, Chemnitz
Kulmbacher, Sternquell-pils, Mönchshof
Germany
Karlsberg (22.5%)
Homburg, Koblenz
Karlsberg, UrPils, Mixery, Desperados
Greece
Athenian Brewery (98.8%)
Athens, Patras, Thessaloniki
Heineken, Amstel, Buckler, Murphy’s Irish Stout, Alfa
Hungary
Amstel Brewery Hungary (100%)
Komárom
Heineken, Amstel, Buckler, Talléros, Fregatt, Zlatý Bažant
Hungary
Brau Union Hungaria (79.8%)
Sopron, Martfü
Schlossgold, Gösser, Kaiser, Soproni Ászok
Ireland
Heineken Ireland (100%)
Cork
Heineken, Amstel, Murphy’s Irish Stout, Coors Light
Italy
Heineken Italia (100%)
Aosta, Bergamo, Cagliari,
Heineken, Amstel, Murphy’s Irish Stout, Dreher,
Massafra, Messina, Pedavena
Birra Messina, McFarland, Sans Souci, Ichnusa, Birra Moretti,
Classica von Wunster, Prinz, Budweiser
Kazakhstan
Dinal (51%)
Almaty
Tian Shan, Amstel
Macedonia
Pivara Skopje (27.6%)
Skopje
Skopsko, Star Lisec
Netherlands
Heineken Nederland (100%)
’s-Hertogenbosch, Zoeterwoude
Heineken, Amstel, Lingen’s Blond, Murphy’s Irish Red,
Netherlands
Brand Bierbrouwerij (100%)
Wijlre
Brand
Norway
Hansa Borg Bryggerier (licence)
Kokstad
Heineken
Poland
.
Grupa Zywiec (61.8%)
.
.
.
.
Z ywiec, Elblag, Warka, Lezajsk, Cieszyn Heineken, Z ywiec, Warka, Lezajsk, Specjal, Tatra
Poland
Brau Union Polska (93.4%)
Warsaw, Bydgoszoz
Krȯlewskie, Kujawiak
Romania
Brau Union Romania (89.2%)
Arad, Bucharest, Constanta, Craiova
Goldenbräu, Ciuc, Bucegi, Hategana, Gambrinus, Silva,
Hateg, Mircurea Ciuc, Reghin
Harhita, Schlossgold, Gösser
St. Petersburg
Heineken, Botchkarov, Ochota, Löwenbräu
Wieckse, Vos
Russia
Heineken Brewery LLC (100%)
92
Affiliated company (non-consolidated)
Operating Companies and Participating Interests
Europe
Country
Company
Location
Brands
Slovakia
Heineken Slovensko (100%)
Hurbanovo, Nitra
Zlatý Bažant, Amstel, Kelt, Corgon, Martiner, Gemer
Spain
Heineken España (98.1%)
Madrid, Valencia, Seville, Jaen, Arano
Heineken, Cruzcampo, Amstel Aguila, Buckler,
Murphy’s Irish Red, Guinness, Kaliber, Legado de Yuste
Sweden
Spendrups (licence)
Grängesberg
Heineken
Switzerland
Heineken Switzerland (100%)
Chur
Heineken, Amstel, Murphy’s Irish Stout, Calanda, Haldengut
Salta, Santa Fe
Heineken, Budweiser, Schneider, Salta, Santa Fe,
The Americas
Argentina
Companias Cervecerias Unidas
Argentina S.A. (24.6%)
Cordoba, Rosario
Bahamas
Commonwealth Brewery (53.2%)
Nassau
Heineken, Kalik, Guinness, Vitamalt
Brazil
Cervejarias Kaiser Brasil S.A. (20%)
Feira de Santana, Gravatai,
Heineken, Kaiser, Santa Cerva, Bavaria, Summer, Xingu
Jacarei, Ponta Grossa, Queimados,
Pacatuba, Araraguara, Manous,
Cuiabá, Ribeirã, Preto
Chile
Companias Cervecerias Unidas S.A.
Santiago, Temuco, Antofagasta
Heineken, Cristal, Escudo
San José
Heineken, Imperial, Pilsen, Bavaria, Rock Ice
(30.8%)
Costa Rica
Cerveceria Costa Rica (25%)
Dominican Republic Cerveceria Nacional Dominicana (9.3%) Santo Domingo
Heineken, Presidente
Haiti
Brasserie Nationale d’Haïti (22.5%)
Port-au-Prince
Prestige, Guinness, Malta
Jamaica
Desnoes & Geddes (15.5%)
Kingston
Heineken, Red Stripe, Dragon Stout, Guinness
Martinique
Brasserie Lorraine (83.1%)
Lamentin
Lorraine, Porter, Malta
Netherlands Antilles Antilliaanse Brouwerij (56.3%)
Willemstad
Amstel, Amstel Bright, Coral, Malta
Nicaragua
Managua
Victoria, Tona
Panama City, David
Panama, Soberana, Cristal, Guinness
Compania Cervecera
Centroamericano (12%)
Panama
Cervecerias Barú-Panama (74.5%)
St. Lucia
Windward & Leeward Brewery (72.7%) Vieux-Fort
Heineken, Piton, Guinness
Surinam
Surinaamse Brouwerij (76.1%)
Parbo
93
Paramaribo
Affiliated company (non-consolidated)
Operating Companies and Participating Interests
Africa/Middle East
Country
Company
Location
Brands
Angola
Nocal (27.1%)
Luanda
Nocal
Angola
EKA (45.8%)
Dondo
EKA
Burundi
Brarudi (59.3%)
Bujumbura, Gitega
Amstel, Primus
Cameroon
Brasseries du Cameroun (8.8%)
Bafoussam, Douala, Garoua, Yaoundé
Amstel, Mützig
Chad
Brasseries du Logone (100%)
Moundou
Gala, Chari, Maltina
Congo
Brasseries du Congo (50%)
Brazzaville, Pointe Noire
Amstel, Mützig, Primus, Guinness, Ngok, Turboking,
Maltina
Democratic
Bralima (94.3%)
Republic of Congo
Boma, Bukavu, Kinshasa, Kisangani,
Amstel, Primus, Mützig, Guinness, Turboking, Maltina
Mbandaka, Lubumbashi
Egypt
Al Ahram Beverages Company (99.9%)
El Obour, Sharka, Badr, Gianarlis
Heineken, Stella, Fayrouz, Birell, Sakara, Meister
Ghana
Ghana Breweries (75.6%)
Kumasi, Accra
Amstel Malta, Star, Gulder, ABC Golden Bubra,
ABC Golden Lager, ABC Stout
Israel
Tempo Beer Industries (17.8%)
Netanya
Heineken, Maccabee, Gold Star, Nesher, Malt Star
Jordan
General Investment (10.8%)
Zerka
Amstel
Lebanon
Almaza (67%)
Beirut
Amstel, Almaza, Laziza
Morocco
Brasseries du Maroc (2.2%)
Casablanca, Fès, Tanger
Heineken
Namibia
Namibia Breweries (14.5%)
Windhoek, Swakopmund
Windhoek, Guinness
Nigeria
Nigerian Breweries (54.2%)
Aba, Enugu, Ibadan, Kaduna, Lagos
Amstel Malta, Maltina, Star, Gulder, Legend
Nigeria
Consolidated Breweries (24.8%)
Jjebu Ode, Owe Omamma
“33“ Export, Hi-malt
Réunion
Brasseries de Bourbon (85.6%)
Saint Denis
Bourbon, Dynamalt, 974
Rwanda
Bralirwa (70%)
Gisenyi, Kigali
Amstel, Primus, Mützig, Guinness
Sierra Leone
Sierra Leone Brewery (42.5%)
Freetown
Heineken, Star, Guinness, Maltina
South Africa
South African Breweries-Miller (licence)
Cape Town, Durban, Johannesburg
Amstel
94
Affiliated company (non-consolidated)
Operating Companies and Participating Interests
Asia/Pacific
Country
Company
Location
Brands
Cambodia
Cambodia Brewery (33.7%)
Phnom Penh
Tiger, Anchor, Gold Crown, ABC Stout
China
Shanghai Asia Pacific (40.9%)
Shanghai
Tiger, Reeb
China
Hainan Asia Pacific (42.2%)
Haikou
Tiger, Anchor, Aoke
China
Guangdong Brewery (21%)
Shenzhen
Kingway
Indonesia
Multi Bintang Indonesia (84.5%)
Tangerang, Sampang Agung
Bintang, Guinness
Japan
Kirin (licence)
Tokyo
Heineken, Buckler
Malaysia
Guinness Anchor Berhad (10.7%)
Kuala Lumpur
Heineken, Tiger, Guinness, Anchor Ice, Baron’s, Kilkenny
New Caledonia
Grande Brasserie de Nouvelle
Noumea
Number One, Havannah
Greymouth, Mangatainoka,
Heineken, DB Draft, Murphy’s Irish Stout, Export Gold,
Otahuhu, Timaru
Export Dry, Tui, Monteith’s, Amstel
Calédonie (87.3%)
New Zealand
DB Breweries (32.5%)
Papua New Guinea
SP Brewery (31.9%)
Port Moresby, Lae
SP Lager, South Pacific Export Lager, Niugini Ice
Singapore
Asia Pacific Breweries (42.2%)
Singapore
Heineken, Tiger, Anchor, ABC Stout, Baron’s
Tahiti
Brasserie de Tahiti (licence)
Papeete
Heineken
Thailand
Thai Asia Pacific Brewery (14.8%)
Bangkok
Heineken
Vietnam
Vietnam Brewery (25.3%)
Ho Chi Minh City
Heineken, Tiger, Bivina
Vietnam
Hatay Brewery (42.2%)
Hatay
Heineken, Tiger, Anchor Draft
95
Affiliated company (non-consolidated)
Colophon
A Heineken N.V. publication
Heineken N.V.
Tweede Weteringplantsoen 21
1017 ZD Amsterdam
P.O. Box 28
1000 AA Amsterdam
Netherlands
telephone +31 20 523 9239
fax
+31 20 626 3503
Copies of this annual report
and further information are obtainable
from the Corporate Communication Department,
telephone +31 20 523 9239
or via www.heinekeninternational.com
Cover illustration
Heineken France campaign
Translation
Mac Bay Consultants
Graphic design
and electronic publishing
Design Studio Hans Kentie BNO
Colour separations
NerocVGM
Printing
Boom Planeta
Binding
Hexspoor
While the authors of this publication have as far as possible
obtained the permission of copyright holders where required,
any organisations or individuals considering that their
copyright has been infringed should contact Heineken’s
Corporate Communication Department.
H E I N E K E N N.V. A N N U A L R E P O R T 2 0 0 3
96

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