Heineken N.V. — Earnings Release 2011

Feb 15, 2012

Heineken N.V. delivers solid top-line and earnings growth in 2011

Amsterdam, 15 February 2012 – Heineken N.V. today announced:

• Top-line: Revenue grew 3.6% organically, driven by total consolidated volume growth of 2.1% and revenue per hectolitre growth of 1.5%. Group beer volume increased 3.6%, with growth in all regions driving global market share gains;
• Heineken®: Volume growth of the Heineken® brand in the international premium segment accelerated to 5.4%, once again outperforming the overall beer market;
• EBIT: Organic EBIT (beia) growth of 1.4% as higher revenues, cost savings and increased profit from joint ventures were partly offset by increased marketing expense, higher input costs and capability building investments;
• Net profit: Net profit (beia) grew 9.2% organically to €1,584 million, driven by higher EBIT (beia), lower interest expense and a lower effective tax rate (beia). Reported net profit declined 1.2%, following an exceptional capital gain in 2010;
• Total Cost Management (TCM): TCM delivered pre-tax savings of €178 million in 2011 and total savings of €614 million over the entire three year period; New €500 million cost saving programme (TCM2) launched covering 2012-14;
• Cost synergies: Achieved cost synergies of €94 million in 2011, relating to acquired beer operations of FEMSA, bringing cumulative savings to €136 million;
• Cash flow: Strong free operating cash flow generation of over €2 billion, resulting in a cash conversion ratio of 122%. Net debt/EBITDA (beia) ratio of 2.2x, in line with 2010, despite acquisition activity and accelerated completion of the ASDI share repurchase programme;
• Dividend: Proposed total dividend of €0.83 per share, representing an increase of 9% compared with 2010 (€0.76).

Key figures1 (in mhl or € million unless stated otherwise)	Full Year 2011	Full Year 2010	Change %	Organic growth %
		(restated)2
Group beer volume	213.9	192.3	11	3.6
Total consolidated volume	194.4	178.1	9.1	2.1
Of which: Consolidated beer volume	164.6	145.9	13	3.2
Heineken® volume in premium segment	27.4	26.0	5.4	5.4
Revenue	17,123	16,133	6.1	3.6
EBIT	2,455	2,491	-1.4
EBIT (beia)	2,697	2,623	2.8	1.4
Net profit	1,430	1,447	-1.2
Net profit (beia)	1,584	1,456	8.8	9.2
Free operating cash flow	2,093	1,993	5.0
Net debt/EBITDA (beia)3	2.2x	2.2x
Diluted EPS (beia) (in €)	2.70	2.58	4.7

¹ For an explanation of the terms used please refer to the Glossary in the Appendix. Unless otherwise stated, any reference to growth rates used throughout the report is calculated on an organic basis and volume relates to group beer volume.

² 2010 restated figures as disclosed in the half year report dated 24 August 2011.

³ 2011 includes the Galaxy Pub Estate on a 12 month pro-forma basis; 2010 includes the beer operations of FEMSA on a 12 month pro-forma basis.

CEO STATEMENT

Jean-François van Boxmeer, Chairman of the Executive Board and CEO, commented:

"At the start of 2011, we said that we would significantly increase investment in our brands and innovation to drive long-term value and volume growth. This strategy helped us to deliver organic volume and revenue growth across all five reporting regions for the year. We also grew the bottom-line organically in 2011, with 9.2% net profit (beia) growth.

Our successful activation of the Heineken® brand and investment in global priority brands such as Desperados and Strongbow Gold supported global share gains. Our innovation rate reached 4.1% at the end of 2011 and we are well on our way to achieving our goal of 6% by 2020.

The Heineken® brand continued to outperform the international premium segment and overall beer market, with particularly strong brand performances in Brazil, China, France, Nigeria and Vietnam. Heineken® was also launched in Mexico and India, two attractive growth markets.

2011 also saw the successful completion of our TCM programme. We have now launched TCM2, a new 3-year €500 million cost saving programme. Our free operating cash flow was strong in 2011, exceeding €2 billion, and this will remain a core focus area going forward.

In the year ahead, we will continue to invest in our brands and global business capabilities across the Company. We will also invest in emerging markets to maintain our growth momentum. In Europe, we will continue to leverage our leadership position through our value growth strategy."

2012 FULL YEAR OUTLOOK

In 2012, HEINEKEN expects to benefit from continued positive growth momentum in higher growth economies and from revenue enhancing initiatives in developed markets. In addition, revenue development will continue to be supported by an ongoing shift towards higher growth economies in Africa, Latin America and Asia.

The Heineken® brand is expected to continue its strong performance in the international premium segment. The 'Open Your World' campaign will be activated around the world. HEINEKEN will also invest in the expansion of its other global brands - Desperados, Strongbow Gold and Amstel - with further planned introductions in new markets in 2012. In addition, Sol, our Mexican global priority brand, will be launched internationally from 2012. HEINEKEN expects marketing and selling (beia) expense as a percentage of revenue to remain broadly in line with 2011 (12.8%).

HEINEKEN anticipates an approximate 6% increase in input costs per hectolitre, primarily reflecting higher pricing for malted barley. The Company expects to mitigate this impact through the implementation of planned revenue growth initiatives, as well as ongoing efficiency programmes.

Following the successful completion of TCM in 2011, HEINEKEN is introducing a new €500 million cost saving programme (TCM2) that will run from 2012 to 2014 across Supply Chain, Commerce, Wholesale and other functions. TCM2 is focused on driving operational cost efficiencies, and on leveraging HEINEKEN's increasing global scale, primarily enabled through the Global Business Services (GBS) organisation formed in 2010. The initial scope of GBS will require an upfront investment of approximately €200 million through to the end of 2014, of which €32 million has already been incurred in 2011. These will be reported as part of the Company's operating costs.

HEINEKEN has made strong progress on the realisation of its targeted €150 million cost synergies related to the acquired beer operations of FEMSA and expects to achieve this during 2012.

HEINEKEN expects a further organic decline in the number of employees in 2012.

HEINEKEN expects a slight increase in the effective tax rate (beia) in 2012 (2011: 26.8%) and forecasts a slightly higher average interest rate of around 5.5% (2011: 5.2%), primarily reflecting a movement in the currency mix of its debt.

Alongside ongoing business capability investments to leverage its global scale, HEINEKEN continues to focus on capital investment in higher growth markets. The Company plans to increase capital expenditure on property, plant and equipment to approximately €1.25 billion (2011: €800 million) reflecting investment in additional capacity and the renewal and expansion of its returnable bottle fleet in higher growth markets. As a consequence, HEINEKEN expects a cash conversion ratio below 100%.

Total dividend for 2011

The Heineken N.V. stated dividend policy is a pay-out ratio of 30% to 35% of full-year net profit (beia). The payment of a total cash dividend of €0.83 per share of €1.60 nominal value for 2011 (total dividend 2010: €0.76) will be proposed to the annual meeting of shareholders. If approved, a final dividend of €0.53 per share will be paid on 2 May 2012, as an interim dividend of €0.30 per share was paid on 6 September 2011. The payment will be subject to a 15% Dutch withholding tax. The ex-final dividend date for Heineken N.V. shares will be 23 April 2012.

Investor Calendar Heineken N.V.

18 April 2012
19 April 2012
22 August 2012
24 October 2012
13-14 November 2012

Press enquiries Investor and analyst enquiries John Clarke George Toulantas Head of External Communication Director of Investor Relations E-mail: john.g.clarke@heineken.com Lucia Bergamini John-Paul Schuirink Senior Investor Relations Manager Financial Communications Manager E-mail: investors@heineken.com E-mail: john-paul.schuirink@heineken.com Tel: +31-20-5239590 Tel: +31-20-5239355

Editorial information:

HEINEKEN is a proud, independent global brewer committed to surprise and excite consumers with its brands and products everywhere. The brand that bears the founder's family name - Heineken® - is available in almost every country on the globe and is the world's most valuable international premium beer brand. The Company's aim is to be a leading brewer in each of the markets in which it operates and to have the world's most valuable brand portfolio. HEINEKEN wants to win in all markets with Heineken® and with a full brand portfolio in markets of choice. The Company is present in over 70 countries and operates more than 140 breweries with volume of 214 million hectolitres of group beer sold. HEINEKEN is Europe's largest brewer and the world's third largest by volume. HEINEKEN is committed to the responsible marketing and consumption of its more than 200 international premium, regional, local and specialty beers and ciders. These include Amstel, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Foster's, Heineken, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, and Zywiec. Our leading joint venture brands include Cristal, Kingfisher, Tiger and Anchor. In 2011, revenue totaled €17.1 billion and EBIT (beia) was €2.7 billion. The number of people employed is around 70,000. Heineken N.V. and Heineken Holding N.V. shares are listed on the Amsterdam stock exchange. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. Most recent information is available on HEINEKEN's website: www.theHEINEKENcompany.com.

Disclaimer:

This press release contains forward-looking statements with regard to the financial position and results of HEINEKEN's activities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond HEINEKEN's ability to control or estimate precisely, such as future market and economic conditions, the behaviour of other market participants, changes in consumer preferences, the ability to successfully integrate acquired businesses and achieve anticipated synergies, costs of raw materials, interest-rate and exchange-rate fluctuations, changes in tax rates, changes in law, pension costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in HEINEKEN's publicly filed annual reports. You are cautioned not to place undue reliance on these forward-looking statements, which are only relevant as of the date of this press release. HEINEKEN does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of these statements. Market share estimates contained in this press release are based on outside sources, such as specialised research institutes, in combination with management estimates.

MANAGEMENT REPORT

Operational Review

Revenue grew 6.1% to €17,123 million in 2011, including a positive net consolidation impact of €753 million (+4.7%). Foreign currency movements had a negative 2.2% impact on revenue. On an organic basis, revenue grew 3.6%, increasing in all operating regions in 2011. This growth was driven by total consolidated volume growth of 2.1% and revenue per hectolitre growth of 1.5% (net of a negative country mix effect of 0.7%).

EBIT (beia) grew 1.4% organically in 2011, supported by higher revenue, which together with the benefit of TCM cost savings and higher profit from joint venture operations, more than offset the impact of increased input costs and higher planned investments in marketing and Global Business Services. This growth was achieved despite the impact of difficult trading conditions in Greece and Egypt and significant upfront business capability investments. In the fourth quarter, solid volume growth in Africa, Latin America and Asia Pacific drove strong operating leverage and EBIT (beia) growth. Input costs per hectolitre increased 2.5% in 2011 in line with the Company's expectations.

HEINEKEN delivered solid earnings growth in 2011 with net profit (beia) up 9.2% organically, primarily driven by higher EBIT (beia), a decline in interest expenses and a lower effective tax rate (beia). Reported net profit was 1.2% lower in 2011, primarily reflecting a €199 million exceptional gain in 2010 related to the transfer of a controlling stake in Multi Bintang Indonesia (MBI) and Grande Brasserie de Nouvelle-Caledonie (GBNC) to our APB joint venture.

HEINEKEN successfully completed its H4C2 programme at the end of 2011, contributing in excess of €5.8 billion of free operating cash flow over the past 3 years. In 2011, the Company generated strong free operating cash flow of €2,093 million, representing an increase of €100 million compared to 2010. This increase was driven by higher cash flow from operations and lower interest paid, only partly offset by higher capital expenditure and income taxes. The cash conversion ratio for 2011 was 122%.

Net debt increased to €8,355 million at 31 December 2011 (from €8,099 million at 31 December 2010), following business development activity and the accelerated completion of the ASDI share repurchase programme. The net debt/EBITDA (beia) ratio of 2.2x was in line with last year and within the Company's long-term target of below 2.5x.

Volume development

Group beer volume increased by 21.6 million hectolitres to 214 million hectolitres, largely reflecting the first time consolidation of the beer operations of FEMSA for the four months ending April 2011. On an organic basis, group beer volume grew 3.6%, with growth achieved across all regions. This growth was primarily led by the Central & Eastern Europe, Africa & the Middle East and Asia Pacific regions.

The strong volume recovery in Russia in 2011 accounted for one third of total organic group beer volume growth.

Total consolidated volume grew 2.1% as consolidated beer volume growth of 3.2% and low single-digit growth of soft drinks, was partly offset by a mid single-digit decline in cider and volume of third party products.

In 2011, effective marketing programmes and strong brand activation supported global volume and value share gains. HEINEKEN grew beer market share in several markets including France, Italy, UK, Ireland, Russia, Austria, Romania, Brazil, Nigeria, Vietnam and South Africa.

Global brands and innovation

Volume of the Heineken® brand in the international premium segment accelerated 5.4% to 27.4 million hectolitres in 2011, again outpacing overall beer market growth. The brand achieved healthy growth across both developed and emerging markets, with the most significant volume increases reported in Vietnam, Brazil, France, China, Nigeria, Taiwan, Russia, the UK and South Africa. During the year Heineken® was launched in Mexico and India.

In 2011, the award-winning new Heineken® 'Open Your World' communication campaign was successfully activated globally, with The Entrance and The Date television commercials aired across more than 40 markets. Importantly, the brand reinforced its leading position in digital and social media by entering into global agreements with Facebook and Google. The number of fans following the Heineken® brand on Facebook reached 5 million at the end of 2011 (compared with 900,000 fans at December 2010), significantly ahead of any other beer brand. During the year, the Company effectively leveraged the brand's sponsorships of the Heineken Cup, Rugby World Cup and the UEFA Champions League. In 2011, a new contract was signed extending the sponsorship of the UEFA Champions League through to 2015, while Heineken® will also be the official beer supplier at the 2012 Olympic Games in London. Further, Heineken® has recently extended its 15 year partnership with the James Bond movie franchise. It will introduce an innovative global marketing campaign to support the launch of SKYFALL, the 6th consecutive James Bond film with which the Heineken® brand will be associated.

Volume of the Amstel brand grew slightly to 10.3 million hectolitres. This was supported by strong brand growth in Nigeria, Russia and Spain, partly offset by lower volume in Greece, South Africa and the USA. During the year, a new brand extension, Amstel Premium Pilsener, was launched in Russia and Greece with encouraging early results.

Desperados, our high-margin, tequila-flavoured specialty beer, continued its strong momentum, with volume up 26%, driven by continued double-digit growth in France, Germany and Poland. In 2011, the brand was successfully launched in 10 new markets, supported by a strong communication platform and activation in both onand off-trade channels.

Volume of the Strongbow cider brand declined in the mid single-digits. This reflects a high single-digit decline in the UK following high promotional support during the 2010 FIFA World Cup, as well as the voluntary discontinuation of Strongbow Black in the UK. Strongbow Gold was launched in Italy and a new marketing campaign for the brand was introduced in the Netherlands.

HEINEKEN continues to invest for growth through innovation, with an ambition to double the innovation rate from 3% at the end of 2010 to 6% by 2020. In 2011, the Company made strong progress against this target, reaching an innovation rate of 4.1%. Successful new flavour innovations were introduced in 2011, such as Zlaty Bazant Radler Citron in Slovakia and Bulmer's No.17 cider in the UK. In addition, the Company continued to expand alcohol free beer with a new brand extension for Golden Brau in Romania, as well as the launch of Cruzcampo Sin and Amstel Sin in Spain. Other successful innovations introduced in 2011 included Foster's Gold in the UK, Amstel Premium Pilsener in Russia and Greece and the continued roll-out of advanced beer dispensing systems such as the 4 litre PET draught keg, Orion and David XL.

Total Cost Management programme

In 2011, HEINEKEN completed its 3-year TCM programme. Pre-tax savings of €178 million were realised in 2011, resulting in total savings of €614 million since inception of the programme in 2009. Pre-tax exceptional costs related to TCM were €81 million in 2011. The total realised cost savings from the Fit2Fight and TCM programmes since 2006 amount to €1.1 billion.

The supply chain function contributed cumulative savings of €263 million under TCM (43% of total savings) led by the successful Total Productive Management initiative, which continues to drive productivity and efficiency improvements across manufacturing and logistics. Commerce contributed 19% of the savings, mainly reflecting a structural reorganisation of the commerce department in a few markets. Wholesale operations accounted for 7% of the savings, with the remainder mainly realised in 'non-product' related spend areas. At a regional level, Europe accounted for 82% of the cumulative savings, with Africa & the Middle East representing the majority of the balance.

During the year, the number of employees decreased by 1,134 to 69,466.

Beer operations of FEMSA

The first time consolidation of the beer operations of FEMSA contributed €946 million of revenue and €85 million of EBIT (beia) in 2011. HEINEKEN realised €94 million of pre-tax cost synergies in 2011. Cumulative cost synergies amount to €136 million since April 2010. Consequently, the Company expects to achieve the €150 million of targeted cost synergies during 2012, earlier than planned. Savings have been primarily achieved in the areas of sales, distribution, purchasing and administration.

Update on Global Business Services

Since the announcement of a GBS organisation in 2010, the HEINEKEN Global Shared Services Centre (HGSS) has been established in Kraków, Poland, and the HEINEKEN Global Procurement Company (HGP) in the Netherlands. These two initiatives will enable TCM2 cost savings across supply chain, commerce, wholesale and other functions.

The initial scope of the HGSS initiative will cover finance transactional services in Europe. HGSS will support the delivery of high quality services and cost efficiencies to the HEINEKEN business through a standardised platform. HGP will attain operational cost savings through leveraging HEINEKEN's scale in purchasing and generate additional improvements in cash flow. These two initiatives are underpinned by common business processes and IT solutions. The HGSS and HGP initiatives present a very attractive business case and investment payback for HEINEKEN.

REGIONAL REVIEW

Western Europe

(in mhl or € million unless stated otherwise)	Full Year 2011	Full Year 2010 (restated)	Total change %	Organic change %
Group beer volume	45.7	45.7	0.0	0.2
Total consolidated volume	65.4	66.8	-2.0	-1.2
Of which: Consolidated beer volume	45.4	45.4	0.0	0.1
Heineken® volume in premium segment	7.7	7.4	3.5	3.5
Revenue	7,752	7,894	-1.8	0.3
EBIT (beia)	962	925	4.0	2.6
Operating profit (beia) margin	12.4%	11.7%	70bp

Group beer volume grew slightly in 2011. Volume growth in France, Italy and Ireland exceeded lower volumes in Portugal, Finland, the UK, Netherlands and Belgium. Volumes in Spain were in line with last year. Total consolidated volume declined 1.2%, driven by lower cider, soft drinks and third party product volumes, partly offset by slight positive growth in consolidated beer volume.

Volume of Heineken® in the international premium segment increased 3.5%, with positive performances across most of the region. France was the largest contributor to this growth. The Desperados brand grew strongly (+27%), driven by France and the success of new introductions in the Netherlands, Belgium, Spain, Switzerland, Ireland and Portugal.

In 2011, EBIT (beia) grew 2.6% driven by better pricing, improved brand mix and the benefit of TCM cost savings resulting in lower fixed costs. The earlier deconsolidation of the Waverley TBS wholesale business also contributed to an increase in regional operating profit (beia) margin.

France reported a strong financial performance in 2011, driven by 5.3% volume growth from favourable weather, improved pricing and the benefit of stringent cost control. All key brands (i.e. Heineken®, Desperados, Pelforth and Affligem) grew volume, contributing to share gains in the country. Heineken® volume increased 6.3%, with the brand gaining share in both on- and off-trade channels.

In the UK, EBIT (beia) increased, driven by business simplification initiatives, the benefit of cost saving programmes and better pricing. Whilst beer volumes were lower (-2.8%), they were ahead of the market resulting in a modest share gain. This was led by Heineken® brand growth (+17%) and the successful launch of Foster's Gold. Cider volumes declined high single-digits in a marginally positive market. This follows higher promotional activity in 2010, the voluntary discontinuation of Strongbow Black on social responsibility considerations and the emergence of new entrants. Bulmer's No. 17 cider was successfully launched in 2011, with innovation expected to support the positive long-term development of the cider category. Reported profit includes a contribution from the Galaxy pub estate which was acquired in December. The acquisition of 918 high quality pubs strengthens HEINEKEN's position in the higher value UK on-trade channel.

Volume and EBIT (beia) in Spain were both in line with last year, a solid result in a very challenging economic environment. Despite the introduction of austerity measures, the beer market remained broadly flat. Increased commercial focus and innovations supported both the Cruzcampo and Amstel brands, growing 3% and 7%, respectively. This more than offset lower volume for the Heineken® brand.

The beer market in Italy grew in 2011, led by growth of the off-trade channel. Volume in Italy grew 2%, slightly ahead of the market, led by Birra Moretti (+4.1%) and Heineken® (+2.2%). EBIT (beia) improved substantially, despite increased marketing investment supporting the introduction of Strongbow Gold cider during the year.

Volume in the Netherlands declined 1.5%, broadly in line with the market. Innovation played an important role in 2011, with the national launch of Strongbow Gold, Desperados and Wieckse 0.0%, a new alcohol free beer. EBIT (beia) was higher, with lower revenue more than offset by fixed cost savings.

The beer market in Portugal declined in the mid single-digits in 2011. This reflects reduced consumer spending following the imposition of increased taxes and government spending cuts in response to a deepening economic crisis in the country. Domestic beer volume in Portugal declined in line with the market, mainly reflecting lower volumes in the on-trade channel. EBIT (beia) declined due to lower volume and negative mix.

Central & Eastern Europe

(in mhl or € million unless stated otherwise)	Full Year 2011	Full Year 2010 (restated)	Total change %	Organic change %
Group beer volume	52.7	49.4	6.5	6.5
Total consolidated volume	48.3	45.3	6.5	6.5
Of which: Consolidated beer volume	45.4	42.2	7.4	7.4
Heineken® volume in premium segment	2.3	2.3	-1.6	-1.6
Revenue	3,229	3,143	2.7	5.0
EBIT (beia)	346	378	-8.4	-7.2
Operating profit (beia) margin	10.2%	11.4%	-120bp

Group beer volume in Central & Eastern Europe grew 6.5% with gains in Russia, Belarus, Romania, Poland and Austria, partly offset by lower volume in Greece. Total consolidated volume increased 6.5%, as growth in consolidated beer and soft drink volume was partially offset by a mid single-digit decline of third party products.

Heineken® declined slightly with brand growth in Russia, Poland, Germany and Romania more than offset by a double-digit volume decline in Greece. Excluding Greece, Heineken® brand growth would have been in the high single-digits.

EBIT (beia) declined organically, as higher input costs and increased operating expense were only partly offset by higher revenues. Lower profit in Russia, Greece and Poland were the main contributors to the decline in EBIT (beia), on an organic basis. The Polish zloty and the Russian rouble devalued by 3% and 2%, respectively, impacting reported EBIT.

Volume in Russia grew 24% in a slightly declining market. This growth was primarily driven by a strong volume recovery in 2011 (following excise related price increases in 2010), as well as successful innovation and activation of key brands. Volume growth was led by the Three Bears, Ochota and Heineken® brands which all grew strongly. These strong brand performances contributed to an estimated market share gain of over 200 basis points during the year. EBIT (beia) declined, largely driven by unfavourable price and sales mix, increased input costs and higher fixed costs.

In Poland, beer volumes increased 2%. A volume shift from traditional trade to modern trade channels adversely affected volume development of the Warka brand. However, Heineken® and the below-mainstream Tatra brand both grew by 6% and 34%, respectively. EBIT (beia) was lower reflecting additional marketing costs and unfavourable channel mix.

EBIT (beia) in Austria grew double-digits, led by higher volume and increased pricing. Volume increased 2.9%, led by Gösser and Zipfer, which both grew by over 5%.

In Romania, volume grew in the high single-digits, led by the strong brand performance of Bucegi, which exceeded 2 million hectolitres for the first time. EBIT (beia) grew significantly, driven by volume, increased pricing and cost control.

The beer market in Greece continued to be impacted by weak consumer confidence, high unemployment and the reduced consumer spending from earlier increases in excise and value added tax. Volume declined in the low double-digits, broadly in line with the overall market. The Company continued to invest in innovation with the successful introduction of Amstel Premium Pilsener. The realisation of substantial cost savings only partly offset the impact of lower revenues, resulting in a doubledigit decrease in EBIT (beia).

The Americas

(in mhl or €million unless stated otherwise)	Full Year 2011	Full Year 2010 (restated)	Total change %	Organic change %
Group beer volume	60.2	47.2	28	1.0
Total consolidated volume	50.8	39.2	30	-0.1
Of which: Consolidated beer volume	50.5	37.9	33	0.0
Heineken® volume in premium segment	8.2	8.2	0.8	0.8
Revenue	4,029	3,296	22	3.0
EBIT (beia)	655	600	9.2	0.2
Operating profit (beia) margin	14.3%	15.9%	- 160bp

The beer operations of FEMSA were consolidated for the first time on 1 May 2010 and contributed to organic changes from May 2011.

Organic Group beer volume growth reflects higher volume in Brazil, the Caribbean, Chile and Argentina, partially offset by lower volume in the USA. On a pro-forma 12 month basis, group beer volume in The Americas region grew 1.7%.

Heineken® volume grew marginally with strong brand growth in Brazil, Chile, Argentina and Mexico, partially offset by lower brand volume in the USA. Dos Equis continues its solid brand performance in the USA and Mexico with double-digit volume growth in both markets.

The reported change in EBIT (beia) includes a €70 million contribution from the firsttime consolidation of the beer operations of FEMSA. The decrease in operating profit (beia) margin primarily reflects the effect of this first time consolidation. On an organic basis, EBIT (beia) grew marginally with increased revenues largely offset by higher marketing investment.

In Mexico, the Company's value growth strategy continued to support strong growth in EBIT (beia) on a pro-forma basis. This was driven by higher pricing and cost synergies, partly offset by increased marketing investment. Group beer volume in Mexico on a pro-forma 12 month basis grew moderately. The implementation of a new route-to-market and brand portfolio strategy is expected to support future profitability. Volume of the Tecate Light and Dos Equis brands grew strongly reflecting increased brand activation. Heineken® was successfully launched in 2011 in line with the Company's value growth strategy.

In Brazil, the overall beer market declined slightly reflecting the effect of no increase in minimum wages, above inflation pricing (following a federal tax increase in April) and unfavourable weather. This follows strong promotional activity during the 2010 FIFA World Cup event. Volume in Brazil grew by mid single-digits on a pro-forma 12 month basis, led by growth of the Heineken®, Kaiser and Bavaria brands. EBIT (beia) was positively impacted by volume growth and higher pricing.

The US beer market declined 2.2% in 2011, as an uncertain economy continues to impede consumer spending. The Company's depletions (sales to retailers) decreased by 3.1%, reflecting lower volume of the Heineken® and Amstel brands. Encouragingly, volume momentum in the US improved in the fourth quarter, led by Heineken® and accelerated growth of the Dos Equis brand. EBIT (beia) in the USA declined, reflecting lower revenues, increased freight costs and higher marketing spend.

Higher volume of CCU, the Company's joint venture business in Chile and Argentina, was led by growth of the Escudo and Heineken® brands in Chile. Profit of CCU grew in 2011, resulting in an increase in the share of net profit recognised by HEINEKEN.

On 14 December 2011, HEINEKEN announced it would increase its shareholding in Brasserie Nationale d'Haiti S.A, the leading brewer in Haiti, from 22.5% to 95%. The acquisition was successfully completed in January 2012 and is expected to be earnings accretive and value enhancing from the first year. The Haitian beer market offers attractive future growth prospects.

Africa & the Middle East

(in mhl or € million unless stated otherwise)	Full Year 2011	Full Year 2010	Total change %	Organic change %
		(restated)
Group beer volume	28.8	25.7	12	6.2
Total consolidated volume	28.6	25.5	12	5.7
Of which: Consolidated beer volume	22.0	19.1	16	7.3
Heineken® volume in premium segment	3.0	2.7	13	13
Revenue	2,223	1,988	12	13
EBIT (beia)	570	560	1.7	9.3
Operating profit (beia) margin	24.0%	26.8%	-280bp

Group beer volume grew 12% including the impact of acquired breweries in Nigeria and Ethiopia. Group beer volume grew 6.2% organically, despite the challenging political and business environment in North Africa. Total consolidated volume increased 5.7% with growth across beer and soft drink categories.

The Heineken® brand achieved a milestone in the region, reaching 3 million hectolitres for the first time. Nigeria, Algeria and South Africa accounted for over two thirds of this brand growth.

EBIT (beia) grew 9.3% organically, reflecting increased volumes and the benefit of higher pricing. Strong profit growth across most markets was only partially offset by lower profitability in Egypt. Reported EBIT (beia) grew 1.7%, following an 8% devaluation of the Nigerian naira and a negative contribution from the acquired Sona breweries in Nigeria.

In Nigeria, volume grew 10% organically, underpinned by successful marketing and innovation initiatives and resulting in market share gains. Volume of all key brands, such as Legend , Heineken®, Maltina, Gulder and Star, increased. Organic EBIT (beia) growth was driven by strong volume growth, positive pricing and sales mix, partly offset by higher marketing investment.

In October 2011, Heineken International transferred three of the earlier acquired breweries (Sona, Life and IBBI) of the Sona Group to Nigerian Breweries. The transfer of the other two breweries (Benue and Champion) to Consolidated Breweries, was completed in July 2011 and January 2012, respectively.

In Congo, our joint venture reported double-digit volume and EBIT growth. Volume and EBIT (beia) in the Democratic Republic of Congo remained broadly stable, as the Company's growth was impeded by capacity constraints.

Volume of our South African joint venture increased in the mid single-digits, resulting in some share gains in a moderately expanding beer market. Volume growth was led by double-digit growth of Windhoek lager and by Heineken® (+4.8%).

Volume in Egypt declined by 17%, due to social unrest and lower tourism levels. The effect of lower volume versus the prior year was partially compensated at EBIT (beia) level by the timely execution of a contingency plan.

In August, HEINEKEN completed its acquisition of the Harar and Bedele breweries from the government of Ethiopia. In December, HEINEKEN established a new office in Nairobi, Kenya, overseeing the development and management of the East African region. The office will support operations in Kenya, Tanzania and Uganda, including an export operation supplying several other countries in the region.

Asia Pacific

(in mhl or € million unless stated otherwise)	Full Year 2011	Full Year 2010 (restated)	Total change %	Organic change %
Group beer volume	26.5	24.3	8.9	6.2
Total consolidated volume	1.3	1.3	-2.6	9.1
Of which: Consolidated beer volume	1.3	1.3	-1.5	9.2
Heineken® volume in premium segment	6.2	5.4	15	15
Revenue	216	206	4.5	11
EBIT (beia)	176	124	42	39
Operating profit (beia) margin	29.9%	22.1%	780bp

The Asia Pacific region had another strong performance in 2011, with group beer volume growing 6.2%. This growth was spread across the Company's Asia Pacific Breweries (APB) and United Breweries Ltd (UBL) joint venture operations, and the HEINEKEN export markets Taiwan and South Korea.

EBIT (beia) grew substantially, driven by higher profit of APB. In May, Heineken-APB China divested its 21% stake in Kingway Brewery. HEINEKEN's share in the capital gain amounts to €19 million and is included in EBIT (beia) organic growth. Excluding this capital gain, EBIT (beia) organic growth would have been 24% in 2011. In the reporting period, the Vietnamese dong (a key currency for APB) depreciated by 12%.

Heineken® grew 15%, driven by strong brand growth in Taiwan, South Korea and Vietnam, with the latter market becoming the second largest market for the brand in the world. In India, Heineken® has been brewed locally since August and is now being distributed in five major cities. A further national roll-out of the brand is planned for 2012.

Net profit of APB, our joint venture with Fraser & Neave, increased substantially. In Vietnam, strong volume growth and higher pricing supported substantial revenue and profit growth. Planned capacity expansion investments at the two breweries in Danang and Ho Chi Minh City were completed in October 2011. Volume growth was also strong in Papua New Guinea and Sri Lanka. In Indonesia, revenues and margins improved, driven by increased volume and higher pricing. Profit in Singapore was in line with last year. In China, a shift in strategic focus towards the international premium segment contributed to Heineken® growing 28%. The Guangzhou brewery, where the Heineken®, Tiger and Anchor brands are all brewed will expand its capacity to 1.5 million hectolitres by the end of the first quarter of 2012.

The export market of Taiwan grew volume in the double-digits. Organically, EBIT (beia) grew substantially.

Volume of UBL, HEINEKEN's joint venture in India, grew 8.2% in 2011, resulting in UBL reaching an all-time high market share of 55%. Kingfisher is the undisputed leading beer brand in India, over three times larger than its nearest competitor. UBL had a positive contribution to HEINEKEN's share of net profit from joint ventures in 2011.

Head Office costs, other items and eliminations

(in mhl or € million unless stated otherwise)	Full Year 2011	Full Year 2010 (restated)	Total change %	Organic change %
EBIT (beia)	-12	36	na	na

Organically, EBIT (beia) declined by €64 million, as higher licensing fees and increased income from the Mexican packaging operations were more than offset by higher central costs for the Supply Chain, Commerce and GBS functions. In 2011, HEINEKEN incurred an incremental €32 million of GBS organisation costs related to the establishment of HGSS and HGP and an incremental €38 million related to investment in commercial capability building initiatives.

The effect of the first time contribution of the FEMSA packaging operation resulted in a positive consolidation impact of €15 million to EBIT (beia).

FINANCIAL REVIEW

Key financials

(in € million)	Full Year 2010 (restated)	Consol. impact	Currency translation	Organic change	Full Year 2011	Organic change %
Revenues	16,133	753	-351	588	17,123	3.6
Operating profit (beia)	2,430	84	-51	-7	2,456	-0.3
EBIT (beia)	2,623	89	-50	35	2,697	1.4
Net profit (beia)	1,456	22	-28	134	1,584	9.2

Consolidation Impact and accounting changes

The following factors led to a consolidation impact on financial results in 2011:

• The deconsolidation of MBI and GBNC as of 1 February 2010;
• The acquisition of the beer operations of FEMSA, consolidated from 1 May 2010;
• The deconsolidation of Waverley TBS as of 21 June 2010;
• The acquisition of the beer operations of the Sona group, in Nigeria, consolidated from 12 January 2011;
• The acquisition of the Harar and Bedele breweries in Ethiopia, consolidated from 4 August 2011; and
• The acquisition of the Galaxy Pub Estate in the United Kingdom, consolidated from 2 December 2011.

In 2011, HEINEKEN changed its accounting policy with respect to employee benefits, to align our accounting to the new IAS 19, as published by the International Accounting Standards Board. At the same time, HEINEKEN reallocated certain management costs from the regions to Head Office, reflecting a change in the Company's operating framework from regional to global reporting lines. In addition, the acquired packaging operations of FEMSA were transferred from The Americas region to Head Office. As a result of these changes, HEINEKEN restated its Full Year 2010 financial results as published in the Half Year report released on 24 August 2011. A copy of this report can be found on the Company's website at the following link:

www.heinekeninternational.com/24082011heinekennvhalfyearresults2011english.aspx

Revenue

Revenue increased 6.1% reflecting revenue growth of 3.6% on an organic basis, a positive net consolidation effect of €753 million (4.7%) and a negative 2.2% impact from unfavourable foreign currency movements (largely driven by the Nigerian naira, the Mexican peso and the British pound).

Total Expenses

Total expenses (beia) increased 4.3% on an organic basis. Input costs increased organically 5.2% and by 2.5% on a per hectolitre basis. On a reported basis, input costs increased 9.4%, due to the first time consolidation of the beer operations of FEMSA.

Energy and water costs were €525 million, up 7.0% organically, largely driven by higher oil prices.

Personnel costs increased 6% on a reported basis and 1.2% organically.

Marketing and selling (beia) expenses increased 4.1% organically, to €2,186 million, representing 12.8% of revenues (2010: 12.4%). On a reported basis, marketing and selling (beia) increased 9.1%, primarily reflecting the first time consolidation impact of the beer operations of FEMSA.

EBIT and EBIT (beia)

EBIT (beia) grew 2.8% to €2,697 million. First time consolidations added €89 million (+3.4%), mostly related to the beer operations of FEMSA. Unfavourable currency movements (particularly the Nigeria naira and Mexico peso) reduced EBIT (beia) by €50 million, or 1.9%.

On an organic basis, EBIT (beia) grew 1.4%, or €35 million, as higher planned investments and input costs were more than offset by higher revenues, cost savings and increased share of net profit from our APB, South African and Congo joint venture operations.

On a reported basis, EBIT declined 1.4% to €2,455 million with lower results from operating activities only partly offset by a higher attributable share of net profit from associates and joint venture. The lower result from operating activities primarily reflects higher amortisation in 2011 and the recognition of a large exceptional capital gain in 2010 (refer Exceptional items and amortisation section below).

Net finance expenses

On an organic basis, net interest costs declined by 25% reflecting strong free operating cash flow generation and a lower average interest rate of 5.2%, compared with 6.0% in 2010.

Other net finance expenses of €20 million (including dividend income) were broadly in line with last year. On an organic basis, other net finance expenses were €11 million below last year.

Taxation

The effective tax rate (beia) was 26.8%, slightly below the 2010 (beia) tax rate of 27.3%. The reported tax rate was 26.1% (2010: 22.5%) and includes the effect of the release of tax provisions after having reached agreement with tax authorities. The reported 2010 tax rate included the tax exempt sale of MBI/GBNC.

Net profit and net profit (beia)

Net profit (beia) grew organically 9.2% to €1,584 million, driven by the positive EBIT (beia) result, a lower effective tax rate and a decline in interest expense and other net financial costs.

Adverse foreign currency movements reduced net profit by €28 million (-1.9%), while the net contribution from first time consolidations added €22 million (+1.5%).

Reported net profit amounted to €1,430 million, broadly in line with last year (2010: €1,447 million), as a result of a shift in exceptional items and amortisation of brands (as presented in the table below).

Exceptional items and amortisation of brands and customer relations (eia)

(in € million)	Full Year 2011	Full Year 2010
Amortisation of brands & customer relations incl. in EBIT
Amortisation of brands and customer relations	(170)	(142)
Exceptional items included in EBIT
TCM programme	(81)	(39)
Book gain on divestments	24	199
Others	(15)	(150)
Net eia (losses)/gains included in EBIT	(242)	(132)
Net eia (losses)/gains incl. in net finance expenses	14	5
eia included in income tax expenses
Tax on amortisation of brands and customer relations	47	39
Tax effect on other exceptional items	27	27
Exceptional tax items	0	52
Net eia (losses)/gains incl. in income tax expenses	74	118
Total eia (losses)/ gains included in net profit	(154)	(9)

An increase in the amortisation of brands and customer relations relates to the first time consolidation of the beer operations of FEMSA for the period January to April 2011.

In 2011, a capital gain of €24 million was recognised relating to the sale of the Courage brands in United Kingdom.

In 2011, 'Other' exceptional items included in EBIT include:

• A €21 million exceptional gain at EBIT level following a decision of the Court of the European Union in the first half of the year to reduce the amount of a fine paid to the European Commission in 2007;
• A €36 million exceptional expense related to the early termination of contracts associated with the acquisition of the Galaxy Pub Estate in the UK.

In 2010, HEINEKEN reported an exceptional capital gain of €199 million, related to the transfer of a controlling stake in MBI and GBNC to our APB joint venture.

Foreign exchange rate movements

Unfavourable currency fluctuations reduced EBIT by €50 million in 2011, with more than half of this impact attributable to an 8% devaluation of the Nigerian naira and a 3% devaluation of the Mexican peso. At the net profit level, foreign currency movements had a negative impact of €28 million.

HEINEKEN delays the impact of the US dollar fluctuations versus the euro by hedging the net cash inflow of US dollars from exports for up to 18 months in advance.

The average EUR/USD exchange rate inclusive of hedging was 1.35 in 2011, equal to the rate achieved in 2010. For the full year 2012, the net dollar inflow is forecast at USD 670 million, of which 89% has been hedged at EUR/USD1.37. For 2013, the net dollar inflow is also forecast at approximately USD 670 million of which 40% is hedged at EUR/USD1.34 as of 8 February 2012.

Balance sheet and cash flow

Total assets increased to €27.1 billion (2010: €26.7 billion). Gross capital expenditure amounted to €800 million (2010: €648 million) representing 4.7% of revenues.

Free operating cash flow grew by 5.0% to €2,093 million. This increase was driven by higher cash flow from operations and lower interest paid, partly offset by higher capital expenditure and income taxes paid.

Equity attributable to equity holders of the Company decreased by €158 million to €9,774 million, mainly driven by a negative currency impact on translation reserve, dividends paid and the purchase of own shares related to the ASDI share repurchase programme. This was only partly offset by a positive movement in retained earnings.

Financial Structure

Net debt increased to €8,355 million (from €8,099 million at the end of December 2010), due to business development activity and the accelerated completion of the ASDI share repurchase programme in 2011.

The net debt/EBITDA (beia) ratio of 2.2x on 31 December 2011 was in line with last year, meeting the Company's long-term target for a ratio below 2.5x.

Including the effect of cross-currency swaps, 74% of net debt is euro-denominated, with the remaining part mostly denominated in US dollar, British pound, Polish zloty, Swiss franc and Mexican peso.

Total gross debt amounts to €9,183 million. The maturity profile of HEINEKEN's longterm gross debt is as follows:

Year	€ million
2012	522
2013	2,422
2014	1,851
2015	723
2016	1,963
2017	83
2018	844
Beyond 2018	4

Long-term debt maturity profile

On May 5th, Heineken N.V. announced the successful closing of a new Revolving Credit Facility for an amount of €2 billion with a syndicate of 17 banks. The new selfarranged credit line has a tenor of five years with two 1-year extension options and can be used for general corporate purposes. The new Revolving Credit Facility replaced an existing €2 billion facility.

On 27 October, Heineken N.V. issued USD90 million of notes in the private placement market with a tenor of 6 years against a fixed interest rate of 2.75%. The proceeds have been used for general corporate purposes.

As at 31 December 2011, the committed financing headroom including cash balances available at Group level was approximately €1.3 billion.

Reconciliation of reported and (beia) financial measures

(in € million, except per share data)	Full Year ended 31 December, 2011
		EIA
	Reported	Amortisation of brands, customer relationships	Exceptional Items	(beia)
Results from operating activities	2,215	170	71	2,456
Attributable share of net profit from associates
and joint ventures	240	1	0	241
EBIT	2,455	171	71	2,697
Net Profit	1,430	123	31	1,584
Diluted EPS1	2.44	0.21	0.05	2.70

(in € million, except per share data)	Full Year ended 31 December, 2010 (restated)
---------------------------------------	----------------------------------------------

		EIA
	Reported	Amortisation of brand, customer relationship	Exceptional Items	(beia)
Results from operating activities	2,298	142	-10	2,430
Attributable share of net profit from associates
and joint ventures	193	0	0	193
EBIT	2,491	142	-10	2,623
Net Profit	1,447	103	-94	1,456
Diluted EPS1	2.57	0.25	-0.24	2.58

¹ Per share amounts may not add due to rounding

Average number of shares

The weighted average number of shares for 2011 includes 86,028,019 shares issued on 30 April 2010 in relation to the acquisition of the beer operations of FEMSA. At the time of acquisition, HEINEKEN entered an undertaking to deliver a further 29,172,504 shares to FEMSA. All of these shares were repurchased and delivered by October 2011.

In the calculation of basic EPS, the effect of undelivered ASDI shares during the year are added, and the shares held for the employee incentive programmes are deducted from the weighted average number of ordinary shares outstanding. The weighted average number of shares outstanding in 2011 was 585,100,381. In the calculation of diluted EPS, shares outstanding in relation to the employee incentive programme are not deducted from the weighted average shares outstanding. The weighted average diluted number of shares outstanding in 2011 was 586,277,702.

APPENDICES

• 1. Consolidated income statement
• 1. Consolidated statement of comprehensive income
• 1. Consolidated statement of financial position
• 1. Consolidated statement of cash flows
• 1. Consolidated statement of changes in equity
• 1. Earnings per share
• 1. Operating segments
• 1. Acquisitions and disposals
• 1. Raw materials, consumables and services
• 1. Loans and borrowings
• 1. Notes to the appendices
• 1. Glossary

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December

In millions of EUR	2011	2010*
Revenue	17,123	16,133
Other income	64	239
Raw materials, consumables and services	(10,966)	(10,291)
Personnel expenses	(2,838)	(2,665)
Amortisation, depreciation and impairments	(1,168)	(1,118)
Total expenses	(14,972)	(14,074)
Results from operating activities	2,215	2,298
Interest income	70	100
Interest expenses	(494)	(590)
Other net finance income/(expenses)	(6)	(19)
Net finance expenses	(430)	(509)
Share of profit of associates and joint ventures
and impairments thereof (net of income tax)	240	193
Profit before income tax	2,025	1,982
Income tax expenses	(465)	(403)
Profit	1,560	1,579
Attributable to:
Equity holders of the Company (net profit)	1,430	1,447
Non-controlling interests	130	132
Profit	1,560	1,579
Weighted average number of shares – basic	585,100,381	562,234,726
Weighted average number of shares – diluted	586,277,702	563,387,135
Basic earnings per share (EUR)	2.44	2.57
Diluted earnings per share (EUR)	2.44	2.57

* Comparatives have been adjusted due to the accounting policy change in employee benefits

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December

In millions of EUR	2011	2010*
Profit	1,560	1,579
Other comprehensive income:
Foreign currency translation differences for foreign operations	(493)	390
Effective portion of change in fair value of cash flow hedges	(21)	43
Effective portion of cash flow hedges transferred to profit or loss	(11)	45
Ineffective portion of cash flow hedges	–	9
Net change in fair value available-for-sale investments	71	11
Net change in fair value available-for-sale investments transferred to profit or loss	(1)	(17)
Actuarial gains and losses	(93)	99
Share of other comprehensive income of associates/joint ventures	(5)	(29)
Other comprehensive income, net of tax	(553)	551
Total comprehensive income	1,007	2,130
Attributable to:
Equity holders of the Company	884	1,983
Non-controlling interests	123	147
Total comprehensive income	1,007	2,130

* Comparatives have been adjusted due to the accounting policy change in employee benefits

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December
In millions of EUR	2011	2010*
Assets
Property, plant & equipment	7,860	7,687
Intangible assets	10,835	10,890
Investments in associates and joint ventures	1,764	1,673
Other investments and receivables	1,129	1,103
Advances to customers	357	449
Deferred tax assets	474	542
Total non-current assets	22,419	22,344
Inventories	1,352	1,206
Other investments	14	17
Trade and other receivables	2,260	2,273
Prepayments and accrued income	170	206
Cash and cash equivalents	813	610
Assets classified as held for sale	99	6
Total current assets	4,708	4,318
Total assets	27,127	26,662

A P P E N D I X 3 ( C O N T I N U E D )

	2010*
922	922
2,701	2,701
498	814
–	666
5,653	4,829
9,774	9,932
318	288
10,092	10,220
8,199	8,078
160	178
1,174	1,097
449	475
894	991
10,876	10,819
207	132
981	862
4,624	4,265
207	241
140	123
–	–
6,159	5,623
17,035	16,442
27,127	26,662
	2011

* Comparatives have been adjusted due to the accounting policy change in employee benefits

CONSOLIDATED STATEMENT OF CASH FLOWS

In millions of EUR	2011	2010*
Operating activities
Profit	1,560	1,579
Adjustments for:
Amortisation, depreciation and impairments	1,168	1,118
Net interest expenses	424	490
Gain on sale of property, plant & equipment, intangible assets
and subsidiaries, joint ventures and associates	(64)	(239)
Investment income and share of profit and impairments of associates and joint ventures and dividend income on AFS and HFT
investments	(252)	(200)
Income tax expenses	465	403
Other non-cash items	244	163
Cash flow from operations before changes
in working capital and provisions	3,545	3,314
Change in inventories	(145)	95
Change in trade and other receivables	(21)	515
Change in trade and other payables	417	(156)
Total change in working capital	251	454
Change in provisions and employee benefits	(76)	(220)
Cash flow from operations	3,720	3,548
Interest paid	(485)	(554)
Interest received	65	15
Dividend received	137	91
Income taxes paid	(526)	(443)
Cash flow related to interest, dividend and income tax	(809)	(891)
Cash flow from operating activities	2,911	2,657
Investing activities
Proceeds from sale of property, plant & equipment and intangible assets	101	113
Purchase of property, plant & equipment	(800)	(648)
Purchase of intangible assets	(56)	(56)
Loans issued to customers and other investments	(127)	(145)
Repayment on loans to customers	64	72
Cash flow (used in)/from operational investing activities	(818)	(664)
Free operating cash flow	2,093	1,993

For the year ended 31 December

In millions of EUR	2011	2010*
Acquisition of subsidiaries, net of cash acquired	(806)	17
Acquisition/Additions of associates, joint ventures and other investments	(166)	(77)
Disposal of subsidiaries, net of cash disposed of	(9)	270
Disposal of associates, joint ventures and other investments	44	47
Cash flow (used in)/from acquisitions and disposals	(937)	257
Cash flow (used in)/from investing activities	(1,755)	(407)
Financing activities
Proceeds from loans and borrowings	1,782	1,920
Repayment of loans and borrowings	(1,587)	(3,127)
Dividends paid	(580)	(483)
Purchase own shares	(687)	(381)
Acquisition of non-controlling interests	(11)	(92)
Disposal of interests without a change in control	43	–
Other	6	(9)
Cash flow (used in)/from financing activities	(1,034)	(2,172)
Net Cash Flow	122	78
Cash and cash equivalents as at 1 January	478	364
Effect of movements in exchange rates	6	36
Cash and cash equivalents as at 31 December	606	478

* Comparatives have been adjusted due to the accounting policy change in employee benefits

A P P E N D I X 5

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

In millions of EUR	Share capital	Share Premium	Translation reserve	Hedging reserve	Fair value reserve	Other legal reserves	Reserve for own shares	ASDI	Retained earnings	Equity attributable to equity holders of the Company	Non controlling interests	Total equity*
Balance as at 1 January 2010	784	–	(451)	(124)	100	676	(42)	–	4,408	5,351	296	5,647
Policy changes	–	–	–	–	–	–	–	–	(397)	(397)	–	(397)
Restated balance as at 1 January 2010	784	–	(451)	(124)	100	676	(42)	–	4,011	4,954	296	5,250
Other comprehensive income	–	–	358	97	(10)	75	–	–	16	536	15	551
Profit	–	–	–	–	–	241	–	–	1,206	1,447	132	1,579
Total comprehensive income	–	–	358	97	(10)	316	–	–	1,222	1,983	147	2,130
Transfer to retained earnings	–	–	–	–	–	(93)	–	–	93	–	–	–
Dividends to shareholders	–	–	–	–	–	–	–	–	(351)	(351)	(138)	(489)
Share issued	138	2,701	–	–	–	–	–	1,026	–	3,865	–	3,865
Purchase/reissuance own/non-controlling shares	–	–	–	–	–	–	(381)	–	–	(381)	–	(381)
Allotted Share Delivery Instrument	–	–	–	–	–	–	362	(360)	(2)	–	–	–
Own shares delivered	–	–	–	–	–	–	6	–	(6)	–	–	–
Share-based payments	–	–	–	–	–	–	–	–	15	15	–	15
Share purchase mandate	–	–	–	–	–	–	–	–	(96)	(96)	–	(96)
Acquisition of non-controlling interests without a change in control	–	–	–	–	–	–	–	–	(57)	(57)	(35)	(92)
Acquisition of non-controlling interests with a change in control	–	–	–	–	–	–	–	–	–	–	20	20
Changes in consolidation	–	–	–	–	–	–	–	–	–	–	(2)	(2)
Balance as at 31 December 2010	922	2,701	(93)	(27)	90	899	(55)	666	4,829	9,932		288 10,220

A P P E N D I X 5 ( C O N T I N U E D )

In millions of EUR	Share capital	Share Premium	Translation reserve	Hedging reserve	Fair value reserve	Other legal reserves	Reserve for own shares	ASDI	Retained earnings	Equity attributable to equity holders of the Company	Non controlling interests	Total equity
Balance as at 1 January 2011	922	2,701	(93)	(27)	90	899	(55)	666	4,829	9,932	288	10,220
Other comprehensive income	–	–	(482)	(42)	69	–	–	–	(91)	(546)	(7)	(553)
Profit	–	–	–	–	–	253	–	–	1,177	1,430	130	1,560
Total comprehensive income	–	–	(482)	(42)	69	253	–	–	1,086	884	123	1,007
Transfer to retained earnings	–	–	–	–	–	(126)	–	–	126	–	–	–
Dividends to shareholders	–	–	–	–	–	–	–	–	(474)	(474)	(97)	(571)
Purchase/reissuance own/non-controlling shares	–	–	–	–	–	–	(687)	–	–	(687)	(1)	(688)
Allotted Share Delivery Instrument	–	–	–	–	–	–	694	(666)	(28)	–	–	–
Own shares delivered	–	–	–	–	–	–	5	–	(5)	–	–	–
Share-based payments	–	–	–	–	–	–	–	–	11	11	–	11
Share purchase mandate	–	–	–	–	–	–	–	–	96	96	–	96
Acquisition of non-controlling interests without a change in control	–	–	–	–	–	–	–	–	(21)	(21)	(1)	(22)
Disposal of interests without a change in control	–	–	–	–	–	–	–	–	33	33	6	39
Balance as at 31 December 2011	922	2,701	(575)	(69)	159	1,026	(43)	–	5,653	9,774		318 10,092

* Comparatives have been adjusted due to the accounting policy change in employee benefits

EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share as at 31 December 2011 is based on the profit attributable to ordinary shareholders of the Company (net profit) of EUR1,430 million (2010: EUR1,447 million) and a weighted average number of ordinary shares – basic outstanding during the year ended 31 December 2011 of 585,100,381 (2010: 562,234,726). Basic earnings per share for the year amounts to EUR2.44 (2010: EUR2.57).

Weighted average number of shares – basic

	2011	2010
Number of shares basic 1 January	576,002,613	489,974,594
Effect of LTV own shares held	(1,177,321)	(1,152,409)
Effect of undelivered ASDI shares	10,275,089	14,726,761
Effect of new shares issued	–	58,685,780
Weighted number of basic shares for the year	585,100,381	562,234,726

ASDI

Allotted Share Delivery Instrument (ASDI) represents HEINEKEN's obligation to deliver shares to FEMSA, either through issuance and/or purchasing of its own shares in the open market, which was concluded in 2011. EPS is impacted by ASDI as in the formula, calculating EPS, the net profit is divided by the weighted average number of ordinary shares. In this weighted average number of ordinary shares, the weighted average of outstanding ASDI is included. This means that the ASDI leads to a lower basic EPS until all shares have been repurchased. In 2011the repurchasing programme was completed and all shares have been delivered.

Diluted earnings per share

The calculation of diluted earnings per share as at 31 December 2011 was based on the profit attributable to ordinary shareholders of the Company (net profit) of EUR1,430 million (2010: EUR1,447 million) and a weighted average number of ordinary shares – basic outstanding after adjustment for the effects of all dilutive potential ordinary shares of 586,277,702 (2010: 563,387,135). Diluted earnings per share for the year amounted to EUR2.44 (2010: EUR2.57).

	2011	2010
Weighted number of basic shares for the year	585,100,381	562,234,726
Effect of LTV own shares held	1,177,321	1,152,409
Weighted average diluted shares for the year	586,277,702	563,387,135

Weighted average number of shares – diluted

Dividends

The following dividends were declared and paid by Heineken:

In millions of EUR	2011	2010
Final dividend previous year EUR0.50, respectively EUR0.40 per qualifying ordinary share	299	195
Interim dividend current year EUR0.30, respectively EUR0.26 per qualifying ordinary share	175	156
Total dividend declared and paid	474	351

Heineken's policy is for an annual dividend payout of 30–35 per cent of Net profit BEIA. The interim dividend is fixed at 40 per cent of the total dividend of the previous year.

After the balance sheet date the Executive Board proposed the following dividends. The dividends, taking into account the interim dividends declared and paid, have not been provided for.

In millions of EUR	2011	2010
per qualifying ordinary share EUR0.83 (2010: EUR0.76)	477	438

A P P E N D I X 7

OPERATING SEGMENTS

Information about reportable segments

In millions of EUR		Western Europe		Central and Eastern Europe		The Americas	Africa and the Head Office & Other/ Middle East Asia Pacific		Eliminations	Consolidated
	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*
Revenue
Third party revenue1	7,158	7,284	3,209	3,130	4,002	3,284	2,223	1,982	216	206	315	247	17,123	16,133
Interregional revenue	594	610	20	13	27	12	–	6	–	–	(641)	(641)	–	–
Total revenue	7,752	7,894	3,229	3,143	4,029	3,296	2,223	1,988	216	206	(326)	(394)	17,123	16,133
Other income	48	71	7	8	1	–	3	–	5	158	–	2	64	239
Results from operating activities	820	786	318	345	493	429	533	531	64	203	(13)	4	2,215	2,298
Net finance expenses													(430)	(509)
Share of profit of associates and joint ventures and impairments thereof	3	3	17	21	77	75	35	28	112	79	(4)	(13)	240	193
Income tax expenses													(465)	(403)
Profit													1,560	1,579

A P P E N D I X 7 ( C O N T I N U E D )

In millions of EUR		Western Europe		Central and Eastern Europe		The Americas		Africa and the Middle East		Asia Pacific	Head Office & Other/	Eliminations		Consolidated
	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*
Attributable to:
Equity holders of the Company (net profit)													1,430	1,447
Non-controlling interest													130	132
													1,560	1,579
EBIT reconciliation
EBIT	823	789	335	366	570	504	568	559	176	282	(17)	(9)	2,455	2,491
Eia²	139	136	11	12	85	96	2	1	–	(158)	5	45	242	132
EBIT (beia)	962	925	346	378	655	600	570	560	176	124	(12)	36	2,697	2,623
Beer volumes2
Consolidated beer volume	45,380	45,394	45,377	42,237	50,497	37,843	22,029	19,070	1,309	1,328	–	–	164,592	145,872
Joint Ventures' volume	–	–	7,303	7,229	9,663	9,195	5,706	5,399	24,410	22,181	–	–	47,082	44,004
Licences	300	284	–	–	65	173	1,093	1,204	769	806	–	–	2,227	2,467
Group volume	45,680	45,678	52,680	49,466	60,225	47,211	28,828	25,673	26,488	24,315	–			– 213,901 192,343

A P P E N D I X 7 ( C O N T I N U E D )

In millions of EUR		Western Europe		Central and Eastern Europe		The Americas		Africa and the Middle East		Asia Pacific	Head Office & Other/	Eliminations		Consolidated
	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*
Current segment assets	1,843	2,104	985	961	1,045	1,011	854	639	91	74	(124)	(536)	4,694	4,253
Other Non-current segment assets	8,186	8,019	3,365	3,622	5,619	5,965	1,867	1,272	2	12	1,143	1,242	20,182	20,132
Investment in associates and joint ventures	23	28	165	134	711	758	272	262	536	507	57	(16)	1,764	1,673
Total segment assets	10,052	10,151	4,515	4,717	7,375	7,734	2,993	2,173	629	593	1,076	690	26,640	26,058
Unallocated assets													487	604
Total assets													27,127	26,662

A P P E N D I X 7 ( C O N T I N U E D )

In millions of EUR		Western Europe		Central and Eastern Europe		The Americas		Africa and the Middle East		Asia Pacific	Head Office & Other/	Eliminations		Consolidated
	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*	2011	2010*
Segment liabilities	3,723	3,444	1,160	1,145	1,068	987	653	532	36	33	508	625	7,148	6,766
Unallocated liabilities													9,887	9,676
Total equity													10,092	10,220
Total equity and liabilities													27,127	26,662
Purchase of P, P & E	215	205	170	158	199	117	202	163	–	1	14	4	800	648
Acquisition of goodwill	–	4	1	–	4	1,495	282	1	–	–	–	248	287	1,748
Purchases of intangible assets	11	5	9	4	20	24	–	9	–	–	16	14	56	56
Depreciation of P, P & E	343	381	234	253	183	131	140	100	–	1	36	27	936	893
Impairment and reversal of impairment of P, P & E	–	1	2	9	(5)	–	3	2	–	–	–	2	–	14
Amortisation intangible assets	100	90	18	22	93	69	6	4	–	–	12	7	229	192
Impairment intangible assets	–	15	3	1	–	–	–	–	–	–	–	–	3	16

¹Includes other revenue of EUR463 million in 2011 and EUR439 million in 2010.

²For definitions see 'Glossary'. Note that these are both non-GAAP measures and therefore un-audited.

* Comparatives have been adjusted due to the transfer of Empaque causing the move of an amount of EUR54 million of EBIT from the Americas region to Head Office; the centralisation of the Regional Head Offices resulting in a shift of EUR43 million EBIT from regions to Head Office; the policy change in Employee Benefits, causing an increase of EUR15 million in EBIT (EUR11 million in region Western Europe and EUR4 million in the Americas region)

A P P E N D I X 8

ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND NON-CONTROLLING INTERESTS

Acquisition of the beer operations of Sona Group

On 12 January 2011, HEINEKEN announced that it had acquired from Lewiston Investments SA ('Seller') two holding companies which together own the Sona brewery group. The two holding companies had controlling interests in Sona Systems Associates Business Management Limited ('Sona Systems'), which held certain assets of Sona Breweries Plc ('Sona') and International Beer and Beverages (Nigeria) Limited ('IBBI'), Champion Breweries Plc ('Champion'), Benue Brewery Limited ('Benue') and Life Brewery Company Limited ('Life') (together referred to as the 'acquired businesses').

Due to the integration of the newly acquired businesses with our existing activities separate financial information on Sona activities is not available anymore.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

In millions of EUR*
Property, plant & equipment	162
Intangible assets	56
Other investments	1
Inventories	19
Trade and other receivables	2
Cash and cash equivalents	2
Assets acquired	242

In millions of EUR*
Employee benefits	6
Provisions	2
Deferred tax liabilities	44
Bank overdraft	–
Loans and borrowings (current)	76
Tax liabilities (current)	12
Trade and other current liabilities	21
Liabilities assumed	161
Total net identifiable assets	81

In millions of EUR*

Net identifiable assets acquired	(81)
Non-controlling interests	(1)
Recognition indemnification receivable	(12)
Consideration transferred	289

* Amounts were converted into euros at the rate of EUR/NGN192.6782. Additionally, certain amounts provided in US dollar were converted into euros based on the following exchange rate EUR/USD 1.2903.

The purchase price accounting for the acquired businesses is prepared on a final basis. The outcome indicates goodwill of EUR195 million. The derived goodwill includes synergies mainly related to the available production capacity.

Goodwill has been allocated to Nigeria in the Africa and Middle East region and is held in NGN. The rationale for the allocation is that the acquisition provides access to the Nigerian market: access to additional capacity, consolidate market share within a fast-growing market and improved profitability through synergy. The entire amount of goodwill is not expected to be tax deductible.

Between HEINEKEN and the Seller certain indemnifications were agreed on, that primarily relate to tax and legal matters existing at the date of acquisition. Our assessment of these contingencies indicates an indemnification receivable of EUR12 million that is considered an included element of the business combination. The purchase price for the acquired businesses was based on an estimate of the net debt and working capital position of the acquired businesses as at 11 January 2011 (the date of the completion of the acquisition).

HEINEKEN and the Seller have determined the exact net debt and working capital position of the acquired businesses as at 11 January 2011 by reference to agreed accounting principles and there will be no adjustment to the final purchase price. Non-controlling interests are recognised based on their proportional interest in the net identifiable assets acquired of Champion, Benue and Life for a total of EUR1 million.

In the year, acquisition-related costs of EUR1 million have been recognised in the income statement.

Acquisition of two breweries in Ethiopia

On 11 August 2011, HEINEKEN announced that it had acquired from the government of the Federal Democratic Republic of Ethiopia ('Seller') two breweries named Bedele and Harar (together referred to as the 'acquired business').

The acquired businesses contributed revenue of EUR13 million and results from operating activities of EUR1.5 million (EBIT) for the five-month period from 4 August 2011 to 31 December 2011. For the financial statements of HEINEKEN the additional 8 months would not have been material.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

In millions of EUR*
Property, plant & equipment	27
Intangible assets	8
Inventories	8
Trade and other receivables	3
Cash and cash equivalents	1
Assets acquired	47
In millions of EUR*
Deferred tax liabilities	8
Trade and other current liabilities	12
Liabilities assumed	20
Total net identifiable assets	27
In millions of EUR*
Consideration transferred	115
Net identifiable assets acquired	(27)
Goodwill on acquisition	88

* Amounts were converted into euros at the rate of EUR/ETB 24,492 and EUR/USD 1.426 for the statement of financial position.

The purchase price accounting for the acquired business is prepared on a provisional basis. The outcome indicates goodwill of EUR88 million. The derived goodwill includes synergies mainly related to market access and the

available production capacity.

Goodwill has been allocated to Ethiopia in the Africa and Middle East region and is held in ETB. The rationale for the allocation is that the acquisition provides access to the Ethiopian market: access to additional capacity, consolidate market share within a fast-growing market and improved profitability through synergy. The entire amount of goodwill is not expected to be tax deductible.

Acquisition-related costs of EUR2.5 million have been recognised in the income statement for the period ended 31 December 2011.

Acquisition of pubs in the UK

On 2 December 2011, HEINEKEN announced that it had acquired from The Royal Bank of Scotland ('RBS') ('Seller') the Galaxy Pub Estate ('Galaxy') in the UK (referred to as the 'acquired business'). The following summarises the major classes of consideration transferred, and the recognised amounts of assets and assumed liabilities at the acquisition date. Management agreements that were in place were settled upon acquisition.

In millions of EUR*
Property, plant & equipment	441
Cash and cash equivalents	–
Assets acquired	441
In millions of EUR*
Liabilities assumed	–
Total net identifiable assets	441
In millions of EUR*
Consideration transferred	480
Settlement of pre-existing relationship	(39)
Net identifiable assets acquired	(441)
Goodwill on acquisition	–

* Amounts were converted into euros at the rate of EUR/GBP 0.859 for the statement of financial position.

The purchase price accounting for the acquired business is prepared on a provisional basis. The outcome indicates no goodwill as the fair value of the assets acquired approximates the consideration transferred. The rationale for the acquisition is to further drive volume growth in Europe and to strengthen the leading position in the UK beer and cider market. The early amortisation and termination of associated contracts under the acquisition gave rise to a one-off, pre-tax expense of EUR36 million.

Acquisition related cost of EUR3 million have been recognised in the income statement for the period ended 31 December 2011.

Provisional accounting FEMSA acquisition in 2010

The FEMSA acquisition accounting has been concluded during the first half year of 2011. A final adjustment was made to provisional accounting for the FEMSA acquisition. Total impact resulted in an increase of goodwill of EUR4 million, the comparatives have not been restated. The adjustment resulted from the filing of a tax return in March 2011, which was EUR6 million lower, a negative impact of EUR12 million due to a legal provision and recognition of certain employee benefits for EUR10 million. In 2010 FEMSA results were included from 1 May 2010 onwards (8 months) and have been fully consolidated in 2011 (12 months).

Disposals

Disposal of interest without losing control

On 12 May 2010 HEINEKEN acquired an additional interest in Commonwealth Brewery Limited (CBL) and Burns House Limited (BHL) situated in the Bahamas, increasing its ownership to 100 per cent in both entities. This acquisition was subject to government approval that 25 per cent of the combined entities would be disposed of. During the period which ended 31 December 2011, HEINEKEN disposed of 25 per cent of its 100 per cent interest in CBL (which had acquired 100 per cent of BHL prior to this), for an amount of EUR43 million through an initial public offering (IPO) in the Bahamas. As a result, its ownership decreased to 75 per cent. After the disposal of this non-controlling interest, HEINEKEN maintains a controlling interest in CBL. There is no impact on net result, the impact is recognised in equity.

RAW MATERIALS, CONSUMABLES AND SERVICES

In millions of EUR	2011	2010
Raw materials	1,576	1,474
Non-returnable packaging	2,075	1,863
Goods for resale	1,498	1,655
Inventory movements	(8)	(8)
Marketing and selling expenses	2,186	2,072
Transport expenses	1,056	979
Energy and water	525	442
Repair and maintenance	417	375
Other expenses	1,641	1,439
	10,966	10,291

Other expenses include rentals of EUR241 million (2010: EUR224 million), consultant expenses of EUR166 million (2010: EUR126 million), telecom and office automation of EUR159 million (2010: EUR156 million), travel expenses of EUR137 million (2010: EUR120 million) and other fixed expenses of EUR938 million (2010: EUR813 million).

LOANS AND BORROWINGS

Non-current liabilities

In millions of EUR	2011	2010
Secured bank loans	37	48
Unsecured bank loans	3,607	3,260
Unsecured bond issues	2,493	2,482
Finance lease liabilities	33	47
Other non-current interest-bearing liabilities	1,825	1,895
Non-current interest-bearing liabilities	7,995	7,732
Non-current derivatives	177	291
Non-current non-interest-bearing liabilities	27	55
	8,199	8,078

Current interest-bearing liabilities

In millions of EUR	2011	2010
Current portion of secured bank loans	13	11
Current portion of unsecured bank loans	329	346
Current portion of finance lease liabilities	6	48
Current portion of other non-current interest-bearing liabilities	184	32
Total current portion of non-current interest-bearing liabilities	532	437
Deposits from third parties (mainly employee loans)	449	425
	981	862
Bank overdrafts	207	132
	1,188	994

Net interest-bearing debt position

In millions of EUR	2011	2010
Non-current interest-bearing liabilities	7,995	7,732
Current portion of non-current interest-bearing liabilities	532	437
Deposits from third parties (mainly employee loans)	449	425
	8,976	8,594
Bank overdrafts	207	132
	9,183	8,726
Cash, cash equivalents and current other investments	(828)	(627)
Net interest-bearing debt position	8,355	8,099

Revolving Credit Facility

On 5 May 2011, Heineken N.V. announced the successful closing of a new Revolving Credit Facility for an amount of EUR2 billion with a syndicate of 17 banks. The new self-arranged credit line has a tenor of five years with two 1-year extension options and can be used for general corporate purposes. The new Revolving Credit Facility replaces the existing EUR2 billion facility. As at 31 December 2011, the committed available financing headroom was approximately EUR1.3 billion, including cash available at Group level.

On 27 October 2011, HEINEKEN issued USD90 million of notes with a 6-year maturity, further improving the currency and maturity profile of its long-term debt.

EMTN Programme

In September 2008, HEINEKEN established a Euro Medium Term Note ("EMTN") Programme which was subsequently updated in September 2009 and September 2010. The programme allows HEINEKEN from time to time to issue Notes. Currently approximately EUR1.9 billion of Notes is outstanding under the programme. The programme can be used for issuance up to one year after its latest update. The EMTN Programme and all Heineken N.V. bonds are listed on the Luxembourg Stock Exchange. HEINEKEN still has a capacity of EUR3.1 billion under this programme. HEINEKEN is in the process of updating the programme.

Incurrence covenant

HEINEKEN has an incurrence covenant in some of its financing facilities. This incurrence covenant is calculated by dividing Net Debt (calculated in accordance with the consolidation method of the 2007 Annual Accounts) by EBITDA (beia) (also calculated in accordance with the consolidation method of the 2007 Annual Accounts and including the pro-forma full-year EBITDA of any acquisitions made in 2011). As at 31 December 2011 this ratio was 2.1 (2010: 2.1). If the ratio would be beyond a level of 3.5, the incurrence covenant would prevent us from conducting further significant debt financed acquisitions.

A P P E N D I X 1 1

NOTES TO THE APPENDICES

Reporting entity

Heineken N.V. (the 'Company') is a company domiciled in the Netherlands. The address of the Company's registered office is Tweede Weteringplantsoen 21, Amsterdam. The consolidated financial statements of the Company as at and for the year ended 31 December 2011 comprise the Company, its subsidiaries (together referred to as 'HEINEKEN' or the 'Group' and individually as 'HEINEKEN' entities) and HEINEKEN's interest in jointly controlled entities and associates.

Accounting Policies

Except for the accounting policies mentioned below, the accounting policies applied by HEINEKEN in these appendices are the same as the policies applied by HEINEKEN in the consolidated financial statements for 2010. Applied are International Financial Reporting Standards (IFRS) adopted by the EU (i.e. only IFRS's that are adopted for use in the EU at the date of publication).

These appendices do not contain all the information required for a complete full-year set of financial statements.

Accounting for employee benefits

On 1 January 2011, HEINEKEN changed its accounting policy with respect to the recognition of actuarial gains and losses arising from defined benefit plans. After the policy change, HEINEKEN recognises all actuarial gains and losses arising immediately in other comprehensive income (OCI). In prior years, HEINEKEN applied the corridor method. To the extent that any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion was recognised in profit or loss over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss was not recognised. As such, this change means that deferral of actuarial gains and losses within the corridor are no longer applied.

HEINEKEN believes this accounting policy change provides more relevant information as all amounts will be recognised on balance, which is consistent with industry practice and in accordance with the amended reporting standard of Employee Benefits as issued by the International Accounting Standards Board on 16 June 2011.

The change in accounting policy was recognised retrospectively in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors', and comparatives have been restated. This results in a EUR15 million and EUR11 million positive impact on 'Results from operating activities' and 'Net profit' for the year ended 31 December 2010, respectively. The adjustment results in a EUR296 million decline in 'Total Equity' for the full year 2010 on Group level. No statement of financial position as at 1 January 2010 has been included. The information included below provides insight in all balance sheet items affected by this change in policy.

The following table summarises the transitional adjustments on implementation of the new accounting policy for the full year 2010:

In millions of EUR	Employee		Retained
	benefit	Deferred Tax	Earnings/Profit or
	obligation	Asset	Loss
Balance as reported on 1 January 2010	634	561	4,408
Effect of policy change on 1 January 2010 retained earnings	548	151	(397)
Restated balance at 1 January 2010	1,182	712	4,011
Balance as reported on 31 December 2010	687	429	5,125
Effect of policy change during 2010 on retained earnings	410	113	(307)
P&L impact for the period 2010	-	-	11
Restated balance at 31 December 2010	1,097	542	4,829

Issued and outstanding shares

On 30 April 2010, HEINEKEN issued 86,028,019 ordinary shares with a nominal value of EUR1.60, as a result of which the issued share capital consists of 576,002,613 shares.

Exceptional items and amortisation of brands and customer relationships

In 2011, a total of EUR 242 million is recognised in EBIT level as exceptional items and amortisation of brands and customer relations.

	Redundancies and contract settlements	EUR 81million
	EU Fine reduction	(EUR 21 million )
	Gain on sales of brands	(EUR 24 million )
	Early amortisation and termination of contracts	EUR 36 million
	Amortisation of brands and customer relations	EUR170 million

A P P E N D I X 1 1 ( C O N T I N U E D )

Contingencies

Netherlands

HEINEKEN is involved in an antitrust case initiated by the European Commission for particular violations of the European Union competition law.

By decision of 18 April 2007 the European Commission concluded that HEINEKEN and other brewers operating in the Netherlands, restricted competition in the Dutch market during the period 1996 – 1999. This decision follows an investigation by the European Commission that commenced in March 2000. Heineken fully cooperated with the authorities in this investigation. As a result of its decision, the European Commission imposed a fine on HEINEKEN of EUR219 million in April 2007.

On 4 July 2007 HEINEKEN filed an appeal with the European Court of First Instance against the decision of the European Commission as HEINEKEN disagrees with the findings of the European Commission. Pending appeal, HEINEKEN was obliged to pay the fine to the European Commission.

This fine was paid in 2007 and was treated as an expense in the 2007 Annual Report.

In its judgment of 16 June 2011 the European Court of First Instance largely upheld the decision of the European Commission. However, the original fine was reduced by EUR21 million. On 26 August 2011 HEINEKEN appealed with the European Court of Justice against the judgment of the European Court of First Instance. A final decision is expected in 2013.

Brazil

As part of the acquisition of the beer operations of FEMSA, HEINEKEN also inherited existing legal proceedings with labour unions, tax authorities and other parties of its, now wholly-owned, subsidiary Cervejarias Kaiser (Heineken Brazil). The proceedings have arisen in the ordinary course of business and are common to the current economic and legal environment of Brazil. The proceedings have partly been provided for, see note 30. The contingent amount being claimed against Heineken Brazil resulting from such proceedings as at 31 December 2011 is EUR848 million. Such contingencies were classified by legal counsel as less than probable but more than remote of being settled against Heineken Brazil. However, HEINEKEN believes that the ultimate resolution of such legal proceedings will not have a material adverse effect on its consolidated financial position or result of operations. HEINEKEN does not expect any significant liability to arise from these contingencies. A significant part of the aforementioned contingencies (EUR364 million) are tax related and qualify for indemnification by FEMSA.

As is customary in Brazil, Heineken Brazil has been requested by the tax authorities to collateralise tax contingencies currently in litigation amounting to EUR280 million by either pledging fixed assets or entering into available lines of credit which cover such contingencies.

Guarantees

In millions of EUR	Total 2011	Less than 1 year	1-5 years	More than 5 years	Total 2010
Guarantees to banks for loans (to third parties)	339	208	91	40	384
Other guarantees	372	128	7	237	271
Guarantees	711	336	98	277	655

Guarantees to banks for loans relate to loans to customers, which are given by external parties in the ordinary course of business of HEINEKEN. HEINEKEN provides guarantees to the banks to cover the risk related to these loans.

Subsequent events

Acquisition of business in Haiti

On 14 December 2011, HEINEKEN announced its intention to increase its shareholding in Brasserie Nationale d'Haiti S.A. (Brana), the country's leading brewer from 22.5 per cent to 95 per cent. The transaction closed on 17 January 2012 and has been funded from existing resources.

GLOSSARY

ASDI

Allotted share delivery instrument (ASDI) representing HEINEKEN's obligation to deliver Heineken NV shares, either through issuance and/or purchasing of its own shares.

Beia

Before exceptional items and amortisation of brands and customer relations.

Cash conversion ratio

Free operating cash flow/Net profit (beia) before deduction of non-controlling interests.

Depletions

Sales by distributors to the retail trade.

Dividend payout

Proposed dividend as percentage of net profit (beia).

Earnings per share

Basic

Net profit divided by the weighted average number of shares – basic – during the year.

Diluted

Net profit divided by the weighted average number of shares – diluted – during the year

EBIT

Earnings before interest and taxes and net finance expenses. EBIT includes HEINEKEN's share in net profit of associates and joint ventures.

EBITDA

Earnings before interest and taxes and net finance expenses before depreciation and amortisation.

Effective tax rate

Taxable profit adjusted for share of profit of associates and joint ventures, dividend income and impairments of other investments.

Eia

Exceptional items and amortisation of brands and customer relations

Fixed costs

Fixed costs include personnel costs, depreciation and amortisation, repair and maintenance costs and other fixed costs. Exceptional items are excluded from these costs.

Fixed costs ratio

Fixed costs as a percentage of revenue.

Free operating cash flow

This represents the total of cash flow from operating activities, and cash flow from operational investing activities.

Gearing

Net debt / total equity.

Innovation rate

The Innovation Rate is calculated as revenues generated from innovations launched / introduced in the past 12 quarters divided by revenue

Net debt

Non-current and current interest-bearing loans and borrowings and bank overdrafts less investments held for trading and cash.

Net debt/EBITDA (beia) ratio

The ratio is based on a twelve month rolling calculation for EBITDA (beia).

Net profit

Profit after deduction of non-controlling interests (profit attributable to equity holders of the Company).

Organic growth

Growth excluding the effect of foreign currency translational effects, consolidation changes, exceptional items, amortisation of brands and customer relations.

Organic volume growth

Increase in volume, excluding the effect of the first time consolidation of acquisitions.

A P P E N D I X 1 2 ( C O N T I N U E D )

Operating profit

Results from operating activities

Profit

Total profit of the Group before deduction of non-controlling interests.

®

All brand names mentioned in this report, including those brand names not marked by an ®, represent registered trademarks and are legally protected.

Region

A region is defined as HEINEKEN's managerial classification of countries into geographical units.

Revenue

Net realised sales proceeds in euros.

Top-line growth

Growth in net revenue.

Volume

Amstel® volume The group beer volume of the Amstel brand.

Consolidated beer volume

100 per cent of beer volume produced and sold by fully consolidated companies (excluding the beer volume brewed and sold by joint venture companies).

Group beer volume

100 per cent of beer volume produced and sold by fully consolidated companies and joint venture companies as well as the volume of HEINEKEN's brands produced and sold under license by third parties.

Heineken® volume

The Group beer volume of the Heineken® brand.

Heineken® volume in premium segment

The Group beer volume of the Heineken® brand in the premium segment (Heineken® volume in the Netherlands is excluded).

Total Consolidated volume

Volume produced and sold by fully consolidated companies (including beer, cider, soft drinks and other beverages), volume of third party products and volume of HEINEKEN's brands produced and sold under license by third parties.

Weighted average number of shares

Basic

Weighted average number of issued shares including the weighted average of outstanding ASDI, adjusted for the weighted average of own shares purchased in the year.

Diluted

Weighted average number of issued shares including weighted average of outstanding ASDI.