The Best Beer Company in a Better World - Anheuser-Busch InBev

Financial Report Annual Report 2008 | 79
The increase in interest income is explained by higher cash and cash equivalent positions in AmBev Brazil and in the parent companies.
The increase in gains on hedging instruments not part of a hedge accounting relationship by 63m euro as compared to 2007 is mainly explained
by the positive market gains on the freestanding cross currency swaps in Korea and Russia.
The 2008 interest income stems from the following financial assets :
Million euro 2008 2007
Cash and cash equivalents 48 25
Investment securities held for trading 16 15
Loans to customers 9 10
Other loans and receivables 11 4
No interest income was recognized on impaired financial assets.
84 54
Foreign exchange gains and losses are presented net of the effect of foreign exchange derivative instruments designated for hedge accounting.
As required by IFRS 7 Financial Instruments : Disclosures the split between results from foreign currency hedged items and results on the related
hedging instruments can be summarized per type of hedging relationship as follows :
Million euro 2008 2007
Fair value hedges – hedged items (250) 219
Fair value hedges – hedging instruments 250 (219)
Cash flow hedges – hedged items 11 (3)
Cash flow hedges – hedging instruments (reclassified from equity) (11) 3
Hedged items not part of a hedge accounting relationship – economic hedges (4) 28
Hedging instruments not part of a hedge accounting relationship – economic hedges 3 (28)
Other 1 -
- -
Foreign exchange results from fair value hedges mainly relate to the private placements and AmBev bond 2011 and 2013 hedges. The results
with regard to cash flow hedges primarily relate to the hedge of a Brazilian real loan in Canada. The increased foreign exchange result on
the cash flow hedges is explained by the devaluation of the Brazilian real during 2008.
Recognized directly in equity
Million euro 2008 2007
Hedging reserve
Recognized in equity during the period on cash flow hedges (1 564) (51)
Removed from equity and included in profit or loss (15) (2)
Removed from equity and included in the initial cost of inventories 17 70
Translation reserve
(1 562) 17
Recognized in equity during the period on net investment hedges (1 191) 17
Foreign currency translation differences for foreign operations (228) (77)
(1 419) (60)
The hedging reserve recognized in equity on cash flow hedges is mainly related to the fair value revaluation of the US dollar interest rate swaps
entered into in 2008 to cover for the interest rate risk on the senior facility, see also note 30 Risks arising from financial instruments.
The movement of the foreign exchange translation adjustment of (1 419)m euro is the effect of the weakening of mainly the closing rates of
the Mexican peso, the Brazilian real, the Pound sterling, the Russian ruble, the South Korean won, the Ukrainian hryvnia and the Canadian
dollar, offset by a positive currency translation effect as a result of the weakening of the US dollar since 18 November 2008, as the major part
of our net debt is US dollar denominated.