Heineken N.V. (AMS:HEIA)

AGM 2018

← View all transcripts

Apr 19, 2018

Ladies and gentlemen, good afternoon. It's now half past 1, so I would like to declare the Annual General Meeting of Heineken N. V. Open. And I would like to welcome you all to the beautiful Delamar Theater. I would also like to extend a warm welcome to the shareholders of Heineken Holding, who are here as observers. Now let me start with a number of housekeeping announcements. Let me kindly request you all to switch off your mobile phones. We do have simultaneous translation from Dutch to English and the other way around. You can hear it using the headphones provided by tuning to Channel 2. And questions asked in English, ladies and gentlemen, will be answered in Dutch and translated simultaneously and the other way around. Also those questions that will then be answered by our board members will be translated into the other language as well. Anyone hard of hearing may also use the headphones and tune into Channel 1, please. As stated on the website, the meeting will be audio cast, so I therefore would like to welcome the listeners. The meeting of Heineken Holding N. V. Will start at 4 p. M. Or later if this meeting overruns. Normally, I say that after this, there's a performance and everybody will have to hurry up, but nobody really pays any heed to that. So I will now move on to the formalities of the meeting. I note that the meeting was convened on Tuesday, 6 March, 2018, by the placing of a notice on the Heineken website. All formalities have been complied with according to the articles of association. Valid decisions can be taken with respect to all of the topics on the agenda. I am going to inform you of the number of shareholders present or represented and the number of votes as soon as the count has been finalized. As is our custom, we have a notary from the office lawyers and Louvre with us. This is notary Mepelink. The resolutions adopted today and the results of the voting are going to be published on the company's website in a couple of days. You will also be able to request them from the office. They will be available within 3 months and then published on the website. In connection with the discussion of the 2017 financial statements by the Executive Board, the meeting is also being attended by the company's auditors, Mr. Dalhuyzen and Vandenberg of Deloitte Accountants BV. Furthermore, there are representatives of the press present at this meeting. I would also like to welcome all of you. A number of remarks with respect to the order of this meeting. I'd like to request anyone who wishes to speak during the meeting to use one of the microphones in the room. Then please state your name as soon as I've given you the floor. Any speaker who is a representative of a shareholder, I would like to ask him or her to state which shareholder he or she represents. I reserve the right to limit the speaking time of each speaker if the progress of the meeting so requires. And I would like to encourage you all not to make extensive comments, but to pose questions. The questions will be directed to me and I will then determine who will answer them. Finally, I'd like to inform you that this year we are once again going to use voting boxes. Shareholders of Heineken NV have blank voting cards without a dot and can of course vote in this meeting. The shareholders of Heineken Holding N. V. Who are attending as observers have a voting card with a yellow dot. This card can only be used in the following meeting of Heineken Holding MV. And of course, shareholders with 2 yellow dots are shareholders of both Heineken NV and Heineken Holding and they can vote in both meetings. Those were the introductory remarks, ladies and gentlemen. I'd like to continue with item 1A on the agenda. Before discussing the Executive Board's report, I'd like to hand over to Mr. Jean Francois von Broxmere, the CEO. Thank you, Cheer, and good afternoon, ladies and gentlemen. I would like to talk you through the report of the 2017 results, which were good. All four regions contributed to autonomous volume growth and sales and profit growth. Our distributed presence in the world allowed us to indeed increase growth in all regions and autonomous operating profit by 9.3% and operating margin expansion as well. The Heineken brand increased by 4.5%, the strongest result in the last years. The focus on costs led to an operating profit organic growth by of 9.3% plus. For 2018, we expect such a margin improve of about 25 basis points, excluding possible unforeseen macroeconomic and political developments and excluding the impact of the acquisitions in Brazil and the U. K, which we have done in 2017. We remain dedicated to creating long term value, and we will continue to strive to achieve a superior sales and revenue growth while we are working on an improvement of our operating margin. Here, you see our operating profit increasing to €3,800,000,000 in 2017. The consolidation impact allow for €80,000,000 amounting to a plus of 2.2% due to specifically the acquisition of Kirin in Brazil. Currency had a negative impact 188 €1,000,000 minus of 5.3%. The Nigerian value currency had the strongest impact, some from the Egyptian fund, the Vietnamese dong €20,000,000 and the Mexican peso about €10,000,000 as well. And closer to home, the British pound with €90,000,000 Excluding these consolidation impacts and currencies, the operational profit increased by a very strong 9.3%. I would like to make a couple of remarks on costs. Costs of packaging and raw materials increased autonomously by 4.7%. This increase is including the significant cost cuttings that our purchasing has made possible. We were able to compensate the inflation costs. Impact of unfavorable currency could only be compensated partially. Marketing and advertising costs increased autonomously by 0.9 percent with a strong growth in the second half of the year, which led to a ratio of 13.2 of the revenue over the full year. As a whole, the basic costs increased more than the revenue. So our attention for costs and our attention for efficiency measures in core markets are increased as well. The autonomous growth of 9.3% of the operational profit is there, even though we had a negative influence from the currencies and we believe that is a strong result. Let me show you the regional overview now. You can see that the balanced growth is due to the regional spread, increased volume growth except for Europe everywhere, Africa, Middle East and Eastern Europe though. In the first column, we're moving from left to right, ladies and gentlemen, through the regions. The consolidated beer volume increased autonomously by 4.8% and the revenue per hectoliter by 9%. We saw a strong double digit growth in Russia and also in Ethiopia and South Africa. Contribution also from the Ivory Coast where we in 2017 opened a new brewery. This compensated the lower volume in Nigeria where the low consumer confidence remains a challenge. A slight improvement was apparent in the second half of the year. Operational profit on autonomous basis increased by 33.8% with a negative impact of the currencies in that region. Let's continue with the Americas. Let's stick to this slide until we've finished all regions from left to right. We're now discussing the Americas in the 3rd column from left. The autonomous consolidated beer volume increased by 3.3% due to the growth in Mexico. This compensated the decrease in Panama and the United States. Revenue per hectoliter increased by 1.7%. The Mexican beer market grew strongly. The volume increased by mid single digits even though the country had to go through an earthquake last year. The brands, Pate and Dos Mekis, increased Heineken by double digits. In Brazil, second half of the year, strong growth of volume, even though the start of the year was difficult. I'm going to discuss later the specific information on Kirin. Now this region delivered a strong autonomous growth of 11.7% as you can see. Onwards to the 4th column, Asia Pacific. Consolidated beer volume increased by 8.9%. Vietnam and Cambodia, the usual suspects, contributed double digit volume growth. The lower volume in Indonesia was compensated. The volume in China was pressurized specifically in the second half of the year. The regional revenue per hectoliter decreased by 2.5%, negative influence through the brand and other factors. The region still contributed operating profit of 9.5% and an autonomous growth. Let me end with Europe. Consolidated autonomous beer volume increased by 0.2%. This growth was driven by our premium portfolio and led by the Heineken brand through the growth of pills and the launch of Heineken O. O arrived at a 3.1% increase in Europe. Revenue per hectoliter, 1 point 3%, even though deflationary price pressure was relevant. You can understand that price increases in supermarkets in Europe are a no go. We have a single digit decrease by a partial delisting of a very large customer. This was compensated by our premium beer and cider and startups projects delivered a contribution as well to the operating profit of 7.7%, thanks to the revenue management, the disciplined cost management that we're working on for years in Europe, innovations that were successful and the premium brand portfolio. This closes my regional overview, ladies and gentlemen, and I'd like to now discuss Heineken specifically, a growth of 4.5%, accelerated growth in the second half of the year. The brand increased double digit in markets like Brazil, South Africa, Russia, Mexico and Romania. A healthy growth in a number of European countries in Italy, Spain and France as well, which profited from a growth in Heineken pills and of the launch of Heineken O. O. Heineken O. O in 2017 was launched in 16 markets and has shown very hopeful results. Heineken was also OOP. O was also introduced in Canada in January 2018, and we will continue to launch it in various markets throughout the course of 2018. I would now like to continue to discuss the next slide. This is about how we are growing our top revenue line. We're not looking at Heineken only now. There are a number of brands that play into this growth. 1st and foremost, our portfolio of international brands is this is the group to the left top hand side. These brands have a potential of becoming successful in various regions or are already successful. I'm talking about Tiger, Crusofficia in the Czech Republic, Bira Moretti in Italy, all of those brands grew double digit. But also the growth of Tecate, Desperados and LED Stripes were robust during the year. The growth of Amstel remained flat, which means there was no growth there, to be put it simply. But in Brazil, we did very well with respect to AMSTL and we were in Nigeria and Greece, we were successful too. Umstel is our 2nd international brand worldwide. They're after just after Heineken, we shouldn't forget that. A second area that we're investing in is cider. Worldwide, our Cider strategy played out very well. The volume outside of the U. K. Increased double digit, specifically in South Africa, Poland, Romania and Vietnam. In the U. K, we had a partial delisting. I already mentioned that. That has a negative influence on our sales volume there. A third pillar of growth is what we call low and no alcohol varieties. This is the top right hand corner group of brands. Here we see a lot of potential in these low and no alcohol innovations. The volume in 2017 for this segment was 12,500,000 hectoliters And these products address the responsible consumption and create new drinking moments for our customers. In Europe, these low and no alcohol increased by double digit growth driven by Radler and Heineken 0.0 introductions in the past year. These volume increases were compensated by a volume decrease of malt, which is a specifically brewed drink with a sweeter taste. They've been brewed in the past in Nigeria specifically pressure on volumes there in those two countries. We also have a 4th pillar, craft and variety of growth. Craft and variety beers continued to do well in 2017 double digit growth, specifically from international craft such as Lagunitas and also from local craft beers and special varieties such as Morzubit and Aflagen from Belgium with line extensions of certain brands. Just think of Brunt in the Netherlands. That is how we go about this. We have seasonal varieties there, brand IPA, brand strong beer. Those are the line extensions. Those are craft beers actually, but they fall under the brand name brand in this example. So we call this area craft and variety. We invest into it in the past year. And in the current year, this will remain a pillar of growth for our company. Further growth, innovation in draft. This is the picture in the middle of the lower part of this slide. We are continuing to invest in our home draw system, the sub. This is available in 8 European markets as well as in the USA and China. The largest part of the sales of the sub are actually done online. Furthermore, in 2017, we launched a new product. It is called the Blade and you will see it on this picture to the right. This is the innovative proposition by extending draft beer to smaller points of sale where to date there was no draft beer available. Again, promising results, introduction has taken place in 11 markets already. These are kegs of 8 litters in a self standing self cleaning device, a kind of sub, but a bit larger for smaller bars and restaurant use. Let me finish with the last pillar, e commerce. E commerce to the far right below on this slide, We've indeed launched a number of initiatives in e commerce. As you will assume, we see quite some future in these initiatives, referring to business to business and business to consumer. Business to consumer, for example, Beer Wolf, which is online and sells special beers. It is a platform for consumers, not only our own specialty beers, but also others that are produced by independent Dutch brewers. And actually 90% of what we sell via this platform is not our own beer. Anyone can sell their beer from that platform. Let me stop the presentation of top line growth now and show you a video. This year, we're not going to show you one on Heineken. We're going to show that a while later. Unfortunately, the Netherlands is not taking part in the World Championships in this summer in Russia. But there are other brands and other countries that will compete. We have Mexico and Tecate. This is the Tecate commercial that we made for the World Championships in Moscow. And I'd like to show it to you now. Okay. I hope you recognize Mr. Gorbachev, who showed up especially for that video. That is a kickoff to move on to Brazil after Mexico and to update you about Brazil, because as you know, our acquisition in Brazil of the Kirin Brewery previously operated by Japan and we completed that last year in May. This transaction transformed our ongoing operations in Brazil and increased our geographic distribution and it gives us economies of scale and gives us a platform for future portfolio enhancement. We're very positive at what we've seen and the integration has progressed well. The growth of the Eisenbaum brand that we also acquired has increased by over 1,000,000 hectoliters since we acquired the brewery, and we expect that our share in the premium segment of the Brazilian market now exceeds 30%. There were 2 routes to market for our distribution systems. 1 is through the Coca Cola bottling business. That's our own Heineken Brazil bottling business, which distributes Kaiser, Bavaria, Heineken and Amstel. And the other distribution system involves the prior kit in Brazil system and that distributes Cario, Eisenbaum, La Vasa, Vaseo and a few other brands. As we announced previously, we intend to work this route to market via this Coca Cola bottling system and translocate it to the former kit in Brazil system, so that we will have a single system, a single distribution system later on. There is a confidential arbitration still pending. And until that is wrapped up, we will not be able to operate a single route to market in Brazil. So we will certainly need to go through that arbitration and we are not going to speculate on its outcome. All I can say is that the operation is performing very well indeed with the present two distribution system. But as Heineken, if we want to be effective and we're now we're now ranked 2nd on the market, if we want to compete effectively with the top player, we need our sales and distribution system to be entirely focused on the portfolio that we manage there. Now, on to the next point, how we do things at Hangingen. And we often call this generally brewing a better world. And there are 3 pillars for brewing a better world. And first, internally in our company, we say safety first. So that's our top priority, safety. For years, we've been devoting a lot of attention to safety in our company, in our industrial and logistic operations. One of the most difficult things to address is road safety because we cannot control that. Now specifically on safety, things have improved slightly from 1 year to the next, but we still have a ways to go quite a ways. In fact, we've had a lower accident rate. Fatalities are down too, but the last year we had to we had to take 14 fatalities compared with 15 the year before. That's, of course, 14 too many on the one hand. But on the other hand we are a global operation with 90,000 people and most of these are road and most of these are road fatalities. So the biggest investment in the company is in training, traffic and road safety. And that's not entirely our call. The most difficult areas remain Latin American and Africa. It's difficult to make any progress there, but we are certainly on top of that. 2nd important pillar is the environmental impact. And there are 2 main pillars there. That's energy and water. Of course, 90% of beer is water. This year again, we have achieved progress. Our beer consumption declined from 3.8 liters in 2 point 14 to considerably less than 2017. When I started in Heineken, we had to use 15 liter waters per liter of beer. So we've achieved a lot of progress within a few years. Now it's progress in decimals. I believe it was from 3.8 to 3.1 between 2014 2017. We have to struggle for all those decimal points, especially in countries where there is water scarcity. Now in water stressed areas, it's down to 3.2 liters of water per liter of beer. So you have to consider the not just the number of liters required to produce beer in a brewery, but the order to cultivate the raw materials we use to brew beer. And that's where we stand to gain the most in the future, because there are practices in the world where agriculture manifests through rainfall, but there are also areas where we need to irrigate. And we need to keep these systems or make these systems sustainable together with the people who supply our raw materials. And that's one of our concerns for the future. We are approaching the end of our commitments about order use for 2020. So in the course of 2018, we will issue a new commitment regarding how we aim to progress in our order use heading to 2,030. And that program will be called every drop, as in every drop counts. The second pillar is energy. We've achieved a lot of progress there too. You can read all the figures in the report. But basically, what we stated as an objective to 2020, 10 years ago has already been accomplished. So in February, we issued new commitments for carbon dioxide targets they're called Drop the Sea heading toward 2,030. And I believe the most important novelty in our political system is not only energy consumption, but also how energy is generated. We have worked very hard to see how to use energy and we've achieved a lot of progress there. But we also are working on how to generate energy. And our commitment here is that heading to 2,030, we will derive 70% of our energy consumption in our breweries from renewable resources. Now, in 2017, on this chart, we're already at 14%. So that's a long way to achieve 70%. Some people want me to achieve 100%. And I have listened to that with a lot of passion and commitment. But to be perfectly honest, we want to disclose targets that are feasible according to the present state of science, because you don't want to be reproached 10 years down the road, you promised this or that, and it never came about. 70% from renewable sources, considering our footprint and everywhere we operate in the world is a very solid target. That's quite a challenge. It's not only about electricity. There's a lot of talk about electricity and that's probably easiest, simplest because then you think about windmills and solar panels. We've installed a lot of windmills and solar panels. And in the years ahead, we will be installing a lot more windmills and solar panels. But we also need steam. So we need energy that is presently derived from fossil fuels. And of course, that's complicated. Quick progress is complicated there. We have one Austrian brewery that is entirely climate neutral because it's in an area with lots of forest and it has a hydro electrical source. So it's energy neutral. And there's a dam nearby so that electricity is by definition renewable. And in those forests, there's a lot of timber industry and the waste from the timber is incinerated for our operations. So that's the perfect setting for a climate neutral brewery. Another example is Vietnam, where we have the rice husks. They are also incinerated because you have 2 or 3 harvests a year. And they're incinerated to generate steam in our country. And because of that in Vietnam, we're in fact more advanced than in several other countries on the road to renewable caloric energy units. These are just a few examples to tell you specifically what we're doing to achieve these targets. And in our new policy, we will also consider how to address packaging. Of course, plastic is a major issue nowadays, But in checking our integral market approach, we will also evaluate our packaging procedures together with our suppliers. And that's the 2nd important pillar in our Drop the Sea policy. That's enough about our environmental footprint. The third point is the societal impact, as we call it. Again, we see 2 pillars. 1 pillar is global, and that's the important pillar that we manufacture a product containing alcohol. It's mainly we mainly produce products containing alcohol. And alcohol use and abuse is not necessarily good for society. We all know that. I don't need to convince you. As a company, we have to continue doing the right things In a consistently dynamic social context, we need to do our very best to promote responsible alcohol consumption as manifested in advertising and communications and as manifested in our investments in local partnerships with people that tried to prevent alcohol abuse. And unlike in England and the Netherlands, that still exists in Mexico and Russia, but all local OKOs are consistently investing not only in dialogue but also in, actions by funding NGOs trying to prevent those problems and resolve them. And we shouldn't be averse to an unequivocal message and tone, and we specifically do that about driving. Never drink when you drive. Don't drink and drive. We've had a motto for years, and you especially have to instrumentalize the Heineken brand to proclaim when you drive never drink because that's indicative of the Heineken firm. 10% of the global Heineken brand, because we're sold at to 197 countries in the world, 10% of Heineken's advertising budget has to be spent on that responsible alcohol consumption messaging, especially when you drive, you never drink. So I'd like to show you a little video on that topic. This is the premier, the global premier, and that associates with our Formula 1 sponsoring. Formula 1 is dedicated to public awareness. We want to sell Heineken beer and compete with other beer brands and expand this beer, but there's nobody who's in a better position than Okay. That's not the first commercial. It won't be the last one that we play to share this message. It was designed for Hanneken, but can also it can also be used for local brands. Could I have the previous slide on brewing a better world? Another point in the societal impact relates to local sourcing in Africa, and I'd like to get back to Africa today and zoom into this point because you may have a lot of questions about all kinds of articles that featured in Dutch dailies today and yesterday about our goings on in Africa following the publication of the book of the second book by Mr. Von Beymouth. I'm not going to scrutinize the content of the book here, but anybody can buy that book and form a personal opinion about what research about what an investigative journalist does and the conclusions he reaches. We have read the book and we do identify with various statements in that book. When a book hits the media, then it often acquires broader and broader recognition, but loses all sense of perspective. So I'd like to highlight a few of the topics stated in the press and cover them briefly with you and share our opinion and position for the record because I know that you probably have many different questions. And the biggest question is what's true about that. That's always the case. Well, there are basically 6 topics that I'd like to present to you very briefly. I'll start with what impacted me personally, what impressed me most. And I'll also talk about how we exude our business code of conduct in the firm and which culture we aim to achieve. Let me explain to you briefly how difficult it is to operate in some countries in Africa. I'm going to tell you about agricultural projects and more specifically your Dutch audience because we often work with NGOs as well as the Dutch government supporting us in this policy. So I'll talk about our medical policy, what we do in Africa and why we do that. And then perhaps I'll wrap up with the topic that caused the most fuss in recent weeks. That's what do we do with the beer promoters? I'd like to cover those 6 topics with you briefly. Let me start with what I consider to be the most sensitive topic. That's the allegation in some of the articles that I had personal ties with a beer promoter at a company in the Congo 25 years back. Of course, you'd all like to know whether it's true. Let me tell you, it's true. It is. Now this is a personal matter in my opinion. This concerns my personal life and nobody else's. It was a consensual, amorous relationship. That's all I want to say about it. Mr. Von Bremen compiled a list of questions and sent that to my press department and asked what does Mr. Von Buchsmir think of this relationship? And question 2: Doesn't Mr. Von Buchsmir believe that he crossed the line? Well, I asked the first question. I think it is a personal matter. Full stop. Now about the second question, which of course relates to that personal matter. Yes, of course, you do cross the line in an extramarital relationship. But again, that's my life. I can't make that disappear and I wouldn't. 2nd, you have a relationship with somebody who works in your own company. That's something that obviously raises questions. That was so before my time. It happened to me. And it still happens to young men and women working at Heineken somewhere in the world. A 56 year old man, as I am today, can look back and say, Was that wise? Was that prudent? But that's hindsight. That's all I can say about it and that's all I am willing to tell about it. But I'd also like to emphasize that, in my opinion, the Dutch newspapers are dealing with this in a libelous way and I object to that. That's topic 1. You don't need to applaud. No need to applaud. I just wanted to share my story. That's it. He marks off mic, inaudible to the interpreter. Do you think I have a choice? Please understand one thing. Heineken employs 90,000 people. All these people are looking at me and they're asking me what's true. I'm answering on their behalf for their sake. 2, some articles suggest that that story of young people I was 29, she was 26. She lives in the United States now. She's married. She has a different life. The idea that that story is linked to misconduct, as they call it in English, misconduct by present, past or future employees. We have a business code of conduct that relates to morality and integrity alike. We've had speak up procedures for many years and they are used especially in a large company such as Heineken that employs 90,000. Of course, there will be incidents. We don't have an official prison system or judiciary, but we do have procedures so that we can take measures. So suggesting that in our company a culture of sexual harassment, of tolerating sexual harassment is being promoted by the top is absolutely untrue. We cannot and do not tolerate that. Let me be perfectly clear about that. The same holds true if you did something wrong. If you had your fingers in the till, you'd be out on the street as well. No matter how long you work for the company or how high up you are, there are procedures. And if there are charges, they are investigated. And if there's no charge or nuisance, people are not prosecuted. But if there is evidence, then they're out. And we're big companies, so these things do happen, but don't put it in the context of a culture of tolerance. That's not the case. Now 3rd, and this was discussed extensively in the Alkmaen Dakhblot daily based on Rwanda. In Africa, we're active in many countries. Some are more difficult than others to operate in and some that are not difficult to operate in today may become difficult tomorrow. That's been happening for eons and we're not quick to leave. Our policy is, 1st of all, that we will never operate or continue operating in a country where our Dutch embassy leaves because staying in such a country is no longer possible. And or if we're talking about the French or the British or EU Embassy, in difficult political situations, we always consult the diplomatic staff. In most cases, we invest heavily in those countries. We certainly are We're also a big taxpayer because there's specific excise duties that are very high in Africa because taxes are due to the state on every bottle of beer purchased. But we cannot determine whether we think a government in a country where we operate is friendly or unfriendly or correct or incorrect. If the international community were to believe that operating in a certain country is no longer justified, I believe that we would also leave. Now, they specifically mentioned Rwanda, where there was a state of civil war and genocide arose within a relatively brief period. And that is still very fresh in my mind because I lived across the border in what was a year at the time. So I did see that happening. And during my previous visit to Rwanda at the end of March 1994, it was palpable the tensions. The tensions were omnipresent. I don't think anybody ever expected to happen what actually came about. Quite honestly, we were delighted that many of our Patriot Executives were on holiday when the shit hit the fan. Others fled across the border with Zaire and still others received protection from the French. Any suggestion that we were active participants to finance a genocide or a war is misplaced. How can I put it best? Of course, the question is perfectly justified that in hindsight we pay taxes to a government before the war that finally prepared this war that nobody saw coming, that raises questions. Don't think that we've made accepted it and made peace with it. We have to cope with it, but there's not very much we can do about it. So the experience of what happened and because I experienced perhaps not directly, but from very close. That's because when things happen now, more than ever before, we stay in touch with our embassies and our governments and the European Union to ask whether this is prudent, what should we do, what should we not do, how do you see it? I could talk about this until the cows come home. But that's the briefest description I can give you about the issues concerning operations in difficult countries and our perspective on that. As for agricultural projects, I can speak briefly about that. We invested heavily in that. Last year, we did we invested somewhat less than in 2016. Now we obtained a little bit less from local agriculture than previously to brew our beer product. That was mainly in Nigeria because it was marginally more difficult. With the target of 60%, we now stand at 42%, but it's will be quite difficult to get up to 60% from local agriculture for 2020. It takes a long time to organize one of those supply chains locally, because you can't organize an agricultural cooperative overnight. Agricultural practices change and working with different crops also takes time. It's very difficult. It's lots of tailor made solutions. These are not plantations we're talking about. Except for sugar cane, there are plantations for that, but we don't have those. There are always cooperatives of farmers growing crops in part for us, but also for use on the market, because you need crop rotation. You cannot consistently grow the same crops. And we don't want to wind up in a plantation system. We brainstormed about this with some NGOs and decided that's not the best policy going forward. So it takes time. We work with NGOs and organizations that know about this. And for years, some of them have been helping us in many different countries, as has the Dutch government that invested several million. We invested €20,000,000 in this. That's not for our beer is to develop the agricultural supply chains that supply about 50% or 60% for us and 50% or 40% for the market. That's how the cookie crumbles, whether we're talking barley in Ethiopia or rice in Congo or sorghum in Nigeria. So the idea that we are using your tax money to build our beer business is not entirely true. It's a triad. We are proud that the Netherlands has such an active, generous and intelligent development policy. Let me stand behind the Dutch Government. Of course, I can't vote in this country because I'm Belgian, but the Dutch government is wonderful. I think it's 1st rate and suggesting could we fund this ourselves? Yes, we could. It's not about the €6,000,000 It's about collaboration between NGOs and the Agricultural University of Wageningen and the Dutch government as well as the government on-site in those countries. I can guarantee you that if the Dutch government invests money, the conduct of local governments improves considerably as well. So the system works. It's good. That doesn't mean that occasionally malfunctions and that you can make mistakes with a certain format or region. If the approach doesn't work, you need to revise it. That's the philosophy on agriculture. As for Medicare, we are not Mother Teresa. Please bear in mind, however, that in many countries, the health care standard is so abysmal that we've had to step in for the lack of Medicare. We offer a very basic package. It's not the Leiden University Hospital. It's very basic, such as day clinics, doctors, nurses, lots of effort investing invested in prevention. We do every best, but this was born out of need. We're happy to do this, but of course we hope that someday those governments will be more serious about health care. We're happy that as a private company, we started offering AIDS treatment to our employees and their families. We did we were front runners there. This is thanks to Yupdellana that contributed immensely there. We're not in this alone. And we are also grateful with the pharmaceutical companies that have made these medical drugs affordable to the masses in Africa. So I just wanted to put that in perspective. And now let me wrap up on what may be the most difficult topic of all for us. And I have to admit that unfortunately, I can't guarantee that there won't be any misconduct. This is the topic of beer promoters in Africa. We have beer promoters all over the world and different versions of them. Soon you'll have beer and appetizers, finger food snacks and those are beer promoters. They're serving you a glass of Heineken with a smile based on historical craftsmanship. That's the idea of the beer promoter. That's what it boils down to. These are the young men and ladies working in the Holland Heineken House or if we have hospitality during the UEFA Champions League Football matches and the like. Those of you who have been attending our shareholders meeting for quite some time probably remember the burning questions about beer promotion girls practices, that's what we called them, in Cambodia way back when. Some people remember that and we investigated that and of course we discovered some things that were really not right and we took measures. Is it perfect? No, I wouldn't say so. Can you stop it? No. We're talking about Africa. Mr. Von Beymond's book lashes out against practices in Africa. When I read it, I said if that's what's happening, that is completely unacceptable. So we got straight to work and headed out there. I entrusted this responsibility to our Commercial Group Directors of the Head of Commercial Affairs because promotion is the purview of sales and marketing together with our Head of Corporate Affairs, Blanca Yuti, somewhere in this auditorium. She went to look at it as well as talking to regional presidents we had and we did a crash course tour of Africa and asked a a counterpart that's an independent organization there and has experience to help us. We invited them to come with us because they have a different perspective, an independent perspective and they can ask the questions that need to be asked and they can ask us to go where they think we should go. We traveled to 14 countries by the end of June. We need to know whether the 7 principles that we jotted down concerning the duties of a beer promoter subject to whether it can happen or not happen. If we cannot guarantee these principles, then in those countries where we feel this won't work, we'll pull out and we'll stop promoting beer. And it's my responsibility to bring in the industry. I was already talking with my counterparts in the industry. They said, we're glad that this is on your plate, but of course we're all in this together. I think if you ask me if you read one of those books, there are other things that need to be addressed, but this is certainly a division that needs to be addressed. Just to be perfectly clear, I think nearly all 95% of the promotion staff is outsourced from other providers. These people are not Heineken employees. That makes a thorough inspection difficult and gives us an additional responsibility. We do a lot more about this in Asia because it was a controversial topic there. In Africa, it was below our radar for a long time. And quite honestly, knowing the continent, I'm saying that in some countries, more problems will surface than in others. That's my hunch. But we need to check all those 14 countries to see whether any of the practices are intolerable. I'll identify one of them so that you don't think I'm trying to get myself off the hook easily. There's one beer promoter just to distinguish sales promotion from brand to sell more and more and more beer to the same customer, usually a man, and is taken on hand. That's a recipe for disaster. That practice, the sales incentive and wanting to sell more way beyond the threshold of responsibility, that's what we have to identify and tackle. Most of our promotion nowadays is what you see in the Heineken Holland House, what you see at company events and party services. We just make things enjoyable for our customers. So we're going to take a long hard look at that. And you have to realize in Africa as well as in parts of Asia and Latin America, the male female ratio in those places are under scrutiny and we'll certainly look into them. I'm going to wrap up on this topical overview. It's I don't it's not that elaborate at all. AGMs usually we discuss the figures more, but I wanted to place this in context because tomorrow we're talking to shareholders as well as the silent presence of the press. This is not a press conference. I just wanted to highlight how we see those things at Heineken. Thank you very much for listening. Thank you, Jean Francois. I would now like to hand over with respect to the results of the Q1 to Mrs. Debreu. I'm going to talk about Q1 and the consolidated beer volume which grew by 4.3%. Looking at the regions, we saw the following development. Africa, Middle East and Eastern Europe showed an increase by 6.1% with growth in Russia, Ethiopia, South Africa and Cote D'ivoire. In Egypt, we see after a decrease in 2017 an improved situation and more growth. Asia Pacific, we saw strong volume growth of 11.3% led by Vietnam Because of very favorable circumstances such as the timing of Cambodia and Malaysia, we saw a volume growth too, though the volume decreased in Indonesia. In the USA, an increase of 6.8% driven by Mexico and Brazil that was for the Americas. Our results were boosted by a favorable comparison to the previous year and the timing of Easter. Heineken USA though decreased in the decreasing overall American beer market. Finally, Europe. The advantage of the early timing of Easter was compensated by the bad weather in the whole region. This led a volume decrease of 1.7%. I think this should receive a big hand. Thank you. Okay. Very well done. Thank you very much. Ladies and gentlemen, I can tell you now how the representation is. According to the attendance list, we have 80 shareholders present, 57 are represented. On the Internet, we have 1183 shareholders who are represented, a total of 13.20 with a total of 502,784,994. And the votes are 88.3 percent of the issued capital. We have 39 shareholders of Heineken Holding NV, and they are observers in this meeting, ladies and gentlemen. So now we will discuss the report on the year 2017. You will find this on pages 1 to 40, a sustainability review on pages 100 and 3 up until 154. I would also like to refer to the remuneration policy, which is on pages 5856. They will be discussed in Agenda Item 1B. And we are also going to discuss pages after 57 during the discussion of the financial statements in agenda item 1C. Is there anyone who wishes to speak on the report of the 2017 financial year? Again, please state your name first. My name is Yonah. I speak here on behalf of the Association For Shareholders. We would like to thank Mrs. De Bruu for her perfect Dutch rendition. And we would also like to express our respect for the CEO, Mr. And his reaction to the book. It's actually only a book is what I would like to say, but you do have to remain alert. Thank you, Mr. Von Voxmeer for that. Back to the segments, I have a question on those. What we see is that the premium beer Heineken in China does not score as high as would be expected. We have great increases everywhere even though there is increased urbanization in China, increased middle and higher classes, You would expect them to take up Heineken beer enthusiastically. What is going on there? We would like to hear more about any issues. Then the beer marked in the United States. Again, a remarkable decrease. I would like to know whether competition is pressurized in the same way. Is the taste changing? Are they turning to craft beers? Or what else can be the reason behind this development? Shareholders. The shareholders were actually a bit scared when we heard that you departed from your expectations of 40 basic points and decreased that to 25. The share price decreased at the same time. The reason that was given was that certain acquisitions, Kirin, 1st and foremost, would not be able to deliver as much as you had hoped. My question then is, is Kirin such an enormous factor? Does it really lead to a decrease from 40 bps to 25 bps? How long will it take before Kirin and its burden has been compensated for? You, of course, need to invest and need to see to the situation, but we would like to hear about that. Actually, you're trading in margin to put more focus on the top line, on the profit. We will also see that later on in remuneration. Is that a desirable move to put sales above profit. And that is what does not make us as shareholders very happy. I am not going to talk about the pubs because otherwise I'll be cut off short. Now tax advantages. You explicitly indicated that tax advantages in the U. S. A. Would be reinvested in the U. S. A. Specifically. What's the reason for that? Are just pleasing President Trump or are you obliged to do so? Was that a requirement? A couple of minor questions. The Mexicans, you say desperado, but that's only 75%. And that's why that is just a bit of a smokescreen as the Mexican government puts it. Are they right? And how are you going to resolve that? Furthermore, Greece. Greece, it has been stated clearly that you have a debt an obligation there, €31,000,000 penalty, a larger claim €100,000,000 from the side of your competitor who was kept outside of that market for years. Now what is the state of affairs there? Can you say anything about it or nothing yet? Thank you. Please, I hand over to Jean Francois. Well, I'll take your questions in sequence. I'll also share out a couple of your questions to my colleagues. Heineken China indeed were under pressure. Growth was quite promising for quite a while. We now experienced strong competition. ABI in the Fujian province, a province where we have a high market share, the attack was quite substantial. Our weakness in China, I have to admit, is our 3 breweries were a niche player. We have great margins, but they are fully reinvested into developing our brand. We don't have economies of scale to distribute. China is a huge market. We also do not operate nationally in China, but only in a restricted number of larger cities. The rest of our produce is sold to other sellers and we're not supporting them in any way. So we're quite small. We do sell almost 3,000,000 hectoliters, but that is quite moderate for China. And we were under pressure from Budweiser. That's quite clear last year. The USA, 21% decrease. This has been ongoing. We are trying to do our best to compensate for that. This is an experience that is repeated from what we saw in Western Europe. Demographics play in, a change in generations from the baby boomers to further generations that prefer other drinks, another change from lighter beers to craft beers that are quite bitter, quite heavy, have much more alcohol. People drink much less in the absolute amount of hectoliters, craft beer, 13% to 14% of the total market in the U. S. A. Now, a couple of years ago, only 4% to 6%. You cannot compare, but light 4.5% alcohol, no bitterness, which you drink for your refreshment with a degustation beer such as our Lagunitas that you can drink only one of compared to 3 Budweisers. So you can see in the stats that the market goes down in value though. The market in the USA did not go down. It did though in volume. Now that's the important difference we need to make about the American market. It is the market. Mr. Vayas just said, it's not only us under pressure, others too. The huge winners are the craft brewers and the lager beers, the lighter Pilsner beers. That's the Constellation Group with Corona and Model. Those are the large winners and the craft beer brewers. And with Lagunitas, we're a winner too. When we bought our 1st share, Lagunitas was number 6 in the craft brewers. Now they have risen to rank 3. So in a competitive sense, we're doing well with Lagunitas in the States. Your question about margin compared to top line. This is an interesting question and a justified one. 4 years ago, with Mr. Van Hoof Garafland, we issued a guidance of 40 basis points per year. At the time, the context was that we thought that the difference between the margin that was published, ours and SAP, was too large. We almost had the same footprint and that is why we publicly committed to the 40 bps and we did deliver. SAB in the meantime has been bought by ABI. The margins of ABR are much higher than Heineken's margin. We cannot compare ourselves to that because the market structure we operate in and they operate in is completely different. Still, we indicate margin improvement as a goal, though a bit lower than in the past. But we also deliver more growth than in the past because as a company, we operate in a triangle with volume growth and return on sales and return on invested capital. For each and every euro we put in, we want to know what is the return. Those three dimensions are what we keep our focus on. And this triangle is what we try to improve bit by bit. Sometimes it is smarter to have your sales grow stronger than your margin because then you have a dividend per share that looks much nicer. That's what we how we see it. It's not one above the other. It's always kind of an exchange between the 3 that has to be kept in a certain balance. I would like to now continue with the next question. With respect to Brazil, Well, in principle, and we've always said that, of course, Brazil has an impact on our margins because the starting point of our operation there is at lower margins than our average margins. Of course, we strive to improve. I cannot really add or attach any kind of commitments or provisions to that. But whenever you buy a company and you show the 1st year's figures And the intention is an increase in volume and margin, which has been shown in the 1st year. So we're on the best road forward. I'd like to give Laurence the floor. I will have to answer your questions this year in English. The tax advantage in the U. S. And the reinvestment, well, I have to say that the tax advantage in the U. S. For us is, in terms of million, quite limited. As you know, our U. S. Organization is a commercial organization. The brewery is here in the Netherlands. So the share of profit, which is local, corresponds to a commercial organization. So there is some benefit also from excise tax being actually lower for a couple of years for beer makers. That's a small benefit. But we're talking about quite limited amounts. And we're very committed in getting this U. S. Market to grow for us. So this is a market where we continue to invest. And then it is, I would say, it is to please our brand. It's not to please anyone in particular. Your last question was on Greece, on the Greek claim. So we are now appealing the fine from the competition authorities and then the appeal will be heard, it's at Supreme Court level, that is for the local situation. And then the competitor of our operating company has filed civil claim before Amsterdam Court. It is ongoing. The court is looking now whether it has jurisdiction and there is not much more comment that we can make at this stage of the procedure. And the last question was about and the last And your last question referred to the tequila beer mix Desperados. That is kind of borderline case. We use certified tequila tequila. Tequila is quite clearly defined as a product. It has to respect geographical and recipe criteria. And we do use tequila in a product as an aroma, which is a very low quantity because Tresporados is only a beer with tequila flavor. Now the word tequila is quite prominently depicted on the labels and that's the debate with the Tequila Council. In Mexico, they have a professional organization for tequila. I took some time to talk to these people to look for a dialogue. And this is a commercial procedure and a legal procedure that go in parallel between the two units. And I cannot make any further statements on that at this point in time, but we are in dialogue. Are there any further questions? Good afternoon. My name is Robert Freke. I'm of We Connect U, Public Affairs and Investor Relations. I appreciate Mr. Von Brochsmeer's openness very much. And I am very happy with all the progress he's made in the past years, specifically in the area of Heineken 0.0 and sustainability. I really appreciate that. Now looking at water and lighter energy, Heineken can really be big there. Now the start of the operation every drop, it's quite simple. There is a rainmaker that makes water from air and that only costs €10 per cubic meter. So €10 per cubic meter everywhere worldwide in deserts or wherever. With respect to lighting, it only costs €2,500,000,000 to provide light for 1,000,000 people. And that is quite easy to do with the Waka Waka. You have your own solar panel and it's very easy for Heineken to roll this out broadly in all the countries that Heineken is active in. Furthermore, it would be great to have Heineken become a world leader in non alcohol beer with Heineken 0.0. This is a great opportunity. The new James Bond film is about to come out and Heineken is probably going to invest €60,000,000 again. So if Heineken wishes to promote Heineken 0.0, that would be great for society. On top of that, the whole world will be writing about Heineken 0.0 because it would be the first time for James Bond to drink Heineken 0.0 or a non alcoholic beer. By the way, Alfred Heineken was a friend of Woebeau Ochols and he developed an item that would be great as product placement in the James Bond film as well. Product placement, I am very much in favor of Formula 1. And if you wish to promote Heineken 0.0, you could indeed promote Formula 1. On top of that, there are quite a number of student associations in the Netherlands, Windikat, Minerva and the Amsterdam Students' Corp. They don't have Heineken 0.0 in their draft or bars arrangements. And things go wrong there when those young students drink too much beer. And I think Heineken 0.0 would be beneficial there as well. The same is true for sports clubs. On top of that, Heineken is a furniture of various cafes, bars and terraces. There are quite a number of environmental associations that are against the heaters used on those terraces. They wish them to be replaced by chair heating arrangements, which issue much less CO2. Possibly, you can start with the Hotel de Le Robe, which is an important place for Heineken. Thank you for your wonderful suggestions. I believe we can leave them at that. Otherwise, you'll require IP rights. I think Mr. Von Brochsmer will react to a number of your suggestions, Mr. Von Fragen. Mr. Fragan, we're going to follow-up on each and every one of your suggestion. I think your cubic meter of water at €10 is a bit expensive. Vaca, Vaca, the solar panels, that's great. We did it once. I can remember that that was a year or 2 ago. Then there's another project, euros 2,500,000,000 were invested there, maybe not for 1,000,000,000 people to give them electricity. The Inghodam and the not so Democratic Republic of Congo, which is one of the most extraordinary sites on hydroelectricity production. Maybe you should have a look at that. James Bond, O. O instead of 7 that's a great idea. I am going to suggest that. Now with heating, terrace heating, we've been in discussion for quite a while. It never succeeded. Maybe we can talk about that during the break. A good suggestion, I'm going to ask whether that is the case or not. Those student clubs, Vindicate, Minerva, etcetera, Heineken, Old Point, all we're going to follow-up on that. Thank you. I see a lady standing at the microphone. Good afternoon. My name is Helen Horsa. I work with MN, who is an asset management company for a number of pension funds. With respect to agenda item 1, I am also speaking on behalf of Triodos and Menses. I would like to thank you very much for your explanation of the annual accounts and your strategy. We would like to compliment you on your annual report where we see sustainability criteria closely linked to results, risks and strategy. We're quite happy to hear that Heineken finished 2017 soundly and solidly, not only with respect to finances, but also the emission goals that have been achieved already are remarkable here. I have three questions on 3 different topics. First of all, the Heineken brand. In your annual report, you state that the power of the Heineken brand is more important than ever. And just now Mr. Von Bochsmer exclaimed that there was a vulnerability involved here as well. How do you position and defend the brand Heineken in today's surrounding of fragmented media and consumers? The media are very low threshold accessible for everyone. They offer opportunities for Heineken example, Beer Wolf, the platform and the Heineken beer to good app. But it also offers risks of YouTube films and other disadvantageous publicity? How do you manage those risks? Because a lot of these media are outside of the control of Heineken. They can result in reputation damage, a damage that may impact your sales. I have another question about drop the sea. We appreciate your ambitious goals for 2,030 to have 70% in renewable or sustainable energy. Mr. Van Boxtmeer mentioned that the costs with respect to packaging have increased in the past year. And what you now are trying is not only to restrict your commitment in production logistics and cooling, but also in packaging. From the viewpoint of the environment and costs, packaging recycling is very interesting. On top of that, there is increased regulation that may lead to increased cost. Are you anticipating those costs, those cost increases? And what do you see as your largest challenge in that respect? My last question, the promotion of responsible drinking. As per the end of 2017, this category in Heineken allows for 5.6 percent of Heineken's total worldwide volume. We would like to see some more progress in this respect. Will you, because of the importance, report regularly on the targets and the results achieved? Can you give us more information on your interests and ambitions with respect to a quicker launch of Heineken Oilpoint Oil? Thank you. Thank you, Mrs. Courson. I think your questions are very relevant. And I'd like to start with the last one if you allow me and then go move forward to the most important one, number 1, because that's where I don't have a very clear answer just now. Now responsible drinking, 5.6%, 12.5 hectoliter volume, low, no alcohol, malt based, etcetera, beverages. You place that into the context of responsible drinking. I wouldn't want to do that because there are places and there are moments in time when you don't want to drink alcohol. If you drive, why not drink a Radler 0.0 or a Heineken 0.0. For us, the no and low are great commercial opportunities. We haven't introduced them to back up our agenda of promoting responsibility because it's actually not yet possible to produce very good wine at very low alcohol percentages or whiskey at low alcohol percentages that have the same taste and feel. We have to be very careful. There are situations where people of their own choice or just because of the circumstances don't wish to drink alcohol. I enjoyed a beer during lunch. I'm much happier now to drink an 0.0. I just do not enjoy water during lunch and I never drink buttermilk like the Dutch do. It's a habit I would I was never happy with. Now if everyone drinks a Heineken O. O during lunch, then our business would boom. So there are circumstances and indeed it is true that we indeed introduce products in the market that can personify responsible drinking, can be ambassadors for it. But I think it is most important that people understand what responsible drinking is. It is drinking with moderately. We would rather have people drinking moderately than drinking over the board. If we cannot show you any growth, then you are going to wonder, Heineken, what are you doing? We will have to find some balance here. And we still believe that in the low and no alcohol products that there's quite a lot of potential for sales there. Why? Because in indeed produces products that are delicious, that can indeed go well with sports or with student parties. It's a pillar for growth, not only for responsible drinking. It is indeed a pillar for growth mainly for the business. Drop the sea. Packaging is the most difficult area because that's where you're not alone, because our business works as follows. If because of environment, and it depends indeed on how you calculate this, a return bottle, is that better than a non return bottle that is recycled? And I've seen calculations that prove one or the other side. Now that's not going to help us. The good news is you can recycle glass practically 100 percent aluminum as well. Those are 2 packaging materials that have a great future. Plastic, on the other hand, is a drama. And we all know that. And that is where we have to take measures. Now this is, of course, a material that we don't use that much, but we do use it for our lot of effort and see to it that recycling systems for plastic aren't efficient yet in those countries. So we will have to very consciously look into this and look to it specifically market by market. Now aluminum. If I buy aluminum from Norsk Hydro, then we know that the majority is produced with hydroelectricity at North Hydro in a very sustainable way. If you have a good recycling system as in North America, then you're doing things well. But you can't have another supplier that does all of that with mineral oil and fossil fuels. So we'll have to look into that. And that is our agenda. We also have to look into our supply chain and see to achieve improvements there. Because on the one hand, we wish to grow, sell more produce, win more markets, but that includes more packaging, more transport. We need to find a balance there. I don't have a direct solution for all of these issues. But what is relevant is the following. Markets are very conscious of the fact that all these aspects have a role. We are very de centrally organized. We have various policies. Drop the Sea is part of a year plan and a 3 years plan. It's not corporate affairs coming forward with a couple of nice initiatives. It's the production, the general manager who have to sit at the table, think of drop the seat through, make it economical for the company and for the planet. And that's what we're working on now. We now fortunately have a generation of younger people in management that think this is the most normal thing in the world. Now this is a change of mindset that we all have to go through. It's heading in the right direction. And I don't know what I I don't know some parts of the answer today. I have to give you that. And now to my last point. The brand is omnipresent globally. We're very proud of that. And we call it the green Heineken blood mix. So proud sometimes we lose sight of the actual company, but we're also vulnerable as a consequence. You cannot be on top of everything. What we can verify is the production quality and integrity. That's scrutinized. There are very few cases of vacaynikin. They're all in the Orient and we invest enough money. We're on top of that in a moment if that happens. I'm not really worried about that. It depends on what people can do. We have what I call our CIA. We have an Internet surveillance system for that to know what's going on. And that way we can operate if something happens immediately or on top we stay on top of it. You can't prevent it. You can't control everything or monitor everything. But that's the world as we live in it and there will be some incidents. We've had a few of them. They're difficult to manage but we're learning on our feet. Prevention requires listening carefully. Is this ours or is it somebody else's? And some people come up with nice ideas with the best of intentions. And sometimes we say, Oh, we never could have thought of that. And we even welcome certain initiatives. There's a lot more dialogue. People have the sense that they're more entitled to your brand than you are. And there are pros and cons to that, but that's the world we live in. Okay, sir. Thank you. I'm Mr. Tavernet, and I'm here on behalf of the Association of Investor for Sustainable Development Green Investors to sum up include both private and institutional investors in the Netherlands. Sometimes statements make you feel all warm and fuzzy. There was one by Mr. Von Buchbier about making supply chain sustainable because that's what matters to us with respect to integrating sustainability in corporate industry. I'm also happy that this Annual Report is integrated again, so not a separate annex concerning sustainability. The core highlights in your annual report include the due diligence that you just discussed at length. Thank you. And also thank you for relating the global goals for sustainable development. We're delighted with those. Since the global development goals in regions such as Africa, Latin America and Asia are so important. I am glad that you build on those in your annual report. I had prepared my first question a bit differently. If you see that in this respect, in the beverage, food and retail sector, Heineken figures so prominently it may even be pioneering in the industry. Are there targets that you could achieve by teaming up in the industry and that would take you a few steps further. In other industries that happens, It would be fit you if Heineken took the lead in taking integrated reporting further and connecting with the global goals, etcetera. That's one. 2nd, you wrote quite a bit about the environmental goals. We agree with the ones for water and carbon reduction and sustainable sourcing. Some things concern us a bit more and I'll ask questions about those. Regarding water in vulnerable areas, you don't seem to have truly formulated goals, whereas in those same areas reducing water consumption, the amount of water necessary to manufacture a hectoliter beer is necessary to accommodate those vulnerable areas. Next, I have a question about sustainable sourcing. You indicated that you want a farm sustainability Assessment from bronze level. We all know what bronze, silver and gold mean. Why aren't you going for silver or gold? And could you tell me when you might want to take it to the next level? The salaries of Hennigan staff or those 90,000 employees. I'm talking about further down the supply chain in Africa and elsewhere. We understand that there's a supplier code of conduct that will be revised this year. And the question is whether you would like to define the living wage concept in that revision and explain how you would try to supervise your own suppliers in that respect. Now let me see. I had one more tiny question about that major topic you just covered, the promotion teams. We understood and once again about your ultimate question, we understand that your teamwork with the Bill and Linda Gates Foundation, or as it's called, the Global Fund on Fight Against AIDS, Tuberculosis and Malaria, Had that group canceled its alliance with Heineken because of the affair? And if so, what would need to happen to resume that alliance because it's an extremely important, reputation enhancing alliance. Thank you very much for your questions. I will try to cover them, not in sequence. Your first question was about the sector approach. Where we have a sector approach, where we've had one while we've had one for a long time between brewers and other alcohol manufacturers such as winemakers and spirits that concerns codes of conduct. There are some countries that embed that in legislation. Others don't. There's some other countries where we have watchdogs or other types of communication. However, we've agreed on some industrial rules that we recalibrate every 5 to 6 years. And we do that as a single industry. We don't compete. We're in that together. This mainly concerns responsible consumption. The industry works together very closely on that. And I've learned you need to work together rather than say Heineken wants to be in the lead. It's we're all in this together and we have to work together. And we're doing that fairly well. As for water in vulnerable areas, we are generally at 3.5. We're aiming to achieve 3.3 in the vulnerable areas. Is that good enough? No. We're working on 2 things. 1 is collecting and reusing wastewater. That's one important source to resolve the water issue in water stressed areas. 2nd, we want to see whether we can collect water. We're talking about rainwater and whether we can get that back into the water below the ground level. That involves a venture with India and it's basically charting new horizons. Some people don't really think it's working. The opinions vary. But in water stressed areas in general, we essentially invest in reusing all the wastewater. So that can be reused as process water, not as product water, but as processing water that gets you into a cycle where you could even get below the 3.3 order use level. And the technology is fairly new too. And you keep learning as you progress. It's not all ready made and bottled. The Global Fund has said that they suspended they did not terminate the Alliance. There is a distinction. I understand why they're suspending it. And quite honestly, I accept it. I understand their perspective. But we still have an ongoing dialogue. And what they're interested in is our experience organizing on the ground good AIDS treatment in an African context. How do you organize that? How do you organize that logistically in very remote areas? That's what mainly interested the Global Fund. In addition, they're interested in social issues because we had very, very long conversations about that. And that gets you somewhere by listening to the other side. The AIDS epidemic in the countries where we've been operating, we've seen it declining in the past 15 or 20 years. We did start some prevention areas. I was a young man in Rwanda when the first prevention campaign was launched. Well, those fell on deaf ears. Nobody was interested. It took 20 or 30 years for thinking about prevention to be accepted. And it's we basically achieved good results. And you can see in the figures that the prevalence of AIDS in some of those countries, the situation in South Africa is alarming. And that's what the globe where the Global Fund wanted to team up with us so that we would enter those bars and try to understand better. And we're certainly interested in working with them to see how that comes about and what the dynamics are and how we can contribute to improve the situation. Well, nowadays, even if it would cost us revenue, we would still do it. It wouldn't be easy, but we would do it. The global fund is on hold. The dialogue has been tabled. I understand their position. I think they're waiting to see how we will proceed with the entire issue concerning what we call the beer promoters. And I'm happy to commit to examining that, not only examining but also taking action. If you've done something specific and you can demonstrate that, I think that we will achieve progress with the Global Fund. At least that's what I hope. As for the fair wage, I'll hand that one over to Laurence. First, a word on integrated reporting. Thank you very much for your remark. We call it combined reporting because we know that we're not there yet. It's not fully integrated. Year after year, it's a journey. We make progress. This year, you will see more of sustainability KPIs and reporting in between the executive board management. You'll see a more explicit link with the SDGs. It's a lot of work, as you know, not only for us in Amsterdam between the sustainability team, the finance team, the people who work on the reports, but that starts with the operating companies who need to be ready with the data and have the same reliability on data that they have on financial data with, of course, far less history and sometimes far less easy definitions to actually do that. So we are progressing and that is our ultimate goal. We are quite modest there. We know we are not there yet. Living wages, just to say that when we say living wages, fair wages, those are two terms that we kind of employ with the same understanding on our side. So yes, in 20 17, we said we would revise our supplier code. We have done so, and we will start rolling it out in 2018. What I want to say also is that in 2017, we worked with Shift on human rights and asking them based on actually audits in a number of countries to help us understand what were the main risks given our activity and given where we operate. And definitely, fair wages, living wages is something that comes up in a number of countries where we operate. So we have decided to include that. And by this, we mean that, of course, all our employees should be paid sufficiently for a decent standard of living. But we know that our responsibility, not alone, but as an important actor in some countries and as an actor in the global supply chain, our responsibility is also to look at what our suppliers are doing with their own employees and at least to do our best to make sure that we make it absolutely clear what we expect from them and that we have some kind of audit measure and we can make decisions when we find that they are not acting according to the standards that we want to see. Thank you very much. Thank you, Will. Thank you, ladies and gentlemen. This is a good debate with many good questions, but we are running very late. I see a lady over there with some questions. I'd like to know whether anybody has any whether anybody else wants to ask questions about this agenda item. I see another lady over there. I see a gentleman over there. The people who would like the floor, please approach the microphone and please state your question concisely. And we will try to give concise answers. And I also wanted to make a couple of comments. The first Identify yourself. Oh, sorry. Yes. I'm Lucy Cottrill, and I'm here in my capacity as a very small shareholder, very long standing. The first is talking about Heineken 0. I've been running a little experiment at home because most of my friends are very argumentative. And I've been serving them Heineken 0, not telling them it was 0. And I've noticed that they go home about 15 minutes earlier and with significantly less arguments. Now, I just wanted to point that out because it's quite extraordinary. The second thing is I wanted to make a couple of comments on the what you said about Africa, not really addressing what you talked about as the problems. This is not to say that those are not all very significant things to address, but I thought what maybe have been slightly lost here is that Heineken has been in Africa a very long time and has been looking at some of the difficult issues like water. I mean, I remember Freddie Heineken was talking about water 20, 30 years ago, and almost nobody else was. And so both the thing about local sourcing water, but also sort of passion for Africa has been there in the company for all this time. And if you look at DRC now, a lot's going on in DRC that is not very savory or encouraging for the rest of us. And I accept your point that sometimes you're told you have to move out as in the case of Burma 20 years ago. But I think it's a good thing where you possibly can, and you'll sometimes get these things wrong, to stay in these countries because it doesn't help the countries. I mean, looking back Roanda, you probably wouldn't stay, but it doesn't always help leaving you at the first sign of trouble. And so I think that although you may get the odd judgment call wrong on that, I think the instinct to stay is a very good one. And I think the other thing that I've noticed, because I listen to an awful lot of quoted companies and I've been doing it since 1984, is no company I've talked to or listened to or invested in has ever been as passionate about Africa as you are. And I think that, again, the enthusiasm Africa is very important. The questions, do you know how to solve the U. S, I. E, the meter reinvigorate it? And the second question, Tony McGee, obviously, Lagunitas is great. You now own all of it. He's got some other interest now. I see that he's taking a great interest in seeds. Is he still very much part of the future of laganitas? And is he still having fun? Or does he feel he's given his baby away? And those are my questions. Thank you. Thank you, Lucie, for your comments on Africa Water and the compliments on our 0 product. I took it as a compliment. U. S. Reinvigoration. U. S. Is a big, big, big market. We have the tendency to speak about the U. S. As one market. In effect, it's much more than one market. And our acquisition of Lagunitas has kind of opened the world for us also and it's just us to look at the U. S. Market as a much more regional market, and we have a larger portfolio than we had 10 years ago. I would agree with you that we have an annual growth rate, but we have a very good return on sales over there. So that is so our U. S. Business is financially in great shape. It is lacking as the whole American beer market from growth with the exception of Lagunitas, which is growing nice and could do with a little bit of more margin. Tony McGee, and therein, has left the daily the management of the company to Maria Stipp, who is the CEO of the company, and she's driving the company from Perluma in California, north of San Francisco. She does a great job. And Tony became the brand ambassador. Tony is traveling the world around because our ambition is to make Lagunitas a more international brand. And I got messages of Tony visiting far reach places like Vietnam or South Africa or Mexico or Brazil. He's going everywhere. And with his look and his experience, he sees at the potential for Lagunitas but also how you should work in a different way on that particular market. That's very, very refreshing, And we received a lot of post with Tony playing guitar in pubs and he's a great ambassador. So we're very happy to have his collaboration still. Madam, I represent the Foundation For Legal Protection For Investors, the SRB. I have 3 brief questions. First, perhaps the Heineken Board would care to explain how they have sheltered these Supervisory Board members concerning their remuneration. That's a good thing, but I haven't read a word about the Supervisory Board members in the press. 2nd, despite our confidence in the fine future that awaits Heineken, nice results often entail risks as well. My question is whether Heineken is burdened by its affluence because that often leads to inefficiencies. How do you avert those? As for the strategic alliance between Sligro and Heineken where storage and distribution for the food and beverage service has been transferred, Is that because Heineken's storage and distribution was inefficient? 3rd, what is your policy on pollution prevention? Early 2017, the environmental agency of the U. K. Following an incident involving Heineken accepted £160,000 There was there were a lot of reports about polluting the surface water. How do you plan to avert such incidents? Those were my questions. Thank you. Quite honestly, I didn't understand your first question. My first question was could you explain how the supervisory board members Because we haven't changed their remuneration in the past 7 years, I can't promise that there won't be any more reports about that. That's a perfectly good question, nice questions. Can lead to complacency. Look at the results. I'm not going to talk about my own supervision of the firm. And usually those are years of steady growth. Complacency is the number one enemy. And all of us on the Heineken executive team are well aware of this. And we try to avoid thinking that we're doing great and shouldn't change anything. I know that that can is when you get into the recession from 2,008 that can vanish overnight, but day after day something can happen and we have to keep trying to improve. As for Slicro, that's a very specific question you're asking. It concerns the Netherlands. The food and beverage service revenue by Heineken has dropped steadily in recent years. And they're communicating vessels between what is drunk through the food and beverage service and what is purchased in the supermarket. People are drinking more supermarket purchased beer. The deal with Sligro is that all packaged beer and non beer provided by Heineken is best sold by Sligro where the distribution is based. We live in a totally deflationary setting both in the Netherlands and in Europe. But a beer crate on sale at Albert Heijn now sells for less than €10 and in 1998 it was just about 20 guilders. So just imagine in 20 years no price increase. So you need to benefit from efficiency in productivity. So Slichro and Heineken are benefiting magnificently from efficiency. Heineken continues to invoice. Sligro distributes. Sligro has some sales outlets that doesn't involve Heineken. We have some sales outlets that doesn't involve Sligro. So it's a win win and Sligro is far more focused on distribution than we are. And last but not least, Slichros collective labor agreement is not identical to Heineken as Slichros is not bad, but Heineken is much better. And to be it's impossible to compete as Heineken in distribution nowadays with our collective labor agreement. That's exactly why we entered this arrangement with Sligro. As for the Balmer incident, I can't answer that question. I don't have that at the top of my mind. We'll check that and we'll send you a reply via Investor Relations. We're in a hurry to move on. Mr. Espana? Yes, Mr. Espana, Mr. Villas. Good afternoon. First, I'd like to say hats off to Mr. Von Buchsmeer as to how he put the, mendacious author in his place. That's magnificent and that the lady already speaks Dutch. Every start is difficult. I'm also impressed. Now on to page 2 of the annual report and Page 3. I have several questions about those. On Page 2, the 6th paragraph, the Chairman writes that the local brands are more relevant than ever. Be happy that your team noticed early on that the local brands are the future. My question is if you're writing that the local brands are more relevant than ever, How does this relate to the Heineken and I'm still brands that the group initially started out with? Because you do write that ultimately 218,000,000 was brewed in beer, but only 36,000,000 was Heineken and only 13,000,000 was low and no alcohol. So if my numbers are right, 169,000,000 liter of the local beers is being brewed. Is that correct? That was my first question. My second question is what I don't understand is why in 2018 of all times have you concluded that Canakin once to on 4 February 2018, you spoke a lot about purpose. And the Director of Corporate Affairs on 19 March 2018 delivered a presentation on that topic. It was always my impression and it still is that the DNA of Heineken staff is that consuming is fine, preferably Heineken, but alcohol is a snack. It shouldn't be an addiction. Why do you conclude at corporate affairs in February that the leadership has to devise a purpose? Didn't you have one for quite a while? I don't understand this. Okay, those questions are clear. Thank you. I hope they are. Yes, they're very clear. Jean Francois. And let me just make the following comment. I've now closed the speakers round after the gentleman in the white shirt because otherwise this will cost too much time. I was also informed that I thought there was a performance this evening here under the name Show Ponies. Let me get back to the question posed by the lady earlier on with respect to the affair and on the Bulmer site. I have an answer to that question. Ma'am, you're correct. That was an incident. The contractor delivered products to an area where he wasn't supposed to deliver them and we took measures and we are correcting the incident. Very relevant remark. Now I've found out what it was about. We're addressing it. Mr. Espana, the portfolio. You stated it correctly. The Heineken brand is 15% of our total sales in hectoliter. It's 30% of the profit and it is still the brand that grows strongest. We have a couple of growth pillars. I presented them. We have a couple of other areas, cider, the draft systems, the No one Low, but also all those other local brands because in 82 or 83 countries, we're present with strong local brands. Heineken is a portfolio company. It's beer and cider. And in beer, it's also no and low alcohol. And it's also craft beers and a variety of brands. What is interesting and unique with Heineken 18% excuse me 15% of the volume grows 1% to 2% stronger than the rest of the portfolio. And for the long term and we're looking at premium only, for the long term that is the promise in the Heineken share. That makes us specific. And that brand is present in virtually all countries in the world. And that is actually what makes our company different from others. So we are Heineken and Portfolio. I wanted to say on your other question about the purpose that it's very obvious for people who have been very long at Heineken the purpose like of bringing very diverse people together, working together. And then really, it's a very decentralized company, but it has a very goal to do good things. When you arrive at Anakin, I arrived 3 years ago, I didn't know what green blood was. And a lot of our colleagues, also because of generation shifting and we are in more than 70 countries, we felt together it was a very good exercise. We didn't do it to actually put it in the annual report. We did it for ourselves. A good exercise to actually together discuss. We started with the Managing Director. We talked to different generation. Then our Corporate Affairs Director, who is also new to the company, took the lead on that and say, okay, what is the culture of Heineken? What do we stand for? And not that we're perfect, of course, but what do we stand for? And we felt that we have that in common, and it was important for any newcomer at Heineken, whether a new country or a new person, to be able to share that. And once we had it, because we really feel that this represents us, we felt that it was also good to share it externally. But that was first an internal exercise. Okay. Okay. Then come for the brand. Well, thank you very much for your answers. My name is Vandama. I'm an individual and private investor. Mr. Van Broeksmeer, you indicated earlier on that it was a bad thing to support Ronda's bad regime via taxes. Aren't you doing the same at Myanmar? Answer: That is your opinion. We went back to Myanmar. I didn't say that in hindsight. It was a bad thing. I said that it became a bad thing had we done the thing everything differently. I don't think you'll ever meet a government that says, well, great to have you here and in 3 years we're going to murder a quarter of our population. Nobody announces that. Those things happen. We left Myanmar also because of pressure around the company and also for the government. It became very clear that Myanmar wasn't a good idea, so we left it. We went back to Myanmar because the government and the European Union and the American government and we actually put a lot of time and effort into that before we returned to Myanmar. All of those parties said, now is the right moment. We have to support Myanmar now. Are you still behind that decision? Yes. For the time being, I am. There are a lot of question marks. We talk to our embassies and to other companies. We're in a dialogue, for example, with Unilever with respect to the situation. And that's that. Well, thank you very much. Well, ladies and gentlemen, may I thank you all for all your questions and answers and contributions on this agenda item. I would like to note that the annual report has been noted and closed this agenda item. Continuing with agenda item 1B, implementation and explanation of the ruination policy for the year 'twenty seven and the Executive Board. You will find this in the pages 48 to 56 of the annual report. I hand over to Mr. Martin Dast, Chairman of the Remuneration Committee. Well, thank you, Chair. I would like to give you an explanation. As you were able to read, ladies and gentlemen, in our remuneration report, the remuneration policy is based on 4 principles. 1st and foremost, to support the company's strategy. Secondly, remunerate according to performance. Thirdly, remunerate in a competitive way. And fourthly, in a fair way. For the Executive Board, the first principal support of the company policy is reflected in almost 80% of the remuneration depending on achieving predefined targets, which reflect the company's policy. Financial targets for short and long term variable remuneration, look at bottom line grew, top line growth and cash generation. On top of that, for the short term variable remuneration targets, they refer to leadership quality, strategy forming, sustainability and other topics that are linked to the company goals for the respective year and can change from year to year, and these targets are also established beforehand. The second remuneration principle, remuneration according to performance, it explains in more detail all those targets that support the company policy. For each and every target, a detailed detailed values are established lower and higher ones with remuneration levels from 50% to 200% of the target level. For performances under the threshold, the remuneration is 0. Now this is a method to determine variable remuneration is part and partial of the remuneration policy since 2,000 and 5, leading to the fact that a variable remuneration in a bad year can be quite low or actually 0. And a variable remuneration in a good year can be quite high. Now that is actually the sense and purpose of the policy, which is remuneration according to performance. By the way, a very good year such as 2017 has led to a variable remuneration that is much higher than the variable remuneration belonging to the target level. For the financial targets on the short and long term of the variable remuneration, the case is as follows. In 4 cases, the performance was between target and maximum level and in 3 cases on or above the maximum level. For the targets with respect to leadership qualities in the short term area, the Supervisory Board decided that the Executive Board was between target and maximum level in a year in which market circumstances were difficult because of geopolitical and social economic developments and challenges in the area of sustainability. Our worldwide market position has been strengthened via further organic growth of volume plus 3%, sales plus 5% and operational profit plus 9.3%, covering all our 4 regions. Very good results for the Heineken brand, plus 4.5%, and an extremely successful introduction of as well as the extension of production capacity in key markets Mexico, Cambodia, Vietnam, Ethiopia and Haiti, as well as the opening of a new brewery in Cote D'ivoire and the first steps to build a new brewery in Mozambique. Furthermore, the Executive Board did a lot to acquire 1900 pubs in the United Kingdom and set the most important steps there. So we're the 3rd largest pubs business there, as well as the our acquisition of Kirin in Brazil, where we have now become the 2nd largest brewer. Both acquisitions in the meantime have been approved by the authorities and integration is underway. Furthermore, progress was made with our sustainability agenda. Now we already have fulfilled all CO2 emission goals for 2020. There are new ambitious goals for 2,030 underway for the Drop the Sea program. On top of that, as of 2014, a 16% reduction was realized in the average water consumption in water distressed areas. And an increase of the share in sustainable raw materials to 28% in 2017 was achieved and 10% of the media budget for the Heineken brand was used for campaigns for responsible alcohol consumption. All of these good steps with respect to financial and leadership targets led to short term variable remuneration of 2017 of 163% of the target remuneration level and a long term remuneration for the performance period 15% to 17% of 163% of the target remuneration level. So in this way, the principle of remuneration according to performance played out for the financial year. Now the 3rd principle, we remunerate in a competitive way. That principle includes that since 2011, the level of the base salary and the long term and short term remunerations for the Executive Board are derived from the median remuneration level of the worldwide peer group of comparable companies to Heineken. A comparison to such a peer group is justified because Heineken is also a globally active company. Of the about 90,000 employees, less than 5% actually work in the Netherlands. The rest is distributed around the world. The relevant labor market for the highest management at Heineken Worldwide is therefore not the Dutch market, but the worldwide market as it is reflected in the worldwide peer group. In the current remuneration policy, the Supervisory Board can adapt elements of the remuneration policy to the median level of the worldwide peer group. By the way, that peer group has changed in 2017 because SABMiller has dropped out. It was taken over by AB InBev and Phillips was split into 2 smaller entities, which do not fulfill the criteria anymore and they were replaced by Nestle. Last year for 2017, there was no increase in the base salary of the CEO and CFO implemented because in the meantime, the median of the worldwide peer group in the last 2 years further evolved. The supervisory board within the valid remuneration policy decided for 2018 to increase the base salary according to the median of the CEO and the CFO, about 4% for the CEO and 2% for the CFO. And then finally, the 4th remuneration principle, remunerate in a fair way, which means that all employees at Heineken, starting from at the Executive Board cascading down to all levels, are always remunerated according to the relevant levels in the labor market of the relevant countries. For the Executive Board, this is fulfilled by reflecting remuneration according to the peer group. And under the Executive Board, the remuneration is compared to the rumination policies of the relevant functions in the relevant countries. The result of this way this method is that the remuneration levels in Heineken are a reflection of those outside. This is internationally and intranationally the case. And in that respect, I would like to add an explanation to the so called pay ratio within Heineken. The reviewed Dutch corporate government code instructs listed companies with statutory seat in the Netherlands to explain this pay ratio between the payment or remuneration of the Executive Board and a relevant reference group. Now this remuneration can be measured in various ways and the reference group can be determined in several ways. The governance code does not instruct as to how to go about this. We did as follows. We chose as a reference group for all Heineken employees worldwide. So we decided to take Heineken Worldwide. We did not choose to take only employees in the Netherlands nor employees from the higher management level. On top of that, we included all remuneration aspects such as pension and compared that. The actual remuneration this year, therefore, was higher than the target. Finally, the remuneration for the Executive Board and for all employees worldwide were measured on the basis of the IFRS audit rules to prevent any kind of undue comparison of the Executive Board or the employee remunerations. This was an approach that was also followed by a number of other ax listed companies. And by the way, the information that we derive the pay ratio fund has been reflected in our annual reports for years. The reason why other companies have not our companies have not published the pay ratio is because it is a measurement that is not really useful. It is dependent on the geographic spread and on the difference in policy in remuneration. Heineken has operations in 70 countries, a lot of emerging countries with structurally lower remuneration, A comparison with a company that operates only in the Netherlands would therefore be useless. On top of that, this is all dependent on the organizational structure of a company. Heineken in emerging countries has all services in its under its own leadership. For example, drivers and other employees too. A comparison to companies that outsource engineers or other services is not meaningful either. On top of that, remuneration policy reflected year by year and performance is reflected year by year, which impinge upon the remuneration for the Executive Board in a large way. And this is also barely comparable to other companies as well. So the method we used was described. We derived from it the pay ratios, which means the CEO has 215 and the CFO has a pay ratio of 100. Heineken can, except for yearly fluctuations, only change these pay ratios by not anymore remunerating internationally and internationally in a market conform way, but to work against the market if that is at all possible, it would not be good or beneficial for the company nor to our stakeholders. And finally, the revised governance code prescribes that the remuneration committee in drafting the proposal for the remuneration of the Executive Board takes into account the position of those Executive Board members with respect to their remuneration. The Remuneration Committee has to ask the Executive Board members to take into account a number of aspects that have to be included. And we can report that the remuneration committee has followed up on all of these rules. And that was my report. Thank you. I wonder whether after this very extensive report there are any more questions in the hall. Yes, indeed. Is there just one and that's all? Well, please go ahead. Well, thank you, even though I'm the only one. What we see is that Mr. Dass remains a lawyer. And I'm very happy that he is not active as a lawyer anymore because otherwise all court proceedings would run over time as well. Now this was quite extensive, but one of the elements that is quite basic wasn't even mentioned by him, which is the relative weighing and that they have been changed because in the target, the sales element, the revenue changes from 25 to 35 in the weighing and the net profit from 25 to 15. Mr. Dass, we've learned that steering according to sales is not always the right way forward and may be the wrong stimulus. Mr. Van Boekse Meyer says, we actually always grow. So then you know the forecast for the next year. Why do you steer following sales more than profits? And the second question, I learned that at Heineken, they're always very creative, specifically in the narration committee. How do you calculate the sales? Do you take into account IFRS 15, 16 consequences with internal deliveries? How do you do that? I haven't heard an answer to that in your extensive explanation. Thank you, Mr. Yonah for those questions. I think the first question indeed is a question that falls within the scope of the remuneration committee. I think the second one is in the scope of the financial managers how to define revenue. With respect to your question, why now revenue was focused on? Mr. Von Broxmire has explained that. And he explained also why in today's competitive world, we believe it is important to focus more on revenue instead of net profits. And that led to the targets or the criteria for performance led remuneration fit into that. So they have to also support the company's strategy. Now if the company's strategy is more focused on revenue, then it is actually applicable to indeed increase that target for the current year, for the short term variable remuneration. And as the total cannot be more than 100%, the other targets are reduced. Now, how according to IFRS and to the definitions, any actions are taken, I believe should be left to someone else. Indeed, I think Mrs. Debru can answer that better. World Chair, I believe that this is indeed the function of Mrs. Debruc. She indicates how to calculate and then we get the numbers. But it is the remuneration committee that takes that number and says, I will take that in DAS deal with it? Does he take it as I don't care. How does Mr. DAS deal with it? Does he take it as is or does he correct for revenue? Secondly, I listened closely to Mr. Van Brocksmeer and this actually came forward in the strategy of Heineken. But my question, please, Mr. Dass, don't shove it aside, why do you change those targets? Why do you don't change those targets in your committee? Why do you remunerate according to revenue instead of net profit? We've seen the consequences. It is your competence. It is your proposals you make. And now you move that over to Mr. Van Buchsmeer. The strategy, whether it's revenue or net profit, I understand that, but the revenue committee has a discretionary possibility. Do not hide. The remuneration committee is not hiding at all. We depart from yearly plans and the targets if the company's strategy for a certain year is a focus on revenue instead of profit, then the targets are adapted because we believe that the remuneration structures have to follow the company strategy and we wish to set them up accordingly. If in a certain yearly plan a target was laid down for revenue, then we make that target, use it as a measurement for remuneration. We follow how it is calculated in such a yearly plan. Well, your last remark by Mrs. Debreu. And furthermore, I close the discussion for this agenda item earlier. Mr. De Bruu? Just wanted to give the very technical answer, and our targets are on organic growth, and that excludes the impact of any changes that would come from changes in IFRS. So it's completely consistently looked at from 1 year to another. So that does not impact the numbers that as final director I deliver to the committees to look at are actually cleaned from any impact and any help that could come from the IFRS changes. So ladies and gentlemen, I believe the explanation has been noted. I close this agenda item and continue with agenda item 1C, which is the adoption of the financial statements for the 2017 financial year, Pages 57 to 132 and Page 155 of the annual report. The financial statements have been audited by Deloitte Accountants BV. The audit report is on Pages 156 to 161. Before discussing these financial statements, I would like to hand to Mr. Dalhuysen, Alf Deloitte. Mr. Chairman, thank you. I brought a very concise sheet reflecting the highlights of the audit. This reflects the scope of the audit of the financial statements and how they're structured. So we conducted an audit within the timeframe for 25 firms within the timeframe of the consolidated financial statements. That doesn't mean that in all the other 70 countries, no audit has taken place. No, that takes place in a different time frame and the obligations by law are wrapped up in the subsequent financial year. The scope of the 25 largest firms means an audit coverage of about 78% of the revenues, 88% of the assets and 75% of the income. And we call that a very comfortable coverage because it's audited specifically within this process. We cover IT, we cover pensions, sustainability, taxes, treasury and the like to make sure that all specialist topics are sufficiently covered. The materiality for the financial statements has been set of roll at €150,000,000 in the financial statements. That's a very high figure, but the agreement is that any potential corrections that emerge in the audit process that exceed €7,500,000 will be reported into the audit committee in detail and we'll discuss there. And the practice in Heineken is that potential corrections that arise during the orders and can still be processed R and D processed in the figures. Now about key audit matters that's you see that at the left explained in our opinions through some specific points. The first acquisition accounting is new with respect to previous years. That's because of the substantial acquisitions in Brazil and somewhat less so in England. According to the applicable legislation, the assets and liabilities need to be assessed based on fair market value. And based on that fair market value, we compare the market situation to determine that to relate the purchase price to goodwill. So there's a subjective element there and that's why we consider that specifically. So the subjectivity is a reason for dealing with that extensively. In addition, intangible assets appreciation of goodwill and trademark rights are also subjective elements and we want them to be dealt with consistently as well. Then there's a moment for revenue recognition and earnings recognition. That's not complex in this business. This does not relate to software or anything like that. But one specific element concerns assessing promotional provisions, volume discounts that need to be taken into consideration. So we do examine those specifically as well. Now 4th, you see the tax position we're operating in a organization with over 70 tax authorities, so that's obviously very complex. We take a very careful look to see where there are any potential disputes with the authorities and whether they've been processed fairly on the books. And finally, related to the geographic system of the group, we have a system for managing the financial reporting that's essential in determining the scope of the audit. And knowing that the company is in control of its financial reporting. That's why we mentioned those items. Now at the upper left report of the Executive Board, in addition to our opinion about the true and fair view of the figures, we also look specifically at what is reflected in the executive report and related documents. And at the upper left, you see what is also reflected. We performed those duties and have found that they passed muster. And well, at the bottom left, we've also included sustainability in the report. On Page 160, you'll see our statement concerning the data that is included at various places in the report. Thank you very much, Mr. Dollhauser, for your excellent explanation. Who would like the floor about the financial statements? I see one hand raised. Okay, Mr. Jorna. You're basically a 1 man show today, aren't you? Yes, but that's why I'm performing in a theater, right? I'd like the accounting to tell me the key audit measures you say regarding the internal controls on Page 158. You say that you were not instructed to check the internal audits concerning the financial reporting. That's why you explicitly state that you are not providing an opinion about this audit. Now that amazes me because I always base myself on the internal controls by the company, especially regarding the financial reporting. But you made that exception in your statement. And if you believe that you should have been granted that commission, why didn't you convince the Audit Committee that they were supposed to instruct you to examine the internal audits in financial reporting? That's one question to the auditor. Another is you mentioned key audit matters. What was the next to the last one that you waived and did not cover as a key audit matter? My third question to the auditor is increasingly we notice and I won't mention the name of last Friday's meeting. We increasingly see what happens if an auditor does not scrutinize the material and does not do more than simply check the boxes, we get very unpleasant situations, especially as with Deloitte that you check money flows that occurred outside the regular circuit? For example, did you consider whether any transfers were being made to the Cayman Island or the like in the Heineken Group. Did you consider that specifically or did you simply say, Well, I don't hear anything, so there probably aren't any. Now, about the financial statements, I did discuss this with Mr. Graf Barents a while ago that Tannikin is not really adding value. I'm sure he disagreed with you. No, no, no. He was fine with that. And he promised he solemnly swore that he would do something about that. Now, you've probably examined acquisitions. You've made substantial acquisitions and you've doubled profits substantially since 2,008. But and so the earnings tripled. And then you were simply chasing the facts. You couldn't keep up with the facts, but the ratio of ROIC divided by WACC is below 1, so you're not creating value. You're in costing you more. And eventually he said, I imagine that in the next 4 years we'll try to catch up with that, but you continue investigating. So when can we expect to exceed 1 in that ratio? Another important ratio is the 2.5 that you mentioned as long term objective with respect to leverage. This concerns investments. What is the long term target for you? That 2.5? Do you say you never want to change that or you'll get it even if you wind up investing? Then on Page 30, we see a list of maturing debts. You basically redeem €1,000,000,000 a year on your debts. If you keep up that pace, then we'll what we just did that you'll be in control very soon. But that's unlikely. Do you have any opportunity given the low interest rates of accelerating repayments and then refinancing, because we can assume that eventually interest rates, I don't know when, but they're certain to rise again. Those were my questions. Mr. Dollhouse? Some of the questions were to you. To the extent that you can answer those questions, of course, I understand that you can't answer all those. As for the internal audit and its quality, No specific investigation. I think it's covered this. The financial statements are part of our audit. We check the quality of the internal audits and we do base ourselves on the operation, the functioning of the internal audit, but we don't provide a separate opinion. It's not required under Dutch legislation and the U. S. Sarbanes Oxley legislation doesn't prescribe this either in this case, so it's unnecessary. 2nd, we didn't discuss which key audit matters were being omitted from the statement, none with respect to last year, with respect to 2 years ago. We're still talking about the return on packaging and the like. That's no longer figures as a key audit matter because in the past 2 years, the firm made many improvements in its management procedures. So that's no longer a key audit matter as far as we're concerned. Were there any other questions, Mr. Chairman? Yes, the Cayman Islands. Regarding substantial transactions outside business as usual, no, there were none or we would have scrutinized those 2. May I reply to that, Mr. Chairman? No. First, we're going to complete the first round of questions. You have the floor. So regarding the net debt to ratio, which is a conservative, 2.5 net debt to EBITDA ratio, you can see that over the years, we are recently, we're slightly above, slightly under, but that we are around this ratio. And indeed, we are we've tried to actually schedule our repayment of debt for €1,000,000,000 about €1,000,000,000 a year because you never know what can happen on the markets. And if at some point the markets are done that over time. We've sometimes accelerated it. We've done that in 2016 2017 to accelerate a little bit, sometimes even within a year when we see a good window of opportunity. We do and we also take that opportunity to lengthen and to go sometimes we've gone to 30 years, so to actually take on fixed interest, a very long timing. If you look at how much we've the cash outflow and acquisition in 2017, about that as well. It's about €1,000,000,000 So that is actually pretty balanced what we issue, what we repay, what we acquire. I mean, the debt ratio the debt to EBITDA ratio is quite stable, given the fact that even so we don't didn't necessarily do a material acquisition at the global scale of the group in recent years. We've been continually improving our portfolio, whether in countries or in regions. So that's what we're doing. When we look at acquisitions, we definitely look at discounted cash flows, and we definitely look at the cost of capital in the country that we are in. And the goal is to be able to generate a return on net asset, which is above the cost of capital in that country. It takes more or less time. And that's also the strategic factor of the acquisition. We often take the example of Vietnam. You know, Vietnam took time to be as a growth engine and the profit engine that it has become. So you need to give time for a strategic acquisition to deliver. But I think if we look back at the acquisitions and we do that internally with at management, but also under the scrutiny of the audit committee and the supervisory board, we really track how this brings value on the country, but also more globally on the strategy of the group and using these metrics of return on net assets compared to cost of capital. Okay. Thank you. Okay. So, does the select thing else, Eim? So it would be a bad sign, Mrs. Dubreu, if that ratio were to exceed 1 because then we would no longer be making acquisitions. Well, that's possible, but that's certainly not a necessary situation. I understood you had one more question for the auditor. Well, basically about his answer. Because if you say there is no legislation prescribing that I have to issue an opinion on the financial controls, then that's a sign of weakness because as an auditor, I would always want to state an opinion about the internal controls concerning financial reporting. That's a foundation that I would like to address. And simply hiding behind the law doesn't make you look very good. What I wanted to know was whether you had asked the Audit Committee to instruct you to do so. And I didn't get an answer to that. Okay. I see that you're looking forward to reposition yourself as an auditor. Perhaps you'd like to talk to the Chairman of the Audit Committee. Let's hand you over to Mr. Huett for that. Waiting for the microphone. I am forced to answer in Dutch, but the answer is no. That's clear. Well, let's leave it at that. Okay, then I believe that I can determine I can establish that. Let's see, where are we? We can adopt the financial statements for the 2017 financial year. You can finally use your handsets to vote. So we'll vote by those handsets. If the handsets don't work, please raise your hand. And if they don't work at all, we'll do it with a show of hands the old fashioned way. Would the voting operator please activate the system? As soon as you insert your chip card into the voting handset, you'll see a welcome message and your name on the screen. Please insert your voting card with the gold colored chip facing upward to you at the top of the voting handset. And as soon as the vote is open, the screen will offer the opportunity to cast your vote. If it does not, then you have an individual problem and one of the ladies or gentlemen will assist you so that it could you can get it to work. Throughout the meeting you can leave your card inserted in the voting handset. First, let me see whether everybody who can vote and wants to vote, whether their voting handsets work. There is a problem and we're going to solve it. Yes, van Persis, operational excellence. Please press 1 if you want to vote in favor. Please press 2 if you want to vote against. And if you want to abstain, please press 3. Ladies and gentlemen, the vote is open. Please cast your vote by pressing the button of your choice. And I see that this proposal has been carried with 99.92 percent of all votes cast in favor. Now on to agenda item 1d, the explanation about the dividend policy, ladies and gentlemen. The Board proposes a dividend each year of 30% to 40% of the net earnings minus amortization of acquisition related intangible asset net profit. Vaz, what we call this range, is consistent with Heineken's strong and sustainable cash generating capacity and with the company's principles aimed at maintaining its independence and a healthy balance sheet structure and setting aside a sufficient portion of generated profit in order to achieve growth both organically and by means of acquisitions. As usual, the annual dividend will be paid in the form of an interim dividend and a final dividend. And the interim dividend will be set at 40% of the total dividend in respect to the previous year. Would anybody like the floor on this topic? Thank you. Then I see that the dividend policy has been accepted and taken and it's been noted on to agenda item 1E on the agenda. It is proposed that for the financial year 2017, a dividend is distributed of €1.47 per share corresponding with 37.3 percent of the net profit Bay of €0.54 was already distributed on 10 August 2017 as an interim dividend. The final dividend of €0.93 per share will be payable 2 May 2018 at ABN AMRO Bank in Amsterdam. The shares will be listed ex dividend on Euronext Amsterdam as of 23 April next. The 2017 profit remaining after the dividend distribution amounting to €838,000,000 will be added as retained earnings in shareholders' equity. Would anybody like the floor on this? Nobody? Then I propose adopting the dividend at €1.47 per share and we will open the vote. Would the operator please activate the system? Please cast your vote. The vote is now closed and we will wait for the result with a slightly higher outcome of 99.93 percent this dividend proposal has been adopted. On to Item 1F discharge of members of the Executive Board, I propose granting discharge to the Executive Board members who served on the Executive Board in 2017 in respect of the performance of their duties in the 2017 financial year. Would anybody like the floor? If not, I will open the vote on this proposal. Would the voting operator please activate the system? Please cast your vote. The vote is closed and that score is even higher. Ladies and gentlemen, at 99.5 percent of the votes cast in favor and this proposal has been adopted as well. That takes us to 1 gs discharge of members of the Executive Board. This is the proposal to discharge the members of the Executive Board serving in 2017 in respect of the performance of their duties in the 2017 financial year. Who would like the floor? Mr. Jorna. Thank you, Mr. Chairman. We know the structure that is usual at Heineken And the governance with Mr. Das, as I call him, Heineken's uncrowned monarch and Mr. Carvallo is still going strong as the representative of the holding and Mr. Fernandez from FEMSA who is monitoring that everything goes by the book here at Heineken. But what I would really like to communicate to you is that if I look at the composition of your supervisory board, then I think it's turning into an old boys network. If I look at Mr. Fentener from Vlissingen, Mr. Huguette and Mrs. Muff Wright, they all 3 of them are under the agents of Mrs. Fenton from Flussing at SHV. What the independents if SHV can appoint 3 members of the Supervisory Board? And then together with Mrs. Fentine Laflin, there's also another member who is affiliated with ABUC, both the Supervisory Board members. And then Mrs. Fentine Lafontaine is the Chairperson at SHV. So it's getting very friendly. And I would propose that if there is a new candidate that should be somebody from outside of the network and I would say keep looking further down the road and introduce more diversity rather than bringing everybody from the same stable. Thank you very much for your suggestion. I have a somewhat different view. Heineken, together with ING and KPN and Unilever, is among the crown jewels of the top Dutch multinationals. And what I've also noticed at Rasaad and Wolters Kluwer is that an increasingly small share of the employees is Dutch. And we're talking about 4%, 5%, 6% or 10%. I think it's extremely important to be prudent about this and to appreciate these companies remaining in the Netherlands and doing their very best to do everything by the book and to control procedures because in the Netherlands there's a lot less corruption than in 98% of the other countries in the world. So I think it's wonderful for Heineken to stay close to home. And of course, there's always room for improvement, but this is one of the crown jewels. And I would encourage all of you to keep this close to home in the Netherlands and to cherish it. Thank you. Those are interesting additions concerning the vote as to whether to discharge members of the Executive Board for 2017, but they all sound very encouraging and reflect a good mindset. Thank you for your suggestions. Now I would like to open the vote on discharge of members of the Executive Board. Would the operator please activate the system? The vote is closed. And we're improving consistently because 99 point 58% of the votes was cast in favor of this proposal which is hereby adopted. Now, here are some evergreens in the agenda for our frequent flyers, so we can probably phrase through them. 2 is authorizing the Executive Board to repurchase shares. It is proposed that the Annual General Meeting of Shareholders authorize the Executive Board for the maximum legally permitted period of 18 months commencing on 19 April 2018 to repurchase own shares up to maximum 10% of the company's issued share capital as per today under subject to the conditions stated in the notes accompanying the agenda and pursuant to the law and articles of association. Such a decision also requires prior approval by the Supervisory Board. I don't see any hands raised by people who might want the floor, so I will open the vote with the voting operator. Please activate the system. Please activate the system and please cast your vote. The vote is closed. 99.68%. Let's keep going, ladies and gentlemen. 99.68 percent of the votes have been cast in favor of the proposal, which is hereby adopted. That takes us to item 2b on the agenda, which is authorization of the Executive Board to issue shares and grant rights to subscribe to shares. It is proposed that the General Meeting of Shareholders authorize the Executive Board for a period of 18 months commencing on April 2018 to issue shares or grant rights to subscribe to shares. The authorization is limited to 10% of the company's issued share capital as per today. Such a decision also requires prior approval by the Supervisory Board. Okay. Does anybody have anything to say about this? If not, I will open the vote with the voting operator. Please activate the system. Please cast your vote. The vote is closed. 99.38 percent, but it just made it this proposal. It's been carried with 99.38 percent of the votes. Now on to item 2C, which is the authorization of the Executive Board to restrict or exclude the preemption rights by shareholders. It is proposed that the General Meeting of Shareholders authorize the Executive Board for a period of 18 months commencing on 19 April 2018 To restrict or exclude shareholders' preemption rights in relation to the issue of shares or the granting of rights to subscribe to shares, the authorization is limited to 10% of the company's issued share capital as per today. Such a decision in this case, too, requires prior approval by the Supervisory Board. Would anybody like to contribute to the debate here? If not, we're going to open the vote. Would the voting operator please activate the system and would you please cast your vote? The vote is closed. We just made it once again. The proposal has been carried with 99 point 16% of the votes cast in favor. That takes to item 3 on the agenda, the implementation of the new revised corporate governance code of 8 December 2016. Pursuant to the recommendations by the corporate governance code monitoring committee, The implementation and compliance with the revised code is being discussed here as mentioned in the agenda item. This corporate code is tailor made and any deviations may be justified by the firm just as with the previous code the firm subscribes to the principles and applies nearly all best practice provisions. As already mentioned in the corporate governance statement in the annual report, given the Heineken Group structure and in particular the connection between the company and holding. And the limited number of best practice provisions has not been applied. Additional information appears on the agenda in the explanatory notes and the corporate governance statement. Who would like the floor on this? Thank you. If nobody would like the floor on this topic, I note that the implementation of the revised code has been noted and conclude this agenda item. That takes me to item 4 on the agenda, which is amendment of the articles of association. The proposal to amend the articles of association arises mainly from the Dutch provisions and mandatory corporate law and the revised corporate governance code and there are a few textual improvements and adjustments. The amendments are in the articles 4, 9, 10, 12, 13 and 16. You have had the opportunity to review the complete text of the proposed amendments and the explanatory notes by the website of the company. Perhaps somebody would like to say a bit about this? Yes, I thought so. Ladies and gentlemen, fine. Then I propose that you cast your vote done, the proposal to amend the articles of association and to Now, on to the vote. Would the voting operator please activate the system? And would you please cast your vote? The vote is closed. So this is what we enjoy seeing 100% in favor of. Thank you very much, ladies and gentlemen. This brings us to agenda item 5a, reappointment of Mr. Jose Antonio Fernandez as Member and Vice Chair of the Supervisory Board. And pursuant to the articles of association of the company and the rotation schedule, Supervisory Board has made a non binding nomination for the reappointment of Mr. Jose Antonio Fernandez Carvajal as member of the Supervisory Board effect from 19 April 2018 for a maximum period of 4 years until the end of the AGM in 2022. It's also proposed to reappoint Mr. Fernandez as Vice Chair. We suggest that because we appreciate Mr. Fernandez in view of his broad strategic experience in the beer industry in Latin America and specifically in Mexico, Because of his contributions to the Supervisory Board meetings, his contributions to the Americas Committee as Chair, the Preparatory and Selection Appointment Committees. In the explanatory notes to the agenda, you've been able to read this information. Who wishes to take the floor? That is not the case. I propose to now proceed to the vote on this proposal. I request the operator to activate the voting system and I would like to ask you to cast your vote. The vote is closed. The proposal has been carried by almost 90 percent of the votes and Mr. Fernandez is reappointed as member of the Supervisory Board. Congratulations. Now reappointment of Mr. Javier Asabu Huaga Sanghines as member of the Supervisory Board Agenda Item 5B. We also made a non binding nomination for him with effect from 19 April for the maximum period of 4 years. The Supervisory Board proposes this reappointment in view of Mr. Asaburaga's broad financial and commercial experiences, contributions to the Supervisory Board meetings and to the Audit Committee. Who wishes to speak on the matter? There is no one coming forward. I would like to ask the operator to activate the voting system. The vote is closed. Again, the reappointment has been carried by 96.4% of the votes. I'm going to analyze tonight what the difference is all about between these two gentlemen, but I would like to congratulate Mr. Asaburaga on his reappointment. Of course, it's a bit of competition who gets the most votes. Now we're looking at a reappointment of Mr. Jean Marc Huette, who again, on the basis of a non binding nomination, has been reappointed by the Supervisory Board based also on his broad financial experience, his experience in the consumer goods sector, his contributions to the Supervisory Board and as Chair to the Audit Committee. No further questions. I would like to then request the operator to activate the voting system and request you to cast your vote. The vote is now closed. This is what makes us happy. 99.31 percent support the reappointment. It will cost you a round of drinks. The resolution has been carried. Continuing with 5 d on the agenda, the appointment of Mrs. Marion Helmers as member of the Supervisory Board, again based on a non binding nomination by the Supervisory Board. Mrs. Helmiss' German National fits the profile as drawn up by the Supervisory Board. We propose to appoint her in view of her broad financial expertise and her experience with Dutch corporate governance. And in other executive boards, it is the attention that she joins the Audit Committee and in time becomes the Chair of that committee, taking over this role from Mr. Huet, who will remain a member of the Audit Committee. Mrs. Halmas holds a number of roles in other companies. She is going to step down from some of them so that she will fulfill all requirements with respect to governance. I'm not going to discuss the details. You will find that in the explanatory notes. She's independent as defined in the Dutch corporate governance code and holds no shares in the company. Before I hand over to the floor, I would like to ask Marion Helmers to briefly introduce herself to the meeting. Then you can see who we're talking about, Marian. Marian. Committees. And I think it has a uniquely profile, having a strong Dutch heritage combining with a true global presence. Having said this, I was really looking forward to support the Heineken Board with my experience and expertise. Danke? Marion? Thank you very much, Marianne. Who wishes to take the floor? If that is not the case, I would like to start the vote. Operator, please activate the system. And I'd like to ask you all to cast your vote. Wonderfully high score. Again, this resolution is carried by 95.73%. Congratulations, Marion, and welcome. Ladies and gentlemen, I'm almost at the end of this meeting, but I would like to talk to you about the fact that Mrs. Fentener von Frillingen is retiring today as member of the Supervisory Board. She was appointed in 2006 to the Supervisory Board. Annemiek, where are you? You're right behind me. And on behalf of all of us and also on behalf of the people in the hall here, I would like to thank you sincerely for your contribution to the company. You've put a lot of effort and time into the Selection and Appointment Committee and the Audit Committee, and you've always devoted yourself to it. We're going to miss you, but we would like to express our sincere gratitude for everything you've done for Heineken and Enkei. Thank you. Ladies and gentlemen, then I would like to close the meeting in at about a quarter to 5. I would like to ask all of you to leave the room. I would like to also inform you that the General Shareholders' Meeting of Heineken Holding will start in 10 minutes on the Dine foyer. It's the 4th story. Hostesses will accompany you to it. So please use the right hand exits to leave this room and then you will be able to go to the foyer as quickly as possible. Shareholders of the Heineken Envy are asked to hand in their voting devices. The shareholders of Heineken Holding will hand in their devices too, but take their chip cards to the foyer where they will be checked again and you will receive a new voting device. Thank you all for your presence. Thank you to all listeners of the audio webcast. The Heineken holding meeting will also be audio webcast. Thank you.

• Slides