Ladies and gentlemen, good afternoon. It's 1:30, I hereby declare Heineken N.V. Annual General Meeting open. I'd like to welcome you all at the DeLaMar Theater. I'd also like to welcome those shareholders that are still alive of Heineken Holding, and they're here attending this meeting as observers. Allow me to start with a number of housekeeping announcements. You're kindly requested to switch off your mobile phones or to put them on silent mode. We will be speaking English from time to time, which is why we are offering you simultaneous interpretation, and you can use the headphones. You can choose channel 5 to listen to English or channel 4 to listen to Dutch. Those of you with a hearing impairment can also use the headphones, you'd have to choose channel 0.
The meeting, as stated on the website, will be webcast, I'd like to welcome all listeners in all corners of the world. The Heineken Holding N.V. meeting shall start at 4:00 or later, depending on the ending time of this meeting. If you want to turn this into a very long meeting, we might have a problem because that's when the regular program of the theater starts, consisting of "Slippers" or "Hair," and there's no logical connection between the titles of those two theater performances and this meeting. I shall move on to the formalities of the meeting. I confirm that the meeting was convened on Tuesday, 7 March 2017, by publishing a notice on the Heineken website.
The record date for this meeting is March 23, 2017, which means that shareholders who were registered as shareholders on the record date are entitled to attend and vote at this meeting. The registration method is stated in the notice of the meeting on the website. I also confirm that the agenda of the meeting is included in the notice of the meeting. The notice of the meeting states that the agenda and accompanying notes, the financial statements, and annual report, and the information referred to in Article 392, Paragraph 1 of Book 2 of the Dutch Civil Code, have been published on the website and have been made available for inspection at the company's offices. Furthermore, that all the formalities for convening this meeting, as required by law, or the articles of association have been complied with.
Therefore, valid and due resolutions can be adopted on all matters announced. The shareholders present or represented have submitted acknowledgment of receipt from the institution administering their shares and that the company has offered the shareholders the possibility of issuing a voting instruction via internet and that this possibility has been used. I shall inform you later on of the number of shareholders, the number of votes, as soon as we've completed the count. This meeting is also attended by civil law notary Meppelink of Loyens & Loeff N.V., who will be supervising the voting. Resolutions adopted today and the results of the voting shall be published on the company's website in a few days. Shareholders can obtain the minutes of the meeting from the company. They'll be available within three months of the meeting and shall be posted on the website.
In connection with the discussion of the financial statement of 2016 by the executive board, the meeting shall also be attended by the company's auditors, Mr. Van den Berg and Mr. Nanne. There they are at the right-hand side for me of Deloitte Accountants B.V. Furthermore, the meeting is also attended by representatives of the press, who I'd like to extend my welcome to all of them as well. In conclusion, and by way of introduction, I would request anyone who wishes to speak during the meeting to use one of the four microphones here in the room and to state his or her name as soon as I've given him or her the floor.
I would also request everyone speaking as a representative of a shareholder to state which shareholder he or she represents, and I reserve the right to limit the speaking time of each speaker if the progress of the meeting so requires. Wouldn't be necessary if you are concise and ask questions and don't go on and on. You can address your questions to me, I shall then decide who will be answering those questions. Finally, I would like to inform you that this year, once again, we'll be using our voting handsets. Got to pay attention now. Shareholders for Heineken N.V. have blank voting cards without a dot and obviously can vote at this meeting. Shareholders of Heineken Holding N.V. who are attending this meeting as observers have a voting card with a yellow dot, and this card can only be used at the Heineken Holding meeting.
We have an extraordinary category, which is the shareholders with two yellow dots. They're shareholders of both Heineken N.V. and Heineken Holding N.V., they can vote at both meetings. Right. This was the introduction, ladies and gentlemen. We shall now proceed to Item 1A of the agenda, which is a report for the financial year 2016. Before we discuss this report, I would like to hand over to the chairman of the executive board, Mr. Jean-François van Boxmeer. Thank you, Mr. Chairman. Allow me to briefly discuss the performance of Heineken. I've prepared a text, that way I shall leave sufficient time for your questions and obviously the answers. Let's proceed to the first slide.
The performance in 2016 was good, this is due to the premium brand portfolio that outperformed the beer market as such, also the momentum, sustained momentum of our innovation agenda. Operational organic profit growth, BEIA, increased by 9.9%, this despite tough economic conditions in some emerging countries and significant currency pressure in a number of countries. For 2017, we expect a margin improvement in line with our previous medium-term prognosis, this including any possible impact of large unforeseen macroeconomic and political developments. The impact of the proposed or intended acquisitions in Brazil and the U.K. have also been excluded from the figures. The next slide. Here you see the operating profit in 2016 amounted to EUR 3.3 billion. Consolidation impact ensuing from acquisitions of the previous year had a positive effect of EUR 40 million, which amounts to 1.2% of the growth.
Fluctuations in currencies had a negative impact. Operating profit was impacted by EUR 216 million. It was reduced. This was particularly due to the decline of the Mexican peso, which had the greatest impact, followed by the Nigerian naira and the British pound. Excluding consolidation changes and currency translation impact, the operating profit increased with an impressive 9.9%. This deserves a number of additional observations with respect to cost. On organic base, the cost of raw materials and also packaging increased by 10.8% in 2016. Cost increased more than revenues, mainly as a consequence of disadvantageous currency fluctuations, Mexico, Brazil, and Nigeria once again. On the other hand, we saw smaller decrease of operational cost because of stricter cost management. The repair and maintenance costs declined as well as cost of energy and water.
The focus on costs allow us to generate an organic growth of operating profit of 9.9%, as I said, which means that we have an operating margin of 17%, which is 54 basis points higher than in 2015. I shall now proceed to the regional overview. The results show that the unique and widespread presence of Heineken as a corporation led to well-balanced growth. Most regions showed healthy growth, offsetting part of the lesser results, Africa, Middle East, and Eastern Europe. Let's start with the toughest areas, the beer volume in Africa, Middle East, and Eastern Europe remained under pressure because of challenging macroeconomic conditions and low oil prices. That would be Nigeria and Russia in particular. Positive growth in Nigeria nonetheless. Ethiopia and export to Africa offset the weaker volume in Russia, the Democratic Republic of Congo and Egypt.
Operating profit BEIA dropped by 21.2%, which was negatively impacted by mainly fluctuations of currencies in those countries, increase of raw material prices, and also inflation costs. In the Americas now. The organic consolidated beer volume increased by 3.7%, driven by strong growth in Mexico. This growth was greater than the decline of volume in Brazil and the U.S. last year. Our Mexican brands are the main growth factors headed by Tecate and Dos Equis. By and large, the region showed strong operational profit growth BEIA of 23.5%. Asia Pacific now. The momentum still is excellent. The result is a growth of organic consolidated beer volume of 17.9%. Revenue per hectoliter dropped by 3.7%. This was impacted by the country mix and brand mix. To put it in straightforward terms, we sold more Tiger than Heineken at slightly lower price. Overall, the result was very positive.
In Vietnam, volume increased double digits and driven by strong results of the Tiger brand and good and effective marketing and sales force that is deployed there. Region leads to a strong operating profit growth of 26.5%. Once again, on the back of Vietnam, also very strong results in Cambodia and Indonesia. Europe now. The organic consolidated beer volume increased by 0.7%. Growth was driven by our premium portfolio led by the Heineken brands that increased by 4.3%. Revenue per hectoliter increased by 1.4%. This was despite the deflationary price pressure that we see and experience in off-trade. In the U.K., the volume increased in low single-digit terms. Single-digit terms is the English words that I'm using because there's no Dutch word for that. Driven by good results in off-trade, which is the supermarkets.
Off-trade is supermarkets in Dutch. Our pub business also contributed to excellent results this past year. Operating profit increased organically in Europe by 7.1%. Is driven by innovations and successful premiumization, that's what it's called. That means more beer at a higher price, sold at a higher price and higher margin and a disciplined cost control. Now, let's zoom in on the Heineken brand. Heineken volume in premium segment increased organically by 3.7% worldwide, with an accelerated growth in the second half of the year, 4.7%. Growth in Brazil, South Africa, Mexico, U.K., and Romania offset the weaker volumes in Russia, the U.S., Thailand, and Greece. The value of the Heineken brand was once again supported by successful campaigns around the UEFA Champions League. Very recently, the beginning of the year, we extended our sponsoring contract for the UEFA Champions League till 2021.
We also engaged in a close cooperation with Formula 1, offering us the opportunity to reach new consumers worldwide and also offers opportunity to deploy a very strong campaign around responsible drinking. It's called When You Drive, Never Drink. You'll see that all the sponsoring of Formula 1 will show the When You Drive, Never Drink campaign. 2016, we launched a number of premium innovations such as the Wild Lager beers, H71 and H41, introduced in a number of European markets, H41 in the Netherlands, Great Britain, Italy, and H71 in France. Well, I could go on and on for an hour about the background of H41 and H71, but very concisely, Wild Lagers means Heineken beer, to which a wild yeast is applied. A wild yeast that we harvested in Patagonia, the trees in Patagonia.
With that, we made beer with a different taste, starting from the same liquid, but with a different fermentation, a different yeast, you get a different taste, a different flavor. Wild yeast beers, therefore the volumes are very small. Heineken Light was introduced in Ireland, New Zealand, and we're still testing it in Greece, Switzerland, and in Austria. We introduced it under the name Heineken 3. Heineken Light or Heineken 3 actually is the same kind of beer, a lighter beer. Both names are used for this product. As you may have seen, in the beginning of this year, we introduced Heineken 0.0 in the Netherlands. It will also be rolled out over the next few months in several European countries.
In addition to our Heineken brand, we also have an extensive portfolio of other international brands. These brands have great potential in order to be successful in several regions. We don't want to have them everywhere worldwide, such as Heineken. They can be introduced in other countries. That would be Affligem, Lagunitas, Red Stripe, Desperados, Tiger. All of them have grown double digit this past year. Desperados, Krušovice, Czech Republic, and Amstel showed excellent growth. Obviously, we're still very excited about cider. Natalie will be a bit more about that later on. I shall now proceed to our first advertisement. You may have seen it here in the Netherlands. We've been showing it in the Netherlands since February. It's on TV.
It tells us the story of how Heineken was set up at the time of Gerard Heineken and how it got its first award for quality. Just goes to show how the Heineken worldwide adventure started by first exporting to Paris and how in those times, Heineken really was a craft brewer.
That is the story of our-
That's about our wonderful, delicious, clear Heineken. On to the next sheet about innovations. That's firmly embedded in our strategy and our mindset within Heineken and the way we achieve revenue growth. I'll start with cider. That's on the sheet. We continue leading the cider market, and in the U.K., our market share continued to grow thanks to many different brands. Outside the U.K., our cider profile posted double-digit growth in the Middle East, South Africa, Russia, and Eastern Europe. We had positive growth in cider. Mexico delivered the highest contribution to cider growth in Americas and in Asia Pacific. Strongbow is now available on five markets, and we're pleased with the first results. Clearly, we're rolling cider out to the world. This may take us 15 or 20 years, and we're the leader in a relatively small market, which we hope will expand.
A second innovation category is low and no alcohol. Without alcohol or with a tiny bit of alcohol, we still see great potential in this segment of low to 0% alcohol-containing products. The volume for 2016 in our portfolio was 12.3 million hectoliters, which is substantial. These products directly address moderation and create new drinking moments for our brands, and we're going to continue investing in the future. Craft and variety, or rather specialty beers, that's another very important segment. I spoke previously about the H41 and H71. These two exemplify this type of beer. It's a craft beer with the wild yeast from Heineken.
There are other specialty beers such as Mort Subite in Belgium or Birra Moretti in Italy, where there are all kinds of regional line alternatives that we launched, as well as in several brands, such as Brand here in the Netherlands, where we offer more flavors than pils beer alone. That's what consumers want. At the same time, Lagunitas, which we acquired the previous year, or rather we acquired a 50% stake in America, is going international and has been launched on several European markets here in the Netherlands, France, the U.K., as well as Mexico. We're also innovating draft beers, and we see positive options for our new draft system, as well as BrewLock, which is an innovative draft system, is posting good growth. Of course, you don't know what the BrewLock is.
In plain English, it's a plastic vessel that cannot be recycled but can be deposited to PET recycle. In export to long-distance countries, that's a great tool for exporting beer. It also retains the freshness of beer over the long term. Now, a bit about sustainability. Sustainability is integral to our work style. It's not simply a sideline in our operations. We call it Brewing a Better World. This year, for the first time in our annual report, we've complemented our financial report with a sustainability report in a single report. We've merged them. Examples include the KPIs in water and energy consumption. That's traditional. We're setting new targets with respect to the upcoming COP21. We also address responsible alcohol consumption. There's a limited amount we can do, but we need to do what we can.
One of our commitments is that 10% of all our media spending on Heineken will be spent on campaigns that send a message to mitigate alcohol consumption, and in some case, not to consume alcohol. We've got a nice video illustrating that when you drive, never drink.
Jo.
Very good. That's from Jackie Stewart, as you can see. He was very supportive in helping us make this commercial. He's very sincere. We did this together with him. He still drives, and that's his car. We'd all love a car like that, wouldn't we? Now, before we wrap up, I'm going to tell you about our two ongoing acquisitions. I'll give you a little bit of news about that. The first acquisition we announced is Brasil Kirin. That will transform our existing business and to help us leverage synergies in Brazil, and will help us start a premiumization platform so that we can sell more beer in Northern Brazil.
As a consequence of the transaction we expect to conduct, Heineken will be the second beer brewer in Brazil, in keeping with our strategy of either being ranked first or a strong number two in countries where we offer a broad portfolio. This reinforces our underlying position at one of the most important beer markets in the world, with vast potential for future growth, even though Brazil's economy is presently in some difficulty. Yesterday, when we published our Q1 figures, we publicly stated that we intend to use the distribution network of Kirin Brazil to leverage our combined business in the future. This acquisition will contribute to the earnings in 2017, and the transaction is expected to be done and dusted in the first half of this year. The second acquisition concerns Punch Taverns in the U.K.
We've also announced that, and given the U.K. Takeover Panel's rules, I'm very limited in what I can tell you here, but I have the following remarks that in keeping with a cash offer for Punch Taverns by Vine Acquisitions, we've reached an agreement with Vine Acquisitions for the Punch Taverns Punch Securitisation A. So it's Vine that is making the cash offer, and they have a 1,900 item pub portfolio. We expect for the time being that the transaction will close at the end of August 2017. Let me wrap up with the highlights from the first quarter. Consolidated beer volume rose organically by 0.6%, our balanced geographic distribution. We changed good growth in Asia Pacific, solid growth in Europe, and weaker volumes in Africa, Middle East, and Eastern Europe.
Heineken brand volume was up by 2.5% and was once again ahead of the group's overall beer volume, which posted growth of 0.7%. As for our expectations for 2017, they are unchanged. Thank you very much for listening, and I'm going to hand you back to our chairman.
Thank you, Jean-François. I would still like to tell you a bit about who is present and represented at this general meeting. The attendance sheet reveals that we have 87 shareholders present and that 66 shareholders are represented. We have 1,257 shareholders voting online. Therefore, a total of 1,410 shareholders comprising 500,805,509 shares, entitling them to an equal number of votes, 87.9% of the issued capital. At the meeting, we have 31 shareholders from Heineken Holding N.V. present who are observing this meeting.
We will now discuss the report on the 2016 financial year, which you'll find in our annual report on pages 1-49. From the executive board report, you'll find the sustainability report on pages 135-150. Please note that the implementation of the executive board's remuneration policy, section two of the remuneration report, is on pages 50-58. That's agenda item 1B afterwards, and the financial statements will also be addressed at item 1C, which you'll find on page 59 and further. Ladies and gentlemen, for those of you who are frequent flyers, I see many familiar faces here in the room. It was an excellent tradition for me to give Mrs. Stadtlander the floor first. I am deeply sorry to tell you that on 19 November of last year, Mrs. Stadtlander passed away.
For the past 30 years, she attended Heineken's general meetings and was always an interested and involved shareholder and asked detailed questions each year and had a very constructive style of asking the questions. We will deeply miss her. I would also like to give you to Laurence, the CFO of the company, about this sad subject. Laurence.
Thank you. I would like to express my deep respect to Mrs. Stadtlander. I first met her in this room in the general assembly in 2015. A few months later, we had lunch at the Heineken offices. Beyond her deep knowledge of the industry and her very good questions, she also shared with me her own story and how she had to struggle in her time to reconcile her career and also the education of her daughter. I found that both very touching and an example of courage also for my generation. I will always remember her very fondly, and I want to thank her.
Dank je wel. Ladies and gentlemen, we are really going to give you the floor about item 1A on the agenda's remuneration policy. The financial statements will be the following items. Who would like the floor about 1A on the agenda, the report on the 2016 financial year? I see a lady who could be highlighted a bit at the right of the room. You have the floor. If you state your name and tell us who you represent, we'll be off to a wonderful start. Good afternoon. I'm Helen Course. I work for MN, the asset manager for PME, PMT, and Pensioenfonds Coop. Regarding this agenda item, I'm also speaking on behalf of Triodos Investment, Achmea Investment Management, Menzis, and Aegon Investment Management B.V.
Thank you for elaborating on the annual figures and the strategy. We're delighted to hear that Heineken has wrapped up 2016 with a positive result. We were also interested to learn about your recently published integrated annual report and sustainability report for 2016. We're delighted to congratulate you on the publication of this first integrated report, which, as far as we're concerned, shows that you aim to embed sustainability further in the business. We are delighted at this vision and pay you compliments on that. As for strategy, we have two questions. In the risk management section of the annual report, we read that an increasing share of the revenue in emerging markets is growing. You explained this. Heineken has exposure in emerging markets, among others in Brazil.
What I'd like to know is, can you say whether you see a future for Heineken in terms of expansion and opportunities in emerging markets? Following up on that, recently upon opening the Abidjan brewery on the Côte d'Ivoire, you said you saw wonderful opportunities for the company in Africa. Can you tell us how, while levering on these opportunities, you'll strike a balance also with a view to averting corruption and human rights violations? On sustainability, of course, we have questions as well, and we greatly appreciate that Heineken has adopted most of the 2020 targets from the Brewing a Better World, and you're on track. For 2030, you seem to be in line with the UN Sustainable Development Goals, as well as the COP 21. My questions about that are as follows.
In your annual report, you mention a price climate, and you say that you'll double your efforts in reducing emissions. Can you tell me specifically what you mean by this? The Paris Climate Agreement assumes a two-degree path and is aiming for energy transition. Have you identified climate risks, including risks related to the progressive drought? WWF, as you indicated in the annual report, has identified 13 additional risk areas where you may have a risk of water. Can you manage these risks properly? Have you quantified your current targets, and are they sufficiently ambitious to be compatible with the Paris Climate Agreement targets? My final question about sustainability, we would like to know your future vision in drafting the ambitions for 2030. You mentioned that you want to contribute to the Sustainable Development Goals, and you have selected 11 specific targets.
Can you explain in what measure the SDGs will be an entirely new perspective, or will you simply tighten the existing sustainability targets? I have another point about human rights policy. For some time, you've had a human rights policy employee, and we appreciate your drafting a plan in keeping with the United Nations Guiding Principles and that you aim to draft guidelines for your company and operations accordingly. Can you tell me about your human rights action plan in keeping with your recent gap analysis? Thank you. Jean-François. '
Well, that's quite a list of questions. I will try to answer them one by one, and I'll try to be as specific as possible. Your first question, you're basically talking about the risk and reward in emerging markets. Where the market grows, there are emerging markets, but they also entail the greatest risk.
If you consider risks from a Western perspective, that's reality, and that's inevitable. North America and Western Europe or Europe are hardly growing in beer consumption. The rest of the world is growing, and that's because there's population growth and urbanization, and in most of those countries, economic growth as well. That's a positive development spiral. We should continue seeing the glass as half full rather than as half empty. However, things can go awry now and then. As you know, last year, we took a huge impairment in the DRC because we had hoped that revenue would rise there. And five or six years ago, when we started building extension and renovations in that country, we had tailwinds, and we thought the country is finally emerging from its problems. But unfortunately, that was not to be. So we had to take a substantial impairment on new capacity.
The capacity is still there, but it's doing poorly on the books. We are considering and assessing those risks, the essence of our operations happens and will continue to happen in emerging markets. If we don't do that, Heineken will no longer have a raison d'être. We have to accept greater risks. It's important to cope with the risks. That's also why it's so important to spread the risks. Things can go awry everywhere. You don't have any year at Heineken where nothing goes wrong anywhere. We do try to invest in spreading that risk, and we will continue investing in saturated markets because they're a good foundation for our business, including over the long term. As you see from the results in Europe, they're still growing. It's more moderate than the emerging markets, but nonetheless, it's growth.
We have to strike a balance in our investments. We have to take care not to become dependent on one country that might jeopardize the entire group if that country ran into problems. That's our ultimate constant strategic assessment together on the Heineken management team. You had a second question about the opening of our brewery in Abidjan. Africa remains one of our spearheads. Africa is not doing as well. That's been the case for two years. Before that, we had 10 to 12 years of continuous growth in Africa. That was wonderful. For the time being, we continue to believe that we have a wonderful future in Africa, but it's in dribs and drabs, and we have to deal with those. Think of Nigeria, think of Egypt, and think of the DRC. It's a rocky ride. There's some countries in Africa that are doing very well.
One is Ethiopia, Côte d'Ivoire is another one. Côte d'Ivoire was a monopoly thus far, and there's now competition over the course of the six months that we've been operating there. In Côte d'Ivoire, we've obtained nearly 20% of the market. That demonstrates that it has potential. It also has potential for something new, we offer that in Côte d'Ivoire. As for corruption and human rights, we have a business code of conduct, that clearly stipulates no corruption. Full stop. In those countries, you have to keep calling people to order, you have to keep refreshing the training because people all face a lot of pressure. It's not a situation where somebody works for his own brewery and simply waves a bag of money.
There are people who will own the brewery and say, "If you don't give me a pot of gold, you won't get a permit." That's the problem. You have to train people to have the courage to say no and to act against it. A group such as Heineken has a lot of patience. We're in it for the long haul, in our present world, most of these emerging markets welcome investments from Heineken. It's not that bad, to be quite honest. As for human rights, violating human rights, well, there are some countries that we wouldn't invest in. North Korea is one of them. That's obvious. There's some other countries where we do invest, occasionally, we see reports of human rights violations. They're occasional, they're not systematic.
We need to take care not to participate in those in our companies, we have a limited scope because we're a commercial operator. We're not the UN, we're not the Dutch ambassador in a position to state, "You're allowed to do this, and you're not allowed to do that." The company does have to make clear what's acceptable and what is not. In some situations, our opportunities for response are limited. I did have to add that. You had a question about the climate targets. COP21 and the Sustainable Development Goals are all headed in the same direction, we were going down that course long before COP21. COP21 calls for the next step, we're working on that. As we have targets for 2020, we'll also issue targets for the next decade, we're hard at work preparing those targets.
You asked a specific question about water scarcity. In several countries, we face water shortages. Some parts of Nigeria or Mexico, where we have large breweries, as well as in areas with water shortages, such as India. At those companies, we have specific plans to do more than the targets that we set on average for our firm as a whole. We aim to go above and beyond those targets. I don't know all the figures for each brewery off the top of my head. Of course, I'm getting old, so I need crib sheets. Recently, I visited our joint venture in India. India's not entirely controlled by Heineken. We have 21 breweries, and some are in areas with a serious water shortage. There you find consumption about 2 liters of beer. That's very low.
In some breweries, they've even tested it to give more water than used. That's because you've got soil, during the monsoon period, the soil has captured some water, there are large funnel-shaped basins to divert that water back into a hollow area. That's an interesting development, where the brewery not only uses the water and purifies it also channels rainwater back to the soil water. That's a fascinating trend that I saw in India, I thought, "If we could do that in several areas of Africa as well, that would be very worthwhile." There's a lot of new technology heading in that direction, it's an advancing insight about what you can accomplish. I think that globally, the world is on the right track, we need to stick with that course. It's very important to us.
I think I covered all questions.
[Foreign language]
In the first section. Ms. Course, are you satisfied with the answers, or was something overlooked perhaps? I think you might have had another question about human rights.
Yes, I did. Water risks. I'd like to know in what measure you're able to manage these risks. You didn't answer that yet. What do you mean by manage them? That's a very general word, what specifically do you mean by managing the risks?
In your view, of course, you're very dependent on water management. If there was a water shortage, that could seriously impact production. Climate risks do not only relate to water use, they also concern stability in a financial system. That might have consequences for your factory sites. I get it. We haven't encountered cases where at a certain site, the shortage became so acute that our operations were in jeopardy.
We look ahead in the areas where we work, and that relates to the technology I mentioned for India. That's essential because we're not operating in isolation there. We use water, the people living there use water as well. You shouldn't see the water study only for the brewery, but also as it relates to the surroundings. Thus far in managing the risks, we haven't encountered anything that would lead us to decide to shut down the brewery. Second, when we set up a new brewery, we do conduct an extensive water management study before opening the brewery. Quite honestly, we did that 20 years ago as well, because you can't always anticipate what lies ahead in the next 20 to 30 years. You might not get it right because, of course, breweries are built to last 50 years.
Thus far, we have not had that experience. As for human rights, often we do this in conjunction with NGOs to see how we can approach the problem best. There are a few examples where we have a due diligence conducted by external parties. That was in Mexico or Myanmar or Nigeria. You can have an opinion, but you need to let others take a look at your operations to judge, and we've been doing that for several years already. Okay, I propose that we give another person the floor to ask a question.
I see. Isn't that Mr. Jorna? Yes.
I shall state it loudly and clearly. The VEB, the association of stockholders, and particularly the smaller stockholders. We're not representing Ms. Heineken. I don't think she's a member of our association, Ms. Carvalho. I don't think so. Thank you, Mr. Chairman. Let's go back to the business at heart. Kirin Brazil, you're acquiring that. It's been loss incurring for a couple of years. You're acquiring it for a third of the price you were prepared to pay for it a couple of years ago. It's a bargain, I think. That was good actions on the part of Mr. van Boxmeer. That's a good thing. Kirin is trying to adjust to the market. Are you taking over someone else's problem child? That's my first question.
Now that you see that the Kirin brands are at the bottom in the mainstream and the really bottom layers, the economic brands. You failed in China. If you go too far, premium you're fine. If you go too far towards the bottom of the market, don't you think this is an issue that you might be acquiring a brand in which you can't really make any money? So far, Heineken's been doing fairly well in Brazil. AB InBev in Brazil, we all know that, did poorly in Brazil. Punch, the acquisition here, you're doing this through a joint venture, Vine. Why don't you acquire it in a back-to-back structure? Why don't you buy the whole of it instead of the 933 pubs? Would you otherwise end up having trouble?
Can't you comment on that in view of the CMA, the authority that is investigating this? These pubs are quite tired, quite old, and you'll be the owner of the real estate, I think. Will you also have to foot the bill for paint and remodeling these properties in order to refurbish them? How much more is this going to cost in addition to the cost that you already incur? Kirin, you say, is contributing to profit. I think that's surprising in view of what I just said. I'm sure that you have a better idea of what's going on. What about the pubs? Are they also contributing to the profit in 2017? This takes me to India. India is a sleeping beer giant. Enormous population, they're not drinking a whole lot of beer there.
United Breweries, Kingfisher is the brand there. The other owner of the company, I think you own about 43%, 44%. The other owner is under pressure, a lot of pressure because of the airline, Mr. Mallya, I think it is. I hope I'm pronouncing his name properly. Do you still have the right of first option should he be forced or should the Indian government take over the shares? Do you have the first right of option to turn your participating interest into a controlling interest? Rumor has it that you will be bidding or are bidding on Coca-Cola beverages in Africa, which is also a large distribution network, EUR 3.2 billion in the books. Do you still have enough money to be able to do that? Particularly also against the background of the privatization of Sabeco in Vietnam.
Vietnam is your flagship, privatization is what's going to happen there. Can you also bid there in order to defend your market? These are all questions against the background of something you said, I believe, last year. The combination AB InBev is not something you're fearing for in your market, because not that much is going on, not that much is changing. Some Japanese have acquired a bit, but they have this big cash flow, and so they have much more momentum. Don't you think in view of all these developments, aren't you facing the restrictions that Heineken has, the restrictions of the holding and the NV? I think that your hands are tied in that respect, or am I completely wrong here? The last one, this was the best one I could come up with. Affligem, great beer, delicious.
The thing is that your brewing license will only apply as long as there are monks. The eldest monk is 92 and the youngest one is 73. How are you going to solve that problem? You might have to call on sponsors to try to convince men to become monks. The latter was not you trying to apply for a job.
No, I'm happily married. Yes. We're going to ask the CFO to answer some questions, so that we can distribute our responsibilities a bit.
I'm going to make all the frustrating answers where we cannot say anything. Jean will tell you a lot of very interesting things on the others. We never comment on rumors on M&A. I mean, Jean might say something about markets, but on whether it's on the rumors on Coca-Cola or what's happening in Vietnam, definitely we will not say anything on those rumors. There is one other place where we cannot say much, a bit more, but not much, which is the U.K. As you know, we're still submitted to the Takeover Panel rules, there is a very stringent rule, which is called Rule 2.7, which our lawyers reminded us once more before that meeting, and that we basically cannot say more than what is in the press release.
What we can tell you is the very good experience that we have with the estate of pubs. The top pubs and bars that we have been running for a few years now, and that we remain convinced that with well-invested pub in good location, you actually make a very good business for a company like ours. This is what also explained our intended move, in that respect. Definitely, yes, it is a back-to-back, which matches our business objective on those pubs. Maybe on Kirin. Here we can say much more. Kirin, yes, indeed, Kirin Brazil has been a loss-making venture. It's also been a venture that has been restructured. Some assets have been impaired in the past. We see definitely synergies there, and maybe also because it's been loss-making and we've looked at it in thorough due diligence.
We also see a wonderful synergy in being able to distribute further our successful premium brands on this market. You know that without even the network of Kirin, we are able to bring Heineken, the brand Heineken, to 2 million hectoliters and to a fair share of the premium market, which we contributed to really create and develop. We were still quite weak in the north, northeast, and that is where the bulk of the network that is where Kirin is very strong. We see a lot of potential here for our premium brand. We also see a lot of potential for Amstel, which was launched last year. Already did last year 500,000 hectoliters and is growing very fast. We know that the economic backdrop has been difficult in Brazil. Even in that environment, both Heineken and Amstel continue to fly in terms of volume growth.
We are very enthusiastic to be able to bring it to also regions where we were not present, and we feel there is a really good strong potential. As for the Schin brand, we really looked at it during due diligence, and we consider it a brand that has retained strong equity. We are quite confident that there is potential for this brand in a market that is the third beer market in the world, and which it is always difficult to say that the market has reached the bottom. We do feel that everything is in place for this market to grow again. Yes, maybe not the easiest of time, but that is also when you are able to acquire and make a success out of a new acquisition.
I would add that Schin, that is a mainstream brand for Brazil, stronger than the mainstream brands that we ourselves have. The parallel to China doesn't really hold water. In China, we only do premium volume. We do a tiny bit in Hainan, in mainstream. Indeed, it is not doing very well, the mainstream volume. A year ago, we decided in China to withdraw from all our joint venture, Kingway and Dafuhao , so the entire mainstream in China is what we are dodging now. That is what is going on. We have all our brewery capacity in China, with the exception of Hainan, because that is on an island. In China, all our brewery capacity is focused on brewing Heineken, just Heineken and a tiny bit of Tiger. Heineken is growing, even in China, more than 2 million hectoliters as well, and the Heineken brand is performing very well.
Our strategy for the time being in China is to concentrate on the Heineken brand, just as we have been doing for a number of decades in the U.S. That is China. Your question about India. Your description is more or less correct. Everybody can read what is going on in the newspapers. The thing is, what I would like to say is that this does not affect the business of United Breweries in India because the business management is professional. It is a listed company. It has a supervisory board with several gentlemen and ladies, independent directors from the Indian world of business. We ourselves are also a member of the supervisory board, and it is a company that is simply doing very well. All these developments around our partner are hardly affecting what is going on in India. The priority right.
In principle, we have a priority right, but we would have to exercise this right whenever we may exercise this right. I mean, we don't control that. For the moment, in our partnership with Mr. Mallya, we have never encountered any problems. I'd like to underscore this. It's been an excellent partnership with the number of shares that he has, or the companies that he has in United Breweries are now held by banks. When these banks proceed to sell, we would be a preferential candidate to purchase the shares at fair value. This is being regulated in India. The stock exchange in India has very strict rules for these processes, but we can only sit back and be passive in this respect. I mean, there's no plan. At the time, it was 2009 that we started this joint venture.
It's continuing to be a joint venture that has a major part of the beer market in India. We look at India as being one of the most promising beer markets in the longer future. Long, long-term future. For the rest, you were talking about rumors about CCBA. Well, let's leave it at that. As you know, I'm not going to comment on rumors here today. Rumors or things that may transpire in the market. I'm not going to talk about that, neither here nor in the press or in any capacity, and the same, of course, also applies to Sabeco. Your question as to whether our structure is an impediment for further acquisitions.
Well, of course, you can always ask that question, but so far, we have never encountered situations in which Heineken's structure and the fact that Heineken Holding controls Heineken was any form of impediment for our strategy. In our strategy, it is not our purpose to become the number one in the world in terms of volume. Our purpose is to grow there where we operate. We want to be a number one or a strong number two, strong runner-up, but we do want to be a world leader in premium brands, leading with the Heineken brand. That is our strategy. That is what we're concentrating on, and we're looking out for opportunities. From time to time, we start up greenfields, starting new breweries with new brands as we just did in the Ivory Coast.
We see many growth possibilities, organic, non-organic in the future for Heineken to turn it into a very, very healthy company. I would like to draw your attention to the fact that for 20, we have an average earnings per share growth of 10%, which is quite an honorable performance. I don't think the structure is any kind of impediment for our strategy. The last question, because you are immediately going to go on and on about the structure, and we can have a debate on that. Affligem, you asked a question about Affligem. If ever I retire, I shall become a monk, and that'll save all of us. No, seriously, the contract. The brand indeed is owned by the monastery, and the monastery will continue to exist, and the trademark rights that we have are eternal. That's all part and parcel of the deal.
Chairman, I was saying this. In the context of the merger of AB and InBev together, the leverage of 5 times cash flow, you don't want to talk about it, but there are a number of investment opportunities for you that were referred to in the press. If you add it all up, you will surely have problems with the banks because the banks are not going to be prepared to lend the money. You have to make choices. At the end of the day, you'll have to pay with shares. I'm looking at the Carvalho family, and I'm just wondering whether there's enough money to have a FEMSA structure with shares.
I propose that we just take cognizance of this observation, which as such, will be reflected in the minutes and that we proceed to the next person who would like to ask a question.
Good afternoon. My name is Robert Fraker of WeKnect-U Public Affairs and Investor Relations. It's always an enormous pleasure to attend this meeting because Mr. Van Boxmeer is always such a good listener and each and every year engages in an excellent dialogue. Every year, you proceed 1 step further. This is really a great year because in 2014 I asked the following question. I said, "Can we have Heineken 0.0? Is that possible?" The answer was, "There shall never be a Heineken 0.0." Obviously, that was terribly disappointing. You'll find it in the minutes, by the way, 2014. That's like Trump, isn't it? It sounds like Trump.
If it sounds like Trump, I would have to repeat it 3 times. Heineken 0.0 is great. Heineken 0.0 is the best. That would not be enough honor for you to refer to Trump. It's like a sort of lecture on your part. I'm really, really pleased that you launched the product because a friend of my son's, Floris Wellart, he had 4 beers and had an accident. His skull has been repaired with 4 screws, and I have a picture of him sent to your secretary. Last year, we were talking about Nico Vervelde. I work for the Cancer Institution, and I talked to the CFO and said I'm going to do about this.
The medical perspective, 10% of the population is suffering from excessive consumption of alcohol, and you see this happening in 25% of the families, which is why I'm so pleased with Heineken 0.0. Sports and alcohol drinking don't go together. My specific question, are you prepared to consider to replace all the Heineken advertisements in the Champions League and to replace it with Heineken 0.0? At the hockey club of my children, Hurley, in the Amsterdam forest, for 2 years, Radler 0.0 was given away free of charge. Would you be prepared to give away Heineken 0.0 free of charge so that children can get used to drinking alcohol-free beers? As far as I'm concerned, drinking and driving don't go together. You are a sponsor of Formula 1. Wouldn't it be wonderful if Heineken would be replaced in Formula 1 by Heineken 0.0 as well?
That way, worldwide, you would be giving off such a tremendous message. There's going to be another James Bond film. I'm sure Heineken will be in the limelight again. If we spend EUR 60 million on Heineken Zero, Heineken would become the number one alcohol-free beer worldwide. There are 1.5 billion Muslims worldwide, actually all of them should be drinking Heineken Zero. If it would be offered everywhere, wouldn't that be fantastic? Sustainability now. A specific question. A question was raised here about scarcity of water. Your colleague, Ralph Hamers of the ING, is very, very excited about the Upfall S hower, which saves you 90% water consumption and 90% gas consumption. Perhaps you could take another detailed look at this shower. Last year, we were talking about seat heating. We've progressed a bit.
The Ministry of Infrastructure and Water Management at the Ministry of General Affairs and Economic Affairs want to make sure that there are chairs heating on all the terraces in the Netherlands. We could save 95% in energy. It would cost you just a couple of EUR cents per seat. I talked to a colleague of yours at the Horecava. There's this gentleman who is in charge of 600 cafes. I suggested that he should apply this innovation. He said, "Well, if Mr. van Boxmeer would say that I should do it, I would do it." Heineken Experience, on the roof, there is seat heating. In Hohes Venn, we have Pepsi Max. There is seat heating sponsored by Pepsi Max with the logo and brand in Nijmegen. There are already sponsors that are engaging in seat heating.
Could you perhaps gradually, after all these wonderful suggestions, be able to come to some sort of conclusion and raise your question? Urbee, the electrical bike, is in Amsterdam, costs EUR 1 an hour, EUR 5 a day. If lots of your staff would start using these bikes, it would be really good for the environment. You would save a lot of costs in terms of car costs, fuel costs, diesel costs. Those are my questions for the moment.
I think you're right that if I said that in 2014, that was a very Trump-style never ever statement. To be honest, we struggled for a very long time with the actual product because non-alcoholic beer will never taste like beer that does contain alcohol. Please bear in mind that pure alcohol has no scent and no flavor, but is the best way of preserving taste and scent. Think of perfume. That's simply alcohol with lots of flowers. That's the idea. Beer or wine. Beer without alcohol is like a salad dressing without vinegar. Vinegar without vinegar simply won't taste the same. Making a product that has the refreshing taste of beer and the refreshing hop.
Making beer without alcohol, we've been doing it for a long time with Amstel and several other brands, but it's taken us a long time to figure out a recipe that we could proudly call Heineken. That's what happened, and it's based on advancing insights as for the potential of the brand today. Finally, I'll admit honestly that this group was traumatized by the Buckler . I'm sure that the Dutch listeners will understand what I mean, and that did complicate things. I think that we're now in a different era, and nowadays it's no longer relevant. As you clearly stated, in some circumstances, you just don't drink alcohol. There's some people who don't want to drink alcohol, but do want to enjoy the flavor of a beer. Quite simply, that's what we're trying to serve nowadays.
You mentioned the market of Muslims. Well, you simply think they should drink it? Well, they don't have to drink it, to be honest. Everybody is free to decide what he wants to drink or does not want to drink. I just wanted to point out that there are great many countries where if you market a non-alcoholic beer as well, if there's also an alcohol-containing version, then that non-alcoholic beer is prohibited. Let's not lump everything together. Your remark that you can't drink alcohol while you're engaging in sports and you can't drink and drive, they're entirely true. Our point is that they're not compatible. Watching sports together with friends, such as a football match on TV, you don't have to forego your beer in that setting. People understand that you shouldn't drink and then go play football.
Quite honestly, I don't think that's your strongest argument. As for the idea of using Heineken 0.0 to advance it, yes, we're going to sponsor the F1 in Barcelona in blue, because blue is the Heineken 0.0 color. In that sense, it's a good argument, but don't think that you're going to turn a Heineken into a non-alcoholic beer. The largest volume will be the Heineken that we know, we're proud of that and intend to valiantly promote that and develop sponsorships. We have a global brand, we need Formula One and Champions League and James Bond to take that global. The one idea doesn't stop the other.
Okay, we've got a lady waiting for a very long time, very patiently. Now she has the floor.
Thank you, Mr. Vaes. I'm Ilonka de Beer from the VBDO.
VBDO is the Association of Investors in Sustainable Development, we've been attending shareholders' meetings for years, including this one of Heineken. We enjoy entering a dialogue with you. I'm delighted that sustainability figures high on your agenda, not only in your presentation, but also based on questions from the audience. The topic is clearly in growing demand. We were also delighted at the first integrated annual report. Our compliments to you, as well as the award that you then won for sustainable reporting from the edie. There's some nice scenes online of that award presentation. That's an impressive achievement. I have three topics, we indicated in advance that we'd be asking questions. The first is about the environment, the second is a social topic, the third is governance, and that also relates to the SDG, Sustainable Development Goals.
As for the environment, Heineken focused on three areas. First, water. We've discussed that at length, so I'm going to omit that question. Next, CO2 emissions and sustainable sourcing of products. Aside from water, you also use agricultural products, and this agriculture probably significantly impacts biodiversity, land degradation, and deforestation. In the press, you increasingly see concerns of many companies about deforestation. We were wondering whether it would be possible, and just to take it a step back, in the annual report, you have expressed affiliation with the Sustainable Agriculture Initiative Platform, and they're involved in proceedings where the farmers commit to a biodiversity plan for the farming grounds. In what measure is Heineken on top of that? Is that part of your code of conduct?
The next question is, we did not see in the annual report that Heineken has already calculated its effect or quantifies its effect on agricultural capital, such as deforestation and land degradation. We'd like Heineken to be a pioneer among brewers and quantify its impact. That was my first question about environment. The second is more social. One human right is the right to decent living. In addition to receiving a salary, people can meet their basic needs with that salary, such as sending their children to school, keeping a roof over their head, et cetera. In the annual report, you mentioned that you meet the minimum wage requirement in many countries, but in many countries you can't subsist from the minimum wage. We'd like you, in your supplier code of conduct as well, to mention to a living wage.
In what measure would you be willing to do that, or what progress have you already achieved there? My last question about the SDGs. We are delighted that you observe the SDGs and have included them in your annual report and have done a mapping for seven of the SDGs to contribute based on your present operations. You also mentioned that in strategy SDGs will figure prominently up to 2030. The VBDO would like you to associate quantifiable targets and KPIs to these SDGs and to report on them. Our question is, in what time frame would you be able to achieve this, if you intend to achieve it? Jean-François.
SDGs denote Sustainable Development Goals. The UN has proclaimed them because I got a lot of text messages telling me not to forget this or that. Somebody heard STGs, but you meant SDGs, the Sustainable Development Goals. First, about sustainable agriculture. We launched that in the Netherlands 15 or 18 years ago. My predecessors did that. That was in the Flevopolder. Biodiversity often relates to return, because if all you're doing is growing potatoes, you keep needing more fertilizer and you won't grow as many potatoes, and the land will grow progressively less fertile, and you'll wind up in trouble. Biodiversity is about common sense and a new method of agriculture, and I've certainly seen that throughout Europe.
Massive progress has been achieved because you're also dealing with a new generation of farmers who unlike at their father's farms, we see that agriculture is thriving in our Western economy. Post-World War II, the Americans took it over in a context of needing to produce a lot of food for people who weren't consuming enough calories. I wouldn't forget all about history. This is clearly advancing insight on the part of science and learning from your mistakes and what does and does not work. Sustainability is about that, too. This SAI is a system for measuring it and putting it in perspective. I think in the past you just imagine we can measure all kinds of KPIs and it would cost a fortune and lots of manpower, and you'd have to set up a vast bureaucracy to report on that.
In addition to reporting on that, you want to report it accurately. We're perfectly willing, but we can't do it everything or we would no longer be a commercial company and all we'd be doing would be observing SDGs. We're also a commercial company. What we do care about is identifying a course of action and the plan for the future. The biggest engine of progress that I have noticed is generational. Young people are driving this company ahead. Here in the Netherlands, it took us seven long years to obtain permits to build three windmills in Zoeterwoude. Seven years. Who's the government to tell us that we have to be sustainable? The good news is that if we build these windmills in the forest, it will take seven months. That's progress. Looking to the future, once again, I see the glass is half full.
Everything that can be accomplished and what matters is that we're a very internationally established company. We're strong in that. People should set priorities and pursue them. We try to report as accurately as possible, but we have not fully succeeded yet in reporting exactly and accurately according to standards and according to the prescribed methods. The provisional measurement is that 17% of our supplies meets biodiversity criteria. In the two or three years ahead, we expect to achieve only 50% because we see a quick win situation. Beyond that horizon, I can't tell you very much, and I can't tell you where we'll get this because we're not the farmers. Biodiversity for yeast is both in France. For barley in is Beauce in France near Orléans. That's biodiversity.
With all those cooperatives, we know exactly what it is, and the generation that is now working on those huge farms is very different from the generation 20 years ago. I think that we're all headed down the right track. That was about agriculture. Next, about a living wage. Quite honestly, a living wage is quite a complicated notion. If we open a brewery, two weeks ago, we all went to Côte d'Ivoire for the official opening of the new brewery there. If we did not offer a living wage to the people who work for us, do you think that we'd have a winning team? Living wages are our stock in trade wherever we operate. In most countries, we pay well above a living wage. That's the reality of how we operate.
Conversely, as a company, you can be a trendsetter and you can team up with other companies, but you can never replace the government in any country to determine what the minimum wage should be in a certain country. At some point, we should stop thinking we can regulate everything from the perspective of omniscience. We don't always know better. Usually, when we operate a brewery or a distribution organization globally, we do it based on intuition and logic. Obviously, we have to pay a living wage or we wouldn't have a winning team. I think Mrs. Debroux would like to add something to that.
Maybe if I can just complement, I also understand your question as being the global supply chain.
Yes.
It is true that
Yes
We believe and we hope and we're committed to really pay a living wage also because it's our best interest to have people who want to work with us and are motivated. We have a very wide supply chain, and that's where it becomes very complicated because of the spread of our suppliers. Yes, we can always include something in the supplier code regarding remuneration, and we're looking into that, but it's very important for us to be able to actually implement the supplier code. We've made big steps. Our supplier code is now deployed with more than 60,000 suppliers, and we really go and check and have surveys and engage third party and audits. Being able to really validate whether every single of our suppliers throughout the global supply chain is paying a living wage. First of all, there are definitions issues.
Beyond the definition issues, this is extremely difficult to make. We are conscious that it's an important. We do our share by committing to paying very decently people in our breweries and in our own employees. It's important for us. It is not easy to actually put it in objective words and be able to check on every single supplier. That remains an area of difficulty. We've actually worked on our supplier code with an NGO called Forum for the Future. We worked with them in 2016, and we're reviewing their conclusion this year. We will update and upgrade our supplier code this year. We have to stay very realistic on what we can actually measure.
Clear. Thank you.
I think it is a very good point. If we're very honest, the touching point where it is difficult is in agricultural supply.
Yes.
Obviously. It is a tension between the fact that we are committed to have over 50% of our total supplies, and in particular in Africa, coming from local sources. Of course, what is left alone in working with what are small farming groups. There is where you might have some tension, especially if you start to work with more commercial groups. It's there where the tension can under pressure. Make no mistake, Africa will go slowly, maturely also to more commercial agricultural produce. It's there where the area of tension that you refer to will inevitably occur. Yeah.
Okay.
Ladies and gentlemen, now, I would like to adopt the annual report, unless there is an extremely important question.
Yes, Mr. Wijers, you know that I always ask important questions.
Yes, I wouldn't doubt that.
Who are you?
I'm Mr. Spanier, and of course, I read the annual report. The cover, that is really impressive. Whoever thought of that cover, that is really part of this wonderful company. It's a wonderful idea on page one, Mr. Chairman. The CEO in his letter wrote that we're proud of our Dutch heritage. Why don't you make the star on your logo orange? Because you know that in a certain group of the population, red leaves a very bad taste, and an orange star might boost your marketing efforts, too. In the next five years, you expect to spend hundreds of millions EUR on marketing. That's a wonderful idea, but with the orange star, we wouldn't have the problem with Hungary because Whether you purchase red or orange paint from your previous employer, the price won't vary that much. For marketing purposes, it might go a long way.
I'd like you to answer that first question. I thought about the horizon that the CEO mentioned. I'd like to think about that dot on the horizon. What's his view of Mexico? Because, of course, we've got Mexico before and after 8th November. What's your idea about Mexico now? Because before November 8th, it was an entirely different country because somebody else was in charge of the U.S. from now. What's your view on that?
Thank you, Mr. Spanier. Excellent questions. Yes, I thought you'd like them. I knew you'd ask wonderful questions.
Well, I'm going to get to work on that orange star because it's almost King's Day.
Yes, I'll tell the marketing department. Sometimes we pass your ideas on. That's with the huge orange sentiment.
No, all jokes aside, we had one problem, which you've all read in the press, and we were watching it, too. That's a bit closer to home. The Red Star in Hungary. How do you put it? There was a lot of fuss about that. It was a tempest in a teapot. Yes. We wouldn't call it a tempest in a beer bottle. Yes. Well, it's reaching its conclusion. Heineken will remain in Hungary with its Red Star. We're not going to change that Red Star to an orange one. That happens now and again, but we don't see that as a reason. Red and green have existed since time immemorial. We're very proud of that at Heineken. Occasionally, we add a touch of orange, but that's very occasional. As for Mexico, before and after November 8th, Mexico is not changing.
As for the brand potential for export from Mexico to the U.S., there are questions about additional duties at the border and tariffs. How would that affect us? It will affect a lot of American companies that have a symbiotic relationship with Mexico. They manufacture a lot there. The industry in northern Mexico is inextricably linked, and it's inconceivably inextricably linked with North America. There's an economic area between some provinces in the north of Mexico and the south of the United States. That's a single economic area that has been privileged by the NAFTA. We'll have to wait and see what happens. If worse comes to worst, then yes, that will impact us, but it will impact so many more things that we'll just be a drop in the bucket by that time. What about that drop? That's a very broad concept.
How can we quantify that in monetary terms? Mr. Spanier, of course, we do know internally that we do perform risk analysis, not only for Mexico. We do check the devaluation of the Nigerian naira, how that would impact us tomorrow. It could have dropped by 30%. That would have global consequences. We do that continuously. It's not only about what you see in the newspaper. There's a lot of other factors that are not in the newspaper. That's what you pay us for, and we do our job. As for our strategy, we don't want the entire group to be jeopardized by a single geography or a single disappointing geography. You have to think about that to continue having a positive perspective on the group. We can survive a minor setback if that happens.
Counterintuitively, with the stronger dollar and the weaker peso, the Mexican economy has experienced a boost in consumption because of all the Mexicans who send remittances to their family every month. They get more pesos, and they can consume more of our products. Our business is thriving there.
That sounds good. The last question from that gentleman over there, and then we will move on with the agenda. It is already past 3:00, and we are still at the first item on the agenda, but the rest will go quickly. I'd like you to guarantee that.
I'll be happy to oblige. I'm Mr. Vos. I'm speaking on behalf of the Foundation for Legal Protection of Investors. Ordinarily, we'd have Mr. Savin. Unfortunately, he can't be present, so he sent me as his junior assistant. That's why I'm a bit late in the line of questions.
Age is all relative, Mr. Van Boxmeer. My comment is that we were especially delighted at the annual report, the integration of sustainability in the annual report that as the former chairman of Milieudefensie really delights me. As for the results, we think it's a wonderful achievement if year after year you can boost the dividend by about 10%, and that certainly merits compliments both to you and to your supervisors. My only question is, if I look at the risk profile on page 21 and the risk appetite, it's very general, and what I don't see is the risks mentioned today, such as water shortage and those things. Wouldn't it be a good idea in your risk appetite to address sustainability and the threats, for example, in India, as well as your wonderful work capturing water that should yield positive water management for the surroundings?
That certainly merits mention in the annual report. Thank you. Mr. Das. As for your compliment about the report, I'll convey that to Blanca Juti, our corporate affairs chief at Heineken. Blanca, please raise your hand. She made sure that in addition to that beautiful binding you mentioned, as well as the content of the report are integrated, and she insisted that we do this despite saying we're not ready for it. She said, "We are ready for it." We did it. Blanca, thank you for insisting on this.
We cover the risk management, the main risk in the risk management section, and one could argue that it could be more developed on sustainability. We also cover it by reference to other section. For instance, if we look at financial risk, they're covered in depth in the annual report, and therefore we don't cover them completely in this section, we just incorporate. The link is there and it's definitely the more we integrate, and that is a great step for the company as well, because it's really required a lot of common work between all departments to get to the combined reports that we're presenting to you today. The more it's integrated in the business and the more indeed it is integrated in the way that the people in the business look at risk management. I would say formally it is more covered.
It's covered in more detail in the sustainability report, but it is there.
Okay. Ladies and gentlemen, I confirm that we have adopted the report as such. Number 1B of the agenda, the remuneration policy of the executive board. The remuneration has been explained on pages 50 to 58. Before we discuss this item on the agenda, I would like to give the floor to Mr. Maarten Das. He's the chairman of the Remuneration Committee, and he shall explain the implementation of remuneration policy. Mr. Das.
Thank you, Mr. Chairman, ladies and gentlemen. I'll be happy to give you a presentation on the implementation of the remuneration policy for the executive board 2016. As you know, our remuneration policy is based on four principles for remuneration, namely, in the first place, support to the business strategy, second, to remunerate according to performance, thirdly, remunerate in a competitive way and in a fair way.
I'll say a few words about each and every one of these principles. The first principle, support the business strategy, is materialized because of a considerable part of the remuneration, up to 80%, you've seen all the figures in the Remuneration Report, is dependent upon the realization of the previously determined targets. The financial targets for the short term and for the longer term variable remuneration provide us with a balanced focus on top line growth, bottom line growth, and cash generation. Furthermore, for the short term variable remuneration, we also have targets that focus on leadership skills in view of specific targets in one specific year. Also, these targets are determined beforehand. The second principle being remunerate according to performance, specifies the targets that reflect the business strategy.
For every target, we established a performance level, and for the financial targets, we also establish a threshold, a minimum threshold, and a maximum. For this performance, you can have a remuneration that could vary from 50%-200% of the target level. For performance that are below the threshold level, the remuneration will be zero. This method to determine variable remuneration at Heineken has existed since 2005 as part and parcel of the remuneration policy, and leads to the fact that a variable remuneration in a year with a lower performance can be low or even zero, and also leads to the fact that variable remuneration in a good year could be high. This is precisely the purpose of the remuneration policy. In accordance with this purpose, this very good year, 2016, led to a higher variable remuneration.
For the financial targets for the short-term and the long-term incentive, the following applies. In three cases, performance was between target and maximum level, and in four cases, performance was in excess of the maximum level. For those targets that focus on leadership skills of the short-term incentive, the supervisory board was of the opinion that the executive board has performed at a maximum level in a year in which market conditions were tough due to geopolitical and socioeconomic developments and challenges in the field of sustainability. Nonetheless, our worldwide market position expanded further because of the successful integration of our acquisitions in Malaysia, Jamaica, Slovenia, and Myanmar by setting up a joint venture in the Philippines, by setting up a greenfield operation in the Ivory Coast, and by acquiring a Coca-Cola bottling company in St. Lucia, a water company in New Caledonia, and a brewery in Vietnam.
The executive board also made headway with respect to the acquisition of the pubs in the U.K., Brasil Kirin in Brazil, that has yet to be approved by the competition authorities, but the work was done in 2016. Furthermore, we've improved marketing of the Heineken brand by means of sponsoring the Formula 1, our campaign for responsible alcohol consumption, and premature extension of the UEFA Champions League sponsorship from 2018 to 2028. In-house, we also took big strides in order to strengthen the competencies within the group senior executives in the line as well as in marketing and other positions. All these excellent levels of performance for financial and leadership targets have led to a short-term incentive for 2016 at the maximum level being 200% of target level and a long-term incentive for 2014 to 2016 at 175% of the target remuneration level.
The excellent performance in 2016 is reflected in higher variable remuneration in accordance with the purpose of our remuneration policy. The third principle of our remuneration policy, to offer competitive remuneration. That means that the level of the basic salary and long-term and short-term incentives plans for the executive board since 2011 has been derived from the median remuneration level of a worldwide peer group of 15 companies comparable to Heineken. Benchmarking ourselves with a worldwide peer group is justified because Heineken is simply a global company. Out of the 75,000 people who work for Heineken, only about 5% are working in the Netherlands. The rest is scattered across the world. The relevant labor market for senior management of Heineken is not the Dutch labor market, but the global labor market, and that justifies benchmarking with a global peer group.
Within the applicable remuneration policy, the supervisory board can adjust elements of remuneration of the executive board from time to time to the median level of this worldwide peer group. Our supervisory board did so for 2016 by making sure that the basic salaries of CEO and CFO are adjusted to this median level. The basic salary of the CEO increased for the first time in three years by 4.3%, and the basic salary of the CFO increased by 18%. These relatively steep increases are due to the fact that the initial salary of the CFO had been established when in April 2015, she joined Heineken at a level that was substantially lower than the median level of the peer group.
In view of the excellent performance of our CFO from the very beginning, Supervisory Board was of the opinion that her salary for 2016 should be brought to the median level of the peer group, and this leads to this relative steep increase of 18%, which is mainly due to the fact that her initial salary was far below the median level. For 2017, no increase of the basic salary had been implemented. This worldwide peer group has only been adjusted slightly, and that was necessary because SABMiller fell out of the peer group because of the acquisition by AB InBev and Philips was split up into smaller entities that no longer qualified for the criteria of the peer group. So that's how they disappeared from the peer group, and they were replaced by Nestlé. Nestlé absolutely belongs in this peer group in all respects.
Then we have the fourth principle for remuneration, fair remuneration, and this entails that all staff of Heineken or all senior management, all employees from the bottom to the top are to be remunerated in accordance with the relevant labor market levels. All this is derived from this worldwide peer group that we have to that effect. So ladies and gentlemen, that was my explanation of the remuneration policy for 2016. Thank you very much.
Thank you for this crystal-clear presentation. I suggest that we first take stock of the questions. Who would like to ask a question about the remuneration policy? I see Mr. Jorna's hand raised over there. He's the only person that I can see for the moment, right?
Yes. You've got a temporary monopoly here. Thank you, Chairman.
Chairman, I believe, as management, I think it's always wonderful to have a Supervisory Board that is in admiration of your performance and acknowledges everything you've done this past year. To me, it's also a matter of you're being paid for these things. It goes with the territory, and it shouldn't be presented as being so extraordinary. Mr. Das does this year in, year out, which is always wonderful, and I think that it's music to Mr. Boxmeer's ears. So that's a good thing for him. If we look at 2015 and then 2016, and of course, I can refer to history in many more respects, you never see, and enough has been said about this, that remuneration at Heineken is always a critical issue. There's a lot of criticism. If you then look at 2015, what is the score of Executive Board maximum?
2016 maximum performance, maximum scores in terms of targets. My question to Mr. Das and his colleagues, do you think that your ambitions are high enough, or do you have other evaluation standards that we're not aware of? I can always ask the auditor whether he feels that these standards have been reached. The question is whether you've raised the bar high enough for Mr. Boxmeer and Ms. Debroux.
Oh, I do see someone else. Mr. Frike would also like to ask a question. Please go ahead.
This is about remuneration policy, right? Well, what else would I discuss? Well, I was thinking solar cells or something along those lines. Well, isn't that a good idea? Because in Wieckse Witte, these advertisements, in the past, it said that it had been made on the basis of solar energy, and we no longer hear that.
I would request you to reintroduce that. Thank you for that comment. I think that Mr. Van Boxmeer is doing an excellent job, and I can show you based on a case that I know of. I was downstairs in the bar, and none of the people at the bar, I mean, the students, boys and girls, none of them had ever drunk Heineken 0.0, and I said, "Why don't we try?" We all tried it, and they all enjoyed it. They liked the taste. I think that this is worth a wonderful bonus for you. Furthermore, I'm also a member of the VEB, the Association of Stockholders, I keep an eye on Mr. Jorna. It's great that we have a national standard and a cap for the remuneration of CEOs, but nobody's sticking to those arrangements.
I think it's a good thing that Heineken employees have a good, comfortable salary, and I think the policy of Heineken is excellent. I'd like to thank you for that. Thank you very much. This is an observation that supports our policy, Mr. Jorna. It seems that I interrupted him, and it was never my intention. You have a second question. Second question, you have to publish the wage gap between the person who is making the most money and the person who is making the least money in the company. This differential, if you publish that differential, do you think that you can still stay in the AEX stock exchange listing, Mr. Das? This was your second question. Do you have any other questions? No, I don't. Thank you, Mr. Chairman.
Mr. Jorna asked two questions. The first question concerns targets. He says that remuneration in 2015 and 2016 was at maximum level. That's not entirely true. I just said that variable remuneration for the short-term incentive was at maximum level, but the long-term was at 175% last year, 2015. It wasn't maximum at all levels. Some were maximum performance, others were just high. In 2015, 2016, performance was very high, and that led to the question asked by Mr. Jorna. Are these targets challenging enough? Allow me to first explain the process for setting the targets. For the short-term incentive, the targets are derived from the annual plan, the annual budget. For the long-term incentive, targets are derived from the three-year plan.
The executive board and the supervisory board make sure that these annual plans, the one-year plan, the three-year plan, are very challenging plans because the purpose of these plans is to motivate the entire company to achieve excellent performance. The one-year plan and the three-year plan are very challenging, and because the targets are derived from those plans, by definition, these targets at target level are very challenging in themselves. It's quite an accomplishment to perform at target level. It's an excellent performance and an excellent accomplishment to achieve the maximum level. It hardly ever happens. If you cast your mind back, you see that it hardly ever happened, particularly in the field as a long-term incentive, it's more an exception than a rule that the maximum be reached.
For 2015 and 2016, the situation was different, and that wasn't because the targets were not challenging enough, but that was due to the fact that it was an excellent year. In such an excellent year, the whole idea of the remuneration policy, unfortunately, the outcome of the remuneration policy is that high variable remuneration is paid out. Now, that's my answer to the question as to whether the targets were challenging enough. My answer implies that these targets were certainly challenging, and the fact that these targets led to higher remuneration is based on excellent performance in those 2 years. How about next year? I'm sorry, I didn't hear what you said. Well, this is what we're hoping for next year as well. Or are you advising Mr. van Boxmeer to set something aside because next year's not going to be that good? No.
We have challenging targets for next year as well. Of course, it's in everybody's interest that we achieve those targets or even outperform those targets. You asked a question about the wage gap. Now, this is something that is addressed in the new corporate governance code in the Netherlands. We're still looking closely at how to comply with this or how to deal with this, and we're not entirely sure. The one thing's for sure, the result is not going to be that we will disappear from the AEX index. No, absolutely not. Today is the AGM of Wolters Kluwer as well, and there we have a CEO that is making a whole lot more money, so you're not going to come out as number one. Well, for the rest, I can't predict what will happen. That would be speculation.
I don't think we should engage in speculation. I was just assuming that Mr. Frike's comments were comments instead of questions. That's how I interpreted it, as well as a support for the remuneration policy that we pursue. Ladies and gentlemen, the remuneration policy has been adopted as such. Let's proceed to the adoption of the financial statements 2016. As I said, you'll find them on pages 59 through 134 and 153 of the executive board report. The financial statements have been audited by Deloitte Accountants. You'll find the audit report on pages 154 to 157. Before we discuss the financial statements, I would like to hand the floor to Mr. Van den Berg of Deloitte, who has audited the financial statements and who shall be explaining his audit.
Thank you, Chairman, for giving me the floor. Good afternoon, ladies and gentlemen.
I'm here right in between the executive board, supervisory board, and the shareholders. I like that. I'm happy to explain the audit of Heineken and our audit report. This is the 2nd year that we're the external auditor of Heineken. Management executive board is responsible for drafting the financial statements, and we are in charge of issuing our opinion. We've issued an opinion, in which we specify our opinion on the financial statements as such. I would like to take you through a number of aspects of our audit. I'll just take a couple of minutes. Let me start on the right-hand side, the scope of the audit. Clockwise, we'll be moving along the different topics. I'd like to say a few words about materiality, the key audit matters, and the report of the executive board, and also the sustainability report.
At the end of my presentation, I will be happy to answer any questions. First of all, the scope of our audit. It is important that you keep in mind that Heineken obviously is a structure operating in several countries. In all those countries, we work with Deloitte offices that audit the books in order to incorporate everything in the financial statements of Heineken. The supervision and the management of all these country auditors is very important. This past year, 25 countries were in the scope, which means that we had a full scope audit in these 25 countries, which led to a comfortable coverage with respect to the different items in the financial statements. We have a lot of central procedures, and we deal with that centrally from the Netherlands.
I am referring to the goodwill impairment test that is an important part of the balance sheet of Heineken Treasury, and that concerns funding and the valuation of derivatives, but also central procurement, Heineken Global Procurement, and also the application of data analytics and large parts of the IT organizations are audited from the Netherlands. This past year, as a group team, as a leading team, we visited several countries in order to supervise the execution of the audit these countries concerned, and you have been able to see this in our opinion, Mexico, Congo, Brazil, China, Vietnam, Italy, Poland, France, Austria, Papua New Guinea, New Zealand, Nigeria, South Africa, Russia, Jamaica, and Chile. I am mentioning these countries because it just goes to show that as a group team, we are quite dedicated to managing the audits in these local countries.
As a group team and as lead partners in this assignment, we spend a lot of time in this work. Our team consists of a number of employees, directors, managers, and other staff members, and also a team of specialists. That would be IT specialists, treasury specialists in the field of accounting, IFRS, taxes, but also valuation specialists. If we proceed to materiality, you will have read in our opinion on page 155 of the Heineken financial statements that has been determined at EUR 150 million for this year, which is about 6% of profit before tax for the financial year 2016. We applied a higher materiality than in 2015, that is on the back of increased business activities in terms of acquisitions in this period of time, but also the fact that 2015 was our first audit year.
If I move on to the left-hand side of the slide, I cannot see it myself, but you find the key matters of the audit, and these are the audit matters that were most significant in the execution of our audit, and they have been specified in our opinion. We do not give a separate opinion on these key audit matters, but there were four topics that we concentrated on. That was revenue recognition and also promotional compensation, et cetera, and also the impairment test on intangible assets and property, plant, and equipment. That is an important part of the balance sheet of Heineken, we focused on the valuation or the assessment of management taxes, and those are provisions for uncertain tax positions, but also evaluation of active deferred taxes and also internal controls regarding financial reporting.
In the opinion on 2015, there are two key issues that you do not see here. One concerned the initial audit assignment, but we do not have that now in the second year. The other one was the evaluation of the plastic refund for plastic bottles, and this year we felt that it is no longer or should no longer be a key audit matter. A few words about the report of the Executive Board. This past year, we have become more involved in the report of the Executive Board. In the past, we always considered the main issues, and we evaluated the main issues, see whether specific elements have been included, and also whether the report was in alignment with the financial statements. In 2016, we issued an opinion in conformity with rules and regulations, stating that there is no incorrect information, material incorrect information in the statement.
By the way, the tone of the top, the tone of the report is appropriate in our opinion. There is also non-financial information that has been included in the report, and that would particularly be the sustainability report. You will find this on page 135 of the annual report. As the chairman pointed out, we also issued an assurance report, a limited assurance report, which means that our procedures with respect to the sustainability report were based on acquiring, gathering information, and also executing data analytics. This was a bird's eye view of all the work, a lot of work that was done in the background, but I would like to leave it at that, and I would be happy to answer any questions should there be any questions regarding the implementation and execution of our audit. I would like to hand back to the chairman.
Well, who has a specific question about the role of the audit? I see Mr. Spanjer. Of course, I have. I see Mr. Jorna. Mr. Spanjer.
Yes, I have a question. Well, you have got lots and lots of experts, but big data is extremely important. Big data can save your organization much more money than just auditing the financial statements. Why do not you have big data specialists? Because this company has lots of big data, age categories. If people order things, you have all those data. Why do not you take those data into account? Because you also have operations in Africa, and in Africa, people do not lock their doors as firmly as people do in the Netherlands. So hackers can find their ways to homes in Africa. Why did you not keep an eye on that? Why do not you keep an eye on that?
Mrs. Spanier, you are in a very strict mood.
Yes, but it is dangerous. Mr. Van den Berg.
Yes, I am being admonished here. I can see that. Your assumption is that we did not look at that, and your question concerns a number of topics, I think. You are speaking of big data and consumer data. Well, this is not something that falls within the scope of the financial statements. But we do carry out data analyses whenever they concern the financial statements and the realization of the financial statements, and we do this centrally. Now, this would be manual records and other things. Your question, if I have interpreted it correctly, also concerns hackers, and I am sure you mean cybersecurity. It is good to keep in mind that we always consider the IT environment of a company, particularly Heineken.
We want to make sure that data processing is done in a reliable fashion, and this would also entail data security, access security. We also evaluate whether this is done properly within the company. If not, whether this is being flagged and addressed in an adequate way. Should that not be the case, obviously, we will focus on that. We'll discuss as much with this executive board.
If I can respond to that.
You should not respond, you should ask questions. Fine. I'll ask questions.
Thank you for that. In an article in the Het Financieele Dagblad, it said that you have to focus on this more. Deloitte was one of the big four that is involved in this. Are you going to hire someone specifically for big data in your team to be able to inform you a bit more about that?
I think that I've given you my answer. We have data specialists in the team insofar as these data are relevant for the audit. Mrs. Spanier, you should not believe everything that is published in the newspaper.
Mr. Jorna, you had another question.
Yes. Thank you, Mr. Chairman. I'm glad you're not that strict. We still have a relaxed atmosphere here. For the auditor, I see that you increased materiality from EUR 100 million to EUR 150 million. Was there a reason for that? Does it mean that your audit was less finely meshed? I don't think that that would be the case. I have seen that you flew in a specialist for pensions. He was not stated in the opinion last year. Was there a reason to do that, to fly in a specialist for pensions? Thank you, Mr. Jorna. Question about materiality.
As I explained in my presentation very briefly, that we increased materiality particularly because of the increased business activities, business operations of the company. When we determined materiality in 2015, it was at the beginning of the financial year 2015. As you may remember, there were a number of acquisitions in the course of 2015 that increased business operations. Another reason that I also referred to in my presentation was that 2015 was the first year we carried out the audit. In the meantime, we have gathered more knowledge about the company. We have been able to focus our risk analysis, and that was a justification for the fact that we increased our materiality. The benchmark, which is providing us guidance for materiality, is 5%-10% of profit before taxes.
With this materiality, we're at 6% profit before tax, which in our opinion, we're still on the conservative side. We also are keeping in mind that materialities as applied in the audit of the country organizations are at a significantly lower level with a maximum of EUR 15 million, which I believe has also been specified in our audit of the financial statements. You mentioned that this year we included that we had pension specialists in our team, which we didn't have last year. It's not that in 2015 we forgot to involve pension specialists because it's always a very tough topic. We always need to involve the expertise of specialists. If it was not stated in the audit, then that was an omission on our part. Thank you.
If there are no further questions or comments, we could perhaps proceed to adopt the financial statements for 2016, that means that we'll be voting. Mr. Jorna has one other question.
I thought you just wanted to deal with questions about the audit. The financial statements, there's a substantial loss that you incurred on currencies, amounted to quite a lot of money. In the past, I asked questions about that, and Mr. van Boxmeer always answered those questions by saying, "Shouldn't be so gloomy. We don't have to hedge that because most of the costs are also incurred in local currency." They offset each other. Which this year is not the case. That's one thing. How come this year the difference is so big? Of course, we're familiar with the currencies that have declined, but the costs that you incurred, were they so much lower?
The item of debtors, page 112, here we see that you have more than 120 days, EUR 450 million, and the year before it was EUR 347 million. How many of these EUR 347 million are still present in the 452 days outstanding that you have now? There's also an item that says impairment on that same page. 2016, it was EUR 341 for payments received of EUR 453. Is this an impairment that we should take into account? Do you have any bad debts included in this figure, et cetera?
I'd like to hear from you on that one. Laurence.
To answer you on loss of currencies. You have the two kind of currency risks that we incur. One of them is just translational risk of converting the result that we have in many different countries into EUR, converting every line of the P&L actually. The other one is transactional risk, which is that when, for instance, Nigeria needs to buy goods in foreign currency in order to produce the beer, then of course that costs them more if their own currency is devaluating. If you look at the translational impact in 2016, it's been particularly tough. The translations or really the conversion of our accounts into EUR, that cost us more than EUR 1 billion, the currency devaluations at a revenue level. At this level, it was very difficult to compensate it by organic growth only.
Because of the sound policy and cost control, we were able to compensate it at result level, that how we were able to still increase the profit, whether you talk about organic or reported. The impact at net result was more than EUR 100 million, it was compensated by the growth of the activity. Definitely 2016 has been a particularly tough year in terms of currency devaluation. Main impacts, as you know, being the Nigerian naira, whose devaluation finally happened at the end of the first half, also the Mexican peso, which has been really impacting us. I would say one of the achievement of the operating company in 2016, also one of the achievement of the spread in our geographic footprint, was to be able to compensate that with other countries actually performing very well and other currencies helping us.
Vietnam, for instance, has been quite positive in 2016. When we actually guided the market for 2017, what we said, and it was just quite conservative, is that we were not expecting an easier time with currencies in 2017. When it comes to your exposure to credit risk, I would say that in terms of impairment losses, we haven't seen any significant downgrading from one year to the other. This is definitely something that we're monitoring quite carefully. In times when an economy is becoming very difficult, you can see an increase in failures of your customers and more bad debt. That is not necessarily something that we've seen. Sometimes you have one-off release of provision of things like that that play from one year to another, but no material downgrading that would be worth mentioning in that context.
Okay. Sorry. [Foreign language]
Back to Dutch. I think now we're going to proceed with the vote unless somebody has any questions. If not, we'll open the vote. I'd like the voting operator to activate the system. Please use the voting boxes if the voting operator has activated the system. You'll see that your box is lighting up, and you'll see that you need to use your smart card. You need to insert your voting card, and you'll see a welcome message and your name. Please insert your voting card for Heineken N.V. without a yellow dot with a gold-colored chip facing towards you into the voting box. As soon as the voting system has been activated, your voting options will be displayed on the screen. If this does not happen, please raise your hand, and we have extremely helpful ladies who will be at your service.
Throughout the meeting, you may leave your voting card in the voting box. Let's see if anybody is having any problems. Oh, there are also gentlemen helping out with that, I apologize. Is everything working out? I don't see any hands raised. If you would like to vote in favor of the proposal, please press 1. If you wish to vote against the proposal, please press 2. If you wish to abstain, please press 3. Ladies and gentlemen, please cast your vote. The vote is now open. You may vote by pressing the button of your choice.
[Foreign language]
Ladies and gentlemen, the vote is closed. I hope that we will see the result of the vote, and I can tell you that the decision to adopt the financial statements for the financial year 2016 has been adopted by 99.96% of the votes. After having established that, we'll move on to the dividend and the dividend policy and an explanation about the dividend policy. The Executive Board proposes a dividend equaling 30%-40% of the net earnings, excluding special items and impairment of brands. (beia) this is compatible with the sustainable quality of Heineken, and it is compatible with retaining the healthy balance sheet structure for the company. Increasingly, we will be able to grow both organically and through acquisitions.
As usual, this is paid as an interim and final dividend, and the final dividend will be set at 40% as in previous years. Who would like the floor on this topic? Okay, that is fixed policy. It's been around for a while. I note that the dividend policy has been accepted. Onto 1G, which is establishing the dividend for the financial year 2016. It is proposed that a dividend of EUR 1.34 per share be distributed, which is 36.4% of the net earnings via, of which EUR 0.52 was already paid out on 11 August 2016 as an interim dividend. The final dividend of EUR 0.82 per share will become payable as of 3 May 2017 at the ABN AMRO Bank in Amsterdam as of 24 April of this year. The shares on the Euronext Amsterdam stock exchange will be listed ex-dividend.
The profit in the financial year 2016 will equal EUR 777 million and will be added to retained earnings in equity. Who would like the floor on that? I propose adopting the dividend at EUR 1.34 per share and voting on that with you. Would the voting operator please activate the system, and please cast your vote. We'll wait for the outcome. It looks reasonable because we note that the dividend proposal has been adopted with 99.91% of the votes cast in favor. Onto 1F on the agenda, which is discharge of members of the Executive Board. This is to discharge the Executive Board members for their management in 2016 and for performing their duties in the financial year 2016. Who would like the floor on that? If nobody would like the floor, I propose that we proceed with the vote. Would the voting operator please activate the system.
Please cast your vote. The vote is closed. I see that at 99.62% of the votes, the members of the executive board have been discharged for their management in 2016 financial year. Next is 1G, which is discharge of supervisory board members considering supervision of the management performed in the financial year 2016. Who would like the floor on that? Nobody. We will proceed with the vote. Would the voting operator please activate the system, and please cast your vote. The vote has ended. Oh, I see the results. At 99.62% of the votes, this proposal has also been adopted to discharge the supervisory board members for their supervision of the management in financial year 2016. We have 2A, B, and C. These are recurring items year after year. They're technical items, authorization of the executive board to repurchase shares. That's 2A.
We have that every year. Nobody has ever asked a question about that, but you can always break with tradition. No questions. Okay, we're going to open the vote. Would the voting operator please activate the system, and please cast your vote. Vote is closed. We note that 99.90% has voted in favor. The authorization has been granted. Next. That was 2B on the agenda. This concerns rights to shares. Who would like the floor on that? If not, I propose we proceed with the vote. Would the voting operator please activate the system, and please cast your vote. Vote is closed. I note that at 99.79% of the votes being cast in favor. The proposed authorization has been granted. That takes us to 2C, which is the authorization of the executive board to restrict or exclude shareholders' preemption rights.
Who would like the floor on that topic? Nobody. We will proceed with a vote. Would the voting operator please activate the system. Please cast your vote.
The voting is now closed.
Vote is closed. The result is that this proposal has also been adopted with 99.41% of the votes. The authorization of the executive board has been decided. Next, item three on the agenda, which is the replace of one of the performance standards for the long-term incentive. Under the executive board's remuneration policy, the long-term variable award plan currently includes organic EBITDA growth with a weight of 25%, as a means to measure the company's profitability, which includes the company's share of net profit from joint ventures and associates, i.e. entities that are not consolidated by the company. The supervisory board believes that organic operating EBITDA growth is a more suitable means for measuring the company's profitability within the context of the long-term variable award plan, since this measure better reflects the profitability that is under the direct control of the company.
Operating profit is one of the key figures of the company's consolidated results on which the company presently reports. Who would like the floor on this? Mr. Jorna. Thank you, Mr. Chairman. The question is, why are you introducing this now? Why didn't you do it last year? Why this particular timing? How do these shifts relate to one another? Is one much higher than the other? For example, if I consider this year, I see a shift from EUR 177 million to EUR 160 million, now we're going to pay out based on a higher amount. Have you analyzed the impact, have you examined that? What we don't see here is if you shift this thing, we know that it's 25% based on the four sections. You can also see that the amount fluctuates considerably. What's the target maximum?
What we would have preferred, especially given an important topic at Heineken, is that there are lots of acquisitions. You'd like to measure how much the return on investment capital equals or exceeds the cost of capital. If you take that as a long-term standard, you'll see the effect of the acquisitions, you can decide whether to divest. What's unfortunate is that if you change this, we believe that the policy decisions to enter a joint venture, we've seen quite a few of those, are not factored into the mechanism for checking how people perform over the long run. You're basically not considering everything, we don't think that this is compatible with the choices and policy of the executive board, they should be held accountable for that. It sounds logical. If you can't remunerate them, include it, but you've already made the choices.
That's why we do not support this change. I would propose that I give the floor to the chairman of the audit committee to discuss acquisitions, followed by Laurence, Mr. Das will take the last part.
Thank you, Mr. Chairman. In the audit committee, we have a standard procedure of reviewing the effects of an acquisition in a given year, after X number of years, we review the base case and the underlying assumptions for an acquisition, after several years, we check what the outcome was. In some cases, we overestimated the revenues, underestimated the costs. In other cases, it's difficult to determine how to measure this because companies are often integrated.
The standard procedure is to assess various acquisitions each year and see what the effects were, and see which lessons can be learned for the future to see whether we need to assess them differently and reach different decisions. It's not part of remuneration, but I imagine that Ms. Debroux or Mr. Das will answer that. It's impossible to express all the aspects of management and remuneration. This does indeed review the performance in the event of the acquisitions, and to see whether the assumptions were correct. Mr. Das.
Thank you, Mr. Chairman. Mr. Jorna's first question was why now and not previously? I believe that based on advancing insights, we've understood that operating profit is a better operating standard than EBIT, because EBIT contains some things that the company can't influence.
Therefore, in the internal reporting, EBIT has been replaced by operating profit, and that helped trigger the decision to propose that the standards in long-term variable compensation remain the same. And there, too, we've understood that EBIT is not as good a standard as operating profit. In addition, it's desirable for internal reporting and remuneration standards to coincide. If there are any differences between the outcome of EBIT and operating profit, then that will be clear from your plans. So that your plans for operating profit will reflect a different value than if EBIT had still been applied. But the new value in the year plan is the direct target level of variable remuneration, and that means that there is no increase or reduction of the standard. We still have to report based on the target level in the year plan.
It remains equally challenging, and I think I've answered Mr. Jorna's three questions. Not entirely, Mr. Chairman? Ms. Debroux will add.
In the short-term incentive plan at the consolidated NV level, you have the net profit, which takes everything. This is taken into account. As regards the switch from EBIT to operating profit, in the past, JVs were much more important in constituting the profit of the company. We now reach a stage where actually, if you look at the amount that come for the share of net profit of associate and JVs, it is quite minimal. That's one consideration. And then it has played in different direction, but really it is not significant. If you look at the organic growth, whether you take operating profit or EBIT, that wouldn't make really a difference here. At the same time, in 2014, we chose to make also a commitment to the market to increase the operating margin by an average of 40 basis points year-on-year midterm.
We found it was a good discipline because that's been something that has been very much appreciated to actually align the KPI we're using internally with the KPI that we are using externally. Talk about operating. The reason why we use that KPI externally from 2014 is exactly what I just told you, is that really that reflects the bulk of our profitability and what we really can control. I would say EBIT came from further away. Operating margin was given as a proxy of really what we can act upon. Today, the difference is very minimal, which it was much bigger in the past. It cannot be up to 20% or 25% of the profit of the company.
We checked whether this would all things being equal lead to an increase, but that's not the case. You need to do the same steps for target setting, it doesn't matter what your targets are. Mr. Das has already explained that they're all stretching. Okay. I understand it. I just appreciated the executive board explaining its own target method rather than the chairperson of the remuneration committee. It shows what a wonderful teamwork we have in this meeting. I think we've discussed this a significant length. No, we haven't. You have the floor. Mrs. Course.
I'm speaking on behalf of the parties I mentioned previously and also on behalf of the Telegraph Pension Fund and APG. We certainly identify with the proposed adjustment.
What we noticed was that explicitly in the annual report for 2016, you explicitly mention the targets for operating profits, you don't do this with organic EBIT. What I'd like to know is, could you, for the record, make them explicit? Your explanation was not very precise, we certainly would have liked to see that in the annual report. I sense some confusion behind me and next to me. May we answer this question offline after the meeting? I think I saw another hand raised. Mr. Frike, you have the floor.
Okay.
We're there. Mrs. Corsten, we'll take your question first.
Got the answer. Is the question right? It is actually in the financial review, which is included in the full year results. You find it a bit further than last year, but you find it also in the annual report, but it is in the press release.
Have you found the answer? I think that's only the organic operating profit of 9.9%. I'm talking about the organic EBITDA growth.
Page 12 of the press release, EBITDA growth of 9%. That's organic growth. You have the two lines with the reconciliation between the two.
Okay. [Foreign language]
Don't worry.
Okay.
Mr. Frike.
Yeah.
Mr. Frick, I would suggest and advise you to examine other interesting markets and family companies such as Illy and Lavazza. They're wonderful coffee brands, and they're very compatible with Heineken, and they might cost EUR 400 million or EUR 1 billion. Those might be nice add-ons because you'll find them in other food and beverage venues together with Pepsi. You might add coffee. This would be a nice addition to a previous item on the agenda because now we're talking about the performance standard and remuneration for that. Who else would like the floor? If nobody does, then we will proceed with a vote. I propose that we replace the previous performance standard also to the tune of 25% over the long year remuneration starting from the performance period from 2017 to 2019. We're going to proceed with a vote. Would the voting operator please activate the system?
Please cast your vote.
The vote is closed.
The vote is closed. This item has received 99.35% of the votes in favor to replace the performance standard concerned. On to item four on the agenda, ladies and gentlemen. That's the reappointment of the external auditor for a three-year period. According to Article 13.1H in our articles of association, the reappointment of the external auditor needs to be submitted to the approval of the annual general meeting of shareholders. The current external auditor, Deloitte Accountants B.V., was appointed at the annual general meeting of shareholders on 24 April 2014 for a three-year period. For the financial years 2015 through 2017. As a company, we have assessed the performance of Deloitte Accountants B.V. as its external auditor, and the senior director global accounting and reporting also did this evaluation. Finance managers of the main operating companies provided input for the assessment by means of questionnaires.
The main conclusions of the assessment have been discussed with the executive board and subsequently in the audit committee and the supervisory board meetings. Given the positive outcome of the evaluation, Deloitte Accountants B.V. as our external auditor, the supervisory board proposes reappointing Deloitte Accountants B.V. as external auditor for an additional three-year period. For the financial years 2018 through 2020. Who would like the floor on that topic? Nobody? I propose that we vote on this item. Would the voting operator please activate the system? Please cast your vote.
The glass is full. The vote is closed.
The glass is full. The vote is closed. We're now looking at the outcome. The proposal has been adopted with 99.69% of the votes. On to item five on the agenda, the reappointment of Mr. Jean-François van Boxmeer as member of the executive board. Ladies and gentlemen, in keeping with the reappointment schedule drafted by the supervisory board, the supervisory board has made a non-binding recommendation for reappointment of Jean-François van Boxmeer to take effect from 20 April 2017 for a maximum period of four years, i.e., until the end of the annual general meeting of shareholders in 2021. The supervisory board proposed reappointing him given his international experience, his leadership skills, and the way he performs his duties day after day as CEO. The supervisory board has reappointed Mr. Van Boxmeer as chairman of the executive board and CEO, subject to his reappointment by you.
Who would like the floor?
Jorna.
Mr. Jorna.
Jorna.
Mr. Jorna from the VEB. The VEB is delighted that Mr. Van Boxmeer will continue for a few years. He's going grayer and grayer compared to a few years ago, but we hope that his health will remain excellent. We were surprised because each time Mr. Van Boxmeer is reappointed, last time, we had a debate about the retention compensation, and Mr. Das fervently advocated that he would need a substantial retention compensation to remain with us. This year, that hasn't been raised. I would say that he's delighted to stay here with his good compensation. I would like you to confirm that there are no special agreements that if Mr. Van Boxmeer is to retire early or there's another benefit that comes up or other types of agreements.
I don't want any more rabbits pulled out of a hat in the next four years, or we'll have our delicious beers, and there are no special agreements aside from the remuneration policy that has been disclosed to you as shareholders. Are there any other questions? If not, I would like to open the vote on this proposal. Would the voting operator please activate the system? Please cast your vote
[Foreign language]
Vote is closed. I note that with our North Korean results of 99.96%, this reappointment has been approved. Congratulations. Thank you, Mr. Chairman. That takes us to 6A on the agenda, which is the reappointment of Mr. Maarten Das as member and delegated member of the Supervisory Board in keeping with the Articles of Association and the reappointments schedule. The Supervisory Board has made a non-binding recommendation that Maarten Das be reappointed as Supervisory Board member with effect from 20 April 2017 for a maximum of four years. Once again, until the end of the annual general meeting to be held in 2021. It is also proposed that Mr. Das be reappointed as delegated member of the Supervisory Board. You will have read information about Mr. Das in the explanatory notes, and you will have enjoyed his presence here again today.
The Supervisory Board proposes reappointing Mr. Das in view of his broad legal experience, his contributions to the Supervisory Board meetings, and his contributions to the Remuneration Committee and the Preparation, Selection, and Appointment Committee. Who would like the floor on this? Mr. Jorna.
Nee, maar goed. Volgens mij bent u in een flow.
I think you're on a roll. I thought I'd settle now. I think we're talking about Heineken's uncrowned king, Mr. Das. Yes, that had to be said. Of course, Mrs. de Carvalho-Heineken is the real boss, but Mr. Das follows closely. He's wearing three hats. He's a Supervisory Board member, he'll be the chairperson of the holding, and he's also decisive and leading at L'Arche Green . We also note this, since 1994, he's been performing well in this type of office. No quibbles. But the Van Manen Code prescribes knowing when it's time to step down, and that's what we wanted to share with you. We would like to ask the holding, how about recommending somebody else? Perhaps the young de Carvalho might be ready for that.
Of course, he doesn't have a law degree, but he does know a lot about beer, so in that sense, perhaps you could rejuvenate here as well. We will be voting in favor because we have no choice. We'd lose anyway. Thank you for this constructive contribution. Mrs. Course.
Once again, on behalf of the parties I mentioned earlier, you're familiar with our position. They align largely with what Mr. Jorna said. We take a different view of independence and exceeding terms of appointment when we talk about appointing and reappointing Mr. Das, as well as because he is the chairman of the Remuneration Committee. Unfortunately, we'll be voting against. We'll give him our shoulder to cry on after this disappointing statement.
Are there any other remarks? Mr. Vos.
I'm Mr. Vos, on behalf of the Foundation for Legal Protection of Investors.
You won't be surprised that as the junior assistant of this foundation, I'm going to strongly advocate experience and old age. I'm absolutely delighted that all of you feel otherwise because, as Supervisory Board members, you would certainly be remiss in your policy if you were to recommend somebody who was not up to the job. Age in years is meaningless. The years should be on a calendar. We consider capacity, experience, skill, and contribution to committees such as these. I wholeheartedly support the reappointment of Mr. Das on behalf of the Stichting, the foundation. Thank you very much.
Are you better, Maarten? Ladies and gentlemen, if there are no other comments, let's proceed with the vote. Would the voting operator please activate the system, and would you please cast your vote?
[Foreign language]
The vote is closed. We note that with an excellent percentage of 95.62% of the votes, this proposal has also been adopted. That takes me to item 6B of the agenda, which is the reappointment of Mr. Christophe Navarre. In keeping with the articles of association and the rotation schedules, the supervisory board has made a non-binding nomination for the reappointment of Mr. Christophe Navarre as member of the supervisory board, effective from 20th of April 2017 for the maximum four-year period. Once again, until the annual general meeting of shareholders in 2021, we'd like to appoint him because of his extensive experience in beer and spirits, his knowledge of marketing, and his contributions to the supervisory board meetings and to the Americas Committee. Who would like the floor on that topic?
Yeah, go.
Please go ahead. I have a question. Please state your name.
You know my name. I'm Spanjer.
Well, there's a recording. This is for the recording.
I've got a question. Why does Mr. Navarre want to be reappointed? What is his reason to continue for another four years? I'd like to hear that. Well, we'll give him the floor for that. Mr. Navarre.
That's a very good question. Sorry?
You almost.
Okay. Well, I think it's not up to me to answer to this question. I think it would be better if the chairman answer because, okay, you know my position in the industry. I've worked during 8 years for ABI in the old time, it was Interbrew. I moved to LVMH in charge of Hennessy, a big brand in the U.S. and in Asia. I was appointed 12 or 13 years ago, Chairman and CEO of Moët Hennessy, the MH of LVMH. I'm running all around the world and meeting a lot of people in the industry, there are close relations between the spirits industry and the beer industry, I think I try to contribute as much I can to the success of this wonderful brand.
I would like to mention that Moët Hennessy launched Heineken a long time ago in France.
Now,
Well, we're delighted if you will support the proposal that we're going to open the vote on. Would the voting operator please activate the system?
The voting is closed.
Vote is closed. We are delighted that Mr. Navarre has been reappointed with 99.62% of the votes, he's been reappointed to the Supervisory Board. Ladies and gentlemen, that takes us almost to the end of this agenda, I have a few announcements left for you. First, this is the farewell of our chairperson of the Audit Committee and member of the Supervisory Board, Mr. Henk Scheffers, who will be stepping down from the Supervisory Board in 2013. He was appointed as member of the Supervisory Board. On your behalf, as well as on behalf of the other Executive and Supervisory Board members, I'd like to thank him for everything he's done for the company. In addition to his contribution to the Supervisory Board, he's always invested a lot of energy in the Audit Committee and have chaired it for the past three years.
We'd like to thank you very much for what you did and how you did. We will miss you and our sincere gratitude. Ladies and gentlemen, there are two other persons. You may not see them at these meetings, but they're always very important. First is our secretary to the Executive and Supervisory Boards, Ernst van der Veer, who is on a dazzling career, he prepares a lot of shareholders meetings and other things. He's done an excellent job and exemplifies career development policy within Heineken because he held this position for only four years but has done so well that he is now going to become the firm's chief legal officer, he will leave us in his present capacity. On behalf of the Executive and Supervisory Boards, I'd like to thank him. He's over there. Please rise.
We'd like to thank him for all his excellent work. He will be succeeded by, just to show you that Heineken appreciates diversity at all levels, by Leonie Sijmons, up-and-coming law graduate, and we'll be able to ask her all kinds of questions about where we stand as well. Leonie, please rise as well. Next, somebody else will be leaving us, who for 20 years has been extremely important. José van Rijk. José, where are you? That's where she always is? Behind the scenes. Backstage. For 20 years, she has been extremely important for all practical organization of shareholders meetings, and she has liaised with all kinds of internal and external parties. José, I'd like to thank you for your excellent work and we will now present you with a lovely bouquet. Ladies and gentlemen, I'm going to conclude the meeting officially, stay in your seats.
In a moment, we'll ask you to leave the room, after all those virtual beers, I'm sure you don't mind. I'd also like to tell you that the general meeting of Heineken Holding shareholders will start in the dinner room on the fourth floor. Not in this room. The hosts and hostesses will escort you there. For that reason, we'd appreciate it if you take the exit to my right, that is the quickest way to reach the dinner room, the banquet room. Shareholders of Heineken should surrender their voting boxes and voting cards. Heineken Holding shareholders should also surrender their voting box but should keep their voting cards, and the hosts and hostesses will check their voting cards there and present them with a new voting box.
Don't try to vote in that meeting with this voting box, or it won't work, and that wasn't right. Thank you for coming. I'd also like to thank our listeners via the audio webcast. The Heineken Holding meeting will also be webcast. Thank you. Have a lovely afternoon and evening.
Use the headphones and listen to channel 2. Questions raised in English will be answered in Dutch and there'll be interpretation. Those of you who are suffering from a hearing impairment, you can also listen to the proceedings of the meeting on channel 1 through the headphones. As we stated before, and as we stated in the convocation of the meeting, the meeting will be webcast. Thank you. I'd like to proceed to the formalities of the meeting. I confirm the following: the meeting was convened on March 7, 2017, by means of a notice published on the Heineken website. March 23, 2017, is the record date for this meeting, which means that those entitled to attend the meeting and to cast votes, are the shareholders who were registered as shareholders on March 23, 2017.
In the notice of the meeting, we've included the agenda, and the notice of the meeting specifies that the agenda, the explanatory notes, the annual report, and the financial statements for the financial year 2016, as well as other data, have been made available to the public at large on the company website and at the offices of Heineken. All the formalities have been complied with as required by the Articles of Association and the law, which is why we can take valid and due decisions with respect to the topics that have been announced in the convocation. The shareholders represented or present here today have submitted a proof of receipt from their institutions, and the company has offered the shareholders the opportunity to provide a voting instruction by internet, and this possibility has been used.
I've just heard from the Civil Law Notary that 32 shareholders are present, 41 shareholders are represented, that 721 shareholders have voted on the internet, 794 shareholders, holders of in total 256,090,930 shares entitled to cast as many votes, which is 88.91% of the issued capital they represented here. The resolutions passed today and the results of the votes shall be posted on the Heineken website within a couple of days. Shareholders can request the minutes of the meeting from the corporation, and the minutes of the meeting shall be available within three months and will be posted on the website of the corporation. The meeting shall be attended by Civil Law Notary Meppelink of Loyens & Loeff N.V., he's sitting on my left-hand side, and he will supervise the vote.
The meeting is also attended by the auditor of the company, Mr. Van den Berg, also on my left-hand side, of Deloitte Accountants. Furthermore, it says here, I don't know whether it's true, the meeting is being attended by representatives of the press. I would like to welcome all those present. Anybody who would like to take the floor at the meeting is requested to use the microphones in the room and to state his or her name as soon as I have granted him or her the floor. Any speaker that is speaking on behalf of another shareholder is also requested to inform us which shareholder he or she is representing. I reserve the right to limit the speaking time of a shareholder if the meeting or proceedings of the meeting give rise to such a decision.
Once again, this year, we're going to try to use the voting handsets. Last year that failed, as soon as we're ready to vote for the first time, I'll explain how things work. This leads us to item one of the agenda, which is the discussion of the report of the board of directors for the financial year 2016. As usual, this meeting, we shall say a few words about the development of the lower share price of the Heineken Holding N.V. as compared with the higher share price of Heineken N.V. Well, we see this and the discount on page 10. The discount moved between 14% and 6% in the fiscal year concerned, and on the 30th December amounted to about 8%. Yesterday, the discount amounted to 6%. Historically, these values are normal to low.
On the graph, we can also see that the share price, Heineken Holding N.V. in 2016, has declined from EUR 71 at the beginning of the year to EUR 66.14 on December 30th. Yesterday, the share price had increased up to, well, in excess of EUR 66, I think EUR 67. Now we'll be discussing the report for the financial year 2016. You'll find that on pages 10 following the financial report.
Who can I give the floor? Mr. Frike.
Well, I'm extremely pleased and proud that this family company, the largest family-owned business in the Netherlands, with a revenue of more than EUR 20 billion, has been able to introduce Heineken 0. That just goes to show what corporate responsibility is and that you're actually listening to shareholders. In 2013, I said as much.
I thought it was 2014, but it turns out it was 2013, and it's great that you were able to realize this within five years. Furthermore, I made a suggestion. I'm crazy about family-owned businesses, and in terms of beer, of course, the growth isn't that impressive. I said to Mr. Polman, the CEO of Unilever, I said, "I advise you to make sure that Lavazza." Great. Is it not working? It's on channel five. Channel five. Is it working?
For me, because I don't exercise it every day. I'm very proud at this company because it's the largest family business in the Netherlands with a turnover of more than EUR 20 billion. That's absolutely great. I'm also very proud, in 2013, I asked in the annual meeting to start with Heineken 0, and it took only four years to realize Heineken 0. I suggested to Mr. Polman of Unilever to buy either Lavazza or Illy. He didn't listen to me, and now he's in big trouble. He prefers tea to coffee, and he said tea is the worldwide market, but I feel that for Heineken, Lavazza or Illy might be very, very interesting. Furthermore, in the field of sustainability.
Mr. Frike, I'm sorry. I have to interrupt you because you are making all these valuable suggestions that you already made at the Heineken N.V. meeting, and indeed, that was the appropriate place to make those suggestions. It is indeed tradition that anything that has to do with business operations, with running a business, and possibly making changes to that that be addressed in the meeting of the company that is in charge. We shouldn't be doing that at the holding here, and here we're particularly focusing on the function of the holding, which is not running the business because the N.V. runs the business. I'd like to thank you warmly for your positive contribution, but I don't think it's very useful to repeat the suggestions that you made in the previous meeting.
I think the interpretation is working now, so if you'd like to say something, you can say it in Dutch. I would urge you to keep in mind that anything that hasn't got to do with the company is to be addressed here, and anything that has to do with the company, with the N.V. I need some time to think about this. I'm just gonna take a timeout. That's fine. I'm sure there'll be another item on the agenda in which you might find it useful to say a few words. Would anybody else like to comment on the board of directors report? Mr. Jorna.
Thank you, Mr. Chairman. Jana on behalf of the VEB, the Association of Stockholders. I shall not repeat myself because we already know what the results are.
Yesterday evening, when I was enjoying an Affligem beer, I thought, "Why should I sell my shares NV and buy the holding shares? I get the same dividend. I get Mr. Das in both meetings, so there's no difference there. I get the exact same dividend. Why? Why wouldn't I buy holding instead of the NV?" Could you explain?
I can't explain why you shouldn't buy holding shares, but I can explain why you should buy holding shares for the exact reason. You can get the dividend at a lower price, and the share price development, in general, has been favorable over the past few years. The beginning of the century, when we still had legal proceedings before the Enterprise Chamber, the discount could increase up to 30%, but that is a matter of the past.
If you buy the shares now with a discount, you will get the same value at a lower price, and if you look at previous years, there's no reason to fear that all of a sudden there'd be an increase in discount, which would impair the value of the share. Should we then say that we're really clever people and the others aren't that clever? Oh, I wouldn't venture to say, but I think it's a good idea to buy holding shares. Are there any questions about the report of the Board of Directors? If not, I think we can adopt it and take it as information. Implementation of remuneration policy for members of the Board of Directors.
In 2005, the general meeting of shareholders has approved the policy regarding the remuneration of members of the Board of Directors, this policy entails that the remuneration of members of the Board of Directors is equal to the remuneration of the members of the Supervisory Board of the Heineken N.V. For 2016, this boils down to a remuneration of EUR 90,000 per year for the chair and EUR 60,000 per year for the remaining members of the Board of Directors. For information regarding the implementation of this policy in 2016, I would like to refer to footnote 33 in the explanatory notes to the consolidated financial statements, this shows that these amounts were indeed paid out. According to legislation, this item of the agenda is a discussion item.
It's not a voting item, it can be discussed, my question is, who would like to take the floor on this matter? Nobody. I suggest that we conclude the discussion, we proceed to the next item on the agenda, which is the adoption of the financial statements for the financial year 2016. Financial statements drafted by the Board of Directors has been printed on page 20. Following the annual report, the audit has been done by Deloitte Accountants, you'll find the opinion of the auditor on page 104. Who would like to take the floor about the financial statements? Well, I suggest that we proceed to a decision with regards to the financial statements, we shall do so by means of the handsets. I shall ask this voting operator to activate the system.
If all goes well, your display should show a word of welcome and your name. Now I would request you to insert your voting card with the gold-colored chip facing towards you. As soon as the vote is opened, the display will show the different options for the vote. If you don't see that, perhaps you should raise your hands so we can help you. Throughout the meeting, you can leave your voting card inserted in the handset. Well, I think everything works. Nobody's protesting. If you wish to vote in favor, please press button 1. If you wish to vote against, press button 2. If you wish to abstain from voting, please press button 3. I declare the vote open on the financial statements 2016, and I would request you to cast your vote by pressing the button of your choice.
We can't hear the noise of the glass that is being filled or the beer poured into the glass. Well, it took about 10 seconds at the previous meeting before the glass is poured full. Those 10 seconds have passed, I can close the vote. Vote is closed, this is where we see the result of the vote. This proposal to adopt the financial statements has been carried with 99.98% of the votes. Item 4 of the agenda is the announcement of the appropriation of the balance of the income statement pursuant to the provisions of Article 10, Paragraph 6 of the Articles of Association, which say that the dividend received by the holding will be passed on to the shareholders of the holding. This is a provision in the Articles of Association.
This is something we don't need to vote on. The dividend for the financial year 2016 amounts to EUR 1.34 per common share, nominal amount of EUR 1.60. On the 11th of August, 2016, an amount of EUR 0.52 was already made payable as an interim dividend. The final dividend will be paid out as per the 3rd of May, 2017 at the ABN AMRO Bank in Amsterdam, which is EUR 0.82. As per the 24th of April, 2017, the shares will be listed at the stock exchange of Euronext Amsterdam ex dividend. Item 6 of the agenda, discharge of members of the board of directors in the financial year 2016, which is Item 5. Right, says the chairman. Item 5.
We'll be discussing the proposal to grant discharge to the members of the board of directors for their management in the financial year 2016, as reflected in the financial statement. Who can I give the floor? Now we can put this to the vote, this proposal to grant discharge. The vote is open. We're improving. Things are going really nice and smoothly. Thank you for that. The vote is closed. I confirm that the proposal to grant discharge to members of the board of directors has been carried with 99.97% of the votes. Item 6 of the agenda. There are three sub-items here we'll be dealing with the authorizations that we deal with every year. First of all, the annual authorization to the board of directors to purchase its own shares, under the conditions specified.
This is an authorization that was granted last year. It's necessary to grant this authorization every year in order to make sure that it is not discontinued or eliminated. I'd like to put this to the vote. Vote is open. Vote is closed. The proposal is adopted with 99.97% of the votes. Now, 6B. Here we're dealing with the proposal regarding the authorization of the board of directors to issue rights to shares. This is an authorization that was always granted in previous years. The proposal is to extend this authorization. Who would like to take the floor on this item? We'll put it to vote then. The vote is open. You're requested to cast your vote. The vote is closed. The proposal's been carried with 99.72%, a disappointing 99.72% of the votes. 6C now.
This is the proposal concerning the authorization of the board of directors to restrict or exclude shareholders' preemptive rights with regards to the issuance of shares under the conditions specified in the explanatory note to the agenda. Once again, this is an authorization that is granted each and every year. It's necessary to extend it in order to make sure that it doesn't lapse. Nobody would like to take the floor regarding the proposal. We'll put it to vote. The vote is open. I'm requesting you to cast your vote. The vote is closed. The proposal has been adopted by 99.68% of the votes cast. Now, item seven of the agenda, the reappointment of the external auditor for a period of three years.
The current external auditor of the corporation, Deloitte Accountants B.V., was appointed at the general meeting of shareholders at the 24th of April 2014 for a period of three years, financial years 2015-2017. There's been an evaluation of the performance of Deloitte Accountants B.V. as the external auditor of our corporation and of Heineken N.V. This is an evaluation performed by the Audit Committee of the Supervisory Board of Heineken N.V. The most important findings of this evaluation were discussed at the meeting of the Board of Directors of Heineken N.V. Based on the positive outcome of the evaluations of Deloitte Accountants B.V. as external auditor, the corporation proposes to reappoint Deloitte Accountants as external auditor for the period of three years, financial years 2018-2020. Who would like to take the floor on this proposal? I propose that we proceed to vote.
The vote is open. The vote is closed. The proposal has been adopted with 99.99% of the votes. I congratulate the gentlemen from the auditor with their reappointment. That takes us to item 8A on the agenda. I'm going to hand over the chair of this meeting to Mrs. Kwist for this item.
Thank you, Mr. Das. I propose the reappointment of Mr. Das as non-executive member of the Board of Directors for a maximum of four years in connection with his resignation at the end of this meeting according to the rotation schedule in 1994. Mr. Das was first appointed as a member of the Board of Directors. In 2002, he was appointed chairman. Mr. Das became a non-executive member of the Board of Directors when the one-tier board was introduced in 2012.
It is proposed that Mr. Das be reappointed, given his broad legal experience and the way he performs his duties as member of the Board of Directors. The Board of Directors has reappointed Mr. Das to chair the Board of Directors, subject to his reappointment as a non-executive member of the Board of Directors. Who would like the floor on this item? Mr. Spanier, for the minutes.
My question is, why are you going to appoint somebody who already wears three hats? It boggles the mind. I'd like you to answer that. I don't understand why Mr. Das is driven to continue for another three years, says the speaker, because we just had Mr. Scheffers, who knew when his time was up. For Mr. Scheffers, it was yesterday and today at various companies. I'd like to hear more about how are we going to deal with this one.
Mr. Spanier?
The opinion is that the priority is very satisfied with Mr. Das and does not believe that his time is up yet. They're very satisfied with the way he performs his duties, and that's why they're recommending that he be reappointed. As for his three hats he wears, as you know, Heineken Holding's purpose is to safeguard independence, continuity, and stability of the Heineken group. One consequence of this is that we have structured this so that some people do wear two hats. Mr. Das is the delegated member of the supervisory board of the NV company. He's also a member of the Heineken Holding Board of Directors. The reason for this choice was to serve the purpose of Heineken Holding.
The objective of Heineken Holding, there's somebody else who serves both here and on the NV. Couldn't you say, we'll have somebody else chair the board, somebody who's independent, because he's wearing three hats? Well, I'm trying to figure out which three hats you mean. It's true that Mr. Das, officially, according to the old and the new corporate governance code, would not be regarded as independent. The reason for this, in our view, is formal. Prior to his appointment, he was a partner of an office that advised the company. That's one reason why he's not considered to be independent. Another reason why he's not considered to be independent is that he had an executive role before the holding became a one-tier board, and there was an executive board and a board of directors. Everybody had an executive role.
There are two people who have executive duties, and Mr. Das is not an executive member. According to the code, Mr. Das might not be independent, but we believe that Mr. Das's role is independent. I agree that formally that's not true, but the priority has decided to make this nomination, and that's what I'd like you to vote on. That's unfortunate.
Meneer
Mr. Yarden. Let me disillusion you. I just explained the three hats in the end phase, so that's known, and it wasn't refuted. If you consider Mr. Das's office in L'Arche Green, then you can note that he can hardly be labeled. He can be labeled as not really independent. Officially, you're right, but not based on the gist of the Van Manen code, which indicates that somebody should be appointed to a one-tier board for two four-year terms. If you think he's indispensable, you can extend that once more, and then you can do another two years extension, but that's it. According to the gist of the Van Manen code, you want some trickle-down, and you don't want an old boys network, and you're basically cuddling Mr. Das to death according to this code.
I hope not, but I'm sure you understand that there's a transition provision for board members eligible for reappointment in 2017, and that's the case with Mr. Das. In that case, the old arrangement of three times a four-year term applies. The priority is acting entirely as provided for by the corporate governance code. Would anybody else like the floor on this proposal? Just wait a moment. Three times four years. Does that mean that Mr. Das can remain in office until 2029? I don't object. You're anticipating things. You're getting ahead of the situation. I propose that we merely decide on the reappointment that is now up for the vote. This is Mr. Das's second reappointment, so that would take us to 2025. I don't think anybody said that. I propose that you decide on the proposed reappointment.
Please cast your vote by pressing the button of your choice.
The stemming is still.
The vote is closed. I note that the proposal to reappoint Mr. Das has been adopted with 90.56% of the votes. I congratulate Mr. Das on his reappointment. I'm pleased to hand sharing the meeting back to him as well. I'd like to thank the meeting for their confidence in me, and I'd like to thank my fellow board member for congratulating me and for her excellent chairing of the meeting. On to item 8B, which is the proposal to reappoint Mr. AAC, also Alexandre de Carvalho, as a non-executive board member. The microphone is switched off of the speaker. Interpreter apologizes. Microphone has been switched off. As non-executive member of the board of directors.
It is proposed that Mr. Carvalho be reappointed given his expertise in the beer sector as executive of Lagunitas Brewing Company and how he has performed his duties as a member of the board of directors. His reappointment would also continue the tradition of personal involvement by consecutive generations of the Heineken family in the Heineken Group. Who would like the floor about this proposal? Mr. Feke.
As you know, I'm in favor of family companies which are run by a huge family. Especially due to the fact that it's run very professional here, and it's one of the major brands in the Netherlands. I've noticed that Mr. De Carvalho is very sensitive, open-minded, has a focus on sustainability and health, and well, I wonder what his motivation is to go for another period of four years. Can you explain that to us?
Mr. Carvalho, are you prepared to give us an explanation?
Thank you for the question and for the compliments. I think it's the greatest honor to be able to have served four years already on the board. I think I've been working to be in a position to be suitable for this position for 32 years.
That's how I think about it. Being part of this company and being able to represent all shareholders, all stakeholders throughout everything that we touch is one of the most important things for me, for the family, and I hope for all of you. The opportunity to have another four years of being involved in such a fantastic business is what I'm looking for.
Yeah. You've a broad experience in the field of mergers and acquisitions. You worked for.
Mr. Freke, the idea is not to cross-examine Mr. De Carvalho. You asked about his motivation. He provided an excellent reply. I think that we should conclude this section of the Q&A. If you have other observations, please share them, but otherwise, I would like to proceed with the vote.
Mr. Das, I think you're too rigid. You're perfectly entitled to your opinion, but I would like to maintain the order of the meeting, and I think that you were basically approaching the limits by asking the candidate about his motivation. Another request in 2014, Mr. De Carvalho did an interview. It's nice when people who have such an exemplary role in society grant interviews about their extensive experience. I'd like to invite Mr. De Carvalho to do likewise. We'll certainly take your suggestion on board. That wasn't a question, but was a suggestion.
Would anybody else like the floor on this item? If not, we're going to open the vote. I now open the vote and request that you please cast your vote. The vote is closed, and the proposal has been adopted with 91.35% of the votes. I'd like to congratulate Mr. De Carvalho.