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Risks arising from financial instruments | 12 Months Ended
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Dec. 31, 2021
Text block [abstract] |
Risks arising from financial instruments |
28. | Risks arising from financial instruments
FINANCIAL ASSETS AND FINANCIAL LIABILITIES Set out below is an overvi e w of financial assets 1 and liabilities held by the company as at the dates indicated:
|  | 31 December 2021 |  |  | 31 December 2020 |
|  |  |  |  | At fair |  |  |  |  |  |  |  |  |  |  |  | At fair |  |  |  |  |  |  |
|  |  |  |  | value |  |  | At fair |  |  |  |  |  |  |  |  | value |  |  | At fair |  |  |  |
|  | At |  |  | through |  |  | value |  |  |  |  |  | At |  |  | through |  |  | value |  |  |  |
|  | amortized |  |  | profit or |  |  | through |  |  |  |  |  | amortized |  |  | profit or |  |  | through |  |  |  |
Million US dollar |  | cost |  |  | loss |  |  | OCI |  |  | Total |  |  | cost |  |  | loss |  |  | OCI |  |  | Total |
Trade and other receivables |  |  | 4 607 |  |  |  | — |  |  |  | — |  |  |  | 4 607 |  |  |  | 4 493 |  |  |  | — |  |  |  | — |  |  |  | 4 493 |
Unquoted debt (debt instruments) |  |  | 22 |  |  |  | — |  |  |  | — |  |  |  | 22 |  |  |  | 22 |  |  |  | — |  |  |  | — |  |  |  | 22 |
Quoted debt (debt instruments) |  |  | — |  |  |  | 374 |  |  |  | — |  |  |  | 374 |  |  |  | — |  |  |  | 396 |  |  |  | — |  |  |  | 396 |
Unquoted companies (equity instruments) |  |  | — |  |  |  | — |  |  |  | 139 |  |  |  | 139 |  |  |  | — |  |  |  | — |  |  |  | 115 |  |  |  | 115 |
Derivatives not designated in hedge accounting relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity swaps |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 27 |  |  |  | — |  |  |  | 27 |
Interest rate swaps |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | 45 |  |  |  | — |  |  |  | 45 |
Cross currency interest rate swaps |  |  | — |  |  |  | 52 |  |  |  | — |  |  |  | 52 |  |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | 7 |
Derivatives designated in hedge accounting relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forward contracts |  |  | — |  |  |  | — |  |  |  | 238 |  |  |  | 238 |  |  |  | — |  |  |  | — |  |  |  | 480 |  |  |  | 480 |
Foreign currency futures |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 36 |  |  |  | 36 |
Interest rate swaps |  |  | — |  |  |  | — |  |  |  | 17 |  |  |  | 17 |  |  |  | — |  |  |  | — |  |  |  | 35 |  |  |  | 35 |
Cross currency interest rate swaps |  |  | — |  |  |  | — |  |  |  | 60 |  |  |  | 60 |  |  |  | — |  |  |  | — |  |  |  | 100 |  |  |  | 100 |
Commodities |  |  | — |  |  |  | — |  |  |  | 282 |  |  |  | 282 |  |  |  | — |  |  |  | — |  |  |  | 235 |  |  |  | 235 |
Financial assets |  |  | 4 629 |  |  |  | 446 |  |  |  | 736 |  |  |  | 5 811 |  |  |  | 4 515 |  |  |  | 475 |  |  |  | 1 001 |  |  |  | 5 991 |
Non-current |  |  | 526 |  |  |  | 73 |  |  |  | 115 |  |  |  | 714 |  |  |  | 588 |  |  |  | 79 |  |  |  | 174 |  |  |  | 841 |
Current |  |  | 4 103 |  |  |  | 373 |  |  |  | 621 |  |  |  | 5 097 |  |  |  | 3 927 |  |  |  | 396 |  |  |  | 827 |  |  |  | 5 150 |
Trade and other payables |  |  | 22 074 |  |  |  | — |  |  |  | — |  |  |  | 22 074 |  |  |  | 20 807 |  |  |  | — |  |  |  | — |  |  |  | 20 807 |
Interest-bearing loans and borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured bank loans |  |  | 628 |  |  |  | — |  |  |  | — |  |  |  | 628 |  |  |  | 702 |  |  |  | — |  |  |  | — |  |  |  | 702 |
Unsecured bank loans |  |  | 106 |  |  |  | — |  |  |  | — |  |  |  | 106 |  |  |  | 294 |  |  |  | — |  |  |  | — |  |  |  | 294 |
Unsecured bond issues |  |  | 85 726 |  |  |  | — |  |  |  | — |  |  |  | 85 726 |  |  |  | 93 725 |  |  |  | — |  |  |  | — |  |  |  | 93 725 |
Unsecured other loans |  |  | 40 |  |  |  | — |  |  |  | — |  |  |  | 40 |  |  |  | 83 |  |  |  | — |  |  |  | — |  |  |  | 83 |
Commercial paper |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 522 |  |  |  | — |  |  |  | — |  |  |  | 1 522 |
Bank overdrafts |  |  | 53 |  |  |  | — |  |  |  | — |  |  |  | 53 |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 5 |
Lease liabilities |  |  | 2 277 |  |  |  | — |  |  |  | — |  |  |  | 2 277 |  |  |  | 2 234 |  |  |  | — |  |  |  | — |  |  |  | 2 234 |
Derivatives not designated in hedge accounting relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity swaps |  |  | — |  |  |  | 5 412 |  |  |  | — |  |  |  | 5 412 |  |  |  | — |  |  |  | 5 353 |  |  |  | — |  |  |  | 5 353 |
Cross currency interest rate swaps |  |  | — |  |  |  | 172 |  |  |  | — |  |  |  | 172 |  |  |  | — |  |  |  | 446 |  |  |  | — |  |  |  | 446 |
Foreign exchange forward contracts |  |  | — |  |  |  | 26 |  |  |  | — |  |  |  | 26 |  |  |  | — |  |  |  | 321 |  |  |  | — |  |  |  | 321 |
Derivatives designated in hedge accounting relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forward contracts |  |  | — |  |  |  | — |  |  |  | 103 |  |  |  | 103 |  |  |  | — |  |  |  | — |  |  |  | 370 |  |  |  | 370 |
Foreign currency futures |  |  | — |  |  |  | — |  |  |  | 37 |  |  |  | 37 |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | 5 |
Cross currency interest rate swaps |  |  | — |  |  |  | — |  |  |  | 98 |  |  |  | 98 |  |  |  | — |  |  |  | — |  |  |  | 264 |  |  |  | 264 |
Commodities |  |  | — |  |  |  | — |  |  |  | 35 |  |  |  | 35 |  |  |  | — |  |  |  | — |  |  |  | 26 |  |  |  | 26 |
Equity swaps |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21 |  |  |  | 21 |
Interest rate swaps |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial liabilities |  |  | 110 904 |  |  |  | 5 610 |  |  |  | 276 |  |  |  | 116 790 |  |  |  | 119 372 |  |  |  | 6 120 |  |  |  | 686 |  |  |  | 126 178 |
Non-current |  |  | 88 182 |  |  |  | 100 |  |  |  | — |  |  |  | 88 282 |  |  |  | 96 748 |  |  |  | 1 758 |  |  |  | — |  |  |  | 98 506 |
Current |  |  | 22 722 |  |  |  | 5 510 |  |  |  | 276 |  |  |  | 28 508 |  |  |  | 22 624 |  |  |  | 4 362 |  |  |  | 686 |  |  |  | 27 672 |
1 | Cash and short-term deposits are not included in this overview.
DERIVATIVES AB InBev’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest risk, commodity risk and equity risk), credit risk and liquidity risk. The company analyses each of these risks individually as well as on a combined basis and defines strategies to manage the economic impact on the company’s performance in line with its financial risk management policy. AB InBev primarily uses the following derivative instruments: foreign currency rate agreements, exchange traded foreign currency futures, interest rate swaps and forwards, cross currency interest rate swaps (“CCIRS”), commodity swaps, exchange traded commodity futures and equity swaps. The table below provides an overview of the notional amounts of derivatives outstanding as at the dates indicated by maturity bucket.
|  | 31 December 2021 |  |  | 31 December 2020 |
|  | < 1 |  |  | 1-2 |  |  | 2-3 |  |  | 3-5 |  |  | > 5 |  |  | < 1 |  |  | 1-2 |  |  | 2-3 |  |  | 3-5 |  |  | > 5 |
Million US dollar |  | year |  |  | years |  |  | years |  |  | years |  |  | years |  |  | year |  |  | years |  |  | years |  |  | years |  |  | years |
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward exchange contracts |  |  | 12 599 |  |  |  | 29 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 18 505 |  |  |  | 290 |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign currency futures |  |  | 1 617 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 218 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Interest rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 1 500 |  |  |  | 1 000 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 500 |  |  |  | 1 000 |  |  |  | — |  |  |  | — |
Cross currency interest rate swaps |  |  | 4 614 |  |  |  | 1 400 |  |  |  | 1 173 |  |  |  | 1 573 |  |  |  | 1 453 |  |  |  | 513 |  |  |  | 5 658 |  |  |  | 1 400 |  |  |  | 1 866 |  |  |  | 789 |
Other interest rate derivatives |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commodities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aluminum swaps |  |  | 1 241 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 184 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other commodity derivatives |  |  | 1 034 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 644 |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |
Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity derivatives |  |  | 11 469 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10 234 |  |  |  | 2 326 |  |  |  | — |  |  |  | — |  |  |  | — |
FOREIGN CURRENCY RISK AB InBev is subject to foreign currency risk when contracts are denominated in a currency other than the functional currency of the entity. This includes borrowings, investments, (forecasted) sales, (forecasted) purchases, royalties, dividends, licenses, management fees and interest expense/income. To manage foreign currency risk the company uses mainly foreign currency rate agreements, exchange traded foreign currency futures and cross currency interest rate swaps. FOREIGN EXCHANGE RISK ON OPERATING ACTIVITIES AB InBev’s policy is to hedge operating transactions which are reasonably expected to occur (e.g. cost of goods sold and selling, general & administrative expenses) within the forecast period determined in the financial risk management policy. Operating transactions that are considered certain to occur are hedged without any time limits. Non-operating transactions (such as acquisitions and disposals of subsidiaries) are hedged as soon as they are highly probable. The table below shows the company’s main net foreign currency positions for firm commitments and forecasted transactions for the most important currency pairs. The open positions are the result of the application of AB InBev’s risk management policy. Positive amounts indicate that the company is long (net future cash inflows) in the first currency of the currency pair while negative amounts indicate that the company is short (net future cash outflows) in the first currency of the currency pair. The second currency of the currency pairs listed is the functional currency of the related subsidiary.
|  | 31 December 2021 |  |  | 31 December 2020 |
|  | Total |  |  | Total |  |  | Open |  |  | Total |  |  | Total |  |  | Open |
Million US dollar |  | exposure |  |  | hedges |  |  | position |  |  | exposure |  |  | hedges |  |  | position |
Euro/Canadian dollar |  |  | (6 | ) |  |  | 6 |  |  |  | — |  |  |  | (9 | ) |  |  | 9 |  |  |  | — |
Euro/Mexican peso |  |  | (112 | ) |  |  | 111 |  |  |  | (1 | ) |  |  | (106 | ) |  |  | 102 |  |  |  | (4 | )
Euro/Pound sterling |  |  | (124 | ) |  |  | 112 |  |  |  | (12 | ) |  |  | (203 | ) |  |  | 130 |  |  |  | (73 | )
Euro/South African rand |  |  | (79 | ) |  |  | 75 |  |  |  | (4 | ) |  |  | (95 | ) |  |  | 65 |  |  |  | (30 | )
Euro/South Korean won |  |  | (39 | ) |  |  | 36 |  |  |  | (3 | ) |  |  | (40 | ) |  |  | 38 |  |  |  | (2 | )
Euro/US dollar |  |  | (123 | ) |  |  | 100 |  |  |  | (23 | ) |  |  | (354 | ) |  |  | 284 |  |  |  | (70 | )
Mexican peso/Euro |  |  | (254 | ) |  |  | 231 |  |  |  | (23 | ) |  |  | (249 | ) |  |  | 146 |  |  |  | (103 | )
Pound sterling/Euro |  |  | (14 | ) |  |  | 22 |  |  |  | 8 |  |  |  | (35 | ) |  |  | 36 |  |  |  | 1 |
US dollar/Argentinian peso |  |  | (661 | ) |  |  | 674 |  |  |  | 13 |  |  |  | (602 | ) |  |  | 543 |  |  |  | (59 | )
US dollar/Bolivian boliviano |  |  | (80 | ) |  |  | 75 |  |  |  | (5 | ) |  |  | (64 | ) |  |  | 56 |  |  |  | (8 | )
US dollar/Brazilian real |  |  | (1 846 | ) |  |  | 1 618 |  |  |  | (228 | ) |  |  | (1 573 | ) |  |  | 1 577 |  |  |  | 4 |
US dollar/Canadian dollar |  |  | (304 | ) |  |  | 253 |  |  |  | (51 | ) |  |  | (302 | ) |  |  | 194 |  |  |  | (108 | )
US dollar/Chilean peso |  |  | (171 | ) |  |  | 162 |  |  |  | (9 | ) |  |  | (151 | ) |  |  | 129 |  |  |  | (22 | )
US dollar/Chinese yuan |  |  | (123 | ) |  |  | 116 |  |  |  | (7 | ) |  |  | (171 | ) |  |  | 201 |  |  |  | 30 |
US dollar/Colombian peso |  |  | (476 | ) |  |  | 434 |  |  |  | (42 | ) |  |  | (359 | ) |  |  | 352 |  |  |  | (7 | )
US dollar/Euro |  |  | (103 | ) |  |  | 96 |  |  |  | (7 | ) |  |  | (98 | ) |  |  | 96 |  |  |  | (2 | )
US dollar/Mexican peso |  |  | (1 236 | ) |  |  | 1 168 |  |  |  | (68 | ) |  |  | (1 032 | ) |  |  | 995 |  |  |  | (37 | )
US dollar/Paraguayan guarani |  |  | (153 | ) |  |  | 139 |  |  |  | (14 | ) |  |  | (132 | ) |  |  | 125 |  |  |  | (7 | )
US dollar/Peruvian nuevo sol |  |  | (292 | ) |  |  | 278 |  |  |  | (14 | ) |  |  | (225 | ) |  |  | 168 |  |  |  | (57 | )
US dollar/South African rand |  |  | (196 | ) |  |  | 148 |  |  |  | (48 | ) |  |  | (130 | ) |  |  | 116 |  |  |  | (14 | )
US dollar/South Korean won |  |  | (114 | ) |  |  | 79 |  |  |  | (35 | ) |  |  | (71 | ) |  |  | 70 |  |  |  | (1 | )
US dollar/Uruguayan peso |  |  | (42 | ) |  |  | 42 |  |  |  | — |  |  |  | (40 | ) |  |  | 39 |  |  |  | (1 | )
Others |  |  | (323 | ) |  |  | 207 |  |  |  | (116 | ) |  |  | (260 | ) |  |  | 131 |  |  |  | (129 | )
Further analysis on the impact of open currency exposures is performed in the currency sensitivity analysis below. Hedges of firm commitm e nts and highly probable forecasted transactions denominated in foreign currency are designated as cash flow hedges. Foreign exchange risk on foreign currency denominated debt It is AB InBev’s policy to have the debt in the subsidiaries as much as possible linked to the functional currency of the subsidiary. To the extent this is not the case, foreign exchange risk is managed using derivatives unless the cost to hedge outweighs the benefits. Interest rate decisions and currency mix of debt and cash are decided on a global basis and take into consideration the holistic risk management approach. A description of the foreign currency risk hedging of debt instruments issued in a currency other than the functional currency of the subsidiary is further detailed in the Interest Rate Risk section below. Currency sensitivity analysis Currency transactional risk Most of AB InBev’s non-derivative financial instruments are either denominated in the functional currency of the subsidiary or are converted into the functional currency through the use of derivatives. Where illiquidity in the local market prevents hedging at a reasonable cost, the company can have open positions. The transactional foreign currency risk mainly arises from open positions in Brazilian real, Mexican Peso, Canadian dollar and South African rand against the US dollar and the euro. AB InBev estimated the reasonably possible change of exchange rate, on the basis of the average volatility on the open currency pairs, as follows:
|  | 2021 |
|  | Closing rate |  |  | Possible |  |  | Volatility |
|  | 31 December 2021 |  |  | closing rate 1 |  |  | of rates in % |
Euro/Mexican peso |  |  | 23.31 |  |  |  | 21.04 - 25.59 |  |  |  | 9.75 | %
Euro/Pound sterling |  |  | 0.84 |  |  |  | 0.80 - 0.88 |  |  |  | 5.15 | %
Euro/South Korean won |  |  | 1 345.90 |  |  |  | 1 273.31 - 1 418.48 |  |  |  | 5.39 | %
Euro/US dollar |  |  | 1.13 |  |  |  | 1.07 - 1.20 |  |  |  | 5.58 | %
Pound sterling/US dollar |  |  | 1.35 |  |  |  | 1.26 - 1.43 |  |  |  | 6.36 | %
US dollar/Argentinian peso |  |  | 102.75 |  |  |  | 99.72 - 105.78 |  |  |  | 2.95 | %
US dollar/Brazilian real |  |  | 5.58 |  |  |  | 4.68 - 6.48 |  |  |  | 16.07 | %
US dollar/Canadian dollar |  |  | 1.27 |  |  |  | 1.19 - 1.35 |  |  |  | 6.54 | %
US dollar/Chinese yuan |  |  | 6.35 |  |  |  | 6.06 - 6.64 |  |  |  | 4.55 | %
US dollar/Colombian peso |  |  | 3 977.14 |  |  |  | 3 568.65 - 4 385.62 |  |  |  | 10.27 | %
US dollar/Euro |  |  | 0.88 |  |  |  | 0.83 - 0.93 |  |  |  | 5.58 | %
US dollar/Mexican peso |  |  | 20.58 |  |  |  | 18.38 - 22.79 |  |  |  | 10.71 | %
US dollar/Nigerian naira |  |  | 424.89 |  |  |  | 379.56 - 470.22 |  |  |  | 10.67 | %
US dollar/Peruvian nuevo sol |  |  | 3.98 |  |  |  | 3.60 - 4.35 |  |  |  | 9.53 | %
US dollar/South African rand |  |  | 15.95 |  |  |  | 13.74 - 18.15 |  |  |  | 13.82 | %
US dollar/South Korean won |  |  | 1 188.32 |  |  |  | 1 092.29 - 1 284.36 |  |  |  | 8.08 | %
US dollar/Tanzanian shilling |  |  | 2 305.28 |  |  |  | 2 236.69 - 2 373.88 |  |  |  | 2.98 | %
US dollar/Zambian kwacha |  |  | 16.67 |  |  |  | 13.41 - 19.93 |  |  |  | 19.58 | %
|  | 2020 |
|  | Closing rate |  |  | Possible |  |  | Volatility |
|  | 31 December 2020 |  |  | closing rate 2 |  |  | of rates in % |
Euro/Mexican peso |  |  | 24.48 |  |  |  | 19.38 - 29.58 |  |  |  | 20.83 | %
Euro/Pound sterling |  |  | 0.90 |  |  |  | 0.82 - 0.98 |  |  |  | 9.09 | %
Euro/South Korean won |  |  | 1 335.11 |  |  |  | 1 218.41 - 1 451.81 |  |  |  | 8.74 | %
Euro/US dollar |  |  | 1.23 |  |  |  | 1.13 - 1.32 |  |  |  | 7.75 | %
Pound sterling/US dollar |  |  | 1.36 |  |  |  | 1.22 - 1.51 |  |  |  | 10.79 | %
US dollar/Argentinian peso |  |  | 84.14 |  |  |  | 74.55 - 93.73 |  |  |  | 11.40 | %
US dollar/Brazilian real |  |  | 5.20 |  |  |  | 4.13 - 6.26 |  |  |  | 20.51 | %
US dollar/Canadian dollar |  |  | 1.27 |  |  |  | 1.17 - 1.38 |  |  |  | 8.25 | %
US dollar/Chinese yuan |  |  | 6.54 |  |  |  | 6.25 - 6.82 |  |  |  | 4.34 | %
US dollar/Colombian peso |  |  | 3 438.52 |  |  |  | 2 908.55 - 3 968.50 |  |  |  | 15.41 | %
US dollar/Euro |  |  | 0.81 |  |  |  | 0.75 - 0.88 |  |  |  | 7.75 | %
US dollar/Mexican peso |  |  | 19.95 |  |  |  | 16.19 - 23.71 |  |  |  | 18.83 | %
US dollar/Nigerian naira |  |  | 397.72 |  |  |  | 345.23 - 450.21 |  |  |  | 13.20 | %
US dollar/Peruvian nuevo sol |  |  | 3.62 |  |  |  | 3.37 - 3.87 |  |  |  | 6.95 | %
US dollar/South African rand |  |  | 14.69 |  |  |  | 12.19 - 17.18 |  |  |  | 16.99 | %
US dollar/South Korean won |  |  | 1 088.02 |  |  |  | 1 000.21 - 1 175.84 |  |  |  | 8.07 | %
US dollar/Tanzanian shilling |  |  | 2 321.74 |  |  |  | 2 205.30 - 2 438.18 |  |  |  | 5.02 | %
US dollar/Zambian kwacha |  |  | 21.16 |  |  |  | 18.44 - 23.89 |  |  |  | 12.89 | %
In case the open positions in Brazilian real, Mexican Peso, Canadian dollar and South African rand as of 31 December 2021 remain unchanged, considering the volatility mentioned above and all other variables held constant, these currencies could lead to an increase/decrease on the consolidated profit before tax from continuing operations of approximately 54m US dollar over the next 12 months (31 December 2020: 30m US dollar considering the open positions in Mexican peso, Canadian dollar, Argentinean peso and Pound sterling; 31 December 2019: 22m US dollar). Additionally, the AB InBev sensitivity analysis 1 to the foreign exchange rates on its total derivatives positions as of 31 December 2021, shows a positive/negative pre-tax impact on equity reserves of 604m US dollar (31 December 2020: 850m US dollar; 31 December 2019: 548m US dollar).
1 | Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2021.
2 | Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2020.
Foreign exchange risk on net investments in foreign operations AB InBev mitigates exposures of its investments in foreign operations using both derivative and non-derivative financial instruments as hedging instruments. As of 31 December 2021, designated derivative and non-derivative financial instruments in net investment hedges amount to 11 921m US dollar equivalent (31 December 2020: 9 691m US dollar) in Holding companies and approximately 589m US dollar equivalent at Ambev level (31 December 2020: 671m US dollar). These instruments hedge foreign operations with Canadian dollar, Chinese yuan, Dominican peso, euro, Mexican peso, pound sterling, South African rand, South Korean won, Nigerian Naira and US dollar functional currencies. Net foreign exchange results Foreign exchange results recognized on unhedged and hedged exposures are as follows:
Million US dollar |  | 2021 |  |  | 2020 |  |  | 2019 |
Economic hedges |  |  | 717 |  |  |  | (181 | ) |  |  | 6 |
Other results - not hedged |  |  | (801 | ) |  |  | 195 |  |  |  | (186 | )
|  |  | (84 | ) |  |  | 14 |  |  |  | (180 | )
INTEREST RATE RISK The company applies a dynamic interest rate hedging approach whereby the target mix between fixed and floating rate debt is reviewed periodically. The purpose of AB InBev’s policy is to achieve an optimal balance between the cost of funding and the volatility of financial results, while taking into account market conditions as well as AB InBev’s overall business strategy. Fair value hedges US dollar fixed rate bond hedges (interest rate risk on borrowings in US dollar) The company manages and reduc e s the impact of changes in the US dollar interest rates on the fair value of certain fixed rate bonds with an aggregate principal amount of 1.0 billion US dollar through fixed/floating interest rate swaps. These derivative instruments have been designated in fair value hedge accounting relationships. Cash flow hedges Pound sterling bond hedges (foreign currency risk and interest rate risk on borrowings in pound sterling) In September 2013, the company issued a pound sterling bond for 500m pound sterling at a rate of 4.00% per year and maturing in September 2025. The impact of changes in the pound sterling exchange rate and interest rate on this bond is managed and reduced through pound sterling fixed/euro fixed cross currency interest rate swaps. These derivative instruments have been designated in a cash flow hedge accounting. US dollar bank loan hedges (foreign currency risk on borrowings against the Nigerian naira) The company has a floating rate loan denominated in US dollar for a total of 268m in Nigeria. This loan is held by an entity with functional currency in Nigerian Naira. In order to hedge against fluctuations in foreign exchange rates, the company entered into foreign exchange futures which have been designated in cash flow hedge relationship. Economic Hedges Marketable debt security hedges (interest rate risk on Brazilian real) During 2021, 2020 and 2019, Ambev invested in highly liquid Brazilian real denominated government debt securities. Interest rate sensitivity analysis The table below reflects the effective interest rates of interest-bearing financial liabilities at balance sheet date as well as the currency in which the debt is denominated.
31 December 2021 |  | Before hedging |  |  | After hedging |
Interest-bearing financial liabilities |  | Effective |  |  |  |  |  | Effective |  |  |  |
Million US dollar |  | interest rate |  |  | Amount |  |  | interest rate |  |  | Amount |
Floating rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Australian dollar |  |  | 1.03 | % |  |  | 218 |  |  |  | — |  |  |  | — |
Canadian dollar |  |  | — |  |  |  | — |  |  |  | 1.21 | % |  |  | 2 043 |
Euro |  |  | — |  |  |  | 1 113 |  |  |  | — |  |  |  | 1 113 |
Pound sterling |  |  | — |  |  |  | — |  |  |  | 1.05 | % |  |  | 1 002 |
South Korean won |  |  | — |  |  |  | — |  |  |  | 1.67 | % |  |  | 502 |
US dollar |  |  | 1.67 | % |  |  | 463 |  |  |  | — |  |  |  | — |
Other |  |  | 7.22 | % |  |  | 516 |  |  |  | 5.99 | % |  |  | 1 504 |
|  |  |  |  |  |  | 2 310 |  |  |  |  |  |  |  | 6 164 |
Fixed rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Australian dollar |  |  | 4.12 | % |  |  | 324 |  |  |  | — |  |  |  | — |
Brazilian real |  |  | 7.21 | % |  |  | 420 |  |  |  | 7.21 | % |  |  | 420 |
Canadian dollar |  |  | 4.11 | % |  |  | 626 |  |  |  | 4.29 | % |  |  | 3 158 |
Euro |  |  | 2.27 | % |  |  | 21 654 |  |  |  | 2.11 | % |  |  | 27 553 |
Pound sterling |  |  | 4.35 | % |  |  | 3 611 |  |  |  | 4.43 | % |  |  | 2 937 |
South Korean won |  |  | 3.85 | % |  |  | 32 |  |  |  | 0.87 | % |  |  | 1 695 |
US dollar |  |  | 4.93 | % |  |  | 59 399 |  |  |  | 5.41 | % |  |  | 46 288 |
Other |  |  | 11.42 | % |  |  | 454 |  |  |  | 8.80 | % |  |  | 615 |
|  |  |  |  |  |  | 86 520 |  |  |  |  |  |  |  | 82 666 |
31 December 2020 |  | Before hedging |  |  | After hedging |
Interest-bearing financial liabilities |  | Effective |  |  |  |  |  | Effective |  |  |  |
Million US dollar |  | interest rate |  |  | Amount |  |  | interest rate |  |  | Amount |
Floating rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Australian dollar |  |  | 0.99 | % |  |  | 231 |  |  |  | — |  |  |  | — |
Brazilian real |  |  | 3.90 | % |  |  | 164 |  |  |  | 3.90 | % |  |  | 164 |
Canadian dollar |  |  | — |  |  |  | — |  |  |  | 1.23 | % |  |  | 1 895 |
Euro |  |  | 0.15 | % |  |  | 2 690 |  |  |  | 0.15 | % |  |  | 2 690 |
Pound sterling |  |  | — |  |  |  | — |  |  |  | 1.10 | % |  |  | 937 |
US dollar |  |  | 1.05 | % |  |  | 617 |  |  |  | 1.13 | % |  |  | 201 |
Other |  |  | 7.30 | % |  |  | 260 |  |  |  | 7.90 | % |  |  | 573 |
|  |  |  |  |  |  | 3 962 |  |  |  |  |  |  |  | 6 461 |
Fixed rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Australian dollar |  |  | 3.91 | % |  |  | 846 |  |  |  | — |  |  |  | — |
Brazilian real |  |  | 8.58 | % |  |  | 578 |  |  |  | 8.58 | % |  |  | 578 |
Canadian dollar |  |  | 4.12 | % |  |  | 613 |  |  |  | 4.29 | % |  |  | 2 646 |
Euro |  |  | 2.12 | % |  |  | 26 092 |  |  |  | 2.15 | % |  |  | 35 515 |
Pound sterling |  |  | 4.30 | % |  |  | 3 655 |  |  |  | 4.36 | % |  |  | 2 973 |
South Korean won |  |  | — |  |  |  | — |  |  |  | 1.30 | % |  |  | 1 997 |
US dollar |  |  | 4.91 | % |  |  | 62 340 |  |  |  | 5.30 | % |  |  | 47 892 |
Other |  |  | 11.96 | % |  |  | 479 |  |  |  | 11.72 | % |  |  | 502 |
|  |  |  |  |  |  | 94 602 |  |  |  |  |  |  |  | 92 103 |
As at 31 December 2021, the total carrying amount of the floating and fixed rate interest-bearing financial liabilities before hedging as listed above includes bank overdrafts of 53m US dollar (31 December 2020: 5m US dollar). As disclosed in the above table, 6 164m US dollar or 6.9% of the company’s interest-bearing financial liabilities bears interest at a variable rate. The company estimated that the reasonably possible change of the market interest rates applicable to its floating rate debt after hedging is as follows:
|  | 2021 |
|  | Interest rate |  |  | Possible |  |  | Volatility |
|  | 31 December 2021 1 |  |  | interest rate 2 |  |  | of rates in % |
Brazilian real |  |  | 8.88 | % |  |  | 7.85% - 9.91 | % |  |  | 11.58 | %
Euro |  |  | — |  |  |  | — |  |  |  | 10.64 | %
US dollar |  |  | 0.21 | % |  |  | 0.11% - 0.31 | % |  |  | 48.10 | %
|  | 2020 |
|  | Interest rate |  |  | Possible |  |  | Volatility |
|  | 31 December 2020 1 |  |  | interest rate 2 |  |  | of rates in % |
Brazilian real |  |  | 2.09 | % |  |  | 1.74% - 2.44 | % |  |  | 16.77 | %
Euro |  |  | — |  |  |  | — |  |  |  | 16.83 | %
US dollar |  |  | 0.24 | % |  |  | 0.10% - 0.38 | % |  |  | 58.30 | %
When AB InBev applies the reasonably possible increase/decrease in the market interest rates mentioned above on its floating rate debt at 31 December 2021, with all other variables held constant, 2021 interest expense would have been 8m US dollar higher/lower (31 December 2020: 3m US dollar; 31 December 2019: 16m US dollar). This effect would be more than offset by 44m US dollar higher/lower interest income on AB InBev’s interest-bearing financial assets (31 December 2020: 58m US dollar; 31 December 2019: 22m US dollar). Interest expense Interest expense recognized on unhedged and hedged financial liabilities are as follows:
Million US dollar |  | 2021 |  |  | 2020 |  |  | 2019 |
Financial liabilities measured at amortized cost – not hedged |  |  | (3 836 | ) |  |  | (4 154 | ) |  |  | (4 264 | )
Fair value hedges |  |  | (6 | ) |  |  | (1 | ) |  |  | (46 | )
Cash flow hedges |  |  | 17 |  |  |  | 19 |  |  |  | 15 |
Net investment hedges - hedging instruments (interest component) |  |  | — |  |  |  | 2 |  |  |  | 2 |
Economic hedges |  |  | 141 |  |  |  | 118 |  |  |  | 124 |
|  |  | (3 684 | ) |  |  | (4 016 | ) |  |  | (4 168 | )
COMMODITY PRICE RISK The commodity markets have experienced and are expected to continue to experience price fluctuations. AB InBev therefore uses both fixed price purchasing contracts and commodity derivatives to manage the exposure to the price volatility. The most significant commodity exposures as at 31 December 2021 and 31 December 2020 are included in the table below (expressed in outstanding notional amounts):
Million US dollar |  | 31 December 2021 |  |  | 31 December 2020 |
Aluminum swaps |  |  | 1 241 |  |  |  | 1 184 |
Exchange traded sugar futures |  |  | 85 |  |  |  | 74 |
Natural gas and energy derivatives |  |  | 350 |  |  |  | 202 |
Corn swaps |  |  | 292 |  |  |  | 160 |
Exchange traded wheat futures |  |  | 129 |  |  |  | 83 |
Rice swaps |  |  | 85 |  |  |  | 76 |
Plastic derivatives |  |  | 93 |  |  |  | 50 |
|  |  | 2 274 |  |  |  | 1 828 |
Commodity price sensitivity analysis The impact of changes in the commodity prices would not have had a material impact on AB InBev’s profit in 2021 as most of the company’s exposure is hedged using derivative contracts and designated in hedge accounting in accordance with IFRS 9 rules.
1 | Applicable 3-month InterBank Offered Rates as of 3 1 December 2021 and as of 31 December 2020.
2 | Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 3 1 December 2021 and at December 2020. For the Brazilian real floating rate debt, the estimated market interest rate is composed of the InterBank Deposit Certificate (‘CDI’) and the Long-Term Interest Rate (‘TJLP’). With regard to other market interest rates, the company’s analysis is based on the 3-month InterBank Offered Rates applicable for the currencies concerned (e.g. EURIBOR 3M, LIBOR 3M). The sensitive analysis does not include any spread applicable to the company’s funding.
The tables below show the estimated impact that changes in the price of the commodities, for which AB InBev held material derivative exposures as at 31 December 2021 and 31 December 2020, would have on the equity reserves.
|  | 2021 |
|  |  |  |  | Pre-tax impact on equity |
Million US dollar |  | Volatility of prices in % 1 |  |  | Prices increase |  |  | Prices decrease |
Aluminum |  |  | 23.09 | % |  |  | 287 |  |  |  | (287 | )
Sugar |  |  | 26.39 | % |  |  | 22 |  |  |  | (22 | )
Energy |  |  | 25.88 | % |  |  | 91 |  |  |  | (91 | )
Corn |  |  | 23.26 | % |  |  | 68 |  |  |  | (68 | )
Wheat |  |  | 29.24 | % |  |  | 38 |  |  |  | (38 | )
Rice |  |  | 15.96 | % |  |  | 14 |  |  |  | (14 | )
Plastic |  |  | 28.68 | % |  |  | 27 |  |  |  | (27 | )
|  | 2020 |
|  |  |  |  | Pre-tax impact on equity |
Million US dollar |  | Volatility of prices in % 2 |  |  | Prices increase |  |  | Prices decrease |
Aluminum |  |  | 14.96 | % |  |  | 177 |  |  |  | (177 | )
Sugar |  |  | 31.48 | % |  |  | 23 |  |  |  | (23 | )
Energy |  |  | 47.08 | % |  |  | 95 |  |  |  | (95 | )
Corn |  |  | 32.84 | % |  |  | 52 |  |  |  | (52 | )
Wheat |  |  | 25.30 | % |  |  | 21 |  |  |  | (21 | )
Rice |  |  | 46.17 | % |  |  | 35 |  |  |  | (35 | )
Plastic |  |  | 26.74 | % |  |  | 13 |  |  |  | (13 | )
EQUITY PRICE RISK AB InB e v enters into equity swap derivatives to hedge the price risk on its shares in connection with its share-based payments programs, as disclosed in Note 26 Share-based Payments. AB InBev also hedges its exposure arising from shares issued in connection with the Modelo and SAB combination (see also Note 11 Finance cost and income ). These derivatives do not qualify for hedge accounting and the changes in fair value are recorded in the profit or loss. As at 31 December 2021, an exposure for an equivalent of 100.5m of AB InBev shares was hedged, resulting in a total loss of (48)m US dollar recognized in the profit or loss account for the period, of which (23)m US dollar related to the company’s share-based payment programs, (13)m US dollar and (12)m US dollar related to the Modelo and SAB transactions respectively. As at 31 December 2021 liabilities for equity swap derivatives amounted to 5.4 billion US dollar (31 December 2020: 5.4 billion US dollar). Equity price sensitivity analysis The sensitivity analysis on the equity swap derivatives, calculated based on a 26.51% (2020: 53.87%; 2019: 25.20%) reasonably possible volatility of the AB InBev share price, with all the other variables held constant, would show 1 604m US dollar positive/negative impact on the 2021 profit before tax (31 December 2020: 3 787m US dollar; 31 December 2019: 2 066m US dollar). CREDIT RISK Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to AB InBev in relation to lending, hedging, settlement and other financial activities. The company has a credit policy in place and the exposure to counterparty credit risk is monitored. AB InBev mitigates its exposure through a variety of mechanisms. It has established minimum counterparty credit ratings and enters into transactions only with financial institutions of investment grade rating. The company monitors counterparty credit exposures closely and reviews any external downgrade in credit rating immediately. To mitigate pre-settlement risk, counterparty minimum credit standards become more stringent with increases in the duration of the derivatives. To minimize the concentration of counterparty credit risk, the company enters into derivative transactions with different financial institutions. The company also has master netting agreements with all of the financial institutions that are counterparties to over the counter (OTC) derivatives. These agreements allow for the net settlement of assets and liabilities arising from different transactions with the same counterparty. Based on these factors, AB InBev considers the impact of the risk of counterparty default as at 31 December 2021 to be limited. The impairment loss recognized in 2020 included AB InBev’s estimate of overdue receivables the company would not be able to collect from defaulting customers as a result of the COVID-19 pandemic.
1 | Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2021.
2 | Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2020.
Exposure to credit risk The carrying am o unt of financial assets represents the maximum credit exposure of the company. The carrying amount is presented net of the impairment losses recognized. The maximum exposure to credit risk at the reporting date was:
|  | 31 December 2021 |  |  | 31 December 2020 |
Million US dollar |  | Gross |  |  | Impairment |  |  | Net carrying amount |  |  | Gross |  |  | Impairment |  |  | Net carrying amount |
Investment in unquoted companies |  |  | 145 |  |  |  | (6 | ) |  |  | 139 |  |  |  | 121 |  |  |  | (6 | ) |  |  | 115 |
Investment in debt securities |  |  | 396 |  |  |  | — |  |  |  | 396 |  |  |  | 418 |  |  |  | — |  |  |  | 418 |
Trade receivables |  |  | 3 796 |  |  |  | (331 | ) |  |  | 3 465 |  |  |  | 3 593 |  |  |  | (308 | ) |  |  | 3 285 |
Cash deposits for guarantees |  |  | 168 |  |  |  | — |  |  |  | 168 |  |  |  | 184 |  |  |  | — |  |  |  | 184 |
Loans to customers |  |  | 117 |  |  |  | — |  |  |  | 117 |  |  |  | 142 |  |  |  | — |  |  |  | 142 |
Other receivables |  |  | 1 272 |  |  |  | (65 | ) |  |  | 1 207 |  |  |  | 1 299 |  |  |  | (62 | ) |  |  | 1 237 |
Derivatives |  |  | 669 |  |  |  | — |  |  |  | 669 |  |  |  | 965 |  |  |  | — |  |  |  | 965 |
Cash and cash equivalents |  |  | 12 097 |  |  |  | — |  |  |  | 12 097 |  |  |  | 15 252 |  |  |  | — |  |  |  | 15 252 |
|  |  | 18 660 |  |  |  | (402 | ) |  |  | 18 258 |  |  |  | 21 974 |  |  |  | (376 | ) |  |  | 21 598 |
There was no significant concentration of credit risks with any single counterparty as of 31 December 2021 and no single customer represented more than 10% of the total revenue of the group in 2021. Impairment losses The allowance for impairment recognized during the period per classes of financial assets was as follows:
|  | 2021 |
Million US dollar |  | Trade receivables |  |  | FVOCI |  |  | Other receivables |  |  | Total |
Balance at 1 January |  |  | (308 | ) |  |  | (6 | ) |  |  | (62 | ) |  |  | (376 | )
Impairment losses |  |  | (34 | ) |  |  | — |  |  |  | (3 | ) |  |  | (37 | )
Derecognition |  |  | 29 |  |  |  | — |  |  |  | 1 |  |  |  | 30 |
Currency translation and other |  |  | (18 | ) |  |  | — |  |  |  | (1 | ) |  |  | (19 | )
Balance at 31 December |  |  | (331 | ) |  |  | (6 | ) |  |  | (65 | ) |  |  | (402 | )
|  | 2020 |
Million US dollar |  | Trade receivables |  |  | FVOCI |  |  | Other receivables |  |  | Total |
Balance at 1 January |  |  | (173 | ) |  |  | (6 | ) |  |  | (103 | ) |  |  | (283 | )
Impairment losses |  |  | (93 | ) |  |  | — |  |  |  | (6 | ) |  |  | (99 | )
Derecognition |  |  | 7 |  |  |  | — |  |  |  | 42 |  |  |  | 49 |
Currency translation and other |  |  | (50 | ) |  |  | — |  |  |  | 4 |  |  |  | (46 | )
Balance at 31 December |  |  | (308 | ) |  |  | (6 | ) |  |  | (62 | ) |  |  | (376 | )
|  | 2019 |
Million US dollar |  | Trade receivables |  |  | FVOCI |  |  | Other receivables |  |  | Total |
Balance at 1 January |  |  | (160 | ) |  |  | (6 | ) |  |  | (106 | ) |  |  | (273 | )
Impairment losses |  |  | (51 | ) |  |  | — |  |  |  | (30 | ) |  |  | (81 | )
Derecognition |  |  | 26 |  |  |  | — |  |  |  | 31 |  |  |  | 57 |
Currency translation and other |  |  | 12 |  |  |  | — |  |  |  | 2 |  |  |  | 14 |
Balance at 31 December |  |  | (173 | ) |  |  | (6 | ) |  |  | (103 | ) |  |  | (283 | )
LIQUIDITY RISK Historically, AB InBev’s primary sources of cash flow have been cash flows from operating activities, the issuance of debt, bank borrowings and equity securities. AB InBev’s material cash requirements have included the following:
| • |  | Debt servicing;
| • |  | Capital expenditures;
| • |  | Investments in companies;
| • |  | Increases in ownership of AB InBev’s subsidiaries or companies in which it holds equity investments;
| • |  | Share buyback programs; and
| • |  | Payments of dividends and interest on shareholders’ equity.
The company believes that cash flows from operating activities, available cash and cash equivalents as well as short term investments, along with related derivatives and access to borrowing facilities, will be sufficient to fund capital expenditures, financial instrument liabilities and dividend payments going forward. It is the intention of the company to continue to reduce its financial indebtedness through a combination of strong operating cash flow generation and continued refinancing. The following are the nominal contractual maturities of non-derivative financial liabilities including interest payments and derivative liabilities:
|  | 31 December 2021 |
|  |  |  |  | Contractual |  |  | Less |  |  |  |  |  |  |  |  |  |  |  | More |
|  | Carrying |  |  | cash |  |  | than |  |  |  |  |  |  |  |  |  |  |  | than |
Million US dollar |  | amount 1 |  |  | flows |  |  | 1 year |  |  | 1-2 years |  |  | 2-3 years |  |  | 3-5 years |  |  | 5 years |
Non-derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured bank loans |  |  | (628 | ) |  |  | (636 | ) |  |  | (551 | ) |  |  | (53 | ) |  |  | (5 | ) |  |  | (9 | ) |  |  | (18 | )
Unsecured bank loans |  |  | (106 | ) |  |  | (106 | ) |  |  | (106 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unsecured bond issues |  |  | (85 726 | ) |  |  | (152 064 | ) |  |  | (3 479 | ) |  |  | (3 596 | ) |  |  | (6 192 | ) |  |  | (13 800 | ) |  |  | (124 997 | )
Unsecured other loans |  |  | (40 | ) |  |  | (84 | ) |  |  | (11 | ) |  |  | (48 | ) |  |  | (5 | ) |  |  | (4 | ) |  |  | (16 | )
Lease liabilities |  |  | (2 277 | ) |  |  | (2 429 | ) |  |  | (497 | ) |  |  | (470 | ) |  |  | (337 | ) |  |  | (450 | ) |  |  | (675 | )
Bank overdraft |  |  | (53 | ) |  |  | (53 | ) |  |  | (53 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Trade and other payables |  |  | (26 442 | ) |  |  | (26 643 | ) |  |  | (25 424 | ) |  |  | (314 | ) |  |  | (507 | ) |  |  | (96 | ) |  |  | (302 | )
|  |  | (115 272 | ) |  |  | (182 015 | ) |  |  | (30 121 | ) |  |  | (4 481 | ) |  |  | (7 046 | ) |  |  | (14 359 | ) |  |  | (126 008 | )
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange derivatives |  |  | (166 | ) |  |  | (166 | ) |  |  | (166 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Cross currency interest rate swaps |  |  | (273 | ) |  |  | (293 | ) |  |  | (147 | ) |  |  | (35 | ) |  |  | (32 | ) |  |  | (56 | ) |  |  | (23 | )
Commodity derivatives |  |  | (34 | ) |  |  | (34 | ) |  |  | (34 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Equity derivatives |  |  | (5 412 | ) |  |  | (5 420 | ) |  |  | (5 420 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | (5 885 | ) |  |  | (5 913 | ) |  |  | (5 767 | ) |  |  | (35 | ) |  |  | (32 | ) |  |  | (56 | ) |  |  | (23 | )
Of which: related to cash flow hedges |  |  | (203 | ) |  |  | (203 | ) |  |  | (170 | ) |  |  | — |  |  |  | — |  |  |  | (29 | ) |  |  | (4 | )
|  | 31 December 2020 |
|  |  |  |  | Contractual |  |  | Less |  |  |  |  |  |  |  |  |  |  |  | More |
|  | Carrying |  |  | cash |  |  | than |  |  |  |  |  |  |  |  |  |  |  | than |
Million US dollar |  | amount 1 |  |  | flows |  |  | 1 year |  |  | 1-2 years |  |  | 2-3 years |  |  | 3-5 years |  |  | 5 years |
Non-derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured bank loans |  |  | (702 | ) |  |  | (735 | ) |  |  | (675 | ) |  |  | (14 | ) |  |  | (12 | ) |  |  | (10 | ) |  |  | (24 | )
Commercial papers |  |  | (1 522 | ) |  |  | (1 522 | ) |  |  | (1 522 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unsecured bank loans |  |  | (294 | ) |  |  | (299 | ) |  |  | (299 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unsecured bond issues |  |  | (93 725 | ) |  |  | (165 812 | ) |  |  | (3 582 | ) |  |  | (4 057 | ) |  |  | (3 823 | ) |  |  | (16 557 | ) |  |  | (137 793 | )
Unsecured other loans |  |  | (83 | ) |  |  | (115 | ) |  |  | (13 | ) |  |  | (8 | ) |  |  | (6 | ) |  |  | (57 | ) |  |  | (31 | )
Lease liabilities |  |  | (2 234 | ) |  |  | (2 455 | ) |  |  | (460 | ) |  |  | (425 | ) |  |  | (315 | ) |  |  | (424 | ) |  |  | (831 | )
Bank overdraft |  |  | (5 | ) |  |  | (5 | ) |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Trade and other payables |  |  | (24 496 | ) |  |  | (24 688 | ) |  |  | (22 906 | ) |  |  | (1 103 | ) |  |  | (135 | ) |  |  | (197 | ) |  |  | (347 | )
|  |  | (123 061 | ) |  |  | (195 631 | ) |  |  | (29 462 | ) |  |  | (5 607 | ) |  |  | (4 291 | ) |  |  | (17 245 | ) |  |  | (139 026 | )
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange derivatives |  |  | (696 | ) |  |  | (696 | ) |  |  | (696 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Cross currency interest rate swaps |  |  | (709 | ) |  |  | (852 | ) |  |  | (8 | ) |  |  | (575 | ) |  |  | (98 | ) |  |  | (132 | ) |  |  | (39 | )
Commodity derivatives |  |  | (26 | ) |  |  | (26 | ) |  |  | (26 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Equity derivatives |  |  | (5 373 | ) |  |  | (5 372 | ) |  |  | (4 455 | ) |  |  | (917 | ) |  |  | — |  |  |  | — |  |  |  | — |
|  |  | (6 803 | ) |  |  | (6 946 | ) |  |  | (5 184 | ) |  |  | (1 492 | ) |  |  | (98 | ) |  |  | (132 | ) |  |  | (39 | )
Of which: related to cash flow hedges |  |  | (418 | ) |  |  | (418 | ) |  |  | (353 | ) |  |  | — |  |  |  | — |  |  |  | (65 | ) |  |  | — |
1 | “Carrying amount” refers to net book value as recognized in the balance sheet at each reporting date.
CAPITAL MANAGEMENT AB InBev continuously optimizes its capital structure to maximize shareholder value while keeping the financial flexibility to execute strategic projects. AB InBev’s c a pital structure policy and framework aims to optimize shareholder value through cash flow distribution to the company from its subsidiaries, while maintaining an investment-grade rating and minimizing investments with returns below AB InBev’s weighted average cost of capital. Besides the statutory minimum equity funding requirements that apply to the company’s subsidiaries in the different countries, AB InBev is not subject to any externally imposed capital r e quirements. Management uses the same debt/equity classifications as applied in the company’s IFRS reporting to analyze the capital structure. FAIR VALUE The following table summarizes for each type of derivative the fair values recognized as assets or liabilities in the balance sheet:
|  | Assets |  |  | Liabilities |  |  | Net |
|  | 31 December |  |  | 31 December |  |  | 31 December |  |  | 31 December |  |  | 31 December |  |  | 31 December |
Million US dollar |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward exchange contracts |  |  | 238 |  |  |  | 480 |  |  |  | (129 | ) |  |  | (691 | ) |  |  | 109 |  |  |  | (211 | )
Foreign currency futures |  |  | — |  |  |  | 36 |  |  |  | (37 | ) |  |  | (5 | ) |  |  | (37 | ) |  |  | 31 |
Interest rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 38 |  |  |  | 80 |  |  |  | — |  |  |  | — |  |  |  | 38 |  |  |  | 80 |
Cross currency interest rate swaps |  |  | 111 |  |  |  | 107 |  |  |  | (273 | ) |  |  | (709 | ) |  |  | (162 | ) |  |  | (602 | )
Commodities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aluminum swaps |  |  | 178 |  |  |  | 170 |  |  |  | (20 | ) |  |  | (10 | ) |  |  | 158 |  |  |  | 160 |
Sugar futures |  |  | 13 |  |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | 13 |  |  |  | 10 |
Energy |  |  | 29 |  |  |  | 9 |  |  |  | (2 | ) |  |  | (7 | ) |  |  | 27 |  |  |  | 2 |
Other commodity derivatives |  |  | 62 |  |  |  | 46 |  |  |  | (13 | ) |  |  | (8 | ) |  |  | 50 |  |  |  | 37 |
Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity derivatives |  |  | — |  |  |  | 27 |  |  |  | (5 412 | ) |  |  | (5 373 | ) |  |  | (5 412 | ) |  |  | (5 346 | )
|  |  | 669 |  |  |  | 965 |  |  |  | (5 886 | ) |  |  | (6 804 | ) |  |  | (5 216 | ) |  |  | (5 839 | )
Of which: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current |  |  | 48 |  |  |  | 138 |  |  |  | (100 | ) |  |  | (1 759 | ) |  |  | (52 | ) |  |  | (1 621 | )
Current |  |  | 621 |  |  |  | 827 |  |  |  | (5 786 | ) |  |  | (5 046 | ) |  |  | (5 164 | ) |  |  | (4 218 | )
The following table summarizes the carrying amount and the fair value of the fixed rate interest-bearing financial liabilities as recognized on the balance sheet. Floating rate interest-bearing financial liabilities, trade and other receivables and trade and other payables, including derivatives financial instruments, have been excluded from the analysis as their carrying amount is a reasonable approximation of their fair value:
Interest-bearing financial liabilities |  | 31 December 2021 |  |  | 31 December 2020 |
Million US dollar |  | Carrying amount 1 |  |  | Fair value |  |  | Carrying amount 1 |  |  | Fair value |
Fixed rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Australian dollar |  |  | (324 | ) |  |  | (366 | ) |  |  | (846 | ) |  |  | (964 | )
Brazilian real |  |  | (420 | ) |  |  | (419 | ) |  |  | (578 | ) |  |  | (578 | )
Canadian dollar |  |  | (626 | ) |  |  | (605 | ) |  |  | (613 | ) |  |  | (633 | )
Euro |  |  | (21 654 | ) |  |  | (23 801 | ) |  |  | (26 092 | ) |  |  | (29 809 | )
Pound sterling |  |  | (3 611 | ) |  |  | (3 913 | ) |  |  | (3 655 | ) |  |  | (4 301 | )
US dollar |  |  | (59 399 | ) |  |  | (75 261 | ) |  |  | (62 340 | ) |  |  | (81 771 | )
Other |  |  | (486 | ) |  |  | (471 | ) |  |  | (479 | ) |  |  | (480 | )
|  |  | (86 520 | ) |  |  | (104 836 | ) |  |  | (94 602 | ) |  |  | (118 536 | )
1 | “Carrying amount” refers to net book value as recognized in the balance sheet at each reporting date.
The table sets out the fair value hierarchy based on the degree to which significant market inputs are observable:
Fair value hierarchy 31 December 2021 |  | Quoted (unadjusted) |  |  | Observable market |  |  | Unobservable market |
Million US dollar |  | prices - level 1 |  |  | inputs - level 2 |  |  | inputs - level 3 |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |
Held for trading (non-derivatives) |  |  | — |  |  |  | 9 |  |  |  | — |
Derivatives at fair value through profit and loss |  |  | — |  |  |  | 155 |  |  |  | — |
Derivatives in a cash flow hedge relationship |  |  | 58 |  |  |  | 352 |  |  |  | — |
Derivatives in a fair value hedge relationship |  |  | — |  |  |  | 17 |  |  |  | — |
Derivatives in a net investment hedge relationship |  |  | — |  |  |  | 87 |  |  |  | — |
|  |  | 58 |  |  |  | 620 |  |  |  | — |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Deferred consideration on acquisitions at fair value |  |  | — |  |  |  | — |  |  |  | 832 |
Derivatives at fair value through profit and loss |  |  | — |  |  |  | 5 611 |  |  |  | — |
Derivatives in a cash flow hedge relationship |  |  | 52 |  |  |  | 141 |  |  |  | — |
Derivatives in a net investment hedge relationship |  |  | — |  |  |  | 82 |  |  |  | — |
|  |  | 52 |  |  |  | 5 834 |  |  |  | 832 |
Fair value hierarchy 31 December 2020 |  | Quoted (unadjusted) |  |  | Observable market |  |  | Unobservable market |
Million US dollar |  | prices - level 1 |  |  | inputs - level 2 |  |  | inputs - level 3 |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |
Held for trading (non-derivatives) |  |  | — |  |  |  | 11 |  |  |  | — |
Derivatives at fair value through profit and loss |  |  | — |  |  |  | 457 |  |  |  | — |
Derivatives in a cash flow hedge relationship |  |  | 29 |  |  |  | 343 |  |  |  | — |
Derivatives in a fair value hedge relationship |  |  | — |  |  |  | 80 |  |  |  | — |
Derivatives in a net investment hedge relationship |  |  | — |  |  |  | 57 |  |  |  | — |
|  |  | 29 |  |  |  | 948 |  |  |  | — |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Deferred consideration on acquisitions at fair value |  |  | — |  |  |  | — |  |  |  | 1 251 |
Derivatives at fair value through profit and loss |  |  | — |  |  |  | 6 119 |  |  |  | — |
Derivatives in a cash flow hedge relationship |  |  | 46 |  |  |  | 353 |  |  |  | — |
Derivatives in a net investment hedge relationship |  |  | — |  |  |  | 287 |  |  |  | — |
|  |  | 46 |  |  |  | 6 759 |  |  |  | 1 251 |
Non-derivative financial liabilities As part of the 2012 shareholders agreement between Ambev and ELJ, following the acquisition of Cervecería Nacional Dominicana S.A. (“CND”), a forward-purchase contract (combination of a put option and purchased call option) was put in place which may result in Ambev acquiring additional shares in CND. In July 2020, Ambev and ELJ amended the Shareholders’ Agreement to extend their partnership and change the terms and the exercise date of the call and put options. ELJ currently holds 15% of CND and the put option is exercisable in 2022, 2023, 2024 and 2026. As at 31 December 2021, the put option on the remaining shares held by ELJ was valued at 589m US dollar (31 December 2020: 671m US dollar) and recognized as a deferred consideration on acquisitions at fair value in the “level 3” category above. HEDGING RESERVES The company’s hedging reserves disclosed in Note 22 relate to the following instruments:
Million US dollar |  | Foreign currency |  |  | Commodities |  |  | Others |  |  | Total hedging reserves |
As per 1 January 2021 |  |  | 20 |  |  |  | 274 |  |  |  | 84 |  |  |  | 376 |
Change in fair value of hedging instrument recognized in OCI |  |  | 766 |  |  |  | 123 |  |  |  | — |  |  |  | 888 |
Reclassified to profit or loss / cost of inventory |  |  | (107 | ) |  |  | (703 | ) |  |  | 27 |  |  |  | (783 | )
As per 31 December 2021 |  |  | 679 |  |  |  | (306 | ) |  |  | 111 |  |  |  | 481 |
Million US dollar |  | Foreign currency |  |  | Commodities |  |  | Others |  |  | Total hedging reserves |
As per 1 January 2020 |  |  | 174 |  |  |  | 117 |  |  |  | 107 |  |  |  | 397 |
Change in fair value of hedging instrument recognized in OCI |  |  | 353 |  |  |  | 31 |  |  |  | — |  |  |  | 384 |
Reclassified to profit or loss / cost of inventory |  |  | (507 | ) |  |  | 126 |  |  |  | (23 | ) |  |  | (404 | )
As per 31 December 2020 |  |  | 20 |  |  |  | 274 |  |  |  | 84 |  |  |  | 376 |
OFFSETTING FINANCIAL ASSETS AND LIABILITIES The following financial assets and liabilities are subject to offsetting, enforceable master netting agreements and similar agreements:
|  | 31 December 2021 |
Million US dollar |  | Gross amount |  |  | Net amount recognized in the statement of financial position 1 |  |  | Other offsetting agreements 2 |  |  | Total net amount |
Derivative assets |  |  | 670 |  |  |  | 670 |  |  |  | (651 | ) |  |  | 19 |
Derivative liabilities |  |  | (5 886 | ) |  |  | (5 886 | ) |  |  | 651 |  |  |  | (5 235 | )
|  | 31 December 2020 |
Million US dollar |  | Gross amount |  |  | Net amount recognized in the statement of financial position 1 |  |  | Other offsetting agreements 2 |  |  | Total net amount |
Derivative assets |  |  | 965 |  |  |  | 965 |  |  |  | (954 | ) |  |  | 11 |
Derivative liabilities |  |  | (6 804 | ) |  |  | (6 804 | ) |  |  | 954 |  |  |  | (5 851 | )

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