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Risks arising from financial instruments

12 Months Ended

Dec. 31, 2023

Risks arising from financial instruments

27. Risks arising from financial instruments

A) FINANCIAL ASSETS AND LIABILITIES

Set out below is an overview of financial assets and liabilities held by the company as at the dates indicated:



	31 December 2023								31 December 2022¹

Million US dollar	At amortized cost		At fair value through profit or loss		At fair value through OCI		Total		At amortized cost		At fair value through profit or loss		At fair value through OCI		Total

Cash and cash equivalents		10 332		-		-		10 332		9 973		-		-		9 973
Trade and other receivables		5 517		-		-		5 517		4 973		-		-		4 973
Investment securities		27		67		151		245		25		97		149		272
Foreign exchange derivatives		-		48		315		363		-		41		186		227
Commodities		-		-		131		131		-		-		101		101
Cross currency interest rate swaps		-		-		52		52		-		-		63		63
Interest rate swaps		-		3		-		3		-		-		-		-
Financial assets		15 876		118		649		16 642		14 971		139		498		15 608
Non-current		473		-		195		668		522		15		193		730
Current		15 403		118		454		15 975		14 450		124		305		14 878
.
Trade and other payables		21 284		741		-		22 026		21 983		762		-		22 746
Non-current interest-bearing loans and borrowings		73 592		571		-		74 163		78 880		-		-		78 880
Current interest-bearing loans and borrowings		3 987		-		-		3 987		1 029		-		-		1 029
Bank overdrafts		17		-		-		17		83		-		-		83
Equity swaps		-		4 718		-		4 718		-		4 763		-		4 763
Foreign exchange derivatives		-		18		414		432		-		20		245		265
Cross currency interest rate swaps		-		-		164		164		-		16		171		187
Commodities		-		-		145		145		-		-		271		271
Interest rate swaps		-		10		-		10		-		3		2		5
Financial liabilities		98 880		6 058		723		105 662		101 975		5 565		689		108 229
Non-current		73 920		876		151		74 947		79 108		473		168		79 749
Current		24 961		5 182		573		30 715		22 867		5 092		521		28 480

Amended to conform to 2023 pre

sentati

on.

B) 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 exchange forwards, currency futures, interest rate swaps, cross currency interest rate swaps (“CCIRS”), commodity swaps, 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 2023										31 December 2022

Million US dollar	< 1 year		1-2 years		2-3 years		3-5 years		> 5 years		< 1 year		1-2 years		2-3 years		3-5 years		> 5 years

Foreign currency
Foreign exchange forwards		13 440		105		300		-		-		11 445		479		-		-		-
Foreign currency futures		245		-		-		-		-		503		-		-		-		-

Interest rate
Interest rate swaps		580		-		-		-		-		1 000		-		-		-		-
Cross currency interest rate swaps		1 217		1 863		510		4 353		717		900		1 923		1 834		2 608		560

Commodities
Aluminum swaps		1 780		-		-		-		-		2 161		4		-		-		-
Other commodity derivatives		913		25		-		-		-		1 160		22		-		-		-

Equity
Equity derivatives		11 189		-		-		-		-		10 800		-		-		-		-

C) FOREIGN CURRENCY RISK

AB InBev is subject to foreign currency risk when contracts are denominated

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 exchange forwards, 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 sales 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

soon as they are highly probable.

The table below shows the company’s main net foreign currency positions for firm commitments and forecasted transactions fo

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 2023						31 December 2022¹

Million US dollar	Total exposure		Total hedges		Open position		Total exposure		Total hedges		Open position

Euro/Colombian peso		(138)		65		(73)		(66)		41		(25)
Euro/Mexican peso		(99)		95		(4)		(108)		100		(8)
Euro/Pound sterling		(71)		65		(6)		(136)		112		(24)
Euro/South African rand		(99)		86		(13)		(67)		31		(36)
Mexican peso/Euro		(219)		180		(39)		(269)		268		(1)
Mexican peso/US dollar		(100)		71		(29)		(68)		50		(18)
US dollar/Argentinean peso		(437)		-		(437)		(702)		206		(496)
US dollar/Brazilian real		(1 832)		1 833		1		(1 955)		1 789		(166)
US dollar/Canadian dollar		(310)		291		(19)		(310)		249		(61)
US dollar/Chilean peso		(164)		129		(35)		(135)		129		(6)
US dollar/Chinese yuan		(87)		83		(4)		(125)		113		(12)
US dollar/Colombian peso		(546)		542		(4)		(615)		559		(56)
US dollar/Dominican peso		(108)		26		(82)		(121)		-		(121)
US dollar/Euro		(90)		100		10		(134)		111		(23)
US dollar/Mexican peso		(1 229)		1 282		53		(1 442)		1 436		(6)
US dollar/Paraguayan guarani		(157)		152		(5)		(144)		135		(9)
US dollar/Peruvian nuevo sol		(217)		209		(8)		(264)		276		12
US dollar/South African rand		(224)		189		(35)		(196)		121		(75)
US dollar/South Korean won		(146)		135		(11)		(121)		110		(11)
Others		(394)		254		(140)		(305)		240		(65)

Further analysis on the impact of open currency exposures is performed in the currency sensitivity analysis below.

Hedges of firm commitments and highly probable forecasted transactions denominated in foreign currency are designated as cash flow

hedges.

Foreign exchange risk on foreign currency denominated debt

AB InBev’s policy is 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 a 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.

Amended to conform to 2023 presentation.

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

Argentinean

peso, Canadian dollar, Chilean peso, Dominican peso and South African rand against the US dollar.

The company uses a sensitivity analysis to estimate the impact in its consolidated income statement and other comprehensive income of a strengthening or a weakening of the US dollar against the other group currencies. In case the open positions remain unchanged and with all other variables held constant, a 10% strengthening or weakening of the US dollar against other currencies could lead to an estimated decrease/increase on the consolidated profit before tax of approximately 98m US dollar over the next 12 months (31 December 2022: 144m US dollar; 31 December 2021: 99m US dollar). Applying a similar sensitivity on the total derivatives positions could lead to a negative/positive pre-tax impact on equity reserves of 504m US dollar (31 December 2022: 537m US dollar). The results of the sensitivity analysis should not be considered as projections of likely future events, as the gains or losses from exchange rates in the future may differ due to developments in the global financial markets.

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 2023, designated derivative financial instruments in net investment hedges applied on the company’s debt amount to 7 908m US dollar equivalent (31 December 2022: 8 482m US dollar). These instruments hedge foreign operations with Canadian dollar, Chinese yuan, Mexican peso and South Korean won functional currencies.

Net foreign exchange results

Foreign exchange results recognized on hedged and unhedged exposures are as follows:



Million US dollar	2023		2022		2021
Hedged (economic hedges)		70		297		717
Not hedged		(423)		(660)		(801)
		(353)		(363)		(84)

D) 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 reduces 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 0.6 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. In May 2017, the company issued a pound sterling bond for 700m pound sterling at a rate of 2.25% per year and maturing in May 2029, and issued a pound sterling bond for 900m pound sterling at a rate of 2.85% per year and maturing in May 2037. These bonds have a principal outstanding as of 31 December 2023 of 500m, 337m and 248m pound sterling, respectively.

The impact of changes in the pound sterling exchange rate and interest rate on these bonds is managed and reduced through pound sterling fixed/euro fixed cross currency interest rate swaps. These derivative instruments have been designated in cash flow hedge relationships.

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 389m 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 a cash flow hedge relationship.

Economic Hedges

Marketable debt security hedges (interest rate risk on Brazilian real)

During 2023, 2022 and 2021, 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 the reporting date as well as the currency in which the debt is denominated.



31 December 2023 Interest-bearing financial liabilities Million US dollar	Before hedging				After hedging
	Effective interest rate		Amount		Effective interest rate		Amount

Floating rate
Euro		4.27%		1 086		4.27%		1 086
US dollar		6.00%		505		6.35%		789
Other		10.47%		299		11.66%		595
				1 889				2 469
Fixed rate
Canadian dollar		4.54%		625		4.37%		2 988
Chinese yuan		2.91%		57		2.49%		2 437
Euro		2.26%		21 233		2.46%		22 072
Pound sterling		5.38%		2 122		8.24%		827
South Korean won		5.49%		49		1.85%		2 209
US dollar		5.02%		50 368		5.20%		43 344
Other		8.85%		1 825		10.00%		1 820
				76 277				75 697



31 December 2022 Interest-bearing financial liabilities Million US dollar	Before hedging				After hedging
	Effective interest rate		Amount		Effective interest rate		Amount

Floating rate
Canadian dollar		-		-		4.34%		1 455
Euro		1.68%		1 048		1.68%		1 048
Pound sterling		-		-		3.70%		1 078
South Korean won		-		1		3.08%		311
US dollar		5.05%		430		-		-
Other		13.39%		252		11.17%		666
				1 730				4 557
Fixed rate
Canadian dollar		4.50%		613		4.37%		3 741
Chinese yuan		2.44%		50		2.50%		1 230
Euro		2.27%		20 391		2.31%		21 242
Pound sterling		5.13%		2 208		5.55%		1 607
South Korean won		2.96%		46		0.94%		1 896
US dollar		4.99%		53 478		5.27%		44 547
Other		10.53%		1 476		12.19%		1 172
				78 261				75 434

As at 31 December 2023, the total carrying amount of the floating and fixed rate interest-bearing financial liabilities before hedging as listed above includes bank overdrafts of 17m US dollar (31 December 2022: 83m US dollar). As disclosed in the above table, 2 469m US dollar or 3.2% of the company’s interest-bearing financial liabilities bears interest at a variable rate.

The sensitivity analysis has been prepared based on the exposure to interest rates for the floating rate debt after hedging, assuming the amount of liability outstanding at reporting date was outstanding for the whole year. The company estimates that an increase or decrease of

100

basis points represents a reasonably possible change in applicable interest rates. Accordingly, if interest rates had been higher/lower by 100 basis points, with all other variables held constant, the interest expense would have been 26m US dollar higher/lower (31 December 2022: 46m US dollar; 31 December 2021: 20m US dollar). This impact would have been more than offset by 96m US dollar higher/lower interest income on interest-bearing

financial assets (31 December 2022: 93m US dollar; 31 December 2021: 81m US dollar). Additionally, the pre-tax impact on equity reserves from the market value of hedging instruments would not have been significant.

Interest expense

Interest expense recognized on unhedged and hedged financial liabilities are as follows:



Million US dollar	2023			2022			2021
Financial liabilities measured at amortized cost – not hedged		(3 722	)		(3 641	)		(3 836	)
Fair value hedges		(22	)		(20	)		(6	)
Cash flow hedges		28			24			17
Net investment hedges - hedging instruments (interest component)		10			(1	)		-
Economic hedges		-			42			141
		(3 705	)		(3 597	)		(3 684	)

E) 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 price volatility. The most significant commodity exposures are included in the table below (expressed in outstanding notional amounts):



Million US dollar	31 December 2023		31 December 2022

Aluminum		1 780		2 165
Energy		249		417
Corn		289		321
Wheat		163		127
Plastic		95		122
Rice		51		100
Sugar		91		95
		2 719		3 348

Commodity price sensitivity analysis

The impact of changes in prices of commodities that are being financially hedged would not have had a material impact on AB InBev’s profit in 2023 as they are hedged using derivative contracts which are designated in hedge accounting in accordance with IFRS 9 rules.

The tables below show the estimated impact that changes in the price of the commodities, for which AB InBev held material derivative exposures would have on the equity reserves.



	2023						2022

			Pre-tax impact on equity						Pre-tax impact on equity

Million US dollar	Volatility of prices in %¹		Prices increase		Prices decrease		Volatility of prices in %¹		Prices increase		Prices decrease


Aluminum		19%		337		(337)		31%		665		(665)
Energy		52%		130		(130)		49%		206		(206)
Corn		27%		78		(78)		22%		72		(72)
Wheat		35%		56		(56)		52%		66		(66)
Plastic		15%		14		(14)		32%		25		(25)
Rice		26%		13		(13)		19%		19		(19)
Sugar		29%		26		(26)		22%		21		(21)

F) EQUITY PRICE RISK

AB InBev 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 24

Share-based Payments.

AB InBev also hedges its exposure arising from shares issued in connection with the Modelo and SAB combinations (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 2023, an exposure for an equivalent of 100.5m of AB InBev shares was hedged, resulting in a total loss of (325)m US dollar recognized in the profit or loss account for the period in exceptional finance income/(cost). As at 31 December 2023, liabilities for equity swap derivatives amounted to 4.7 billion US dollar (31 December 2022: 4.8 billion US dollar).

Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2023 and 31 December 2022.

Equity price sensitivity analysis

The sensitivity analysis on the equity swap derivatives, calculated based on a 18% (2022: 28%; 2021: 27%) reasonably possible volatility of the AB InBev share price, with all the other variables held constant, would show 1 181m US dollar positive/negative impact on the 2023 profit before tax (31 December 2022: 1 660m US dollar; 31 December 2021: 1 604m US dollar).

G) 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 2023 to be limited.

Exposure to credit risk

The carrying amount 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 2023						31 December 2022

Million US dollar	Gross		Impairment		Net carrying amount		Gross		Impairment		Net carrying amount

Cash and cash equivalents		10 332		-		10 332		9 973		-		9 973
Trade receivables		4 734		(387)		4 347		3 980		(343)		3 637
Other receivables		1 483		(74)		1 409		1 545		(68)		1 477
Derivatives		549		-		549		391		-		391
Cash deposits for guarantees		164		-		164		189		-		189
Investment in unquoted companies		151		-		151		155		(5)		149
Loans to customers		72		-		72		81		-		81
Investment in debt securities		94		-		94		123		-		123
		17 578		(462)		17 116		16 434		(416)		16 019

There was no significant concentration of credit risks with any single counterparty as of 31 December 2023 and no single customer represented more than 10% of the total revenue of the group in 2023.

Impairment losses

The allowance for impairment recognized during the period on financial assets was as follows:



	31 December 2023		31 December 2022		31 December 2021
Balance at end of previous year		(416)		(402)		(376)
Impairment losses		(54)		(38)		(37)
Derecognition		26		24		30
Currency translation and other		(18)		1		(19)
Balance at end of period		(462)		(416)		(402)

H) 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 2023

Million US dollar	Carrying amount¹		Contractual cash flows		Less than 1 year		1-2 years		2-3 years		3-5 years		More than 5 years

Non-derivative financial liabilities
Unsecured bond issues		(74 410)		(125 728)		(5 689)		(3 699)		(6 352)		(16 731)		(93 258)
Trade and other payables		(26 719)		(27 020)		(26 026)		(233)		(156)		(240)		(365)
Lease liabilities		(2 829)		(3 228)		(823)		(596)		(472)		(599)		(738)
Secured bank loans		(415)		(426)		(395)		(5)		(5)		(10)		(10)
Unsecured bank loans		(182)		(182)		(182)		-		-		-		-
Unsecured other loans		(314)		(364)		(200)		(109)		(28)		(16)		(11)
Bank overdraft		(17)		(17)		(17)		-		-		-		-
		(104 886)		(156 965)		(33 331)		(4 642)		(7 013)		(17 597)		(94 383)

Derivative financial liabilities
Equity derivatives		(4 718)		(4 718)		(4 718)		-		-		-		-
Foreign exchange derivatives		(432)		(432)		(428)		-		(4)		-		-
Cross currency interest rate swaps		(174)		(174)		(24)		(34)		(13)		(103)		-
Commodity derivatives		(145)		(145)		(145)		-		-		-		-
		(5 469)		(5 469)		(5 316)		(34)		(16)		(103)		-

Of which: related to cash flow hedges		(542)		(542)		(494)		(34)		-		(14)		-


	31 December 2022

Million US dollar	Carrying amount¹		Contractual cash flows		Less than 1 year		1-2 years		2-3 years		3-5 years		More than 5 years

Non-derivative financial liabilities
Unsecured bond issues		(76 798)		(133 670)		(3 273)		(5 683)		(3 783)		(15 482)		(105 450)
Trade and other payables		(27 208)		(27 453)		(26 376)		(170)		(349)		(260)		(297)
Lease liabilities		(2 492)		(2 840)		(618)		(566)		(414)		(531)		(712)
Secured bank loans		(393)		(405)		(371)		(5)		(5)		(10)		(14)
Unsecured bank loans		(100)		(100)		(100)		-		-		-		-
Unsecured other loans		(125)		(193)		(34)		(78)		(28)		(31)		(23)
Bank overdraft		(83)		(83)		(83)		-		-		-		-
		(107 199)		(164 745)		(30 856)		(6 501)		(4 579)		(16 313)		(106 496)

Derivative financial liabilities
Equity derivatives		(4 763)		(4 763)		(4 763)		-		-		-		-
Foreign exchange derivatives		(265)		(265)		(265)		-		-		-		-
Cross currency interest rate swaps		(192)		(191)		(9)		(43)		(47)		(62)		(30)
Commodity derivatives		(271)		(251)		(249)		(2)		-		-		-
		(5 492)		(5 471)		(5 287)		(45)		(47)		(62)		(30)

Of which: related to cash flow hedges		(551)		(530)		(469)		-		(43)		(17)		-

“Carrying amount” refers to the net book value as recognized in the statement of financial position at each reporting date.

I) 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 capital structure policy and framework aim 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 requirements. Management uses the same debt/equity classifications as applied in the company’s IFRS reporting to analyze the capital structure.

J) FAIR VALUE

The following table summarizes for each type of derivative the fair values recognized as assets or liabilities in the statement of financial position:



	Assets				Liabilities				Net

	31 December		31 December		31 December		31 December		31 December		31 December

Million US dollar	2023		2022¹		2023		2022¹		2023		2022¹

Foreign currency
Foreign exchange derivatives		363		227		(432)		(265)		(70)		(38)

Interest rate
Interest rate swaps		3		-		(10)		(5)		(7)		(5)
Cross currency interest rate swaps		52		63		(164)		(187)		(112)		(124)

Commodities
Aluminum derivatives		72		52		(57)		(174)		15		(122)
Energy derivatives		30		12		(29)		(28)		1		(16)
Other commodity derivatives		29		36		(58)		(69)		(30)		(32)

Equity
Equity derivatives		-		-		(4 718)		(4 763)		(4 718)		(4 763)
		549		391		(5 469)		(5 492)		(4 920)		(5 101)
Of which:
Non-current		44		60		(151)		(184)		(107)		(124)
Current		505		331		(5 318)		(5 308)		(4 813)		(4 977)

The following table summarizes the carrying amount and the fair value of the fixed rate interest-bearing financial liabilities as recognized in the statement of financial position. Floating rate interest-bearing financial liabilities, trade and other receivables and trade and other payables, lease liabilities and derivative 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 2023				31 December 2022

Million US dollar	Carrying amount²		Fair value		Carrying amount²		Fair value

Fixed rate
US dollar		(49 917)		(52 268)		(52 993)		(52 158)
Euro		(20 379)		(19 796)		(19 655)		(17 926)
Pound sterling		(2 069)		(2 012)		(2 148)		(2 039)
Canadian dollar		(526)		(505)		(515)		(437)
Other		(558)		(554)		(458)		(448)
		(73 449)		(75 135)		(75 769)		(73 008)

1	Amended to conform to 2023 presentation.

2	“Carrying amount” refers to the net book value as recognized in the statement of financial position 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 2023 Million US dollar	Quoted (unadjusted) prices - level 1		Observable market inputs - level 2		Unobservable market inputs - level 3

Financial Assets
Held for trading (non-derivatives)		-		9		-
Derivatives at fair value through profit and loss		-		51		-
Derivatives in a cash flow hedge relationship		28		381		-
Derivatives in a net investment hedge relationship		-		89		-
		28		530		-
Financial Liabilities
Deferred consideration on acquisitions at fair value		-		-		741
Derivatives at fair value through profit and loss		-		4 736		-
Derivatives in a cash flow hedge relationship		18		524		-
Derivatives in a fair value hedge relationship		-		10		-
Derivatives in a net investment hedge relationship		-		181		-
		18		5 451		741



Fair value hierarchy 31 December 2022 Million US dollar	Quoted (unadjusted) prices - level 1		Observable market inputs - level 2		Unobservable market inputs - level 3

Financial Assets
Held for trading (non-derivatives)		-		9		-
Derivatives at fair value through profit and loss		-		41		-
Derivatives in a cash flow hedge relationship		36		219		-
Derivatives in a net investment hedge relationship		-		94		-
		36		364		-
Financial Liabilities
Deferred consideration on acquisitions at fair value		-		-		762
Derivatives at fair value through profit and loss		-		4 799		-
Derivatives in a cash flow hedge relationship		26		525		-
Derivatives in a fair value hedge relationship		-		4		-
Derivatives in a net investment hedge relationship		-		138		-
		26		5 466		762

There were no significant changes in the measurement and valuation techniques, or significant transfers between the levels of the financial assets and liabilities during the period. Movements in 2023 and 2022 in the fair value “level 3” category of financial liabilities, measured on a recurring basis, are mainly related to the settlement and remeasurement of deferred consideration

from

prior years acquisitions.

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 2024 and 2026. As at 31 December 2023, the put option on the remaining shares held by ELJ was valued at 577m US dollar (31 December 2022: 585m US dollar) and recognized as a deferred consideration on acquisitions at fair value in the “level 3” category above.

On 31 January 2024, ELJ exercised its put option to sell to Ambev approximately 12% of the shares of CND for

a net consideration

of 0.3 billion US dollar. The closing of the transaction resulted in Ambev’s participation in CND increasing from 85% to 97%.

K) HEDGING RESERVES

The company’s hedging reserves disclosed in Note 21 C

hanges in equity and earnings per share

relate to the following instruments:



Million US dollar	Foreign currency		Commodities		Others		Total hedging reserves

As per 1 January 2023		491		(476)		131		145
Change in fair value of hedging instrument recognized in OCI		(237)		(197)		-		(434)
Reclassified to profit or loss / cost of inventory		102		368		-		470
As per 31 December 2023		356		(304)		131		181


Million US dollar	Foreign currency		Commodities		Others		Total hedging reserves

As per 1 January 2022		679		(306)		111		481
Change in fair value of hedging instrument recognized in OCI		143		39		-		183
Reclassified to profit or loss / cost of inventory		(331)		(208)		22		(518)
As per 31 December 2022		491		(476)		131		145

L) OFFSETTING FINANCIAL ASSETS AND LIABILITIES

The following financial assets and liabilities are subject

offsetting, enforceable

master

netting agreements

and

similar agreements:



	31 December 2023

Million US dollar	Gross amount			Net amount recognized in the statement of financial position¹			Other offsetting agreements²			Total net amount

Derivative assets		549			549			(538	)		11
Derivative liabilities		(5 469	)		(5 469	)		538			(4 931	)


	31 December 2022

Million US dollar	Gross amount			Net amount recognized in the statement of financial position¹			Other offsetting agreements²			Total net amount

Derivative assets		391			391			(381	)		10
Derivative liabilities		(5 492	)		(5 492	)		381			(5 111	)

1	Net amount recognized in the statement of financial position after taking into account offsetting agreements that meet the offsetting criteria as per IFRS rules.

2	Other offsetting agreements include collateral and other guarantee instruments, as well as offsetting agreements that do not meet the offsetting criteria as per IFRS rules.