Heineken N.V. (HEIA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. At 1:30 p.m., I am pleased to open the Annual General Meeting of Shareholders of Heineken N.V. I would like to welcome you all, and I'm delighted to meet you all again in this beautiful DeLaMar theater. I'm also pleased to welcome the shareholders of Heineken Holding N.V. who are present here as observers. I'll open with a few general announcements. First, please switch off your mobile phones or put them in silent mode. Taking photographs or making video recordings during this meeting is prohibited. Simultaneous interpretation from Dutch to English is available on 2 and from English to Dutch on Channel 1. Those who are hard of hearing may also use the headphones and should set them at Channel 0. This meeting will be broadcast live. I'd like to welcome all participants on the webcast. The Heineken Holding N.V. meeting will start at 4 p.m. or later if this meeting runs late. At 7:30 p.m., the musical Annie will start in this room, so our time is somewhat limited. I would not like to disappoint 500 excited children or their parents. Now on to the formalities of this meeting. I determined that all formalities for convening this meeting have been observed. Valid resolutions may therefore be taken on all matters announced. The company has offered shareholders the opportunity to issue voting instructions online, and this opportunity has been used. I will tell you the number of shareholders present or represented and the number of shares they may cast the moment the count has been completed. Present at this meeting, we have civil law notary van Agt from Loyens & Loeff. This is Mr. van Agt over there. And he will supervise the voting. The resolutions adopted today and the voting results will be published on the company's website in a few days. Shareholders can obtain the report of the company meeting from the website within 3 months in connection with discussing the financial statements from 2020 by the Executive Board. And this meeting is also being attended by the company's auditors, messieurs from [ Deferte ], and then of course of Deloitte Accountants B.V. I understand that the meeting is also being attended by representatives of the press, and I am also pleased to welcome them present here. I'll briefly explain the procedure for asking questions today. Before the meeting, some questions were submitted by shareholders by e-mail. We will address most of the questions at the meeting at the relevant agenda items. The complete questions and answers appear on our company website. I request anyone who wishes to speak during the meeting to use one of the microphones positioned here and there in the room and to state his or her name for the record as soon as I have given that person the floor. If you are speaking as a representative of a shareholder, please state which shareholder you represent. I explicitly reserve the right to restrict speaking time if the progress of the meeting so requires. Please address any questions to me, and I will state in each case, who will be answering that question. I am also asking Anne Marie van der Waal, the Company Secretary, to make the announcements concerning voting during this meeting. Anne Marie, thank you.

To vote, please use the voting boxes. Shareholders of Heineken N.V. have blank voting cards without a doubt and may vote in this meeting. Shareholders of Heineken Holding N.V. attending this meeting as observers have a voting card with a yellow dot. This card may be used only at the Heineken Holding meeting. Shareholders with 2 yellow dots under cards are shareholders of both Heineken N.V. and Heineken Holding N.V. and may vote at both meetings. Mr. Chairman, back to you.

Thank you. That was the introductory section. We are now going to start at Item 1a on the agenda, the Executive Board report for the 2021 financial year. You will find this report in our annual report. I'm pleased to hand you over to Dolf van den Brink, Chairman of the Executive Board and CEO. And after that, to Harold van den Broek, CFO. Dolf, you have the floor.

Thank you, Jean-Marc. First, I'm delighted to be able to address you in person here today. In the past few years, we've learned that we can do a lot virtually online. But nothing beats seeing each other in person and speaking with each other in person. And that holds true for this shareholders' meeting as well as for the reception afterwards. I think that we all hoped that 2021 would be a calmer year. But once again, the year proved filled with challenges, which we will share with you. We have continued to adapt to this rapidly changing environment. And we also explicitly set aside time to pursue our EverGreen program to build for the future, and we'll tell you more about that later on. We're extremely proud of the resilience and adaptability of our coworkers, customers and suppliers and especially of how we have supported each other and nonetheless have achieved strong results. This speed of the recovery remains uncertain, and we are facing high inflation that we have -- that has been unprecedented for decades, but we're very proud of the strong results of our company at the start of this year and during the previous year as -- and of the development of our EverGreen strategy. This is intended as a new chapter in the long and successful history of our company. And we're confident that we are on the right track to achieve superior and balanced growth and to create sustainable long-term value. I'd also like to comment on the tragedy in Ukraine. This remains on our mind, and we are very shocked and deeply saddened to see how the situation has changed and continues to develop. And we stand behind the Ukrainian people and our hearts go out to all those affected. The Russian government's war against Ukraine is un-elicited and unjustified. It was not provoked. After extended evaluation of our strategy, we took the very difficult decision to leave Russia. And we are committed to an orderly transfer to the new owner. During this transition period, we will remain active with the recently enhanced scaled back activities to ensure the safety of our employees, and we will guarantee payment of their salaries at least until the end of 2022. We continue to provide support and donations to NGOs active in Poland, Hungary, Romania and Slovakia. We're very proud of our coworkers helping people. They're people who have fled the war in search of safety. And we hope that the path to peace will be found soon. I'd like to share the main results for 2021 with you now. We're pleased to report strong results. Despite the circumstances, we're well on track to recovery to pre-pandemic levels. We're not there yet. But in some respects, we've already done better than before. Net revenue rose organically with 12.2%. We benefited from strong volume and revenue per hectoliter growth. Beer volume grew organically by 4.6%. And the Heineken brand even posted a 17.4% growth with double-digit growth in over 60 markets. Our operating profit increased by 43.8% and the margin was 15.6%, thanks to top line growth leverage, continuous cost mitigation actions and major progress in rightsizing our cost base structurally. Net profit and EPS grew even faster from the low base of last year, higher profits from our joint venture partners and lower financing costs. In the region, Africa, Middle East and Eastern Europe, net revenue grew organically by 25.9% and operating profit grew by 89%, with strong growth in the majority of our operations, especially in South Africa and Nigeria. Nigeria continues to grow quickly. The volume increased to above the 2019 level. Our premium portfolio increased by more than 30%, driven by Tiger, the Heineken brand and the successful launch of Desperados. We will be expanding our Ama brewery to enable additional growth. In South Africa, volume grew by more than 40% and was thus ahead of the market. In November, we announced our intention to acquire Distell and Namibian Breweries to create a successful regional beverage champion operating in various beverage segments. Full completion is still pending regulatory approvals across various jurisdictions. In the Americas, net revenue and operating profit increased organically by 17.9% and 19.5%, respectively, mainly driven by Mexico and Brazil. In Mexico, beer volume grew in the high teens and was less ahead of the market and is now back at the 2019 level. Our premium portfolio grew by more than 30%, led by Amstel Ultra, Bohemia and there too, Heineken. Amstel Ultra is extremely successful, and we'll be rolling it out to other markets as well. In Brazil, over the course of this year, we gained market share, thanks in part to revenue per hectoliter growing by over 30%, driven by strong pricing and mix effects, and we continue to rebalance the entire portfolio. The premium beer volume grew by close to 30%, led by the Heineken brand and Eisenbahn. The Heineken brand volume is now double -- at double its pre-pandemic volume. Heineken U.S.A. grew by low single digits, once again ahead of the market, led by Heineken, Dos Equis and Dos Equis' innovations such as Ranch Water and Lime & Salt. We posted strong growth in the majority of our markets in the region, especially in Panama, Peru and Ecuador. Our joint venture partners in Chile, Argentina, Colombia and Costa Rica also grew considerably. After the strong start of the year, the Asia Pacific region was hit hard by the pandemic. Net revenue was down 6.1%. Operating profit declined by 13.5% organically driven by Vietnam and Cambodia, which were hit the hardest. This decline was partly offset by growth from Indonesia, Malaysia and the restructuring of our business in the Philippines. Our growth momentum in Vietnam was thus disrupted by these lockdowns, which were more serious, especially in our stronghold, such as Ho Chi Minh City. Toward the end of the year, when the restrictions were lifted, we did manage to restore our national leadership position. Despite these challenges, the local Bia Viet beer brand grew by almost 30%. In India, United Breweries Limited grew by over 30% and outperformed the market, and UBL is now proud to be part of the Heineken Group after years of waiting. The strong momentum in China continued. The Heineken brand today is close to double its size before the pandemic. And China is now the fourth largest market for the brand globally. Now finally, moving to the Europe region, where net revenue grew by 8.6% and operating profit more than doubled. In Q4, the food and beverage sector volume grew in the high teens through less rigid and less widespread COVID restrictions as in the same period last year. But we're still 30% below our level from 2019 in the food and beverage industry. So we have a ways to go to recover fully. On the other hand, retail channels were relatively stable versus last year and ahead of 2019 by nearly 10%, driven by premium segments. In 2/3 of our markets, we held or gained market share. Our greater focus on a few premium brands specifically focused on meeting the needs of younger consumers has yielded excellent results with 30% growth, and these brands combined now represent nearly 8% of our volume in Europe. Moving on to premiumization. However, it's a tongue twister. It's difficult to convey in Dutch. I hope it's clear. Premiumization is a key driver in the engine for our superior growth. Premium beer is expected to grow twice as fast as overall beer and even faster than total alcohol. Over 40% of our beer revenue comes from premium, the highest percentage compared to our competitors and peers. So we're best positioned to capture this opportunity. We intend to continue leveraging this advantage under the aegis of the Heineken brand, making it the #1 brand choice for the younger generation. The brand has strong momentum, growing 17% ahead of 2019. Nearly 40 markets posted double-digit growth with respect to before the pandemic. Heineken 0.0 and Silver further support the growth. Heineken 0.0 grew over 30% this year and is now present in over 100 markets. Heineken Silver is thriving in Vietnam and China more than doubling its volume this year. And in the next slide, I'll tell you more about Heineken Silver. We're also scaling up and replicating the success of our premium international brands such as Desperados, Tiger Crystal, Amstel Ultra and Birra Moretti. They're significantly ahead of 2019. Our strongest local premium brands are growing quickly as well, such as the stated brands, which posted 61% growth in Europe versus 2019. Now Heineken Silver. Heineken Silver is a smooth new pilsner with 4% alcohol and an ultra-fresh taste. Building on its successes in China and Vietnam, our goal with Heineken Silver was to rejuvenate the Heineken brand, strengthen our premium image and market Heineken Silver at a large scale throughout Europe. To this end, we needed a disruptive plan that would capture the hearts and minds of the Gen Z generation, so we have ventured onto the metaverse by launching our first virtual beer, an ironic joke, winking at ourselves and at other brands by launching a beer in the only place you can enjoy its extra refreshing taste. If you don't know what the metaverse was, you're not alone. This was the first time in my career that I started to feel old. I had no idea what it was, but a new world has opened up to us, especially last month. It's great -- it's greatly disrupted the status quo in the brand. Well, that metaverse is all very well and good, but we wanted to launch it in the real world and we did that in the past few weeks and days in over 20 countries throughout Europe. Our advertising campaign aims to remind consumers that real is always better than virtual. And to reinforce this message, for the first time ever, we teamed up with influencers who even featured on some of our TV commercials and digital assets. We have steeply accelerated the rollout of our digital platforms, which is incredibly important at this time. And we now operate these platforms on 30 markets, which together represent 75% of our net revenue. Through these platforms, we're building on strengthening our relationships with our customers in this fragmented trade so that they can grow their business with more and better services and data insights as we increase our sales and productivity. In 2021, we captured EUR 2.8 billion in digital sales value, which is growth of 130% versus last year, driven by strong growth in Mexico, Brazil, Vietnam, Nigeria, the U.K., Italy, France, et cetera. And we're well on track to achieving our objective of EUR 10 billion in revenue by 2025. The right graph conveys the acceleration throughout the year starting at just 15% and culminating at 47% of our online business as a percentage of the total fragmented market. We're now digitally connected to 370,000 active customers who place orders at a level considerably higher than in 2020. In 2021, we further developed and expanded our global presence to build a sustainable long-term growth advantage. In July, as stated previously, United Breweries Limited in India became part of the Heineken Group, which was a very special moment after 13 years of strategic patience. And I'm especially grateful to my predecessor, Jean-François van Boxmeer and many others at Heineken, who helped achieve this. We believe that in the long run, India offers excellent growth opportunities with its population of 1.4 billion, a rapidly emerging middle class and currently low per capita beer consumption. UBL has an illustrious history that goes back over a century. The company has established itself as the undisputed market leader in India with a strong network of breweries across the country and a fantastic brand portfolio, including the iconic Kingfisher. We're honored to be able to build on this heritage and integrating UBL is proceeding according to plan. As mentioned previously, in addition to UBL in November, we signed an implementation agreement with Distell Group Holdings and Namibian Breweries to integrate their businesses and thereby to create a regional market leader for Southern Africa. Distell is the largest manufacturer and seller of ciders, alcoholic mixed drinks, wines and spirits in Africa. And NBL is the market leader in beer in Namibia. The combination of our companies will significantly strengthen and complement the route to market in South Africa and Namibia with additional growth opportunities throughout Southern Africa. In 2021, we launched our renewed Brew a Better World strategy. The sustainability strategy comprises 3 pillars. Environmentally, we defined important milestones on our path to net zero impact. Socially, we want to head toward an inclusive there and equitable world. And the third pillar is where we raise the bar in terms of responsible alcohol consumption and preventing harmful alcohol consumption. Another objective is that we shared is to reach zero carbon emissions in the full value chain by 2040, 10 years ahead of the Paris Agreement. The science-based targets initiative improved our targets to reach net zero emissions in manufacturing by 2030 and to reduce total value chain emissions by 30% versus 2018. We're well on track, but our journey is going to be very challenging and will require coordinated action with many suppliers and stakeholders globally. In 2021, we also raised the bar in terms of transparent reporting. We began the year as a founding signatory member to the WEF Stakeholder Capitalism Metrics initiative. And toward the end of the year, we committed to the recommendations of the task force on climate-related financial disclosures also known as TCFD. And we also checked our remuneration policy, and we tried to see how we could best align it to creating long-term sustainable value. And our proposal will be voted on later at this AGM. Now I'll address a few questions submitted by the VEB prior to this meeting. To avert extending the meeting too long, I'll address the various topics briefly. The detailed questions and our answers are posted on our website. The VEB asked questions about our business in Brazil, India South Africa, Nigeria and China. Early in my presentation, I addressed our business in Brazil, which led to a joint improvement of sales per hectoliter. Improving the profitability of our business in Brazil remains one of our top priorities, but we still have a lot of work ahead of us. We will not disclose expected operating profit margins in India. We don't do that for any of our opcos, but we do expect limited synergies from the integration of UBL as stated. This largely concerns long-term growth potential in India that we consider to be significant and vast. In South Africa, with the expansion of our Sedibeng brewery, we expect to manufacture more locally, hence, improving profit margins. At present, we are forced to import a significant share of our volume from Europe. And once we are entirely local in manufacturing, that will enormously boost the profit margins. We also expect synergy from the intended integration of Distell and Namibia Breweries in South Africa. In Nigeria, we increased priced considerably to improve profitability. Finally, we're very satisfied with the progress that CRB is achieving in China with our international brand portfolio and the Heineken brand, as I just discussed. By now, it's at twice the level of what it was pre-pandemic. Now to wrap up before I give the floor to our CFO, Harold van den Broek, I'd like to share 3 videos from our latest Heineken campaigns with you. The first is the new Heineken 0.0, Cheers With No Alcohol. Now You Can; afterwards, a Heineken Silver commercial with the Spanish influencer, Dante Caro; and finally, a new commercial related to our UEFA Champions League sponsorship. [Presentation]

Good afternoon. Good to see you here this afternoon. I would like to start by explaining our financials. And if we look at this slide, to growth of revenue, you see that we have organic growth of revenue, EUR 2.4 billion or 12.2%, and this was driven by partial volume recovery. But for a larger part, it was driven by assertive pricing, which led to net revenue growth of EUR 21.9 billion. Total consolidated volume on an organic basis grew by 3.6% for the full year 2021. Within the last quarter, we recorded a total volume growth of 5.2%. Higher growth in the fourth quarter was due to the fact that there were fewer restrictions in Europe as compared to 2020. If we then look at the full year 2021, we see that the growth was led by Mexico, South Africa, Nigeria, Italy, Spain and the U.K. and was partially offset by the decline in Asia Pacific. The region, particularly in the second half of the year, was deeply impacted by the pandemic because of the restrictions. Net revenue per hectoliter was up 8.3%, and the underlying price mix on a constant geographic basis was up 7.1%. This accelerated in the second half of the year. We increased prices further in order to tackle inflation and adverse currency impacts. We also saw a positive mix of premiumization and an improved channel mix such as hospitality as compared to 2020. The currency translation effect was EUR 550 million for the full year at 2.6%, mainly due to the devaluation of the Brazilian real and the Nigerian naira. Consolidation of United Breweries since August 2021 contributed EUR 280 million or EUR 1.4 million -- 1.4% to revenue. Operating profit in 2021 reached EUR 3.4 billion. You see that on the right-hand side of the slide. Strong results, strong performance, an important step towards recovering our profitability. Let's now take a look at organic growth of this operating profit. The EUR 2.4 billion of organic net revenue growth on the previous slide translated to more than EUR 1 billion operating profit. Organic growth for the full year conversion ratio -- rate of 44%. Overall, the revenue was the main driver of growth, further helped by structural growth savings and cost mitigations. For instance, less traveling and no advertising costs in those countries where hospitality was closed. Operating profit growth was very broad-based, with many of our operations contributing most noticeably, U.K., Mexico, France, Spain, South Africa, Brazil and Italy. In the region Asia Pacific, operating profit dropped with Vietnam and Cambodia most affected, mainly due to COVID. Currency translation negatively impacted operating profit by EUR 98 million, which was lower than the first half 2021. And the Brazilian real led to the biggest impact, but the Surinamese dollar, the Vietnamese dong and the Ethiopian birr also played a part with respect to the negative impact. Consolidation of UBL finally contributed EUR 31 million to operating profit. An important part of EverGreen is the productivity program, EUR 2 billion. It was introduced in order to partially offset COVID impact, but also to restore profitability and to deliver sustained operating leverage beyond that. We're well on track to deliver this target. At the end of 2021, we achieved EUR 1.3 billion of gross savings as compared to the cost basis in 2019. More than 80 operating companies accumulated over 7,500 initiatives, delivering results and filling a pipeline of initiatives, achieving EUR 1.3 billion cost savings. And to give you an idea of how much our operations and markets contributed to this number, on the right-hand side, you see that each region and all cost components realized at least mid-single-digit savings related to their own cost base. And so we're very pleased with that, and we hope to be able to continue this. And in the meantime, we built a tool to capture all these ideas. We developed it with IT. Now this methodology is deployed across Heineken. And the methodology shows us that we're on track to deliver the EUR 2 billion gross savings in full. And also, we expect to be able to realize important cost savings in 2022. We now have alliances and networks between experts, enthusiasts who activate, learn, share, discover and follow a drum beat, so to speak, so that projects move from idea to realization. And we can also measure the results, and this has become part of our short-term incentive structure. All in all, we hope to be able to show you that we have started to build on our cost-conscious culture. In February 2021, we introduced our EverGreen strategy in order to make our company successful in the future. And we're convinced that we can realize superior balanced growth with sustainable value creation at its core. And this means that we have to constantly find a balance between committing to change and making long-term investments. Well, in the short term, we also want to make progress and achieve our financial targets and all of this in the rapidly changing external conditions. And we think we're on the right track, as evidenced by strong results in 2021 and the way EverGreen is starting to take shape. This year, we're going to continue that. We do see, however, that there's a lot of uncertainty in the world. And we expect that COVID-19 will continue to have an impact. We also see that inflation is rising sharply and that the robustness of the supply chain is under pressure. Not everything is available anymore. We expect that these factors will have an important impact on us. To be more specific, we expect that the input cost per hectoliter will rise in the mid-teens. We will offset the increase in input costs with price increases, which may have a negative impact on beer consumption. Nonetheless, we remain confident in the long term, which is why we intend to reverse the temporary savings that we took in 2021. This includes, for instance, investing in our brands, where we temporarily suspended advertising expenditures due to curfew restrictions. And in 2022, now that the markets are open again, we will redeploy that and those investments will be partly offset by further gross savings from our productivity program. And we will continue to invest in digital and sustainability initiatives. Overall, we expect in 2022 a stable marginal growth of operating profit margin. We continue to aim at an operating profit margin of 17% in 2023. But the uncertainty about achieving this has increased, given current and changing economic conditions and related raw material costs, commodity costs, which is why we said that later this year, we will provide an update on our 2023 guidance. Moving on to our performance in the first quarter 2022. It was a solid start to the year, in line with our expectations, and we continue to make good progress with EverGreen. Net revenue grew organically by 24.9%, driven by price increases and premiumization in all regions and a positive impact from the mix of sales channels, particularly in Europe. The total beer volume increased organically by 5.2% as compared to last year and was, organically, 2.8% up from 2019. All regions contributed to growth, particularly Europe, given last year's low base due to COVID-related restrictions in on-trade. And Asia Pacific showed a growth again after the lockdown in the second half of last year. The Americas region recorded a modest growth, while Africa, Middle East and Eastern Europe continued their positive momentum. Heineken volume grew by 12.9%, significantly outperforming the overall beer market and outperforming 2019 by nearly 1/3. Volume grew at double-digit rates across all regions in more than 45 markets. Heineken 0.0 grew by more than 20% with strong momentum in Brazil, Mexico, United States, Chile and South Korea. And Heineken Silver, Dolf mentioned it, grew by more than 8% following a good launch in Europe and strong growth in Vietnam and China. However, the speed of recovery remains uncertain. Looking ahead, we expect additional challenges as a result of inflation, which is both impacting consumers' disposable income and putting further pressure on our own cost base. We'll have to take additional measures in order to address these challenges and, therefore, maintain our guidance for 2022. And at the same time, we'll continue to invest in the long-term operations of our company. And finally, I'd like to address the VEB's questions about our gross margins per hectoliter and what it is that we're doing in order to improve our profitability. Just to remind you, the pandemic has had a major impact on our business. We increased our prices in several countries in order to mitigate the impact of inflation and unfavorable exchange rate effects. These results became visible in the second half of 2021. And also, you just saw it in the first quarter of this year. And also, in the future, by means of investments, price increases and cost cutting, we will try to protect our profitability. And in addition, we aim to go beyond COVID recovery alone. Superior growth is what we aim for. And also, improvement in productivity should enable investments not only in increased marketing and sales investments, but also in our digital and sustainability initiatives. And with that, I'd like to give the floor back to Jean-Marc, who will continue to address your questions. Thank you.

Thank you, Dolf. Thank you, Harold. And just before we move to the questions, ladies and gentlemen, just an announcement that I was unable to give you. The civil law notary has confirmed the following to me. From the list of attendees, we see that 35 shareholders are present here today. 30 shareholders are represented here. In the Internet, 3,365 shareholders have cast their votes, so in total, 3,430 shareholders of, in total, 514,941,315 shares entitling to cast just as many votes, being 89.5% of issued capital, issued shares. At the meeting are present 19 shareholders of Heineken Holding N.V. who are attending this meeting as observers. Who can I give the floor first for this item, which is the report of Dolf and Harold? Should you wish to ask a question, please state your name and possibly the organization that you are representing for the benefit of the record of the meeting. Mr. [ Vreeken ]?

Good afternoon, ladies and gentlemen. It is good to be here to be back. I'm very pleased with the robust performance of Heineken. I'm also pleased with the innovation as announced by the new CEO of Heineken. And I'm also very pleased that the former CEO is also present here today, Jean-François van Boxmeer. Two years ago, we weren't able to properly say goodbye to him, whereas he achieved so much for the company. We had a wonderful dialogue during the meeting. And after the meeting as well, he's rather modest as you see. But he's done a wonderful job. And I assume that Dolf van den Brink is going to continue this excellent work with his team. And the thing is that he is surrounded by people who have a Unilever background, Mr. Huet and Mr. van den Broek, and that is very promising for this company. As you know, I would like Heineken to become a market leader globally with Heineken 0.0 with this global beer. So I'd like to know what the share is of alcohol-free beer globally. Heineken, by acquiring companies, can become the leading company in terms of mineral water with Sourcy and can solve the water problem in the world. And what struck me was that Heineken sponsors 007 films, No Time to Die was the last movie. I was very pleased with that because I thought, oh, good, exposure for Heineken 0.0. But what do I see in that movie? One glass after the other was drunk by 007. I understand that there are new negotiations, as we know, as you know, [ Umberto Tan ] and myself gave a presentation to Heineken. Both of us are very much in favor of alcohol-free beer in combination with the new [ Super Buzz ] or the new light [ beer ] that will be introduced in the Netherlands. It would be wonderful if Heineken 0.0 would be the most popular drink in combination possibly with Sourcy mineral water. Wage increases. Inflation is moving to 20%. So this is what you're facing and for blue-collar workers, that is -- has an enormous impact. These people are facing higher energy bills. And now that can be changed and reversed if we give employees a package of EUR 10,000 with solar panels with batteries in order to store solar energy, circular shower that would save you 80% of energy expenses. We can reduce energy consumption from EUR 600 to about EUR 350 more or less. Well, that would be much better than a wage increase. And if you then extend a loan at 4% interest over a period of 10 or 20 years, that will make everybody happy. And it's also good for the environment and also seat heating in hotels and restaurants. That will cost about EUR 0.02 per person per capita. And that is not only interesting and necessary. The heaters in hospitality industry cost about EUR 0.35 up to EUR 1 per person per hour. So it would be wonderful if Heineken could accelerate this process. What else? Now the value -- social interest of Heineken. ARTIS is incurring losses. ARTIS is the zoo in Amsterdam. It would be wonderful if Heineken could help out with the financials of ARTIS Zoo and perhaps also sponsor and serve Heineken 0.0 or Sourcy mineral water. What else? This other problem. At Heineken, well, Heineken, of course, could not foresee what's going on in Russia. Russia is turning into a province of China. And we know that Taiwan is a bit of a headache. And so perhaps, Heineken can start looking at plan B for China, start lobbying there to see if we can sort things out there and see whether we can get China to tell Putin to slow down. That will require quite a bit of diplomacy. But I think that you can do that job at Heineken because you have a good position in China. It would be terrible if you'd have to leave China after Russia. So that is something we're looking at. And then finally, in India, they have excess of wheat, but that they cannot ship the wheat. And if Heineken could help out, the price of wheat could be reduced for people who need bread but also people who desperately want to have a Heineken 0.0. Those are my questions so far. Thank you.

Fantastic. Thank you, Mr. [ Vreeken ], 10 or 11 questions. A couple of them are very relevant, but perhaps I can start by agreeing with what you said about Jean-François van Boxmeer. He's very, very modest, but he had a wonderful impact on the company over a period of 35 years. So we absolutely agree with you, and we're all extremely pleased that he is still so involved in the holding. Thank you, Jean-François. And now the challenge, not for example, so how about for Dolf to answer these 11 questions.

Let's see what we can do here. Thank you, Mr. [ Vreeken ]. I'm absolutely impressed by your innovative ideas and your passionate list of questions. First of all, the opportunity 0.0 beer, alcohol-free beer, we absolutely agree with that. We are proud to say that Heineken is a global market leader in 0.0. Heineken 0.0 is the largest brand on the planet available now in 100 countries. And at the same time, I think it's appropriate to be modest because globally, alcohol-free beer is only 1% of the overall beer market. So we're in this for the long haul. And a couple of European countries have already shown what is possible, 5% in the Netherlands is alcohol-free, and Spain is about 10% of the market that is alcohol-free beer. So we are absolutely convinced that over the next 1 or 2 decades, alcohol-free beer will move to 5 -- 15% and 20% of the beer market, and we absolutely intend as Heineken to play a leading role here. And as far as the James Bond films, as you are, we are absolute fans. But it's a creative process. And obviously, we have no say in this creative process, so it is the film director that is in charge of that. We can always make suggestions, but we can never take any decisions, and we have no control. So that should be clear. We can pass on your ideas, but we cannot guarantee that they will take any heed of those observations. Inflation globally affects all of us. Each and every one of us, it has an impact on our employees. And your idea to, in part, solve the problem with solar panels and a circular shower are interesting. Interesting. We haven't really thought about it, not like this, but -- and I'll admit as much. But we'll take a closer look at this. And it is fantastic because all the Heineken beer that is being brewed at the Zoeterwoude plant has been completely made with renewable energy. Last year, we made the announcement that we are partnering with an eco-energy provider in order to make our entire footprint renewable, the electric production but also thermal energy. I'm just trying -- I was trying to keep up and take note. ARTIS, the zoo, yes, that's what I wrote down, but I don't really remember what the question was, Mr. [ Vreeken ].

EUR 15 million is the deficit that ARTIS had, and the municipality of Amsterdam and the province refused to help out financially. So the zoo, ARTIS is looking for sponsors. There are businesses that are helping out. The former CFO of Heineken is personally also involved there in order to help out with this deficit. So perhaps you can help out as well, Mr. van den Brink.

Yes, we can consider that. But in our donation policy, it's important to keep that in mind that we do this for adults. I mean, if the event involves children, underage children, of course, we cannot be involved. And so that would apply to ARTIS, the zoo. Your comments about China. Yes, it's an important statement. And I think we should zoom out a bit. I mean the world is becoming increasingly complex to operate in. But yes, for all businesses, after a period of 30 years of globalization, if you will, and a predictable way in which things were evolving, all of a sudden, we're being faced with more turbulence and volatility as we can see for ourselves in terms of the situation in Russia. So as a company, we have to tread carefully, and I think it's very difficult to make general statements. I think that we should look at each and every case separately, and beer is very much a local business. As brewers, where we have local rooting, so we have to look at the context of the local markets. So I think that with that, I have answered most of the questions. India. That was a question about grain. Could you please repeat the specific question?

The farmers produce a lot of grain, but they can't export it because the logistics are not suitable for the farmers in India. And it would be good for those people because Heineken's wonderful logistics could help ship the grain both for people who need bread and for people who are desperate for Heineken 0.0. That would lead prices to drop too, if that's an excellent idea.

I'm not sure how practical it would be for us to join that one. And zooming out again, we have whole logistic chains not only India with under severe pressure. There's a huge shortage of truck drivers and seaport staff. And whereas last year, we managed to sustain reasonable service to our customers. Now we're all being hit very hard by disrupted supply chains. In our Q1 report, we specifically mentioned the U.S. market where the capacity shortage on the trans-Atlantic routes from Europe to America are becoming a serious problem. So unfortunately, that's our daily reality. And wherever we can, we'll do our bit and try to make a difference. Thank you, Mr. [ Vreeken ].

Dolf, thank you. I propose that you receive the floor. We've been waiting the longest. Well, I'm not as much of a performer as the previous person who asked questions, so I'll be brief. My questions are as follows. First, I'd like to thank the CEO and Mr. van Boxmeer for your good results despite corona, not the beer, but the virus. Next, how do you expect to improve the gross beer margins, a, short-term; and b, in the long run. And dependence from beer raw material, that's another issue for the Heineken Group. Why don't you purchase more plantations for barley or malt, so you're independent of the raw materials? Three, a reconsideration that's a different story, whether those who retired from Heineken could get Christmas packages. It shouldn't be a problem. Four, what about the [ baby tax ] in the U.S.A.? And are they available here in Europe as well? The person asking the questions is a retiree from Heineken. And China, how does the China region expect to recover given the major impact? Those are my questions.

Thank you, Mr. [ Moncar ]. I lived outside the Netherlands for many years, and it's nice to hear that Christmas packages are still there. Okay, perhaps, but not at Heineken. That's why you're asking the question. So I'll still have to hand you over to Dolf. What's your view on the Christmas packages?

The Christmas gifts. [ Max ] did submit that question previously by e-mail. So I had to check with Jean-François van Boxmeer what our considerations were. But in the past 2 years, we thought that considering the difficult painful decisions that needed to be taken within the company, there was no cause for Christmas packages. We had to let 8,000 staff go last year, and that made us very sad. So that's why we didn't expand our Christmas package scope. That might be a lesson for the future. So shall I answer the question about China? And then perhaps, Harold, you can talk about the gross margin and the raw materials for beers, yes. We're presently worried about China. If you read the newspapers, and we don't really know a lot more than what's known in the West. But the zero-COVID policy in China, it's no longer feasible. So now you see in Shanghai, even our own staff are stuck at home. And they're isolated and under difficult circumstances. They're in dire straights. Aside from this heavily impacting our staff, it is undoubtedly going to impact our results as well. That was not clear in Q1, but we expect that it will be clear in Q2. Harold, regarding the gross profit margins.

Hello, Mr. [ Moncar ]. First, Heineken is a growth company. We have become great through growth, and growth accounts for what's on our mind 70% of the time. But we want robust healthy growth. That's why we really appreciate your question. Especially as a CFO, it's important to note that COVID deeply impacted volumes in our brewery. And when brewers experience steep volume drops, then the margins decline as well because the fixed costs throughout the chain are very high. So we hope that when those volumes recover, we'll experience a favorable impact on our occupancy ratio and consequently, on our margins. And second, the food and beverage industry is recovering. We're delighted to see the sunshine and people sitting at outdoor cafes because that helps boost those margins. But as we indicated earlier in this conversation, there are 3 major factors that made it difficult for us in the context of declining margin. The first is that, especially in the emerging markets, local currencies are devaluing. And it's very difficult to increase prices all at once. We need to manage price increases very carefully to keep our consumers with us and avoid losing them. And second, as you would have read in the newspapers, since COVID, the cost of freight and containers and our raw materials are all increasing dramatically in price. And you may have seen that in Q1, we did our very best as well as in the second half of last year to pass these costs on to our customers and to the consumers. But we have to do it with full knowledge of what the competition is doing and what consumers can afford. In the long run, we need to consider very carefully how we will continue optimizing our costing programs so that we become more cost conscious and derive benefits from that and by adapting our portfolio to increase our margins. That's the answer to your first question. Your second question about more plantations to be less dependent is extremely relevant and is an important issue at present because much of the value chain has been disrupted. And there's a shortage of many raw materials, and we're trying to explore vertical integration to see whether in some areas, we should get on board to become less dependent on large suppliers and have additional certainty regarding access to our own ingredients and materials so that we can continue brewing beer. And it's also important that this is not the only way forward. We're also thinking very carefully about people in agriculture to see whether science can help us boost returns per square meter in wheat or barley. So you don't need to own all of that to share our knowledge and boost productivity. And that's not only good for supply. It also cultivates loyalty to us. So for example, if you look at the [ Albert Mount ] today in Belgium, they have a lot of knowledge that would benefit agriculture and work together with agriculture as well. So that's how we try to boost proceeds and cultivate mutual loyalty.

Thank you, Dolf and Harold. I see that you have some questions, madam.

Yes. And I represent the VBDO, the Dutch Association of Investors for Sustainable Development. We comprise more than 80 institutional investors and more than 600 private investors, and it is our mission to make the Dutch capital market more sustainable. We are very pleased as well to be back live here and also indeed, to greet the new CEO live this year. And yes, as every year, we are pointing Heineken to some of their material sustainability themes. And this year, I focus on 3 in specific. And the first one is biodiversity. The loss of biodiversity is increasingly a real threat and risk to companies, especially those with strong reliance on agricultural inputs. And we can read also in Heineken's annual report that you say we must act now to dramatically reduce long-term devastating impacts on biodiversity. We, of course, very much agree with this statement. However, we could not find, other than related to water issues, really a comprehensive biodiversity strategy and also assessment of risks and opportunities that Heineken faces in this regard. And often, when we are asking this question, then we hear that the assessments and monitoring tools for biodiversity may not be mature enough yet to conduct this in a standardized way. However, of course, with Heineken really being a front runner in this regard, we trust that you are one of the parties together with partners that can set new standards in this regard. So we are wondering what Heineken's strategy is going to be in the coming years and if you are going to start with assessing biodiversity more thoroughly, positive and negative impacts. The second thing is carbon emissions and circular economy. We had to find that Heineken has 27% of its carbon footprint relating to packaging. That is a really enormously high number. But also luckily indeed, one of the areas that you can really do something about. And Heineken is also a signatory of the Ellen MacArthur Foundation, and that's an organization that is concerned with circular economy and thereby also reducing carbon emissions. And the Ellen MacArthur Foundation asks companies to report on reuse, recycling, reducing packaging and other materials separately. And this is something that we do not yet see with Heineken. We see that you reported that the Gösser brand now has 100% recycled labels. But again, from a leader and also a company that, as you have emphasized today, is really aspiring balanced growth, we would expect more, and we would see this as an opportunity for you to show that you are aiming for such balanced growth and that you also show the good impacts that you're making in this regard. So we are wondering, when can we see more of this as well? And then finally, last year, we talked with you about the gender pay gap issues at Heineken or more in general, and Heineken had committed to assessing such gender pay impacts -- gaps, excuse me. And we are just wondering because we haven't seen this back in the report yet, and you say it's about 97% done. If we can expect to see this soon? And what are the things that you're going to report in this regard in the future also to show, yes, that indeed, diversity and treating diverse employees fairly is one of the things that you also aspire as part of your pillars, obviously. Thank you.

Thanks, Mrs. [ Ryka ] for your questions. If you don't mind, we'll answer in Dutch, and you can listen to the interpretation. So questions about biodiversity, circular economy and the gender gap in pay, Dolf?

Thank you, Mrs. [ Ryka ]. We'll start with a question about biodiversity. In April 2021, when we disclosed our Brewing a Better World 2030 targets, there was a document on environmental sustainability where we did point 3 focus areas. First was carbon emissions with a very clear commitment for net zero production in 2030 and in total production chain for 2040. Second, we set very rigid water efficiency targets in general, especially focused on water-stressed areas. And third, circularity. Quite honestly, the resources necessary to accelerate in carbon and decarbonization, at present, that requires the bulk of our resources. It's incredibly labor-intensive for an operation present in 80 countries with nearly 200 breweries and hundreds of warehouses to get all of that at net zero. That's our top priority at this time. Water has always been a priority. So that's continuing on the course we had already charted. And you're right that we can and should do more about biodiversity. As for urgency, this is very important to the world. We do believe that if you consider barley and hop, then 95% of that takes place on existing arable land. We believe that barley and hop are therefore a different kettle of fish from -- with respect to palm oil and beef, which have a huge deforestation impact. We're not trying to hide behind that. We're not using that as an excuse. So we are trying to get good land use accounting up and running. So to determine that all the barley that we source is indeed sourced from existing arable land. And that's why we also joined what you probably know, the Forest, Land and Agriculture Group or the SBTi. So first, we think that we're -- that barley and hop are relatively favorable categories, but we need to get the accounting properly transparent. We're working on it. And in part, Brewing a Better World 2030 includes a huge effort to get sustainably sourced barley and hop. And we started that in 2010. We're trying to team up with the sustainable agriculture initiative authority, which sets the standards for that. And at present, for 2021, we achieved 60% for barley and 92% for hop. So we still have a ways to go. We're not there yet, but we're fully confident that we'll get to 100% sustainably sourced barley and hop, which will favorably impact biodiversity. Ultimately, the only true solution is regenerative agriculture, and that's quite a bit more difficult -- is much more difficult. We're in the test-and-learn stage, and we have 300 pilot initiatives at farmers in 15 countries, 7,500 hectares that we are now cultivating in a regenerative manner, and we want to expand that to 500 pilot farms. That's our current commitment, and it's clear from the intent of the question that we'll need to step that up in the future. But hopefully, that gives you a more comprehensive impression than was clear from the annual report. Next, your second question regarding waste circularity. Yes, we are members of the Ellen MacArthur Foundation. Several years ago, I attended one of Ellen's conferences. So we do believe that circularity is the solution if we want to keep growing. And as corporate industry, we want to do that, but we have to do it through circularity. Now back to Brewing a Better World 2030 targets, we are firmly committed to achieve zero landfill in our production chain. Beer is historically fairly circular. Our waste stream is largely reusable and especially the spent grains, you have little peels left over afterwards. And we generally sell those to farmers, and they can feed their livestock with that. But we're trying to see whether there are any better uses because those are plant-based proteins that are extremely valuable given the trend to plant-based protein in the food chain. So we've got some initiatives in the pipeline. It's also a high-fiber food that you could use to generate your own biomass in breweries. And we hope to be able to tell you more about that in the future. At present, 99% of brewery waste is recycled. We've reduced a lot to 1% ahead of us. One thing I remember from when I was director in Mexico, the washing machines used to wash the bottles that you recycle leads to pulp of old labels and glue, and that's difficult to work with. In Mexico, we're trying to process that. And we managed to recycle them as egg boxes, those boxes that your eggs are packed in when you purchase them. So the low-grade carbon can be made from that pulp. So that's just an anecdote of how we intend to achieve 100%. And packaging materials are a major step. The good news is that what I would say is fairly unique about beer compared with other FMCGs is that nearly 40% of all beer we sell is in our returnable packs. And I don't think there's any other consumer good category that is already at that level of circularity as far as the packaging is concerned, and we intend to increase that. It's also in our economic interest because the margin is better there, too. So from Brazil to Europe, we're hard at work to encourage returnable crates and reuse of our packaging. What's most difficult at the end of the day is your one-way bottle and your one-way tin. Oddly, in the emerging markets, that's a much better situation. Aluminum, so scrap metal, is very valuable. So in developing countries, the recycling rate tends to be very high because a great many people in the informal economy obtain aluminum from the waste flow. So recycling is doing very well there. We haven't reported that properly yet because there are hundreds of suppliers that we need to work with to set standards and to be able to report reliably, but we certainly intend to do that. I don't know when we'll reach the necessary level of quality, but we are headed there. Now it's also important to help set up deposit return schemes. There is a big debate in the Netherlands and in England about that. And we strongly support these initiatives, but you need to reach solid agreements with all market operators, so retail and supermarket channels figure prominently here. Now your last question concerns the gender pay gap. And that's part of our Brewing a Better World commitment social pillar. Our commitment is to assess all our opcos based on equal pay, but we don't want to restrict it to that. Equal pay is only one element. It's about gender representation and equal opportunity in promotion and gender balance in management teams. So we're well aware that the outside world focuses on the equal pay metric. But as far as we're concerned, the challenge is far more holistic. I'm looking at our coworkers who work for our people, and we didn't disclose this, but our equal pay gap is low single digit. To be quite honest, on average, it looks very good. But of course, there are differences between the different opcos. 97% of the opcos were assessed, and 88% of the opcos has an action plan to get that gender gap at or as close as possible to zero. Now finally, in terms of gender representation, in general and on management teams, part of ESG -- as part of our LTI bonuses we'll be discussing later on this afternoon, one of the 3 criteria in addition to carbon emissions and water efficiency is female representation on senior management. And our objective is to increase that to 30% by 2025. I hope, Mrs. [ Ryka ], that I have sufficiently answered your question. Thank you very much.

That was a complete answer. Thank you very much for your patience. Mr. [ Spania ], it's your turn.

Yes, [ Spania ] is my name for the minutes. I don't want to be faced with that question again. Now my question is, you say that the hospitality industry is lagging behind. But on the one hand, that is due to the fact that there are simply no truck drivers anywhere. So what is Heineken going to do about that? Are they going -- are you going to set up an academy for lorry drivers? Are you going to help them? How are you going to do this? Because you could say, I want to have a Heineken beer on every terrace. But what if there are no lorry drivers anymore? What about the U.K.? That's a disaster there. All these foreigners, since they exited the EU, that's a big problem there. So how do you want to solve that problem? Because indeed, you may have solved it well in the Netherlands with Sligro or [ Simon Loews ]. But what about all the other countries? And then you said something about grain prices. You want to increase prices. What are you going to do with the supermarket chains? I hope you're not going to do what Nestle did so that Ahold Delhaize and other chains take you out of their shelves just because you've increased your prices. Price management. What are you going to do about that? I'd like to have an answer to those questions.

Do you have other questions? Are these the only 2 questions you have?

Well, perhaps later on under any other business.

Dolf, the questions.

Thank you, Mr. [ Spania ], for your very passionate questions. And in both respects, these are issues close to our hearts. Let me address the question about the hospitality industry, truck drivers. And perhaps, Harold, you can comment on price increases. As far as hospitality industry is concerned, the lorry driver problem is not limited to hospitality industry. Every time we need to transport our beer, we are dealing with a disruptive situation. Indeed, there are challenges in supplying hospitality industry but also the supermarkets. In all modesty, I don't think that as Heineken, we can say that we're going to solve this problem. This is a general problem. And to be quite honest, I think the price mechanism will solve the problem at the end of the day. It's a good day to be a truck driver because those salaries, I'm sure, will increase. As a consequence of COVID, there's been an enormous dislocation, a shift. Hundreds of thousands of people that worked in restaurants, hotels or restaurants and all of a sudden had to shift to call centers and other centers. I mean that has created a lopsided situation in the labor market. And everybody thought after COVID, we go back to normal. But this shift continued, this dislocation. And unfortunately, it will take some time for the dust to settle before we find a new balance. But price mechanism, at the end of the day, I think, will be the only effective way at this scale to make sure that the labor we deploy there where it generates the highest added value.

That's quite right. But that doesn't solve the problem about the shortage of drivers.

I understand, Mr. [ Spania ], and this is a problem we face each and every day. But we don't have a magic wand to solve the problem other than indeed accepting significant cost increases. Sometimes, even once we have contracts with lower rates and we accept higher costs, and hopefully, that way, we can contribute to a better situation so that labor can be hired there where labor is needed. Harold?

Mr. [ Spania ], indeed, it's not easy to discuss price increases. And we prefer not to do so, but it's a reality, unfortunately, that we're facing. And particularly in Western Europe, that is the case. I think there's a healthy tension among -- or between larger retail chains that are defending the interest of the consumers. We're not only -- they're also asking us, what are you yourself doing to reduce costs instead of just passing on price increases. And I think that we have shown and I just showed you that we have a large-scale cost reduction program in all operating units. So we gathered 7,500 ideas. People are working day and night to make sure that we continue to have the capacity to invest. And at the same time, we only pursue price increases if it is absolutely necessary. This, in order to protect everybody. And it's also very important to make sure that our brands can deal with this because if the consumers are happy with the beer that we brew, then, of course, you can attach your price to that. It's very important if you talk about innovation, if you're talking about the quality of beer, quality of service. Sometimes, it comes at a price. And that's what we're trying to do, trying to find a balance, strike a balance between a price that is not too high, not too low.

Thank you very much for answering my questions.

Yes, I'll give you the floor. And hopefully, you won't raise too many questions. Otherwise, I'll start worrying about the 500 children that have to watch Annie.

My name is [ Sophie Compass ]. I'm representing MN, a asset manager for a number of Dutch pension funds, including PME and PMT. I'm also speaking on behalf of [ Aholme ] Asset Management, APG Asset Management, NN Investment Partners and Achmea Investment Management. I have 3 questions, questions around 3 different topics. First of all, Heineken's net zero ambitions. You've disclosed ambitions to reach net zero carbon emissions across your total carbon footprint by 2040, with an overall road map that highlights actions in different stages of the value chain. We very much appreciate these efforts. You've already elaborated on this following a question from VBDO. There is a number of areas that are very emission-intensive, including agriculture and packaging. Together, they combine, I believe, more than 50% of total emissions. Could you elaborate on any plans you have to publish more detailed road maps for these areas and the frequency of updates to these road maps and whether they will be made public? That's my first question. My second question relates to the Speak Up system. In your annual report, 2021, it stated that Heineken received over 1,700 reports of suspected misconduct through your Speak Up system. These reports concerned allegations of fraud, discrimination and harassment, conflicts of interest, and then there's a category called Other Issues, which represents 37% of the total reports received. Now currently, I believe there is no information disclosed on the content of these reports and if these also include corruption and bribery cases. We would very much like to have more insight on this. So our question would be, could you be more specific on what is included in this category, Other Issues, and if this category also includes reports on corruption and bribery? And going forward, do you have plans to disclose more information related to corruption and bribery. Then my last question relates to the remuneration policy. We very much appreciate that Heineken has plans to include ESG-related performance measures in your LTI. these ESG metrics are based, as we understand, on your Brew a Better World commitments, which are public and are targets for 2030. First of all, we noted that there is no ex-ante disclosure of the specific ESG targets in the proposed LTI. Could you elaborate on that decision? And then secondly, will the targets and achievement of the ESG metric be published on an ex-post basis in the next annual report? And then my last question, as ESG performance will become an important element of the total compensation package of the Executive Boards, will you consider requesting the external auditor to provide reasonable assurance regarding at least the outcomes of the ESG metrics? I'll stop here. Thank you very much.

Thank you, Ms. [ Compass ], for your 4 questions. I'll pass on the first 2 questions to Dolf. Perhaps, the question on the remuneration policy, we can just wait until Mr. Das has given his presentation. The question about the auditor, I think that we can pass that question on to Harold.

Thank you, Ms. [ Compass ]. To start with your question about net zero emission, Scope 1 and 2, as opposed to Scope 3, as you said, could you disclose more information on Scope 3. We published a road map, which is also publicly available in terms of how, in 2030, we intend to move to 0 Scope 1 and 2 and how towards 2040, we want to move towards net zero in the overall chain. We put this to the SBTi that we referred to earlier on. We do have approval, the SBTi, for our road map for 2030. And we're still awaiting approval of the SBTi for our road map to 2040. The bottleneck, by the way, is that SBTi is so busy because there are so many companies knocking on their door that it's only in Q4 next year that we've been given a time slot to engage with them. So it's important that our road map and our commitment is in line with the 1.5% scenario of the Paris Agreement. And so we are a front-runner along with another 1,000 companies worldwide that made that commitment. Now we deliberately decided, before pointing our fingers to our suppliers, to first set the example ourselves and to really start with our Scope 1 and Scope 2 emissions. For a brewer, this is somewhat more complicated than for other businesses, and this has to do with the fact that in terms of energy, you need a great deal of energy. But as brewers, we also need a lot of thermal energy. Electricity -- electrical energy is -- can be replaced more easily by renewable sources, such as wind energy and solar energy. And it is our aim in 2025 to move to 100% renewable electricity. And in part, you can do that by placing solar panels on your own warehouses and breweries. But this would mainly be by means of PPA, purchase power agreements, with renewable providers. And so we're going to do that. And we're completely confident about that path, but 2/3 of the energy consumption of the brewery is thermal energy. Just like in your home, in order to charge your phone and to use your coffee maker, you'll do that by using electricity. But to heat your house, you need gas, and you have higher energy intensity than electricity grid can provide. So it's much more difficult to make your thermal energy more renewable. We're working on that, and we also have the commitment to move to 100% renewable thermal energy. But there's a lot of work involved. Biogas, for instance, needs to be extracted from our wastewater treatment plants. We need to capture that, and we can do that by means of using a sustainable biomass in Vietnam, billions of tonnes of spent grains from the rice production, you can buy that, and you can use that in your biomass boilers, et cetera. So every day up to 20 -- we will have to make use of each and every day up to 2030 in order to achieve that target. We've established priorities, and we're not just sitting back in terms of Scope 3, we want to measure. We want to get a transparent view of the carbon footprint of the grains that we procure, the cans, the bottles. And I would venture to say that we have just so many people working in sustainability and procurement that are really working on Scope 3 as people who are working on it in the rest of the company. So we'll be going through a process in which we learn more, become more mature. And then, slowly but surely, we will be able to give you more visibility of the road map. Speak Up cases. You're right. Every year, we have about 1,700 Speak Up cases, 600 thereof are covered by the category others, other subjects. And this is a mixture of responsible consumption, responsible communication. Let me see, look at my notes. Environment, other human rights, retaliation, the competition law, there's all sorts of things covered here. Also includes bribery and corruption. And this past year, we had 41 cases in the category bribery and corruption, which is less than 2% of the total number of Speak Up cases that we received. And by the way, this -- many concerns kickbacks from suppliers giving freebies, not very elegant, but there you go. It's a well-known phenomenon, something you want to keep an eye, something we focus on in order to reduce it to 0 wherever possible, [ Harold ], audits, assurance, ESG. Yes. Let's start at the beginning. To us, it's very important to do a proper and appropriate ESG reporting. It's an important responsibility. We've got to sort out the situation ourselves first and then ask someone else to take a look at it. That's important. And many of the cases of the things that we do at this point, in progress. I don't know have to say it in Dutch. And so we are continuously improving our procedures, our systems so that we can give -- increasingly give assurance about the accuracy of reporting. And this is important for everybody to understand because whatever you have in-house, that's okay. But as soon as you move to Scope 3, things become so much more complicated. And this is something that we are really working very hard on. So what we're doing is we're working inside towards the outside. First of all, sorting it out in-house and then applying our internal control procedures, and then the internal auditor will take a look at it early. After that, we will proceed to external assurance. And by the way, it's also important to highlight that we have many internal protocols and processes. We have the Supervisory Board, the Sustainability and Responsibility Committee that deals with that. We were talking about that this morning, that really looks at progress, checks and balances and make sure that they keep an eye on our expertise. As well, we have an Audit Committee that also reviews our progress in our Brew a Better World reporting. And within Brew a Better World, we have 20 KPIs, and we're going to ask for a limited assurance for that. So that's something that we already have in place. And by the way, it is our opinion to specifically answer your question, that reasonable assurance will become an obligation in the short term. We're absolutely in favor of that. But in the time being, what we want to do is concentrate on preparing ourselves instead of starting at the end, instead of starting at the beginning, but we're absolutely in favor of that. Thank you, [ Harold ]. And your third question, we'll be addressing that question when we talk about remuneration. If there are no further questions, ladies and gentlemen, I confirm that the report of the financial year 2021 that cognizance has been taken about that, and I'm closing this item. Now proceeding to 1b of the agenda, advisory vote on the remuneration report for the financial year 2021 remuneration of the Executive Board. You will be able to find that in the annual report. I should give the floor to the Chairman of the Remuneration Committee, Mr. Maarten Das.

Thank you, Chairman. I would like to provide the AGM a brief presentation on the remuneration policy for 2021. As reported in our remuneration report 2021. Our remuneration policy for the Executive Board is based on 4 remuneration principles, which are: supporting the corporate strategy, performance-based remuneration, competitive remuneration and fair remuneration. For the first remuneration principle, supporting the corporate strategy is fulfilled by the fact that a considerable part of the remuneration, potentially exceeding 80%, depends on the achievement of predefined performance measures, which are a good reflection of the corporate strategy. These measures focus on top line and bottom line growth, cash generation for the short-term variable remuneration, also, on good leadership. The second remuneration principle, performance-based remuneration, means that -- means setting target performance levels for each performance measure. And for each financial measure, also a lower threshold performance level and a higher maximum performance level, so a target level and a higher -- a lower threshold performance level and a higher maximum performance level. These performance levels are linked to the variable remuneration levels, which can range from 0% if the threshold is not met or 200% if the maximum is met or exceeded at the target level for each performance measure. At the beginning of 2021, the context of COVID-19 crisis, the Supervisory Board only set preliminary performance levels for long-term variable remuneration for the period 2021 to 2023. Thus performance levels were confirmed by the Supervisory Board in the summer of 2021 once there was better visibility of the market conditions for the company's 3-year plan. So these levels went from preliminary to final performance levels. During the previous agenda item, the Executive Board gave a detailed account of the company's excellent performance in 2021. In line with our remuneration principle, performance-based remuneration, the 2021 financial year has resulted in a short-term variable remuneration that is higher, and a long-term variable remuneration that is lower than the variable remuneration at target performance levels. With regard to the financial measures, performance -- short-term performance measures exceeded the maximum level, and the long-term incentive performance were mainly below threshold or target due to a difficult year 2020. For the leadership measures linked to the short-term variable remuneration with a weighting of 25%, Supervisory Board established that performance had been at maximum level as a result of excellent leadership of the Executive Board, navigating the COVID-19 pandemic and building a brighter future for Heineken. Year 2021 has been a very strong year of recovery for Heineken despite the continuation the COVID-19 crisis. Based on the Executive Board remuneration policy, the performance has led to a short-term variable remuneration for 2021 of 180% versus target level, and a long-term variable remuneration for the period 2019 to 2021 of 71% of the target level. In our remuneration report, we disclose annually beforehand each of the performance measures to be used for short- and long-term variable remuneration and the weighting of each measure. The financial performance levels for short-term and long-term variable compensation are commercially very sensitive information and, therefore, we do not disclose that information. Our main competitors don't disclose their financial performance levels either. Nevertheless, if in agenda item 3, the AGM approves this subject, we will introduce the ESG measures for long-term variable remuneration, namely performance measures relating to carbon emission, water efficiency, women at senior management level. These performance measures are not considered to be commercially sensitive, which is why in our annual report, 2022, we will disclose detailed performance levels and results for each ESG measure. And this shows Heineken's commitment to disclose performance levels when they're not sensitive to the competitiveness of the business. Now following on the questions raised by [ Ms. Campos ]. I'd like to say the following: If indeed, the AGM under item 3 of the agenda, decides to introduce a sustainability target for the long-term variable remuneration, then that will become an issue for the long-term variable remuneration for the period of 2023 to 2025. The Supervisory Board will, in December of this year, decide which threshold target and maximum performance levels pertain to these items, and we'll disclose that in the remuneration report 2022, which will be disclosed in February 2023. And the outcome of those performance levels for the period 2023 to 2025 will be disclosed in the remuneration report for 2025. Back to the remuneration principles of our remuneration for the Executive Board. The third remuneration principle, competitive remuneration, means that since 2011, the policy level base salary and short-term and long-term variable remuneration of the Executive Board have been derived from the median remuneration level of a global peer group of companies similar to Heineken. Comparing ourselves to a global peer group is justified because Heineken is truly a global company operating worldwide. Of the 83,000 employees of Heineken, less than 5% work in the Netherlands, all the others are scattered across the world. And therefore, the relevant reference market for the remuneration of Heineken's top management is not the Dutch market, but the global market. And furthermore, this peer group makes sure that the remuneration levels derived from it are also attractive for international candidates, supporting the desired international diversity of our top management. Supervisory Board, after the annual benchmarking review process with the peer group, decided not to adjust the base salary of the CEO and the CFO in 2021, to maintain it at the same level. And now the fourth remuneration principle, fair remuneration, means that all Heineken employees from the Executive Board level and downward is always remunerated in accordance with the labor market relevant to the levels in question. For the Executive Board, this principle is adhered to by mirroring the remuneration to the global peer group. And then finally, current Supervisory Board remuneration policy was adopted by the Annual General Meeting of Shareholders in 2019, and no changes are proposed at this point in time. Chairman, that concludes my presentation on the remuneration 2021.

Thank you, Maarten. Who can I give the floor about this subject? [ Mr. Mungal ]?

I have a small question. If I read it correctly, the long-term remuneration of the CEO is less than the short-term remuneration whereas in the list I saw that of all the CEOs, the long-term remuneration is much higher. How come?

Can you repeat your question? I didn't really hear your question very well. Speak out.

I read in the annual report that the long-term remuneration of the CEO is lower than the short-term remuneration. And if you look at the list of CEOs, you always see that the long-term remuneration is much higher than the short-term remuneration. Is it clear?

Absolutely. Indeed, ordinarily, we frequently see that long-term variable remuneration is higher than the short-term variable remuneration for the Executive Board. But this year, things are different because the short-term variable remuneration is linked to the year 2021, which was an excellent year, and that led to a remuneration level of 181% of the target level. But for the long term, variable remuneration, and this was for the years 2019 to 2021, the average of that entire period was lower because of the very difficult COVID year. 2020 was a bad year, '19 was a good year. 2022 was a good year. But nonetheless, we didn't achieve more than 71% of the target level. And that is because of that difficult year.

Thank you for those excellent questions, and the very complete answer. Who can I give the floor? [ Mr. Frejka ], you have the floor.

As is known, Heineken is a fine company and a type of family business. Mr. Carvalho, is no longer very widely heard. But I believe that outside of the meetings, he shares his ideas about the financial market at Citibank, where he worked. What's nice is that Heineken is based in Amsterdam. There are 2 companies in the Netherlands that made the mistake to move to London, Shell and Unilever. And you see where that gets you. So it would be nice if the upper echelons of Heineken remain in the Netherlands, with a salary that ensures that they do not transfer to London. Of course, that's always risky, but it should correspond with the CEOs of SEB or Carlsberg. They should be comfortable here and hopefully, they'll enjoy staying with Heineken.

Thank you for your observation and your questioning. Your observation was that Michel de Carvalho is he -- quite as a mouse. Definitely not. I can assure you that. Your second remark is about Amsterdam. Well, I feel that I'm a bit unusual and I feel lonely because everybody is delivering such nice long answers. So I'll answer this one. I expect Heineken to stay here in Amsterdam for many years to come. I didn't say that Mr. Carvalho was small like a mouse. I said that at the meeting, he was quiet as a mouse, so that's the difference. Well, yes, everybody has to be quiet except for the person answering the question. Whether or not you're a mouse. Any more questions about remuneration. Well, if there are none, then we will now move on to the advisory vote, which is very exciting concerning the financial report on 2021. Anne Marie, over to you.

We will vote with the voting boxes. If the voting boxes do not work, we will revert to voting forms. As soon as you insert your voting card in the voting box, a welcome message and your name will appear. Please insert your voting card in the voting box for Heineken N.V. without the yellow dot -- with the yellow -- excuse me, with the gold-colored chip facing upward towards you. 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 somebody will come to assist you. You may leave your voting card in the voting box throughout the meeting. If you wish to vote in favor of the proposal, please press the button marked 1. If you wish to vote against the proposal, please press the button marked 2. If you wish to abstain from the vote, please press the button marked 3. Please cast your vote by pressing the button of your choice. [Voting]

That was a long sip of beer. I confirm that 79.49% of the votes voted in favor. And so the result of this agenda item is advisory, we will consider the result when we assess the remuneration policy. Now on to agenda item 1c, adoption of the financial statements for the 2021 financial year. The financial statements have been audited by Deloitte, and the audit report appears in the annual report. Before discussing the financial statements, I will give the floor to Mr. van der Vegte of Deloitte.

Good afternoon, ladies and gentlemen. I'm pleased to share the highlights of our audit for 2021 with you. In 2021, COVID continued to impact the operations and results of our operations, and therefore, our audit. We have, therefore, adjusted our assessment of the materiality and potential risks are work related to the group audit and our monitoring of the opcos globally and impairment testing as a result. During our audit, together with our forensic specialists and our audit teams at the individual opcos, we also checked whether COVID-19 might, because for an increased risk of fraud. We did not identify any significantly increased fraud risks as a result of COVID-19 in our audit. The materiality for our audit for 2021 was EUR 170 million. Last year, it was EUR 140 million. The benchmark to determine materiality is based in part on the 3-year average of profit before tax, the consolidated sales and total assets. Now regarding the risks relating to, in particular, testing, special impairment and recoverability of deferred tax assets. They were key audit issues this year. Our auditor's report in the financial statements provide some more detailed explanation at both our risk analysis of the risks we identified and the audit procedures performed and that we -- as well as the conclusion that we did not identify any significant findings. Revenues from contracts with customers, expected credit losses and internal control over financial reporting have not been identified as key audit matters for 2021, whereas they were in 2020. The reason is that their individual significance and the results of the audit we performed, including risk assessment activities and the less complex judgments for us as auditors in evaluating the related estimates for 2021 and, therefore, not been identified as a key control issue. In addition to the audit work we performed centrally at the growth level, we also -- here in Amsterdam, we also audited 28 opcos, 2 of which were not consolidated. The full scope of our audit was 80% of revenue directly, 90% of income before taxes as well as 90% of total assets, which resembled the scope for 2021. So a fairly high cover rate. We supervised the work at the auditor of the business units located outside the Netherlands. Unfortunately, due to COVID-19 restrictions, we were unable to visit them, but had to do this remotely. We reviewed working papers, held virtual meetings with the auditors at the start of the audit and during the audit, and we were able to review our coworkers' case files afterwards. And we were able to assess performance of that business unit. And during COVID, we also had far more contact with Heineken, and we're able to align with the way that Heineken refunded to the ongoing effects to the pandemic and the COVID restrictions in different countries. We also engaged various specialists in the course of our audit such as for valuation, treasury, information technology, taxes, accounting, pensions and sustainability as well as fraud and compliance. And to say a bit about that last point as auditors, we have to identify potential risks of material misstatement due to fraud and noncompliance with laws and regulations. To this end, we reviewed Heineken's risk assessment. And as for input from management, those responsible for governance and others from the Supervisory Board and within the group, we also engaged a forensic specialist. Here, we reviewed the reports from the Integrity Committee including Heineken's Speak Up reports just mentioned as well as relevant litigation reports. As far as fraud risks were concerned, we considered those relating to management breaches of internal controls and manual revenue recognition and any possible adjustments. Our response to these risks included an evaluation of relevant internal controls and substantive audit procedures, including testing journal entries and extensive testing of manual revenue entries to analyze thousands of entries, and test them as necessary. In addition, we considered retrospective reviews and evaluated any management bias to see whether there were any discrepancies. And we also assessed any bias on the part of management with respect to the estimates, but have no findings in that respect. Finally, noncompliance with relevant legislation. Regulations is another important topic. We conducted inquiries within the group and the internal Legal Affairs Department of Heineken. Coworkers did that locally, and we did that centrally, and we requested letters from outside lawyers and relevant correspondence and assessed it. And during the audit, we also remained alert to any indications of noncompliance or suspected noncompliance with legislation and regulations. Any findings we had were discussed with management and piled up. Now that was the -- the financial statements comprise the financial statements as well as the report by the Board in the sustainability report. We did the work you might expect from auditors based on Title 9, Book 2 of the Dutch Civil Code as well as the standards that apply to auditors, which is Standard 720. In addition, we provided some certainty with respect to the sustainability report on 18 KPIs relating to sustainability. Nothing has come to our attention that causes us to believe that these KPIs are not -- have not been prepared in all material respects in accordance with the reporting criteria as set forth in sustainability paragraph of the annual report. Those were the duties we performed, and those were my comments. Over to the Chairman, again.

I'd like to thank Mr. der Vegte for his presentation. [ Mr. Spanier ], you have the floor.

I have a question to the auditor. What you said about -- what you wrote about IT was fairly brief and superficial. Cybersecurity is vast. How did you assess that? Because I did not understand that clearly. How do you elaborate on that? You're a global group, how can you get a grip on that? Were you able to audit IT everywhere? It wasn't clear from your report because that's a dangerous issue. Cybersecurity is what I mean.

Okay. Please provide some clarification, Mr. van der Vegte.

[ Mr. Spanier ] is correct. Cyber is a huge risk, and Heineken does everything possible to mitigate cybersecurity risks. I think we all need to remain aware that we'll all be exposed to cyber risk at some point. Despite preventive and repressive measures, Cyber remains risky. And in our audit, we took that into consideration and examined the presence of measures to evert cyber risks as well as some repressive measures to track cyber attacks. We examined internal control and its existence in functioning.

Back to [ Mr. Spanier ].

What about the manual? How do you devise a password? Did you consider that as well?

Yes. Access controls are extremely important because if your door isn't locked, then people can enter. So we certainly considered access controls.

I hope you did.

Yes. I confirm that.

Excellent. Any other questions? [ Mr. Frejka ]?

I'm delighted at the question from Mr. [ Spanier ] because cybersecurity is an issue. It's basically being dismissed as a global problem, but we need to be more specific. How many attacks were there from red teams? And how many other attacks were there in the past year? On Heineken, what's your plan B? Suppose everything goes dark in the Netherlands or all over Europe, how will we go back to doing it manually? Because the Russians are getting more and more irate, in my view. They're more active. And the hackers are becoming increasingly well paid for what they hack just to run something. So has Heineken systems been taken hostage? And was a ransom paid? [ Mr. Spanier's ] question is very sensible, and that led to some more -- some probing from my end.

You're both doing this very well. And Harold can describe this on the part of management because this is a very important topic.

It certainly is. I'll try to provide very specific answers. Your first question was, how many attacks has Heineken experienced? Millions, millions. And we have a pyramid indicating where we block them and how realistic the threat is because depending on how quickly they increase, that makes it more difficult to block the cyber attacks, and we have a wide variety of measures that we keep practicing. We have continuous drills. We've got a center in Poland filled with cybersecurity experts to keep track of that.

And one thing that Mr. Spanier indicated was that it's important to raise awareness among staff. So how do you devise a strong password? How do you train them?

Everybody receives phishing software and you click on it and you wonder what happened now. I've done it too. These are ways of truly raising awareness. That's just 1 example. I saw you stand up, but I wasn't done with my answer yet. So let me state something more specific about Russia, 2 more points. We were hard at work from the moment that, that threat became very real to see how vulnerable we were in Russia. And we took certain measures to follow up very specifically on that. Because you're right, the risk is higher there. Third, we also conduct cybersecurity drills. So we take this very seriously. I'll leave it at that.

Thank you for your explanation because you're one of the few CFOs that addresses this specifically. I've never heard a CFO say, we experienced 1 million attacks. So that was comforting and realistic. And it comforts me that you answer. That's the way you do it. Now another question to the auditor. I proposed proving wages through enhancing sustainability by solar panels and generators and circular showers. Perhaps the account -- the auditor could run the numbers for about 25,000 employees, and you'll see how inexpensive it is to make things more sustainable compared with 10% pay increases. It benefits the environment, and that's a very good thing nowadays.

Okay. Let's present this challenge to Deloitte.

Thank you very much, Mr. Huet. We've jotted that down. It's on our to-do list.

Any other questions? If there are no other questions, ladies and gentlemen, I would like to conclude this part of the discussion. I propose adopting the financial statements for the 2021 financial year. And Anne Marie, over to you for the vote.

Would the voting operator please activate the system, and please cast your vote. [Voting]

I confirm that the financial statements for the 2021 financial year has been adopted with 99.97% of the votes cast in favor. So I would like to move on with 1 deep commentary on the dividend policy. In the agenda, you will attend additional information on the dividend policy. Our policy is to pay a dividend of 30% to 40% of the net profit (beia) for the previous year. For the 2021 financial year, the proposal is to set the dividend at EUR 1.24 per share, which represents 35% of net income. Who would like the floor about this topic? Let me put on my glasses, I see nobody jumping at the bit. Ladies and gentlemen, I would like to conclude this discussion. So I establish that -- I confirm that the dividend policy has been noted on to item 1e, adoption of the dividend for the 2021 financial year. Total dividend is proposed of EUR 1.24 per share, corresponding with 35% of the net profit (beia) of this amount on 11 August. EUR 0.28 was already distributed as an interim dividend. The final dividend of EUR 0.96 per share shall be made payable from 3 May 2022. The 2021 profit remaining after the dividend distribution amounting to EUR 2.61 billion will be added to retained earnings in shareholders' equity. Would anybody like the floor about this topic? And if nobody would like to speak on this, I don't want to rush you, but I then propose that we adopt the EUR 1.24 per share dividend. Now we will proceed to the vote. Anne Marie?

I request the operator to activate the voting system. Please cast your vote. [Voting]

I confirm that the dividend proposal has been adopted with 100% of the votes cast in favor. So that's a good proposal. Over to 1f, the proposed discharge of the Executive Board members in respect of the performance of their duties in the 2021 financial year. Who would like the floor about this topic? And if there are no questions, I propose that you grant the aforementioned discharge, and we will now proceed to the vote. Anne Marie?

I request the operator to activate the voting system again, and I request that you cast your vote. [Voting]

It's less than 100%, but I confirm that with 99.49% of the votes cast in favor, discharge has been granted to the Executive Board members who served on the Executive Board in 2021 in respect of the performance of their duties in the 2021 financial year. The next item concerns the discharge members of the Supervisory Board in respect of their supervision of the management during the 2021 financial year. Who would like the floor on this topic? If there are no questions, I propose that you decide to approve the aforementioned discharge. Over to you Anne Marie.

Thank you. You may now cast your vote. [Voting]

I confirm that with 99.49% of the votes cast in favor, discharge has been granted to the Supervisory Board members who served on the Supervisory Board in 2021 in respect to their supervision of the management in the 2021 financial year. Moving on to agenda item 2, which concerns several authorizations. These agenda items appear on the agenda every year, and these authorizations are issued every year. I will explain them briefly. Item 2a concerns an authorization to repurchase own shares. Item 2b concerns the authorization to issue shares and rights to shares. Finally, item 2c concerns the authorization to restrict or exclude shareholders' preemptive rights. The conditions for these authorizations are described in detail in the agenda. Would anybody like to address this topic? Would anybody like the floor? Nobody. We will proceed to vote on agenda item 2a. I propose that the Executive Board be authorized to repurchase own shares subject to the conditions stated in the notes accompanying the agenda and in accordance with legislation and the Articles of Association. Anne Marie?

I request the operator to activate the voting system. Please cast your vote. [Voting]

I confirm that 99.63% of the votes cast in favor, thereby issuing the proposed authorization. Now item 2b on the agenda. I propose that the Executive Board be authorized to issue shares or grant rights to subscribe for shares under the conditions stated in the explanatory notes to the agenda, and in accordance with the law and the Articles of Association. Now we will proceed to the vote.

Thank you. Please cast your vote. [Voting]

I confirm that with 99.76% of the votes cast in favor, the proposed authorization has been adopted. Now item 2c on the agenda. I propose authorizing the Executive Board to be authorized to restrict or exclude shareholders' preemptive rights in relation to the issue of shares or the granting of rights to subscribe shares in accordance with legislation and the Article of Association.

Please cast your vote. [Voting]

I confirm that with 99.17% of the votes cast in favor, the proposed authorization has been adopted. This takes us to agenda item 3, the proposal to amend the remuneration policy for the Executive Board. I will now give the floor to the Chairman of the Remuneration Committee, Mr. Maarten Das.

Thank you, Chairman. I'd just like to give you a brief presentation on the proposed adjustment to the remuneration policy for the Executive Board. As you know, the current remuneration policy for the Executive Board was adopted by the General Meeting of Shareholders on 23 April 2020 with 97% of the votes. In 2021, the Supervisory Board reviewed the Executive Board's remuneration policy, taking into account internal and external perspectives, engaging with shareholders and other stakeholders. Heineken's strong strategic ambition with respect to sustainability has led us to propose to the 2022 AGM, introducing ESG-related performance measures in the long-term incentive plan. This way, we propose to link the Executive Board's remuneration with our sustainability responsibility strategy. Heineken's strong ambition regarding sustainability responsibility is clearly reflected in our EverGreen strategy, and is very much linked to bringing better world commitments. As extensively communicated and described in our annual report, clear and ambitious long-term targets have been set for these commitments, and we have selected 3 of these commitments to be included as a long-term incentive performance measures, namely carbon emissions reduction in our own production, water efficiency and percentage of women at senior management level. Subject to 2022 AGM approval, these 3 ESG-related performance measures will replace the current operating profit performance measures. Operating profit remains a relative indicator for our performance. And so therefore, this measure will be included in the financial component of the short-term variable remuneration. Heineken has engaged with its top 10 main shareholders in order to get feedback on our current remuneration policy and the above proposed modifications. Heineken has committed to an ongoing dialogue with its shareholders in seeking their views before any material changes are put forward for approval. So this is my explanation of this item of the agenda. But I'd also like to proceed to answer 2 questions that were raised by the VEB prior to the meeting.

The first question is whether the Supervisory Board agrees that adding gross profit as a performance measure in the long-term variable remuneration will encourage management to improve pricing. Supervisory Board believes that the proposed performance measures for long-term variable remuneration already provide the right balance for long-term value creation for all Heineken stakeholders. These measures relate to revenue growth, profitability, capital efficiency and sustainability. The VEB also asks where Heineken is prepared to consider adding a gross profit margin measure or target when reviewing current remuneration policy? I can inform you that the remuneration policy is reviewed every year in relation to the strategic direction and external developments of the company. And in this process, we also review the choice of performance measures for a long-term variable remuneration to ensure the best balance for long-term value creation. So these are my answers to the questions we received prior to the meeting.

Thank you, Maarten. Who can I give the floor to speak on this matter? Mr. [ Spanier ]?

Yes. My name is [ Spanier ]. Mr. Das, you say that you engaged with 10 major shareholders, perfect. But when you said that you also moved on, but what was the feedback of this -- of the top 10 shareholders with respect to your plan? You didn't disclose that or perhaps you haven't gotten that far. I'd like to hear that from you.

Well, I'm happy to tell you we engaged with the top 10 shareholders, but also other stakeholders, we had advisory talks prior to formulating the proposal. And I can tell you that the reactions were generally positive.

So generally, not all?

No. Some people always have something to say. And shareholders were particularly positive about the introduction of sustainability components for the long-term variable remuneration. There was a bit of discussion in terms of the targets, how to report on the targets, and the shareholders were happy to hear, as I outlined here, that we are going to observe full transparency beforehand in terms of the target levels linked to the measures, but also after the fact, realization thereof. But there were also other subjects such as reporting on other targets, not being sustainability, but financial targets. Shareholders don't always completely understand our policy -- or support our policy not to disclose our measures because they could be sensitive for competition.

Thank you very much, Mr. [ Spanier ]. Are there any other questions? If there are no further questions, I propose that the remuneration policy for the Executive Board be adjusted in accordance with the proposal as submitted. We're going to proceed to the vote.

Yes. You can proceed to cast your vote. [Voting]

I confirm that with 97.49% of the votes, the proposed adjustments to the remuneration policy have been carried. On with agenda item 4a, reappointment of myself as a member of the Supervisory Board, I should give the floor to Mr. Jose Antonio Fernandez Carbajal, Vice President of the Supervisory Board.

We propose to reappoint Mr. Jean-Marc Huet as member of the Supervisory Board as from today for a period of 2 years, in line with the provisions of the Dutch Corporate Governance code. We propose to reappoint Mr. Huet in view of his broad financial experience, his experience in the consumer goods business and the way he fulfills his role as Chairman of the Supervisory Board. We also much value his contributions on the Remuneration Committee and the Audit Committee meetings as well as his contribution as Chair of the Selection and Appointment Committee meetings. Is there anyone who wishes to speak on this matter?

First of all, I have 2 general comments. It is quite common to have a brief description with the agenda or in the explanatory notes of the person who is appointed or reappointed. So in the future, if you include that in the agenda, it would be a good idea because other peers do that as well. Something else is that it's also rather common that the Directors to be appointed or reappointed, introduce themselves briefly and point out why it is they'd like to carry on. And as a shareholder -- as shareholders, we feel reassured by that. If I look at Mr. Huet, I'm really, really pleased to have him here because he used to work for Paul Polman at Unilever. And I can see that he is really making headway. Also, at the meeting is someone who really has an eye for sustainability. I have 2 specific questions -- actually 3. Heineken 0.0 -- along with Heineken 0.0, it would be good to have mineral water, with which Heineken can work globally. I think you can make a lot of money with that. And it could be called Heineken H2O. Formula One, I had nothing at all about Formula One. Now it's wonderful that you use that to make the world a safer place. But what about sustainability that's related to Heineken?

Okay. Where to start? The first thing, there is a profile. There's a profile of all the candidates, the Directors with the agenda. Page 3 of the explanatory note. So we have included that information. Should you not have found that information, we can always send it to you, so that's not an issue. I am not going to answer your question about Formula One and 0.0 because I hope that it won't have an impact on my appointment or reappointment. But what I will tell you is why I want to carry on. I have been a Supervisory Director for 8 years at Heineken. Heineken is a marvelous company, and it is truly an honor for me to work for this company. And it is a very exciting journey that we're on under the leadership of Dolf and Herald, and we have an experienced Supervisory Board. And as long as I can make a contribution, to me, it is truly an honor to work for Heineken. So I'm really looking forward to the next 2 years. Are there any other questions about me, myself? You can vote.

Well, if there are no questions, I shall return...

No, no, no. Sorry, Jose Antonio.

We will now proceed to vote for the proposal. I request the operator to activate the voting system. [Voting]

Thank you, Jose Antonio. So this takes us to agenda item 4b. We propose to reappoint Mr. Jose Antonio Fernandez Carbajal as member of the Supervisory Board with effect from today for a maximum period of 4 years. We propose to reappoint Mr. Fernandez in view of his broad strategic experience in the beer business in Latin America, and specifically in Mexico. And also due to his valuable contributions to the Supervisory Board meetings as well as the Preparatory Committee, Selection and Appointment Committee, but also as Chair of the Sustainability and Responsibility Committee. Mr. Fernandez is also the Vice President of the Supervisory Board. Is there anybody who would like to take the floor to speak on this issue? I'm envious. No questions. So now I propose that Mr. Fernandez be reappointed as a member of Supervisory Board of the company for a period of 4 years. We'll proceed to vote.

Thank you. I request the operator to activate the voting system. I request you to cast your vote. [Voting]

I confirm that 82.56% of the votes have been cast in favor of the reappointment of Mr. Fernandez Carbajal. Congratulations, Jose Antonio. We're very pleased that we can continue to make use of your knowledge and experience as a Supervisory Director. Now agenda item 4c We propose to reappoint Ms. Marion Helmes as a member of Supervisory Board as per today for a maximum period of 4 years. We propose to reappoint Ms. Helmes in view of her broad financial experience and experience with Dutch corporate governance as well as her contributions -- valuable contributions to the Supervisory Board meetings and Chair of the Audit Committee. Can I give anyone the floor about the proposed reappointment? If nobody wishes to take the floor, I now propose that Ms. Helmes be reappointed as a member of the Supervisory Board for a term of 4 years. We will now proceed to the vote.

Thank you. You can now cast your vote. [Voting]

I confirm that 98.47% of the votes have been cast in favor of the resolution to reappoint Ms. Helmes. Congratulations, Marion. Extremely happy to be able to continue to make use of your expertise as Supervisory Director. Thank you very much. And now item 4d of the agenda, appointment of Mr. Francisco Joshue Camacho Beltran as member of the Supervisory Board for a maximum period of 4 years as per today. He's called Paco. Supervisory Board proposes to appoint Mr. Camacho Beltran in view this broad financial, strategic and commercial experience in the FMCG business worldwide. Since 2020, Mr. Camacho Beltran is Chief Corporate Officer of FEMSA. And before he became CCO of FEMSA, Mr. Camacho Beltran held several senior management positions at Danone, Revlon, Procter & Gamble in Europe and North and South America. And he holds an MBA and a Bachelor's Degree in Computer Science from the Tecnologico De Estudios Superiores De Monterrey. And before I hand over the floor for any questions, I'm going to ask Paco to briefly introduce himself to the meeting. Paco?

[Foreign Language] It is fantastic to be here. Good morning. It's fantastic to be here today. [indiscernible] Deutsche language, but that's the only thing I know to have to say, so I'm going to switch to English. Thank you, Mr. Chairman. My name is Francisco Camacho. I'm the Chief Corporate Officer in FEMSA. And before joining FEMSA, I spent my career in FMCG companies in assignments around the world. In the last 20 years, I worked for a French food company called Danone in different country, regional and global roles. The last 10 years, based out of Paris, I was the President for the -- first, I was the President for the Global Beverage and Water business, and then later, for the Dairy and Plant-based division. I was also the Global Chief Growth and Innovation Officer. I have 1 daughter and 2 sons. Two of them were born in the United States in different cities. One was born in France. I am married to an Argentinian. And until recently as a family, we own a Venezuelan dog. Throughout my life, I have learned to value and appreciate the power of diversity in business and in life. I am honored for the opportunity to be appointed to join the Supervisory Board of Heineken. [Audio Gap] 72% of the votes cast in favor of resolution to -- or the proposal to appoint Mr. Camacho Beltran. Congratulations, Paco, [Foreign Language], and welcome to the Supervisory Board. This takes us to the last item of the meeting, which is the appointment of the external auditor. The current external auditor, Deloitte, has been appointed for a period of 1 year, the previous meeting. The company and the Audit Committee have evaluated the work of the Audit Committee. And in view of the positive outcome, the Supervisory Board proposes to reappoint Deloitte as an external auditor for a period of 1 year. This would be for the financial year 2023. Is there anybody who would like to take the floor with respect to the proposal to reappoint? [ Mr. Spanier ]?

Yes. Mr. Huet, that's me again. I have a question. What is the auditor going to change in this policy with respect to 2021 and 2022? What about IT and cybersecurity? How is he going to improve that? Because this business has operations in all corners of the world, so how is he going to improve IT? Because IT is one of the most vulnerable elements of the business.

Absolutely. We fully agree with you, and we're looking forward to the answers.

So am I.

As I pointed out, in our audit '21. We involved IT specialists in our audit. We see that uncertainties are increasing globally, not only inflation. You quite rightly mentioned, cybersecurity. Cybersecurity is a key matter in our audit for 2022, you heard the CFO talk to us about a secure operating center and the repressive controls the company has, and we will take a look at that to see whether those controls are sufficient in order to prevent hacking or becoming vulnerable in any respect.

Can I ask a follow-up question?

Go ahead [ Mr. Spanier ].

Heineken Russia is on the back burner. But Mr. Putin and his mates can take a look behind the scenes, and by hacking the company can peak into the worldwide -- the global system. What are you going to do? Have you advised closing the door there to close off Heineken Russia? Close it off and sever it completely from the IT system, the global IT system?

Perhaps this is a good question for Harold van den Broek.

I mean that's -- Mr. van den Broek can answer the question. That's not my point. The point is what is the auditor going to do about this, but I'll listen to Mr. van den Broek's answer. That's fine.

Really, this is something that we discussed with the auditors. We discussed the risks, what the risks are and what Heineken can do about it. So I'd like to reassure you on that. But actually, within a matter of days, we had taken internal measures to, first of all, see what was going on in Russia, were people logging on to our network at strange times, whether people that were trying to enter certain accounts with different passwords. So this is something that we kept an eye on very quickly because of the cyber center that we set up in Poland. So we focused on that pretty quickly. Second thing we did, it may sound strange, but all the brewery, we closed all the turnstiles -- sorry, all the ports, the computers, so that no pen drives could be stuck into the computers because that's how fraud takes place and hacking takes place. What we also did is we made sure that we could compartmentalize this Russian operation so that we erected firewalls and severed the link between Russia and the rest of the world. We're very, very active in this, and I would add that you can never be sure. Obviously, we're doing our best and our utmost, but there's -- nothing is certain.

Well, there's one certainty is that one day, we will leave this Earth. We will die. That's the only certainty we have.

Absolutely. Thank you. Are there any other questions? If there are no other questions, I propose that we reappoint Deloitte as external auditor for 2023 financial year. Anne Marie, we can proceed to the vote.

Thank you very much. This is the last time in this meeting that you can proceed to cast your vote. [Voting]

I confirm that 99.89% -- one of the highest percentages, the vote has been carried for the appointment -- reappointment of Deloitte as external auditor. Ladies and gentlemen, before we close, I have some important announcements. Today, unfortunately, we're saying goodbye to Mr. Javier Astaburuaga as a member of the Supervisory Board. Javier was appointed in 2010 to the Supervisory Board, and he has attended no less than 86 members of the Supervisory Board. First meeting that Javier attended was on 23 April 2010. Javier has been to New York, Ethiopia, Mexico, London and Vietnam, among others for Heineken. Javier has been a dedicated and valued member of the Supervisory Board. We will definitely miss his unique combination of in-depth operational and financial knowledge and strategic knowledge of the beer industry. Just as his great sense of humor. I'd like to thank him very much for everything he has done over the past few years. Javier, at the end of the meeting, we will raise our glasses together to celebrate your valuable contribution to Heineken. Thank you very much, Javier. Well, ladies and gentlemen, we have now come to the end of this meeting. I'd like to thank you for attending the meeting, and thank you all as well to the people who are following the meeting via the video webcast. Hope to see you next year, and I'm closing the meeting at 16:12 p.m., our Company Secretary, Anne Marie, has some final announcements for you.

Thank you very much. The General Meeting of Shareholders of Heineken Holding N.V. will take place in 10 minutes on the fourth floor at the floor at the [indiscernible], so not in this room. You're kindly asked to leave this room, walk to the stairs of the elevator on the right side where hostesses will be waiting to escort you upstairs. Shareholders of Heineken N.V. can hand in their voting boxes, their handsets, including chip cards at the exit. After the meeting, as usual, there will be drinks. Shareholders of Heineken Holding will also hand in their handsets, their voting boxes, at the exit, but will take their chip cards to the [indiscernible]. The assistants will check the chip card of Heineken Holding shareholders there, and will issue a new handset to vote. Thank you. See you next year.