assets are valued at zero, unless their future realiza
tion can reasonably be expected. The provision for
pension liabilities is determined using the accrued
benefit valuation method on the basis of present
value according to actuarial principles. Pension lia
bilities on account of previous service are fully pro
vided for. Backservice liabilities originating from
improved compensation and pension plans are
charged directly to the profit and loss account and
added to the provision for pension liabilities. The
provision for other personnel schemes is calculated
on the basis of the present value of the benefit
commitments on account of termination, transfer,
retaining pay and disability, where applicable taking
into account the expected degree of utilization of
the scheme concerned.
Debts Long-term debts and current liabilities are
shown at par value.
Accounting policies for the determination
of income
Proceeds and expenses in the statement of income
are in principle accounted foratthetimewhen
the relevant goods or services are supplied.
Net turnover means the proceeds of products
supplied and services rendered to third parties,
after deduction ofturnover taxes and discounts.
The consumption of raw materials and other
materials is stated at replacement cost in the
statement of income.
Excise duties are stated at the actual amount
incurred. The depreciation based on replacement
cost is applied on a straight-line basis, in
accordance with the estimated useful life of each
asset; the withdrawal from the investment facilities
equalization account is allowed for in this calculation.
Earnings of non-consolidated participations consist
of the dividends received in the financial year from
participations valued at cost of acquisition and the
Heineken share in the earnings of participations
valued at net asset value. As far as possible the
share in the earnings of participations valued at net
asset value is determined according to the
Heineken policies for the determination of income,
taking account oftaxation and minority interests.
Interest expenses are allocated to the period to
which they relate. Interest variances, resulting
from financial instruments used to control the
interest risk, are accounted for as interest income
and/or expense. These interest instruments are
used to hedge the risk of reduction of interest
income from surplus cash invested in short-term
bank deposits. Interest hedging instruments are not
used without an underlying position. Taxation on
profit is calculated on the income according to the
annual accounts on the basis of nominal rates.
Due account is taken of taxation on profit distribu
tions which is borne by the Group, and the facilities
applicable. The differences from the taxes actually
payable in respect of the financial year are offset
against the provision for deferred tax liabilities.
52