Notes to the Consolidated Balance Sheet, Profit and Loss Account and Cash Flow Statement for 2003
Provisions
The provision for deferred tax liabilities is formed in respect of
timing differences between valuation for tax purposes and
valuation according to the accounting policies for reporting
purposes. A taxation provision is also formed for the withholding
tax to be deducted from undistributed profits of foreign group
companies. The liabilities are calculated at the standard tax rates
on balance sheet date and are stated at face value. Deferred tax
assets are netted off against deferred tax liabilities of the same
kind over matching periods. A net deferred tax asset is not
recognised unless future realisation is reasonably certain.
The provisions for pension liabilities and similar schemes are
calculated at net present value according to actuarial principles
based on current pay levels. Full provision is made for pension
liabilities in respect of accrued benefit rights. Prior-service
liabilities resulting from improvements in remuneration
packages and pension plans are added to the provision for
pension liabilities and charged directly to the result.
Provisions connected with reorganisation plans are calculated at
the net present value of the benefit commitments in connection
with early retirement, relocation and redundancy schemes.
Where applicable, the expected degree of employee partici
pation in the schemes concerned is taken into account.
Long-term borrowings
ong-term interest-bearing loans are included at face value
aking into account any discounts or premiums and associated
ransaction costs. Discounts and premiums plus costs are
harged to the profit and loss account as interest expenses over
he period of the loan. Other long-term borrowings are stated at
ace value.
urrent liabilities
lurrent liabilities are stated at face value.
Determination of results
ncome and expenses are accounted for in the profit and loss
iccount at the time of supply of the relevant goods or services,
fet turnover means the proceeds from sales of products and
ervices supplied to third parties, net of sales taxes direct,
ustomer discounts and excise duties.
Raw materials and consumables are stated at replacement
ost in the profit and loss account.
Depreciation charges based on replacement cost are calcu-
ated on a straight-line basis according to the estimated useful
ves of the assets concerned.
The results of non-consolidated participating interests consist
)f dividends received during the year from companies carried at
cost and Heineken's share of the net profits of companies carried
at net asset value. The share of the results of companies carried
at net asset value is calculated as far as possible in accordance
with group accounting policies for the determination of results,
taking account of taxation and minority interests.
Interest expenses are allocated to the periods to which they
relate. Results arising from operations involving interest rate
hedging instruments are also accounted for as interest. Such
instruments are used to hedge the risk of a reduction in interest
income on surplus funds temporarily invested in bank deposits
due to falling interest rates and higher interest charges on
interest-bearing liabilities due to interest rate rises. Interest rate
hedging instruments are not used without a corresponding
underlying position.
Taxation on profits is calculated on the profit shown in the
financial statements by applying the standard tax rates, taking
into account tax payable by the group on profit distributions by
participating interests and applicable tax facilities. Differences
between the amount thus calculated and the tax actually
payable for the year are accounted for in the provision for
deferred tax liabilities.
INANCIAl STATEMENTS 2003
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