76 Heineken N.V. Annual Report 2004 Report of the Executive Board Financial Review
Tangible Fixed Assets (IAS 16).
Under Dutch GAAP, Heineken's tangible fixed assets are stated at replacement value less accumulated
depreciation. Under IFRS Heineken will carry tangible fixed assets at historic values less accumulated
depreciation. The annual depreciation will also be calculated based on historic costs. 2004 figures
will be restated accordingly. The impact in 2004 on the annual depreciation charge is approximately
€35 million lower. The one-off decrease of tangible fixed assets amounts to €350 million in the
opening balance of 2004.
Goodwill amortisation (IFRS 3)
Under Dutch GAAP, goodwill was capitalised and amortised over a maximum of 20 years. Under IFRS,
goodwill will be capitalised and not be amortised but will be tested for impairment at least yearly.
IFRS 3 requires that the difference between purchase price and the fair value of acquired assets
and liabilities have to be allocated to brands and customer relationships, and the remaining balance
to goodwill. Previously, Heineken reported the difference between purchase price and the fair value
of acquired assets and liabilities as goodwill. Under IFRS, Heineken will start capitalising its brands,
starting with the acquisition of Brau Union. Since brands with a definite lifetime should be amortised,
Heineken estimates that the annual amortisation charge in 2004 will be reduced by approximately
€70 million and will increase operating profit and net profit by the same amount.
Hedge accounting IAS 39 and 32)
Under IFRS, all financial assets, including derivatives and other financial instruments used to minimise
the impact of fluctuations in interest rates and in currency exchange rates, must be measured at fair
value. Starting in 2005, we will use hedge accounting. It is not possible to predict the impact of hedge
accounting on 2005 results, as this will depend on the development of the prevailing foreign currency
exchange rates and interest rates. In 2004, the financial statements will not be restated to reflect
hedge accounting.
Stocks (IAS 2)
Under IFRS, stocks will no longer be valued at current replacement value but at weighted average
prices based on historic values. The impact of the introduction of IFRS on the restated financial state
ments of 2004 will be a decrease of €8 million in the value of stocks listed in the opening balance 2004.
A full restatement based on IFRS was done as of 1 January 2004, in order to provide comparative
2004 IFRS results for the 2005 IFRS compliant financial statements. Via a press release on 19 May
2005, a detailed analysis of the impact of IFRS on the opening balance - balances per 30 June and
31 December - as well as on the profit and loss accounts for half year- and full year 2004, will be
presented.
Amsterdam, 21 February 2005
Ruys
Bolland
Van Boxmeer
Hooft Graafland
Büche
