Heineken N.V. Annual Report 2004 Financial Statements 2004 Notes to the Consolidated Balance Sheet,
Profit and Loss Account and Cash Flow Statement for 2004
The replacement cost is based on appraisals by internal and external experts, taking into account
technical and economic developments. Other factors taken into account include the experience
gained in the construction of breweries throughout the world. Grants received in respect of invest
ments in tangible fixed assets are deducted from the amount of the investment. Projects under
construction are included at cost.
Financial fixed assets
Non-consolidated participating interests where the group has a significant influence are stated at the
Heineken share of the net asset value, which is determined on the basis of the Heineken accounting
policies as far as possible. Other non-consolidated participating interests are stated at the lower of cost
and market value, if permanently impaired. Loans to non-consolidated companies and other financial
fixed assets are carried at face value, less provisions for credit risks.
Impairment of assets
Regular assessments are made for any indications that intangible and tangible fixed assets might be
impaired. If any such indications exist, the net realisable value is determined by taking into account
the net present value of the future cash flows to be generated by the assets concerned or the net
proceeds from sale. If the net realisable value of an asset is less than its book value, the difference is
deducted from the carrying amount as an impairment loss. The impairment is first charged to the
revaluation reserve, any remainder being charged to the profit and loss account.
Current assets
Stocks purchased from third parties are stated at replacement cost, based on prices from current
purchase contracts and latest prices as at balance sheet date. Finished products and work in progress
are stated at manufactured cost based on replacement cost and taking into account the production
stage reached.
Stocks of spare parts are depreciated on a straight-line basis taking account of obsolescence.
If the recoverable amount or net realisable value of stocks is less than their replacement cost,
provisions are formed in respect of the difference. Advance payments on stocks are included
at face value.
Receivables are carried at face value less a provision for credit risks and less the amount of
deposits on returnable packaging.
Securities are carried at the lower of historical cost and quoted price, or estimated market
value in the case of unlisted securities.
Cash is included at face value.
Revaluations
Differences in carrying amounts due to revaluations are credited or debited to group equity,
less an amount in respect of deferred tax liabilities where applicable.
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 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.
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.
The expected degree of employee participation in the schemes concerned is taken into account.