if Heineken has made an offer encouraging voluntary redundancy, it is probable that the offer will
be accepted, and the number of acceptances can be estimated reliably.
(v) Share-based payment plan (long-term incentive plan)
At 1 January 2005 Heineken established a share plan for the Executive Board members (see note 27),
as at 1 January 2006 Heineken also established a share plan for senior management members (see
note 27).
The share plan for the Executive Board is fully based on external performance conditions, whilst the
plan for senior management members is for 25 per cent based on external market performance
conditions and for 75 per cent on internal performance conditions.
The grant date fair value of the share rights granted is recognised as personnel expenses with
a corresponding increase in equity. The costs of the share plan for the Executive Board members
are spread evenly over the performance period. The costs of the share plan for senior management
members are spread evenly over the performance period and are partly adjusted to reflect the actual
number of share rights that will vest.
The fair value is measured at grant date using the Monte Carlo model taking into account the terms
and conditions of the plan.
(v Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as ihe related service is provided.
A ability is recognised for the amount expected to be paid under short-term benefits if the Group has
a esent legal or constructive obligation to pay this amount as a result of past service provided by the
er ployee and the obligation can be estimated reliably.
(k rovisions
(i) eneral
A rovision is recognised if, as a result of a past event, Heineken has a present legal or constructive
o gation that can be estimated reliably, and it is probable that an outflow of economic benefits will
bt equired to settle the obligation. Provisions are determined by discounting the expected future cash
fit s at a pre-tax rate that reflects current market assessments of the time value of money and the
ri' 5 specific to the liability.
(i estructuring
A ovision for restructuring is recognised when Heineken has approved a detailed and formal
Irt ructuring plan, and the restructuring has either commenced or has been announced publicly.
Ft ire operating costs are not provided for. The provision includes the benefit commitments in
cc nection with early retirement, relocation and redundancy schemes.
(i Jnerous contracts
A rovision for onerous contracts is recognised when the expected benefits to be derived by Heineken
fr n a contract are lower than the unavoidable cost of meeting its obligations under the contract.
T provision is measured at the present value of the lower of the expected cost of terminating the
c tract and the expected net cost of continuing with the contract. Before a provision is established,
H ïeken recognises any impairment loss on the assets associated with that contract.
(I evenue
(i roducts sold
R enue from the sale of products in the ordinary course of business is measured at the fair value of
tl consideration received or receivable, net of sales tax, excise duties, customer discounts and other
s; s-related discounts. Revenue from the sale of products is recognised in the income statement when
tl amount of revenue can be measured reliable, the significant risks and rewards of ownership have
Heineken N.V.
Annual Report 2006 OX
