2,012
99
Impairment tests for cash-generating units containing goodwill
The aggregate carrying amounts of goodwill allocated to each cash-generating unit are as follows:
In millions of EUR 2007 2006
Brau Union
1,250
1,116
Russia
434
451
Compania Cervecerias Unidas (CCU)
328
339
1,906
Various other entities
280
289
2,292 2,195
Goodwill has been tested for impairment as at 31 December 2007. The recoverable amounts exceed
the carrying amount of the cash-generating units including goodwill, except for cash-generating units
(various other entities) where an impairment loss of €18 million was charged to the income statement.
This mainly relates to impairments of goodwill on the Karlsberg Brewery in Germany for a total amount
of €13 million.
The recoverable amounts of the cash-generating units are based on value-in-use calculations. Value-in-
use was determined by discounting the future post-tax cash flows generated from the continuing use of
the unit using a post-tax discount rate.
The key assumptions used for the value in use calculations are as follows:
Cash flows were projected based on actual operating results and the three-year business plan. Cash
flows for a further seven-year period were extrapolated using expected annual per country volume
growth rates, which are based on external sources. Management believes that this forecasted period
is justified due to the long-term nature of the beer business and past experiences.
The beer price growth per year after the first three-year period is assumed to be at specific per
country expected annual long-term inflation, based on external sources.
Cash flows after the first ten-year period were extrapolated using expected annual long-term inflation,
based on external sources, in order to calculate the terminal recoverable amount.
A per cash-generating unit specific post-tax Weighted Average Cost of Capital (WACC) was applied in
determining the recoverable amount of the units. The WACC's used are presented in the table below,
accompanied by the expected volume growth rates and the expected long-term inflation:
Brau union Russia CCU Other
Post-tax WACC 8 J% 13.1% 9.4% 6.4%-17.4%
Expected annual long-term inflation 2.9% 6.8% 3.4% 1.3%-8.7%
ie values assigned to the key assumptions represent management's assessment of future trends in the
t er industry and are based on both external sources and internal sources (historical data).
Heineken N.V. Annual Report 2007
