HEINEKEN N.V. ANNUAL REPORT 2008
(n) Provisions
(i) General
A provision is recognised if, as a result of a past event, Heineken has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are measured at the present value of the expenditures to be expected to be
required to settle the obligation using a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognised as part of the net finance expenses.
(ii) Restructuring
A provision for restructuring is recognised when Heineken has approved a detailed and formal restructuring
plan, and the restructuring has either commenced or has been announced publicly. Future operating costs
are not provided for. The provision includes the benefit commitments in connection with early retirement,
relocation and redundancy schemes.
(iii) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by Heineken
fr >m a contract are lower than the unavoidable cost of meeting its obligations under the contract. The
pi avision is measured at the present value of the lower of the expected cost of terminating the contract and
the expected net cost of continuing with the contract. Before a provision is established, Heineken recognises
ai y impairment loss on the assets associated with that contract.
(c Loans and borrowings
B rrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
st isequently stated at amortised cost; any difference between the proceeds (net of transaction costs)
a d the redemption value is recognised in the income statement over the period of the borrowings using
ti 3 effective interest method. Borrowings included in a fair value hedge are stated at fair value in respect
0 the risk being hedged.
B rrowings for which the Group has an unconditional right to defer settlement of the liability for at least
1 months after the balance sheet date, are classified as non-current liabilities.
(f Revenue
(i Products sold
R /enue from the sale of products in the ordinary course of business is measured at the fair value of the
c nsideration received or receivable, net of sales tax, excise duties, returns, customer discounts and other
s es-related discounts. Revenue from the sale of products is recognised in the income statement when
t amount of revenue can be measured reliably, the significant risks and rewards of ownership have been
t; nsferred to the buyer, recovery of the consideration is probable, the associated costs and possible return
o nroducts can be estimated reliably, and there is no continuing management involvement with the products.
