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Report of the Executive Board Financial Review
TCM is Heineken's Company-wide cost reduction programme covering the period from the beginning of 2009 to the end of 2011.
In 2010, the pre-tax amount of cost savings realised under TCM totalled EUR280 million, resulting in cumulative TCM savings
of EUR435 million. Restructuring programmes and brewery closures were launched and realised, mainly in the UK and Spain.
Related costs amount to EUR39 million and are considered exceptional items.
Mainly due to implemented restructuring programmes, personnel expenses were organically 2.6 per cent lower.
Total costs relating to the acquisition and integration of the beer operations of FEMSA amount to EUR80 million and are considered
exceptional items.
The operating margin increased significantly by 1.6 per cent point, due to a combination of a higher gross profit margin and
lower costs.
The increase of impairments on customer loans and receivables was due to bad economic environments mainly in Western and
Eastern Europe. Impairment of receivables on one large on-trade customer in Western Europe, including related guarantees
to banks, totalling EUR70 million is considered exceptional item.
Results (beia)
2010
Result from operating activities
2,283
1,630
Share of profit of associates and Joint Ventures
193
127
EBIT
2,476
1,757
Amortisation of brands and customer relationships
142
79
Exceptional items
(10)
EBIT (beia)
2,608
2,095
2010
Net profit
1,436
1,018
Amortisation of brands and customer relationships
103
59
Exceptional items
(94)
(22)
Net profit (beia)
1,445
1,055
EBIT (beia) and Net profit (beia)
2,095
1,055
Organic growth
179
208
Changes in consolidation
264
133
Effects of movements in exchange rates
70
49
2010
2,608
1,445
EBIT and net profit
Net interest expenses decreased by EUR53 million from EUR543 million to EUR490 million.
Organically, interest cost decreased by EUR122 million due to the very strong cash flow generation which reduced net debt.
New acquisitions and exchange rate differences impacted interest costs negatively by EUR68 million.
Other net financing expenses amount to EUR19 million, while last year a net income of EUR214 million was reported mainly due
to a book gain on the Globe restructuring. Without these exceptional gains in 2009, other net financing expenses in 2010 were
in line with 2009 and relate to transactional foreign exchanges differences and losses on derivatives, unwinding of discounts on
the long-term tax liability in Brazil and unwinding of discounts of provisions.
The average tax burden is 22.5 per cent and is in line with 2009. The rate includes the (partly) tax exempt gain on the sale of MBI/
GBNC, the disposal of Waverley TBS, exceptional tax items in 2010 related to the finalisation of the Globe transactions in the UK and
various other settlements with the tax authorities. Tax rate (beia) increased from 25 per cent to 27.3 per cent mainly due to the
relatively high tax rate applicable to our new Mexican business.