(vi) Matching share entitlement
As from 21 April 2011 HEINEKEN established a matching share entitlement for the Executive Board. The grant date fair value of the matching shares
is recognised as personnel expenses in the income statement as it is deemed an equity settled incentive.
(vii) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term benefits if the Group has a present legal or constructive obligation
to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
A provision is recognised if, as a result of a past event, El EINEKEN 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.
A provision for restructuring is recognised when EIEINEKEN has approved a detailed and formal restructuring plan, and the restructuring has either
commenced or has been announced publicly. Future operating losses are not provided for. The provision includes the benefit commitments in
connection with early retirement and redundancy schemes.
(Hi) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by EIEINEKEN from a contract are lower than the unavoidable
cost of meeting its obligations under the contract. The provision 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, EIEINEKEN recognises any impairment loss
on the assets associated with that contract.
The other provisions, not being provisions for restructuring or onerous contracts, consist mainly of surety and guarantees, litigation and claims
and environmental provisions.
(m) Loans and borrowings
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Loans and borrowings are subsequently stated at amortised cost;
any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using
the effective interest method. Loans and borrowings included in a fair value hedge are stated at fair value in respect of the risk being hedged.
Loans and borrowings for which the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance
sheet date, are classified as non-current liabilities.
(i) Products sold
Revenue from the sale of products in the ordinary course of business is measured at the fair value of the consideration received or receivable, net of
sales tax, excise duties, returns, customer discounts and other sales-related discounts. Revenue from the sale of products is recognised in profit or loss
when the amount of revenue can be measured reliably, the significant risks and rewards of ownership have been transferred to the buyer, recovery of
the consideration is probable, the associated costs and possible return of products can be estimated reliably, and there is no continuing management
involvement with the products.
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue
as the sales are recognised.
(ii) Other revenue
Other revenues are proceeds from royalties, rental income, pub management services and technical services to third parties, net of sales tax. Royalties
are recognised in profit or loss on an accrual basis in accordance with the substance of the relevant agreement. Rental income, pub management
services and technical services are recognised in profit or loss when the services have been delivered.
Eleineken N.V. Annual Report 2011