Report of the Report of the
Contents Overview Executive Board Supervisory Board
Financial
statements
Other information
3. Significant accounting policies
(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 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 HEINEKEN 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 and taking into consideration
any reasonably obtainable sub-leases. Before a provision is established, HEINEKEN recognises any impairment loss on the assets
associated with that contract.
(iv) Other
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 subseguently
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 HEINEKEN 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.
(n) Revenue
(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.
(0) Other income
Other income includes gains from sale of P, P& E, intangible assets and (interests in) subsidiaries, joint ventures and associates, net of
sales tax. They are recognised in profit or loss when ownership has been transferred to the buyer.
(p) Expenses
(1) Operating lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives
received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease.
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