15. Intangible assets
Contents
Overview
Report of the
Executive Board
Report of the
Supervisory Board
Financial
statements
Other information
Throughout the year total goodwill mainly decreased due to the disposal of Hartwall, an impairment loss recognised in our CGU
Russia and net foreign currency differences.
The recoverable amounts of theCGUsare based on value-in-use calculations. Value in use was determined by discounting the future
cash flows generated from the continuing use of the unit using a pre-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 forecast 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 a perpetual growth rate equal to the expected annual long-term
inflation, in order to calculate the terminal recoverable amount.
A per CGU-specific pre-tax Weighted Average Cost of Capital (WACC) was applied in determining the recoverable amount of
the units.
The values assigned to the key assumptions used for the value-in-
-use calculations are as follows:
In per cent
Pre-tax WACC
Expected
annual
long-term
inflation
2017-2023
Expected
volume
growth rates
2017-2023
Western Europe
9.6
2.0
(0.5)
Central and Eastern Europe (excluding Russia)
11.7
2.3
0.5
Russia
14.1
4.1
1.0
The Americas (excluding Brazil)
12.0
3.2
1.7
Brazil
15.5
4.5
0.9
Africa Middle East
14.8-22.7
3.2-10.7
CO
I
Asia Pacific
13.3
4.9
3.9
Head Office and other
11.2-13.0
2.1 -3.8
2.2-2.6
The impact of excise duty increases and other recent adverse regulatory changes has resulted in the deterioration of the beer
market outlook in Russia, whilst also limiting HEINEKEN's commercial freedom in the country. Consequently, a goodwill impairment
ofEUR94 million before tax has been recognised in 2013. The recoverable amount is based on the value in use.
Sensitivity to changes in assumptions
The outcome of a sensitivity analysis of a 100 basis points adverse change in key assumptions (lower growth rates or higher discount
rates respectively) did not result in a materially different outcome of the impairment test.
Heineken N.V. Annual Report 2013