Notes to the consolidated financial statements continued
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15. Intangible assets
Throughout the year, goodwill increased mainly due to the acguisition of Zagorka and net foreign currency differences, partly offset by the
transfer of Empague to assets held for sale and an impairment in Tunisia.
The recoverable amounts of the (group of) CGU(s) are 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 10-year period were extrapolated using a perpetual growth rateegual 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 percent
Pre-tax WACC
Expected
annual
long-term
inflation
2018-2024
Expected
volume
growth rates
2018-2024
Western Europe
9.3
1.8
0.1
Central and Eastern Europe (excluding Russia)
9.8
2.2
(0.1)
The Americas (excluding Brazil)
15.7
3.5
1.0
Brazil
13.5
44
2.1
Africa Middle East
13.8-23.1
3.6-9.1
3.6-7.4
Asia Pacific
16.1
47
3.6
10.5 3.9 2.9
The high inflation on costs combined with pressure in pricing as a result of affordability issues resulted in a deterioration of the outlook of the
beer and soft drinks businesses in Tunisia. Conseguently, a goodwill impairment of EUR16 million before tax has been recognised in 2014
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.
16. Investments in associates and joint ventures
HEINEKEN has interests in a number of individually insignificant joint ventures and associates.
HEINEKEN holds a 75 per cent eguity interest in Sedibeng Brewery Pty Ltd, but based on the contractual arrangements HEINEKEN has joint
control. As a result, this investment is accounted for using the eguity method.
Heineken N.V. Annual Report 2014