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Notes to the Consolidated Financial Statements (continued)
(j) Assets or disposal groups classified as held for sale
(k) Employee benefits
(iii) Other long-term employee benefits
(iv) Termination benefits
Heineken NV.
Report of the
Report of the
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Sustainability
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Annual Report 2016
Introduction
Executive Board
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Information
Assets or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing
use are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are measured
at the lower of their carrying amount and fair value less costs of disposal. Any impairment loss on a disposal group is first allocated to goodwill,
and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets
and employee defined benefit plan assets, which continue to be measured in accordance with HEINEKEN's accounting policies. Impairment losses
on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised
in excess of any cumulative impairment loss.
Intangible assets and P, P E once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity-accounted
investees ceases once classified as held for sale.
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan (pension plan) under which HEINEKEN pays fixed contributions into a separate entity.
HEINEKEN has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior periods.
Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods
during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction
in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which
the employee renders the service are discounted to their present value.
(ii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan (pension plan) that is not a defined contribution plan. Typically, defined benefit plans define
an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service
and compensation.
HEINEKEN's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future
benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present
value. The fair value of any defined benefit plan assets is deducted. The discount rate is the yield at balance sheet date on high-quality credit-rated
bonds that have maturity dates approximating to the terms of HEINEKEN's obligations and that are denominated in the same currency in which
the benefits are expected to be paid.
The calculations are performed annually by qualified actuaries using the projected unit credit method. When the calculation results in a benefit to
HEINEKEN, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or
reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum
funding requirements that apply to any plan in HEINEKEN. An economic benefit is available to HEINEKEN if it is realisable during the life of the plan,
or on settlement of the plan liabilities.
When the benefits of a plan are changed, the expense or benefit is recognised immediately in profit or loss.
HEINEKEN recognises all actuarial gains and losses arising from defined benefit plans immediately in other comprehensive income and all expenses
related to defined benefit plans in personnel expenses and other net finance income and expenses in profit or loss.
HEINEKEN's net obligation in respect of long-term employee benefits, other than pension plans, is the amount of future benefit that employees
have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value
of any related assets is deducted. The discount rate is the yield at balance sheet date on high-quality credit-rated bonds that have maturity dates
approximating to the terms of HEINEKEN's obligations. The obligation is calculated using the projected unit credit method. Any actuarial gains
and losses are recognised in profit or loss in the period in which they arise.
Termination benefits are payable when employment is terminated by HEINEKEN before the normal retirement date, or whenever an employee
accepts voluntary redundancy in exchange for these benefits.
Termination benefits are recognised as an expense when HEINEKEN is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal, or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised if HEINEKEN has made an offer encouraging
voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably
Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.