Notes to the Consolidated Financial Statements (continued)
5. Operating segments
Report of the
Report of the
Annual Report 2016
HEINEKEN distinguishes the following five reportable segments:
- Africa, Middle East Eastern Europe*
- Asia Pacific
- Head Office and Other/eliminations.
Within the Africa, Middle East Eastern Europe segment, Eastern Europe consists of Belarus and Russia.
The first four reportable segments as stated above are HEINEKEN's business regions. These business regions are each managed separately by a
Regional President. The Regional President is directly accountable for the functioning of the segment's assets, liabilities and results of the region and
reports regularly to the Executive Board (the chief operating decision-maker) to discuss operating activities, regional forecasts and regional results.
The Head Office operating segment falls directly under the responsibility of the Executive Board. The Executive Board reviews the performance of
the segments based on internal management reports on a monthly basis.
Information regarding the results of each reportable segment is included in the table on the next page. Performance is measured based on
EBIT (beia), as included in the internal management reports that are reviewed by the Executive Board. EBIT (beia) is defined as earnings before
interest and taxes and net finance expenses, before exceptional items and amortisation of acquisition-related intangibles. Exceptional items are
defined as items of income and expense of such size, nature or incidence, that in the view of management their disclosure is relevant to explain
the performance of HEINEKEN for the period. EBIT and EBIT (beia) are not financial measures calculated in accordance with IFRS. EBIT (beia) is
used to measure performance as management believes that this measurement is the most relevant in evaluating the results of these segments.
HEINEKEN has multiple distribution models to deliver goods to end customers. There is no reliance on major clients. Deliveries to end consumers
are done in some countries via own wholesalers or own pubs, in other markets directly and in some others via third parties. As such, distribution
models are country-specific and diverse across HEINEKEN. In addition, these various distribution models are not centrally managed or monitored.
Consequently, the Executive Board is not allocating resources and assessing the performance based on business type information and therefore
no segment information is provided on business type.
Inter-segment pricing is determined on an arm's length basis. As net finance expenses and income tax expenses are monitored on a consolidated
level (and not on an individual regional basis) and regional presidents are not accountable for that, net finance expenses and income tax expenses
are not provided for the reportable segments.