92
Notes to the Consolidated Financial Statements (continued)
14. Property, plant and equipment (continued)
Impairment losses
Property, plant and equipment under construction
Heineken NV.
Report of the
Report of the
Financial
Sustainability
Other
Annual Report 2016
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
In 2016, a total impairment loss of EUR 295 million (2015: EUR 71 million) was charged to profit or loss. These impairment losses mainly relate
to The Democratic Republic of Congo (DRC). A slowdown of the expected future economic growth in DRC due to lower commodity prices, power
constraints and lower investments and consumption resulting from political uncertainties, resulted in an impairment of assets in the cash generating
unit (CGU). The impairment primarily relates to property, plant and equipment and has been recorded on the line Amortisation, depreciation and
impairments' in the Income Statement. The CGU DRC is part of the Africa and Middle East and Eastern Europe segment. The determination of the
recoverable amount of these assets is based on a fair value less costs of disposal (FVLCD) valuation. The FVLCD is based on a discounted ten-year
cash flow forecast (level 3). The key assumptions used to determine the cash flows are based on market expectations and management's best
estimates. See the table below for the key assumptions:
In 2017-2026 After that
Sales volume growth (CAGR)
3.4
0.0
Cost inflation
4.0
4.0
Discount rate - post tax
16.0
16.0
P, P E under construction mainly relates to extension of brewing capacity in various countries.