77
Notes to the Consolidated Financial Statements (continued)
(u) Earnings per share
(v) Cash flow statement
(w) Operating segments
(x) Recently issued IFRS
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
HEINEKEN presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted
forthe weighted average number of own shares purchased in the year. Diluted EPS is determined by dividing the profit or loss attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding, adjusted forthe weighted average number of own shares
purchased in the year and forthe effects of all dilutive potential ordinary shares which comprise share rights granted to employees.
The cash flow statement is prepared using the indirect method. Changes in balance sheet items that have not resulted in cash flows such as
translation differences, fair value changes, equity-settled share-based payments and other non-cash items have been eliminated forthe purpose of
preparing this statement. Assets and liabilities acquired as part of a business combination are included in investing activities (net of cash acquired).
Dividends paid to ordinary shareholders are included in financing activities. Dividends received are classified as operating activities. Interest paid is
also included in operating activities.
Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Board, which is considered to be
HEINEKEN's chief operating decision-maker. An operating segment is a component of HEINEKEN that engages in business activities from which
it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of HEINEKEN's other components.
All operating segments' operating results are reviewed regularly by the Executive Board to make decisions about resources to be allocated to the
segment and to assess its performance, and for which discrete financial information is available.
Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to
unrelated third parties.
Segment results, assets and liabilities that are reported to the Executive Board include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated result items comprise net finance expenses and income tax expenses. Unallocated assets
comprise current other investments and cash call deposits.
Segment capital expenditure is the total cost incurred during the period to acquire P, P E,and intangible assets other than goodwill.
New relevant standards and interpretations not yet adopted
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2017, which HEINEKEN has
not applied in preparing these consolidated financial statements.
IFRS 9 Financial instruments
IFRS 9, was published in July 2014 and subsequently endorsed by the European Union on 9 November 201 7. IFRS 9 includes revised guidance
on classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial
assets, and new general hedge accounting requirements. The standard replaces existing guidance in IAS 39 Financial Instruments: Recognition
and Measurement. HEINEKEN will implement IFRS 9 per 1 January 2018 using the modified retrospective approach, meaning that the 2017
comparative numbers in the 2018 financial statements will not be restated. Any impact of IFRS 9 as of 1 January 2018 will be recognised directly
in equity
HEINEKEN has reviewed the impact of this new standard and has concluded that the impact is limited:
-With regard to the revised classification and measurement principles, IFRS 9 contains three classification categories: 'measured at amortised cost',
'fair value through other comprehensive income' (FVTOCI) and 'fair value through profit and loss' (FVTPL). The standard eliminates the existing
IAS 39 categories: 'loans and receivables', 'held to maturity' and available-for-sale'. For HEINEKEN this new classification only means that the
assets currently classified as available-for-sale will be measured at FVTOCI which constitutes no significant change, except forthe accounting for
accumulative gains or losses when equity securities measured at FVTOCI are disposed of. These cumulative gains or losses will not be recognised
in the income statement upon disposal but kept in the fair value reserve. HEINEKEN has no investments classified as held to maturity and the
other categories involve no change in measurement for HEINEKEN.
-With regard to the impact of the expected loss model on trade receivables and both advances and loans to customers HEINEKEN concluded that
the impact is immaterial. The impact on HEINEKEN's future consolidated income statement is also expected to be immaterial as the standard
requires provisions to be recorded earlier and the initial impact of this timing difference is recorded in equity upon implementation.
- Forthe new hedging requirements of IFRS 9 HEINEKEN concluded that all current hedging relationships will continue to qualify as hedging
relationships upon application of IFRS 9. For existing hedges HEINEKEN will exclude the foreign currency basis spread from the hedge relation
only when this improves hedge effectiveness by applying the cost of hedging approach. HEINEKEN will retrospectively apply the cost of hedging
approach for these hedges and recognise any initial impact, which is expected to be immaterial, directly in equity upon implementation.
