79
Notes to the Consolidated Financial Statements (continued)
Other standards and interpretations
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
IFRS16 Leases
IFRS 16 'Leases'was published in January 2016 and subsequently endorsed by the European Union on 9 November 2017. IFRS 16 establishes
a revised framework for determining whether a lease is recognised in the (Consolidated) Statement of Financial Position. The standard replaces
existing guidance on leases, including IAS 1 7. HEINEKEN will implement IFRS 16 per 1 January 2019 by applying the modified retrospective
method, meaning that the 2018 comparative numbers in the 2019 financial statements will not be restated to show the impact of IFRS 16.
Under the new standard lease contracts will be recognised on HEINEKEN's balance sheet and subsequently depreciated on a straight line basis.
The liability recognised upon transition is measured based on discounted future cash flows and the future interest will be recorded in interest
expenses. Lease expenses currently recorded in the income statement will therefore be replaced by depreciation and interest expenses for all lease
contracts within the scope of the standard. The financial impact of the new standard on HEINEKEN is not yet known.
HEINEKEN completed the selection of a lease contract management and accounting tool in 2017, which will support the implementation of
the new standard. HEINEKEN has around 30,000 operating leases that will be recorded on HEINEKEN's balance sheet as a result of IFRS 16.
These operating leases mainly relate to offices, warehouses, pubs, stores, cars and (forklift) trucks.
In selecting which practical expedients to apply HEINEKEN has focused on reducing the complexity of implementation. Based on analysis of the
options available, HEINEKEN will:
- use the option to grandfather classification as a lease for the existing contracts
- measure the Right of Use Asset based on the lease liability recognised
- apply the short-term and low value exemptions
- not use the transition option for leases with a short remaining contract period
- apply the option to exclude non-lease components from the lease liability for real estate leases
- most likely not use the option to exclude non-lease components from the lease liability for equipment leases because the lessors of HEINEKEN
are currently not able to provide a sufficiently reliable and consistent split for both the calculation and invoicing.
The following new or amended standards are not expected to have a significant impact of HEINEKEN's consolidated financial statements:
- Classification and measurement of Share-based Payments (amendments to IFRS 2)
- Foreign Currency Transactions and Advance Consideration (IFRIC 22)
- Uncertainty over tax treatments (IFRIC 23)
- Transfers of Investment Property (amendments to IAS 40)
-Annual Improvements to IFRS Standards 2014-2016 Cycle (amendments IFRS 1 and IAS 28).
