81
Notes to the Consolidated Financial Statements (continued)
5. Operating segments
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
HEINEKEN distinguishes the following five reportable segments:
-Africa, Middle East Eastern Europe*
-Americas
- Asia Pacific
- Europe
- 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
operating profit (beia), as included in the internal management reports that are reviewed by the Executive Board. Operating profit beia has
replaced EBIT beia as key measure of profitability as of 1 January 201 7. Operating profit better reflects the profitability that is underthe direct
control of HEINEKEN. 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. Operating profit and operating profit (beia) are
not financial measures calculated in accordance with IFRS. Operating profit (beia) is used to measure performance as management believes that
this measurement is the most relevant in evaluating the results of the 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.