84
Notes to the Consolidated Financial Statements (continued)
5. Operating segments (continued)
Reconciliation of segment profit or loss
6. Acquisitions and disposals of subsidiaries
Acquisition of Brasil Kirin
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
In the internal management reports, HEINEKEN measures its segmental performance primarily based on operating profit and operating profit beia
(before exceptional items and amortisation of acquisition-related intangible assets). Operating profit beia is a non-GAAP measure not calculated in
accordance with IFRS. Beia adjustments are also applied on other metrics. The presentation of these financial measures may not be comparable to
similarly titled measures reported by other companies due to differences in the ways the measures are calculated.
The table below presents the reconciliation of operating profit (beia) to profit before income tax.
In millionsof 2017 2016
Operating profit (beia)
3,759
3,540
Amortisation of acquisition-related intangible assets included in operating profit
(302)
(315)
Exceptional items included in operating profit
(105)
(470)
Share of profit of associates and joint ventures and impairments thereof (net of income tax)
75
150
Net finance expenses
(519)
(493)
Profit before income tax
2,908
2,412
The 2017 exceptional items and amortisation of acquisition-related intangibles in operating profit amounts to €407 million (2016: €785 million).
This amount consists of:
-€302 million (2016: €315 million) of amortisation of acquisition-related intangibles recorded in operating profit.
-€105 million (2016: €470 million) of exceptional items recorded in operating profit, of which €20 million in revenue (2016: nil), €93 million
of restructuring expenses (2016: €80 million), €19 million of reversal of impairments of property, plant and equipment (2016: €316 million
impairment loss of which €286 million related to The Democratic Republic of Congo), €72 million of acquisition and integration costs
(2016: €8 million) and €61 million of other exceptional net benefits (2016: €66 million expense). Other exceptional net benefits include
the gain on sale of non-beer and cider wholesale operations in the Netherlands.
On 13 February 2017, HEINEKEN announced that it had entered into an agreement with Kirin Holdings Company, Limited to acquire Brasil
Kirin Holding S.A. ('Brasil Kirin'), one of the largest beer and soft drinks producers in Brazil, through its wholly owned subsidiary Bavaria S.A.
The acquisition transforms HEINEKEN's existing business across the country by extending its footprint, increasing scale and further strengthening
its brand portfolio. The transaction completed on 31 May 201 7 as from which date Brasil Kirin is consolidated within HEINEKEN. The total
consideration paid by HEINEKEN to Kirin for all the shares was €594 million, mainly paid in cash.
In the condensed consolidated interim financial statements for the six-month period ended 30 June 201 7, the major classes of consideration
transferred and the recognised provisional amounts of assets acquired and liabilities assumed at the acquisition date of 31 May 2017, have
been disclosed. IFRS 3 requires the acquirer to retrospectively adjust the provisional amounts recognised at the acquisition date to reflect new
information obtained about facts and circumstances that existed as of the acquisition date. The following table summarises the revised purchase
price allocation as per 31 December 201 7 forthe acquisition of Brasil Kirin:
Provisional fair values
In millionsof
Brasil Kirin disclosed in
HY report 2017
Adjustments
Adjusted fair values
Brasil Kirin
Property, plant and equipment
561
38
599
Intangible assets
374
374
Inventories
137
(5)
132
Trade and other receivables
173
(6)
167
Cash and cash equivalents
148
148
Other assets
166
113
279
Assets acquired
1,559
140
1,699
Short-term liabilities
734
15
749
Long-term liabilities
775
237
1,012
Liabilities assumed
1,509
252
1,761
Total net identifiable assets
50
(112)
(62)
Consideration transferred
594
594
Net identifiable assets acquired
50
(112)
(62)
Goodwill on acquisition (provisional)
544
112
656
