92
Notes to the Consolidated Financial Statements (continued)
15. Intangible assets (continued)
Sensitivity to changes in assumptions
16. Investments in associates and joint ventures
Summarised financial information for equity accounted joint ventures and associates
-
-
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
In millions of
2017
2016
Europe
4,720
4,788
The Americas (excluding Brazil)
2,109
2,115
Brazil
668
78
Africa, Middle East and Eastern Europe (aggregated)
346
414
Asia Pacific
2,882
3,154
Head Office
480
480
11,205
11,029
Throughout the year, goodwill increased mainly due to the Brasil Kirin acquisition offset by net foreign currency differences.
The recoverable amounts of the (group of) CGUsare based on the higher of the fair value less costs of disposal and value in use calculations.
Value in use was determined by discounting the future cash flows generated from the continuing use of the unit using a pre-tax discount rate.
The key assumptions used for the value in use calculations are as follows:
- Cash flows were projected based on actual operating results and the three-year business plan. Cash flows for a further seven-year period (except for
Europe, where a further two-year period was applied) were extrapolated using expected annual per country volume growth rates, which are based on
external sources. Management believes that this period is justified due to the long-term development of the local beer business and past experiences.
-The beer price growth per year after the first three-year period is assumed to be at specific per country expected annual long-term inflation, based
on external sources.
- Cash flows afterthe first 10-year (Europe five-year) period were extrapolated using a perpetual growth rate equal to the expected annual
long-term inflation, in orderto calculate the terminal recoverable amount.
- A per CGU-specific pre-tax Weighted Average Cost of Capital (WACC) was applied in determining the recoverable amount of the units.
The values assigned to the key assumptions used for the value in use calculations are as follows:
Expected annual Expected volume
long-term inflation growth rates 2021-
In Pre-tax WACC 2021-2027 2027
Europe 9.2 1.9 0.5
The Americas (excluding Brazil) 14.2 3.1 3.3
Brazil 14.3 3.9 2.0
Africa, Middle East and Eastern Europe 17.7-27.4 3.5-12.3 0.0-8.5
Asia Pacific 15.4 4.8 3.7
Head Office 8.9 1.9 0.5
The outcome of these impairment tests in 201 7 did not result in an impairment loss (2016: nil) being charged to profit or loss.
The outcome of a sensitivity analysis of a 100 basis points adverse change in key assumptions (lower growth rates or higher discount rates
respectively) did not result in a materially different outcome of the impairment test.
HEINEKEN has interests in a number of individually insignificant joint ventures and associates.
The following table includes, in aggregate, the carrying amount and HEINEKEN's share of profit and OCI of joint ventures and associates:
Joint ventures Associates
In millions of
2017
2016
2017
2016
Carrying amount of interests
1,612
2,022
229
144
Share of:
Profit or loss from continuing operations
43
124
32
26
Other comprehensive income
(13)
6
30
124
38
26
The decrease in the carrying amount of interests is mainly due to the acquisition in 201 7 of all the remaining shares in Lagunitas Brewing
Company, which was formerly ajoint venture.
