Independent Auditor's Report (continued) O Q, Introduction Report of the Executive Board Report of the Supervisory Board Revenue recognition Observation Applying the aforementioned materiality, we have evaluated the accruals for promotional allowances and volume rebates as recorded in the financial statements. Based on our procedures performed, we did not identify any reportable matters in management's valuation of the promotional allowances and volume rebates accrual. As disclosed in note 4(a), the adoption of IFRS 15 has not resulted in any changes impacting shareholders' equity and (operating) profit. The restatement of revenues due to the revised presentation of excise taxes, is disclosed in the same note. In addition, a footnote is included in the consolidated income statement to explain the restatement. Intangible assets (including goodwill) and property, plant and equipment impairment test - Management assessment of recoverability Risk Intangible assets (including goodwill) and property, plant and equipment amounted to €28,818 million as at December 31, 2018. They represent close to 70% of the Company's total assets. These assets are allocated to Cash Generating Units (CGUs) and groups of CGUs for which management is required to assess the recoverability of the goodwill carrying value annually. Recoverability of other intangible assets and property, plant and equipment is assessed upon the existence of a triggering event. The Company uses assumptions and forecasts in respect of future market and economic conditions, such as economic growth, expected inflation rates, demographic developments, expected market share, revenue and margin development. Further details on the accounting and disclosure requirements under IAS 36 Impairment of assets are included in notes 8.1 and 8.2 to the financial statements. These notes also explain certain impairments recorded in 2018, for a total amount of €153 million. Procedures over management's impairment test are considered to be a key audit matter, given the level of judgement and complexity involved with the valuation models and assumptions used within these models. Heineken N.V. Annual Report 2018 Financial Statements Sustainability Review Other Information Intangible assets (including goodwill) and property, plant and equipment impairment test - Management assessment of recoverability How the scope For our audit we assessed and tested the assumptions, the discount rates, of our audit methodologies and data used by the Company, for example by comparing them to responded external data such as expected inflation rates, external market growth expectations to the risk and by analysing sensitivities in the Company's valuation model. We included valuation specialists in our team to assist us. We specifically focused on the sensitivity in the available headroom of CGUs and whether a reasonably possible change in assumptions could cause the carrying amount to exceed its recoverable amount. We also obtained supporting evidence for impairments recognised in the year. We assessed the historical accuracy of management's estimates and tested the effectiveness of the Company's internal controls around the goodwill accounting, including their forecasted financial information. We also assessed the adequacy of the Company's disclosure notes 8.1 and 8.2 in the financial statements about those assumptions to which the outcome of the impairment test is most sensitive. Observation We did not identify any reportable matters in management's assessment of the recoverability of intangible assets and property, plant and equipment and the corresponding disclosures in note 8.1 and 8.2. Taxes - provisions for uncertain tax positions and valuation of deferred tax assets Risk The Company operates across several tax jurisdictions and is subject to periodic challenges by local tax authorities during the normal course of business, including transaction-related taxes and transfer pricing arrangements. In those cases where the amount of tax payable or recoverable is uncertain, the Company establishes provisions based on its judgement of the probable amount of the liability or recovery. Deferred tax assets for tax losses carried forward are recognised by the Company to the extent that it is probable that future taxable income will be available, against which unused tax losses can be utilised or the extent of the deferred tax liability. The accounting for uncertain tax positions and deferred tax assets, as detailed in note 12.1 to the financial statements, is significant to our audit because of the level of judgement applied in quantifying appropriate provisions for uncertain tax positions and in determining assumptions about future profitability, as it relates to the recoverability of deferred tax assets.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2018 | | pagina 159