3
Notes to the Consolidated Financial Statements (continued)
Reconciliation of segment profit or loss
O Q,
Introduction Report of the Executive Board Report of the Supervisory Board
The table below presents the reconciliation of operating profit before exceptional items and amortisation
of acquisition-related intangibles (operating profit beia) to profit before income tax.
In millions of
2018
2017
Operating profit (beia)
3,868
3,759
Amortisation of acquisition-related intangible assets included in operating profit
(311)
(302)
Exceptional items included in operating profit
(420)
(105)
Share of profit of associates and joint ventures
210
75
Net finance expenses
(495)
(519)
Profit before income tax
2,852
2,908
The 2018 exceptional items and amortisation of acquisition-related intangibles in operating profit
amounts to €731 million (2017: €407 million). This amount consists of:
- €311 million (2017: €302 million) of amortisation of acquisition-related intangibles recorded in
operating profit.
- €420 million (2017: €105 million) of exceptional items recorded in operating profit, of which nil in
revenue (2017: €20 million), €122 million of restructuring expenses (2017: €93 million), €183 million of
impairments mainly in the Democratic Republic of Congo (DRC) (2017: €19 million gain from reversal of
impairments), €24 million of acquisition and integration costs (2017: €72 million), €4 million net gain on
disposals (2017: €71 million net gain mainly from the sale of non-beer and cider wholesale operations
in the Netherlands) and €95 million of other exceptional expenses (2017: €10 million which included
exceptional benefits of €58 million).
Accounting estimates and judgements
Due to the complexity and variety in tax legislations, significant judgement is applied in the assessment
whether excise tax expenses are borne by HEINEKEN or collected on behalf of a third party.
HEINEKEN makes estimates when determining discount accruals in revenue at year-end, specifically for
conditional discounts. Refer to note 7.3 for more explanation on how discount accruals are estimated.
Heineken N.V. Annual Report 2018
Financial Statements
Sustainability Review
Other Information
Accounting policies
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Executive Board, which is considered to be HEINEKEN's chief operating decision-maker. An operating
segment is a component of HEINEKEN that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of HEINEKEN's
other components. All operating segments' operating results are reviewed regularly by the Executive Board
to make decisions about resources to be allocated to the segment and to assess its performance, and for
which discrete financial information is available.
The first four reportable segments as presented in the segmentation tables are HEINEKEN's business
regions. These business regions are each managed separately by a Regional President, who reports to
the Executive Board, and is directly accountable for the functioning of the segment's assets, liabilities and
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.
Segment results, assets and liabilities that are reported to the Executive Board include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated result
items comprise net finance expenses and income tax expenses. Unallocated assets mainly comprise
deferred tax assets.
Segment capital expenditure is the total cost incurred during the period to acquire PP&E and intangible
assets other than goodwill.
Performance is measured based on operating profit (beia), as included in the internal management reports
that are reviewed by the Executive Board. Beia stands for 'before exceptional items and amortisation of
acquisition-related intangibles'. 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. Exceptional items include, amongst others, impairments (and reversal of
impairments) of goodwill and fixed assets, gains and losses from acquisitions and disposals, redundancy
costs following a restructuring, past service costs and curtailments, the tax impact on exceptional items
and tax rate changes (the one-off impact on deferred tax positions). 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. 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.
