Notes to the Consolidated Financial Statements (continued) O Q, Introduction Report of the Executive Board Report of the Supervisory Board Goodwill impairment testing For the purpose of impairment testing, goodwill in respect of Europe, the Americas (excluding Brazil) and Asia Pacific is allocated and monitored on a regional basis. For Brazil and subsidiaries within Africa, Middle East Eastern Europe and Head Office, goodwill is allocated and monitored on an individual country basis. The total amount of goodwill of €11,194 million (2017: €11,205 million) is allocated to each (group of) Cash Generating Unit (CGU) as follows: Goodwill per (group of) CGU 6,000 5,000 4,721 4,720 4,000 2,877 2,882 3,000 2,000 1,000 480 480 Head Office Americas Africa, Middle East Eastern Europe The carrying amount is compared to the recoverable amount. The recoverable amounts of the (group of) CGUs are based on the higher of the fair value less costs of disposal and value in use calculations. For CGUs representing more than 95% of goodwill the recoverable amount is based on a value in use model. Value in use is 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 are 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. Financial Statements Sustainability Review Heineken N.V. Annual Report 2018 Other Information - 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 after the first 10-year (Europe five-year) period are extrapolated using a perpetual growth rate equal to the expected annual long-term inflation, in order to 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: In Pre-tax WACC Expected annual long-term inflation 2022-2028 Expected volume growth rates 2022-2028 Europe 9.5 1.9 1.0 The Americas (excluding Brazil) 12.4 3.0 3.2 Brazil 18.1 3.8 0.2 Africa, Middle East and Eastern Europe 19.2-33.8 3.7-11.1 (4.8)-1.7 Asia Pacific 15.1 4.0 3.1 Head Office 9.1 1.9 1.0 CGUs for which the recoverable amount is based on a FVLCD model represent less than 5% of goodwill. The outcome of these goodwill impairment tests in 2018 did not result in a material impairment loss (2017: nil). Sensitivity to changes in assumptions 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. Brands, customer-related and contract-based intangibles The main brands capitalised are the brands acquired in various acquisitions. The main customer-related and contract-based intangibles relate to customer relationships (constituted either by way of a contractual agreement or by way of non-contractual relations) and re-acquired rights.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2018 | | pagina 83