s
Notes to the Consolidated Financial Statements (continued)
-
8.3 Loans and advances to customers
O Q,
Introduction Report of the Executive Board Report of the Supervisory Board
Land and buildings include the breweries and offices of HEINEKEN as well as stores, pubs and bars.
The plant and machinery asset class contains all the assets needed in HEINEKEN's brewing, packaging
and filling activities. Other fixed assets mainly consists of returnable packaging materials, commercial fixed
assets and furniture, fixtures and fittings. Refer to note 7.4 for further information on returnable packaging
materials that are included in this category.
Impairment losses
In 2018 an impairment of property, plant and equipment of €133 million was charged to profit or loss
(2017: nil), mainly relating to The Democratic Republic of Congo (DRC), which is part of the Africa,
Middle East and Eastern Europe segment. A decrease of the expected market volume growth in the DRC
resulted in an impairment of assets. The determination of the recoverable amount of these assets is based
on a value in use (VIU) valuation, which is based on a discounted 10-year cash flow forecast. The key
assumptions used to determine the cash flows are based on market expectations and management's
best estimates. See the table below for the key assumptions:
in 2019-2028 After that
Sales volume growth (CAGR)
(1.7)
Inflation
10.1
10.1
Discount rate - pre tax
20.1
20.1
Accounting estimates and judgements
Estimates are required to determine the (remaining) useful lives of fixed assets. Useful lives are determined
based on an asset's age, the frequency of its use, repair and maintenance policy, technology changes in
production and expected restructurings.
HEINEKEN estimates the expected residual value per asset item. The residual value is the higher of the
expected sales prices or the scrap value. The residual value is estimated based on recent market transaction
of similar sold items or on its material scrap value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of items
of P,P&E. HEINEKEN believes that straight-line depreciation most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset.
Accounting policies
A fixed asset is recognised when it is probable that future economic benefits associated with the PP&E item
will flow to HEINEKEN and when the cost of the P,P&E can be reliably measured. The majority of the PP&E
of HEINEKEN are owned assets, rather than leased assets.
PP&E are recognised at historical cost less accumulated depreciation and impairment losses. Historical cost
include all cost directly attributable to the purchase of an asset. The cost of self-constructed assets include
all directly attributable costs to make the asset ready for its intended use. Spare parts that meet the
Heineken N.V. Annual Report 2018 8
Financial Statements
Sustainability Review
Other Information
definition of P,P&E are capitalised as such and accounted for accordingly. If spare parts do not meet the
recognition criteria of PP&E, they are either carried in inventory or consumed and recorded in profit or loss.
Subsequent costs are capitalised only when it is probable that the expenses will lead to future economic
benefits and can be measured reliably. The carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or
loss during the reporting period in which they are incurred.
For the contractual commitments on ordered P,P&E refer to note 13.2.
Depreciation and impairments
Depreciation is calculated using the straight-line method, based on the estimated useful life of the asset
class. The estimated useful lives of the main asset classes are as follows:
- Buildings 30 - 40 years
- Plant and equipment 10 - 30 years
- Other fixed assets 3 - 10 years
Land and assets under construction are not depreciated. When assets under construction are ready for
its intended use, they are transferred to the relevant category and depreciation starts. All other P.P&E items
are depreciated over their estimated useful live to the asset's residual value.
The depreciation method, residual value and useful lives are reassessed annually. Changes in useful lives
or residual value are recognised prospectively
HEINEKEN reviews whether impairment triggers exist on cash generating unit (CGU) level. When a
triggering event exists, assets are tested for impairment, refer to note 8.1.
Derecognition
PP&E is derecognised when it is scrapped or sold. Gains on sale of P,P&E are presented in profit or loss
as other income (refer note 6.2); losses on sale are included in depreciation.
Loans and advances to customers are inherent to HEINEKEN's business model. Loans to customers are
repaid in cash on fixed dates while the settlement of advances to customers are linked to the sales volume
of the customer. Loans and advances to customers are usually backed by a collateral such as properties.
In millions of
2018
2017
Loans to customers
52
54
Advances to customers
289
277
Loans and advances to customers
341
331
