tiï O Q,
Notes to the Consolidated Financial Statements (continued)
9.2 Provisions
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Introduction Report of the Executive Board Report of the Supervisory Board
Accounting estimates
To make the actuarial calculations for the defined benefit plans, HEINEKEN needs to make use of
assumptions for discount rates, future pension increases and life expectancy as described in this note.
The actuarial calculations are made by external actuaries based on inputs from observable market
data, such as corporate bond returns and yield curves to determine the discount rates used, mortality
tables to determine life expectancy and inflation numbers to determine future salary and pension
growth assumptions.
Accounting policies
Defined contribution plans
A defined contribution plan is a post-retirement plan for which HEINEKEN pays fixed contributions to
a separate entity. HEINEKEN has no legal or constructive obligations to pay further contributions if the
fund does not hold sufficient assets to pay out employees.
Defined benefit plans
A defined benefit plan is a post-retirement plan that is not a defined contribution plan. Typically, defined
benefit plans define an amount of pension benefit that an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service and compensation.
HEINEKEN's net obligation in respect of defined benefit pension plans is calculated separately for each
plan by estimating the amount of future benefits that employees have earned in return for their service in
the current and prior periods; those benefits are discounted to determine its present value. The fair value of
any defined benefit plan assets are deducted. The discount rate is the yield at balance sheet date on high-
quality credit-rated bonds that have maturity dates approximating to the terms of HEINEKEN's obligations
and that are denominated in the same currency in which the benefits are expected to be paid.
The calculations are performed annually by qualified actuaries using the projected unit credit method.
When the calculation results in a benefit to HEINEKEN, the recognised asset is limited to the present value
of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan. In order to calculate the present value of economic benefits, consideration is
given to any minimum funding requirements that apply to any plan in HEINEKEN. An economic benefit is
available to HEINEKEN if it is realisable during the life of the plan, or on settlement of the plan liabilities.
When the benefits of a plan are changed, the expense or benefit is recognised immediately in profit or loss.
HEINEKEN recognises all actuarial gains and losses arising from defined benefit plans immediately in other
comprehensive income and all expenses related to defined benefit plans in personnel expenses and other
net finance income and expenses in profit or loss.
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2018
Other Information
Provisions within HEINEKEN mainly relate to claims and litigation, that arise in the ordinary course of
business. The outcome depends on future events, which are by nature uncertain.
In millions of
Claims and
litigation
Taxes
Restruc
turing
Onerous
contracts
Other
Total
Balance as at
1 January 2018
403
498
104
56
87
1,148
Changes in consolidation
(9)
(26)
13
1
(21)
Provisions made during the year
91
29
102
31
34
287
Provisions used during the year
(3)
(64)
(28)
(13)
(108)
Provisions reversed
during the year
(87)
(31)
(12)
(20)
(23)
(173)
Effect of movements in
exchange rates
(42)
(34)
(3)
(1)
(80)
Unwinding of discounts
16
1
17
Transfer
(1)
(62)
3
(60)
Balance as at
31 December 2018
368
375
130
49
88
1,010
Non-current
355
322
80
32
57
846
Current
13
53
50
17
31
164
Claims and litigation
The provision for claims and litigation of €368 million mainly relates to civil and labour claims in Brazil.
Taxes
The provisions for taxes mainly relate to Brazil. Tax legislation in Brazil is highly complex and subject
to interpretation, therefore the timing of the cash outflows for these provisions is uncertain.
Restructuring
The provision for restructuring of €130 million (2017: €104 million) mainly relates to restructuring
programmes in Spain and the Netherlands.
Other provisions
Included are, among others, surety and guarantees provided of €47 million (2017: €42 million).
