O O
Notes to the Consolidated Financial Statements (continued)
8.3 Loans and advances to customers
Introduction Report of the Executive Board Report of the Supervisory Board
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 their
intended use, they are transferred to the relevant category and depreciation starts. All other P,P&E items are
depreciated over their estimated useful life 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).
De-recognition of Property, plant equipment
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 to note 6.2); losses on sale are included in depreciation.
Right of use (ROU) assets
Definition of a lease
A contract is or contains a lease if it provides the right to control the use of an identified asset for a period
of time in exchange for an amount payable to the lessor. The right to control the use of the identified asset
exists when having the right to obtain substantially all of the economic benefits from use of that asset and
when having the right to direct the use of that asset.
HEINEKEN as a lessee
At the start date of the lease, HEINEKEN (lessee) recognises a right of use (ROU) asset and a lease liability
on the balance sheet. The ROU asset is initially measured at cost, and subsequently at cost less accumulated
depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability
For measurement of the lease liability, refer to note 11.3.
HEINEKEN applies the following practical expedients for the recognition of leases:
- The short-term lease exemption, meaning that leases with a duration of less than a year are expensed
in the income statement on a straight-line basis.
- The low value lease exemption, meaning that leased assets with an individual value of €5 thousand
or less if bought new, are expensed in the income statement on a straight-line basis.
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2019
Other Information
HEINEKEN as a lessor
A lease is classified as a finance lease when it transfers substantially all the risks and rewards relating to
ownership of the underlying asset to the lessee. For contracts where HEINEKEN acts as an intermediate
lessor, the subleases are classified with reference to the ROU asset.
Lease related notes
For lease liabilities, refer to note 11.3 Borrowings. For short-term and low value leases, refer to other expenses
in note 6.3 Raw materials, consumables and services. For the lease receivables, refer to other receivables
in note 8.4 Other non-current assets and other receivables in note 7.2 Trade and other receivables. For the
contractual maturities of lease liabilities, refer to note 11.5 Credit, liquidity and market risk.
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 collateral such as properties.
In millions of
2019
2018
Loans to customers
55
52
Advances to customers
222
289
Loans and advances to customers
277
341
The movement in allowance for impairment losses for loans and advances to customers during the year was
as follows:
Allowance for credit losses 2019 - Loans and advances to customers
160
7
140
135
In millions of
o to
O O
2
80
(56)
(3)
79
(6)
60
Balance as
at 1 January
Addition to
allowance
Allowance
used
Allowance
released
Effect of
movements in
exchange rates
Other
Balance as at
31 December
