g)@
Notes to the Consolidated Financial Statements
Reconciliation of segment profit or loss
Profit before income tax
^7/ Heineken N.V. Report of the Report of the Financial Sustainability Other
U Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
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
2020
2019
Operating profit (beia)
2,421
4,020
Amortisation of acquisition-related intangible assets included in operating
(273)
(309)
profit
Exceptional items included in operating profit
(1,370)
(78)
Share of profit/(loss) of associates and joint ventures
(31)
164
Net finance expenses
(590)
(513)
157
3,284
The 2020 exceptional items and amortisation of acquisition-related intangibles in operating profit amounts
to €1,643 million (2019: €387 million). This amount consists of:
- €273 million (2019: €309 million) of amortisation of acquisition-related intangibles recorded in
operating profit.
- €1,370 million (2019: €78 million) of exceptional items recorded in operating profit. This includes nil
exceptional items on revenue (2019: €78 million exceptional benefit on revenue, mainly relating to
tax credits in Brazil), and €8 million exceptional excise tax expenses (2019: €2 million), €331 million
of restructuring expenses, largely associated with the EverGreen programme (2019: €91 million),
€963 million of impairments (net of reversal) mainly in Papua New Guinea, Lagunitas, Jamaica and various
UK Pubs (2019: €85 million), €35 million net loss on disposals (2019: €57 million gain on disposals, mainly
related to the sale of operating entities in China and Hong Kong) and €33 million of other net exceptional
expenses (2019: €35 million).
HEINEKEN has not introduced new exceptional items related to COVID-19 or classified COVID-19 as an
exceptional item as such. Although COVID-19 is an exceptional situation, it is not considered as an incident
as it is unfolding over time, with an impact on many different financial statement line items. Therefore, any
effect of COVID-19 is not considered as an exceptional item, unless the effect relates to the exceptional items
as mentioned in the accounting policy sections below.
Accounting estimates and judgements
Due to the complexity and variety in tax legislations, significant judgement is applied in the assessment of
whether excise tax expenses are borne by HEINEKEN or collected on behalf of third parties.
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.
Accounting policies
Segment reporting
Operating segments are reported in a consistent manner 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 property, plant and
equipment 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 of goodwill and fixed
assets (and reversal of impairments), 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.
