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Notes to the Consolidated Financial Statements
7.4 Returnable packaging materials
8. Non-current assets
8.1 Impairment testing of Intangible assets and Property, plant and equipment
(a) Introduction
(b) Impact of the COVID-19 pandemic on impairment testing
(c) Summary of impairments on Intangible assets and Property, plant and equipment
Accounting estimates
O A Heineken N.V. Report of the Report of the Financial Sustainability Other
Ot1 Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
HEINEKEN uses returnable packaging materials such as glass bottles, crates and kegs in selling the finished
products to the customer.
Returnable packaging materials
The majority of returnable packaging materials is classified as property, plant and equipment.
The category 'Other fixed assets' in Property, plant and equipment (refer to note 8.3) includes €824 million
(2019: €922 million) of returnable packaging materials.
Returnable packaging deposit liability
In certain markets, HEINEKEN has the legal or constructive obligation to take back the materials from the
market. A deposit value is generally charged upon sale of the finished product, which is reimbursed when the
empty returnable packaging material is returned.
The main accounting estimate relating to returnable packaging materials is determining the returnable
packaging materials in the market and the expected return thereof. This is based on circulation times and
losses of returnable packaging materials in the market.
Accounting policies
Returnable packaging materials
Returnable packaging materials may be classified as property, plant and equipment or inventory.
The classification mainly depends on whether ownership is transferred and if HEINEKEN has the legal or
constructive obligation to buy back the materials.
Refer to note 8.3 for the general accounting policy on property, plant and equipment. Specifically for
returnable packaging materials, the estimated useful life depends on the loss of the materials in the market
as well as on HEINEKEN sites.
Returnable packaging deposit liability
HEINEKEN recognises a deposit liability when a legal or constructive obligation exists to reimburse the
customer for returnable packaging materials that are returned. The returnable packaging deposit liability is
based on the estimated returnable packaging materials in the market, the expected return thereof and the
deposit value.
The results of impairment testing for non-financial non-current assets is covered both in note 8.2 Intangible
assets and note 8.3 Property, plant and equipment. Note 8.2 covers the impairment testing of goodwill and
Intangible assets with an indefinite useful life. Note 8.3 covers the impairment testing for Property, plant and
equipment (P,P&E) and intangible assets with a finite useful life.
Due to the uncertainty of the depth and duration of the COVID-19 pandemic, including the resurgence of
the virus, limitations on operations and adverse effects on disposable income, projecting future cash flows
for cash generating units (CGUs) for 2020 involves a higher degree of judgement compared to previous years.
HEINEKEN therefore prepared multiple recovery scenario's for the impairment trigger testing with regard to
the short-term impact (e.g. short-term impact on sales volumes and revenue) and the longer term impact of
COVID-19 (e.g. the recovery of sales volumes to pre-COVID-19 levels).
In the event of an impairment indicator, the final forecasts used for impairment testing were prepared for
a single most likely scenario. These forecasts were prepared under the assumption of a full recovery to the
2019 sales volumes over a two-year planning horizon. The forecasts took into account the continuation of the
current wave and its containment measures into 2021, but no additional waves beyond 2021.
During the year, impairment losses of €963 million were recorded, of which €39 million relates to goodwill
(2019: €6 million), €427 million to intangible assets with a finite useful life (2019: €14 million) and €497 million
to P,P&E (2019: €52 million). The impairment charges mainly relate to the CGUs Papua New Guinea
(€246 million), Lagunitas (€230 million), Jamaica (€100 million) and various (individual) pub impairments in
the UK amounting to €191 million. Additionally, various smaller impairments have been recorded.
The drivers of the impairment losses in 2020 are mainly due to the impact of the COVID-19 pandemic on
developing economies and on the on-trade business (like cafés, bars and restaurants) in some developed
economies. For more details refer to note 8.3.
The impairments have been charged to the line 'Amortisation, depreciation and impairments' in the
Income Statement.
In millions of 2020 2019
Returnable packaging deposits 454 565
