g)@
Notes to the Consolidated Financial Statements
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O Q Heineken N.V. Report of the Report of the Financial Sustainability Other
O s Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
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 consist 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
Given the impact of COVID-19 on HEINEKEN's markets and businesses, HEINEKEN assessed its CGUs for an
indication of an impairment. Following the assessment, CGUs with a total fixed asset base (including goodwill
and before impairment) of €4.3 billion were tested for asset impairment (2019: €0.4 billion). As a result, CGUs
with a total fixed asset base of €2.5 billion (2019: €0.1 billion) were found to be partially impaired.
Following the impairment tests, impairments of €463 million on owned P,P&E (2019: €52 million), €34 million
of ROU assets, €427 million on intangible assets with a finite useful life and €39 million on goodwill were
recorded in 2020. The impairment charges mainly relate to the CGUs Papua New Guinea (€246 million),
Lagunitas (€230 million), Jamaica (€100 million, net of reversal) and various (individual) pub impairments in
the UK totalling €191 million. Additionally, various smaller impairments were recorded.
Impairments are recorded on the line Amortisation, depreciation and impairments' in the Income Statement.
Refer to the table below for the impairment loss recorded per segment:
In millions of
Total
impairment
loss
Lagunitas
Jamaica
Papua New
Guinea
Various UK pubs
Various
smaller
impairments
Americas
391
230
100
61
AMEE
96
96
APAC
269
246
23
Europe
194
191
3
Head Office
13
13
963
230
100
246
191
196
For a split per asset class, refer to the movement schedules in note 8.2 and 8.3.
The determination of the recoverable amount of the assets of Lagunitas, Papua New Guinea and Jamaica
is based on a VIU valuation, which is based on a management forecast extrapolated to a 10-year cash flow
forecast for Papua New Guinea and Jamaica and a 5-year cash flow forecast for Lagunitas. Cash flows after
the first 10-year period (Lagunitas 5-year) are extrapolated using a perpetual growth rate equal to the
expected 10-year compounded average inflation, in order to calculate the terminal recoverable amount.
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:
Papua New Guinea
Lagunitas
Jamaica
In
2021 - 2025
2026 - 2030
2021-2023
2024-2025
2021-2024 2025-2030
Pre-tax WACC (in local
17.7
17.7
6.7
6.7
17.7
17.7
currency)
Expected annual long-term
4.0
4.0
1.9
1.9
4.7
4.7
inflation
Expected volume growth
7.9
4.6
0.1
2.0
3.7
0.0
Right of use (ROU) assets
HEINEKEN leases stores, pubs, offices, warehouses, cars, (forklift) trucks and other equipment in the
ordinary course of business. HEINEKEN has around 35,000 leases with a wide range of different terms and
conditions, depending on local regulations and practice. Many leases contain extension and termination
options, which are included in the lease term if HEINEKEN is reasonably certain to exercise an extension
option and reasonably certain not to exercise a termination option. Refer to the table below for the carrying
amount of ROU assets per asset class per balance sheet date:
In millions of
2020
2019
Land and buildings
Equipment
672
273
807
232
Carrying amount ROU assets as at 31 December
945
1,039
During 2020, €329 million was added to the ROU assets as a result of entering into new lease contracts and the
remeasurement of existing leases (2019: €271 million). The depreciation and impairments of ROU assets for
the financial year ending 31 December is as follows:
In millions of
2020
2019
Land and buildings
Equipment
185
95
OO O
LO OO
Depreciation and impairments for ROU assets
280
238
