Heineken Annual Report & Accounts 2008

Notes 1-5

• 1. Reporting entity
• 2. Basis of preparation
• 3. Significant accounting policies
• 4. Determination of fair values
• 5. Segment reporting

5.Segment reporting

General

Segment information is presented only in respect of geographical segments consistent with Heineken’s management and internal reporting structure. Over 80 per cent of the Heineken sales consist of beer. The risks and rewards in respect of sales of other beverages do not differ significantly from beer, as such no business segments are reported.

Heineken operates its business through five regions headed by a regional president. Regional and operating company management are responsible for managing performance, underlying risks and effectiveness of operations, supported and supervised by Group departments.

Heineken has multiple distribution models to deliver goods to end customers. Deliveries are carried out in some countries via own wholesalers or own pubs, in other markets directly and in some others via third parties. As such, distribution models are country-specific and, on consolidated level, diverse. Therefore, the results and the balance sheet items cannot be split between types of customers on a consolidated basis. The various distribution models are also not centrally managed or monitored. Therefore, no secondary segment information is provided.

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Export revenue and results are also allocated to the regions. Most of the production facilities are located in Europe. Sales to the other regions are charged at transfer prices with a surcharge for cost of capital. Segment assets are based on the geographical location of the assets.

Heineken distinguishes the following geographical segments:

• Western Europe
• Central and Eastern Europe
• The Americas
• Africa and the Middle East
• Asia Pacific
• Head Office/eliminations.

Geographical segments

	Western Europe		Central and Eastern Europe		The Americas
In millions of EUR	2008	2007	2008	2007	2008	2007
Revenue
Third-party revenue1	6,979	4,827	3,671	3,208	1,566	1,608
Interregional revenue	682	623	16	18	–	–
Total revenue	7,661	5,450	3,687	3,226	1,566	1,608
Other income	16	27	5	–	1	1
Results from operating activities	505	416	98	399	163	185
Net finance expenses
Share of profit of associates and joint ventures and impairments thereof	4	(6)	13	(46)	43	49
Income tax expenses
Profit
Attributable to:
Equity holders of the Company (net profit)
Minority interest
Beer volumes2
Consolidated volume	44,245	31,910	50,527	46,451	10,329	9,925
Joint ventures’ volume	–	–	10,775	11,060	8,803	7,585
Licences	345	313	–	–	255	223
Interregional volume	11,755	11,223	343	356	–	–
Group volume	56,345	43,446	61,645	57,867	19,387	17,733
Segment assets	11,658	3,791	5,075	5,155	1,062	431
Investment in associates and joint ventures	29	7	123	58	450	504
Total segment assets	11,687	3,798	5,198	5,213	1,512	935
Unallocated assets
Total assets
Segment liabilities	6,533	3,665	3,401	3,104	206	157
Total equity
Total equity and liabilities
Purchase of P, P & E	447	394	335	382	19	22
Acquisition of goodwill	3,474	11	232	135	303	–
Purchases of intangible assets	10	5	18	8	108	2
Depreciation of P, P & E	365	253	259	257	17	23
Impairment and reversal of impairment of P, P & E	79	–	(1)	(9)	–	–
Amortisation intangible assets	70	9	20	13	13	2
Impairment intangible assets	–	–	275	4	–	–

	Africa and the Middle East		Asia Pacific		Head Office/ Eliminations		Consolidated
In millions of EUR	2008	2007	2008	2007	2008	2007	2008	2007
Revenue
Third-party revenue1	1,764	1,307	279	245	60	50	14,319	11,245
Interregional revenue	10	4	–	–	(708)	(645)	–	–
Total revenue	1,774	1,311	279	245	(648)	(595)	14,319	11,245
Other income	10	–	–	–	–	–	32	28
Results from operating activities	442	300	46	34	(72)	30	1,182	1,364
Net finance expenses							(485)	(95)
Share of profit of associates and joint ventures and impairments thereof	20	26	(182)	31	–	–	(102)	54
Income tax expenses							(248)	(394)
Profit							347	929
Attributable to:
Equity holders of the Company (net profit)							209	807
Minority interest							138	122
							347	929
Beer volumes2
Consolidated volume	18,076	14,731	2,644	2,358	–	–	125,821	105,375
Joint ventures’ volume	2,186	1,981	11,039	10,120	–	–	32,803	30,746
Licences	1,316	1,586	949	933	–	–	2,865	3,055
Interregional volume	4	2	1	–	(12,103)	(11,581)	–	–
Group volume	21,582	18,300	14,633	13,411	(12,103)	(11,581)	161,489	139,176
Segment assets	1,755	1,186	173	121	(472)	73	19,251	10,757
Investment in associates and joint ventures	164	98	379	225	–	–	1,145	892
Total segment assets	1,919	1,284	552	346	(472)	73	20,396	11,649
Unallocated assets							167	305
Total assets							20,563	11,954
Segment liabilities	1,007	781	117	76	4,547	(1,540)	15,811	6,243
Total equity							4,752	5,711
Total equity and liabilities							20,563	11,954
Purchase of P, P & E	251	161	10	7	40	38	1,102	1,004
Acquisition of goodwill	149	1	–	–	–	4	4,158	151
Purchases of intangible assets	4	1	–	1	18	–	158	17
Depreciation of P, P & E	79	78	7	7	14	(3)	741	615
Impairment and reversal of impairment of P, P & E	2	–	–	–	4	3	84	(6)
Amortisation intangible assets	1	1	–	–	2	–	106	25
Impairment intangible assets	–	–	–	–	–	–	275	4

¹

Includes other revenue of €360 million in 2008 and €228 million in 2007.

²

For volume definitions see ‘Glossary’, excluding India volumes.