IAS 36 para 130, impairment of PPE, fvlcd level 3 fair value hierarchy and assumptions

Heineken N.V. – Annual report – 31 December 2016

Industry: food and drink

  1. Property, plant and equipment (extract)

Impairment losses

In 2016, a total impairment loss of EUR 295 million (2015: EUR 71 million) was charged to profit or loss. These impairment losses mainly relate to The Democratic Republic of Congo (DRC). A slowdown of the expected future economic growth in DRC due to lower commodity prices, power constraints and lower investments and consumption resulting from political uncertainties, resulted in an impairment of assets in the cash generating unit (CGU). The impairment primarily relates to property, plant and equipment and has been recorded on the line ‘Amortisation, depreciation and impairments’ in the Income Statement. The CGU DRC is part of the Africa and Middle East and Eastern Europe segment. The determination of the recoverable amount of these assets is based on a fair value less costs of disposal (FVLCD) valuation. The FVLCD is based on a discounted ten-year cash flow forecast (level 3). 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: