Property, Plant and Equipment

Changes in property, plant and equipment in 2017 were as follows:

Changes in Property, Plant and Equipment

 

 

Land and buildings

 

Plant installations and machinery

 

Furniture, fixtures and other equipment

 

Construction in progress and advance payments

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

Cost of acquisition or construction, December 31, 2016

 

10,346

 

20,335

 

2,297

 

2,551

 

35,529

Acquisitions

 

 

 

 

 

Capital expenditures

 

286

 

460

 

193

 

1,022

 

1,961

Retirements

 

(82)

 

(304)

 

(143)

 

 

(529)

Transfers

 

282

 

699

 

52

 

(1,033)

 

Transfers (IFRS 5)

 

(498)

 

(601)

 

(66)

 

(240)

 

(1,405)

Divestments / changes in the scope of consolidation

 

(3,167)

 

(11,059)

 

(500)

 

(455)

 

(15,181)

Inflation adjustment (IAS 29)

 

5

 

 

 

 

5

Exchange differences

 

(466)

 

(884)

 

(112)

 

(82)

 

(1,544)

December 31, 2017

 

6,706

 

8,646

 

1,721

 

1,763

 

18,836

Accumulated depreciation and impairment losses, December 31, 2016

 

5,592

 

15,111

 

1,685

 

27

 

22,415

Retirements

 

(60)

 

(280)

 

(125)

 

 

(465)

Depreciation and impairment losses in 2017

 

334

 

893

 

223

 

5

 

1,455

Depreciation

 

310

 

860

 

222

 

 

1,392

Impairment losses

 

24

 

33

 

1

 

5

 

63

Impairment loss reversals

 

(7)

 

(6)

 

 

 

(13)

Transfers

 

6

 

4

 

(1)

 

(9)

 

Transfers (IFRS 5)

 

(82)

 

(214)

 

(31)

 

 

(327)

Divestments / changes in the scope of consolidation

 

(1,923)

 

(8,631)

 

(420)

 

(1)

 

(10,975)

Exchange differences

 

(199)

 

(610)

 

(75)

 

(3)

 

(887)

December 31, 2017

 

3,661

 

6,267

 

1,256

 

19

 

11,203

Carrying amounts, December 31, 2017

 

3,045

 

2,379

 

465

 

1,744

 

7,633

Carrying amounts, December 31, 2016

 

4,754

 

5,224

 

612

 

2,524

 

13,114

Including impairment loss reversals of €13 million, net impairment losses totaling €50 million were recognized on property, plant and equipment in the Pharmaceuticals (€23 million), Consumer Health (€8 million), and Crop Science (€25 million) segments, as well as All Other Segments (€1 million), while impairment loss reversals were recognized for Covestro (€7 million).

In 2017, borrowing costs of €31 million (2016: €31 million) were capitalized as components of the cost of acquisition or construction of qualifying assets, applying an average interest rate of 2.5% (2016: 2.5%).

Capitalized property, plant and equipment included assets with a total net value of €231 million (2016: €471 million) held under finance leases. The cost of acquisition or construction of these assets as of the closing date totaled €368 million (2016: €867 million). They comprised buildings with a carrying amount of €98 million (2016: €146 million), plant installations and machinery with a carrying amount of €75 million (2016: €191 million), and other property, plant and equipment with a carrying amount of €58 million (2016: €134 million). For information on the liabilities arising from finance leases, see Note “Financial Liabilities”.

In 2017, rental payments of €385 million (2016: €346 million), excluding Covestro, were made for assets held under operating leases as defined in IAS 17 (Leases).

Lease payments of €1 million are expected to be received in 2018 from operating leases – as defined in IAS 17 (Leases) – pertaining to property, plant and equipment, excluding the investment property stated below. Lease payments totaling €1 million are expected to be received between 2019 and 2022 and lease payments totaling €0 million after 2022.

Investment property

The fair values of investment property are mainly determined using the income approach based on internal valuations for buildings and developed sites, and using the market comparison approach for undeveloped sites.

The total carrying amount of investment property as of December 31, 2017, was €97 million (December 31, 2016: €136 million). The fair value of this property was €336 million (2016: €507 million). The rental income from investment property was €14 million (2016: €11 million), and the operating expenses directly allocable to this property amounted to €4 million (2016: €5 million). A further amount of €1 million (2016: €1 million) in operating expenses was directly allocable to investment property from which no rental income was derived.

Changes in property, plant and equipment in 2016 were as follows:

Changes in Property, Plant and Equipment (Previous Year)

 

 

Land and buildings

 

Plant installations and machinery

 

Furniture, fixtures and other equipment

 

Construction in progress and advance payments

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

Cost of acquisition or construction, December 31, 2015

 

9,685

 

19,418

 

2,142

 

2,295

 

33,540

Acquisitions

 

 

 

 

 

Capital expenditures

 

248

 

369

 

206

 

1,441

 

2,264

Retirements

 

(69)

 

(262)

 

(158)

 

(9)

 

(498)

Transfers

 

407

 

698

 

82

 

(1,187)

 

Transfers (IFRS 5)

 

(14)

 

(4)

 

(1)

 

(1)

 

(20)

Divestments / changes in the scope of consolidation

 

 

 

 

 

Inflation adjustment (IAS 29)

 

3

 

1

 

 

 

4

Exchange differences

 

86

 

115

 

26

 

12

 

239

December 31, 2016

 

10,346

 

20,335

 

2,297

 

2,551

 

35,529

Accumulated depreciation and impairment losses, December 31, 2015

 

5,255

 

14,303

 

1,578

 

29

 

21,165

Retirements

 

(49)

 

(245)

 

(139)

 

(6)

 

(439)

Depreciation and impairment losses in 2016

 

334

 

936

 

235

 

5

 

1,510

Depreciation

 

314

 

927

 

234

 

 

1,475

Impairment losses

 

20

 

9

 

1

 

5

 

35

Impairment loss reversals

 

 

 

 

 

Transfers

 

5

 

(4)

 

 

(1)

 

Transfers (IFRS 5)

 

(2)

 

(1)

 

(1)

 

 

(4)

Divestments / changes in the scope of consolidation

 

 

 

 

 

Exchange differences

 

49

 

122

 

12

 

 

183

December 31, 2016

 

5,592

 

15,111

 

1,685

 

27

 

22,415

Carrying amounts, December 31, 2016

 

4,754

 

5,224

 

612

 

2,524

 

13,114

Carrying amounts, December 31, 2015

 

4,430

 

5,115

 

564

 

2,266

 

12,375

Compare to Last Year