Note 3 Property, plant and equipment, and right-of-use assets
Property, plant and equipment
€ million | Land and buildings | Networks | Other plant and equipment | Assets under construction | Total |
As at 1 January 2018 | |||||
Historical cost | 273 | 10,242 | 1,771 | 200 | 12,486 |
Accumulated depreciation and impairments | -101 | -4,626 | -966 | - | -5,693 |
Carrying amount as at 1 January 2018 | 172 | 5,616 | 805 | 200 | 6,793 |
Movements 2018 | |||||
Investments | - | 417 | 167 | 147 | 731 |
Divestments | -3 | -14 | -16 | - | -33 |
Depreciation | -11 | -251 | -111 | - | -373 |
Reclassifications and other movements | 4 | 76 | 45 | -125 | - |
Discontinued consolidations | - | - | -44 | -2 | -46 |
Total | -10 | 228 | 41 | 20 | 279 |
As at 31 December 2018 | |||||
Historical cost | 265 | 10,682 | 1,806 | 220 | 12,974 |
Accumulated depreciation and impairments | -103 | -4,838 | -960 | - | -5,902 |
Carrying amount as at 31 December 2018 | 162 | 5,844 | 846 | 220 | 7,072 |
Movements 2019 | |||||
Investments | 2 | 467 | 165 | 200 | 834 |
Divestments | -7 | -18 | -19 | - | -44 |
Depreciation | -7 | -257 | -112 | - | -376 |
Impairments | -4 | - | -2 | - | -6 |
Reclassification to assets held for sale | -3 | - | - | - | -3 |
Reclassifications and other movements | - | 70 | 64 | -135 | -1 |
Total | -19 | 262 | 96 | 65 | 404 |
As at 31 December 2019 | |||||
Historical cost | 237 | 11,160 | 1,883 | 285 | 13,565 |
Accumulated depreciation and impairments | -94 | -5,054 | -941 | - | -6,089 |
Carrying amount as at 31 December 2019 | 143 | 6,106 | 942 | 285 | 7,476 |
Investments
Investments in property, plant and equipment totalled €834 million (2018: €731 million).
Divestments
Divestment in 2018 and 2019 related to decommissioning of network and other assets.
Discontinued consolidations
There were no discontinued consolidations in 2019. The discontinued consolidations in 2018 relate to the property, plant and equipment of Allego.
Impairments
Impairments of property, plant and equipment in 2019 totalled €6 million and related to business premises (€4 million) and a write-down on assets in Germany (€2 million). For further details of the business premises, reference is made to note [33]. The write-down in Germany relates to operations in the area of public lighting and traffic management systems, for which an impairment test was performed based on the value in use. The value in use was measured on the basis of the most recent business plans. The pre-tax discount rate used is 6.7%. The outcome of the impairment test led to a €2 million write-down on property, plant and equipment.
There were no impairments in 2018.
Reclassification to assets held for sale
For further disclosures with respect to this item, reference is made to note [33].
Cross-border lease transactions
In the period 1998 to 2000, subsidiaries of Alliander N.V. entered into US cross-border leases for networks, in the form of LILO (lease-in lease-out) and SILO (sale-in lease-out) structures.
There were no changes in the existing CBL portfolio in 2019. The three transactions currently remaining relate to gas networks in Friesland, Gelderland, Flevoland, Noord-Holland and Utrecht, district heating networks in Almere and Duiven/Westervoort and the electricity network in the Randmeren region. The networks have been leased for a long period to US parties (head lease), which have in turn subleased the assets to the various Alliander subsidiaries (sublease). At the end of the sublease, there is the option of purchasing the rights of the US counterparty under the head lease, thus ending the transaction. The terms agreed for the subleases expire between 2022 and 2028. The fees earned on the cross-border leases were recognised in the year in which the transaction in question was concluded. There are conditional and unconditional contractual rights and obligations relating to the cross-border leases.
The total net carrying amount of the networks covered by cross-border leases at year-end 2019 was approximately €660 million (year-end 2018: €650 million). At the end of 2019, a total of $2,664 million (2018: $2,786 million) was held on deposit with several financial institutions or invested in securities in connection with these transactions.
Since no powers of disposal exist over the majority of the investments concerned and associated liabilities, these are not regarded as assets and liabilities of Alliander and the respective amounts are not recognised in Alliander’s consolidated financial statements. The investments in securities over which Alliander does have powers of disposal are recognised as financial assets. The associated lease obligations are recognised in lease liabilities.
At the end of 2019, the ‘strip risk’ (the portion of the ‘termination value’ – the possible compensation payable to the American counterparty in the event of premature termination of the transaction – which cannot be settled from the deposits and investments held for this purpose) for all transactions together was $140 million (2018: $200 million). The strip risk is affected to a great extent by market developments.
In connection with the implementation of the Dutch Independent Network Operation Act, the district heating networks belonging to Liander Infra N.V. that had been covered by a cross-border lease were subleased in mid-2008 to Vattenfall Warmte N.V., part of Vattenfall N.V. These operating leases have a term of 12.5 years (term runs to 31 December 2020). The total carrying amount of the subleased heating networks and associated meters as at 31 December 2019 was €87 million (2018: €90 million).
Right-of-use assets
€ million | Land and buildings | Other plant and equipment | Total |
As at 1 January 2019 | |||
Historical cost | 10 | 49 | 59 |
Accumulated depreciation and impairments | - | - | - |
Carrying amount as at 1 January 2019 | 10 | 49 | 59 |
Movements 2019 | |||
Investments | 3 | 20 | 23 |
Divestments | - | -1 | -1 |
Depreciation | -5 | -16 | -21 |
Reclassifications and other movements | -1 | 4 | 3 |
Total | -3 | 7 | 4 |
As at 31 December 2019 | |||
Historical cost | 12 | 72 | 84 |
Accumulated depreciation and impairments | -5 | -16 | -21 |
Carrying amount as at 31 December 2019 | 7 | 56 | 63 |
The biggest part of these assets relates to business premises and lease vehicles. Ground rents and the rental of telecommunication masts and connections are also accounted for in this amount.