Note 3 Property, plant, equipment and right-of-use assets

Property, plant and equipment

Investments

Investments in property, plant and equipment totalled €890 million (2019: €834 million).

Divestments

Divestments in 2019 and 2020 related to decommissioning of buildings, network assets and other plant and equipment.

New consolidations

In 2020, TReNT was added to the consolidated group companies. 

Impairments

There were no impairments in 2020. 

In the comparative figures, the impairments 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]. Last year, the write-down in Germany related to operations in the area of public lighting and traffic management systems, for which an impairment test was performed in 2019 based on the value in use. The value in use was measured on the basis of the then most recent business plans. The discount rate used for taxes in 2019 was 6.7%. The outcome of the impairment test led to a €2 million write-down on the fixed assets in 2019.

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 2020. 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 2020 was approximately €680 million (year-end 2019: €660 million). At the end of 2020, a total of $3,112 million (2019: $3,002 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 2020, 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 $72 million (2019: $140 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 N.V. in Duiven-Westervoort and Almere-Stad had been subleased under a cross-border lease for a period of 12.5 years, ending on 31 December 2020. At the end of 2020, Alliander and Vattenfall agreed to extend the sub-subleases on their expiry on 31 December 2020, until 31 December 2024 and 31 December 2025, respectively. The total carrying amount of the subleased heating networks and associated meters as at 31 December 2020 was €82 million (2019: €87 million).

Right-of-use assets

The greatest 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.