Property, Plant and Equipment

Changes in property, plant and equipment in 2016 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, 2015

 

9,685

 

19,418

 

2,142

 

2,295

 

33,540

Changes in scope of consolidation

 

 

 

 

 

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)

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

Changes in scope of consolidation

 

 

 

 

 

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)

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

Impairment losses totaling €35 million were recognized on property, plant and equipment in the reporting segments Consumer Health (€14 million), Pharmaceuticals (€8 million), Covestro (€4 million), Crop Science (€1 million), Animal Health (€1 million) and All Other Segments (€7 million).

In 2016, borrowing costs of €31 million (2015: €33 million) were capitalized as components of the cost of acquisition or construction of qualifying assets, applying an average interest rate of 2.5% (2015: 2.5%).

Capitalized property, plant and equipment included assets with a total net value of €471 million (2015: €533 million) held under finance leases. The cost of acquisition or construction of these assets as of the closing date totaled €867 million (2015: €915 million). They comprised plant installations and machinery with a carrying amount of €191 million (2015: €220 million), buildings with a carrying amount of €146 million (2015: €168 million) and other property, plant and equipment with a carrying amount of €134 million (2015: €145 million). For information on the liabilities arising from finance leases, see the Note “Financial liabilities”.

In 2016, rental payments of €429 million (2015: €263 million) were made for assets leased under operating leases as defined in IAS 17 (Leases).

Lease payments of €3 million are expected to be received in 2017 from operating leases – as defined in IAS 17 (Leases) – pertaining to property, plant and equipment, excluding the investment property stated below. Lease payments totaling €4 million are expected to be received between 2018 and 2021 and lease payments totaling €0 million after 2021.

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, 2016, was €136 million (December 31, 2015: €164 million). The fair value of this property was €507 million (2015: €484 million). The rental income from investment property was €18 million (2015: €13 million), and the operating expenses directly allocable to this property amounted to €11 million (2015: €8 million). A further amount of €3 million (2015: €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 2015 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, 2014

 

9,088

 

18,144

 

2,009

 

2,078

 

31,319

Changes in scope of consolidation

 

 

3

 

1

 

 

4

Acquisitions

 

33

 

2

 

1

 

 

36

Capital expenditures

 

230

 

390

 

239

 

1,309

 

2,168

Retirements

 

(167)

 

(429)

 

(185)

 

(58)

 

(839)

Transfers

 

273

 

797

 

56

 

(1,126)

 

Transfers (IFRS 5)

 

1

 

(64)

 

(4)

 

 

(67)

Inflation adjustment (IAS 29)

 

7

 

2

 

1

 

 

10

Exchange differences

 

220

 

573

 

24

 

92

 

909

December 31, 2015

 

9,685

 

19,418

 

2,142

 

2,295

 

33,540

Accumulated depreciation and impairment losses, December 31, 2014

 

4,940

 

13,426

 

1,482

 

43

 

19,891

Changes in scope of consolidation

 

 

1

 

1

 

 

2

Retirements

 

(101)

 

(397)

 

(156)

 

(72)

 

(726)

Depreciation and impairment losses in 2015

 

317

 

945

 

232

 

38

 

1,532

Depreciation

 

294

 

892

 

230

 

 

1,416

Impairment losses

 

23

 

53

 

2

 

38

 

116

Impairment loss reversals

 

 

(1)

 

 

 

(1)

Transfers

 

 

(1)

 

1

 

 

Transfers (IFRS 5)

 

1

 

(57)

 

(3)

 

 

(59)

Exchange differences

 

98

 

387

 

21

 

20

 

526

December 31, 2015

 

5,255

 

14,303

 

1,578

 

29

 

21,165

Carrying amounts, December 31, 2015

 

4,430

 

5,115

 

564

 

2,266

 

12,375

Carrying amounts, December 31, 2014

 

4,148

 

4,718

 

527

 

2,035

 

11,428