Property, plant and equipment

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Land and buildings

Machinery and equipment

Regulated networks

Other operating assets

Assets under construction

Total

Cost

At 1 January 2012

69

2,153

6,820

127

179

9,348

Investments

8

41

357

15

289

710

Acquisitions

9

32

6

47

Disposals

– 2

– 8

– 9

– 4

– 7

– 30

Reclassification from / to assets held for sale

43

– 2

1

– 2

40

Reclassification other

5

76

45

– 126

At 31 December 2012

132

2,292

7,168

184

339

10,115

Investments

37

422

6

381

846

Acquisitions

2

2

Disposals

– 5

– 15

– 14

– 1

– 11

– 46

Reclassification to assets held for sale

– 40

– 2

– 137

– 179

Reclassification other

– 2

264

8

4

– 273

1

At 31 December 2013

85

2,576

7,447

193

438

10,739

Accumulated depreciation and impairment

At 1 January 2012

23

606

2,306

86

1

3,022

Annual depreciation and impairment

– 6

184

207

14

399

Acquisitions

1

1

Disposals

– 1

– 4

– 4

– 3

– 1

– 13

Reclassification from / to assets held for sale

29

– 2

1

28

Reclassification other

5

3

8

At 31 December 2012

50

785

2,509

101

3,445

Annual depreciation and impairment

12

188

213

14

2

429

Disposals

– 5

– 14

– 8

– 27

Reclassification to assets held for sale

– 33

– 53

– 86

Reclassification other

– 1

3

– 3

1

At 31 December 2013

24

958

2,664

112

3

3,761

Carrying amount

At 31 December 2012

82

1,507

4,659

83

339

6,670

At 31 December 2013

61

1,618

4,783

81

435

6,978

Regulated networks

The regulated networks category also includes non-regulated assets required for cash generation in the regulated domain and, therefore, for gas and electricity distribution and transmission activities. Regulated network activities are subject to regulation by the Office of Energy Regulation of the Netherlands Authority for Consumers and Markets (ACM).

Fair value of regulated networks 

The information for measuring the regulated networks (some 95% of the total fair value) is covered by ‘level 1’ in the fair value hierarchy. These measurement models use observable market prices, being Regulated Asset Value tariffs set by the government, and there is a principal market for purchasing and selling these types of assets at Regulated Asset Value tariffs.

At 31 December 2013, the carrying amount of the regulated networks at historical cost was € 3,629 million (2012: € 3,449 million).

Capitalised interest

During the reporting period, € 15 million (2012: € 8 million) of attributable interest was capitalised for property, plant and equipment as required by the relevant reporting standards. The capitalisation rate for interest in 2013 was 4.7% (2012: 4.6%)

Assets under construction

Assets under construction were mainly wind farms, the Gasspeicher gas storage facility and the 'Leiding over Noord' project.

Lease-and-leaseback transactions

Between 1997 and 2000, lease-and-leaseback transactions were entered into for a large part of the gas, electricity and district heating networks. Eneco retained legal and economic ownership of these networks. See Note 30 for further information on these transactions.

Impairment

In 2013, the Electricity cash-generating unit, which includes all electricity-related assets, was subdivided by country into the Netherlands and Belgium (combined), United Kingdom and France, as this new structure is more closely in line with management control and the independence of the cashflows. At year-end 2013, management performed an impairment analysis of the Property, plant and equipment and Intangible assets of the Netherlands and Belgium Electricity cash-generating unit, which includes all the electricity-related operations in these countries, principally because of the deterioration in the relationship between future gas and electricity prices in combination with the low price of CO2 which continued in 2013. The analysis established that the value in use of these assets was lower than their carrying amount, which was based on expected future cash flows in Eneco’s long-term plans. The pre-tax discount rate, which reflects the risks of the activities, was 9% (2012: 9%). No account was taken of long-term growth. Based on this analysis, the management applied impairment of € 60 million and € 8 million proportionately to the Property, plant and equipment and Intangible assets of the Netherlands and Belgium Electricity cash-generating unit. These amounts were recognised in the income statement in Depreciation and impairment of property, plant and equipment and Amortisation and impairment of intangible assets.

The calculation of the value in use of electricity-related assets is most sensitive to the following assumptions: the discount rate, the growth figure applied for extrapolating cash flows beyond the 5-year plan and the average life of the assets. Of these factors, the discount rate is the most sensitive and an adjustment of 0.5 percentage points would change the impairment by some € 38 million.