(20) Property, plant and equipment
Accounting and measurement policies
Recognition and initial measurement
In the course of determining cost, government grants received within the scope of IAS 20 are deducted. Grants receivable for financial support that are no longer linked to future costs are recognized in profit or loss.
Subsequent measurement
Subsequent measurement is based on amortized cost. Property, plant and equipment is depreciated using the straight-line method over the useful life of the asset concerned and depreciation expenses are allocated to the respective functional costs. Depreciation of property, plant and equipment is based on the following useful lives:
|
|
Useful life |
|---|---|---|
Production buildings |
|
No more than 33 years |
Administration buildings |
|
No more than 40 years |
Plant and machinery |
|
6 to 25 years |
Operating and office equipment, other facilities |
|
3 to 10 years |
The useful lives of the assets are reviewed regularly and adjusted if necessary.
An impairment test is performed if there are indications of impairment. External and internal information is used in this context. In the event of impairment, an impairment loss is recorded under other operating expenses. Impairment losses are reversed to the amortized cost and presented in other operating income if the original reasons for impairment no longer apply.
Significant discretionary decisions and sources of estimation uncertainty
Determination of the useful life and residual value
Assumptions and estimates are required in determining the appropriate useful life and the expected residual value in order to calculate the level of amortization of property, plant and equipment. This applies in particular to the determination of the underlying remaining useful life. In making these estimates, the Group considers the useful lives of the property, plant and equipment derived from past experience.
Identification of a need to recognize impairment loss and reverse impairment loss
Discretionary decisions are required in the identification of objective evidence of impairment as well as in identifying the need to reverse impairment of property, plant and equipment.
€ million |
|
Land, land rights and buildings1 |
|
Plant and machinery1 |
|
Other facilities, operating and office equipment1 |
|
Construction in progress and advance payments to vendors and contractors |
|
Total1 |
||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cost at January 1, 2019 |
|
4,222 |
|
4,330 |
|
1,372 |
|
1,096 |
|
11,019 |
||||
Additions due to business combinations |
|
139 |
|
270 |
|
35 |
|
84 |
|
529 |
||||
Other Additions |
|
190 |
|
45 |
|
57 |
|
812 |
|
1,104 |
||||
Disposals due to divestments/ |
|
– |
|
– |
|
– |
|
– |
|
– |
||||
Other Disposals |
|
-81 |
|
-88 |
|
-46 |
|
-8 |
|
-223 |
||||
Transfers |
|
299 |
|
327 |
|
100 |
|
-713 |
|
14 |
||||
Currency translation difference |
|
47 |
|
26 |
|
13 |
|
8 |
|
95 |
||||
Dec. 31, 2019 |
|
4,816 |
|
4,910 |
|
1,532 |
|
1,278 |
|
12,537 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Accumulated depreciation and impairment losses as of Jan. 1, 2019 |
|
-1,609 |
|
-3,150 |
|
-977 |
|
-4 |
|
-5,740 |
||||
Depreciation |
|
-273 |
|
-284 |
|
-150 |
|
– |
|
-708 |
||||
Impairment losses |
|
-6 |
|
– |
|
– |
|
-1 |
|
-8 |
||||
Reversals of impairment losses |
|
– |
|
– |
|
– |
|
– |
|
– |
||||
Disposals due to divestments/ |
|
– |
|
– |
|
– |
|
– |
|
– |
||||
Disposals |
|
48 |
|
85 |
|
41 |
|
1 |
|
176 |
||||
Transfers |
|
1 |
|
-21 |
|
– |
|
– |
|
-20 |
||||
Currency translation difference |
|
-14 |
|
-19 |
|
-10 |
|
– |
|
-44 |
||||
Dec. 31, 2019 |
|
-1,854 |
|
-3,390 |
|
-1,097 |
|
-4 |
|
-6,345 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Net carrying amounts as of Dec. 31, 2019 |
|
2,962 |
|
1,520 |
|
435 |
|
1,274 |
|
6,192 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Cost as of Jan. 1, 2020 |
|
4,816 |
|
4,910 |
|
1,532 |
|
1,278 |
|
12,537 |
||||
Changes in the scope of consolidation |
|
1 |
|
1 |
|
– |
|
– |
|
2 |
||||
Additions |
|
363 |
|
49 |
|
87 |
|
1,031 |
|
1,530 |
||||
Reclassification to assets held for sale |
|
-66 |
|
-44 |
|
-7 |
|
-1 |
|
-117 |
||||
Disposals |
|
-217 |
|
-62 |
|
-53 |
|
-4 |
|
-336 |
||||
Transfers |
|
249 |
|
510 |
|
142 |
|
-901 |
|
– |
||||
Currency translation difference |
|
-177 |
|
-119 |
|
-52 |
|
-39 |
|
-386 |
||||
Dec. 31, 2020 |
|
4,969 |
|
5,245 |
|
1,649 |
|
1,365 |
|
13,229 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Accumulated depreciation and impairment losses January 1, 2020 |
|
-1,854 |
|
-3,390 |
|
-1,097 |
|
-4 |
|
-6,345 |
||||
Depreciation |
|
-297 |
|
-346 |
|
-175 |
|
– |
|
-818 |
||||
Impairment losses |
|
-5 |
|
-5 |
|
– |
|
-13 |
|
-23 |
||||
Reversals of impairment losses |
|
– |
|
– |
|
– |
|
– |
|
– |
||||
Disposals due to divestments/ |
|
17 |
|
27 |
|
7 |
|
– |
|
51 |
||||
Disposals |
|
85 |
|
44 |
|
43 |
|
1 |
|
174 |
||||
Transfers |
|
1 |
|
– |
|
– |
|
-1 |
|
– |
||||
Currency translation difference |
|
56 |
|
65 |
|
32 |
|
– |
|
153 |
||||
Dec. 31, 2020 |
|
-1,997 |
|
-3,605 |
|
-1,189 |
|
-17 |
|
-6,808 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Net carrying amounts as of Dec. 31, 2020 |
|
2,972 |
|
1,640 |
|
460 |
|
1,348 |
|
6,421 |
||||
|
||||||||||||||
The changes in the scope of consolidation in fiscal year 2020 primarily related to the sale of the Allergopharma allergy business, the sale of Litec-LLL GmbH, Greifswald, and the acquisition of AmpTec GmbH, Hamburg. Detailed information can be found in Note (6) “Acquisitions and divestments”.
The largest individual addition was the acquisition of the previously leased land and buildings of the Life Science Campus in Burlington, United States. Other major individual additions to assets in fiscal year 2020 related to the investment projects shown below:
Business sector |
|
Investment project |
|
Country |
|---|---|---|---|---|
Healthcare |
|
Biotech development system |
|
Switzerland |
Healthcare |
|
Filling and packaging center |
|
Switzerland |
Healthcare |
|
Expansion of research center |
|
United States |
Life Science |
|
Production plant |
|
United States |
Life Science |
|
Filling and logistics center |
|
Germany |
Life Science |
|
Production plant |
|
Germany |
Life Science |
|
Production plant |
|
Ireland |
Life Science |
|
Production plant |
|
United States |
Performance Materials |
|
Laboratory and office building |
|
United States |
Performance Materials |
|
Research center |
|
Germany |
Impairment losses of € 23 million (2019: € 8 million) were recognized in fiscal year 2020. These primarily related to assets under construction and production facilities in the Performance Materials business sector in Germany and Japan.