Property, plant and equipment
x € 1 million | Land and buildings | Machinery and equipment | Regulated | Other operating assets | Assets under construction | Total |
|---|---|---|---|---|---|---|
Historical cost as at 1 January 2019 | 29 | 41 | 10,051 | 49 | 6 | 10,176 |
Investments | 40 | 3 | 590 | 8 | 3 | 644 |
Disposals | - | -1 | -28 | - | - | -29 |
Reclassification from / to assets held for sale | - | -1 | - | - | - | -1 |
Reclassification other | 1 | 1 | -6 | 6 | -3 | -1 |
Historical cost as at 31 December 2019 | 70 | 43 | 10,607 | 63 | 6 | 10,789 |
Investments | 1 | 2 | 613 | 2 | 1 | 619 |
Disposals | -2 | - | -36 | - | - | -38 |
Reclassification other | - | -2 | 9 | -1 | -6 | - |
Historical cost as at 31 December 2020 | 69 | 43 | 11,193 | 64 | 1 | 11,370 |
Accumulated depreciation and impairment as at 1 January 2019 | 12 | 16 | 3,702 | 40 | - | 3,770 |
Annual depreciation and impairment | 3 | 4 | 278 | 4 | - | 289 |
Disposals | - | -1 | -23 | - | - | -24 |
Reclassification other | -1 | 3 | -1 | - | - | 1 |
Accumulated depreciation and impairment as at 31 December 2019 | 14 | 22 | 3,956 | 44 | - | 4,036 |
Annual depreciation and impairment | 3 | 4 | 288 | 5 | - | 300 |
Disposals | - | - | -25 | - | - | -25 |
Reclassification other | - | -3 | 7 | -2 | - | 2 |
Accumulated depreciation and impairment as at 31 December 2020 | 17 | 23 | 4,226 | 47 | - | 4,313 |
Net book value as at 31 December 2019 | 56 | 21 | 6,651 | 19 | 6 | 6,753 |
Net book value as at 31 December 2020 | 52 | 20 | 6,967 | 17 | 1 | 7,057 |
- * Regulated networks also comprises assets under construction.
The net book value of property, plant and equipment increased by € 304 million compared with the preceding year. Stedin Group's investments in property, plant and equipment amounted to € 619 million and related mainly to the regulated gas and electricity grids as well as to the large-scale offer and installation of smart meters. The disposals related to asset retirements (especially the machinery and equipment in the regulated domain).
Regulated grids also comprise assets under construction. An amount of € 5 million in interest was capitalised in 2020 on the assets under construction, applying an interest rate of 2.3% (2019: € 3 million, at 2.5%).
Regulated networks are measured at the revalued amount, i.e. the fair value at the date of the revaluation (NRAV) less accumulated depreciation and impairment.
Other property, plant and equipment is recognised at cost less accumulated depreciation and impairment.
The main data used to measure fair value are:
Parameters for measuring fair value of regulated networks | |
|---|---|
Valuation method (ACM) | Income approach derived from indexed value of regulated assets (NRAV) |
Cash flow horizon for networks in years | Remaining term of regulated networks |
WACC (ACM) applied in percent | 4.04% |
Date of change of WACC (ACM) | 2021 |
Market share of Stedin Group in the Netherlands (ACM) in percent | Electricity transmission 24% and gas distribution 26% |
The most recent revaluation took place in 2017. There were no changes in the valuation methodology in 2020. The fair value of the grids (NRAV) will be reassessed in 2021, when the new regulation information from the ACM will be available. In 2021, the ACM will publicly disclose this information again, as a result of which the unobservable parameters for fair value measurement of 'level 3' in IFRS 13 will be 'objective market data' again for Stedin Group for that moment.
In 2021, the ACM is reviewing how to treat the current regulatory payments for the existing gas grid. In doing so, it considers both alternative utilisation of the gas grid and the affordability of the charges. Under the current regulatory rules, if the number of users decreases, the investments will be apportioned among fewer users, resulting in a higher tariff and therefore more costs for individual users. Stedin considers the current depreciation periods of 25 years to be appropriate for the expected useful lives on the basis of the existing utilisations and the current regulatory regime. As soon as an alternative utilisation of the gas grid, an accelerated removal or a change in the payments structure becomes clear, this may lead to a different assessment of useful life, and depreciation charges may change in the future.
As described in 'Removing gas connections' in note 24 Other provisions, Stedin will accelerate the removal of gas connections that are 'out of operation'. The accelerated removal affects the estimated remaining useful life of the connections concerned. This situation did not affect the 2019 and 2020 results.
In 2020, an impairment occurred in respect of the building in Delft, of €2 million, as its recoverable amount had decreased. In 2020, the useful life of the GPRS smart meters was revised, resulting in higher depreciation of around €6 million in the 2020 financial year. The annual impact on the future periods is less than € 6 million.
As at 31 December 2020, the book value of regulated grids at historical cost was € 6,191 million (31 December 2019: € 5,850 million).
