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 | 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 2019 | 69 | 43 | 11,193 | 64 | 1 | 11,370 |
Investments | 1 | 1 | 667 | 1 | 15 | 685 |
Disposals | -1 | - | -48 | - | - | -49 |
Fair value adjustment for regulated networks | - | - | 382 | - | - | 382 |
Reclassification from / to assets held for sale | - | -5 | - | - | - | -5 |
Reclassification other | 7 | -1 | -14 | 12 | -2 | 2 |
Historical cost as at 31 December 2020 | 76 | 38 | 12,180 | 77 | 14 | 12,385 |
Accumulated depreciation and impairment as at 1 January 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 2019 | 17 | 23 | 4,226 | 47 | - | 4,313 |
Annual depreciation and impairment | 4 | 3 | 313 | 2 | - | 322 |
Disposals | -1 | - | -30 | - | - | -31 |
Fair value adjustment for regulated networks | - | - | 144 | - | - | 144 |
Reclassification from / to assets held for sale | - | -2 | - | - | - | -2 |
Reclassification other | 3 | - | -10 | 11 | - | 4 |
Accumulated depreciation and impairment as at 31 December 2020 | 23 | 24 | 4,643 | 60 | - | 4,750 |
Net book value as at 31 December 2019 | 52 | 20 | 6,967 | 17 | 1 | 7,057 |
Net book value as at 31 December 2020 | 53 | 14 | 7,537 | 17 | 14 | 7,635 |
- * Regulated networks also comprises assets under construction.
The net book value of property, plant and equipment increased by €578 million compared with the preceding year. Stedin Group's investments in property, plant and equipment amounted to €685 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 networks also comprise assets under construction. An amount of €5 million in interest was capitalised in 2021 on these assets under construction, applying an interest rate of 2.3% (2020: €5 million, at 2.3%).
Regulated networks (consisting of grids, connections and meters) 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 regulated assets value (RAV) normalised for market share. |
Cash flow horizon for networks in years | Remaining life of regulated networks |
WACC (ACM) applied in percent | 2.2% - 3.5% |
Date of change of WACC (ACM) | 2021 |
Market share of Stedin Group in the Netherlands (ACM) in percent | Electricity transmission 26% and gas distribution 28% |
A revaluation was made of the regulated networks as per 1 January 2021. In 2021, the ACM publicly disclosed new regulation data, including the indexed regulated asset value and the respective market shares of the grid managers, as a result of which the unobservable parameters for fair value measurement of 'level 3' in IFRS 13 are 'objective market data' again for Stedin Group for that moment. The normalised, indexed asset value of the grids and connections is the main parameter for the valuation. In addition, cash flows were measured with regard to the maintenance of the assets, taking into account the expected developments in the position of Stedin Group in the benchmark and the development of the WACC.
There were no indications that the fair value varied materially from the book value between the revaluation date and year-end. Key parameters for the determination of fair value (in particular, Stedin Group’s market share) are not observable at year-end. These will become objective market data again when the regulation data for the sector are published in 2026.
The metering domain is not covered by the measurement regulation of the ACM. The indexed asset value (of Stedin) is the main parameter for the meters. Information is also available on the parameters that determine the valuation of this category of assets, and a revaluation of these assets was carried out on 31 December 2021. An adjustment has been made in the valuation of the meters for future surplus profits to be repaid in future in an amount of approximately €11 million.
The total fair value of the regulated networks at 1 January 2021 was €5.9 billion.
Stedin assessed the useful life of assets in 2021. No adjustments were necessary.
As described in 'Removing gas connections' in note 25 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 2020 and 2021 results.
As at 31 December 2021, the book value of regulated networks at historical cost, excluding assets under construction, adjusted for customer connection contributions, was €5,1 billion (31 December 2020: €4,8 billion).
For the recognition in group assets, see note 23 Group equity.
