2.4 Movements in property, plant, and equipment

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CHF million

 

Investment properties

 

Machinery and production equipment

 

Buildings

 

Building components

 

Other equipment

 

Assets under construction

 

Land

 

Undeveloped property

 

Assets held under finance leases

 

Property, plant, and equipment for own use

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 31 December 2019

 

196

 

1’414

 

603

 

159

 

230

 

133

 

44

 

4

 

23

 

2’610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

 

39

 

13

 

3

 

9

 

132

 

 

 

 

 

 

 

196

Disposals

 

–19

 

–33

 

–3

 

–1

 

–7

 

 

 

 

 

 

 

 

 

–44

Changes in scope of consolidation

 

 

 

–53

 

 

 

–3

 

–5

 

 

 

 

 

 

 

 

 

–61

Other changes, reclassifications

 

21

 

58

 

42

 

30

 

27

 

–178

 

 

 

 

 

 

 

–21

Translation adjustment

 

–6

 

–38

 

–12

 

–2

 

–5

 

–3

 

–1

 

 

 

–1

 

–62

As of 31 December 2018

 

200

 

1’441

 

563

 

132

 

211

 

182

 

45

 

4

 

24

 

2’602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

2

 

44

 

7

 

5

 

11

 

160

 

5

 

 

 

4

 

236

Disposals

 

–2

 

–159

 

–5

 

–3

 

–10

 

 

 

 

 

 

 

–1

 

–178

Changes in scope of consolidation

 

 

 

–493

 

3

 

–27

 

–19

 

–4

 

 

 

 

 

 

 

–540

Other changes, reclassifications

 

140

 

52

 

–93

 

10

 

11

 

–127

 

–1

 

 

 

4

 

–144

Translation adjustment

 

–5

 

–54

 

–16

 

–3

 

–6

 

–2

 

–2

 

 

 

–1

 

–84

As of 31 December 2017

 

65

 

2’051

 

667

 

150

 

224

 

155

 

43

 

4

 

18

 

3’312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 31 December 2019

 

–119

 

–974

 

–313

 

–83

 

–172

 

–2

 

 

 

 

 

–12

 

–1’556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

–2

 

–79

 

–16

 

–7

 

–16

 

 

 

 

 

 

 

–3

 

–121

Impairment

 

 

 

–8

 

–2

 

 

 

 

 

–2

 

 

 

 

 

 

 

–12

Disposals

 

5

 

32

 

2

 

1

 

6

 

 

 

 

 

 

 

 

 

41

Changes in scope of consolidation

 

 

 

39

 

 

 

2

 

3

 

 

 

 

 

 

 

 

 

44

Other changes, reclassifications

 

–10

 

15

 

9

 

1

 

–13

 

 

 

 

 

 

 

 

 

12

Translation adjustment

 

4

 

26

 

5

 

1

 

3

 

 

 

 

 

 

 

1

 

36

As of 31 December 2018

 

–116

 

–999

 

–311

 

–81

 

–155

 

 

 

 

 

 

 

–10

 

–1’556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

–1

 

–102

 

–18

 

–7

 

–13

 

 

 

 

 

 

 

–2

 

–142

Disposals

 

 

 

93

 

4

 

3

 

10

 

 

 

 

 

 

 

1

 

111

Changes in scope of consolidation

 

 

 

444

 

–1

 

17

 

15

 

 

 

 

 

 

 

 

 

475

Other changes, reclassifications

 

–89

 

3

 

86

 

3

 

 

 

 

 

 

 

 

 

 

 

92

Translation adjustment

 

3

 

36

 

7

 

2

 

4

 

 

 

 

 

 

 

1

 

50

As of 31 December 2017

 

–29

 

–1’473

 

–389

 

–99

 

–171

 

 

 

 

 

 

 

–10

 

–2’142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 31 December 2019

 

77

 

440

 

290

 

76

 

58

 

131

 

44

 

4

 

11

 

1’054

As of 31 December 2018

 

84

 

442

 

252

 

51

 

56

 

182

 

45

 

4

 

14

 

1’046

As of 31 December 2017

 

36

 

578

 

278

 

51

 

53

 

155

 

43

 

4

 

8

 

1’170

The movement in assets under construction is mainly due to ongoing investment projects. This includes the refurbishment of an administration building in Schaffhausen (Switzerland) for GF Piping Systems amounting to CHF 13 million, ongoing investment in the newly built innovation and production center in Biel (Switzerland) and plant expansion in Changzhou (China) for GF Machining Solutions amounting to CHF 9 million each, ongoing investment into the light metal die-casting plant in Mills River (USA) of the joint venture with GF Casting Solutions and Linamar Corporation amounting to CHF 48 million, as well as the transfer of completed projects to other categories of property, plant, and equipment. 

Management assumptions and estimates

The values of non-current assets and intangible assets are reviewed whenever there are indications that their carrying amount may no longer be recoverable, due to changed circumstances or events. If such a situation arises, the recoverable amount is determined. It corresponds to the higher of the discounted value of expected future net cash flows and the expected net selling price. If the recoverable amount is lower than the carrying amount, a corresponding impairment loss is recognized in the income statement. The main assumptions on which these measurements are based include growth rates, margins, and discount rates. The actual future cash flows can differ considerably from discounted projections.

The movements in the line “Changes in scope of consolidation” result from acquisitions and divestments, explained in more detail in note 4.1 (4.1.2 Acquitions and divestments).

Investments in property, plant, and equipment with an effect on liquidity in the 2020–2024 period amount to CHF 78 million. This amount mainly relates to investments for GF Piping Systems division in the amount of CHF 31 million and the GF Casting Solutions division in the amount of CHF 37 million.

The overall movements in the line “Other changes, reclassifications” are explained by the reclassification of a building used for own use to investment property following the divestment of the iron foundry in Herzogenburg, mold and tooling equipment used at production facilities in China that had to be moved from net working capital to property, plant, and equipment as well as demo machines earmarked for sale reclassified to inventories.

In the category investment properties, sale of properties in Garching (Germany) and Schaffhausen (Switzerland) is recorded. The fair value of investment properties, as determined by internal assessments on the basis of capitalized and current market values, is CHF 112 million (previous year: CHF 101 million).

Impairments amounting to CHF 12 million is entirely due to the relocation of production from Werdohl (Germany), started in the second half of 2019.

Management assumptions and estimates

The values of non-current assets and intangible assets are reviewed whenever there are indications that their carrying amount may no longer be recoverable, due to changed circumstances or events. If such a situation arises, the recoverable amount is determined. It corresponds to the higher of the discounted value of expected future net cash flows and the expected net selling price. If the recoverable amount is lower than the carrying amount, a corresponding impairment loss is recognized in the income statement. The main assumptions on which these measurements are based include growth rates, margins, and discount rates. The actual future cash flows can differ considerably from discounted projections.

Accounting principles

Property, plant, and equipment are stated at cost or manufacturing cost less depreciation and impairment. Financing costs of assets under construction are part of the costs of the asset if material. Assets held under finance lease contracts are capitalized at the lower of the present value of the minimum lease payments and fair value. The related outstanding finance lease obligations are presented as liabilities.

Assets are depreciated on a straight-line basis over their estimated useful lives or lease terms:

When components of larger assets have different useful lives, these are depreciated separately. Useful lives and residual values are reviewed annually on the balance sheet date and adjustments are recognized in the income statement. Any gains or losses on the disposal of items of property, plant, and equipment are recognized in the income statement.

Assets held under the terms of a finance lease are described in note 3.3.

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