Property, plant and equipment

Land and buildings

Machinery and equipment

Regulated networks

Other operating assets

Assets under construction

Total

Cost

At 1 January 2011

70

1,553

5,823

145

506

8,097

Revaluation regulated networks

619

619

Investments

4

100

386

3

241

734

Acquisitions

242

1

243

Disposal of consolidated group companies

– 1

– 2

– 3

Disposals

– 3

– 242

– 10

– 31

– 286

Reclassification to assets held for sale

– 19

– 27

– 1

– 47

Reclassification other

18

528

2

10

– 569

– 11

Translation differences

1

1

2

At 31 December 2011

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 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

Accumulated depreciation and impairment

At 1 January 2011

28

623

1,906

104

5

2,666

Revaluation regulated networks

210

210

Annual depreciation and impairment

2

90

193

10

– 4

291

Disposal of consolidated group companies

– 1

– 1

– 2

Disposals

– 2

– 110

– 3

– 29

– 144

Reclassification to assets held for sale

1

1

Reclassification other

– 4

3

1

At 31 December 2011

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 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

Carrying amount

At 31 December 2011

46

1,547

4,514

41

178

6,326

At 31 December 2012

82

1,507

4,659

83

339

6,670

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 Competition Authority (NMa).

Fair value of networks in the regulated domain

The fair value of networks and network-related assets in the regulated domain was established by an independent external valuer as at 1 January 2010, based on the Regulated Asset Value and related assumptions as used in the regulatory framework. The fair value is derived from a valuation model and not from observable market prices. Measurement is based on a return of 6.2% and future transmission tariffs as set by Office of Energy Regulation. The fair value of the regulated networks fell by € 78 million in 2010, resulting in a fall of € 58 million in the revaluation reserve. Consequently, the depreciation charge fell by € 2.2 million.

The fair value of the regulated networks was reassessed at 1 October 2011. As a result, there were increases in measurement of the regulated network assets of € 409 million, the revaluation reserve of € 307 million and deferred tax liabilities of € 102 million. Consequently, depreciation rose by € 3.0 million in the reporting period. At 31 December 2012, the carrying amount of the regulated networks at historical cost was € 3,449 million (2011: € 3,246 million).

Capitalised interest

During the reporting period, € 8 million (2011: € 23 million) of attributable interest was capitalised for property, plant and equipment as required by the relevant reporting standards. The capitalisation rate for interest in 2012 was 4.6% (2011: 4.8%)

Assets under construction

Assets under construction were mainly the wind farms and Golden Raand biofuel power station.

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 30 for further information on these transactions.

Impairment

At year-end 2012, the management performed an impairment analysis of the electricity-related property, plant and equipment and intangible assets of the Eneco cash-generating unit, principally because of the deterioration in the relationship between gas and electricity prices in combination with the low price of CO2. The analysis established that the carrying amount of these assets was higher than the value in use, which was based on expected future cash flows. These cash flows are based on Eneco’s long-term plans. The pre-tax discount rate which reflects the risks of the activities was 9% (2011: 9%). No account was taken of long-term growth. Based on this analysis, the management applied impairment proportionately to the property, plant and equipment and intangible assets of € 65 million and € 13 million respectively. 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 the electricity-related assets is most sensitive to the following assumptions: discount rate, growth figure applied for extrapolating cash flows beyond the 5-year plan and the life of the assets of 25 years. An adjustment of 0.5% to the discount rate would change the impairment by some € 32 million.