11. Property, plant and equipment

Accounting policy

Property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses. The cost of self-produced assets includes the cost of materials, direct labour costs, a reasonable portion of the indirect production costs and capitalised borrowing costs. Where relevant, the estimated costs of dismantling and removing the asset and the costs of restoring the site where the asset was located are added to the total cost.

Computer software that is an integral part of the computer equipment is capitalised as part of the equipment in question. Only assets where the Group has beneficial ownership are recognised in the balance sheet.

Gains and losses on the sale of an item of property, plant and equipment are determined by comparing the sales revenue with the carrying amount of the asset, and the net amount is then recognised under ‘Other revenue’ in the income statement.

Components

If property, plant and equipment consist of components with differing useful lives, these components are listed as separate items under property, plant and equipment.

The carrying amount of an item of property, plant and equipment is adjusted for the cost of replacing all or part of that asset when such costs are incurred and if it is likely that the replacement will result in future economic benefits. All other costs of maintaining the asset are charged to the income statement when they are incurred.

Depreciation

Depreciation of property, plant and equipment happens on a straight-line basis, after deducting the residual value and based on the estimated useful life of each individual item of property, plant and equipment. Depreciation is charged to the income statement.

Land is not depreciated, with the exception of street paving. The estimated useful life for different types of property, plant and equipment is as follows.

The specified useful life is an average for the assets concerned and for any components of which those assets consist. The depreciation method, remaining useful life and residual value are reviewed each year.

If a change in use causes an item of property, plant and equipment to be treated as investment property or if an investment property is intended for the company’s own use, it is reclassified to ‘investment property’ or ‘property, plant and equipment’ respectively. Because both categories of non-current assets are measured in the same way, the reclassification is at the carrying amount.