Annual Report 2016

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10. Property, plant and equipment

2016

Peatland, drainage and production buildingsLandfillRailway, plantand machineryGenerating assetsFreehold land, administration and research buildingsAssets under constructionTotal
€’000€’000€’000€’000€’000€’000€’000
Cost
At 26 March 2015135,64638,879235,179328,00820,8527,416765,980
Additions3,4263,9557,9605,18768310,91832,129
Disposals/retirements(70)-(4,542)(26)(1,951)-(6,589)
Reclassification(104)-(380)-484--
Transfers from assets under construction5492,8082,5895,6881,556(13,190)-
Transfer of assets held for sale (Note 27)----(2,748)-(2,748)
Exchange adjustments--(49)-(2)-(51)
At 30 March 2016139,44745,642240,757338,85718,8745,144788,721
Depreciation and impairment
At 26 March 2015108,73629,439194,22280,24711,571-424,215
Depreciation charge6,8646,41512,88219,398687-46,246
Reclassification630-(90)-(540)--
Impairment87-83122,725--23,643
Disposals/retirements--(4,364)(5)(1,054)-(5,423)
Transfer of assets held for sale (Note 27)----(780)-(780)
Exchange adjustments--(46)-(2)-(48)
At 30 March 2016116,31735,854203,435122,3659,882-487,853
Carrying Amount
At 30 March 201623,1309,78837,322216,4928,9925,144300,868
At 25 March 201526,9109,44040,957247,7619,2817,416341,765

2015

Peatland, drainage and production buildingsLandfillRailway, plant and machineryGenerating assetsFreehold land, administration and research buildingsAssets under constructionTotal
€’000€’000€’000€’000€’000€’000€’000
Cost
At 27 March 2014133,45935,222232,494159,94617,651115,030693,802
Additions2,1001,6967,0943,2242,91056,22873,252
Disposals/retirements--(1,394)(117)--(1,511)
Reclassification--(4,465)4,465---
Transfers from assets under construction871,9611,303160,490-(163,841)-
Exchange adjustments--147-290-437
At 26 March 2015135,64638,879235,179328,00820,8517,417765,980
Depreciation and impairment
At 27 March 2014100,24923,858181,97664,07710,935-381,095
Depreciation charge8,4875,58113,52116,099495-44,183
Impairment--151-88-239
Disposals/retirements--(1,336)(117)--(1,453)
Reclassification--(188)188---
Exchange adjustments--98-53-151
At 26 March 2015108,73629,439194,22280,24711,571-424,215
Carrying amount
At 26 March 201526,9109,44040,957247,7619,2807,417341,765
At 27 March 201433,21011,36450,51895,8696,716115,030312,707

Reclassification – During the prior year the landfill gas generation engines that generate electricity from recovered gas within the landfill were reclassified from plant to generating assets.

Additions include:

(i) A sum of €3,199,000 (2015: €5,349,000) in respect of decommissioning and restoration assets.

(ii) There was no capitalisation of borrowing costs in the current year (2015: €3,062,000 at a rate of interest of 7.3%) in respect of assets in the course of construction during the year.

(iii) Transfers from assets under construction includes plant constructed in-house and engineered landfill cells which became operational during the year. The balance at year-end represents engineered landfill cells and in-house machinery construction.

No property, plant and equipment is held as security for any loans or borrowings of the Group. The unsecured loan notes do however, restrict the Group from selling more than 16% of the Groups gross assets without prior consent.

In accordance with the Group’s accounting policies, the Directors undertake an annual review of the carrying amount of all property, plant and equipment at the reporting date to determine whether there is any indication of impairment.

An impairment review has been carried out on assets displaying indications of impairment by comparing the net present value of future cash flows to their carrying value as at 30 March 2016. An impairment loss of €22.7 million (2015: nil) has been recognised in the income statement in respect of two Power plants. The impairment has arisen as a result of adverse changes to the projected Irish Wholesale Electricity Price curve, projected capacity payments and expected changes to the I-SEM market that will come into effect in 2018. The key assumptions used in the impairment calculation were:

(i) Irish Wholesale Electricity price curve

(ii) Expected capacity payments

(iii) Carbon prices

(iv) Biomass prices

(v) Peat prices

(vi) Planning permission will be granted to the co-fired power station

If the discount rate was to increase by 1% the impairments on both plants would increase by €2.5 million; if capacity payments were to reduce by 5% the impairment on both plants would increase by €2.4 million: and if SMP prices were to decrease by a further 5% the impairment would increase by €4.2 million.

An impairment loss of €0.9m has been recognised in the income statement in respect of Fuel’s Production Plant. The impairment has arisen as a result the impending nationwide ban on bituminous coal and the result of surplus production capacity.

In determining an asset’s recoverable amount the directors are required to make judgements, estimates and assumptions that impact on the carrying value of the property, plant and equipment. The estimates and assumptions used are based on historical experience, industry knowledge and other factors that are believed to be reasonable based on information available.