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10. Property, plant and equipment

The carrying amounts of all assets summarized in property, plant and equipment, are as follows:

in thousand EUR   2020   2019
Land   42 178   56 331
Forest roads   4 280   5 460
Buildings and improvements   4 952   5 764
Machinery and vehicles   3 235   3 702
Furniture and fixtures   286   522
Construction in progress   6 065   4 451
Advanced payments for PPE   604   853
Total carrying amounts   61 600   77 083

The Group uses different valuation methods for its assets. Beside the land in Brazil and Gabon, which is presented at fair value according to the revaluation model of IAS 16 Property, Plant and Equipment, the assets are held at cost.

The forests in Brazil are presented separately as biological assets, according to IAS 41 Agriculture and are further detailed in Note 11; as well as the leased assets, presented separately according to IFRS 16 Leases in Note 21.

a. Land at fair value

The land owned by Precious Woods was valued at cost in the past. Since 2019, Precious Woods applies the revaluation model according to IAS 16 Property, Plant and Equipment for all its land assets. Independent valuators performed in 2019 a revaluation of the land in Brazil and Gabon according to the revaluation model of IAS 16.31. The carrying amount for those assets, if the cost model had been applied, would have been EUR 12.2 million (2019: EUR 13.7 million).

Land revaluation Brazil and Gabon

The revaluations in 2019 were performed by BDO Brazil for the land assets in Brazil and by A.N. Dengue for the land assets in Gabon. These valuators are not related to the Group and have recent experience in location and category of the land being valued. The valuation was based on the market value. The sales comparison approach is used to determine market value. This approach consists of comparing the subject land to similar land sold in the recent past in an open market situation, and adjusting the value for market trends. This results in a market value for the land. For 2020, land prices and their fluctuations were reviewed. No major fluctuations were detected, so no new assessments were made.

The fair value measurement for the land has been categorized as a level 2 fair value based on the inputs to the valuation technique used.

Reconciliation of carrying amount of level 2 land revaluation
in thousand EUR   2020
at Fair Value
  2019
at Fair Value
At 1 January   56 331   14 204
Disposals     –468
Revaluation adjustment     42 669
Currency effects   –14 153   –74
At 31 December   42 178   56 331
Accounting policies

The land value is measured at fair value with any changes in value recognized in other comprehensive income under revaluation surplus.

b. Other assets at cost

Beside the land, all other asset categories in property, plant and equipment are held at cost.

in thousand EUR   Forest roads
  Buildings
and
improve-
ments
  Machinery
and vehicles
  Furniture
and fixtures
  Construction
in progress
  Advanced
payments for
PPE
  Total
PPE at cost
Cost
At 1 January 2019   11 448   20 986   29 683   2 192   1 330   2 578   68 218
Additions   150   874   790   120   3 747     5 681
Disposals     –910   –1 693   –0   –42     –2 645
Reclassifications     410   145   28   –583    
Currency effects   –70   –34   –84   –0   –1   –40   –230
At 31 December 2019   11 528   21 326   28 841   2 340   4 451   2 538   71 024
 
Additions     431   695   102   2 766     3 994
Disposals 1     –8 632   –8 617   –1 358   –43     –18 650
Reclassifications     366   673   48   –1 087    
Currency effects   –1 277   –633   –1 634   –81   –22   –741   –4 388
At 31 December 2020   10 252   12 858   19 957   1 051   6 065   1 797   51 980
 
Accumulated depreciation and impairment
At 1 January 2019   5 791   15 457   25 811   1 638     1 066   49 763
Charge for the year   323   712   1 024   180       2 239
Impairment charge             650   650
Reversal of impairment   –15             –15
Disposals     –586   –1 631   –0       –2 217
Currency effects   –31   –21   –65   –0     –31   –148
At 31 December 2019   6 068   15 562   25 138   1 817     1 685   50 272
 
Charge for the year   529   618   818   150       2 116
Reversal of impairment   –40             –40
Disposals 1     –7 881   –7 934   –1 133       –16 948
Currency effects   –586   –393   –1 300   –69     –492   –2 841
At 31 December 2020   5 971   7 906   16 722   765     1 193   32 558
 
Carrying amount
At 31 December 2019   5 460   5 764   3 702   522   4 451   853   20 752
At 31 December 2020   4 280   4 952   3 235   286   6 065   604   19 422
1 Please refer to note 13 for further details about the disposal on PP&E contributed in associate

For certain land acquired by Precious Woods in Brazil, the land title registration is not yet finalized. These transactions are disclosed as advanced payments for property, plant and equipment at historical cost. For advanced payments for land titles with a certain risk of losing the land, an allowance is recorded based on Management’s estimate of the probability of not being able to prove the ownership of the land. Despite the continued efforts to clean the land titles from legal issues, Precious Woods was not able to reclassify in 2020 any advanced payments for property, plant and equipment to land (2019: EUR 0).

Accounting policies

In general, assets in property, plant and equipment are recorded at cost less accumulated depreciation and any impairment in value. Depreciation is applied using the straight-line method over the estimated useful life of the assets as follows:

  • Permanent forest roads 25 years
  • Buildings and improvements 3 to 25 years
  • Machinery and vehicles 4 to 10 years
  • Furniture and fixtures 5 to 10 years

The assets’ residual values and useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate. Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the consolidated statement of profit or loss.