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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
at Fair Value
|At 1 January||56 331||14 204|
|Revaluation adjustment||–||42 669|
|Currency effects||–14 153||–74|
|At 31 December||42 178||56 331|
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
PPE at 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|
|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|
|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|
|Reversal of impairment||–15||–||–||–||–||–||–15|
|Disposals||–||–586||–1 631||–0||–||–||–2 217|
|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|
|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).
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.