Annual report 2012

14. Property, plant and equipment (PPE)

Land, buildings and cables lines are carried at fair value, whereas other items of property, plant and equipment are stated at cost.

Land and buildings were valued by a licensed appraiser to fair value as at 1 October 2012.

For the purpose of appraisal, properties are classified into three groups, taking into account their carrying amount as at the date of appraisal:

  • properties whose carrying amount exceeds EUR 5 million (62% of total carrying amount);
  • properties whose carrying amount ranges from EUR 1 million to EUR 5 million; and
  • properties whose carrying amount is up to EUR 1 million.

As defined within the International Valuation Standards, all three valuation methods (i.e. market value method, discounted cash flow method, and cost method) were applied for properties whose carrying amount exceeds EUR 5 millions. In case of properties with a value ranging from EUR 1 million to EUR 5 million, the market value method and the cost method were applied, while the market value method was used for properties worth less than EUR 1 million. Taking into account the purpose for which the asset is used, the fair value hierarchy was applied for each asset separately.

The value of land and buildings decreased according to the appraiser's report by EUR 4,223 thousand. A related impairment was recorded through profit or loss in the amount of EUR 1,919 thousand, as well as lower revaluation reserves by EUR 2,304 thousand and a reversal of deferred taxes in the amount of EUR 345 thousand.

Cable lines were valued by a licensed appraiser as at 1 January 2010 using the depreciated replacement cost method as no comparable prices are available for these assets.

In 2012, significant increases in property, plant and equipment primarily included the acquisition of real estate and cable lines amounting to EUR 10,405 thousand, construction and modernisation of the cable network in the amount of EUR 8,040 thousand,  acquisition of telecommunications equipment and other equipment in the amount of EUR 50,070 thousand and other equipment.

As at 31 December 2012, the carrying amount of equipment under finance lease was EUR 2,896 thousand.

Group companies have no limited property rights on property, plant and equipment, which are free of encumbrances.


Movement in property, plant and equipment in 2012

1 Other transfers comprise transfers between intangible assets and property, plant and equipment, transfers between groups of assets and transfers from inventories.
EUR thousand Land, buildings, cables and lines Cable network Switching exchanges Equipment for mobile telephony Other equipment PPA under con-struction Other Total
Cost                
Balance at 1 Jan 2012 432,347 921,284 281,514 795,412 483,156 49,892 393 2,963,998
Translation to the presentation currency 138 29 24 28,400 -26,984 84 -36 1,655
Revaluation effect – increase 586 0 0 0 0 0 0 586
Revaluation effect – decrease -30,798 0 0 0 0 0 0 -30,798
Additions 113 2,150 0 2,886 13,944 75,884 4 94,981
Transfer from assets under construction 10,405 8,360 3,639 17,038 29,073 -68,515 0 0
Disposal, write-offs -1,140 -3,164 -8,018 -4,297 -19,779 -648 -7 -37,053
Other transfers 1 53,553 0 13 -71,612 16,518 -111 348 -1,291
Balance at 31 Dec 2012 465,204 928,659 277,172 767,827 495,928 56,586 702 2,992,078
Accumulated depreciation                
Balance at 1 Jan 2012 89,355 669,264 262,536 563,540 373,431 11,434 0 1,969,560
Translation to the presentation currency 88 -146 36 13,690 -12,461 0 0 1,207
Revaluation effect -25,989 0 0 0 0 0 0 -25,989
Additions 84 0 0 0 0 0 0 84
Impairment 0 1,364 49 559 1,161 0 0 3,133
Disposals, write-offs -42 -2,151 -7,902 -4,289 -20,041 0 0 -34,425
Depreciation 18,867 28,630 8,080 51,537 38,737 0 0 145,851
Other transfers 1 31,945 0 13 -50,802 14,161 0 0 -4,683
Balance at 31 Dec 2012 114,308 696,961 262,812 574,235 394,988 11,434 0 2,054,738
CARRYING AMOUNT                
Balance at 1 Jan 2012 342,992 252,020 18,978 231,872 109,725 38,458 393 994,438
Balance at 31 Dec 2012 350,896 231,698 14,360 193,592 100,940 45,152 702 937,340


Movement in property, plant and equipment in 2011

1 Other transfers comprise transfers between intangible assets and property, plant and equipment, transfers between groups of assets and transfers from inventories.
EUR thousand Land, buildings, cables and lines Cable network Switching exchanges Equipment for mobile telephony Other equipment PPA under con-struction Other Total
Cost                
Balance at 1 Jan 2011 424,196 909,338 287,893 776,301 475,403 55,614 937 2,929,682
Translation to the presentation currency -266 -29 -48 -2,398 -243 -143 0 -3,127
Additions 25 3,567 130 1,686 5,185 60,843 67 71,503
Transfer from assets under construction 9,365 10,179 2,337 21,165 24,071 -67,117 0 0
Disposal, write-offs -973 -1,771 -8,798 -1,342 -21,260 695 0 -33,449
Other transfers1 0 0 0 0 0 0 -611 -611
Balance at 31 Dec 2011 432,347 921,284 281,514 795,412 483,156 49,892 393 2,963,998
Accumulated depreciation                
Balance at 1 Jan 2011 72,934 640,451 260,746 487,488 358,741 914 0 1,821,274
Translation to the presentation currency -151 -81 65 -1,498 -163 0 0 -1,828
Revaluation effect 32 0 0 3,724 129 0 0 3,885
Impairment 0 57 66 6,335 0 0 0 6,458
Disposal, write-offs -307 -1,771 -8,672 -1,096 -19,968 0 0 -31,814
Depreciation 15,473 29,620 9,423 55,633 46,374 0 0 156,523
Other transfers 1 1,374 988 908 12,954 -11,682 10,520 0 15,062
Balance at 31 Dec 2011 89,355 669,264 262,536 563,540 373,431 11,434 0 1,969,560
CARRYING AMOUNT                
Balance at 1 Jan 2011 351,262 268,887 27,147 288,813 116,662 54,700 937 1,108,408
Balance at 31 Dec 2011 342,992 252,020 18,978 231,872 109,725 38,458 393 994,438