31 JOTUN GROUP 8 PROPERTY, PLANT AND EQUIPMENT MACHINERY, ELECTRICAL VEHICLES AND CONTRUCTION (NOK THOUSAND) LAND BUILDINGS INSTALLATION EQUIPMENT IN PROGRESS TOTAL COST Balance as of 1 January 2015 260 191 2 382 569 187 565 3 240 747 867 964 6 939 036 Additions 59 745 150 946 8 626 294 174 343 367 856 858 Disposals –19 123 –87 181 17 859 –333 241 –18 242 –439 928 Reclassifications 49 668 205 629 5 207 49 526 –310 030 – Foreign currency translation effect 16 231 123 966 6 628 131 675 39 527 318 026 Balance as of 31 December 2015 366 712 2 775 929 225 885 3 382 881 922 586 7 673 992 Additions –35 299 267 454 30 470 391 195 375 743 1 029 562 Disposals –505 –31 311 –970 –127 244 –2 876 –162 905 Reclassifications – 313 368 72 637 35 438 –421 443 – Foreign currency translation effect –21 010 –116 504 –15 888 –147 955 –38 045 –339 401 Balance as of 31 December 2016 309 898 3 208 937 312 134 3 534 315 835 964 8 201 247 DEPRECIATION AND IMPAIRMENT Balance as of 1 January 2015 –5 637 –1 021 662 –57 308 –2 099 915 – –3 184 522 Depreciation –1 323 –131 630 –47 476 –180 443 – –360 872 Depreciation on disposals 144 95 448 1 251 286 219 – 383 062 Impairment – –62 490 –1 572 –14 944 – –79 006 Foreign currency translation effect –79 –31 479 –5 259 –175 618 – –212 435 Balance as of 31 December 2015 –6 895 –1 151 813 –110 365 –2 184 701 – –3 453 774 Depreciation –7 981 –131 841 –34 844 –208 001 – –382 667 Depreciation on disposals – 22 390 970 115 640 – 138 999 Impairment – –92 527 –2 345 –22 255 – –117 127 Foreign currency translation effect 2 050 56 964 21 320 75 562 – 155 896 Balance as of 31 December 2016 –12 826 –1 296 827 –125 264 –2 223 755 – –3 658 673 NET BOOK VALUE Balance as of 31 December 2016 297 071 1 912 110 186 869 1 310 560 835 964 4 542 575 Balance as of 31 December 2015 359 816 1 624 116 115 520 1 198 180 922 586 4 220 218 Property, plant and equipment are depreciated over the following useful lifetimes: ASSET CATEGORY USEFUL LIFE Land infinite Buildings 25–33 years Electrical Installations 10–14 years Machinery 7–10 years Office equipment and furniture 5–7 years Vehicles 4–5 years IT equipment 3 years IMPAIRMENT The impairment charges on property, plant and equipment amounts to NOK 117 million in 2016, and relates to production facilities in Brazil. Jotun Group completed the construction of a new factory in Brazil in 2015. Current operational losses in combination with generally challenging market conditions reducing the projected future cash inflow, led to the impairment. The recoverable amount of the fixed assets is NOK 165 million based on assessment of their value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Separate discount rates for different future periods, varying from 12.7 per cent to 11.6 per cent as the value in use is sensitive to the term structure of interest rates. The period of depreciation is reviewed each year and if there are changes in useful life, depreciation is adjusted. Residual value is estimated and if it is higher than the carrying value, depreciation is stopped. CONSTRUCTION IN PROGRESS A major part of the amount under “Construction in progress” relates to production and warehouse facility projects in Russia, the Philippines, Thailand, Indonesia, Myanmar, Malaysia, Egypt and Norway.
Jotun Annual Report 2016
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