Note 7 – Property, Plant and Equipment

Year ended 31 December 2018

million CHF

 

Notes

 

Land

 

Buildings and structures

 

Production facilities

 

Construction in progress

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

1

Includes the Water Care related assets with a net book value of CHF 100 million as well as the building of Lonza’s former Guangzhou (CN) site

At 1 January

 

 

 

96

 

2,023

 

4,588

 

406

 

7,113

Additions

 

 

 

0

 

15

 

93

 

420

 

528

Disposals

 

 

 

0

 

(9)

 

(216)

 

0

 

(225)

Reclassification to asset held for sale1

 

5.2

 

0

 

(102)

 

(83)

 

(14)

 

(199)

Transfers / reclassification

 

 

 

3

 

67

 

190

 

(260)

 

0

Currency translation differences

 

 

 

0

 

(12)

 

(34)

 

(1)

 

(47)

At 31 December

 

 

 

99

 

1,982

 

4,538

 

551

 

7,170

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January

 

 

 

(3)

 

(974)

 

(2,938)

 

0

 

(3,915)

Depreciation charge

 

 

 

0

 

(66)

 

(267)

 

0

 

(333)

Disposals

 

 

 

0

 

9

 

209

 

0

 

218

Impairment losses

 

4

 

0

 

(67)

 

(9)

 

0

 

(76)

Reclassification to asset held for sale1

 

5.2

 

0

 

46

 

20

 

0

 

66

Transfers / reclassification

 

 

 

(1)

 

1

 

0

 

0

 

0

Currency translation differences

 

 

 

0

 

2

 

20

 

0

 

22

At 31 December

 

 

 

(4)

 

(1,049)

 

(2,965)

 

0

 

(4,018)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net carrying amount 31 December

 

 

 

95

 

933

 

1,573

 

551

 

3,152

Year ended 31 December 2017

million CHF

 

Notes

 

Land

 

Buildings and structures

 

Production facilities

 

Construction in progress

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

1

Several years ago local government authorities requested Lonza to close its Guangzhou (CN) manufacturing site. In response, Lonza entered into an agreement with a third-party property development company to develop jointly the original land into commercial properties. According to the agreement, Lonza provided the land and the property development company offered the funds and assumed construction responsibilities. In 2017, Lonza obtained its entitled portion of commercial properties based on the agreement. A non-cash gain of the property fair value was recognized in 2017. The fair value of the property was determined by an independent external property valuation specialist

At 1 January

 

 

 

40

 

1,741

 

3,903

 

374

 

6,058

Additions

 

 

 

7

 

37

 

147

 

236

 

427

Guangzhou (CN) land transaction1

 

 

 

0

 

74

 

0

 

0

 

74

Disposals

 

 

 

(2)

 

0

 

(58)

 

0

 

(60)

Acquisition of subsidiaries

 

 

 

52

 

134

 

381

 

34

 

601

Transfers / reclassification

 

 

 

0

 

25

 

204

 

(229)

 

0

Currency translation differences

 

 

 

(1)

 

12

 

11

 

(9)

 

13

At 31 December

 

 

 

96

 

2,023

 

4,588

 

406

 

7,113

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January

 

 

 

(3)

 

(906)

 

(2,737)

 

0

 

(3,646)

Depreciation charge

 

 

 

0

 

(62)

 

(223)

 

0

 

(285)

Disposals

 

 

 

0

 

0

 

50

 

0

 

50

Impairment losses

 

4

 

0

 

(5)

 

(16)

 

0

 

(21)

Reversal of impairment losses

 

4

 

0

 

1

 

1

 

0

 

2

Currency translation differences

 

 

 

0

 

(2)

 

(13)

 

0

 

(15)

At 31 December

 

 

 

(3)

 

(974)

 

(2,938)

 

0

 

(3,915)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net carrying amount 31 December

 

 

 

93

 

1,049

 

1,650

 

406

 

3,198

Commitments for capital expenditure in property, plant and equipment amounted to CHF 407 million at year-end 2018 (2017: CHF 107 million), mainly related to capital expenditures at the Portsmouth site and for Lonza’s Swiss-based operations. The carrying amount of property, plant and equipment under finance lease contracts at year-end 2018 amounted to CHF 8 million (2017: CHF 9 million). Depreciation relating to property, plant and equipment under finance lease amounted to CHF 0.7 million (2017: CHF 0.7 million). No assets were pledged for security of own liabilities in 2018 and 2017. The Group’s obligation under finance leases is secured by the lessors’ title to the leased assets.

Leases

Lessee

million CHF

 

2018

 

2017

 

 

 

 

 

Finance lease liabilities – minimum lease payments

 

 

 

 

Not later than 1 year

 

2

 

2

Later than 1 year and not later than 5 years

 

5

 

6

Later than 5 years

 

8

 

9

Total future minimum finance lease payments

 

15

 

17

Future finance charges on finance lease payments

 

(4)

 

(5)

Present value of minimum finance lease payments

 

11

 

12

 

 

 

 

 

Present value of finance lease liabilities

 

 

 

 

Not later than 1 year

 

1

 

1

Later than 1 year and not later than 5 years

 

4

 

4

Later than 5 years

 

6

 

7

Present value of minimum finance lease payments

 

11

 

12

 

 

 

 

 

Operating lease liabilities – minimum lease payments

 

 

 

 

Not later than 1 year

 

31

 

36

Later than 1 year and not later than 5 years

 

97

 

75

Later than 5 years

 

121

 

59

Total future minimum operating lease payments

 

249

 

170

Lonza leases a number of vehicles, buildings, warehouses, factory and office facilities under operating leases. These leases run for periods between 1 and 20 years, all with an option to renew the lease after that date. None of the leases includes contingent rentals.

During the year ended 31 December 2018, CHF 42 million (2017: CHF 29 million) was recognized as an expense in the consolidated income statement in respect of operating leases.

The land and building elements of a lease of land and buildings were considered separately for the purpose of lease classification as outlined in IAS 17.

Lessor

There is an operating lease for which Lonza acts as lessor. This lease falls within the scope of IAS 17 and IFRIC 4 guidance. It consists primarily of a biopharmaceutical manufacturing facility in Visp. The future minimum lease payments under non-cancelable operating leases are zero, because the lease payments are pre-financed by the customer.