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Financial Statements
18. Property, plant and equipment
Changes in property, plant and equipment in 2007 were as follows:
| Land and buildings | Plant installations and machinery | Furniture, fixtures and other equipment | Construction in progress and advance payments | Total | |
| € million | |||||
| Gross carrying amounts, December 31, 2006 | 7,267 | 12,514 | 1,566 | 971 | 22,318 |
| Changes in the scope of consolidation | 2 | 10 | 1 | 4 | 17 |
| Acquisitions | 28 | 36 | 0 | 5 | 69 |
| Capital expenditures | 117 | 273 | 144 | 1,046 | 1,580 |
| Retirements | (413) | (290) | (167) | (23) | (893) |
| Transfers | 189 | 277 | 93 | (577) | (18) |
| Exchange differences | (191) | (372) | (38) | (64) | (665) |
| Gross carrying amounts, December 31, 2007 | 6,999 | 12,448 | 1,599 | 1,362 | 22,408 |
| Accumulated depreciation and write-downs, December 31, 2006 | 3,670 | 8,703 | 1,049 | 29 | 13,451 |
| Changes in the scope of consolidation | (2) | 3 | - | - | 1 |
| Retirements | (356) | (274) | (142) | (2) | (774) |
| Depreciation and write-downs in 2007 | 370 | 711 | 184 | 5 | 1,270 |
| of which write-downs | 92 | 30 | 3 | 5 | 130 |
| Write-backs | (3) | (8) | (1) | - | (12) |
| Transfers | (28) | 26 | - | - | (2) |
| Exchange differences | (74) | (247) | (21) | (3) | (345) |
| Accumulated depreciation and write-downs, December 31, 2007 | 3,577 | 8,914 | 1,069 | 29 | 13,589 |
| Net carrying amounts, December 31, 2007 | 3,422 | 3,534 | 530 | 1,333 | 8,819 |
Write-downs of property, plant and equipment totaled €130 million, including €109 million related to plant closures under the subgroups’ restructuring programs.
Further capital expenditures were made for the expansion of the production facilities in Caojing, China. The amount of €1.3 billion recorded for construction in progress includes approximately €600 million for this major project alone.
In 2007, borrowing costs of €9 million (2006: €8 million) were capitalized as components of the cost of acquisition or construction of qualifying assets, applying an average financing cost factor of 5 percent (2006: 4.75 percent)
Capitalized property, plant and equipment includes assets with a total net value of €237 million (2006: €273 million) held under finance leases. The gross carrying amounts of these assets total €719 million (2006: €780 million). They principally comprise plant installations and machinery with a carrying amount of €156 million (gross amount: €587 million) and buildings with a carrying amount of €77 million (gross amount: €118 million).
Also included are assets with a carrying amount of €51 million (2006: €48 million) leased to other parties under operating leases as defined in IAS 17 (Leases). The gross carrying amount of assets classified as operating leases is €70 million (2006: €69 million); their depreciation in 2007 amounted to €4 million (2006: €5 million). If under the relevant agreements the lessee is to be regarded as the economic owner of the assets and the lease therefore constitutes a finance lease, a receivable is recognized in the balance sheet in the amount of the discounted future lease payments.
Changes in property, plant and equipment in 2006 were as follows:
Further capital expenditures were made for the expansion of the production facilities in Caojing, China. The amount of €1.3 billion recorded for construction in progress includes approximately €600 million for this major project alone.
In 2007, borrowing costs of €9 million (2006: €8 million) were capitalized as components of the cost of acquisition or construction of qualifying assets, applying an average financing cost factor of 5 percent (2006: 4.75 percent)
Capitalized property, plant and equipment includes assets with a total net value of €237 million (2006: €273 million) held under finance leases. The gross carrying amounts of these assets total €719 million (2006: €780 million). They principally comprise plant installations and machinery with a carrying amount of €156 million (gross amount: €587 million) and buildings with a carrying amount of €77 million (gross amount: €118 million).
Also included are assets with a carrying amount of €51 million (2006: €48 million) leased to other parties under operating leases as defined in IAS 17 (Leases). The gross carrying amount of assets classified as operating leases is €70 million (2006: €69 million); their depreciation in 2007 amounted to €4 million (2006: €5 million). If under the relevant agreements the lessee is to be regarded as the economic owner of the assets and the lease therefore constitutes a finance lease, a receivable is recognized in the balance sheet in the amount of the discounted future lease payments.
Changes in property, plant and equipment in 2006 were as follows:
| Land and buildings | Plant installations and machinery | Furniture, fixtures and other equipment | Construction in progress and advance payments | Total | |
| € million | |||||
| Gross carrying amounts, December 31, 2005 | 7,014 | 12,913 | 1,960 | 910 | 22,797 |
| Changes in the scope of consolidation | 0 | 0 | (1) | 0 | (1) |
| Acquisitions | 784 | 507 | 204 | 87 | 1,582 |
| Capital expenditures | 130 | 369 | 184 | 913 | 1,596 |
| Retirements | (165) | (264) | (204) | (5) | (638) |
| Reclassifications to current assets | (467) | (1,029) | (636) | (80) | (2,212) |
| Transfers | 233 | 487 | 129 | (795) | 54 |
| Exchange differences | (262) | (469) | (70) | (59) | (860) |
| Gross carrying amounts, December 31, 2006 | 7,267 | 12,514 | 1,566 | 971 | 22,318 |
| Accumulated depreciation and write-downs, December 31, 2005 | 3,857 | 9,156 | 1,463 | 0 | 14,476 |
| Changes in the scope of consolidation | 0 | 0 | (1) | - | (1) |
| Retirements | (98) | (237) | (171) | 0 | (506) |
| Reclassifications to current assets | (252) | (678) | (432) | 0 | (1,362) |
| Depreciation and write-downs in 2006 | 276 | 774 | 241 | 31 | 1,322 |
| of which write-downs | 46 | 39 | 9 | 31 | 125 |
| Write-backs | 0 | 0 | 0 | - | 0 |
| Transfers | 4 | 1 | (2) | - | 3 |
| Exchange differences | (117) | (313) | (49) | (2) | (481) |
| Accumulated depreciation and write-downs, December 31, 2006 | 3,670 | 8,703 | 1,049 | 29 | 13,451 |
| Net carrying amounts, December 31, 2006 | 3,597 | 3,811 | 517 | 942 | 8,867 |
The following tables provide an overview of the main sites operated by each subgroup:
| Location | Principal use |
| Bayer HealthCare | |
| Leverkusen, Germany | Formulation and packaging of pharmaceutical products |
| Wuppertal, Germany | Production of active ingredients for ethical pharmaceutical products, research and development |
| Berkeley, California | Production of recombinant Factor VIII |
| Myerstown, Pennsylvania | Formulation and packaging of Consumer Care products |
| Mishawaka, Indiana | Production of instruments for the Diabetes Care Division |
| Bergkamen, Germany | Active ingredient production, administration |
| Berlin, Germany | Production and packaging of contrast media; packaging of solids; research and development; offices |
| Turku, Finland | Production of gynecological and andrological products; solids (oncology); research and development; offices |
| Bayer CropScience | |
| Monheim, Germany | Research and development for fungicides and insecticides; corporate headquarters of Bayer CropScience |
| Frankfurt, Germany | Research and development for herbicides, manufacture of products for Crop Protection and Environmental Science |
| Dormagen, Germany | Development of new production processes and manufacture of products for Crop Protection and Environmental Science |
| Kansas City, Missouri | Development of new production processes and manufacture of products for Crop Protection and Environmental Science |
| Haelen, Netherlands | Research, development and production of vegetable seeds |
| Bayer MaterialScience | |
| Krefeld, Germany | Production of polycarbonates, diphenylmethane diisocyanate, chlorine, sodium hydroxide solution, hydrochloric acid and hydrogen |
| Baytown, Texas | Production of modified isocyanates, polycarbonates, diphenylmethane diisocyanate, toluene diisocyanate, chlorine, sodium hydroxide solution, hydrochloric acid and hydrogen |
| Dormagen, Germany | Production of modified isocyanates, coating resins, polycarbonate film, toluene diisocyanate, polyether, thermoplastic polyurethanes, chlorine, sodium hydroxide solution, hydrochloric acid and hydrogen |
| Antwerp, Belgium | Production of polycarbonates, aniline, nitrobenzene and polyether |
| Brunsbüttel, Germany | Production of diphenylmethane diisocyanate, toluene diisocyanate, chlorine, hydrochloric acid and hydrogen |
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