18. Property, plant and equipment
| Group | |||||||
| 2006 | Investment properties £m |
Freehold premises £m |
Long leasehold premises £m |
Short leasehold premises £m |
Computers and other equipment £m |
Operating lease assets £m |
Total £m |
| Cost or valuation: | |||||||
| At 1 January 2006 | 4,347 | 2,681 | 338 | 1,045 | 3,310 | 11,569 | 23,290 |
| Currency translation and other adjustments | 14 | (38) | (1) | (29) | (98) | (587) | (739) |
| Reclassifications | — | (6) | (9) | 12 | — | 3 | — |
| Additions | 632 | 295 | 26 | 266 | 553 | 2,551 | 4,323 |
| Expenditure on investment properties | 16 | — | — | — | — | — | 16 |
| Change in fair value of investment properties | 486 | — | — | — | — | — | 486 |
| Disposals and write-off of fully depreciated assets | (610) | (353) | (44) | (40) | (693) | (1,947) | (3,687) |
| Disposals of subsidiaries | — | — | — | — | (3) | — | (3) |
| At 31 December 2006 | 4,885 | 2,579 | 310 | 1,254 | 3,069 | 11,589 | 23,686 |
| Accumulated depreciation and amortisation: | |||||||
| At 1 January 2006 | — | 390 | 121 | 319 | 1,891 | 2,516 | 5,237 |
| Currency translation and other adjustments | — | (2) | — | (11) | (41) | (95) | (149) |
| Reclassifications | — | 4 | (7) | 3 | — | — | — |
| Disposals and write-off of fully depreciated assets | — | (5) | (26) | (15) | (539) | (528) | (1,113) |
| Disposals of subsidiaries | — | — | — | — | (2) | — | (2) |
| Depreciation charge for the year | — | 59 | 8 | 78 | 361 | 787 | 1,293 |
| At 31 December 2006 | — | 446 | 96 | 374 | 1,670 | 2,680 | 5,266 |
| Net book value at 31 December 2006 | 4,885 | 2,133 | 214 | 880 | 1,399 | 8,909 | 18,420 |
| Group | |||||||
| 2005 | Investment properties £m |
Freehold premises £m |
Long leasehold premises £m |
Short leasehold premises £m |
Computers and other equipment £m |
Operating lease assets £m |
Total £m |
| Cost or valuation: | |||||||
| At 1 January 2005 | 4,162 | 2,878 | 404 | 842 | 3,143 | 9,447 | 20,876 |
| Currency translation and other adjustments | (55) | 17 | 11 | 18 | 67 | 469 | 527 |
| Reclassifications | (2) | 34 | (31) | — | (1) | — | — |
| Additions | 348 | 331 | 25 | 322 | 597 | 3,136 | 4,759 |
| Expenditure on investment properties | 53 | — | — | — | — | — | 53 |
| Change in fair value of investment properties | 26 | — | — | — | — | — | 26 |
| Disposals and write-off of fully depreciated assets | (176) | (560) | (71) | (127) | (466) | (1,372) | (2,772) |
| Disposals of subsidiaries | (9) | (19) | — | (10) | (30) | (111) | (179) |
| At 31 December 2005 | 4,347 | 2,681 | 338 | 1,045 | 3,310 | 11,569 | 23,290 |
| Accumulated depreciation and amortisation: | |||||||
| At 1 January 2005 | — | 417 | 138 | 280 | 1,831 | 1,782 | 4,448 |
| Currency translation and other adjustments | — | 4 | — | 6 | 31 | 141 | 182 |
| Disposals and write-off of fully depreciated assets | — | (91) | (24) | (29) | (340) | (159) | (643) |
| Disposals of subsidiaries | — | — | — | (2) | (21) | (53) | (76) |
| Depreciation charge for the year | — | 60 | 7 | 64 | 390 | 805 | 1,326 |
| At 31 December 2005 | — | 390 | 121 | 319 | 1,891 | 2,516 | 5,237 |
| Net book value at 31 December 2005 | 4,347 | 2,291 | 217 | 726 | 1,419 | 9,053 | 18,053 |
| 2006 £m |
2005 £m |
|
| Contracts for future capital expenditure not provided for in the accounts at the year end (excluding investment properties and operating lease assets) | 117 | 38 |
| Contractual obligations to purchase, construct or develop investment properties or to repair, maintain or enhance investment properties | 6 | 4 |
| Property, plant and equipment pledged as security | 1,222 | 1,250 |
Investment properties are valued to reflect fair value, that is, the market value of the Group’s interest at the reporting date excluding any special terms or circumstances relating to the use or financing of the property and transaction costs that would be incurred in making a sale. Observed market data such as rental yield, replacement cost and useful life, reflect relatively few transactions involving property that, necessarily, is not identical to property owned by the Group.
Valuations are carried out by qualified surveyors who are members of the Royal Institution of Chartered Surveyors, or an equivalent overseas body. The 31 December 2006 valuation for a significant majority of the Group’s investment properties was undertaken by external valuers.
The fair value of investment properties includes £451 million (2005 – £100 million) of appreciation since purchase.
Rental income from investment properties was £278 million (2005 – £250 million; 2004 – £241 million). Direct operating expenses of investment properties were £54 million (2005 – £61 million; 2004 – £72 million).
Property, plant and equipment, excluding investment properties, include £607 million (2005 – £84 million) assets in the course of construction.
© 2007