13. Property, plant and equipment

     2015 2014
Group     Cost
Rm		 Accumulated
depreciation
and write-offs
Rm		 Carrying
value before
impairment
Rm		   Cost
Rm		 Accumulated
depreciation
and write-offs
Rm		 Carrying
value before
impairment
Rm		 Impairment
Rm		 Carrying
value
Rm		  

Freehold land and buildings		     6 406 (4 320) 2 086   6 515 (4 205) 2 310 – 2 310  
Leasehold buildings     432 (360) 72   551 (460) 91 – 91  
Network equipment     68 298 (50 205) 18 093   65 798 (47 725) 18 073 – 18 073  
Support equipment     4 552 (3 460) 1 092   4 303 (2 957) 1 346 (392) 954  
Furniture and office equipment     239 (200) 39   301 (243) 58 – 58  
Data processing equipment and software     4 579 (3 657) 922   4 634 (3 675) 959 – 959  
Under construction     1 929 – 1 929   2 530 – 2 530 – 2 530  
Other     537 (383) 154   552 (404) 148 – 148  
      86 972 (62 585) 24 387   85 184 (59 669) 25 515 (392) 25 123  

      2015 2014
Company     Cost
Rm		 Accumulated
depreciation
and write-offs
Rm		 Carrying
value before
impairment
Rm		   Cost
Rm		 Accumulated
depreciation
and write-offs
Rm		 Carrying
value before
impairment
Rm		 Impairment
Rm		 Carrying
value
Rm		  

Freehold land and buildings		     6 406 (4 320) 2 086   6 515 (4 205) 2 310 – 2 310  
Leasehold buildings     432 (360) 72   432 (341) 91 – 91  
Network equipment     68 181 (50 148) 18 033   65 514 (47 626) 17 888 – 17 888  
Support equipment     4 550 (3 459) 1 091   4 302 (2 956) 1 346 (392) 954  
Furniture and office equipment     236 (198) 38   281 (230) 51 – 51  
Data processing equipment and software     4 573 (3 653) 920   4 452 (3 586) 866 – 866  
Under construction     1 929 – 1 929   2 652 – 2 652 – 2 652  
Other     536 (382) 154   550 (401) 149 – 149  
      86 843 (62 520) 24 323   84 698 (59 345) 25 353 (392) 24 961  

Fully depreciated assets with a cost of R989 million (2014: R3 679 million) were derecognised in the current financial year. This has reduced both the cost price and accumulated depreciation of property, plant and equipment.

The company capital expenditure under property, plant and equipment relates to expansions of R1 354 million and maintenance of R2 663 million (2014 expansions: R2 109 million and maintenance: R3 559 million).

A total of 62 properties (2014: 55 properties) were held for sale as at the end of the current financial year. These assets have a total net book value of R4.9 million (2014: R4.4 million) with a total market value of R159.6 million (2014: R251.9 million) as at the end of the current financial year. The accumulated depreciation on these assets is R9.8 million (2014: R11.4 million). These properties are being sold because they do not form part of the group’s core business.

Property, plant and equipment with a carrying value of R58 million (2014: R73 million) has been pledged as security. Details of the loans are disclosed in note 28.

The carrying amounts of property, plant and equipment can be reconciled as follows:

Group     Carrying value at beginning of year
Rm		 Additions
Rm		 Transfer to disposal group
Rm		 Transfers*
Rm		 Disposals
Rm		 Deprecia-tion
Rm		 Write-offs
Rm		 Carrying value before impairment
Rm		 Impai-rment**
Rm		 Carrying value at
end of year
Rm		  
2015                          
Freehold land and buildings     2 310 138 – (118) (7) (205) (32) 2 086 – 2 086  
Leasehold buildings     91 – (1) 1 – (19) – 72 – 72  
Network equipment     18 073 2 243 – 1 633 (9) (3 747) (100) 18 093 – 18 093  
Support equipment     954 214 – 147 – (219) (4) 1 092 – 1 092  
Furniture and office equipment     58 1 (6) 7 – (18) (3) 39 – 39  
Data processing equipment and software     959 230 (90) 82 – (256) (3) 922 – 922  
Under construction     2 530 1 201 – (1 799) – – (3) 1 929 – 1 929  
Other     148 11 – 33 – (36) (2) 154 – 154  
      25 123 4 038 (97) (14) (16) (4 500) (147) 24 387 – 24 387  
2014                          
Freehold land and buildings     2 398 135 – 13 – (231) (5) 2 310 – 2 310  
Leasehold buildings     113 (3) – – – (19) – 91 – 91  
Network equipment     18 511 2 796 – 728 (17) (3 880) (65) 18 073 – 18 073  
Support equipment     1 089 229 – 225 – (189) (8) 1 346 (392) 954  
Furniture and office equipment     42 3 – 37 – (22) (2) 58 – 58  
Data processing equipment and software     820 183 – 212 – (247) (9) 959 – 959  
Under construction     1 812 2 330 – (1 543) – – (69) 2 530 – 2 530  
Other     96 22 – 60 – (29) (1) 148 – 148  
      24 881 5 695 – (268) (17) (4 617) (159) 25 515 (392) 25 123  

The carrying amounts of property, plant and equipment can be reconciled as follows:

Company     Carrying
value at
beginning
of year
Rm		 Additions
Rm		 Transfers*
Rm		 Disposals
Rm		 Deprecia-
tion
Rm		 Write-offs
Rm		 Carrying
value
before impairment
Rm		 Impair-
ment**
Rm		 Carrying
value at
end of year
Rm
2015                      
Freehold land and buildings     2 310 138 (118) (7) (205) (32) 2 086 – 2 086
Leasehold buildings     91 – – – (19) – 72 – 72
Network equipment     17 888 2 225 1 757 (8) (3 729) (100) 18 033 – 18 033
Support equipment     954 213 146 – (218) (4) 1 091 – 1 091
Furniture and office equipment     51 1 7 – (18) (3) 38 – 38
Data processing equipment and software     866 229 83 – (255) (3) 920 – 920
Under construction     2 652 1 201 (1 921) – – (3) 1 929 – 1 929
Other     149 11 32 – (36) (2) 154 – 154
      24 961 4 018 (14) (15) (4 480) (147) 24 323 – 24 323
2014                      
Freehold land and buildings     2 398 135 13 – (231) (5) 2 310 – 2 310
Leasehold buildings     113 (3) – – (19) – 91 – 91
Network equipment     18 327 2 772 733 (16) (3 863) (65) 17 888 – 17 888
Support equipment     1 089 229 225 – (189) (8) 1 346 (392) 954
Furniture and office equipment     36 1 37 – (21) (2) 51 – 51
Data processing equipment and software     719 182 212 – (238) (9) 866 – 866
Under construction     1 939 2 330 (1 548) – – (69) 2 652 – 2 652
Other     95 22 60 – (27) (1) 149 – 149
      24 716 5 668 (268) (16) (4 588) (159) 25 353 (392) 24 961

The group does not have temporarily idle property, plant and equipment.

47% of capital expenditure relates to the expansion of existing networks and services. 29% of capital expenditure contributed to the new next generation network programme. The balance of 24% capital expenditure is mainly attributable to investment in submarine cable systems, network evolution initiatives, sustainment programmes, IT and OSS systems and property upgrade and growth projects. An extensive build programme that provides capacity for growth in services, focusing on next generation network and mobile technologies, is expected to continue over the next few years.

An amount of R7.9 million (2014: R15.9 million) under property, plant and equipment disposals relates to the sale of customer premises equipment in terms of a finance lease.

Changes to the estimated useful lives on property, plant and equipment were necessary due to the transformation programme and the group policies and procedures, resulting in an increase in the depreciation by a further R257 million (2014: R1 193 million).

* The group and company has a process of determining whether an asset which incorporates both a tangible and an intangible element, should be recognised as tangible or intangible assets, based on management’s judgement and on facts available and the significance of each element to the total value of the asset. Assets with a carrying value to the net amount of R14 million (2014: R268 million) for company and group were reclassified from property, plant and equipment to intangible assets in the current year.
** The amount impaired for support equipment relates to assets transferred from inventory to property, plant and equipment. The assets relate to an asset class previously impaired and thus had to be assessed for impairment in the prior financial year. As there are no future cash flows related to these assets, the recoverable amount based on value in use was assessed as Rnil and the assets were impaired.