AIRBUS - 2019 Financial Statements

2.5 Operational Assets and Liabilities Notes to the IFRS Consolidated Financial Statements / 2 (In € million) Balance at 1 January 2018 Exchange differences Additions Changes in consolidation scope Reclassi- fication (1) Disposals (1) Depreciation / Impairment Balance at 31 December 2018 Land, leasehold improvements and buildings, including buildings on land owned by others 5,091 9 84 172 166 (40) (301) 5,181 Technical equipment and machinery 8,066 70 391 69 888 (50) (1,412) 8,022 Other equipment, factory and office equipment 939 10 147 0 50 (15) (229) 902 Construction in progress 2,514 (7) 1,381 11 (1,223) (8) 0 2,668 Total 16,610 82 2,003 252 (119) (113) (1,942) 16,773 (1) Includes property, plant and equipment from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “– Note 7: Acquisitions and Disposals”). Property, plant and equipment increased by €+521 million to €17,294 million (2018: €16,773 million), mainly due to the application of IFRS 16 offset by depreciation in the period. Property, plant and equipment includes right-of-use assets for an amount of € 1,543 million as of 31 December 2019. For details on assets related to lease arrangements on sales financing, see “– Note 27: Sales Financing Transactions”. PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHICAL AREAS (In € million) 31 December 2019 2018 France 7,912 7,630 Germany 4,322 4,281 UK 1,991 2,144 Spain 1,405 1,500 Other countries 1,664 1,218 Total 17,294 16,773 The Company as Lessee The Company leases mainly real estate assets, cars and equipment (such as land, warehouses, storage facilities and offices). Short-term leases and leases of low-value assets refer mainly to IT equipment ( e.g. printers, laptops and mobile phones) and other equipment. The Company incurred interest expense on lease liabilities of € 14 million. The expense in relation to short-term and low-value assets is insignificant. There are no significant variable lease payments included in the Company’s lease arrangements. The discount rate used to determine the right-of-use asset and the lease liability for each country and leased asset is calculated based on the incremental borrowing rate at inception of the lease. The Company calculated the rate applicable to each lease contract on the basis of the lease duration. The maturity analysis of lease liabilities, based on contractual undiscounted cash flows is shown in Note 37.1 – Financial Risk Management. Real Estate Leases The Company leases land and buildings mainly for its operational business warehouses including logistic facilities, offices, production halls and laboratories. The major leases are located in France, Germany, Spain, the US and the UK. As lease contracts are negotiated on an individual basis, lease terms contain a wide range of different terms and conditions. Leases are typically made for a fixed period of 3-25 years and may include extension, termination and other options, which provide operational flexibility to the Company. In November 2019, additional clarifications were issued by the IFRS Interpretations Committee. Consequently, economic terms should be taken into account when determining the enforceable period of a lease. Based on its lease portfolio, the Company considers that there are no economic consequences leading to a reassessment of the previously assessed enforceable period. 39 Airbus / Financial Statements 2019