Property, plant and equipment

6 Months Ended

Jun. 30, 2020

10.

Property, plant and equipment

Property, plant and equipment comprises owned and leased assets, as follows:


Million US dollar	30 June 2020		31 December 2019
Property, plant and equipment owned		22 669		25 515
Property, plant and equipment leased (right-of-use assets)		2 049		2 029

Total property, plant and equipment		24 718		27 544


	30 June 2020												31 December 2019
Million US dollar	Land and buildings			Plant and equipment, fixtures and fittings			Under construction			Total			Total
Acquisition cost
Balance at end of previous year		12 216			34 381			2 160			48 757			47 969
Effect of movements in foreign exchange		(1 043	)		(2 908	)		(239	)		(4 190	)		(485	)
Acquisitions		6			382			871			1 259			4 451
Acquisitions through business combinations		—			3			—			3			24
Disposals		(16	)		(394	)		—			(409	)		(1 987	)
Disposals through the sale of subsidiaries		—			—			—			—			(4	)
Transfer (to)/from other asset categories and other movements 1		211			623			(1 014	)		(180	)		(1 211	)

Balance at end of the period		11 374			32 087			1 778			45 239			48 757

Depreciation and impairment losses

Balance at end of previous year		(3 604	)		(19 638	)		—			(23 242	)		(22 331	)

Effect of movements in foreign exchange		237			1 551			—			1 788			310
Depreciation		(194	)		(1 419	)		—			(1 613	)		(3 370	)
Disposals		4			365			—			369			1 734
Disposals through the sale of subsidiaries		—			—			—			—			3
Impairment losses		—			(26	)		—			(26	)		(87	)
Transfer to/(from) other asset categories and other movements 1		(24	)		177			—			153			499

Balance at end of the period		(3 581	)		(18 990	)		—			(22 571	)		(23 242	)

Carrying amount
at 31 December 2019		8 612			14 743			2 160			25 515			25 515
at 30 June 2020		7 794			13 097			1 778			22 669			—

As at 30 June 2020, the carrying amount of property, plant and equipment subject to restrictions on title amounted to 2m US dollar (31 December 2019: 4m US dollar)

Contractual commitments to purchase property, plant and equipment amounted to 596m US dollar as at 30 June 2020 compared to 457m US dollar as at 31 December 2019.

AB InBev’s net capital expenditures in the statement of cash flow amounted to 1 524m US dollar in the first six months of 2020 compared to 1 488m US dollar for the same period last year. Out of the total 2020 capital expenditures approximately 41% was used to improve the company’s production facilities while 44% was used for logistics and commercial investments and 15% for improving administrative capabilities and for the purchase of hardware and software.

The transfer (to)/from other asset categories and other movements relates mainly to transfers from assets under construction to their respective asset categories, to contributions of assets to pension plans, to the separate presentation in the balance sheet of property, plant and equipment held for sale in accordance with IFRS 5

Non-current

assets held for sale and discontinued operations

and to the restatement of

non-monetary

assets under hyperinflation accounting in line with IAS 29

Financial reporting in hyperinflationary economies

. Accordingly, the transfers include the balances of Australian operations reclassified to assets held for sale as at 31 December 2019 and disposed of upon the completion of the sale on 1 June 2020

Property, plant and equipment leased by the company

(right-of-use

assets) is detailed as follows:


	2020
Million US dollar	Land and buildings			Machinery, equipment and other			Total
Net carrying amount at 30 June		1 765			284			2 049
Depreciation for the six-month period ended 30 June		(169	)		(75	)		(244	)


	2019
Million US dollar	Land and buildings			Machinery, equipment and other			Total
Net carrying amount at 31 December		1 723			306			2 029
Depreciation for the six-month period ended 30 June (restated)		(173	)		(77	)		(250	)

Additions to

right-of-use

assets for the

six-month

period ended 30 June 2020 were 393m US dollar (30 June 2019: 293m US dollar). Following the sale of Dutch and Belgian pub real estate to Cofinimmo in October 2007, AB InBev entered into lease agreements with a term of 27 years. Furthermore, the company leases a number of warehouses, trucks, factory facilities and other commercial buildings, which typically run for a period of five to ten years. Lease payments are increased annually to reflect market rentals, if applicable. None of the leases include contingent rentals.

The company leases out pub real estate for an average outstanding period of 6 to 8 years and part of its own property under operating leases.

The expense related to short-term and

low-value

leases and variable lease payments that are not included in the measurement of the lease liabilities is not significant