29. Non-current assets held for sale
Plan to dispose of Spanish energy business
On December 12, 2016, the Company entered into a sale agreement to dispose of its Spanish energy business. The assets and associated liabilities of this business were classified as held for sale in the balance sheet at December 31, 2016. Subsequently, in July 2017, the Company announced that it did not receive the required regulatory approvals to divest of its Spanish energy business and although it will continue to explore all options to capture the full value of these assets, completion of the previously announced sale is no longer considered to be highly probable. Accordingly, the Company in the second quarter of 2017 ceased to classify the assets and liabilities of the business as held for sale.
In accordance with IFRS 5, the Company ceased to recognize depreciation expense in relation to its Spanish energy business while it was classified as held for sale. When the business ceased to be classified as held for sale, the Company recorded an adjustment of $2,608 thousand to the carrying amount of its assets, equivalent to the depreciation that would have been charged if the business had not been classified as held for sale. This loss is charged in the income statement within the line item “other loss”.
As at December 31, 2016, the assets of the Spanish energy business classified as held for sale and associated liabilities were as follows:
|
|
|
2016 |
|
|
|
US$'000 |
|
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment |
|
83,935 |
|
Deferred tax assets |
|
1,948 |
|
Other non-current assets |
|
582 |
|
Total non-current assets |
|
86,465 |
|
Current assets |
|
|
|
Inventories |
|
32 |
|
Trade and other receivables |
|
3,596 |
|
Current receivables from related parties |
|
2,792 |
|
Other current assets |
|
1 |
|
Cash and cash equivalents |
|
51 |
|
Total current assets |
|
6,472 |
|
Assets and disposal groups classified as held for sale |
|
92,937 |
|
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Provisions |
|
89 |
|
Obligations under finance leases |
|
70,876 |
|
Other financial liabilities |
|
5,576 |
|
Deferred tax liabilities |
|
11,667 |
|
Total non-current liabilities |
|
88,208 |
|
Current liabilities |
|
|
|
Provisions |
|
1,265 |
|
Obligations under finance leases |
|
10,507 |
|
Payables to related parties |
|
254 |
|
Trade and other payables |
|
3,651 |
|
Other current liabilities |
|
3,797 |
|
Total current liabilities |
|
19,474 |
|
Liabilities associated with assets held for sale |
|
107,682 |
The assets held for sale and associated liabilities shown in the table above are presented after the elimination of intercompany balances with other subsidiaries of Ferroglobe.
Other financial liabilities
Other financial liabilities comprise the fair value of interest rate swaps, which were taken out to hedge the risk of changes in interest rates of finance leases for hydroelectrical installations. As detailed in Note 19, since June 30, 2015, these interest rate swaps have been considered ineffective for the purposes of hedge accounting and as a result the changes in their fair value have been recognized in the income statement.
Obligations under financial leases
Obligations under financial leases comprise a finance lease that relates to the Company’s rights to use certain hydroelectrical installations. This lease expires in 2022, ten years from the date on which it was entered into and bears interest at a variable market rate.
The minimum lease payments on hydroelectrical installation finance leases at December 31, 2016 are as follows:
|
|
|
2016 |
|
|
|
US$'000 |
|
Within one year |
|
10,507 |
|
Between one and five years |
|
47,510 |
|
After five years |
|
23,366 |
|
Total |
|
81,383 |