9. Property, plant and equipment

The reconciliation of the carrying amounts of the property, plant and equipment for the periods presented in the Consolidated Financial Statements as of March 31, 2019, is as follows:

As of March 31, 2019, restrictions on the disposal of property, plant and equipment were EUR 0.6 million (March 31, 2018: EUR 4.0 million). Furthermore, as of March 31, 2019, commitments for the purchase of property, plant and equipment were EUR 439.3 million (March 31, 2018: EUR 398.1 million).

Borrowing costs related to qualifying assets in the amount of EUR 3.8 million (2017/18: EUR 6.2 million) were capitalized in the reporting period. The calculation was based on an average borrowing rate of 2.0% (2017/18: 2.4%).

The disposals of land, land rights, and buildings include EUR 13.3 million in assets held for sale.

As of March 31, 2019, the gross carrying amount and accumulated depreciation of investment properties (IAS 40) included afore are as follows:

The following table shows the reconciliation of the carrying amounts of investment properties for the periods presented in the Consolidated Financial Statements as of March 31, 2019:

Investment properties are measured at cost. Depreciation is recognized in line with the general accounting policies for property, plant and equipment. Based on comparable sales transactions, the fair value of these assets is estimated at EUR 0.3 million (March 31, 2018: EUR 24.8 million). Rental income and expenses for investment properties are immaterial.

In the business year 2018/19, the Management Board resolved and the Supervisory Board approved the sale of undeveloped properties in Meerbusch, Germany, not required for operating purposes. This led to negotiations with several interested parties. The sale is in line with the strategy of selling assets not required for operating purposes. These properties will probably be sold within 12 months. The sale proceeds are expected to substantially exceed the carrying amounts of the properties, with the result that no impairment losses were recognized on these properties at the time they were classified as held for sale. The properties are allocable to the High Performance Metals Division and are shown separately in the statement of financial position.

The carrying amount for each asset class under finance leases included in property, plant and equipment is as follows:

The terms and present value of the minimum finance lease payments are as follows:

The most significant finance leases for buildings and production plants have a remaining term of five years. The Group has the option in this connection to purchase the plants at the end of a contractually agreed period or to exercise the given contract renewal option.

In addition to finance leases, obligations also exist under operating leases for property, plant and equipment that are not reported in the statement of financial position. These obligations have the following terms:

Payments of EUR 64.3 million (2017/18: EUR 62.7 million) under operating leases have been recognized as expenses.

The most significant operating leases concern land and buildings with minimum lease terms of up to 50 years subject, in some cases, to termination options on the part of voestalpine companies and, in certain cases, to renewal options. Purchase options at fair value are available at the end of the lease term. There are no restrictions concerning dividends, additional debt, and further leases.

Impairment losses and reversal of impairment losses

In the previous year, the cash generating unit of the Metal Engineering Division that produces special drawn wire (ultrafine wire) recognized impairment losses of EUR 12.2 million on property, plant and equipment as well as of EUR 3.5 million on intangible assets, for a total of EUR 15.7 million, in other operating expenses due to negative sales-related developments, the resulting adjustment of the division’s strategic alignment, and lowered earnings forecasts. These impairment losses contrast with reversals of investment grants in the amount of EUR 0.8 million. The recoverable amount (value in use) of these assets was EUR 31.5 million. A pre-tax discount rate of 7.88% was applied.

Also in the previous year, write-downs of EUR 10.1 million were taken on property, plant and equipment in other operating expenses for the Brazilian CGU of the High Performance Metals Division—whose largest export market is the United States—due to the Section 232 restrictions that the US has placed on exports and the ensuing uncertainties. The recoverable amount (value in use) for this CGU was EUR 197.9 million (translated at the end of period exchange rate). The discount rates applied were between 8.19% and 16.95% before tax.