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Capital expenditures
| Capital expenditures (€ million) | 2019 | 2018 | Change | |||
absolute | thereof IFRS 16 effect | % | ||||
| Gross capital expenditures | 13,093 | 11,205 | + 1,888 | +1,097 | + 16.8 |
thereof integrated rail system | 11,713 | 10,606 | + 1,107 | +382 | + 10.4 | |
Investment grants | 7,447 | 7,209 | + 238 | – | + 3.3 | |
thereof integrated rail system | 7,412 | 7,195 | + 217 | – | + 3.0 | |
| Net capital expenditures | 5,646 | 3,996 | + 1,650 | +1,097 | + 41.3 | |
thereof integrated rail system | 4,301 | 3,411 | + 890 | +382 | + 26.1 | |
The increase in gross capital expenditures resulted primarily from the inclusion of the finance leases because of the changes to accounting for liabilities arising from leasing agreements (IFRS 16 effect).
In the integrated rail system, increased capital expenditures in the track infrastructure also had an impact on capital expenditures.
Investment grants, which are almost exclusively allocated to the integrated rail system, also increased significantly. They accounted for about 57% of gross capital expenditures (previous year: about 64%).
Net capital expenditures also increased significantly, partly due to the IFRS 16 effect. In the integrated rail system, there was also an increase in capital expenditures to expand capacity in rolling stock and in the infrastructure works, especially at DB Long-Distance.
The focus of our capital expenditure activities continues to be in the business units of the integrated rail system for measures to improve performance and efficiency in the area of track infrastructure, as well as the renovation and the expansion of our vehicle fleet. The structure of gross capital expenditures has changed slightly due to the first-time application of IFRS 16 and has shifted towards DB Arriva and DB Schenker.
Capital expenditure priorities
| Gross capital expenditures by regions (€ million) | 2019 | 2018 | Change | ||
absolute | % | ||||
| Germany | 11,826 | 10,682 | + 1,144 | + 10.7 |
| Europe (excluding Germany) | 1,186 | 506 | + 680 | + 134 | |
| Asia/Pacific | 133 | 79 | + 54 | + 68.4 | |
| North America | 37 | 16 | + 21 | + 131 | |
| Rest of world | 13 | 5 | + 8 | + 160 | |
| Consolidation | – 102 | – 83 | – 19 | + 22.9 | |
DB Group | 13,093 | 11,205 | + 1,888 | + 16.8 | |
| Net capital expenditures by regions (€ million) | 2019 | 2018 | Change | ||
absolute | % | ||||
| Germany | 4,414 | 3,487 | + 927 | + 26.6 |
| Europe (excluding Germany) | 1,151 | 492 | + 659 | + 134 | |
| Asia/Pacific | 133 | 79 | + 54 | + 68.4 | |
| North America | 37 | 16 | + 21 | + 131 | |
| Rest of world | 13 | 5 | + 8 | + 160 | |
| Consolidation | – 102 | – 83 | – 19 | + 22.9 | |
DB Group | 5,646 | 3,996 | + 1,650 | + 41.3 | |
In the regional breakdown of gross capital expenditures, the focus remained on Germany and the integrated rail system. Adjusted for IFRS 16 effects, the increase is mainly due to infrastructure measures at DB Netze Track and DB Netze Stations, as well as vehicle purchases, particularly at DB Long-Distance.
Capital expenditures have also increased in Europe (excluding Germany). In addition to the IFRS 16 effect, higher capital expenditures from DB Schenker in France also had an effect.
In the Asia/Pacific region, DB Schenker invested more heavily in logistics facilities in Singapore.
The regional distribution of gross capital expenditures has also largely been shifted by the IFRS 16 effect at DB Arriva and DB Schenker towards the regions of Europe (excluding Germany), Asia/Pacific, North America and the rest of the world.
Investment grants
Of the investment grants received by DB Group in the year under review (€ 7,447 million), almost all of them (€ 7,352 million) related to infrastructure. The most important funding sources for capital expenditures on infrastructure are grants, mostly from the Federal Government and from Federal states and local authorities.
Most of these are based on the LUFV Μ237 F. and the Federal Rail Infrastructure Extension Act (Bundesschienenwegeausbaugesetz; BSWAG). Further investment grants are provided in accordance with the Municipal Transport Financing Act (Gemeindeverkehrsfinanzierungsgesetz; GVFG) and the LFederal Goverments's Noise remediation program.
The European Union allocates grants (Trans-European Networks; TEN and Connecting Europe Facility; CEF) for infrastructure capital expenditures on TEN.
In addition to investment grants, DB Group also receives (significantly lower) grants recognized as income, also mainly in respect of infrastructure.
On the balance sheet, investment grants are directly deducted from the purchase and manufacturing costs of the assets to which they relate. The reporting of all grants is such that the competent Federal agencies can conduct comprehensive checks to ensure that they are spent in accordance with their purpose and the law.
A transparent description of the various forms of grants is available online.