The logic behind the Asset Mapping

The Asset Mapping is a crucial step of the process, and doing it right is key. Here are some indications to guide you through it

As the name suggests, the Asset Mapping is an exercise that aims at mapping/listing the assets of a company/division/business area, which is, among other things, the stepping stone to build the Base Alternative in a Capex Strategy project by Weissenrieder & Co.

Why the Asset Mapping?

Mapping assets fills an Asset Ledger that will list information about all major assets of a site or group of sites in a structured way, which is crucial in order to gain a good understanding of the total value of those assets. But most importantly, Weissr translates automatically the information comprised in the Asset Ledger to Investment Plans that lay out the investment need of a given site or group of sites, year after year.

Principles to follow

1. Try to focus solely on assets which replacement values are over 0.5 or 1 million €/£/$ (an additional sum calculated as a percentage of the gross asset value will be included to capture smaller capexes on a yearly basis).

2. Assume your current products, and how they are produced, to remain the same in the future.

Once those principles are laid on the table, it's time to get started with the Asset Mapping, one site at a time, which revolves around 3 questions that are central to the process, through which each asset must go, and we shall detail each of them below:

When was the current asset installed? (In Use Year in Weissr)

• Absolute accuracy is not of the essence here, if the year is within +/- 5 years from the reality, it will not affect the end result. It's only important to be able to determine whether the asset is from the 1970's or 1990's for example.

• If the "original asset" was replaced at some point in time, the installation year of the replacement is to be entered.

How much would it cost to replace the asset today? (Amount in Weissr)

• If you would have to buy the exact same asset, piece for piece, how much would it cost. There again, absolute accuracy for that number is not crucial, it's only important to have a reliable number +/- 500 000 €/£/$.

• More important than accuracy is comparability. By this, one must understand that the replacement value of one asset in one site should be reasonable compared to the replacement value of a similar asset in another site.

When is the asset to be replaced/refurbished next? (Repl. Year in Weissr)

• As all assets have different life cycles (called "Standard Life" in Weissr) at the end of which they must be replaced or at least greatly refurbished, it is important to know what year(s) is(are) expected the next investment(s) to come regarding this asset.

• Contrary to the two previous items, accuracy does hold some importance here. Being correct within +/- 2 years will ensure that the future outlays are reliable.

• If only a part of an asset is to be replaced earlier than the rest, it is recommended to create a replacement asset for it, and act as if it were a stand-alone asset (with its own replacement value, then subtracted to the replacement value of the asset it belonged to).

The "as is going concern" principle

When answers to those three questions have been collected for each asset, according to the principles laid out earlier, the Asset Mapping is nearly complete. As explained above, the purpose of the Asset Mapping exercise is to issue Investment Plans that will lay out the future investments regarding the listed assets on a timeline. So now, especially if you are part of a Weissenrieder & Co. Capex Strategy project, it's time to review those outlays and make sure that they respect an "as is going concern" principle, which means that the outlays for a given asset should:

• include capexes regarding safety issues and environmental regulations over time.

• include capexes regarding needed maintenance for the current equipment over time.

• include capexes regarding needed upgrades to keep quality levels just high enough to satisfy the current customer base and stay competitive in the industry over time.

• include capexes that were already decided upon at the time of the exercise only.

• exclude any speculative capexes regarding expansions in production (capacity, volumes..) over time.