10. PROPERTY, PLANT AND EQUIPMENT

At December 31, 2011 the breakdown and changes are as follows:

The changes at December 31, 2010 were as follows:

The increases in 2011 mainly involved the Tyre segment and were mainly dedicated to growth projects in South America, Romania and China, completing construction of new car tyre plants in Mexico and radial motorcycle tyres in China. These are in addition to the capital expenditure on the other production sites, made to increase the production mix, improve the qualitative capability of plants, and optimise occupational health and safety and environmental management of factories.

The ratio of increases of property, plant and equipment to depreciation in 2011 was 2.80 (in 2010 the ratio was 2).

Construction in progress at December 31, 2011, included in the individual categories of property, plant and equipment, totalled euro 373,611 thousand (euro 220,361 thousand at December 31, 2010).

The impairment losses for 2011, included in the “gross amount – decrease” column in the above table, totalled euro 1,122 thousand (euro 7,369 thousand at December 31, 2010). They are accounted for in the income statement under the item “Amortisation, depreciation and impairment” (note 33).

In regard to restrictions on the ownership of assets, note that:

• the subsidiary Pirelli Tyres Alexandria Co. posted the value of plant and machinery totalling euro 6,900 thousand (euro 8,206 thousand at December 31, 2010) as collateral for loans granted by the National Bank of Egypt;
• the subsidiary Pirelli Pneus Ltda. pledged its machinery and land as collateral for a total of euro 55,760 thousand (euro 62,403 thousand at December 31, 2010) against bank loans granted by BNDES (Banco Nacional de Desenvolvimento) and litigation with the national social security institution INSS (Instituto nacional de seguridade social) .
• the subsidiary Pirelli Neumaticos SAIC pledged its own land and buildings for a total of euro 12,839 thousand as collateral for a loan granted by Banco de la Nacion Argentina.

No borrowing costs were capitalised on property, plant and equipment.

10.1. Finance Leases

The value of land, buildings, plant, machinery and other assets for which the Group has entered into a financial leasing agreement is included in the respective categories of property, plant, and equipment.
The breakdown is shown as follows:

The value of leased land and leased buildings mainly refers to:

• the lease made by Pirelli & C. S.p.A. with a pool of banks (SG LEASING S.p.A. and UniCredit Leasing S.p.A.) for the building that hosts the structures and buildings of the Tyre Segment in Italy.
  The agreement, in place since May 2000, has a term of 13 years and includes a purchase option on expiry. The lease instalments are indexed to 3-month Euribor. The net carrying amount of the building is euro 35,962 thousand (euro 36,925 thousand at December 31, 2010) and the carrying amount for the land is euro 10,348 thousand (euro 10,184 thousand at December 31, 2010);
• three agreements made by Solar Utility S.p.A. and UBI Leasing S.p.A. in place since August 2011;
• an agreement made between Solar Utility S.p.A. and Leasint S.p.A. in place since December 2011.
  The object of these lease agreements are properties consisting of photovoltaic plants. The agreements have a term of 18 years and include a purchase option on expiry. The lease instalments are indexed to 3-month Euribor. The agreement with Leasint S.p.a. commits Pirelli to maintain its equity investment in Solar Utility S.p.A. for the entire duration of the lease agreement. In the event of default on this clause, Pirelli jointly guarantees with Solar Utility S.p.A. all obligations resulting from the lease agreement.

The increase in leased buildings from the previous year is related to the aforementioned agreements made by Solar Utility S.p.A. in 2011.

The payables for finance leases are included in financial payables (note 25). The change in finance lease payables from the previous year stems from the change in finance lease agreements in effect at December 31, 2011 as compared with the previous year.

The minimum payments due (or the payments required of the lessee during the remaining term of the lease) can be broken down as follows:

The table below shows the amount of financial lease payables broken down by due date: