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Annual Financial Statements 2021
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CHAPTER 11:
Leases

  • 11.1ACCOUNTING POLICIES RELATING TO LEASES

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

At inception, or upon reassessment, of a contract that contains a lease component, the consideration in the contract is allocated to each lease and non-lease component on the basis of their relative standalone prices.

An accounting policy choice was made not to apply IFRS 16 to leases of intangible assets.

As lessee

a) Recognition

A lease is recognised as a lease liability and corresponding right-of-use asset at the commencement date of the lease. Each lease payment is allocated between the settlement of the lease liability and finance costs. The finance costs are charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis, except when there is a purchase option which is expected to be exercised, in which case it is depreciated over the asset's useful life.

Non-lease components, contained in a lease, are recognised as an expense in profit or loss when incurred.

b) Measurement

i) Initial measurement

Right-of-use assets Lease liabilities

Measured at cost which is:

  • The amount of the initial measurement of the lease liability
  • Plus any lease payments made at or before the commencement date
  • Less any lease incentives received
  • Plus any initial direct costs
  • Plus estimated restoration costs.

Measured at the present value of the following lease payments:

  • Fixed payments (including in-substance fixed payments), less any lease incentives receivable
  • Variable lease payments that are based on an index or a rate
  • Amounts expected to be payable by the lessee under residual value guarantees
  • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option
  • Payments of penalties for terminating the lease if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, an incremental borrowing rate is applied.

ii) Subsequent measurement

Right-of-use assets Lease liabilities

The right-of-use asset is measured applying the cost model where a right-of-use asset falls within the scope of IAS 16 Property, Plant and Equipment.

Measured at:

  • Cost less
  • Accumulated depreciation and accumulated impairment losses
  • Adjusted for any remeasurements or modifications of the lease liability.

The lease liability is measured by:

  • Increasing the carrying amount to reflect interest on the lease liability
  • Reducing the carrying amount to reflect the lease payments made
  • Remeasuring the carrying amount to reflect any reassessment or lease modification or to reflect revised in-substance fixed lease payments.
Useful lives 2021 2020 Incremental borrowing rates 2021 2020
Land and buildings 10 to 30 years 10 to 30 years Lease term greater than 12 months but less than 18 months 7.85% 7.85%
Residential land and buildings 2 years 3 years
Buildings and infrastructure 3 to 10 years 3 to 10 years Lease term greater than 18 months 6.09% to
10.43%
7.33% to
10.44%
Machinery, plant and equipment 3 to 5 years 2 to 5 years

c) Short-term leases and leases of low-value assets

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis, over the lease term, as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Leases of low-value assets comprise IT equipment, furniture, fittings and appliances as well as tools and other small equipment.

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CHAPTER 1: THE YEAR IN BRIEF
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The year in brief

CHAPTER 2: REPORTS
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2.1 Responsibility statement on internal financial controls
2.2 Certificate by the group company secretary
2.3 Report of the directors
2.4 Audit committee report
2.5 Independent auditor's report

CHAPTER 3: SEGMENTAL REPORTING
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3.1 Accounting policy relating to segmental reporting
3.2 Significant judgements and assumptions made by management in applying the related accounting policy
3.3 Reportable segments
3.4 Geographic location of segment assets

CHAPTER 4: FINANCIAL STATEMENTS
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4.1.1 Group financial statements of comprehensive income
4.1.2 Group financial statements of financial position
4.1.3 Group financial statements of changes in equity
4.1.4 Group financial statements of cash flows
4.2.1 Company financial statement of comprehensive income
4.2.2 Company financial statement of financial position
4.2.3 Company financial statement of changes in equity
4.2.4 Company financial statement of cash flows

CHAPTER 5: EARNINGS
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5.1 Accounting policy relating to earnings
5.2 Attributable earnings per share
5.3 Reconciliation of headline earnings
5.4 Headline earnings per share
5.5 Dividend distributions
5.6 Notes to the statements of cash flows relating to earnings

CHAPTER 6: OPERATIONAL PERFORMANCE AND WORKING CAPITAL
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6.1 Operational performance
6.2 Working capital
6.3 Notes to the statements of cash flows relating to operational performance and working capital

CHAPTER 7: TAXATION
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7.1 Accounting policies relating to taxation
7.2 Significant judgements and assumptions made by management in applying the related accounting policies
7.3 Income tax (expense)/benefit
7.4 Reconciliation of tax rates
7.5 Deferred tax
7.6 Notes to the statements of cash flows relating to taxation
7.7 Tax effect of other comprehensive income

CHAPTER 8: BUSINESS ENVIRONMENT AND PORTFOLIO CHANGES
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8.1 Accounting policies relating to business environment and portfolio changes
8.2 Significant judgements and assumptions made by management in applying the related accounting policies
8.3 Divestment of non-core assets
8.4 Impairment charges of non-current assets
8.5 Non-current assets and liabilities held-for-sale

CHAPTER 9: ASSOCIATES AND JOINT ARRANGEMENTS
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9.1 Accounting policies relating to investments in associates and joint arrangements
9.2 Significant judgements and assumptions made by management in applying the related accounting policies
9.3 Income from investments in associates and joint ventures
9.4 Investments in associates and joint arrangements
9.5 Movement analysis of investments in associates and joint ventures
9.6 Summarised financial information of associates and joint ventures
9.7 Reconciliation of carrying amounts of investments in associates and joint ventures

CHAPTER 10: ASSETS
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10.1 Property, plant and equipment
10.2 Intangible assets
10.3 Financial assets
10.4 Other assets

CHAPTER 11: LEASES
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11.1 Accounting policies relating to leases
11.2 Judgements and assumptions made by management in applying the related accounting policies
11.3 Right-of-use assets
11.4 Lease liabilities

CHAPTER 12: FUNDING
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12.1 Debt
12.2 Equity

CHAPTER 13: PROVISIONS AND CONTINGENCIES
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13.1 Accounting policies relating to provisions and contingencies
13.2 Significant judgements and assumptions made by management in applying the related accounting policies
13.3 Provisions
13.4 Contingent liabilities

CHAPTER 14: PEOPLE
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14.1 Accounting policies relating to employee benefits
14.2 Significant judgements and assumptions made by management in applying the related accounting policies
14.3 Employee benefits
14.4 Retirement employee obligations
14.5 Directors' and prescribed officers' remuneration

CHAPTER 15: RELATED PARTIES
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15.1 Related-party transactions

CHAPTER 16: FINANCIAL INSTRUMENTS
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16.1 Accounting policies relating to financial instruments
16.2 Judgements and assumptions made by management in applying the related accounting policies
16.3 Financial instruments

CHAPTER 17: SUBSIDIARIES
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17.1 Accounting policies relating to subsidiaries
17.2 Significant judgements and assumptions made by management in applying the related accounting policies
17.3 Transactions with subsidiaries
17.4 Summary of investments in subsidiaries
17.5 Summary of indebtedness by/(to) subsidiaries
17.6 Detailed analysis of investments in subsidiaries
17.7 Non-controlling interests

CHAPTER 18: COMPLIANCE
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18.1 Basis of preparation
18.2 Adoption of new, amended and revised standards and interpretations
18.3 Events after the reporting period

CHAPTER 19: CHANGES TO COMPARATIVE INFORMATION
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19.1 Re-presentation of group comparative information
19.2 Restatement of company comparative information

CHAPTER 20: ANNEXURES
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Annexure 1 Shareholder analysis
Annexure 2 Definitions
Annexure 3 Administration
Annexure 4 Shareholders' diary

ACRONYMS
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Acronyms