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 Leases 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	2023	2022	Incremental borrowing rates	2023	2022
Land and buildings	10 to 30 years	10 to 30 years	Lease term: greater than 12 but less than 18 months:	11.75% 1.35%	7.85% 1.35%
Residential land and buildings	2 years	2 years	Local
Buildings and infrastructure	3 to 10 years	3 to 10 years	Foreign
Machinery, plant and equipment	3 to 5 years	3 to 5 years	Lease term greater than 18 months	10.25% to 10.87%	8.97% to 10.43%

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. Refer note 6.1.3.