Chapter 11: Leases

a) Incremental borrowing rates

In determining the incremental borrowing rates, management considers the term of the lease, the nature of the asset being leased and the funding strategy and principles applied by the group’s corporate treasury department.

b) Extensions and termination options

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

In 2025, management reviewed the assessment of the lease term applied in the measurement of the conneXXion lease and considered it appropriate to include the five-year extension option in the lease term as negotiations are in progress that indicate circumstances are present which will lead to the group not terminating the lease. The inclusion of the five-year extension lease option, that is in the control of Exxaro, is therefore more representative of the expected term of occupation based on the existing contract. The lease measurement was accordingly modified and the discount rate revised to 8.92%.