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SUSTAINABILITY JOURNEY HOW WE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 303

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) Leases (continued)

The Group and Company as a lessee (continued)
(b) Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments that are not paid at that date.
The lease payments include the following:

• Fixed payments (including in-substance fixed payments), less any lease incentive receivable;
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at
the commencement date, if any;

• Amounts expected to be payable by the Group under residual value guarantees;
• The exercise price of a purchase and extension options if the group is reasonably certain to exercise that
option, if any; and

• Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option,
if any.
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing is used.
This is the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the ROU in a similar economic environment with similar term, security and conditions.
Lease payments are allocated between the liability and finance cost. The finance cost is 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 liability
for each period.
Variable lease payments that depend on sales are recognised in profit or loss in the period in which the condition
that triggers those payments occurs.
The Group presents the lease liabilities as a separate line item in the statement of financial position.
Interest expense on the lease liability is presented within the finance cost in the statement of profit or loss.
(c) Lease term

In determining the lease term, the Group 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 Group reassesses the lease term upon the occurrence of a significant event or change in circumstances
that is within the control of the Group and affects whether the Group is reasonably certain to exercise an option
not previously included in the determination of lease term, or not to exercise an option previously included in
the determination of lease term. A revision in lease term results in remeasurement of the lease liabilities
(refer to (d) below).