DIGI - Annual Report 2021

Notes to the Financial Statements 31 December 2021 159 Integrated Annual Report 2021 Governance Audited Financial Statements Other Information 2. Significant accounting policies (CoNT’D.) 2.15 Leases (Cont’d.) Group as a lessee (Cont’d.) (a) ROU assets The Group recognises ROU assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). ROU assets are measured at cost, less any accumulated depreciation and impairment losses,and adjusted for any remeasurement of lease liabilities.The cost of ROU assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The Group elected to apply the practical expedient not to separate out non-lease components from lease components and instead account for the lease and non-lease component as a single component. ROU assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: Leasehold land and buildings 1% - 3% Telecommunication network sites 10% - 33% Transmission facilities 10% - 20% Spectrum bandwidths 6.3% - 66.7% Stores, office buildings and kiosks 33.3% The ROU assets are also subject to impairment. Refer to Note 2.6 for accounting policy on impairment of non-financial assets. (b) Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate and are dependant on a future activity are recognised as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification or a change in the lease term. The Group’s lease liabilities are included in loans and borrowings. Please refer to Note 21.

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