Fraser & Neave Holdings Bhd Annual Report 2021

4. RIGHT%OF%USE ASSETS Group Note Leasehold land RM’000 Buildings RM’000 Plant and machinery RM’000 * Others RM’000 Total RM’000 At 1 October 2019 65,120 23,547 123 4,478 93,268 Additions – 8,813 432 12,643 21,888 Depreciation for the year 25 (1,178) (20,057) (389) (4,241) (25,865) Terminations/Modifications – (402) – (1,232) (1,634) E!ect of movement in exchange rates (40) (363) – (71) (474) At 30 September 2020/1 October 2020 63,902 11,538 166 11,577 87,183 Additions 1,350 62,567 429 867 65,213 Acquisition through business combination 8 – 2,084 – – 2,084 Depreciation for the year 25 (1,175) (19,363) (476) (4,080) (25,094) Terminations/Modifications (14) (3,942) (13) (121) (4,090) E!ect of movement in exchange rates (43) 160 – (46) 71 At 30 September 2021 64,020 53,044 106 8,197 125,367 * Comprise motor vehicles and forklifts. Leasehold land relates to the lease of land with lease terms of eighteen to ninety-nine years (2020: ten to ninety-nine years) for the Group’s factory buildings, o&ce buildings and warehouse. The Group leases various warehouses, o&ce buildings, plant and machinery, and motor vehicles. Rental contracts are typically made for fixed periods of one to ten years with an option to renew the lease after that date. Lease terms are negotiated on an individual basis with di!erent terms and conditions. 4.1 EXTENSION OPTIONS Some leases of o&ce buildings contain extension options exercisable by the Group up to three years before the end of the non- cancellable contract period. Where applicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. Lease liabilities recognised (discounted) Group 2021 RM’000 2020 RM’000 Leasehold land 1,854 844 Buildings 52,212 9,261 Motor vehicles – 242 54,066 10,347 4.2 SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS IN RELATION TO LEASE The Group assesses at lease commencement by applying significant judgement whether it is reasonably certain to exercise the extension options. Group entities consider all facts and circumstances including their past practice and any cost that will be incurred to change the asset if an option to extend is not taken, to help them determine the lease term. The Group also applied judgement and assumptions in determining the incremental borrowing rate of the respective leases. Group entities first determine the closest available borrowing rates before using significant judgement to determine the adjustments required to reflect the term, security, value or economic environment of the respective leases. Financial Statements 195 Fraser & Neave Holdings Bhd ! Annual Report 2021