31. Leases

Accounting policy

The Group recognises a right-of-use asset and a lease liability at the commencement date of the lease arrangement. The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability, adjusted for any lease payments made at or before the commencement date of the lease arrangement, plus any initial direct costs incurred and an estimate of the costs of dismantling and removing the underlying asset or restoring the underlying asset or restoring the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date until the end of the lease term. The average depreciation periods are as follows:

• Rolling stock 6 years

• Real estate 11 years

• Miscellaneous 9 years

In addition, the right-of-use asset is periodically reduced by any impairment losses and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Group's incremental borrowing rate. The incremental borrowing rate of interest consists of the risk-free rate plus a surcharge for country risk with account being taken of the object. The lease liability is measured at amortised cost using the effective interest method. It is remeasured if there is a change in the future lease payments as a result of a change in an index or rate, if there is change in the Group's estimate of the amount expected to be payable under a residual value guarantee or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.