There are currently leases in place for real estate, operating and office equipment (vehicles and IT) and for out-of-home advertising inventory. The leases for real estate and out-of-home advertising inventory have a residual term of between one and ten years. The residual terms of the operating and office equipment leases are between one and five years. Various rental agreements feature options to extend the rental period.
The capitalised right-of-use assets, the lease liabilities on the liabilities side, the effect in terms of depreciation and amortisation in the income statement and on the financial result as well as the impact on the statement of cash flows are set out in the individual notes. By way of summary, IFRS 16 “Leases” has the following impact on the consolidated financial statements:
|in CHF mn||2022||2021|
|Right of use, leasing – real estate||75.2||64.9|
|Cumulative depreciation in right of use – real estate||(39.0)||(28.4)|
|Right of use, leasing – operating and office equipment||2.5||2.8|
|Cumulative depreciation in right of use – operating and office equipment||(1.9)||(1.9)|
|Right of use, leasing – out-of-home advertising inventory||149.9||23.0|
|Cumulative depreciation in right of use – out-of-home advertising inventory||(27.6)||(6.5)|
|in CHF mn||2022||2021|
|Depreciation in right of use, leasing – real estate||(10.8)||(11.2)|
|Depreciation in right of use, leasing – operating and office equipment||(0.6)||(0.8)|
|Depreciation in right of use, leasing – out-of-home advertising inventory||(21.1)||(4.2)|
|Depreciation in right of use, leasing||(32.5)||(16.2)|
|Interest expense from leases||(2.6)||(0.9)|
|Financial income from net leasing||(2.6)||(0.9)|
Short-term leases with terms of less than one year and low-value underlying assets do not have to be recognised and were recorded in the reporting year as lease expenses under other operating expenses in the amount of around CHF 1.7 million (short-term leases) and CHF 1.2 million (low-value underlying assets) (previous year: CHF 2.2 million and CHF 1.1 million).
In the reporting year, TX Group received no material rent concessions in connection with the coronavirus crisis. The revenue from subleasing in relation to capitalised right-of-use assets is not material, and there are no sale and leaseback transactions.
As of 31 December 2022, liabilities from signed leases yet to start totalled CHF 2.2 million (previous year: CHF 133.9 million). These liabilities are, as required under IFRS 16, recognised as a liability at the cash value at the time the lease begins.
Significant judgements or estimates
When determining the terms of leases, all facts and circumstances that represent an economic incentive to exercise extension options or not exercise termination options are considered. Extension and termination options are only factored into the contract term if it is sufficiently certain that these will be exercised. The assessment is revised if a significant event or a significant change in circumstances occurs that could influence the estimate used to this point, provided these are in the control of the lessee. These estimates are inherently uncertain and may not prove to be accurate.
All leases with their associated rights and obligations are generally recorded in the balance sheet. Right-of-use assets are capitalised in the balance sheet under property, plant and equipment, while lease obligations are shown as current and non-current financial liabilities. Short-term leases with a term of less than one year and leases where the underlying asset is of low value do not have to be recognised. The payments for short-term leases (with a term of less than a year) and for low-value underlying assets (replacement value below CHF 5,000) are recorded as lease expenses under other operating expenses. Any assessment of the term of leases with extension options involves estimates and assumptions. These estimates are inherently uncertain and may not prove to be accurate.
The initial capitalisation of right-of-use assets and lease liabilities associated with a lease is performed on the basis of the fair value of the future lease payments (discounted). An incremental borrowing rate of interest is used to calculate the fair value of lease liabilities. In order to determine this value, due account is taken of the risk-free interest rate for specific lease terms, the collateral, the credit spread and the country-specific risk premium, with a uniform rate being applied to a portfolio of similar leases. Lease liabilities include firmly agreed lease payments. The first capitalisation of right-of-use assets is based on the fair value of lease obligations and includes any initial direct costs. Depreciation of right-of-use assets is linear and applies across the term of the lease. The lease payments reduce the lease liability on the liabilities side, and the interest added in relation to the lease liability is applied across the term of the lease and recognised in the income statement as financial expense.