asset; or the customer designed the asset in a way that predetermines how and for what purpose it will be used. The Group and the Company as lessees The Group and the Company lease various buildings, plant and machinery, furniture and fittings, office equipment and motor vehicles. These leases have tenures between 1 and 25 years. Lease terms are generally negotiated on an individual basis. As for leasehold land, the remaining period of the respective leases ranges from 4 to 99 years. (i) Initial recognition The Group and the Company recognise a ROU asset and a lease liability for all leases conveying the right to control the use of an identified asset for a period of time. The ROU assets recognised by the Group and the Company are initiallyrecorded at cost, which comprise the following: • The amount of the initial measurement of the lease liability; • Any lease payments made on or before the commencement date of the lease, less any lease incentives received; • Any initial direct costs incurred by the Group and the Company; and • An estimate of costs to be incurred by the Group and the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the lessor. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the Group’s incremental borrowing rate. Lease liabilities include the net present value of the following lease payments: • Fixed payments (including in-substance fixed payments), less any lease incentives receivable; • Variable lease payments that are based on an index or a rate; • Amounts expected to be payable by the lessee under residual value guarantees; • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. NOTES TO THE FINANCIAL