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30. Leases

Group as lessee

The Group has lease contracts for rolling stock, real estate and other operating assets that are used in its operations. The Group's obligations under the leases are safeguarded by the lessor's right to the ownership of the leased assets. Generally, the Group's possibilities for subleasing the leased assets are restricted. There are various lease contracts that contain extension and termination options, which are discussed in more detail below.

The Group also has certain lease contracts for machines with a lease term of 12 months or less and lease contracts for office equipment of low value. The Group applies the recognition criteria for exemptions for ‘short-term leases’ and ‘leases of low-value assets’ for these lease contracts.

The carrying amounts of the recognised right-of-use assets and the changes during the period are stated below.

(in millions of euros)

Rolling stock

Property

Other

Total

     

Composition as at 1 January 2019

    
     

Cost

2,190

192

15

2,397

Accumulated amortisation and impairments

775

27

2

804

Carrying amount as at 1 January 2019

1,415

165

13

1,593

     

Changes in 2019

    

Additions

783

15

5

803

Acquisitions

    

Depreciation

-402

-18

-2

-422

Impairments

-

-

-

-

Exchange differences

47

-

2

49

Other changes

-1

1

-1

-1

Total changes during the financial year

427

-2

4

429

     

Composition as at 31 December 2019

    
     

Cost

2,991

208

21

3,220

Accumulated amortisation and impairments

1,149

45

4

1,198

Carrying amount as at 31 December 2019

1,842

163

17

2,022

     

Changes in 2020

    

Additions

504

14

-

518

Acquisitions

-43

-

-1

-44

Depreciation

-461

-18

-3

-482

Impairments

-83

-27

-1

-111

Exchange differences

-46

-1

-1

-48

Other changes

10

-3

3

10

Total changes during the financial year

-119

-35

-3

-157

     

Composition as at 31 December 2020

    
     

Cost

2,977

214

27

3,218

Accumulated amortisation and impairments

1,254

86

13

1,353

Carrying amount as at 31 December 2020

1,723

128

14

1,865

The carrying amounts of the lease liabilities and the changes during the period are stated below.

(in millions of euros)

2020

2019

Lease liabilities as at 1 January

2,109

1,650

Additions

518

825

Interest allocated

34

37

Payments

-515

-457

Other changes

-29

-

Currency differences

-51

53

Lease liabilities as at 31 December

2,066

2,109

   

Presented under:

  

Non-current

1,601

1,676

Current

465

433

`

  

The lease liabilities can be subclassified into the following countries:

(in millions of euros)

31 december 2020

31 December 2019

The United Kingdom

844

959

Germany

1,042

953

The Netherlands

180

197

Total

2,066

2,109

The maturity analysis of lease liabilities is disclosed in note 25.

The following amounts are recognised in the income statement:

(in millions of euros)

2020

2019

Depreciation of right-of-use assets

482

422

Impairments of right-of-use assets

111

-

Interest expense on lease contracts

34

37

Costs relating to short-term lease arrangements (Other operating expenses)

30

49

Costs relating to leases of low-value assets (Other operating expenses)

1

1

Variable lease payments (Other operating expenses)

17

18

Total recognised in the income statement

675

527

The Group has no lease arrangements with material variable lease payments.

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 1-6 years

  • Real estate 1-11 years

  • Other 1-9 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 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.

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