B.7 IMPAIRMENT OF ASSETS

At the end of each reporting period, the Group determines whether there is any indication that its assets (tangible,
intangible assets and investments in equity instruments carried at cost) have suffered an impairment loss with
reference to their carrying amounts. If any indication of impairment exists, the recoverable amount of such assets is
estimated and impairment is recognised, if the carrying amount exceeds the recoverable amount. Recoverable amount
is higher of the fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted.

B.8 LEASES

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration.

The Group as a lessee

The Group’s lease asset classes primarily consist of leases for machineries and buildings. The Group assesses whether
a contract contains a lease, at inception of a contract. To assess whether a contract conveys the right to control the use
of an identified asset, the Group assesses whether: (i) the contract involves the use of an identified asset (ii) the Group
has substantially all of the economic benefits from use of the asset through-out the period of the lease and (iii) the
Group has the right to direct the use of the asset.

At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding
lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less
(short-term leases) and low value leases. For these short-term and low value leases, the Group recognizes the lease
payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities include these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs
less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment
losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on
an individual asset basis unless the asset does not generate cash flows that are largely independent of those from
other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the
asset belongs.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the
incremental borrowing rates of the entity. Lease liabilities are remeasured with a corresponding adjustment to the
related right-of-use asset if the entity changes its assessment if whether it will exercise an extension or a termination
option.

240
