Page 136 - HRC_Annual_Report_2023

134 About HRC Value Creation Management Discussion Leadership
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

15 LEASES (continued)
(iv) Extension options and termination options
Extension and termination options are included in lease contracts across the Company. Lease terms are negotiated on
an individual basis and contain a wide range of different terms and conditions. Extension and termination options are
included, when possible, to provide greater flexibility. The individual terms and conditions used vary across the lease
contracts.
In cases in which the Company is not reasonably certain to exercise an optional extended lease term, payments associated
with the optional period are not included within lease liabilities. In the current and previous financial year, the Company
did not exercise any extension option, therefore no financial effect recognised in lease liabilities. However, the Company
modified two of its lease contracts in the current financial year. Gain on modification of lease contract is included in
“other income” line item in the profit or loss.
Some of the lease agreements contain termination options. These options are used to limit the period to which the
Company is committed to individual lease contracts and to maximise operational flexibility. For these lease agreements,
recognised lease liabilities do not include potential future rental payments after the exercise date of termination options
because the Company is not reasonably certain to extend the lease beyond that date. This is the case for most leases for
which a longer lease term can be enforced only by the Company and not by the lessor, and for which there is no penalty
associated with the option.
(v) Movement in lease payables and changes in lease liabilities arising from leasing activities is as below:
2023 2022
RM’000 RM’000
At 1 January 8,105 16,101
Repayment of lease liabilities (7,373) (8,355)
Non-cash changes:
- Additions 409 -
- Modification on lease contracts (297) -
- Interest expense (Note 8) 68 359
At 31 December 912 8,105