8.3 Leases
Rieter leases offices, warehouses, equipment, and vehicles, complementing property, plant, and equipment owned by group companies. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
The total carrying amount of right-of-use assets as presented in note 4.4 can be allocated to the following asset classes:
CHF million | December 31, 2023 | December 31, 2024 |
Land and buildings | 32.2 | 59.1 |
Vehicles and furniture | 2.0 | 3.1 |
Right-of-use assets | 34.2 | 62.2 |
Depreciation associated with right-of-use assets can be allocated to the following asset classes:
CHF million | 2023 | 2024 |
Land and buildings | – 5.4 | – 7.5 |
Vehicles and furniture | – 0.6 | – 0.9 |
Depreciation associated with right-of-use assets | – 6.0 | – 8.4 |
The following table summarizes other expenses charged to the income statement in relation to leases:
CHF million | 2023 | 2024 | |
Expenses associated with short-term leases | EBIT | – 4.9 | – 3.0 |
Expenses associated with leases of low-value assets | EBIT | – 0.1 | – 0.1 |
Interest expenses on lease liabilities | Financial result | – 0.8 | – 2.1 |
Movements in the carrying amount of right-of-use assets are presented in note 4.4. Lease liabilities and the respective maturity analysis are included in note 5.3 and 8.5.
Total cash outflows for leases amounted to CHF 12.9 million in 2024 (2023: CHF 11.3 million).
At December 31, 2024, future cash outflows in connection with lease arrangements that were committed, but have not commenced, amounted to CHF 0.7 million (December 31, 2023: CHF 37.5 million).
Material accounting policies
For contracts that are or contain a lease, a lease liability reflecting future lease payments and a right-of-use asset are recognized on the balance sheet.
Lease liabilities are measured at present value of the outstanding lease payments at the date of commencement. Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used (interest rate payable to borrow the funds necessary to purchase an asset of similar value in a similar economic environment with similar terms and conditions). Lease payments include fixed payments, variable payments that are based on an index or a rate, and the exercise price of a purchase option if the lessee is reasonably certain to exercise that option. Options for extension of the lease term are included in the calculation of the lease liability if management is reasonably certain to execute that option. Lease payments are divided into a component reducing the lease liability and interest expense recognized in the financial result. Lease liabilities are included in either current or non-current financial debt, depending on their maturity date.
Right-of-use assets represent the underlying assets leased by Rieter. The respective assets are measured at cost, comprising the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, initial direct costs, and restoration costs. Right-of-use assets are depreciated over the shorter of the assets’ useful life and the lease term on a straight-line basis.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as expenses in the income statement. Short-term leases are leases with a non-cancelable lease term of twelve months or less. Low value assets comprise IT-equipment and small items of office furniture.