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LEASING | 12 Months Ended
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Dec. 31, 2019
LEASING |
LEASING | NOTE 7 – LEASING TORM has leases for the office buildings, some vehicles and other administrative equipment. With the exception of short-term leases and leases of low-value assets, each lease is reflected on the balance sheet as a right-of-use asset with a corresponding lease liability. The right-of-use assets are included in the financial statement line item in which the corresponding underlying assets would be presented if they were owned. Please refer to note 6. As of 31 December 2019, TORM had recognized the following right-of-use assets:
|  | Vessels and |  |  |  | Other plant
|  | capitalized |  | Land and |  | and operating
USDm |  | dry-docking |  | buildings |  | equipment
Cost: |  |  |  |  |  |
Balance as of 1 January |  | 43.3 |  | — |  | —
Adjustment on transition to IFRS 16 |  | — |  | 9.9 |  | 0.3
Additions |  | 1.8 |  | 0.5 |  | 0.4
Disposals |  | (2.7) |  | — |  | (0.1)
Balance as of 31 December |  | 42.4 |  | 10.4 |  | 0.6
Depreciation: |  |  |  |  |  |
Balance as of 1 January |  | 13.4 |  | — |  | —
Disposals |  | (2.7) |  | — |  | —
Depreciation for the year |  | 4.8 |  | 2.3 |  | 0.2
Balance as of 31 December |  | 15.5 |  | 2.3 |  | 0.2
Carrying amount as of 31 December |  | 26.9 |  | 8.1 |  | 0.4
The table below describes the nature of the Group’s leasing activities by type of right-of-use asset recognized on the balance sheet:
|  |  |  |  |  |  |  |  | Other plant |
|  | Vessels and capitalized |  |  | Land and |  | and operating |
|  | dry-docking |  |  | buildings |  | equipment |
No. of right-of-use assets leased |  | 3 |  |  |  |  | 10 |  |  |  | 19 |
Range of remaining term |  | 2 | years |  |  |  | 0-9 | years |  |  | 0-3 | years
Average remaining lease term |  | 2.3 | years |  |  |  | 2.8 | years |  |  | 1.3 | years
No. of leases with extension options |  | — |  |  |  |  | 10 |  |  |  | 19 |
No. of leases with options to purchase |  | 3 |  |  |  |  | — |  |  |  | — |
No. of leases with termination options |  | 3 |  |  |  |  | 2 |  |  |  | 10 |
Lease liabilities regarding right-of-use assets are included on the balance sheet under “Borrowings”.
USDm |  | 2019 |  | 2018
Maturity analysis - contractual undiscounted cash flow |  |  |  |
Less than one year |  | 7.5 |  | 5.2
One to five years |  | 27.6 |  | 25.6
More than five years |  | 0.1 |  | —
Total undiscounted lease liabilities as of 31 December |  | 35.2 |  | 30.8
Lease liabilities included under "Borrowings" as of 31 December |  | 30.6 |  | 25.3
Non-current |  | 10.2 |  | 3.2
Current |  | 20.4 |  | 22.1
Extension and termination options are included in several leases in order to optimize operational flexibility in terms of managing contracts. The lease term determined by TORM is the non-cancellable period of a lease, together with any extension/termination options if these are/are not reasonably certain to be exercised. Lease payments not recognized as a liability The Group has elected not to recognize a lease liability for short-term leases (leases of an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. The expenses relating to payments not recognized as a lease liability are insignificant. Administrative expenses The total outflow for leases, USD 2.9m, is presented as “Depreciation” of USD 2.5m and “Financial expenses” (interest) of USD 0.4m, in contrast to the recording of an operating lease charge of a materially equivalent figure within the line item “Administrative expenses” under IAS 17. Financial expenses Financial expenses for the reporting periods:
USDm |  | 2019 |  | 2018 |  | 2017
Interest expenses: |  |  |  | — |  | —
Financial expenses arising from lease liabilities regarding right-of-use assets |  | 2.4 |  | 2.3 |  | 1.8
Other financial expenses |  | 39.5 |  | 37.0 |  | 38.8
Total |  | 41.9 |  | 39.3 |  | 40.6

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- Definition The entire disclosure for leases. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IFRS -Number 16 -IssueDate 2019-01-01 -Section Presentation -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=16&code=ifrs-tx-2019-en-r&doctype=Standard&dita_xref=IFRS16_g47-50_TI -URIDate 2019-03-27 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Name IFRS -Number 16 -IssueDate 2019-01-01 -Section Disclosure -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=16&code=ifrs-tx-2019-en-r&doctype=Standard&dita_xref=IFRS16_g51-60_TI -URIDate 2019-03-27 + Details
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- References No definition available. + Details
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