Tesco 2011 Annual Report Download - page 149
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NOTE 36 LEASING COMMITMENTS CONTINUED
Operating lease commitments – Group as lessee
Future minimum rentals payable under non-cancellable operating leases are as follows:
2011
£m
2010
£m
Within one year 1,138 1,043
Greater than one year but less than five years 4,246 3,702
After five years 10,631 10,004
Total minimum lease payments 16,015 14,749
Future minimum rentals payable under non-cancellable operating leases after five years are analysed further as follows:
2011
£m
2010
£m
Greater than five years but less than ten years 4,203 3,610
Greater than ten years but less than fifteen years 3,023 2,894
After fifteen years 3,405 3,500
Total minimum lease payments – after five years 10,631 10,004
Operating lease payments represent rentals payable by the Group for certain of its retail, distribution and office properties and other assets such as
motor vehicles. The leases have varying terms, purchase options, escalation clauses and renewal rights.
The Group has lease break options on certain sale and leaseback transactions, which are exercisable if an existing option to buy back leased assets at
market value at a specified date is also exercised, no commitment has been included in respect of the buy-back option as the option is at the Group’s
discretion. The Group is not obliged to pay lease rentals after that date, therefore minimum lease payments exclude those falling after the buy-back date.
Operating lease commitments with joint ventures
Since 1988 the Group has entered into several joint ventures and sold and leased back properties to and from these joint ventures. The terms of these
sale and leasebacks vary, however, common factors include: the sale of the properties to the joint venture at market value; options within the lease for
the Group to repurchase the properties at market value; market rent reviews; and 20 to 30 full-year lease terms. The Group reviews the substance
as well as the form of the arrangements when determining the classification of leases as operating or finance; all of the leases under these
arrangements are operating leases.
Operating lease receivables – Group as lessor
The Group both rents out its properties and also sublets various leased buildings under operating leases. At the balance sheet date, the following
future minimum lease payments are contractually receivable from tenants:
2011
£m
2010
£m
Within one year 286 259
Greater than one year but less than five years 537 566
After five years 306 348
Total minimum lease payments 1,129 1,173
TESCO PLC Annual Report and Financial Statements 2011
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145
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