Tesco 2012 Annual Report Download - page 145

STRATEGIC REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS OVERVIEW
Note 34 Leasing commitments continued
Operating lease commitments – Group as lessee
Future minimum rentals payable under non-cancellable operating leases are as follows:
2012
£m
2011
£m
Within one year 1,289 1,138
Greater than one year but less than five years 4,797 4,246
After five years 11, 237 10,631
Total minimum lease payments 17,323 16,015
Future minimum rentals payable under non-cancellable operating leases after five years are analysed further as follows:
2012
£m
2011
£m
Greater than five years but less than ten years 4,667 4,203
Greater than ten years but less than fifteen years 3,245 3,023
After fifteen years 3,325 3,405
Total minimum lease payments – after five years 11,237 10,631
Future minimum rentals payable under non-cancellable operating leases associated with the discontinued operations in Japan included in the above
tables amount to £nil (2011: £132m). See Note 7 for further details on discontinued operations.
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:
2012
£m
2011
£m
Within one year 241 286
Greater than one year but less than five years 398 537
After five years 297 306
Total minimum lease receivables 936 1,129
Note 35 Events after the reporting period
On 5 March 2012, Ek-Chai Distribution System Co. Ltd. (‘Tesco Lotus’), announced the final offering price of the Initial Public Offering of Tesco Lotus
Retail Growth Freehold and Leasehold Property (‘TLGF’). Tesco Lotus subscribed for 25% of the available units in TLGF. The units commenced trading
on the Stock Exchange of Thailand on 19 March 2012.
Tesco PLC Annual Report and Financial Statements 2012 141