Tesco 2010 Annual Report Download - page 122

Download and view the complete annual report

Please find page 122 of the 2010 Tesco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Notes to the Group financial statements continued
Note 35 Leasing commitments
Finance lease commitments – Group as lessee
The Group has finance leases for various items of plant, equipment, fixtures and fittings. There are also a small number of buildings which are held
under finance leases. The fair value of the Group’s lease obligations approximate to their carrying value.
Future minimum lease payments under finance leases and hire purchase contracts, together with the present value of the net minimum lease payments
are as follows:
Present value of
Minimum lease payments minimum lease payments
2010 2009 2010 2009
£m £m £m £m
Within one year 49 55 45 47
Greater than one year but less than five years 101 140 90 114
After five years 178 172 74 82
Total minimum lease payments 328 367 209 243
Less future finance charges (119) (124)
Present value of minimum lease payments 209 243
Analysed as:
Current finance lease payables 45 47
Non-current finance lease payables 164 196
209 243
Operating lease commitments – Group as lessee
Future minimum rentals payable under non-cancellable operating leases are as follows:
2010 2009
£m £m
Within one year 1,043 754
Greater than one year but less than five years 3,702 3,069
After five years 10,004 9,170
Total minimum lease payments 14,749 12,993
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 and so 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 20-30 year lease terms. The Group reviews the substance
as well as the form of the arrangements when making the judgement as to whether these leases are operating or finance leases; 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:
2010 2009
£m £m
Within one year 259 201
Greater than one year but less than five years 566 445
After five years 348 335
Total minimum lease payments 1,173 981
120 Tesco PLC Annual Report and Financial Statements 2010