Tesco 2007 Annual Report Download - page 98

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Notes to the financial statements continued
Note 30 Commitments and contingencies
Capital commitments
On 24 February 2007 there were commitments for capital expenditure contracted for, but not provided, of £2,003m (2006 – £1,578m),
principally relating to the store development programme.
Contingent liabilities
The Company has irrevocably guaranteed the liabilities, as defined in section 5(c) of the Republic of Ireland (Amendment Act) 1986,
of various subsidiary undertakings incorporated in the Republic of Ireland.
Tesco Personal Finance, in which the Group owns a 50% joint venture share, has commitments, as described in its own financial
statements as at 31 December 2006, of formal standby facilities, credit lines and other commitments to lend, totalling £5.5bn
(2006 – £6.0bn). The amount is intended to provide an indication of the volume of business transacted and not of the underlying
credit or other risks.
For details of assets held under finance leases, which are pledged as security for the finance lease liabilities, see note 11.
There are a number of contingent liabilities that arise in the normal course of business which if realised are not expected to result
in a material liability to the Group. In connection with the railway tunnel collapse at Gerrards Cross, the Group is currently assessing
a number of potential claims. Due to the nature of those claims it is not currently possible to assess any liabilities or potential
recoveries, therefore no provision has been made. The final outcome is not expected to be material to the Group.
Note 31 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
2007 2006 2007 2006
£m £m £m £m
Within one year 38 23 36 20
Greater than one year but less than five years 109 37 90 27
After five years 130 132 57 57
Total minimum lease payments 277 192 183 104
Less future finance charges (94) (88)
Present value of minimum lease payments 183 104
Analysed as:
Current finance lease payables 36 20
Non-current finance lease payables 147 84
183 104
Finance lease receivables – Group as lessor
In 2006, the Group entered into finance leasing arrangements with UK staff for certain of its electronic equipment as part of the
Computers for Staff scheme. The average term of finance leases entered into was three years. The interest rate inherent in the leases
is fixed at the contract date for all of the lease term. The average effective interest rate contracted approximates to 4.0% (2006 –
4.6%) per annum. The fair value of the Group’s finance lease receivables at 24 February 2007 is estimated at £12m (2006 – £17m).
96 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate