Tesco 2013 Annual Report Download - page 129

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125
Tesco PLC Annual Report and Financial Statements 2013
OVERVIEW BUSINESS REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS
Note 34 Leasing commitments continued
Operating lease commitments – Group as lessee
Future minimum rentals payable under non-cancellable operating leases are as follows:
2013
£m
2012
£m
Within one year 1,404 1,289
Greater than one year but less than five years 4,999 4,797
After five years 10,867 11,237
Total minimum lease payments 17,270 17,323
Future minimum rentals payable under non-cancellable operating leases after five years are analysed further as follows:
2013
£m
2012
£m
Greater than five years but less than ten years 4,756 4,667
Greater than ten years but less than fifteen years 3,128 3,245
After fifteen years 2,983 3,325
Total minimum lease payments – after five years 10,867 11,237
Future minimum rentals payable under non-cancellable operating leases associated with the discontinued operations in the US are excluded from
the above tables (2012: £709m). 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 and associates
Since 1988 the Group has entered into several joint ventures and sold and leased back properties to and from these joint ventures. In addition,
the Group also entered into property sale and leaseback transactions with an associate in this financial year. 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:
2013
£m
2012
£m
Within one year 258 241
Greater than one year but less than five years 348 398
After five years 260 297
Total minimum lease receivables 866 936