Annual Report and Financial Statements 2007 - Tesco PLC

Note 31 Leasing commitments continued
Future minimum lease receivables under finance leases together with the present value of the net minimum lease receivables
are as follows:
Present value of
Minimum lease receivables minimum lease receivables
2007 2006 2007 2006
£m £m £m £m
Within one year 7 7 6 6
Greater than one year but less than five years 6 12 6 11
Total minimum lease receivables 13 19 12 17
Less unearned finance income (1) (2)
Net lease receivables 12 17
Analysed as:
Current finance lease receivables 6 6
Non-current finance lease receivables 6 11
Operating lease commitments – Group as lessee
Future minimum rentals payable under non-cancellable operating leases are as follows:
12 17
2007 2006
£m £m
Within one year 379 315
Greater than one year but less than five years 1,444 1,105
After five years 4,838 3,795
Total minimum lease payments 6,661 5,215
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.
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 at the end of the lease for the Group to repurchase the properties at market value, market rent reviews and
20-25 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; the majority of the leases under these arrangements are operating leases.
Operating lease receivables – Group as lessor
The Group both rents out its investment properties and also sub-lets various leased buildings under operating leases. At the Balance
Sheet date, the following future minimum lease payments are contractually receivable from tenants:
2007 2006
£m £m
Within one year 123 84
Greater than one year but less than five years 260 234
After five years 268 283
Total minimum lease payments 651 601
Note 32 Events after the balance sheet date
On 20 March 2007, the Group formed a property joint venture with The British Land Company PLC. The limited partnership contains
21 superstores which have been sold from and leased back to Tesco. The Group sold assets to the joint venture with a fair value of
approximately £650m and a net bookvalue of approximately £350m; 50% of the resulting profit will be recognised within profit
arising on property-related items with the remaining percentage deferred on the Balance Sheet in accordance with IAS 31 ‘Interests
in Joint Ventures’.
In March 2007, the Group issued two bonds: £500m paying interest at 5.2%, maturing in 2057 and €600m paying interest at
5.125%, maturing in 2047.
97
NOTES TO THE GROUP
FINANCIAL STATEMENTS