annington annual rep 2019-web - Page 75



Financial statements | Notes to the financial statements
Notes to the financial statements
27. ANALYSIS OF CHANGES IN NET DEBT
At 31 March 2019, the Group had contracted with tenants
the following future minimum rentals receivable under noncancellable operating leases:
Non-cash items
Cash and cash equivalents
2019
£’000
Cashflow
£’000
Amortisation
of bond issue
costs and
interest
accrued
£’000
162,783
6,176
-
Revaluation
adjustment
£’000
Finance
lease liability
additions
£’000
2018
£’000
-
-
156,607
(117)
-
(3)
-
(114)
-
(2,974,173)
-
(1,520)
8,836
-
(2,981,489)
(396,904)
-
(894)
-
-
(396,010)
(119)
-
-
-
(119)
-
Total loans and borrowings
(3,371,313)
-
(2,417)
8,836
(233)
(3,377,499)
Net debt
(3,208,530)
6,176
(2,417)
8,836
(233)
(3,220,892)
Debts falling due after one year
Unsecured notes
Unsecured term loan
Finance lease liabilities

28. LEASE COMMITMENTS
ACCOUNTING POLICY
The determination of whether an arrangement is, or contains,
a lease is based on the substance thereof at the inception
date. The arrangement is assessed for whether its fulfilment is
dependent on the use of a specific asset or assets or it conveys
a right to use the asset or assets, even if that right is not
explicitly specified.
Operating lease commitments - Group as a lessor
Leases in which the Group does not transfer substantially all
the risks and benefits of ownership of the asset are classified
as operating leases. Management has exercised judgement in
considering the potential transfer of the risks and rewards of
ownership, in accordance with IAS 17 Leases, for properties
leased to tenants and has determined that such leases are
operating leases.
Initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as revenue in
the period in which they are earned.
74 | Annington Limited Annual Report & Accounts 2019
Leases of property, plant and equipment where the Group, as
lessee, has substantially all the risks and rewards of ownership
are classified as finance leases.
99,581
6,509
25,217
-
47,221
105,523
172,019
After five years
The Company has entered into computer equipment leases.
These leases are capitalised within plant and equipment
Note 11.
Commitments in relation to finance leases are payable
as follows:

Present value of
minimum lease
payments
Minimum lease
payments
2019
£’000
2018
£’000
2019
£’000
2018
£’000

Within one year
127
-
117
-
Operating lease commitments – Group as lessee
In two to five years
137
-
119
-
-
-
-
-
264
-
236
-
(28)
-
-
-
236
-
236
-
The Group has entered into property leases on land and
buildings, machinery and motor vehicles. The lease terms are
between one to five years but the Group has the option, under
some of its leases, to lease the assets for additional terms of up
to 12 months.
Future minimum rentals payable under non-cancellable
operating leases are, as follows:
Land and
buildings
Within one year
After five years
Less: future finance
charges
Present value of
lease obligations

In two to five years
Finance lease commitments - Group as a lessee
99,014
In two to five years
Operating lease commitments - Group as a lessee
Operating lease payments are recognised as an operating
expense in the income statement on a straight-line basis
over the lease term.
2018
£’000
Within one year
Debts falling due within one year
Finance lease liabilities
2019
£’000
Finance lease commitments – Group as lessee
Machinery and
motor vehicles
2019
£’000
2018
£’000
2019
£’000
2018
£’000
565
182
189
177
1,663
2,020
261
162
2,228
2,202
450
339

The present value lease obligations spilt between current and
non-current is disclosed within Note 17.
Operating lease commitments – Group as lessor
The Group has entered into property lease agreements on
its investment properties portfolio and has performed an
evaluation of the terms and conditions of the arrangements
of these leases. This includes factors such as the lease term
not constituting a substantial portion of the economic life
of the property and the present value of the minimum lease
payments not amounting to substantially all of the fair value of
the property. The Group also retains all the significant risks and
rewards of ownership of these properties. As such, all of these
leases are accounted for as operating leases.
Annington Limited Annual Report & Accounts 2019 | 75

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