Pick n Pay Annual Report 2010

Pick n Pay Stores Limited and its subsidiaries

 

Notes to the annual financial statements

for the year ended 28 February 2010

 

24.   Operating leases  
 

The Group has entered into various operating lease agreements in respect of premises. Leases on premises are contracted for periods of between 10 and 20 years with renewal options for a further 10 to 20 years. Rentals comprise minimum monthly payments and additional payments based on turnover levels. Turnover rentals, where applicable, average 1.5% of turnover. Rental escalations vary but average 6.5% per annum.  
 

In terms of IAS 17, operating leases with fixed rental escalations are charged to the statement of comprehensive income on a straight-line basis. This results in the raising of a liability for future lease expenses and an asset for future lease income on the balance sheet. This liability and asset is reversed during the latter part of each lease term when the actual cash flow exceeds the statement of comprehensive income amounts.  
    GROUP
     2010  
Rm  		   2009  
Rm  
24.1   Operating lease asset        
  At 1 March   19.3     10.9  
  Accrual for future lease income   14.2     8.4  
  At 28 February   33.5     19.3  
  At 28 February future minimum rentals receivable from non-cancellable sublease contracts amount to:        
  Cash flow due in 2011   139.8     88.6  
  Creation of lease asset   13.2     12.7  
  Income in statement of comprehensive income   153.0     101.3  
  Cash flow due in 2012 – 2015   423.6     285.1  
  (Reversal)/creation of lease asset   (14.1)    13.9  
  Income in statement of comprehensive income   409.5     299.0  
  Cash flow due in 2015   153.9     297.2  
  Reversal of lease asset   (32.6)    (45.9) 
  Income in statement of comprehensive income   121.3     251.3  
  Total operating lease income receivable   683.8     651.6  
  Comprising:        
  Total future cash flows   717.3     670.9  
  Operating lease asset   (33.5)    (19.3) 
24.2   Operating lease liability        
  At 1 March   658.5     626.9  
  Accrual for future lease expenditure   37.4     31.6  
  At 28 February   695.9     658.5  
  At 28 February future non-cancellable minimum lease rentals are payable during the following financial years:        
  Cash flow due in 2011   790.7     709.5  
  Creation of lease liability   30.0     25.5  
  Statement of comprehensive income expense   820.7     735.0  
  Cash flow due in 2012 – 2015   2 966.3     2 752.3  
  Reversal of lease liability   (120.3)    (107.9) 
  Statement of comprehensive income expense   2 846.0     2 644.4  
  Cash flow due after 2015   3 238.8     3 413.1  
  Reversal of lease liability   (605.6)    (576.1) 
  Statement of comprehensive income expense   2 633.2     2 837.0  
  Total operating lease commitments   6 299.9     6 216.4  
  Comprising:        
  Total future cash flows   6 995.8     6 874.9  
  Operating lease liability   (695.9)    (658.5) 

 

 

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