118 LV= Annual Report 2012
Notes to the financial statements continued
31 December 2012
42. Commitments (continued)
b) Operating lease commitments
The Group leases various properties under non-cancellable operating lease agreements. The leases have varying terms, escalation
clauses and renewal rights. The future aggregate minimum lease payments net of income under non-cancellable operating leases
are as follows:
Group Society
2012 2011 2012 2011
£m £m £m £m
Within one year 6.7 6.7 4.8 5.0
Between one and five years 19.4 19.6 14.3 13.8
Over five years 3.3 5.7 2.1 3.3
29.4 32.0 21.2 22.1
The Group has entered into commercial subleases for some of its properties that are unoccupied. These leases have varying terms
and escalation clauses. Where these subleases are insufficient to cover the Group’s operating lease agreements an onerous contract
provision for unused premises is set up. The future aggregate minimum sublease payments expected to be received under operating
subleases is as follows:
Group Society
2012 2011 2012 2011
£m £m £m £m
Within one year 1.0 0.4 0.7 0.1
Between one and five years 2.6 0.7 2.3 -
3.6 1.1 3.0 0.1
c) Finance lease commitments
It is the Group’s policy to lease certain of its properties under finance leases. The average lease term is 99 years. Interest rates are
fixed at the contract rate. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent
payments. The Group’s obligations under finance leases are secured by the lessors’ charges over the leased assets.
Group
2012 2011
£m £m
Gross finance lease liabilities - minimum lease payments
Within one year 1.1 1.1
Between one and five years 4.8 4.7
Over five years 88.2 89.4
94.1 95.2
Future finance charges on finance leases (89.1) (90.1)
Present value of financial lease liabilities 5.0 5.1
Group
2012 2011
£m £m
The present value of finance lease liabilities is as follows:
Within one year 0.2 0.2
Between one and five years 0.7 0.7
Over five years 4.1 4.2
5.0 5.1
d) Other financial commitments
The Group has entered into several long-term contracts following service outsourcing. These contracts will end no later than 2018. An
option to withdraw from some of these commitments in 2013 is available. The present value of the remaining commitment is estimated
at £89.5m (2011: £89.1m) for the Group and the Society. These amounts have not been provided for in the financial statements.