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Property, plant and equipment and investment property
 12 Months Ended
Dec. 31, 2022
Text block [abstract]  
Property, plant and equipment and investment property
10. Property, plant and equipment and investment property
 
               
          
Right-of-use
assets
                        
Owned assets
        
                 
All figures in £ millions
   
        Investment
property
    
        Land and
buildings
    
Plant and
      equipment
          
      Land and
buildings
    
Plant and
      equipment
    
Assets in
    the course of
construction
    
Total
  
                 
Cost
                                                              
                 
At 1 January 2021
   
 
–
 
  
 
439
 
  
 
12
 
  
  
   
 
296
 
  
 
308
 
  
 
21
 
  
 
1,076
 
                 
Exchange differences
   
 
–
 
  
 
–
 
  
 
–
 
       
 
2
 
  
 
(3
) 
  
 
–
 
  
 
(1
) 
                 
Additions
   
 
–
 
  
 
32
 
  
 
–
 
       
 
8
 
  
 
17
 
  
 
39
 
  
 
96
 
                 
Disposals and retirements
   
 
–
 
  
 
(6
) 
  
 
(7
) 
       
 
(100
) 
  
 
(72
) 
  
 
–
 
  
 
(185
) 
                 
Reclassifications and transfers
   
 
–
 
  
 
–
 
  
 
–
 
       
 
35
 
  
 
–
 
  
 
(31
) 
  
 
4
 
                 
Transfer to assets classified as held for sale
   
 
–
 
  
 
–
 
  
 
–
 
  
 
   
 
(15
) 
  
 
–
 
  
 
–
 
  
 
(15
) 
                 
At 31 December 2021
   
 
–
 
  
 
465
 
  
 
5
 
  
 
   
 
226
 
  
 
250
 
  
 
29
 
  
 
975
 
                 
Exchange differences
   
 
–
 
  
 
30
 
  
 
–
 
       
 
18
 
  
 
23
 
  
 
–
 
  
 
71
 
                 
Additions
   
 
22
 
  
 
33
 
  
 
1
 
       
 
4
 
  
 
8
 
  
 
33
 
  
 
           101
 
                 
Transfers to investment property
   
 
174
 
  
 
(141
) 
  
 
–
 
       
 
(32
) 
  
 
(1
) 
  
 
–
 
  
 
–
 
                 
Disposals of businesses (note 31)
   
 
–
 
  
 
(10
) 
  
 
–
 
       
 
(1
) 
  
 
(8
) 
  
 
–
 
  
 
(19
) 
                 
Disposals and retirements
   
 
(6
) 
  
 
(23
) 
  
 
(1
) 
       
 
(5
) 
  
 
(39
) 
  
 
–
 
  
 
(74
) 
                 
Reclassifications and transfers
   
 
–
 
  
 
–
 
  
 
–
 
       
 
13
 
  
 
27
 
  
 
(40
) 
  
 
–
 
                 
Transfer to assets classified as held for sale
   
 
–
 
  
 
–
 
  
 
–
 
  
 
   
 
(45
) 
  
 
(3
) 
  
 
–
 
  
 
(48
) 
                 
At 31 December 2022
   
 
190
 
  
 
354
 
  
 
5
 
  
 
   
 
178
 
  
 
257
 
  
 
22
 
  
 
1,006
 
               
          
Right-of-use
assets		                         Owned assets         
                 
All figures in £ millions   
        Investment
property
             Land and
buildings		     Plant and
      equipment		                 Land and
buildings		     Plant and
      equipment		     Assets in
    the course of
construction		      Total  
                 
Depreciation and impairment
                                                               
                 
At 1 January 2021      –       (110 )      (9 )            (199 )      (243 )      –        (561 ) 
                 
Exchange differences      –       (1 )      1            (1 )      1       –        –  
                 
Charge for the year      –       (46 )      (3 )           (16 )      (30 )      –        (95 ) 
                 
Disposals and retirements      –       7       6            99       71       –                   183  
                 
Reclassifications and transfers      –       –       –            (5 )      7       –        2  
                 
Impairment      –       (119 )      –            (22 )      (5 )      –        (146 ) 
                 
Transfer to assets classified as held for sale      –       –       –    
 
      8       –       –        8  
                 
At 31 December 2021
      –       (269 )      (5 )   
 
      (136 )      (199 )      –        (609 ) 
                 
Exchange differences   
 
–
 
  
 
(17
) 
  
 
–
 
       
 
(14
) 
  
 
(18
) 
  
 
–
 
   
 
(49
) 
                 
Transfers to investment property   
 
(105
) 
  
 
101
 
  
 
–
 
       
 
3
 
  
 
1
 
  
 
–
 
   
 
–
 
                 
Charge for the year   
 
(6
) 
  
 
(44
) 
  
 
(1
) 
       
 
(13
) 
  
 
(26
) 
  
 
–
 
   
 
(90
) 
                 
Disposals of businesses (note 31)   
 
–
 
  
 
2
 
  
 
–
 
       
 
1
 
  
 
5
 
  
 
–
 
   
 
8
 
                 
Disposals and retirements   
 
–
 
  
 
13
 
  
 
1
 
       
 
5
 
  
 
39
 
  
 
–
 
   
 
58
 
                 
Reclassifications and transfers   
 
–
 
  
 
–
 
  
 
–
 
       
 
–
 
  
 
–
 
  
 
–
 
   
 
–
 
                 
Impairment   
 
(19
) 
  
 
(15
) 
  
 
–
 
       
 
(9
) 
  
 
(3
) 
  
 
–
 
   
 
(46
) 
                 
Transfer to assets classified as held for sale   
 
–
 
  
 
–
 
  
 
–
 
  
 
   
 
30
 
  
 
2
 
  
 
–
 
   
 
32
 
                 
At 31 December 2022
   
 
(130
) 
  
 
(229
) 
  
 
(5
) 
  
 
   
 
(133
) 
  
 
(199
) 
  
 
–
 
   
 
(696
) 
                 
Carrying amounts
                                                               
                 
At 1 January 2021      –       329       3            97       65       21        515  
                 
At 31 December 2021      –       196       –    
 
      90       51       29        366  
                 
At 31 December 2022
   
 
60
 
  
 
125
 
  
 
–
 
  
 
   
 
45
 
  
 
58
 
  
 
22
 
   
 
310
 
         
     
    
  
LOGO
Key areas of estimation
  
    
     
   
The recoverability of
right-of-use
assets and in particular assumptions related to the ability to sublease vacant leased assets in the future.
    
         
 
Depreciation expense of £45m (2021: £40m; 2020: £44m) has been included in the income statement in cost of goods sold and £45m (2021: £55m; 2020: £81m) in operating expenses. The impairment charge of £46m (2021: £146m; 2020: £nil) has been included within operating expenses within the income statement.
Property, plant and equipment (including investment property) assets are assessed for impairment triggers annually or when triggering events occur. In 2022, similar to 2021, as part of a major restructuring programme, the Group continued to simplify its property portfolio, reducing the overall office space required. All property related assets were assessed for impairment as a result of this triggering event and impairment charges of £46m (2021: £141m) have been recognised within costs of major restructuring (see note 4 for details). The recoverability of certain of the Group’s
right-of-use
assets is now based on the Group’s ability to sublease vacant space. This involves the use of assumptions related to future subleases including the achievable rent, lease start dates, lease incentives such as rent free periods and the discount rate applied. Should the future sublease outcomes be more or less favourable than the assumptions used by management this could result in additional impairment charges or reversals of impairment charges.
Investment property
Buildings, or portions of buildings, that are no longer occupied by the Group and are held for operating lease rental are classified as investment property. Investment property includes both,
right-of-use
assets and owned assets. The Group recognised rental income of £3m (2021: £nil; 2020 £nil) in relation to properties classified as investment property. Investment property is measured using the cost model. As a result of recent impairments, the fair value of investment property is equal to the carrying value. The fair value of investment property has been determined using a discounted cash flow model. The valuation model is internally generated but uses inputs from external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. The valuations require the application of judgement and involve the use of known inputs for existing contracted subleases as well as assumptions related to future potential subleases including the achievable rent, lease start dates, lease incentives such as rent free periods and the discount rate applied. The fair value measurement of investment properties has been classified as level 3 within the fair value hierarchy based on the inputs and valuation technique used. Should the future sublease outcomes be more or less favourable than the assumptions used by management this could result in additional impairment charges or reversals of impairment charges.