Leases

12 Months Ended

Dec. 31, 2022

Presentation of leases for lessee [abstract]

Leases

35. Leases

The Group’s lease portfolio consists of approximately 720 property leases, mainly offices and test centres, together with a number of vehicle and equipment leases. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a lessee:

The amounts recognised in the income statement are as follows:

All figures in £ millions	Note		2022			2021			2020
Interest on lease liabilities				(25	)		(27	)		(41	)
Expenses relating to short-term leases				–			–			(1	)
Depreciation of right-of-use assets		10		(46	)		(49	)		(68	)
Impairment of right-of-use assets		10		(34	)		(119	)		(4	)

Lease liabilities are included within financial liabilities – borrowings in the balance sheet, see note 18. The maturities of the Group’s lease liabilities are as follows:

All figures in £ millions	2022		2021
Less than one year		94		92
One to five years		320		318
More than five years		332		394
Total undiscounted lease liabilities		746		804
Lease liabilities included in the balance sheet		605		633
Analysed as:
Current		71		68
Non-current		534		565

There are no lease liabilities classified as held for sale.

The amounts recognised in the cash flow statement are as follows:

All figures in £ millions	2022		2021		2020
Total cash outflow for leases as a lessee		118		115		133

At the balance sheet date commitments for capital leases contracted for but not yet incurred were £5m (2021: £3m). Extension and termination options and variable lease payments are not significant within the lease portfolio. Short-term leases to which the Group is committed at the balance sheet date are similar to the portfolio of short-term leases to which the short-term lease expense is disclosed above.

As a lessor:

In the event that the Group has excess capacity in its leased offices and warehouses, the Group subleases some of its properties under operating and finance leases.

The amounts recognised in the income statement are as follows:

All figures in £ millions	2022		2021		2020
Interest on lease receivables		5		6		9
Income from subleasing right-of-use assets (within other income)		4		2		7

The amounts recognised in the cash flow statement are as follows:

All figures in £ millions	2022		2021		2020
Total cash inflow for leases as a lessor		23		27		50

The following table sets out the maturity analysis of lease payments receivable for subleases classified as operating leases, showing the undiscounted lease payments to be received after the reporting date, and subleases classified as finance leases showing the undiscounted lease payments to be received after the reporting date and the net investment in the finance lease receivable. During the year, the investment in finance lease receivable increased by £6m (2021: decreased £15m), primarily due to new finance subleases entered into in excess of payments received.

All figures in £ millions	Operating leases		Finance leases			2022 Total		2021 Total		2020   Total
Less than one year		3		21			24		21		24
One to two years		5		23			28		18		24
Two to three years		5		23			28		20		18
Three to four years		5		23			28		21		18
Four to five years		5		24			29		20		18
More than five years		21		23			44		41		56
Total undiscounted lease payments receivable		44		137			181		141		158
Unearned finance income				(16	)
Net investment in finance lease receivable				121