Leases

12 Months Ended

Dec. 31, 2023

Presentation of leases for lessee [abstract]

Leases

35. Leases

The Group’s lease portfolio consists of approximately 710 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		2023			2022			2021
Interest on lease liabilities				(23	)		(25	)		(27	)
Expenses relating to short-term leases				–			–			–
Depreciation of right-of-use assets		10		(39	)		(45	)		(49	)
Impairment of right-of-use assets		10		(2	)		(34	)		(119	)

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	2023		2022
Less than one year		84		94
One to five years		286		320
More than five years		301		332
Total undiscounted lease liabilities		671		746
Lease liabilities included in the balance sheet		547		605
Analysed as:
Current		64		71
Non-current		483		534

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

All figures in £ millions	2023		2022		2021
Total cash outflow for leases as a lessee		107		118		115

At the balance sheet date commitments for capital leases contracted for but not yet incurred were £8m (2022: £5m). 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	2023		2022		2021
Interest on lease receivables		4		5		6
Income from subleasing right-of-use assets (within other income)		6		4		2

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

All figures in £ millions	2023		2022		2021
Total cash inflow for leases as a lessor		19		23		27

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 decreased by £21m (2022: increased £6m), primarily due to payments received.

All figures in £ millions	Operating leases		Finance leases			2023 Total		2022 Total		2021 Total
Less than one year		10		21			31		24		21
One to two years		10		23			33		28		18
Two to three years		11		23			34		28		20
Three to four years		11		23			34		28		21
Four to five years		11		16			27		29		20
More than five years		48		6			54		44		41
Total undiscounted lease payments receivable		101		112			213		181		141
Unearned finance income				(12	)
Net investment in finance lease receivable				100