Annual report and financial statements 2009
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Notes to the Group financial statements
21 Provisions
| Restructuring £m |
Property provisions £m |
Total £m |
|
|---|---|---|---|
| At 3 February 2008 | 29 | 110 | 139 |
| Charged to the income statement | – | 5 | 5 |
| Unused amounts reversed during the period | (8) | – | (8) |
| Utilised in period | (21) | (9) | (30) |
| Unwinding of discount | – | 6 | 6 |
| At 1 February 2009 | – | 112 | 112 |
a) Restructuring
The restructuring of the Group’s distribution centres, begun in 2006, concluded in the year. The original provision made, of £75m, was not fully utilised and an unspent balance of £8m was therefore reversed in the period. The remaining provision at the start of the year, relating to the Group’s change in corporate logo, was fully utilised in the year.
b) Property provisions
Property provisions comprise onerous leases provision, petrol filling station decommissioning reserve and provisions for dilapidations on leased buildings.
Onerous leases relate to sublet and vacant properties. Where the rent receivable on the properties is less than the rent payable, a provision based on present value of the net cost is made to cover the expected shortfall. The lease commitments range from 1 to 65 years. Market conditions have a significant impact and hence the assumptions on future cash flows are reviewed regularly and revisions to the provision made where necessary. As noted in the financial review, adjustments have been made to reflect the change in market conditions and the legislative changes in respect of rates charges for empty properties.
Other property provisions comprise petrol filling station decommissioning reserve and dilapidations cost. Provision is made for decommissioning costs for when the petrol filling station tanks reach the end of their useful life or when they become redundant and is based on the present value of costs to be incurred to decommission the petrol tanks. Dilapidation costs are incurred to bring a leased building back to the condition in which it was originally leased. Provision is made for these costs, which are incurred on termination of the lease.