Investor Presentaiton
124
Notes to the Consolidated Financial Statements
3.5
Leases (continued)
3.6
Property, plant and equipment
Assets and liabilities
3
125
Annual Report 2023
Woolworths Group
Critical accounting estimates
Determining the lease term
In determining the lease term, the Group considers all facts and circumstances that create
an economic incentive to exercise an extension option, or not to exercise a termination option.
The assessment is reviewed upon the occurrence of a significant event or change in circumstance.
Extension options are most common for property leases.
At the end of the reporting period, the weighted average remaining lease terms for the portfolio
of leases were:
Property, plant and equipment represent the Group's investments in tangible
assets, such as development properties, freehold land, warehouse, retail and
other properties, store fit-outs, distribution infrastructure, and technology.
1
DEVELOPMENT
PROPERTIES
FREEHOLD LAND,
WAREHOUSE,
RETAIL, AND OTHER
PROPERTIES
LEASEHOLD
IMPROVEMENTS
PLANT AND
EQUIPMENT
TOTAL
2023
$M
$M
$M
$M
$M
Cost
1,640
927
4,013
11,021
17,601
Less: accumulated depreciation
highlights
Performance
WEIGHTED AVERAGE LEASE TERM¹ WEIGHTED AVERAGE LEASE EXPIRY²
and impairment
(61)
(114)
(2,188)
(6,357)
(8,720)
Carrying amount at end of period¹
1,579
813
1,825
4,664
8,881
2023
YEARS
2022
YEARS
2023
2022
YEARS
YEARS
Movement:
2
Australian Food
9.0
9.9
7.8
8.2
Carrying amount at start of period
1,303
808
1,712
4,408
8,231
Australian B2B
8.2
8.1
8.2
7.4
Additions
570
32
347
1,009
1,958
New Zealand Food
9.3
9.2
8.0
7.8
Acquisition of businesses2
19
19
BIG W
8.8
9.4
6.7
6.7
Disposals
(60)
(8)
(1)
(4)
(73)
Other
7.7
7.1
6.9
6.4
Group
9.0
9.6
7.7
7.6
Transfer to assets held for sale
Depreciation expense
(9)
(185)
(2)
(196)
Business
review
(18)
(232)
(773)
(1,023)
1
Represents the weighted average number of years from the end of the reporting period to the end of the reasonably
certain lease term.
Impairment (expense)/reversal
Transfers and other
(19)
5
(4)
(23)
(41)
(206)
177
2
27
2 Represents the weighted average number of years from the end of the reporting period to the contractual lease end
date which has been disclosed for informative purposes.
During the current period, remeasurements include the impact of revising lease terms for
reasonably certain options, which resulted in an increase in recognised lease liabilities and lease
assets of $66 million (2022: $367 million).
Discount rates
In calculating the lease liability, the lease payments are discounted using the rate implicit in the
lease or the Group's incremental borrowing rate.
Determining the incremental borrowing rate involves significant judgement and is derived from key
external market-based rates and the Group's credit margin, whilst considering the type of asset
being leased, and the length of the lease.
Effect of movements in foreign
exchange rates
Carrying amount at end of period¹
1,579
2
1
813
1,825
3
4,664
6
8,881
3
FREEHOLD LAND,
WAREHOUSE,
DEVELOPMENT
PROPERTIES
RETAIL, AND OTHER
PROPERTIES
LEASEHOLD
IMPROVEMENTS
PLANT AND
EQUIPMENT
TOTAL
Directors'
Report
2022
$M
$M
$M
$M
$M
Cost
1,369
924
3,716
10,188
16,197
Less: accumulated depreciation
and impairment
(66)
(116)
(2,004)
(5,780)
(7,966)
Carrying amount at end of period¹
1,303
808
1,712
4,408
8,231
4
Movement:
Carrying amount at start of period
1,025
864
1,657
3,931
7,477
Additions
418
71
264
1,194
1,947
Acquisition of business2
47
47
Disposals
(10)
(10)
(6)
(5)
(31)
Transfer to assets held for sale
(55)
(167)
(3)
(225)
Depreciation expense
(19)
(215)
(701)
(935)
Impairment (expense)/reversal
(11)
2
(9)
Transfers and other
(75)
76
27
(42)
(14)
Financial
LO
Report
5
Effect of movements in foreign
exchange rates
(7)
Carrying amount at end of period¹
1,303
808
(4)
1,712
(15)
(26)
4,408
8,231
1 Carrying amount at the end of the period includes assets under construction of $1,102 million (2022: $974 million).
2 Acquisition of businesses comprises $18 million of property, plant and equipment relating to the acquisitions of Shopper and MyDeal
and $1 million relating to other individually immaterial acquisitions (2022: Acquisition of PFD).
Other
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