12. Leases | | | | | | | | | | Where the group is the lessee, all leases are recognised on the balance sheet as right-of-use assets as part of property, plant and equipment, and depreciated on a straight-line basis with the charge recognised in cost of sales or in other operating items depending on the nature of the costs. The liability, recognised as part of net borrowings, is measured at a discounted value and any interest is charged to finance charges. The group recognises services associated with a lease as other operating items. Payments associated with leases where the value of the asset when it is new is lower than $5,000 (leases of low value assets) and leases with a lease term of 12 months or less (short-term leases) are recognised as other operating items. A judgement in calculating the lease liability at initial recognition includes determining the lease term where extension or termination options exist. In such instances, any economic incentive to retain or end a lease are considered and extension periods are only included when it is considered reasonably certain that an option to extend a lease will be exercised. | | | | |
(a) Movement in right-of-use assets The company principally leases warehouses, office buildings, plant and machinery, cars and distribution vehicles in the ordinary course of business. | | | | | Land and buildings $ million | Plant and equipment $ million | | | | | | | | | | | | | | Reclassification within property, plant and equipment | | | | Reclassification to assets held for sale | | | | | | | | | | | | | | | | | | | | Reclassification to assets held for sale | | | | | | | | | | | |
(b) Lease liabilities | | | | | | Current lease liabilities | | | Non-current lease liabilities | | | | | |
The future cash outflows, which are not included in lease liabilities on the balance sheet, in respect of extension and termination options which are not reasonably expected to be exercised are estimated at $201 million (2025 – $211 million). (c) Amounts recognised in the consolidated income statement In the year ended 30 June 2026, other external charges (within other operating items) included $38 million (2025 – $43 million) in respect of leases of low value assets and short-term leases and $24 million (2025 – $23 million) in respect of variable lease payments. See note 5 for further information relating to the interest expense on lease liabilities. The total cash outflow for leases in the year ended 30 June 2026 was $222 million (2025 – $212 million).
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