23 » Leasing and Service Arrangements
Operating Leases
The Group leases offices, retail stores, warehouses and equipment under leases with expiration
dates of between one and sixteen years. Rent expenses are recognized on a straight-line
basis over the lease term. Rent expenses (continuing operations) aggregated to € 278 million
and € 171 million for the years ending December 31, 2006 and 2005, respectively.
Future minimum lease payments under non-cancelable operating leases are as follows:
Minimum Lease Payments for Operating Leases € in millions
| Dec. 31 2006 |
Dec. 31 2005 |
|
| Within 1 year | 171 | 117 |
| Between 1 and 5 years | 397 | 243 |
| After 5 years | 218 | 202 |
| Total | 786 | 562 |
Finance Leases
The Group also leases various premises for administration, warehousing, research and development
as well as production, which are classified as finance leases.
The net carrying amount of these assets of € 10 million and € 12 million is included
in property, plant and equipment as at December 31, 2006 and 2005, respectively. Interest
expenses
were € 2 million (2005: € 1 million) and depreciation expenses were € 2 million
(2005: € 3 million) for the year ending December 31, 2006.
The minimum lease payments under these contracts over their remaining terms which extend up to 2016 and their net present values are as follows:
Minimum Lease Payments for Finance Leases € in millions
| Dec. 31 2006 |
Dec. 31 2005 |
|
| Lease payments falling due: | ||
| Within 1 year | 2 | 3 |
| Between 1 and 5 years | 6 |
7 |
| After 5 years | 2 | 2 |
| Total lease payments | 10 | 12 |
| Less: estimated amount representing interest |
2 | 1 |
| Obligation under finance leases |
8 | 11 |
| Thereof falling due: |
||
| Within 1 year |
3 | 3 |
| Between 1 and 5 years |
3 | 7 |
| After 5 years |
2 | 1 |
Service Arrangements
The Group has outsourced certain logistics and information technology functions, for which it
has entered into long-term contracts. Financial commitments under these contracts mature
as follows:
Financial Commitments for Service Arrangements € in millions
| Dec. 31 2006 |
Dec. 31 2005 |
|
| Within 1 year | 43 | 38 |
| Between 1 and 5 years | 42 | 18 |
| After 5 years | 0 | 0 |
| Total | 85 | 56 |