Our stores The Group operates from 466 stores and the strategic focus remains in the development of the two formats of choice, the superstore and the smaller format Compact store, previously referred to as Neighborhood. Compact stores provide a comprehensive Halfords offer, carrying some 6,000 of the 10,000 lines available within an average superstore, to smaller catchments where a full superstore would not be viable (p. 6).
Finance director’s report – operating leases All of the Group’s stores are occupied under operating leases, the majority of which are on standard lease terms, typically with a 15-year term at inception. The Group has a total commitment under noncancellable operating leases of £778.5m (2008: £818.6m), (p. 20).

Accounting policy – Property, plant and equipment Property, plant and equipment are held at cost less accumulated depreciation and any impairment in value. Depreciation of property, plant and equipment is provided to write-off the cost, less residual value, on a straight-line basis over their useful economic lives as follows:
l Leasehold premises with lease terms of 50 years or less are depreciated over the remaining period of the lease;
l Motor vehicles are depreciated over 3 years;
l Store fixtures are depreciated over the period of the lease to a maximum of 25 years;
l Fixtures, fittings and equipment are depreciated over 4 to 10 years according to the estimated life of the asset;
l Computer equipment is depreciated over 3 years; and l Land is not depreciated.

Residual values, remaining useful economic lives and depreciation periods and methods are reviewed annually and adjusted if appropriate (p. 62).

Discussion points

1 Why is it important for the company to give descriptive information about the investment in stores?
2 What is the largest non-current asset category by net book value? Is it what you would expect for a business of this kind?

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Note 11. Property, plant and equipment Net book value at 3 April 2009 Net book value at 28 March 2008 Short leasehold land and buildings m 28.3 29.2 Fixtures, fittings and equipment m 79.0 86.6 Payments on account and assets in course of construction m 0.2 0.4 Total m 107.5 116.2