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Right-of-use assets and lease liabilities | 12 Months Ended
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Dec. 31, 2020
Lease liabilities and Right of use assets Disclosure Abstract |
Disclosure of leases [text block] | 10. Right-of-use assets and lease liabilities The following table summarizes the movements of the right-of-use assets of continuing operations:
(USD millions) |  | 2020 |  | 2019 |
Right-of-use assets at January 1 |  | 1 677 |  | 1 554 |
Impact of acquisitions of businesses |  | 32 |  |  |
Additions |  | 346 |  | 537 |
Depreciation charge |  | – 330 |  | – 305 |
Lease contract terminations 1 |  | – 63 |  | – 98 |
Impact of divestments |  | – 32 |  | – 17 |
Currency translation effects |  | 46 |  | 6 |
Total right-of-use assets at December 31 2 |  | 1 676 |  | 1 677 |
1 Lease contract terminations also includes modifications to existing leases that result in reductions to the right-of-use assets, and reductions due to sub-leasing.
2 No impairment charge was recorded in 2020 (2019: nil).
The following table shows the right-of-use assets carrying value and depreciation charge of continuing operations at December 31, 2020 and 2019, by underlying class of asset:
(USD millions) |  | December 31, 2020 carrying value |  | Depreciation charge 2020 |  | December 31, 2019 carrying value |  | Depreciation charge 2019 |
Land |  | 528 |  | 11 |  | 537 |  | 14 |
Buildings |  | 963 |  | 207 |  | 990 |  | 194 |
Vehicles |  | 155 |  | 100 |  | 129 |  | 87 |
Machinery and equipment, and other assets |  | 30 |  | 12 |  | 21 |  | 10 |
Total right-of-use assets |  | 1 676 |  | 330 |  | 1 677 |  | 305 |
The following table shows the lease liabilities of continuing operations by maturity at December 31, 2020 and 2019:
(USD millions) |  | Lease liabilities 2020 |  | Lease liabilities undiscounted 2020 |  | Lease liabilities 2019 |  | Lease liabilities undiscounted 2019 |
Less than one year |  | 286 |  | 338 |  | 246 |  | 295 |
Between one and two years |  | 229 |  | 274 |  | 202 |  | 246 |
Between two and three years |  | 186 |  | 226 |  | 163 |  | 202 |
Between three and four years |  | 148 |  | 183 |  | 138 |  | 173 |
Between four and five years |  | 129 |  | 160 |  | 119 |  | 150 |
After five years |  | 1 027 |  | 2 326 |  | 1 081 |  | 2 419 |
Total lease liabilities |  | 2 005 |  | 3 507 |  | 1 949 |  | 3 485 |
Less current portion of lease liabilities |  | – 286 |  | – 338 |  | – 246 |  | – 295 |
Non-current portion of lease liabilities |  | 1 719 |  | 3 169 |  | 1 703 |  | 3 190 |
At December 31, 2020 and December 31, 2019, there were no material future cash outflows, including extension options, excluded from the measurement of lease liabilities. The Group’s most material lease with a lease term extension, representing a lease liability value of USD 0.6 billion (2019: USD 0.6 billion), has a determined lease term end date of 2071 (2019: 2071). In 2019, the Group completed sale and leaseback transactions for certain property, plant and equipment as part of its plans to consolidate sites. Transactions resulted in net cash inflows of USD 0.7 billion and the recognition of USD 96 million of lease liabilities, and USD 37 million of right-of-use assets. The right-of-use assets value reflects the proportion of the property, plant and equipment retained for a period of one to five years, with two five-year extension periods for certain right-of-use assets. The liabilities reflect the net present value of future lease payments. The net gain on the sale and leaseback transactions amounted to USD 478 million. There were no significant sale and leaseback transactions completed in 2020. The following table provides additional disclosures related to right-of-use assets and lease liabilities of continuing operations for 2020 and 2019:
(USD millions) |  | 2020 |  | 2019 |
Interest expense on lease liabilities 1 |  | 67 |  | 66 |
Expense on short-term leases |  | 4 |  | 7 |
Expense on low-value leases |  | 7 |  | 8 |
Total cash outflows for leases |  | 379 |  | 339 |
Thereof: |  |  |  |  |
Cash outflows for short-term leases and low-value leases 2 |  | 11 |  | 15 |
Payments of interest 3 |  | 56 |  | 51 |
Payments of lease liabilities 4 |  | 312 |  | 273 |
1 The weighted average interest rate is 3.4% (2019: 3.9%).
2 Cash flows from short-term and low-value leases are included within total net cash flows from operating activities. The portfolio of short-term leases to which the Group is committed to at December 31, 2020 and 2019, is similar to the portfolio of short-term leases the Group entered into during 2020 and 2019.
3 Included within total net cash flows from operating activities.
4 Reported as cash outflows used in financing activities net of lease incentives received of USD nil (2019: USD 33 million).
The net investment held and income from subleasing right-of-use assets were not significant for 2020 and 2019. Income from leasing Novartis property, plant and equipment to third parties for both 2020 and 2019 was not significant. Note 30 provides additional disclosures on discontinued operations.

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