Tesco 1998 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 1998 Tesco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 45

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45

3 5
Note 24 Reserves
a) Share premium account
At 22 February 1997
Premium on issue of shares less costs
Scrip dividend election
At 28 February 1998
b) Other reserves
At 28 February 1998 and 22 February 1997
c) Profit and loss account
At 22 February 1997
Goodwill arising on acquisition of subsidiary undertakings
Amount written back in respect of goodwill previously
offset against reserves
Loss on foreign currency net investments
Issue of shares
Retained profit for the financial year
At 28 February 1998
Other reserves comprise a merger reserve arising on the acquisition of Hillards plc in 1987.
In accordance with section 230 of the Companies Act 1985 a profit and loss account for Tesco PLC, whose result for the year is shown
above, has not been presented in these accounts.
The cumulative goodwill written off against the reserves of the Group as at 28 February 1998 amounted to £718m (1997 – £408m).
During the year the company received £54m on the issue of 10m shares in respect of the exercise of options awarded under the
savings-related share option scheme. Employees paid £16m to the Group for the issue of these shares and the balance of £38m
comprised contributions to the qualifying share ownership trust (QUEST)from subsidiary undertakings.
1998
£m
1,431
79
18
1,528
40
2,310
(445)
135
(14)
(38)
250
2,198
Group
1997
£m
1,383
30
18
1,431
40
2,057
(30)
–
(12)
–
295
2,310
1998
£m
1,431
79
18
1,528
–
815
–
–
–
–
36
851
Company
1997
£m
1,383
30
18
1,431
–
708
–
–
–
–
107
815
Note 25 Pension commitments
The Group operates a funded defined benefit pension scheme for full-time employees, the assets of which are held as a segregated
fund, administered by trustees.
The pension cost relating to the scheme is assessed in accordance with the advice of an independent qualified actuary using the
projected unit method. The latest actuarial assessment of this scheme was at 5 April 1996. The assumptions which have the most
significant effects on the results of the valuation are those relating to the rate of return on investments and the rate of increase in
salaries and pensions. It was assumed that the investment return would be 81⁄2% per annum with dividend growth of 4% per annum,
that salary increases would average 51⁄2% per annum and that pensions would increase at the rate of 31⁄2% per annum.
At the date of the latest acturial valuation, the market value of the scheme’s assets was £792m and the actuarial value of these assets
represented 108% of the benefits that had accrued to members, after allowing for expected future increases in earnings.
Benefit improvements to members have been agreed with the trustees which have resulted in an increased company cost. This
increasing on-going cost has been offset by the amortisation of the surplus as a level percentage of pay over nine years.
The pension cost of this scheme to the Group was £44m (1997 – £39m).