Tesco 2005 Annual Report Download - page 57

Tesco PLC 55
Note 25 Reserves
Group Company
2005 2004 2005 2004
restated
£m £m £m £m
Share premium account
At 28 February 2004 3,470 2,465 3,470 2,465
Premium on issue of shares less costs 143 851 143 851
Scrip dividend election 91 154 91 154
At 26 February 2005 3,704 3,470 3,704 3,470
Other reserves
At 26 February 2005 and 28 February 2004 40 40 – –
Profit and loss account
As previously reported 4,051 3,649 683 430
Prior year adjustment†24 53 – –
As at 28 February 2004 (restated) 4,075 3,702 683 430
Gain/(loss) on foreign currency net investments 19 (157) (71) (2)
Tax effect of exchange adjustments offset in reserves 16 – 16 –
Issue of shares (16) (25) – –
Retained profit for the financial year 779 584 508 255
At 26 February 2005 4,873 4,104 1,136 683
†Prior year comparatives have been restated (see note 1).
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 financial statements.
The cumulative goodwill written-off against the reserves of the Group as at 26 February 2005 amounted to £718m (2004 – £718m).
During the year, the qualifying employee share ownership trust (QUEST) subscribed for 10 million, 0.1% of called-up share capital
at 26 February 2005 (2004 – 30 million, 0.4%), shares from the company. The amount of £16m (2004 – £25m) shown above
represents contributions to the QUEST from subsidiary undertakings.
Included in the profit and loss account is an investment in own shares of £12m, which represents 5.89 million 5p ordinary shares
in Tesco PLC (0.1% of called up share capital at 26 February 2005) with a weighted average value of £1.95 each. These shares
are held by the QUEST in order to satisfy options under savings-related share option schemes which become exercisable over the
next few years. The carrying value of £12m (market value £18m) represents the exercise amount receivable in respect of these
shares subscribed for by the QUEST at market value. Funding is provided to the QUEST by Tesco Stores Limited, the company’s
principal operating subsidiary. The QUEST has waived its right to dividends on these shares.
The employee benefit trusts hold shares in Tesco PLC for the purpose of the various executive share incentive and profit share
schemes. At 26 February 2005, the trusts held 70.88 million shares (2004 – 52.38 million), which cost £185m (2004 – £110m)
and had a market value of £219m (2004 – £135m). In accordance with UITF 38, these shares have been treated as a deduction
in arriving at shareholders’ funds. The prior period figures have been restated accordingly.
Note 26 Share options
Company schemes
The company had the following share option schemes in operation during the year:
(i) The savings-related share option scheme (1981) permits the grant to employees of options in respect of ordinary shares
linked to a building society/bank save-as-you-earn contract for a term of three or five years, with contributions from employees
of an amount between £5 and £250 per four-weekly period. Options are capable of being exercised at the end of the three or
five-year period at a subscription price not less than 80% of the middle-market quotation of an ordinary share immediately
prior to the date of grant.
†