Tesco 2005 Annual Report Download - page 65

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Tesco PLC 63
Note 34 Acquisitions
The net assets and results of acquired businesses are included in the consolidated accounts from their respective dates of
acquisition. The following table sets out the effect of the material acquisitions by the Group in the year to 26 February 2005 on
the consolidated balance sheet. Acquisition accounting has been applied in all cases. The fair values currently established for all
acquisitions made in the year to 26 February 2005 are provisional. Fair values will be reviewed based on additional information
up to 2 April 2006. The Directors do not believe that any net adjustments resulting from such a review would have a material
effect on the Group. The goodwill arising on these acquisitions has been capitalised and is being amortised over 20 years.
Adminstore
Adminstore was acquired on 17 April 2004 and included in the consolidated balance sheet at 26 February 2005. The purchase
consideration was £56m. The net assets of Adminstore on acquisition and the provisional fair values were as follows:
Adjustments
Book values to align Fair values
of acquired accounting at date of
business policies Revaluations acquisition
£m £m £m £m
Fixed assets 3–14
Stock 3––3
Debtors 5––5
Cash 1––1
Creditors (8) – – (8)
Provisions for liabilities and charges (1) – – (1)
Net assets acquired 3–14
Consideration
Cash 56
Goodwill 52
The principal fair value adjustment made to the net bookvalues of the assets and liabilities of Adminstore was the revaluation
of freehold property to market value, based on valuations obtained from independent experts.
For the year ended 27 September 2003, Adminstore reported an audited profit after tax of £1.3m, and for the period
28 September 2003 to 17 April 2004 audited operating profit before exceptional items of £0.7m and audited post-tax
loss after exceptional items of £7.6m based on its then accounting policies.
Other acquisitions
During the year C Two-Network in Japan acquired Fre’c, which operates a small number of convenience stores in Japan, for cash
consideration of £2m. Goodwill on the acquisition was £13m after taking account of Fre’c’s liabilities at the time of acquisition.
The Group also acquired eDiets for cash consideration of £2m; there was £nil goodwill in respect of this acquisition. The company
owns the licence to use the eDiets name in the UK and Republic of Ireland.