Tesco 2009 Annual Report Download - page 79

77
FINANCIAL STATEMENTS
Tesco PLC Annual Report and Financial Statements 2009
To find out more go to
www.tesco.com/annualreport09
Treatment of agreements to acquire minority interests
The Group has entered into a number of agreements to purchase the
remaining shares of subsidiaries with minority shareholdings.
Under IAS 32 ‘Financial Instruments: Presentation’, the net present value
of the expected future payments are shown as a financial liability. At the
end of each period, the valuation of the liability is reassessed with any
changes recognised in the Group Income Statement within finance income
or costs for the year. Where the liability is in a currency other than Pounds
Sterling, the liability has been designated as a net investment hedge. Any
change in the value of the liability resulting from changes in exchange
rates is recognised directly in equity.
Securitisation transactions
During 2008/9 the Group has entered into a securitisation transaction
and issued debt securities. The debt securities in issue and the loans and
advances to customers are recorded on the Group’s Balance Sheet within
current borrowings and loans and advances to customers.
Provisions
Provisions are recognised when there is a present legal or constructive
obligation as a result of a past event, for which it is probable that a transfer
of economic benefits will be required to settle the obligation, and where
a reliable estimate can be made of the amount of the obligation.
Provisions for onerous leases are recognised when the Group believes
that the unavoidable costs of meeting the lease obligations exceed the
economic benefits expected to be received under the lease. Where
material these leases are discounted to their present value. Provisions
for dilapidation costs are recognised on a lease by lease basis.
Recent accounting developments
Standards, amendments and interpretations effective for 2008/9
or issued and early adopted:
In preparing the Group financial statements for the current year, the Group
has adopted the following new IFRS, amendments to IFRS and IFRIC
Interpretations which have not had a significant impact on the results or
net assets of the Group:
Amendments to IAS 39 ‘Financial Instruments: Recognition and 
Measurement’ and IFRS 7 ‘Financial Instruments: Disclosures’, effective
from 1 July 2008. These amendments permit the reclassification of
financial assets in particular circumstances. The adoption of the
amendments to IAS 39 and IFRS 7 has had no impact on the results
or net assets of the Group.
IFRIC 11 ‘Group and Treasury Share Transactions’, effective for annual 
periods beginning on or after 1 March 2007.
IFRIC 12 ‘Service Concession Arrangements’, effective for annual periods 
beginning on or after 1 January 2008. This interpretation applies to
public sector service concession operators and explains how to account
for the obligations undertaken and rights received in service concession
arrangements. No member of the Group is an operator and hence the
adoption of IFRIC 12 has had no impact on the results or net assets of
the Group.
Standards, amendments and interpretations not yet effective,
but not expected to have a significant impact on the Group:
IFRS 8 ‘Operating Segments’, effective for annual periods beginning on 
or after 1 January 2009. This new standard replaces IAS 14 ‘Segment
Reporting’ and requires segmental information to be presented on the
same basis that management uses to evaluate performance of its
reporting segments in its management reporting. We do not expect the
adoption of IFRS 8 to have a significant impact upon the results or net
assets of the Group.
Amendment to IAS 23 ‘Borrowing Costs’, effective for annual periods 
beginning on or after 1 January 2009. The standard has been revised
to require capitalisation of borrowing costs when such costs relate to
a qualifying asset. We do not expect the adoption of the amendment
to IAS 23 to have a significant impact upon the results or net assets of
the Group.
IFRIC 14 ‘The Limit on a Defined Benefit Asset, Minimum Funding 
Requirements and their Interaction’, effective for annual periods
beginning on or after 1 January 2009 as endorsed by the EU. This
interpretation provides guidance on how to assess the limit on the
amount of surplus in a defined benefit scheme that can be recognised
as an asset under IAS 19 ‘Employee Benefits’. We do not expect the
adoption of IFRIC 14 to have a significant impact upon the results
or net assets of the Group.
Standards, amendments and interpretations not yet effective
and under review as to their impact on the Group:
Amendment to IAS 1 ‘Presentation of Financial Statements’, effective 
for annual periods beginning on or after 1 January 2009.
Amendment to IAS 27 ‘Consolidated and Separate Financial 
Statements’, effective for annual periods beginning on or after
1 July 2009.
Amendment to IAS 32 ‘Financial Instruments: Presentation’ and IAS 1 
‘Presentation of Financial Statements’– Puttable Instruments and
Instruments with Obligations Arising on Liquidation, effective for
annual periods beginning on or after 1 January 2009.
Amendment to IAS 39 ‘Financial Instruments: Recognition and 
Measurement’– Eligible hedged items, effective for annual periods
beginning on or after 1 July 2009.
Amendments to IFRS 1 ‘First-time Adoption of IFRSs’ and IAS 27 
‘Consolidated and Separate Financial Statements’– Cost of an
Investment of a Subsidiary, Jointly Controlled Entity or Associate,
effective for annual reporting periods beginning on or after
1 January 2009.
Amendment to IFRS 2 ‘Share-Based Payment’– Vesting Conditions 
and Cancellations, effective for annual periods beginning on or after
1 January 2009.
Amendments to IFRS 3 ‘Business Combinations’, effective for business 
combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after 1 July 2009.
IFRIC 13 ‘Customer Loyalty Programmes’, effective for annual periods 
beginning on or after 1 July 2008. This interpretation requires customer
loyalty award credits to be accounted for as a separate component of
the sales transaction in which they are granted and therefore part of the
fair value of the consideration received is allocated to the award credits
and deferred over the period that the award credits are fulfilled.
IFRIC 15 ‘Agreements for the Construction of Real Estate’, effective for 
annual periods beginning on or after 1 January 2009.
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’, effective 
for annual periods beginning on or after 1 October 2008.
IFRIC 17 ‘Distributions of Non-Cash Assets to Owners’, effective for 
annual periods beginning on or after 1 July 2009.
IFRIC 18 ‘Transfers of Assets from Customers’, effective for transfers 
of assets from customers received on or after 1 July 2009.
Note 1 Accounting policies continued