Tesco 2007 Annual Report Download - page 92

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Notes to the financial statements continued
Note 26 Business combinations
The Group has made a number of acquisitions in the year, of which the material acquisitions have been disclosed separately and
the remainder shown in aggregate.
The net assets and results of the acquired business are included in the consolidated accounts of the Group from the date of
acquisition. Acquisition accounting has been applied and the goodwill arising has been capitalised and is subject to annual
impairment testing.
The goodwill acquired in the business combinations listed below has been allocated to the single group of cash-generating units
represented by the acquired businesses, as this is the lowest level within the Group at which the goodwill is monitored internally.
Goodwill arising on acquisitions in the year is attributable mainly to customer loyalty, the assembled workforce and the synergies
expected to be achieved.
The fair values currently established for acquisitions made in the year to 24 February 2007 are provisional. Fair values will be reviewed
based on additional information up to one year from the date of acquisition. The Directors do not believe that any net adjustments
resulting from such a review would have a material effect on the Group.
Had all the combinations listed below taken place at the beginning of the financial year, the operating profit of the Group would
have been £2,626m and revenue from continuing operations would have been £43,306m. The pro forma information is provided for
comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative
of future results of operations of the combined companies.
Carrefour ˇ
Ceská Republika s.r.o
On 31 May 2006, the Group acquired 100% of the share capital of Carrefour ˇ
Ceská Republika s.r.o, a retailer in the Czech Republic,
as part of an asset swap deal for our Taiwanese business (see note 7).
The fair value of the identifiable assets and liabilities of Carrefour ˇ
Ceská Republika s.r.o as at the date of acquisition were:
Pre-acquisition Recognised
carrying Fair value values on
amounts adjustments acquisition
£m £m £m
Property, plant and equipment 88 (3) 85
Investment property 30 – 30
Deferred tax asset –1818
Inventories 17 (7) 10
Trade and other receivables 69 (5) 64
Cash and cash equivalents 13 – 13
Trade and other payables (166) (16) (182)
Net assets acquired 51 (13) 38
Goodwill arising on acquisition 32
70
Consideration:
Cash consideration 67
Costs associated with the acquisition 3
Total consideration 70
From the date of acquisition, the acquired business has contributed £151m to revenue and £8m of operating losses to the Group.
90 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate