Tesco 2010 Annual Report Download - page 95

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Financial statements
Note 11 Property, plant and equipment continued
Land and
buildings Other(a) Total
£m £m £m
Cost
At 23 February 2008 19,210 6,340 25,550
Foreign currency translation 434 191 625
Additions(b) 3,345 1,013 4,358
Acquisitions through business combinations 586 34 620
Reclassification across categories (305) 45 (260)
Classified as held for sale (74) (8) (82)
Disposals (847) (120) (967)
At 28 February 2009 22,349 7,495 29,844
Accumulated depreciation and impairment losses
At 23 February 2008 2,280 3,483 5,763
Foreign currency translation 55 103 158
Charge for the year 352 659 1,011
Reclassification across categories (5) – (5)
Classified as held for sale 18 (3) 15
Disposals (128) (90) (218)
Impairment losses 56 – 56
Reversal of impairment losses (88) – (88)
At 28 February 2009 2,540 4,152 6,692
Net carrying value(c)(d)(e)
At 28 February 2009 19,809 3,343 23,152
At 23 February 2008 16,930 2,857 19,787
Capital work in progress included above(f )
At 28 February 2009 1,375 159 1,534
Impairment of property, plant and equipment
The Group has determined that for the purposes of impairment testing, each store is a cash-generating unit. Cash-generating units are tested for
impairment if there are indications of impairment at the balance sheet date.
Recoverable amounts for cash-generating units are mainly based on value in use, which is generally calculated from cash flow projections for five to
twenty years using data from the Group’s latest internal forecasts, the results of which are reviewed by the Board. The key assumptions for the value in
use calculations are those regarding discount rates, growth rates and expected changes in margins. Management estimate discount rates using pre-tax
rates that reflect the current market assessment of the time value of money and the risks specific to the cash-generating units. Changes in selling prices
and direct costs are based on past experience and expectations of future changes in the market.
The forecasts are extrapolated beyond five years based on estimated long-term growth rates of generally 1% to 4% (2009 – 2% to 10%).
The pre-tax discount rates used to calculate value in use range from 6% to 14% (2009 – 7% to 24%) depending on the specific conditions in which each
store operates. These discount rates are derived from the Group’s post-tax weighted average cost of capital.
Tesco PLC Annual Report and Financial Statements 2010 93