Tesco 2006 Annual Report Download - page 88

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86 Tesco plc
Notes to the financial statements continued
Note 25 Statement of Changes in Equity continued
Share premium account
The share premium account is used to record amounts received in excess of the nominal value of shares on issue of new shares.
Translation reserve
The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
subsidiaries. It is also used to record the movements in net investment hedges.
Treasury shares
During the year, the qualifying employee share ownership trust (QUEST) subscribed for 10 million from the Company, 0.1%
of called-up share capital as at 25 February 2006 (2005 – 10 million, 0.1%). An amount of £12m (2005 – £16m) represents
contributions to the QUEST from subsidiary undertakings.
The employee benefit trusts hold shares in Tesco PLC for the purpose of the various executive share incentive and profit share
schemes. At 25 February 2006, the trusts held 48.4 million shares (2005 – 70.9 million), which cost £140m (2005 – £185m) and
had a market value of £163m (2005 – £219m).
Merger reserve
The merger reserve arose on the acquisition of Hillards plc in 1987.
Other
The cumulative goodwill written-off against the reserves of the Group as at 25 February 2006 amounted to £718m (2005 – £718m).
Note 26 Business combinations
On 1 March 2005 the Group acquired the trade and assets of Aram-Mart, which operates a chain of 12 hypermarkets in Korea.
The consideration paid for this business was £49m cash.
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 combination listed below has been allocated to the single group of cash-generating units
represented by the acquired business, as this is the lowest level within the entity at which the goodwill is monitored internally.
The fair value of the identifiable assets and liabilities of Aram-Mart are:
Fair value Recognised
Carrying value adjustments on acquisition
£m £m £m
Property, plant and equipment 16 7 23
Inventories 2–2
Trade and other receivables 5–5
Trade and other payables (1) – (1)
Net assets acquired 22 7 29
Cash consideration 49
Goodwill arising on acquisition 20