Tesco 2009 Annual Report Download - page 92

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90 FINANCIAL STATEMENTS
Tesco PLC Annual Report and Financial Statements 2009
Note 11 Property, plant and equipment continued
Land and
buildings Other(a) Total
£m £m £m
Cost
At 24 February 2007 16,540 5,389 21,929
Foreign currency translation 545 231 776
Additions(b) 2,802 925 3,727
Acquisitions through business combinations 153 26 179
Reclassification across categories (50) (95) (145)
Classified as held for sale (295) (5) (300)
Disposals (485) (131) (616)
At 23 February 2008 19,210 6,340 25,550
Accumulated depreciation and impairment losses
At 24 February 2007 1,942 3,011 4,953
Foreign currency translation 52 117 169
Charge for the year 353 507 860
Reclassification across categories 34 (40) (6)
Classified as held for sale (44) (1) (45)
Disposals (47) (111) (158)
Impairment losses 77 – 77
Reversal of impairment losses (87) – (87)
At 23 February 2008 2,280 3,483 5,763
Net carrying value(c)(d)(e)
At 23 February 2008 16,930 2,857 19,787
At 24 February 2007 14,598 2,378 16,976
Capital work in progress included above(f)
At 23 February 2008 1,058 112 1,170
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 based on value in use, which is calculated from cash flow projections for five 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 2%-10% (2008: 3%-4%).
The pre-tax discount rates used to calculate value in use range from 7%-24% (2008: 8%-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.
Notes to the Group financial statements continued