Annual Report and Financial Statements 2007 - Tesco PLC

Note 26 Business combinations continued
Makro
On 24 January 2007, Tesco Stores Malaysia Sdn Bhd acquired 100% of the share capital of Makro Cash & Carry Distribution (M)
Sdn Bhd, which operates a chain of eight stores in Malaysia.
The fair value of the identifiable assets and liabilities of Makro Cash & Carry Distribution (M) Sdn Bhd 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 31 (10) 21
Investment property 2 – 2
Inventories 10 (1) 9
Trade and other receivables 5 6 11
Trade and other payables (32) – (32)
Provisions (1) – (1)
Net assets acquired 15 (5) 10
Goodwill arising on acquisition 63
Consideration:
Cash consideration 72
Costs associated with the acquisition 1
Total consideration 73
From the date of acquisition, the acquired business has contributed £12m to revenue and £nil to the operating profit of the Group.
Hymall
On 12 December 2006, the Group acquired a further 40% of the share capital of its joint venture, Hymall, a retail chain in China,
giving the Group control of the entity, making it a subsidiary entity.
On the same day, the minority shareholders of Hymall entered into an agreement to sell their remaining share of the business to
Tesco by 2009. Under IAS 32, the net present value of the future payments are shown as a financial liability, the value of which was
£48m at 24 February 2007.
The fair value of the identifiable assets and liabilities of Hymall as at the date of acquisition were:
73
Pre-acquisition Recognised
carrying Fair value values on
amounts adjustments acquisition
£m £m £m
Property, plant and equipment 95 – 95
Deferred tax asset 4 – 4
Inventories 39 – 39
Trade and other receivables 49 – 49
Cash and cash equivalents 33 – 33
Trade and other payables (219) – (219)
Provisions (23) – (23)
Net liabilities (22) – (22)
Minority interest 2
Transferred from investment in joint ventures 11
Net liabilities acquired (9)
Goodwill arising on acquisition of additional shares (in addition to previously held goodwill of £156m) 190
Consideration:
Cash consideration 180
Costs associated with the acquisition 1
Total consideration 181
As Hymall was acquired towards the end of their financial year, it has continued to be treated as a joint venture in 2006/07. However,
the net liabilities of Hymall have been consolidated as a subsidiary within the Group Balance Sheet as at 24 February 2007. From
the start of 2007/08, Hymall’s net result will be consolidated with that of the Group.
181
91
NOTES TO THE GROUP
FINANCIAL STATEMENTS