Changes to accountancy rules could wipe out up to £30m of supermarket giant Tesco’s profits and add £40m to its property portfolio.
The new IFRS standards mean that Tesco’s leasehold properties will have to be brought on to its balance sheet.
The retailer, which is today holding a seminar on the impact of the standards on its business, said only a small number of leases would be affected by the new rules.
It said around £40m of net fixed assets would be capitalised because of the new standards. Tesco currently has assets with a book value of about £12bn.
Finance and strategy director Andrew Higginson said that, while some figures may alter as a result of IFRS, the business itself would not change.
Tesco will adopt the new standards from the start of the 2005/06 financial year and will issue 2004/05 accounts restated under the same regime in May.
References: EGi Legal News 25/2/05
