Tesco PLC Annual Review and Summary Financial Statement 2010
Overview Chairman’s statement A business for a new decade Tesco at a glance Chief Executive’s review Our business Long-term strategy and business highlights International Core UK Non-food Retailing Services Community Our people
1 2 6 8
Group sales (including VAT)*
+6.8% +10.1% +10.4% +9.1% +9.8% +9.1%
Underlying profit before tax
Group profit before tax
10 12 14 16 18 20 22
Underlying diluted earnings per share**
Diluted earnings per share
Summary Financial Statement Summary report of the Directors 24 Group financials 26 Our Board of Directors 29
Dividend per share
All growth figures reported on a 52-week basis.
52 weeks ended 27 February 2010
Group sales (£m) (including VAT)* Group revenue (£m) (excluding VAT) Group trading profit (£m) Underlying profit before tax (£m) Group profit before tax (£m) Underlying diluted earnings per share (p) Dividend per share (p) Group enterprise value (£bn) (market capitalisation plus net debt) Return on capital employed
62,537 56,910 3,412 3,395 3,176 31.66 13.05 41.4 12.1%
58,570 53,115 3,039 3,083 2,876 28.50 – – –
59,426 53,898 3,086 3,124 2,917 28.87 11.96 35.9 12.8%
* Group sales (inc. VAT) excludes the accounting impact of IFRIC 13 (Customer Loyalty Programmes). ** Growth in underlying diluted EPS calculated on a constant tax rate basis. ‡ Restated for the impact of IFRIC 13 and IFRS 2.
Over the past decade Tesco has transformed itself into a diverse international business – and by following our consistent strategy we are well positioned for long-term growth. I am pleased to report that the Tesco team has once again delivered a good set of results – guided by experienced management who have steered the business through recessions before. As markets around the world are emerging from this recession each part of our business is well positioned to pursue our strategy for growth. We have continued to grow sales, profits and market share over the past year. We’ve also significantly strengthened our balance sheet. Our acquisition in South Korea is performing well and delivering excellent results, we’ve opened our first three Tesco Lifespace shopping malls in China and we have made good progress building the infrastructure and developing new products for Tesco Bank. I am also pleased to announce that we again increased our dividend – for the 26th consecutive year. This consistent track record of delivering dividend growth for shareholders is unrivalled in the FTSE 100. The strong Group results over the last year have been achieved through a constant focus on what matters most to customers in challenging times around the world. A good example of this has been our renewed focus on rewarding loyalty – at home and abroad – which has been a great success with customers. In the UK, we increased our Clubcard investment with Double Points – giving customers even greater reward for their loyalty. Internationally, we launched Clubcard in three more countries during the year – in Poland, Slovakia and Thailand – and for the first time we now have more Clubcard holders internationally than in the UK. It has been another significant year for our work on the environment and within local communities. As we grow, our customers increasingly look to Tesco to take the lead in these areas – and we are. In January, we opened the world’s first zero-carbon store at Ramsey in Cambridgeshire – the latest step in our journey to reduce the carbon footprint of our business. Over the past year we have made significant progress towards our long-term goals by reducing our emissions by 7.8% on our baseline 2006/7 store and distribution porfolio. This year we donated over £60 million to charities – once again exceeding our target to give the equivalent of 1% of our...