More than the weekly shop
Annual Report and Financial Statements 2008
Financial highlights Chief Executive’s statement Report of the Directors > Business Review > General information > Corporate governance Directors’ remuneration report 1 2 3 3 18 20 25
More than the weekly shop
Most people know something about Tesco. After all, we are the UK’s largest grocer and we’ve been serving customers for the best part of a century. What you might not know, is that Tesco is also the world’s third largest grocery retailer with operations in 12 international markets, employing over 440,000 people and serving millions of customers every week. We’re not simply about providing great quality food at affordable prices. We provide more choice than ever to more customers, whether it’s through our expanding international operations, innovative retailing services or our growing non-food offer. It doesn’t matter how people choose to shop with us or what they choose to buy, our core purpose remains the same – to create value for customers to earn their lifetime loyalty. We are also playing our part in tackling some of the social and environmental challenges we all face by putting community at the heart of what we do. From carrots to computers, from banking to broadband, from Shanghai to San Diego. We are… …more than the weekly shop.
Financial statements 39 > Statement of Directors’ responsibilities 40 > Independent auditors’ report to the members of Tesco PLC 41 > Group income statement 42 > Group statement of recognised income and expense 43 > Group balance sheet 44 > Group cash flow statement 45 > Reconciliation of net cash flow to movement in net debt note 45 > Notes to the Group financial statements 46 > Five year record 96 > Tesco PLC – Parent Company financial statements 98 > Independent auditors’ report to the members of Tesco PLC 108
Every year, more and more information is available for our shareholders, staff and customers. www.tesco.com/annualreport08
Growth on 2007
Group sales (including VAT)
Underlying Group profit before tax
Group profit before tax
(15.3% growth excluding last year’s exceptional items; principally the Pensions A-Day credit)
Underlying diluted earnings per share*
Diluted earnings per share
Dividend per share 2008 2007 46,611 42,641 2,545 2,653 22.36 23.31 9.64 40,469 12.6%‡ 51,773 47,298 2,846 2,803 27.02 26.61 10.90 37,656 12.9%§
Group sales (£m) (including value added tax) Group revenue (£m) (excluding value added tax) Underlying Group profit before tax (£m)† Group profit before tax (£m) Underlying diluted earnings per share (p) Diluted earnings per share (p) Dividend per share (p) Group enterprise value (£m) (market capitalisation plus net debt) Return on capital employed
* 13.1% growth on a normalised 28.9% tax rate. † Adjusted for IAS 32, IAS 39, the net difference between the IAS 19 Income Statement charge and ‘normal’ cash contributions for pensions and IAS 17 ‘Leases’ – impact of annual uplifts in rent and rent-free periods. In 2007 adjustment was also made for pensions adjustment – Finance Act 2006 and impairment of the Gerrards Cross site. § Using a ‘normalised’ tax rate before start-up costs in the US and Tesco Direct, and excludes the impact of foreign exchange in equity and our acquisition of a majority share of Dobbies ‡ Including the one-off gain from Pensions A-Day, ROCE in 2007 was 13.6%.
Tesco PLC Annual Report and Financial Statements 2008
Chief Executive’s statement
Strong growth across the Group The breadth of the Group and the strength of our business model have enabled Tesco to deliver another year of double-digit sales, profit and earnings per share growth. These results demonstrate that Tesco has again made strong progress. Sales, profits and returns have grown well, the growth has been broadly...