Tesco 1998 Annual Report Download

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Tesco PLC •Annual report and financial statements 1998

Table of contents

  • Page 1
    Tesco PLC • Annual report and financial statements 1998

  • Page 2
    ...Statement 1998. These Annual Accounts together with the Annual Review and Summary Financial Statement 1998 comprise the full Annual Report and Accounts of Tesco PLC for 1998, in accordance with the Companies Act 1985. Copies may be obtained, free of charge, by writing to the Company Secretary, Tesco...

  • Page 3
    ... net loss on disposal of fixedassets, discontinued operations and integration costs) 26.6p Dividend per share 11.6p 23.5p 10.35p 13.2% 12.1% U K market share* for t he year ended 31 December 1997 % * source: IGD/Tesco 94 95 96 97 98 *estimated 1 UK sales (excluding property development sales...

  • Page 4
    ... In total, we will add around 600,000 square feet of new space - almost as much as we will open in the UK. Total Central Europe sales rose by 28.6% to £288m (1997 - £224m) reflecting a full year's contribution from our businesses in the Czech Republic and Slovakia and our two new stores in Hungary...

  • Page 5
    ... to accounting for the net loss on disposal of fixed assets and discontinued operations and the acquisition provisions, our underlying tax rate was 29%. Store development and capital expenditure In the UK we opened 23 stores with a total sales area of 561,500 feet in Budapest, Hungary. In the year...

  • Page 6
    ... The share price rose from 349p at the start of the financial year to 517p on 27 February 1998, giving a market capitalisation of approximately £11.4bn (1997 - £7.6bn).The share price reached a high of 539p on 30 January 1998. Tesco Market Total shareholder returns % Year 2000 Formal procedures...

  • Page 7
    ... Finance and interest rate risk 94 95 96 97 98 I nt erest cover (number of times) 5 The Group ensures continuity of funding by arranging for short term borrowings and commercial paper issuance to be fully backed by committed bank facilities, by limiting the amount of debt repayable in any one year...

  • Page 8
    ...in a Polish chain of stores for £4m, and a number of businesses in the UK for £10m. Details of acquisitions are set out in note 31 to the financial statements. During the year, the company invested £20m for 50% of the shares of a joint venture, Tesco Personal Finance Group Limited, with The Royal...

  • Page 9
    ... signatory to the CBI Code of Prompt Payment. Copies of the Code may be obtained from the CBI, Centre Point, 103 New Oxford Street, London WCA 1DU. Payment terms and conditions are agreed with suppliers in advance. Tesco PLC has no trade creditors in its balance sheet.The Group pays its creditors on...

  • Page 10
    ...a year, whose terms of reference cover the points recommended by the Code. Its duties include monitoring internal control throughout the Group, approving the Group's accounting policies and reviewing the interim and annual financial statements before submission to the Board. The Committee is chaired...

  • Page 11
    ... assets of the Tesco PLC Pension Scheme is delegated to a number of independent fund managers. Contributions to the Tesco PLC Money Purchase Pension Scheme are paid into insurance policies administered by the Equitable Life Assurance Society. There is no self-investment in Tesco shares or property...

  • Page 12
    ...market research. Compliance annexed to the Listing Rules.The auditors' report set out on page 15 covers the disclosures referred to in this report that are specified for audit by the London Stock Exchange. Details of directors' emoluments and interests, including executive and savings-related share...

  • Page 13
    ... of strategic corporate goals and comparative performance against peer companies including total shareholder return.The maximum long-term bonus is 25% of salary. Shares awarded have to be held 11 Table 2 Gains made on share options 217 217 Number of shares at exercise price (pence) Price at...

  • Page 14
    ... and conditional upon continuous employment with the company. Executive directors are included in an approved executive share option scheme (ESOS ), and are eligible to join the employees' savings-related share option scheme (SAYE ) when they have completed one year's service. Executive options...

  • Page 15
    ...three years. Non-executive directors receive a basic fee plus an additional sum in respect of committee membership. Baroness O'Cathain has the benefit of the use of a company car. 13 Table 4 Share options held by directors and not exercised at 28 February 1998 Executive share options schemes (1984...

  • Page 16
    ... to acquire ordinary shares shown above comprise options under the executive share option schemes (1984), (1994), (1996) and the savings-related share option scheme (1981) (note 23). Between 28 February 1998 and 20 April 1998 there were no changes in the number of shares held by the directors.

  • Page 17
    .... Auditors' report to the shareholders of Tesco PLC 15 We have audited the financial statements on pages 16 to 39 which have been prepared under the historical cost convention, the accounting policies set out on pages 20 and 21 and the directors' emoluments and share details included on...

  • Page 18
    Group profit and loss account Continuing operations 1998 £m Acquisitions 1998 £m 53 weeks ended 28 Februar y 1998 Note 1 Discontinued operations 1998 £m Total 1998 £m Total 1997 £m Sales at net selling prices 16,069 1,182 14,887 13,987 35 - 865 1,110 82 1,028 979 - 95 ( 46) 600 63 537...

  • Page 19
    Statement of total recognised gains and losses Group 53 weeks ended 28 Februar y 1998 1998 £m Company 1998 £m 1997 £m 1997 £m Profit for the financial year Loss on foreign currency net investments Total recognised gains and losses relating to the financial year 505 (14 ) 491 520 (12) 508...

  • Page 20
    ...up share capital Share premium account Other reserves Profit and loss account Equity shareholders' funds 22 24 24 24 110 1,528 40 2,198 3,876 109 1,431 40 2,310 3,890 110 1,528 - 851 2,489 109 1,431 - 815 2,355 Terry Leahy Andrew H igginson Directors Financial statements approved by the Board...

  • Page 21
    ... outflow from returns on investments and servicing of finance Taxation 28 ( 116) ( 6) ( 94) ( 238) Corporation tax paid (including advance corporation tax) Payments to acquire tangible fixed assets Receipts from sale of tangible fixed assets Increase in fixed asset investments Capital expenditure...

  • Page 22
    ... amortised by equal annual instalments over the unexpired period of the lease. Plant, equipment, fixtures and fittings and motor vehicles - at rates varying from 10% to 33%. Leasing The Group profit and loss account and balance sheet consist of the financial statements of the parent company and its...

  • Page 23
    ... currencies are translated into sterling at the financial year end exchange rates. Profits and losses of overseas subsidiaries are translated into sterling at average rates of exchange. Gains and losses arising on the translation of the net assets of overseas subsidiaries are taken to reserves, less...

  • Page 24
    Notes to the financial statements N ote 1 Segmental analysis of sales,turnover, profit and net assets The Group's operations of food retailing and associated activities and property development are carried out in the UK, Northern Ireland, Republic of Ireland, Hungary, Poland, Czech Republic and ...

  • Page 25
    ... £12m redundancy costs, £28m asset write-downs and £20m for other integration costs. N ote 3 Employee profit-sharing 23 This represents the amount allocated to the trustees of the profit-sharing scheme and is based on the UK profit after interest before net loss on disposal of fixed assets and...

  • Page 26
    ... receivable and similar income on money market investments and deposits Less interest payable on: Short term bank loans and overdrafts repayable within five years Finance charges payable on finance leases 4% unsecured deep discount loan stock 2006 (a) E.C.S.C. loans 1998-1999 (b) 103⁄8% bonds 2002...

  • Page 27
    ...excluding integration costs and net loss on disposal of fixed assets, is based on the profit on ordinary activities after taxation and after adding the interest income, net of corporation tax, which would have arisen had all the various ordinary share options granted under the company's schemes been...

  • Page 28
    ... leasehold - 50 years or more Short leasehold - less than 50 years At 28 Februar y 1998 4,628 508 292 5,428 4,245 544 299 5,088 e) Capital work in progress does not include land. f ) Net book value is stated after charging £28m in respect of integration costs incurred on acquisition of the Irish...

  • Page 29
    ... share capital, loan capital and debt securities Country of incorporation and principal country of operation Shopping Centres Limited BLT Properties Limited Tesco British Land Property Partnership Tesco Personal Finance Group Limited Tesco Personal Finance Life Limited Property Investment Property...

  • Page 30
    ... financial statements continued N ote 12 Fixed asset investments continued The net borrowings of the associated undertakings, as at 28 February 1998, were as follows: 1998 £m 1997 £m Cash and deposits Term bank loan - repayable 1999 Debenture stock - repayable 2001 Term bank loan - repayable...

  • Page 31
    ... in other creditors falling due after more than one year (note 17). Group Company 1998 £m 29 N ote 17 Other creditors falling due after more than one year 1998 £m 1997 £m 1997 £m 4% unsecured deep discount loan stock 2006 (a) Finance leases (note 21) 103⁄8% bonds 2002 (b) 83⁄4% bonds...

  • Page 32
    ... years Finance leases Due otherwise than by instalments after five years Bank and other loans Gross debt Less: Cash at bank and in hand Money market investments and deposits Net debt 30 N ote 19 Financial instruments Analysis of interest rate exposure and currency of net debt. The interest rate...

  • Page 33
    ... costs £m Total £m At 22 February 1997 Integration costs charged in the year Amount utilised in year (a) At 28 February 1998 20 - (14) 6 - 67 (35) 32 20 67 ( 49) 38 Details of the integration costs are included in note 2. a) Deferred taxation includes £3m disposed of as part of the sale...

  • Page 34
    ... rental obligations Less finance charges allocated to future periods 50 8 42 1998 £m 1997 £m Net amounts payable are: Within one year Between one and five years After five years 32 17 24 1 42 21 47 8 76 b) Operating leases Group commitments during the 52 weeks to 27 February 1999, in terms...

  • Page 35
    ... in respect of ordinary shares to selected executives. The scheme expired after ten years on 9 November 1994. Options were generally exercisable between three and ten years from the date of grant at a subscription price determined by the Board but not less than the middle market quotation within the...

  • Page 36
    ... continued N ote 23 Share options continued The company has granted outstanding options in connection with the four schemes as follows: Savings-related share option scheme (1981) Date of grant Number of executives and employees Shares under option 28 February 1998 Subscription price (pence) 29.10...

  • Page 37
    ... account 40 40 - - At 22 February 1997 Goodwill arising on acquisition of subsidiary undertakings Amount written back in respect of goodwill previously offset against reserves Loss on foreign currency net investments Issue of shares Retained profit for the financial year At 28 Februar y 1998...

  • Page 38
    ...Group's key management or members of their close family. During the year the Group traded with its five associated undertakings, Shopping Centres Limited, BLT Properties Limited, Tesco British Land Property Partnership, Tesco Personal Finance Group Limited and Tesco Personal Finance Life Limited.The...

  • Page 39
    ...been consolidated into the Tesco Group balance sheet as follows: Balance sheet at acquisition Ireland £m Other £m Fair value adjustments £m Fair value balance sheet £m 37 Fixed assets Stock Debtors Net cash Loans Creditors Taxation Shareholders' funds Goodwill Total purchase consideration 304...

  • Page 40
    ... Operating profit Interest Profit on sale of fixed assets Profit before tax Taxation Profit after taxation 731 21 (1) 2 22 13 9 The Irish businesses purchased contributed £130m to the Group's net operating cash flows, paid £10m in respect of net returns on investments and servicing of finance...

  • Page 41
    ...net returns of investments and servicing of finance, had a financing cash outflow of £3m and utilised £3m for capital expenditure. N et loss on disposal of Catteau S.A. £m Fixed assets Cash Working capital Finance leases Taxation Net assets Consideration - cash Costs Goodwill write-back Net loss...

  • Page 42
    .../Central Statistical Office data for the year to the previous December. The figures have all been restated following a change in the IGD market definition. The figure for 1998 is estimated. 13 Average store sizes exclude Metro Market share in food and drink shops Number of stores Total sales...

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    Tesco PLC, Tesco House, Delamare Road,Cheshunt,Hertfordshire EN8 9SL Front cover photograph:customers at our Sutton Cheam Park store, which opened in June 1997.

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