Tesco 1999 Annual Report Download

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TESCO PLC ANNUAL REPORT
AND FINANCIAL STATEMENTS 1999

Table of contents

  • Page 1
    T E S C O P L C A N N UA L R E P O RT A N D F I N A N C I A L S TAT E M E N T S 19 9 9

  • Page 2
    ... Annual Accounts together with the Annual Review and Summary Financial Statement 1999 comprise the full Annual Report and Accounts of Tesco PLC for 1999, in accordance with the Companies Act 1985. Copies may be obtained, free of charge, by writing to the Company Secretary, Tesco House, Delamare Road...

  • Page 3
    ...1998 53 weeks (restated) £m Group sales (including value added tax) Group operating profit (prior to integration costs and goodwill amortisation) Profit on ordinary activities before tax ‡ Group enterprise value (market capitalisation plus net debt) Earnings per share Dividend per share Number...

  • Page 4
    ...relates mainly to our development plans in the rest of Europe and Asia. †Excluding net loss on disposal of fixed assets and discontinued operations, integration costs and goodwill amortisation 758 Group 841 770 666 608 682 757 The financial period to 28 February 1998 was a 53 week trading year...

  • Page 5
    ...). The share price reached a high of 202p on 2 July 1998. 22.7 15.1 Five years 1998 * £m Change % % 5.5 Total shareholder return Three years One year UK performance 1999 £m Food retail sales (including value added tax) Operating profit 17,070 919 15,799 859 8.0 7.0 * 52 weeks proforma...

  • Page 6
    ...Peterborough, providing one-stop shopping convenience for customers. Express is also proving to be a promising format. We have 17 stores and during the year we announced our joint venture with Esso to develop more petrol sites, the first of which opened recently on the Fulham Road, Chelsea. In 1999...

  • Page 7
    ...£6m (1998 - loss of £6m). Tesco Personal Finance has been an important part of our business strategy now for two years and is in good shape. Products launched to date, including savings, loans, visa, insurance and pensions have all been popular and over one million customers now use our financial...

  • Page 8
    ... areas of work lie within: • computer systems • suppliers of products for re-sale • suppliers of equipment and services • the supply chain and our distribution network Our aim is for all the relevant parts of the Group to be able to handle business in euros when required. Tesco has project...

  • Page 9
    ... it is to form a partnership company with Samsung Corporation to develop hypermarkets in South Korea. The Group will initially invest £80m in cash for 51% of the business and a further £50m for an additional 30% holding in June 1999. Share capital Group turnover excluding VAT rose by £706m...

  • Page 10
    ... and territory in which the suppliers operate. Auditors The Group depends on the skills and commitment of its employees in order to achieve its objectives. Company staff at every level are encouraged to make their fullest possible contribution to Tesco success. A key business priority is to provide...

  • Page 11
    ...treasury policies, risk management policies and succession plans for senior executives. In order that the Board is able to make considered decisions, a written protocol exists, and has been communicated to senior managers, ensuring that relevant information is presented to all Board members one week...

  • Page 12
    ... framework The Group operates a comprehensive The company has an Audit Committee, chaired by Mr J W Melbourn and consisting entirely of non-executive directors, which meets a minimum of three times a year. Membership of the Audit Committee is set out in the table on page 11. Its terms of reference...

  • Page 13
    ... paid into insurance policies administered by the Equitable Life Assurance Society. There is no selfinvestment in Tesco shares or property occupied by the Tesco Group. Details of pension commitments are set out in note 26 to the financial statements on page 37. Statement of compliance with the Code...

  • Page 14
    ...considering external market research. Compliance report set out on page 17 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 options, are set out...

  • Page 15
    ... C O P L C ANNUAL REPORT 1999 1 3 Profit-sharing The Group operates an approved employee profit-sharing scheme for the benefit of all employees, including executive directors, with over two years' service with the Group at its year end. Shares in the company are allocated to participants in the...

  • Page 16
    ... each year based on the scheme shares held. This holding period may be extended only subject to personal shareholding targets set by the Committee being met by the scheme members and conditional upon continuous employment with the company. Share options Executive directors are members of the Tesco...

  • Page 17
    T E S C O P L C ANNUAL REPORT 1999 1 5 Table 4 Share options held by directors and not exercised at 27 February 1999 Executive share options schemes (1984), (1994) and (1996) 72.3 (a) 72.3 (b) 70.0 (b) 81.0 (b) 77.3 (b) Number of shares at exercise price (pence) 90.3 104.0 98.3 Sub-total Mr T P ...

  • Page 18
    ...L C ANNUAL REPORT 1999 Report of the Directors on Remuneration continued Table 5 Share options held by directors and not exercised at 27 February 1999 Savings-related share option scheme (1981) As at 28 Feb 1998 Granted Exercised Number of shares As at 27 Feb 1999 Value realisable Exercise price...

  • Page 19
    ... and fair view of the state of affairs of the company and the Group at 27 February 1999 and of the profit and cash ï¬,ows of the Group for the year then ended and have been properly prepared in accordance with the Companies Act 1985. Chartered Accountants and Registered Auditors London 12 April...

  • Page 20
    18 T E S C O P L C ANNUAL REPORT 1999 Group profit and loss account 52 weeks ended 27 February 1999 Total 1999 £m Note Total 1998 (restated) £m Sales at net selling prices 1 Value added tax Turnover excluding value added tax 1/2 18,546 (1,388) 17,158 (16,155) (38) (26) (5) 934 - (8) 6 932...

  • Page 21
    ...of movements in shareholders' funds 52 weeks ended 27 February 1999 Group 1998 (restated) £m Company 1998 £m 1999 £m 1999 £m Profit for the financial year Dividends Loss on foreign currency net investments New share capital subscribed less expenses Payment of dividends by shares in lieu of...

  • Page 22
    ... 1,577 - 783 2,699 - 2,699 110 1,528 - 851 2,489 - 2,489 Minority interest Total capital employed Terry Leahy Andrew Higginson Directors Financial statements approved by the Board on 12 April 1999. Accounting policies and notes forming part of these financial statements are on pages 22 to 40.

  • Page 23
    ... in debt and lease financing Loans and finance leases acquired with subsidiary Loans and finance leases disposed of as part of sale of business Cash used to increase liquid resources Amortisation of 4% unsecured deep discount loan stock Foreign exchange differences Increase in net debt 196 (704...

  • Page 24
    .../98 Ireland integration costs in the profit and loss account to that amount actually incurred in the year. For 1998/99 a further charge for integration costs has been incurred. Stocks The Group has adopted Financial Reporting Standard 10, 'Goodwill and Intangible Assets' in its accounts this year...

  • Page 25
    ...in accordance with the depreciation accounting policy over the anticipated working lives of the assets which generally correspond to the primary rental periods. The cost of operating leases in respect of land and buildings and other assets is expensed as incurred. Deferred taxation Gains and losses...

  • Page 26
    ...L C ANNUAL REPORT 1999 Notes to the financial statements Note 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, Republic of Ireland, France, Hungary, Poland, Czech...

  • Page 27
    ... the year 1999 £m 1998 £m Wages and salaries Social security costs Other pension costs (note 26) 1,558 105 73 1,736 1,481 99 62 1,642 b) Number of persons employed The average number of employees per week during the year was: UK 172,712 (1998 - 164,716), Rest of Europe 19,497 (1998 - 20...

  • Page 28
    ... Note 7 Net interest payable £m £m Interest 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...

  • Page 29
    ... the average daily mid-market closing price over the period. 52 weeks to 27 Feb 1999 53 weeks to 28 Feb 1998 Weighted average number of dilutive share options (m) Weighted average number of shares in issue in the period (m) Total number of shares for calculating diluted earnings per share (m) 153...

  • Page 30
    28 T E S C O P L C ANNUAL REPORT 1999 Notes to the financial statements continued Note 12 Tangible fixed assets Cost Land and buildings £m Plant equipment fixtures and fittings and vehicles £m Total £m At 28 February 1998 Currency translation Additions at cost (a) Purchase of ...

  • Page 31
    ... are: Business Share of issued 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...

  • Page 32
    ...C O P L C ANNUAL REPORT 1999 Notes to the financial statements continued Note 13 Fixed asset investments continued The net borrowings of the joint ventures, as at 27 February 1999, were as follows: 1999 £m 1998 (restated) £m Cash and deposits Debenture stock - repayable 2001 Term bank loan...

  • Page 33
    ... 1998 £m Note 17 Creditors falling due within one year 1999 £m 1999 £m Bank loans and overdrafts (a) (b) Trade creditors Amounts owed to Group undertakings Other creditors Corporation tax (c) Other taxation and social security Accruals and deferred income (d) Finance leases (note 22) Proposed...

  • Page 34
    ...P L C ANNUAL REPORT 1999 Notes to the financial statements continued Group Company 1999 £m Note 19 Net debt 1999 £m 1998 £m 1998 £m Due within one year Bank and other loans Finance leases Due within one to two years Bank and other loans Finance leases Due within two to five years Bank...

  • Page 35
    ... swaps. Currency analysis of net assets The Group's net assets by currency on 27 February 1999 Financing Net assets before financing £m Gross debt £m Net investment 1999 £m 1998 £m Currency Sterling Irish punt Thai baht Other Total net assets The currency value shown is the year end value...

  • Page 36
    ... (3) 27 1999 £m 1998 £m Net amounts payable are: Within one year Between one and five years After five years 19 8 - 27 17 24 1 42 b) Operating leases Group commitments during the 52 weeks to 26 February 2000, in terms of lease agreements expiring, are as follows: 1999 £m 1998 £m Within...

  • Page 37
    ... Restatement for prior year accounting adjustment At 28 February 1998 (restated) 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...

  • Page 38
    ... as follows: Savings-related share option scheme (1981) Date of grant Number of executives and employees Shares under option 27 Feb 1999 Subscription prices (pence) 22 October 1993 26 October 1994 27 October 1995 31 October 1996 30 October 1997 29 October 1998 Executive share option scheme (1984...

  • Page 39
    ... company cost. This increasing ongoing cost has been offset by the amortisation of the surplus as a level percentage of pay over nine years. The pension cost of this scheme to the Group was £55m (1998 - £44m). The Group also operates a defined contribution pension scheme for part-time employees...

  • Page 40
    ...Limited purchased a property from Spenhill Properties Limited (a fellow Group company) for £7m. iv) The Group has charged Tesco Personal Finance Limited (a 100% subsidiary of Tesco Personal Finance Group Limited) an amount totalling £10m in respect of services, loan interest and assets transferred...

  • Page 41
    ... The £206m purchase consideration comprises net cash outï¬,ow, £182m, acquired loans, £19m, and accrued acquisition costs, £5m. Note 33 Post Balance Sheet event On 23 March 1999, the Group announced it is to form a partnership company with Samsung Corporation to develop hypermarkets in South...

  • Page 42
    40 T E S C O P L C ANNUAL REPORT 1999 Notes to the financial statements continued Note 34 Analysis of changes in net debt At 28 Feb 1998 £m Other non Cash ï¬,ow cash changes £m £m Acquisitions £m Exchange movements £m At 27 Feb 1999 £m Cash in hand, at bank Overdrafts 29 (131) (102...

  • Page 43
    ...year to the previous December. 13 Average store sizes exclude Metro Turnover per employee 9 Profit per employee 9 Wages per employee 9 Weekly sales per sq ft 10/11 UK food retail statistics and Express stores. 14 Based on average number of full- time equivalent employees in the UK. Market share...

  • Page 44
    Tesco PLC,Tesco House, Delamare Road, Cheshunt, Hertfordshire EN8 9SL Front cover: Customer assistant Irene Collins helping customers at our store in Sevenoaks