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TESCO PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2000

Table of contents

  • Page 1
    TESCO PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2000

  • Page 2
    ... and Tesco Personal Finance International business achieving real scale 20 21 22 24 40 Balance sheets Group cash ï¬,ow statement Accounting policies Notes to the financial statements Five year record • This publication includes the operating and financial review, the Directors' report, the...

  • Page 3
    ... 7.30 Group sales (including value added tax) (£m) 20,358 18,546 17,447 1997 7.83 1998 8.70* 1999 9.37 2000 52 weeks 1999 52 weeks 1998* 52 weeks (pro forma) 10.18 2000 Pence * 52 weeks pro forma Adjusted diluted earnings per share †(p) Dividend per share Number of stores Retail...

  • Page 4
    ... returns and dividends 1996 1997 1998 1999 2000 Adjusted diluted earnings per share (excluding the net loss on disposal of fixed assets, integration costs and goodwill amortisation) increased by 8.6% to 10.18p (1999 - 9.37p). TESCO SHARE PRICE Pence The Board has proposed a final net dividend...

  • Page 5
    ...amount in the current year. 603 In total we opened 1.2m sq ft of new space and expect to open a 680 837 1,216 1996 1997 1998 1999 2000 000 sq ft UK sales area opened including Express UK fact file POPULATION MARKET SHARE NUMBER OF STORES SQUARE FOOTAGE 000s STORES OPENED/SQ FT ADDED CAPITAL...

  • Page 6
    ...Thailand which will increase to 2.8m sq ft by the end of 2000. On 23 March 1999 we announced we had formed a partnership with the Samsung Corporation to develop hypermarkets in South 497 (1) 170 (2) 192 50 Asian fact file POPULATION NUMBER OF STORES SQUARE FOOTAGE 000s STORES OPENED/SQ FT ADDED...

  • Page 7
    ... and by deal type, are reviewed at least annually by the Board. Mandates, defining the Group's dealing practices are agreed with these institutions prior to deals being arranged. Foreign currency risk The objective is to reduce the risk to short-term profits of exchange rate volatility. Relevant...

  • Page 8
    ... of the leap day at the end of February 2000. The actual spend on the Year 2000 programme of £30m over three years was in line with the original budget. Economic Monetary Union Our aim is for all the relevant parts of the Group to be able to handle business in euros when required. Project...

  • Page 9
    ... company in South Korea. Details of this acquisition are set out in note 32 to the financial statements. Principal activity and business review The principal activity of the Group is the operation of food stores and associated activities in the UK, Republic of Ireland, France, Hungary, Poland...

  • Page 10
    ... the Code may be obtained from the CBI, Centre Point, 103 New Oxford Street, London WC1A 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 a timely basis which varies according to the type of...

  • Page 11
    .... The full Board meets ten times a year and, in addition, annually devotes two days to a conference with senior executives on longer term planning giving consideration both to the opportunities and risks of future strategy. The Board manages overall control of the Group's affairs by the schedule of...

  • Page 12
    ...times a year. Membership of the Audit Committee is set out in the table on page 11. Its terms of reference represent current best practice. The Audit Committee's primary responsibilities include monitoring internal control throughout the Group, approving the Group's accounting policies and reviewing...

  • Page 13
    ... 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 has been no self-investment in Tesco shares or property occupied by the Tesco Group. Details of pension...

  • Page 14
    ... set out in Schedule B, annexed to the Listing Rules.The auditors' 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...

  • Page 15
    TESCO PLC 13 Pensions Executive Directors are members of the Tesco PLC Pension Scheme which provides a pension of up to two-thirds of base salary on retirement, normally at the age of 60, dependent upon service.The scheme also provides for dependants' pensions and lump sums on death in service.The ...

  • Page 16
    ....The market price of the shares at 26 February 2000 was 169p. The share price during the 52 weeks to 26 February 2000 ranged from 156p to 197p. TABLE 3 Pension details of the Directors Increase in accrued Transfer pension during value of increase Years of the year (a) during the year service...

  • Page 17
    TESCO PLC 15 TABLE 4 Share options held by Directors and not exercised at 26 February 2000 Number of shares at exercise price (pence) 81.0 (a) 66.0 90.3 104.0 98.3 117.7 Sub-total 61.7 61.7 70.0 (a) Executive share options schemes (1984), (1994) and (1996) Mr T P Leahy Mr D E Reid Mr R S Ager Mr ...

  • Page 18
    TESCO PLC 16 report of the directors on remuneration continued TABLE 5 Share options held by Directors and not exercised at 26 February 2000 Number of shares Granted Exercised As at 26 Feb 2000 Exercise price pence 2000 £000 Value realisable 1999 £000 As at 27 Feb 1999 Savings-related share ...

  • Page 19
    ... Code specified for our review by the London Stock Exchange, and we report if it does not. We are not required to consider whether Chartered Accountants and Registered Auditors London 10 April 2000 We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board...

  • Page 20
    TESCO PLC 18 group profit and loss account 52 weeks ended 26 February 2000 2000 £m 1999 £m note Sales at net selling prices Value added tax Turnover excluding value added tax Operating expenses - Normal operating expenses - Employee profit-sharing - Integration costs - Goodwill amortisation ...

  • Page 21
    TESCO PLC 19 statement of total recognised gains and losses 52 weeks ended 26 February 2000 Group 2000 £m 1999 £m 2000 £m Company 1999 £m Profit for the financial year Loss on foreign currency net investments Total recognised gains and losses relating to the financial year 674 (36) 638 ...

  • Page 22
    TESCO PLC 20 balance sheets 26 February 2000 Group note 2000 £m 1999 £m 2000 £m Company 1999 £m Fixed assets Intangible assets Tangible assets Investments Investments in joint ventures Current assets Stocks Debtors Investments Cash at bank and in hand 14 15 16 11 12 13 13 136 8,140 79 172 8,...

  • Page 23
    ... Net cash inï¬,ow/(outï¬,ow) from acquisitions and disposals Equity dividends paid Cash outï¬,ow before use of liquid resources and financing Management of liquid resources Increase in short-term deposits Financing Ordinary shares issued for cash Increase in other loans New finance leases Capital...

  • Page 24
    ... with applicable accounting standards and the Companies Act 1985. The Group has adopted Financial Reporting Standard 15, 'Tangible Fixed Assets', and Financial Reporting Standard 16, 'Current Tax', during the year. Fixed assets and depreciation The Group has adopted Financial Reporting Standard...

  • Page 25
    ...the Group's defined benefit pension schemes is charged to the profit and loss account over the working lifetimes of employees in the schemes. Actuarial surpluses and deficits are spread over the expected remaining working lifetimes of employees. Post-retirement benefits other than pensions The...

  • Page 26
    ...analysis of sales, turnover, profit and net assets The Group's operations of retailing and associated activities and property development are carried out in the UK, Republic of Ireland, France, Hungary, Poland, Czech Republic, Slovakia, South Korea and Thailand.The results for South Korea,Thailand...

  • Page 27
    ... 5 Employment costs 2000 £m 1999 £m Employment costs during the year Wages and salaries Social security costs Other pension costs (note 26) 1,677 106 82 1,865 Number of persons employed The average number of employees per week during the year was: UK 169,500 (1999 - 164,471), Rest of Europe 24...

  • Page 28
    ...Net interest payable 2000 £m £m £m 1999 £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...

  • Page 29
    ...At 26 February 2000 Net carrying value At 27 February 1999 At 26 February 2000 112 136 - 112 5 7 12 - 5 5 117 31 148 - 117 117 Goodwill arising on the purchase of our businesses in South Korea and Thailand has been capitalised and amortised over 20 years in accordance with the provisions set out in...

  • Page 30
    ...(c) At 26 February 2000 At 27 February 1999 Capital work in progress included above (d) At 26 February 2000 At 27 February 1999 a Includes £40m in respect of interest capitalised principally relating to land and building assets. The capitalisation rate used to determine the amount of finance costs...

  • Page 31
    ... 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 BL Holdings Limited Tesco British Land Property Partnership Tesco Personal Finance Group Limited Tesco Personal...

  • Page 32
    ... ventures, apart from £16m (1999 - £15m) which has been guaranteed by Tesco PLC (note 29). Details of transactions and balances with the joint ventures are set out in note 30. NOTE 14 Stocks Group 2000 £m 1999 £m 2000 £m Company 1999 £m Goods held for resale Development property 636 108...

  • Page 33
    ... one year Group 2000 £m 1999 £m 2000 £m Company 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 final dividend...

  • Page 34
    TESCO PLC 32 notes to the financial statements NOTE 19 continued Net debt Group 2000 £m 1999 £m 2000 £m Company 1999 £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 and other ...

  • Page 35
    ... on exchange arising which are taken to the profit and loss account, relate to purchases made by Group companies in currencies other than their reporting currencies. After taking into account hedging transactions, there were no significant balances on these exposures at year end. Rolling...

  • Page 36
    ... the Group was committed at 26 February 2000 and which have been guaranteed by Tesco PLC are: Gross rental obligations Less: finance charges allocated to future periods £m 81 (15) 66 2000 £m 1999 £m Net amounts payable are: Within one year Between one and five years After five years 15...

  • Page 37
    ... with section 230 of the Companies Act 1985 a profit and loss account for Tesco PLC, whose result for the year is shown above, has not been presented in these accounts. The cumulative goodwill written off against the reserves of the Group as at 26 February 2000 amounted to £718m (1999 - £718m...

  • Page 38
    ... as follows: Savings-related share option scheme (1981) Date of grant Number of executives and employees Shares under option 26 Feb 2000 Subscription prices (pence) 22 October 1993 26 October 1994 27 October 1995 31 October 1996 30 October 1997 29 October 1998 28 October 1999 Executive share option...

  • Page 39
    ... lifetime of employed members. The Group also operates a defined contribution pension scheme for part-time employees which was introduced on 6 April 1988. The assets of the scheme are held separately from those of the Group, being invested with an insurance company. The pension cost represents...

  • Page 40
    ...(£41m in Tesco Personal Finance Group Limited and £1m in Tesco Home Shopping Limited). ii The sale of nine properties formerly held in the British Land Property Partnership to subsidiaries of Tesco BL Holdings Limited, a limited company owned 50:50 by Tesco PLC and British Land PLC. A bank loan of...

  • Page 41
    ..., Tesco acquired a 51% controlling interest in a newly incorporated company, Samsung Tesco Co. Limited for a cash consideration of £81m and incurred fees of £4m. Subsequently the company paid £57m to increase its holding in Samsung Tesco Co. Limited to 81% on 30 June 1999. Net assets amounted to...

  • Page 42
    ....4% Return on capital employed 7 16.9% Net assets per share 8 56p UK retail productivity £ Turnover per employee 9 143,3359 Profit per employee 9 8,841 Wages per employee 9 13,948 Weekly sales per sq ft 10/11 18.31 UK retail statistics Market share in food and drink shops 12 13.4% Number of stores...

  • Page 43
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  • Page 44
    Tesco PLC,Tesco House, Delamare Road, Cheshunt, Hertfordshire EN8 9SL Front cover:Tesco Superstore, Hammersmith, London.