Tesco 2001 Annual Report Download

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TESCO PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2001

Table of contents

  • Page 1
    TESCO PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2001

  • Page 2
    ...Auditors' report 7 9 12 17 18 Group profit and loss account Statement of total recognised gains and losses Reconciliation of movements in shareholders' funds 19 Our successful long-term growth strategy has four elements: strong UK core business - continues to grow and to build market share non...

  • Page 3
    ...,358 01 GROUP PROFIT BEFORE TAX £m * 52 weeks pro forma 1,070 (before integration costs, goodwill amortisation and net loss on disposal of fixed assets) 01 97 98 99 00 EARNINGS PER SHARE Pence * 52 weeks pro forma Group sales (including value added tax) (£m) Profit on ordinary activities...

  • Page 4
    ... 1,067 Shareholder returns and dividends Adjusted diluted earnings per share (excluding the net loss on disposal of fixed assets, integration costs and goodwill amortisation) increased by 11.1% to 11.31p (2000 - 10.18p). The Board has proposed a final dividend of 3.50p (2000 - 1,206 Group UK 757...

  • Page 5
    ... 19.2 Tesco UK fact file (0.2) 5.3 3 years 12.5 5 years market POPULATION NUMBER OF STORES SQUARE FOOTAGE 000s STORES OPENED/SQ FT ADDED CAPITAL EXPENDITURE £m RETAIL TURNOVER £m OPERATING PROFIT £m 60m 692 17,965 48 / 1,298,000 1,206 19,880 1,100 1 year UK SALES GROWTH % * 52 weeks pro...

  • Page 6
    ... regulatory approval to start our hypermarket development programme. We continue to research in China and Japan. 14 Asia fact file 99 00 01 POPULATION NUMBER OF STORES SQUARE FOOTAGE 000s STORES OPENED/SQ FT ADDED CAPITAL EXPENDITURE £m TURNOVER £m OPERATING PROFIT £m 130m 32 3,643 13 / 1,386...

  • Page 7
    ...11m last year. Within this, our share of Tesco Personal Finance profits was £3m (2000 - £4m loss). NUMBER OF TESCO PERSONAL FINANCE ACCOUNTS million The treasury function has been formally authorised by the Board to manage the financial risks that arise in relation to underlying business needs...

  • Page 8
    ...the euro. Foreign currency risk management Our principal objective is to reduce the risk to short-term profits of exchange rate volatility. Currency exposures that could significantly impact the profit and loss account are hedged, typically using forward purchases or sales of foreign currencies. We...

  • Page 9
    ... the Group through a variety of schemes, principally the Tesco employee profit-sharing scheme and the savings-related share option scheme. Dividends The Directors recommend the payment of a final dividend of 3.50p per ordinary share to be paid on 29 June 2001 to members on the Register at the close...

  • Page 10
    ... Annual General Meeting. Annual General Meeting A separate circular accompanying the annual accounts explains the special business to be considered at the Annual General Meeting on 15 June 2001. By Order of the Board Rowley Ager Secretary 9 April 2001 Tesco PLC Registered Number: 445790 8 TESCO...

  • Page 11
    ... Report and Financial Statements or an abbreviated Annual Review and Summary Financial Statement. At the half year, all shareholders receive an Interim Report.These reports, together with publicly-made trading statements, are available on the Group's website (www.tesco.com/corporateinfo). TESCO PLC...

  • Page 12
    ... taken. The Board acknowledges that the Group operates in an ever-changing environment, both externally in meeting the challenges in a competitive marketplace and internally through the development of new business streams, systems and procedures. The Board has established a change management process...

  • Page 13
    ... shares in the total market. Contributions to the Tesco PLC Money Purchase Pension Scheme are paid into insurance policies administered by the Equitable Life Assurance Society. Details of pension commitments are set out in note 26 to the financial statements on page 38. BOARD COMMITTEE MEMBERSHIP...

  • Page 14
    ... benefit of 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 scheme on a pro rata basis to base salary earned up to Inland Revenue approved limits. Share options Executive Directors are...

  • Page 15
    ... to review every three years. Non-executive Directors receive a basic fee plus an additional sum in respect of committee membership. Mr J A Gardiner has the benefit of the use of a company car. Service agreements Executive Directors have service contracts with entitlement to notice of 24 months...

  • Page 16
    ... to the number of options exercised. The market price of the shares at 24 February 2001 was 271p. The share price during the 52 weeks to 24 February 2001 ranged from 169p to 286p. TABLE 3 Pension details of the Directors Increase in accrued Transfer pension during value of increase Years of the...

  • Page 17
    ...held by Directors and not exercised at 24 February 2001 Number of shares at exercise price (pence) 81.0 (a) 90.3 104.0 98.3 117.7 151.7 Sub-total 72.3 (a) 72.3 (a) 70.0 (a) Executive share options schemes (1984), (1994) and (1996) Mr T P Leahy Mr D E Reid Mr R S Ager Mr P A Clarke Mr J Gildersleeve...

  • Page 18
    ...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 25). Between 24 February 2001 and 9 April 2001 there were no changes in the number of shares held by the Directors. 16 TESCO...

  • Page 19
    ... Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the Board's statements on internal control cover all risks and controls, or to form an opinion on the effectiveness of the company's or Group's corporate governance procedures...

  • Page 20
    GROUP PROFIT AND LOSS ACCOUNT 52 weeks ended 24 February 2001 note 2001 £m 2000 £m 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 Operating ...

  • Page 21
    ... £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 cash Net addition/(reduction) to shareholders' funds Opening shareholders' funds Closing shareholders' funds Accounting policies...

  • Page 22
    ...: falling due after more than one year Provisions for liabilities and charges Total net assets Capital and reserves Called up share capital Share premium account Other reserves Profit and loss account Equity shareholders' funds Minority interests Total capital employed 17 (4,389) (2,695) 7,343 18...

  • Page 23
    ... of finance lease rental payments Net cash outflow from returns on investments and servicing of finance Taxation Corporation tax paid Capital expenditure and financial investment Payments to acquire tangible fixed assets Receipts from sale of tangible fixed assets Purchase of own shares Net cash...

  • Page 24
    ...'s interests in joint ventures are accounted for using the gross equity method. As a result of a change in its financial year end, the share of interests of joint ventures for the year to 24 February 2001 includes the results of the Tesco Personal Finance Group for the ten months to 31 December 2000...

  • Page 25
    ...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, less exchange differences arising on matched foreign currency borrowings, are taken...

  • Page 26
    ... Segmental 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, Thailand, South Korea, and Taiwan. The results for...

  • Page 27
    ... 428 7 158 1 1,865 NOTE 5 Employment costs 2001 £m 2000 £m Employment costs during the year Wages and salaries Social security costs Other pension costs (note 26) 1,831 118 98 2,047 Number of persons employed The average number of employees per week during the year was: UK 177,527 (2000 - 169...

  • Page 28
    ... Net interest payable 2001 £m £m £m 2000 £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
    ... shareholders. The calculation for earnings, including and excluding integration costs, net loss on disposal of fixed assets and goodwill amortisation, is based on the profit for the financial year of £767m (2000 - £674m). For the purposes of calculating earnings per share, the number of shares...

  • Page 30
    ...227 39 266 49 - 49 c The net book value of land and buildings comprises: 2001 £m 2000 £m Freehold Long leasehold - 50 years or more Short leasehold - less than 50 years At 24 February 2001 d Capital work in progress does not include land. 7,200 586 455 8,241 6,022 553 394 6,969 28 TESCO PLC

  • Page 31
    ... Group Limited Tesco Home Shopping Limited iVillage UK Limited DunnHumby Associates Limited Property Investment Property Investment Property Investment Property Investment Personal Finance Mail Order Retail Internet Data Analysts 50% 50% 50% 50% 50% 60% 50% 53% Registered in England Registered...

  • Page 32
    ... TO THE FINANCIAL STATEMENTS continued NOTE 13 Fixed asset investments continued 2001 £m 2000 £m The net (borrowings)/funds of the joint ventures, as at 24 February 2001, were as follows: Cash and deposits Debenture stock - repayable 2001 Term bank loan - repayable 2003 Other loans 1,795 - (135...

  • Page 33
    ... within one year Group 2001 £m 2000 £m 2001 £m Company 2000 £m Bank loans and overdrafts (a) (b) Trade creditors Amounts owed to Group undertakings Other creditors Corporation tax Other taxation and social security Accruals and deferred income (c) Finance leases (note 22) Dividends 1,389 1,538...

  • Page 34
    ... than by instalments after five years: Gross debt Less: Cash at bank and in hand Money market investments and deposits Net debt Finance leases Bank and other loans NOTE 20 Financial instruments An explanation of the objectives and policies for holding and issuing financial instruments is...

  • Page 35
    ... fees at market rates and would provide funding at floating rates. Currency exposures Within the Group, the principal differences 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...

  • Page 36
    ... to which the Group was committed at 24 February 2001 and which have been guaranteed by Tesco PLC are: Gross rental obligations Less: finance charges allocated to future periods 59 (18) 41 2001 £m 2000 £m Net amounts payable are: Within one year Between one and five years After five years 24 17...

  • Page 37
    ... the terms of the savings-related share option scheme (1981) and the executive share option schemes (1984, 1994 and 1996) respectively. As at 24 February 2001 the Directors were authorised to purchase up to a maximum in aggregate of 683 million ordinary shares. NOTE 24 Reserves Group 2001 £m 2000...

  • Page 38
    ... options Company schemes The company had six principal share option schemes in operation during the year: i The savings-related share option scheme (1981) permits the grant to employees of options in respect of ordinary shares linked to a building society/bank save-as-you-earn contract for a term...

  • Page 39
    ... continued Number of executives and employees Shares under option 24 Feb 2001 Subscription prices (pence) Irish savings-related share option scheme (2000) Date of grant 2 June 2000 26 October 2000 2,107 956 2,108,938 717,199 163.0 198.0 Tesco has taken advantage of the exemptions applicable to...

  • Page 40
    ... Land Property Partnership, Tesco BL Holdings Limited, Tesco Personal Finance Group Limited, Tesco Personal Finance Life Limited, Tesco Personal Finance Investments Limited,Tesco Home Shopping Limited, iVillage UK Limited and DunnHumby Associates Limited.The main transactions during the year were...

  • Page 41
    ...BLT Properties Limited an amount totalling £1m in respect of services, loan interest and assets transferred. vii DunnHumby Associates Limited has made sales to the Group totalling £1m, and has loaned the Group £2m. viii The Group made loans totalling £5m to Tesco Home Shopping Limited. A loan of...

  • Page 42
    ... share Dividend per share Net worth - £m 5 Return on shareholders' funds 6 Return on capital employed 7 Net assets per share 8 Group statistics Number of stores Total sales area - 000 sq ft Full-time equivalent employees UK retail productivity £ Turnover per employee 9 Profit per employee 9 Wages...

  • Page 43
    Designed and produced by Corporate Edge 020 7855 5888 • Printed by CTD Capita

  • Page 44
    Tesco PLC, Tesco House, Delamare Road, Cheshunt, Hertfordshire EN8 9SL Front cover: Tesco Store, Budaörs, Hungary.