Tesco 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Tesco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

Annual Report and Financial Statements 2007

Table of contents

  • Page 1
    Annual Report and Financial Statements 2007

  • Page 2
    ... Financial Statement Read a full review of our UK and international business and a summary of our financial statement. Annual Report and Financial Statements Read our full financial statements and accounts. Corporate Responsibility Review Read about our social, environmental and ethical policies...

  • Page 3
    OPERATING AND FINANCIAL REVIEW inside...02 03 20 Financial highlights Operating and financial review THE BOARD AND THEIR RESPONSIBILITIES The Board and their responsibilities 20 22 27 Directors' report Corporate governance Directors' remuneration report 41 Group financial statements 42 43 44 45...

  • Page 4
    ... Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate financial highlights growth on 2006* 10.9% 13.2% 20.3% Group sales (including VAT) Underlying Group profit before tax†Group profit before tax 11.6% 18.5% 11.7% Underlying diluted earnings per share...

  • Page 5
    ... competitive and profitable - in fact, they make more profit than the entire Group did in 1997. The objectives of the strategy are: • to grow the core UK business; • to become a successful international retailer; • to be as strong in non-food as in food; and • to develop retailing services...

  • Page 6
    4 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued 2,802 2,990 Group performance These results represent very good progress across the Group and have been achieved by investing to improve the shopping ...

  • Page 7
    ... losses, trading profit increased by 14.7%. Trading margins rose in Asia to 5.6%, driven by strong performances in Korea, Thailand and Malaysia. Comparable Basis 52 weeks vs 52 weeks Actual rates Actual rates Constant Statutory Basis 52 weeks vs 60 weeks Actual rates Asia sales (inc. VAT) Asia...

  • Page 8
    ... cash dividend and purchase existing Tesco shares in the Company through a Dividend Reinvestment Plan. This scheme replaced the scrip dividend at the last Interim Results and was introduced to reduce dilution of issued shares and improve earnings per share. Cash flow and Balance Sheet Group capital...

  • Page 9
    ... and return significant value to shareholders, either through enhanced dividends (through the growth in underlying earnings per share, which includes property profits) or share buy-backs. The first of these deals, with the British Airways Pension Fund, which formed part of our plan to release some...

  • Page 10
    8 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued Key Performance Indicators (KPIs) We operate a balanced scorecard approach to managing the business that is known internally within the Group as our Steering ...

  • Page 11
    ...During the last year we have made good progress with rolling-out our Corporate Responsibility management system to our International operations. We report quarterly on social, ethical and environmental matters alongside their Customer, Operations, Finance and People KPIs. More detail on each country...

  • Page 12
    10 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued Operations, resources and relationships We have continued to make good progress with all four parts of our strategy: • grow the core UK business • become ...

  • Page 13
    ...14 new stores in 2006/07, including 10 hypermarkets, and we plan to add 15% to our total space in the current year. • Against the background of an improving economy and a consolidating retail industry in Poland, we are making very good progress, with rising sales, profits and returns. Sales growth...

  • Page 14
    12 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued • Our Kipa business in Turkey, continues to grow strongly and profitably and now has the capability and resources to become a national business. We now have...

  • Page 15
    ... - either our own or a partner's - so that we can simultaneously price our services competitively for customers and also achieve high returns for shareholders. • Tesco Personal Finance (TPF) has delivered a creditable performance in a difficult financial services market as a consequence of making...

  • Page 16
    ...PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued • Telecoms moved into profit during the year and continued to build its customer base successfully through a combination of simple, great value tariffs, good service...

  • Page 17
    ... REVIEW Community, environment and corporate responsibility People tell us they want us to use our size and reach to be a force for good in society. To help us meet this challenge we decided in 2006 to introduce a new Community Plan. This is part of our Steering Wheel, setting out objectives...

  • Page 18
    ...and properly manage strategic risk in order to deliver long-term growth for the benefit of all our stakeholders. Our strategy is based on a four-part strategy: to grow the core UK business, be as strong in non-food as in food, develop retailing services and become a successful international retailer...

  • Page 19
    ... and avoid the loss of such loyalty. The Tesco Values are embedded in the way we do business at every level and our Code of Ethics guides our behaviour in our dealings with customers, employees and suppliers. We engage with stakeholders in every sphere to take into account their views and...

  • Page 20
    18 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued IT systems and infrastructure The business is dependent on efficient Information Technology (IT) systems. Any significant failure in the IT processes of our ...

  • Page 21
    ... uncertainties underlying any such forwardlooking information. Other information Additional financial and non-financial information, including press releases and year end presentations, can be accessed on our website, www.tesco.com/corporate and also in our Corporate Responsibility Review 2007.

  • Page 22
    ... treasury shares held by Tesco PLC are shown in note 25 of the financial statements. Company's shareholders The Company has been notified that as at the date of this report, the following shareholders own more than 3% of the issued share capital of the Company: Fidelity International/FMR Corporation...

  • Page 23
    ... employee profit-sharing scheme (Shares in Success), the savings-related share option scheme (Save As You Earn) and the partnership share plan (Buy As You Earn). Political and charitable donations Cash donations to charities amounted to £17,698,393 (2006 - £15,047,768). Contributions to community...

  • Page 24
    ... PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Corporate governance Directors' report on corporate governance Tesco PLC is committed to the highest standards of corporate governance. We recognise that good governance helps the business to deliver strategy...

  • Page 25
    ...: meeting the continuing challenges of improving our capability in terms of talent development, leadership skills and building the process, systems and organisation for a fast-growing international business. The Chief Executive reviews the performance of each Executive Director. The Chairman reviews...

  • Page 26
    ... way of personal objectives. Key to delivering effective risk management is ensuring our people have a good understanding of the Group's strategy and our policies, procedures, values and expected performance. We have a structured internal communications programme that provides employees with a clear...

  • Page 27
    ... Group. We recognise that some investors and other stakeholders take a keen interest in how companies manage SEE matters and so we report more detail on our policies and KPIs in our Annual Corporate Responsibility Review and on our website (www.tesco.com/corporate). To provide further assurance, the...

  • Page 28
    ... Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Corporate governance continued • Corporate Responsibility Committee The Committee is chaired by an Executive Director and membership is made up of senior executives from across the business. It meets...

  • Page 29
    ... policy and also market practice. The remuneration strategy for Executive Directors and other key executives is tailored to emphasise the delivery of strong year-on-year earnings growth as well as sustained performance in the longer term. Long-term performance is rewarded through delivery of shares...

  • Page 30
    ...(which comprise car benefits, life assurance, disability and health insurance and staff discount); and • pensions. Executive Directors are also eligible to participate in the Company's all-employee savings related share option scheme (SAYE), Shares in Success and Buy As You Earn scheme on the same...

  • Page 31
    ... share awards will continue to be deferred for three years before release. Awards will be subject to performance conditions which measure the successful progress of the US business including leadership and delivery of financial and strategic objectives, and factors such as site acquisitions, store...

  • Page 32
    ... salary: 100% for Group performance; and 50% for international performance*) * US CEO not eligible for the 50% relating to international performance Assures a focus on long-term business success and shareholder returns Share options Incentivises earnings growth and Executive Director shareholding

  • Page 33
    ... Executive Directors. Under this scheme, employees save up to a limit of £250 on a four-weekly basis via a bank/building society with an option to buy shares in Tesco PLC at the end of a three or five-year period at a discount of up to 20% of the market value. There are no performance conditions...

  • Page 34
    ...and interests, including executive and savings-related share options, are set out on pages 33 to 40. Mr C L Allen Chairman of the Remuneration Committee Director Mr P A Clarke Mr A T Higginson Whitbread Group PLC BSkyB 45 53 Note: As stated in the Annual Report and Financial Statements 2006, Mr...

  • Page 35
    ...audited information. Table 1 Directors' emoluments Fixed emoluments Share Incentive Plan £000 Performance-related emoluments Short-term Deferred Shares £000 Total 2006/07 £000 Total 2005/06 £000 Salary £000 Allowances £000 Benefits (b) £000 Short-term £000 Long-term (c) £000 Executive...

  • Page 36
    ... be paid annually on retirement at 60, based on service to 24 February 2007. (b) Some of the Executive Directors' benefits are payable from an unapproved pension arrangement. This is secured by a fixed and floating charge on a cash deposit. (c) The method used for calculating transfer values was...

  • Page 37
    ... Table 4 Share options held by Directors and not exercised at 24 February 2007 Executive share option schemes (1994) and (1996) and discretionary share option plan (2004) Options as at 25 Feb 2006 Options granted in year (a) Options exercised in year Options as at 24 Feb 2007 Exercise price (pence...

  • Page 38
    ... Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Directors' remuneration report continued Table 4 Share options held by Directors and not exercised at 24 February 2007 continued Executive share option schemes (1994) and (1996) and discretionary share...

  • Page 39
    ....11.2004 02.11.2005 08.11.2006 (a) Save As You Earn is an all employee share scheme. Options are not subject to performance conditions. All options are exercisable from 1 February in the year which is six years from the year of grant. All options expire six months from their exercise date (i.e. on...

  • Page 40
    38 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Directors' remuneration report continued Table 6 Long-term Performance Share Plan continued Share price on award date (pence) As at 25 Feb 2006 Shares awarded/ options granted As at 24 Feb 2007 Date ...

  • Page 41
    39 Table 8 Directors' interests in the long-term incentive plan Year of release Award date As at 25 Feb 2006 Shares awarded Shares released As at 24 Feb 2007 Value of shares released £000 Release date Market price on release (pence) Name Sir Terry Leahy 2007 2007 2007 2008 2008 2008 2009 2009 ...

  • Page 42
    40 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Directors' remuneration report continued Table 8 Directors' interests in the long-term incentive plan continued Year of release Award date As at 25 Feb 2006 Shares awarded Shares released As at 24 Feb...

  • Page 43
    ... 18 Trade and other payables 19 Borrowings 20 Financial instruments 21 Provisions 22 Share-based payments 23 Post-employment benefits 24 Called up share capital 25 Statement of changes in equity 26 Business combinations 27 Related party transactions 28 Reconciliation of profit before tax to net cash...

  • Page 44
    ... Group financial statements, Article 4 of the IAS Regulation. The Directors are responsible for the maintenance and integrity of the Annual Review and Summary Financial Statement and Annual Report and Financial Statements published on the Group's corporate website. Legislation in the UK concerning...

  • Page 45
    ...law regarding Directors' remuneration and other transactions is not disclosed. We review whether the Corporate Governance Statement reflects the Company's compliance with the nine provisions of the Combined Code (2003) specified for our review by the Listing Rules of the Financial Services Authority...

  • Page 46
    44 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Group income statement Year ended 24 February 2007 2007 £m 2006* £m notes Continuing operations Revenue (sales excluding VAT) Cost of sales Pensions adjustment - Finance Act 2006 Impairment of the...

  • Page 47
    ... 24 February 2007 2007 £m 2006* £m notes (Loss)/gain on revaluation of available-for-sale investments Foreign currency translation differences Total gain/(loss) on defined benefit pension schemes (Losses)/gains on cash flow hedges: - net fair value (losses)/gains - reclassified and reported in...

  • Page 48
    46 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Group balance sheet 24 February 2007 2007 £m 2006 £m notes Non-current assets Goodwill and other intangible assets Property, plant and equipment Investment property Investments in joint ventures ...

  • Page 49
    ... sale of property, plant and equipment Purchase of intangible assets Net increase in loans to joint ventures Invested in joint ventures and associates Dividends received Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from issue of ordinary share...

  • Page 50
    48 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Group financial statements Note 1 Accounting policies General information Tesco PLC is a public limited company incorporated in the United Kingdom under the Companies Act 1985 (...

  • Page 51
    ... of the points awarded is determined with reference to the cost of redemption and considers factors such as redemption via Clubcard deals versus money-off in store and redemption rate. Computers for Schools and Sport for Schools and Clubs vouchers are issued by Tesco for redemption by participating...

  • Page 52
    50 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Group financial statements continued Note 1 Accounting policies continued The Group as a lessee Assets held under finance leases are recognised as assets of the Group at their fair value...

  • Page 53
    ...of the Group receive part of their remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The fair value of employee share option plans is calculated at the grant date using the Black...

  • Page 54
    52 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Group financial statements continued Note 1 Accounting policies continued Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the Balance Sheet...

  • Page 55
    ...Note 1 Accounting policies continued Derivative financial instruments and hedge accounting The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing and investment activities. The Group does not hold or issue...

  • Page 56
    ...Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Group financial statements continued Note 1 Accounting policies continued Treatment of agreements to acquire minority interests The Group has entered into a number of agreements to purchase...

  • Page 57
    ... are as follows: - Pensions adjustment relating to the Finance Act 2006 - Following changes introduced by the Finance Act with effect from April 2006 (Pensions A-Day), Tesco's UK approved pension schemes have implemented revised terms for members exchanging pension at retirement date, allowing them...

  • Page 58
    ... Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 2 Segmental reporting The Board has determined that the primary segmental reporting format is geographical, based on the Group's management and internal...

  • Page 59
    ...22,563 (13,119) 9,444 NOTES TO THE GROUP FINANCIAL STATEMENTS Business segments The Group has one business segment, retail and associated activities. 2007 £m 2006 £m Revenue Segment assets Capital expenditure (including acquisitions through business combinations) 42,641 24,493 3,794 39,454 22...

  • Page 60
    ...Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 3 Income and expenses 2007 £m 2006 £m From continuing operations Profit before tax is stated after charging/(crediting) the following: Profit arising on property...

  • Page 61
    ... Post-employment benefits Share-based payments expense - equity settled 3,794 377 215 209 4,595 3,473 271 335 190 4,269 The average number of employees by geographical segment during the year was: Average number of employees 2007 2006 Average number of full-time equivalents 2007 2006 UK Rest...

  • Page 62
    60 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 6 Taxation Recognised in the Income Statement 2007 £m 2006 £m Current tax expense UK corporation tax Foreign tax Adjustments in respect of prior ...

  • Page 63
    ...year: Accelerated tax depreciation £m Retirement benefit obligation £m Short-term timing differences £m Share-based payments £m Tax losses £m IAS 32 and IAS 39 £m Total £m At 26 February 2005 (Charge)/credit to the Income Statement (Charge)/credit to equity Disposal of subsidiary Foreign...

  • Page 64
    62 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 7 Discontinued operation and assets classified as held for sale 2007 £m 2006 £m Assets of the disposal group Non-current assets classified as held ...

  • Page 65
    ... classified as held for sale 2007 £m 2006 £m Non-current assets classified as held for sale 408 54 The non-current assets classified as held for sale consist mainly of properties held for sale, including the UK assets disposed of as part of the post-balance sheet sale and leaseback transaction...

  • Page 66
    64 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 8 Dividends 2007 pence/share 2006 pence/share 2007 £m 2006 £m Amounts recognised as distributions to equity holders in the year: Final dividend for ...

  • Page 67
    ... other intangible assets Internally generated development costs £m Pharmacy and software licences £m Other intangible assets £m Goodwill £m Total £m Cost At 25 February 2006 Foreign currency translation Additions Acquisitions through business combinations Reclassification across categories...

  • Page 68
    66 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 10 Goodwill and other intangible assets continued Impairment of goodwill Goodwill arising on business combinations is not amortised but is reviewed ...

  • Page 69
    ... 11 Property, plant and equipment Land and buildings £m Other (a) £m Total £m Cost At 25 February 2006 Foreign currency translation Additions (b) Acquisitions through business combinations Reclassification across categories Classified as held for sale Disposals At 24 February 2007 Accumulated...

  • Page 70
    68 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 11 Property, plant and equipment continued Land and buildings £m Other (a) £m Total £m Cost At 26 February 2005 Foreign currency translation ...

  • Page 71
    ... market. The forecasts are extrapolated beyond five years based on estimated long-term growth rates (generally 3%-4%). The pre-tax discount rates used to calculate value in use range from 10%-17% (2006: 9%-11%) depending on the specific conditions in which each store operates. These discount rates...

  • Page 72
    ... PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 12 Investment property 2007 £m 2006 £m Cost At beginning of year Foreign currency translation Additions Acquisitions through business combinations Transfers...

  • Page 73
    ...: Business activity Share of issued ordinary share capital, and voting rights Country of incorporation Tesco Stores Limited* Tesco Distribution Limited* Tesco Property Holdings Limited* Tesco Insurance Limited* Valiant Insurance Company Limited One Stop Stores Limited Tesco Ireland Limited* Tesco...

  • Page 74
    ... at www.tesco.com/corporate Notes to the financial statements continued Note 13 Group entities continued (a) Disposals of associates Groceryworks £m Greenergy Fuels Limited £m Total £m Consideration received/value of assets exchanged Carrying value of investment disposed of Profit on sale of...

  • Page 75
    ...the Board of Greenergy International Limited requires the consent of Tesco on certain reserve matters as specified in the company's Articles of Association. The share of the assets, liabilities, revenue and profit of the Group's associates, which are included in the consolidated financial statements...

  • Page 76
    74 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 14 Other investments 2007 £m 2006 £m Available-for-sale financial assets 8 4 Other investments are available-for-sale financial assets consisting...

  • Page 77
    75 Note 17 Cash and cash equivalents 2007 £m 2006 £m Cash at bank and in hand Short-term deposits 902 140 1,042 964 361 1,325 The effective rate of interest on short-term deposits is 4.8% (2006 - 3.9%) and the average maturity term is 4 weeks (2006 - 2 weeks). Note 18 Trade and other payables...

  • Page 78
    ... PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 19 Borrowings continued Non-current Effective interest rate % Effective interest rate after hedging transactions % Par value Maturity year 2007 £m 2006...

  • Page 79
    ... of the objectives and policies for holding and issuing financial instruments is set out in the Operating and Financial Review. Carrying values of derivative financial instruments and other liabilities in the Balance Sheet: 2007 Assets £m Liabilities £m Assets £m 2006 Liabilities £m Current...

  • Page 80
    78 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 20 Financial instruments continued Analysis of interest rate exposure of financial assets and liabilities By maturity date, the interest rate exposure...

  • Page 81
    ... and provisions for future rents above market value on unprofitable stores. The majority of the provision is expected to be utilised over the period to 2020. The balances are analysed as follows: 2007 £m 2006 £m Current Non-current 4 25 29 2 5 7 NOTES TO THE GROUP FINANCIAL STATEMENTS

  • Page 82
    ... The Company had eight share option schemes in operation during the year, all of which are equity-settled schemes: 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...

  • Page 83
    ...2006 Savings-related share option scheme Options WAEP Irish savings-related share option scheme Options WAEP Approved share option scheme Options WAEP Unapproved share option scheme Options WAEP International executive share option scheme Options WAEP Nil cost share options Options WAEP Outstanding...

  • Page 84
    ... shares. Bonuses are awarded to eligible employees that have completed a required service period and depend on the achievement of corporate targets. The accrued cash element of the bonus at the Balance Sheet date is £17m. The Executive Directors participate in short-term and long-term bonus schemes...

  • Page 85
    ... liabilities of the schemes as at 24 February 2007. The schemes' assets are stated at their market values as at 24 February 2007. Buck Consultants (Ireland) Limited have updated the most recent Republic of Ireland valuation. The liabilities relating to retirement healthcare benefits have also been...

  • Page 86
    84 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 23 Post-employment benefits continued The following table illustrates the expectation of life of an average member retiring at age 65 at the Balance ...

  • Page 87
    ... Expense. Changes to scheme rules in the Republic of Ireland affecting early retirement have reduced pension liabilities by a further £8m, which is also shown as a past service gain in the Income Statement. 2007 £m 2006 £m 2005 £m NOTES TO THE GROUP FINANCIAL STATEMENTS Analysis of the amount...

  • Page 88
    86 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 23 Post-employment benefits continued Summary of movements in deficit during the year 2007 £m 2006 £m 2005 £m Deficit in schemes at beginning of ...

  • Page 89
    ... the terms of the executive share option schemes (1994 and 1996) and the discretionary share option plan (2004). As at 24 February 2007, the Directors were authorised to purchase up to a maximum in aggregate of 790.5 million (2006 - 778.7 million) ordinary shares. The holders of ordinary shares are...

  • Page 90
    ... defined benefit schemes Tax on items taken directly to or transferred from equity Decrease in fair value of available-for-sale financial assets Losses on cash flow hedges Purchase of treasury shares Share-based payments Issue of shares Share buyback Future purchases of minority interests Profit for...

  • Page 91
    .... The employee benefit trusts hold shares in Tesco PLC for the purpose of the various executive share incentive and profit share schemes. At 24 February 2007, the trusts held 57.0 million shares (2006 - 48.4 million), which cost £184m (2006 - £140m) and had a market value of £254m (2006 - £163m...

  • Page 92
    90 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 26 Business combinations The Group has made a number of acquisitions in the year, of which the material acquisitions have been disclosed separately ...

  • Page 93
    ... THE GROUP FINANCIAL STATEMENTS As Hymall was acquired towards the end of their financial year, it has continued to be treated as a joint venture in 2006/07. However, the net liabilities of Hymall have been consolidated as a subsidiary within the Group Balance Sheet as at 24 February 2007. From the...

  • Page 94
    92 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 26 Business combinations continued Leader Price On 30 November 2006, the Group acquired 100% of the share capital of Leader Price Polska Sp. z.o.o, ...

  • Page 95
    ... profit to the Group. Other acquisitions The other acquisitions in the year include the share capital or the trade and assets of Edeka, Hikso Limited, Maintenance One Limited and Tesco Home Shopping Limited. The companies acquired undertake activities including retailing, software development...

  • Page 96
    94 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 27 Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation ...

  • Page 97
    ... 2007 £m 2006 £m Profit before tax Net finance costs Share of post-tax profits of joint ventures and associates Profit on sale of investments in associates Operating profit Operating loss of discontinued operation Depreciation and amortisation Profit arising on property-related items Loss...

  • Page 98
    96 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the financial statements continued Note 30 Commitments and contingencies Capital commitments On 24 February 2007 there were commitments for capital expenditure contracted for, but not ...

  • Page 99
    ... both rents out its investment properties and also sub-lets various leased buildings under operating leases. At the Balance Sheet date, the following future minimum lease payments are contractually receivable from tenants: 2007 £m 2006 £m NOTES TO THE GROUP FINANCIAL STATEMENTS Within one year...

  • Page 100
    98 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Five year record UK GAAP 2003 2004 53 wks 2005 2005 20061 IFRS 2007 Financial statistics Group sales (including VAT) (£m) Revenue (excluding VAT) (£m) UK Rest of Europe Asia 21,309 2,664 2,031 26,...

  • Page 101
    ... earnings per share7 Diluted earnings per share7 Dividend per share8 Return on shareholders' funds9 Return on capital employed10 Group statistics Number of stores Total sales area - 000 sq ft11 Average employees Average full-time equivalent employees UK retail statistics Number of stores Total sales...

  • Page 102
    100 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Tesco PLC - Parent Company Balance sheet 24 February 2007 2007 £m 2006 £m notes Fixed assets Investments in subsidiaries and joint ventures Current assets Derivative financial instruments Debtors...

  • Page 103
    ...presented a Profit and Loss Account for the Company alone. The Company has also taken advantage of the exemption from preparing a Cash flow statement under the terms of FRS 1 'Cash Flow Statement'. The cash flows of the Company are included in the Tesco PLC Group financial statements. The Company is...

  • Page 104
    102 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Parent company financial statements continued Note 1 Accounting policies continued Interest-bearing borrowings Interest-bearing bank loans and overdrafts are initially recorded at the ...

  • Page 105
    ... audit of the Parent Company and consolidated annual accounts 0.6 0.4 Note 3 Employment costs 2007 £m 2006 £m Wages and salaries Social security costs Pension costs Share-based payment expense - equity settled 13 10 1 19 43 10 8 2 15 35 The average number of employees (all Directors of the...

  • Page 106
    ... Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Parent company financial statements continued Note 6 Debtors continued b) The deferred tax asset recognised by the Company, and the movements thereon, during the year are as follows: Share...

  • Page 107
    ... 2007, after taking into account the effect of interest rate swaps, was: Within 1 year £m 1-2 years £m 2-3 years £m 3-4 years £m 4-5 years £m More than 5 years £m Total £m PARENT COMPANY FINANCIAL STATEMENTS Fixed rate (fair value interest rate risk) Bank and other loans Floating rate (cash...

  • Page 108
    ...Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Parent company financial statements continued Note 10 Derivative financial instruments continued Hedging activities Fair value hedges The Company uses interest rate swaps and cross-currency...

  • Page 109
    ... total cost of the Pension scheme to the Group was £167m (2006 - £292m). Further disclosure relating to the Tesco PLC Pension Scheme can be found in note 23 of the Group financial statements. Note 13 Called up share capital 2007 Ordinary shares of 5p each Number £m 2006 Ordinary shares of 5p each...

  • Page 110
    108 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Notes to the Parent company financial statements continued Note 13 Called up share capital continued Share buyback liability Insider trading rules prevent the Group from buying back its own shares ...

  • Page 111
    ...auditors' report to the members of Tesco PLC We have audited the Parent Company financial statements of Tesco PLC for the year ended 24 February 2007 which comprise the Balance Sheet and the related notes. These Parent Company financial statements have been prepared under the accounting policies set...

  • Page 112
    ... awarded the ISO14001 certificate for environmental management. All paper has been supplied by the Robert Horne Group. This report is 100% Recyclable and biodegradable. Printed by an ISO 14001 and FSC certified printer using vegetable based inks. Cover: Ampang hypermarket, Malaysia Tesco PLC, Tesco...