Tesco 2008 Annual Report Download

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More than the
weekly shop
Annual Report and Financial Statements 2008
Annual Report and Financial Statements 2008Tesco PLC

Table of contents

  • Page 1
    Tesco PLC Annual Report and Financial Statements 2008 More than the weekly shop Annual Report and Financial Statements 2008

  • Page 2
    ... Executive's statement Report of the Directors > Business Review > General information > Corporate governance Directors' remuneration report 1 2 3 3 18 20 25 More than the weekly shop Most people know something about Tesco. After all, we are the UK's largest grocer and we've been serving customers...

  • Page 3
    ...' tax rate before start-up costs in the US and Tesco Direct, and excludes the impact of foreign exchange in equity and our acquisition of a majority share of Dobbies ‡ Including the one-off gain from Pensions A-Day, ROCE in 2007 was 13.6%. Tesco PLC Annual Report and Financial Statements 2008 1

  • Page 4
    ... new businesses come through to scale and profitability; > it also means we can carry the costs of investing now in the new products and businesses which will drive our long-term growth; > at the same time we can deliver improving returns and tangible benefits for shareholders; > we are meeting our...

  • Page 5
    ... help us deliver a low cost model - particularly in customer relationship management, justin-time supply chain and distribution, property development and store formatting. In some of our newer markets - such as telecoms or financial services, our willingness to partner with established businesses...

  • Page 6
    ... returns for shareholders. These improvements have been achieved whilst continuing to invest in the long term - in the people, assets, processes and systems, which will enable Tesco to sustain its success in the future. Results These results are for the 52 weeks ended 23 February 2008, compared...

  • Page 7
    ...of integration costs and initial operating losses, principally related to the Leader Price stores which were acquired in late 2006. International margins rose by 15 basis points excluding the impact of consolidating the China business. At constant exchange rates, International trading profit grew by...

  • Page 8
    ...our acquisition of a majority share in Dobbies (last year ROCE was 12.6%, excluding the Pensions A-Day credit). This represents a good performance and we remain on track to deliver our targeted ROCE improvement in the years ahead as these investments mature. 6 Tesco PLC Annual Report and Financial...

  • Page 9
    ... business, it is simply based around the philosophy that if we look after customers well and operate efficiently and effectively then shareholders' interests will always be best served by the inevitable outputs of those - growth in sales, profits and returns. Tesco PLC Annual Report and Financial...

  • Page 10
    ... rate before start-up costs in the US and Tesco Direct, and excludes the impact of foreign exchange in equity and our acquisition of a majority share of Dobbies. Including the one-off gain from Pensions A-Day, ROCE was 13.6%. 8 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com...

  • Page 11
    ... from the Executive Directors, to ensure they are tailored to drive the priorities of each business. 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 Community, which includes...

  • Page 12
    .... > In China, with majority ownership and full management control of the business, we have begun to accelerate store and infrastructure development as part of our long-term strategy to become a leader in the market. We plan to construct large multi-level freehold shopping centres, built around Tesco...

  • Page 13
    ... distribution centres, located close to Bratislava, which handle general merchandise for the whole of Central Europe, are now fully operational and delivering significant benefits. These substantial investments are enabling our Central European businesses to harmonise and improve our non-food...

  • Page 14
    ... services strategy is a strong economic model, based around leveraging existing assets - 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. 12 Tesco PLC Annual Report and Financial Statements...

  • Page 15
    ... Community Plan. This is part of our Steering Wheel, setting out objectives that the business will deliver. It will ensure we provide the right resources, energy and focus to meet the expectations of our customers and other stakeholders in this area. Tesco PLC Annual Report and Financial Statements...

  • Page 16
    ... in order to deliver long-term growth for the benefit of all our stakeholders. Our strategy is based on five elements: to grow the core UK business, be as strong in non-food as in food, develop retailing services, become a successful international retailer 14 Tesco PLC Annual Report and Financial...

  • Page 17
    ...monitor developments in areas such as health, safety and nutrition in order to respond appropriately to changing customer trends and new legislation. We have clear processes for crisis management, pulling together expert teams should we need to respond quickly on issues. Tesco PLC Annual Report and...

  • Page 18
    ... of our customers and employees are represented and try to anticipate and contribute to important changes in public policy wherever we operate. Activism and terrorism A major incident or terrorist event incapacitating management, systems or stores could impact on the Group's ability to trade. In...

  • Page 19
    .... Other information Additional financial and non-financial information, including press releases and year end presentations, can be accessed on our website www.tesco.com/annualreport08 and also in our Corporate Responsibility Review 2008. Tesco PLC Annual Report and Financial Statements 2008 17

  • Page 20
    ... a variety of schemes, principally the Tesco 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). 18 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 21
    ...PLC, a majority owned subsidiary of the Group, announced plans to raise £150m through an open offer of shares. Dobbies Garden Centres PLC will seek shareholder approval at an Annual General Meeting on 21 May 2008 to issue up to 12.45 million shares on a six for five basis at 1,200p per share. Tesco...

  • Page 22
    ... senior executive levels below the Board, the Committee also regularly reviews board structure, size, composition, working arrangements and capability, and considers succession plans for Executive and Non-executive Directors. 20 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com...

  • Page 23
    ... to the Board the remuneration of the Executive Directors. It monitors the levels and structure of remuneration for senior management and seeks to ensure that they are designed to attract, retain and motivate the Executive Directors needed to run the Company successfully. Mr Allen chairs the...

  • Page 24
    ... control systems and report on their effectiveness to Executive management, as well as to the Audit Committee, in order to facilitate its review of the systems. Background The Group has a five-year rolling business plan to support the delivery of its strategy of long term growth and returns for...

  • Page 25
    ... relevant financial expertise, Executive Directors and members of senior management. The Committee usually meets twice a year and its role is to review and agree the Finance Plan on an annual basis, to review reports of the Treasury and Tax functions, and to review and approve Treasury limits and...

  • Page 26
    ...right thing by all our stakeholders. Our programme of engaging with stakeholders including customers, staff, suppliers, investors, non-governmental organisations and others, is set out in more detail in the Corporate Responsibility Review and on our website. The addition of Community to our strategy...

  • Page 27
    ... Long-Term Incentive Plan for our US Executive team to ensure that we can attract great talent to build our US business. The Group New Business Incentive Plan and the US Long-Term Incentive Plan were both approved by shareholders at last year's AGM. Tesco PLC Annual Report and Financial Statements...

  • Page 28
    .../11 to 2013/14 and will be in the form of Tesco PLC shares. Members of the US senior management team will also participate in the US incentive arrangements. The other Executive Directors have responsibility both for delivering continued success of our core business and developing our international...

  • Page 29
    ... on the financial performance of the Company's US business, based on the achievement of stretching earnings before interest and tax (EBIT) and return on capital employed (ROCE) targets set by reference to the US long-term business plan. Tesco PLC Annual Report and Financial Statements 2008 27

  • Page 30
    ... in the Company's Remuneration Report. Group New Business Incentive Plan A key part of the Group's long term strategy is to consider new business ventures which have the potential for significant long term value creation for our shareholders. It is important to incentivise executives to encourage...

  • Page 31
    ... achieved EPS relative to retail price index Incentivises establishment of a successful new businesses over the long term, but ensures continued focus on the Group as a whole Incentivises earnings growth and Executive Director shareholding Tesco PLC Annual Report and Financial Statements 2008 29

  • Page 32
    ... share investment plan for the benefit of employees including Executive Directors. Under this scheme, employees save up to a limit of £110 on a four-weekly basis to buy shares at market value in Tesco PLC. Pensions The retention of key management is critical to the future success of the business...

  • Page 33
    .... The long-term bonuses awarded on 14 November 2007 under the Performance Share Plan were awarded in the form of nil cost options with the exception of Mr Mason who received an unfunded promise to deliver shares. Details of these awards are shown in Table 6. Tesco PLC Annual Report and Financial...

  • Page 34
    Directors' remuneration report continued Table 2 Pension details of the Directors 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 ...

  • Page 35
    ... share options awarded on 30 April 2004 vested in full on 30 April 2007. Executives have until the tenth anniversary of the date of grant to exercise their options. 2 No options lapsed in the year. 3 The market price at exercise is shown in Table 3. Tesco PLC Annual Report and Financial Statements...

  • Page 36
    ... options expire six months from their exercise date (i.e. on 1 August of the relevant year). All directors exercised options on 1 February 2008 when the market price was 416.75p. No options lapsed in the year. 34 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 37
    ... at a share price of 405.00p in order to fund a US tax liability. 2 Miss L Neville Rolfe's 2006 awards were made in the form of restricted shares under the senior management performance share plan. 3 The Performance Share Plan replaced the Long-Term Executive Incentive Scheme. The first award under...

  • Page 38
    ... specified performance targets related to the return on capital employed over the seven-year plan. The award is in the form of nil cost options. Table 8 US Long-Term Incentive Plan Date of award Share price on award date (pence) As at 24 February 2007 Shares awarded in year Shares released in year...

  • Page 39
    ... in the Long-Term Incentive Plan Year of release Award date Number of shares as at 24 February 2007 Shares awarded in year Shares released in year Number of shares as at 23 February 2008 Value of shares released £000s Release date Market price on release (pence) Mr R Brasher 1 Total Mr P A Clarke...

  • Page 40
    ... Plan shown in Table 4, Save As You Earn scheme shown in Table 5, and nil cost options held under the Performance Share Plan, Group New Business Incentive Plan and Executive Incentive Plan shown in Tables 6, 7 and 9 respectively. 38 Tesco PLC Annual Report and Financial Statements 2008 www.tesco...

  • Page 41
    ... > Tesco PLC - Parent Company financial statements 98 > Independent auditors' report to the members of Tesco PLC 108 Go online! Every year, more and more information is available for our shareholders, staff and customers. www.tesco.com/annualreport08 Tesco PLC Annual Report and Financial Statements...

  • Page 42
    ... risks and uncertainties of the business. 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 the preparation and...

  • Page 43
    ... the related notes. These Group financial statements have been prepared under the accounting policies set out therein. We have reported separately on the Parent Company financial statements of Tesco PLC for the year ended 23 February 2008 and on the information in the Directors' Remuneration Report...

  • Page 44
    ... site Gross profit Administrative expenses Profit arising on property-related items Operating profit Share of post-tax profits of joint ventures and associates (including £nil on property-related items (2006/7 - £47m gain)) Profit on sale of investments in associates Finance income Finance costs...

  • Page 45
    ... Foreign currency translation differences Total gain on defined benefit pension schemes Gains/(losses) on cash flow hedges: Net fair value gains/(losses) Reclassified and reported in the Group Income Statement Tax on items taken directly to equity Net income recognised directly in equity Profit...

  • Page 46
    ...current liabilities Financial liabilities Borrowings Derivative financial instruments and other liabilities Post-employment benefit obligations Other non-current payables Deferred tax liabilities Provisions Net assets Equity Share capital Share premium account Other reserves Retained earnings Equity...

  • Page 47
    ... Interest paid Corporation tax paid Net cash from operating activities Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired Proceeds from sale of subsidiary, net of cash disposed Proceeds from sale of joint ventures and associates Purchase of property, plant and...

  • Page 48
    ... 1 Accounting policies General information Tesco PLC is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 1985 (Registration number 445790). The address of the registered office is Tesco House, Delamare Road, Cheshunt, Hertfordshire, EN8 9SL, UK. As...

  • Page 49
    ...and operating leasebacks, generally the assets are sold at fair value, and accordingly the profit or loss from the sale is recognised immediately. Following initial recognition, the lease treatment is consistent with those principles described above. Tesco PLC Annual Report and Financial Statements...

  • Page 50
    ... be expected to be completed within one year from the date of classification. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. 48 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com...

  • Page 51
    ... The Group accounts for pensions and other post-employment benefits (principally private healthcare) under IAS 19 'Employee Benefits'. In respect of defined benefit plans, obligations are measured at discounted present value (using the projected unit credit method) whilst plan assets are recorded...

  • Page 52
    ... is in a currency other than Pounds Sterling, the liability has been designated as a net investment hedge. Any change in the value of the liability resulting from changes in exchange rates is recognised directly in equity. 50 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com...

  • Page 53
    ... and explains how to account for the obligations undertaken and rights received in service concession arrangements. No member of the Group is a public sector operator and hence this interpretation will have no impact on the Group. > IFRIC 14 'The Limit on a Defined Benefit Asset, Minimum Funding...

  • Page 54
    ...items, profit/(loss) arising on property-related items, impact on leases of annual uplifts in rent and rent-free periods, and replaces the IAS 19 pension charge with the 'normal' cash contributions for pensions. 52 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 55
    ...Europe £m Asia £m Total £m Operating profit Adjustments for: (Profit)/loss arising on property-related items IAS 19 Income Statement charge for pensions 'Normal' cash contributions for pensions IAS 17 'Leases' - impact of annual uplifts in rent and rent-free periods Trading profit Trading margin...

  • Page 56
    ...Europe £m Asia £m Total £m Operating profit Adjustments for: (Profit)/loss arising on property-related items IAS 19 Income Statement charge for pensions 'Normal' cash contributions for pensions Pensions adjustment - Finance Act 2006 Impairment of Gerrards Cross site Trading profit Trading margin...

  • Page 57
    ... of Europe £m Other/ unallocated £m UK £m Asia £m Total £m Assets and liabilities Segment assets Investments in joint ventures and associates Total assets Segment liabilities Total net assets Other segment information Capital expenditure (including acquisitions through business combinations...

  • Page 58
    ... of employees 2007 Average number of full-time equivalents 2008 2007 2008 UK Rest of Europe Asia Total 282,868 83,705 77,554 444,127 270,417 74,017 68,627 413,061 193,917 77,267 74,570 345,754 184,461 67,351 66,471 318,283 56 Tesco PLC Annual Report and Financial Statements 2008 www.tesco...

  • Page 59
    ...pension finance income (note 24) Total finance income (on historical cost basis) IAS 32 and IAS 39 'Financial instruments' - Fair value remeasurements Total finance income Finance costs Interest payable on short-term...- (11) 78 (212) (4) (216) Tesco PLC Annual Report and Financial Statements 2008 57

  • Page 60
    ... all open issues relating to years up to February 2006 including capital allowance claims. Tax on items charged to equity 2008 £m 2007 £m Current tax credit/(charge) on: Foreign exchange movements Share-based payments Deferred tax credit/(charge) on: Share-based payments Pensions Total tax...

  • Page 61
    ...2011) that will expire in 2012 and £57m (2007 - £22m in 2027) that will expire in 2028. Other losses will be carried forward indefinitely. In addition, the Group has UK capital losses of £350m, which were agreed with HMRC during the year. Tesco PLC Annual Report and Financial Statements 2008 59

  • Page 62
    .... Cash Flow Statement - - - - - - 46 (36) (14) (4) 22 18 2008 £m 2007 £m Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities - - - - (7) (2) 11 2 60 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com...

  • Page 63
    ...as held for sale continued The table below shows the net assets disposed of and consideration received. Balance Sheet 31 May 2006 £m Property, plant and equipment Investment property Investment in subsidiary Investment in joint ventures and associates Deferred tax asset Inventories Trade and other...

  • Page 64
    ... pence/share Profit Earnings from continuing operations Adjustments for: IAS 32 and IAS 39 'Financial Instruments' - Fair value remeasurements Total IAS 19 Income Statement charge for pensions 'Normal' cash contributions for pensions Pensions adjustment - Finance Act 2006 IAS 17 'Leases' - impact...

  • Page 65
    ...assets Internally generated development costs £m Pharmacy and software licences £m Other intangible assets £m Goodwill £m Total £m Cost At 24 February 2007 Foreign currency translation Additions Acquisitions through business... 1,525 Tesco PLC Annual Report and Financial Statements 2008 63

  • Page 66
    ... rates, growth rates, expected changes in margins and capital expenditure. Management estimate discount rates using post-tax rates that reflect the current market assessment of the time value of money and the risks specific to the cash-generating units. Changes in selling prices and direct costs...

  • Page 67
    ...50 years Net carrying value 15,209 892 829 16,930 13,267 657 674 14,598 (e) Carrying value of land and buildings includes £6m (2007 - £8m) relating to the prepayment of lease premiums. (f) Capital work in progress does not include land. Tesco PLC Annual Report and Financial Statements 2008 65

  • Page 68
    ... risks specific to the cash-generating units. Changes in selling prices and direct costs are based on past experience and expectations of future changes in the market. The forecasts are extrapolated beyond five years based on estimated long-term growth rates of generally 3%-4% (2007: 3%-4%). The pre...

  • Page 69
    Note 11 Property, plant and equipment continued The following amounts have been (charged)/credited to operating costs in the Group Income Statement during the current and prior year. 2008 £m 2007 £m Impairment losses UK Rest of Europe Asia Reversal of impairment losses UK Rest of Europe Asia Net ...

  • Page 70
    ... Distribution System Co. Limited* Tesco Stores Malaysia Sdn Bhd* C Two-Network Co. Limited* Hymall* Dobbies Garden Centres PLC* Tesco Distribution Limited* Tesco Property Holdings Limited* Tesco Stores Hong Kong Limited* dunnhumby Limited* Tesco Insurance Limited* Valiant Insurance Company Limited...

  • Page 71
    ...Business activity Share of issued share capital, loan capital and debt securities Country of incorporation and principal country of operation Tesco Personal Finance Group Limited Tesco Mobile Limited†Shopping Centres Limited BLT Properties Limited Tesco British Land Property Partnership†Tesco...

  • Page 72
    ...technique based on assumptions that are not supported by observable market prices or rates. The fair value of the listed available-for-sale investments is based on quoted market prices at the Balance Sheet date. 70 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 73
    ... Unused amounts reversed Uncollectible amounts written off At 24 February 2007 Exchange adjustments Charge for the year Unused amounts reversed Uncollectible amounts written off At 23 February 2008 (24) (1) (20) 4 7 (34) (3) (15) 9 14 (29) Tesco PLC Annual Report and Financial Statements 2008 71

  • Page 74
    ... to joint ventures and associates (note 28) Accruals and deferred income Dividends 3,936 324 1,714 116 1,187 - 7,277 3,317 203 1,329 128 1,062 7 6,046 Non-current 2008 £m 2007 £m Other payables 42 29 72 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 75
    ... - - 188 36 1,554 Non-current Par value Maturity year 2008 £m 2007 £m Finance leases (note 32) 6% MTN 5.25... Price Index (RPI) over the life of the MTN. (b) An additional bond issue ...market rates and would provide funding at floating rates. Tesco PLC Annual Report and Financial Statements 2008 73

  • Page 76
    ... assets against changes in value due to changes in foreign exchange rates. The Group has a South Korean Won denominated liability relating to the future purchase of the minority shareholding of its subsidiary, Samsung Tesco Co. Limited. This liability has been designated as a net investment...

  • Page 77
    ...-term investments Joint venture loan receivables Derivative financial assets: Interest rate swaps and similar instruments Cross currency swaps Forward foreign currency contracts Total financial assets Liabilities Short-term borrowings: Amortised cost Bonds in fair value hedge relationships Long-term...

  • Page 78
    ... out by a central treasury department under policies approved by the Board of Directors. The Board provides written principles for risk management, as described in the Business Review on pages 15 to 17. Interest rate risk Interest rate risk arises from long-term borrowings. Debt issued at variable...

  • Page 79
    ... policy on credit risk is described on page 17. The counterparty exposure under derivative contracts is £313m (2007 - £108m). The Group policy is to transact derivatives only with counterparties rated at least A1 by Moody's. Liquidity risk Liquidity risk is managed by short- and long-term cash...

  • Page 80
    ... floating rate debt is treated as not having any interest rate already set, therefore a change in interest rates affects a full 12-month period for the interest payable portion of the sensitivity calculations. 78 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 81
    ...issued totalling £2,034m. The Group borrows centrally and locally, using a variety of capital market issues and borrowing facilities to meet the requirements of each local business. Note 22 Provisions Property provisions £m At 24 February 2007 Additions Effect of changes in foreign exchange rates...

  • Page 82
    ... vesting dates for nil consideration. The exercise of options will normally be conditional on the achievement of specified performance targets related to the return on capital employed over the seven-year plan. 80 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 83
    ... 4.06 - 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 at 25 February 2006 Granted Forfeited...

  • Page 84
    ... Shares in Success Executive Incentive Scheme Performance Share Plan US Long-Term Incentive Plan 18,019,768 10,012,950 1,292,172 4,817,720 470.45 456.11 466.21 471.10 24,062,964 11,878,791 1,885,288 - 319.65 316.88 346.25 - 82 Tesco PLC Annual Report and Financial Statements 2008 www.tesco...

  • Page 85
    ... profits in the current year. Defined benefit plans United Kingdom The principal plan within the Group is the Tesco PLC Pension Scheme, which is a funded defined benefit pension scheme in the UK, the assets of which are held as a segregated fund and administered by trustees. Watson Wyatt Limited...

  • Page 86
    ... the defined benefit pension schemes and the expected nominal rates of return were: 2008 Long-term rate of return % Market value £m Long-term rate of return % 2007 Market value £m Long-term rate of return % 2006 Market value £m Equities Bonds Property Other (alternative assets) Cash Total market...

  • Page 87
    ... £m 2007 £m 2006 £m Opening defined benefit obligation Current service cost Interest cost Gain/(loss) on change of assumptions Experience losses Foreign currency translation differences Benefits paid Actual member contributions Past service gains Acquisitions Closing defined benefit obligation...

  • Page 88
    ... historical movement in defined benefit pension schemes assets and liabilities and history of experience gains and losses are as follows: 2008 £m 2007 £m 2006 £m 2005 £m Total market value of assets Present value of liabilities relating to unfunded schemes Present value of liabilities relating...

  • Page 89
    ... in aggregate of 793.4 million (2007 - 790.5 million) ordinary shares. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings of the Company. Tesco PLC Annual Report and Financial Statements 2008 87

  • Page 90
    ...Retained earnings £m Minority interests £m Total £m At 25 February 2006 395 Foreign currency translation differences - Actuarial gain on defined benefit schemes - Tax on items taken directly to or transferred from equity - Decrease in fair value of available-for-sale financial assets - Losses...

  • Page 91
    ... undertakings. The employee benefit trusts hold shares in Tesco PLC for the purpose of the various executive share incentive and profit share schemes. At 23 February 2008, the trusts held 47.4 million shares (2007 - 57.0 million), which cost £184m (2007 - £184m) and had a market value of £190m...

  • Page 92
    ...property management and IT services. In addition the Group acquired the remaining share capital of Nutri Centres Limited, changing it from a joint venture to a subsidiary undertaking. The activity undertaken by Nutri Centres Limited is retailing. 90 Tesco PLC Annual Report and Financial Statements...

  • Page 93
    ... January 2007 Tesco Stores Malaysia Sdn Bhd acquired 100% of the share capital of Makro Cash and Carry Distribution Sdn Bhd, which operated a chain of eight stores in Malaysia. The provisional fair value of assets and liabilities at the date of acquisition was included in the financial statements at...

  • Page 94
    ... of the Board of Directors of Tesco PLC are deemed to be key management personnel. It is the Board who have responsibility for planning, directing and controlling the activities of the Group. Key management personnel compensation is disclosed in the audited part of the Directors' Remuneration Report...

  • Page 95
    ...Trading issued its provisional findings in its Statement of Objections relating to the alleged collusion between certain large supermarkets and dairy processors. We continue to defend our case vigorously. No provision has been recognised in the Group's results. Tesco PLC Annual Report and Financial...

  • Page 96
    ... years Total minimum finance lease receivables Less unearned finance income Net finance lease receivables Analysed as: Current finance lease receivables Non-current finance lease receivables 5 - 5 - 5 7 6 13 (1) 12 5 - 5 6 6 12 5 - 5 6 6 12 94 Tesco PLC Annual Report and Financial Statements...

  • Page 97
    ... plans to raise £150m through an open offer of shares. Dobbies Garden Centres PLC will seek shareholder approval at an Annual General Meeting on 21 May 2008 to issue up to 12.45 million shares on a six for five basis at 1,200p per share. Tesco PLC will underwrite the offer. Tesco PLC Annual Report...

  • Page 98
    ... is presented under UK GAAP as previously published. If IFRS had been applicable for these years the main adjustments would have been IFRS 2 'Share-based payment', IFRS 3 'Business Combinations' and IAS 19 'Employee Benefits'. 96 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com...

  • Page 99
    ... foreign exchange in equity and our acquisition of a majority share of Dobbies. 17 Excluding stores in the US and Dobbies. 18 Excluding start-up costs in the US and Tesco Direct and adjusting average number of full-time equivalent employees in the UK to exclude US and Tesco Direct employees - profit...

  • Page 100
    ... Directors The Parent Company financial statements on pages 98 to 107 were authorised for issue by the Directors on 28 April 2008 and are subject to the approval of the shareholders at the Annual General Meeting on 27 June 2008. 98 Tesco PLC Annual Report and Financial Statements 2008 www.tesco...

  • Page 101
    ... Assets and liabilities in foreign currencies are translated into Pounds Sterling at the financial year end exchange rates. Share-based payments Employees of the Company receive part of their remuneration in the form of share-based payment transactions, whereby employees render services in exchange...

  • Page 102
    ... in equity are included in the Profit and Loss Account when the foreign operation is disposed of. Derivative instruments qualifying for net investment hedging are principally forward foreign exchange transactions and currency options. Pensions The Company participates in the Tesco PLC Pension Scheme...

  • Page 103
    ... are included within the Directors' Remuneration Report on pages 25 to 38. Note 4 Dividends For details of equity dividends see note 8 in the Group financial statements. Note 5 Fixed asset investments Shares in Group undertakings £m Shares in joint ventures £m Total £m Cost As at 24 February...

  • Page 104
    ... falling due within one year: Corporation tax Other tax and social security Amounts owed to Group undertakings Other liabilities Accruals and deferred income - 1 1,725 304 7 2,037 125 1 2,163 214 7 2,510 102 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 105
    ... RPI MTNs is redeemable at par, indexed for increases in the Retail Price Index (RPI) over the life of the MTN. (b) An additional bond issue increased the principal of this MTN from £350m to £415m during the...823 524 1,327 2,119 3,970 4,793 Tesco PLC Annual Report and Financial Statements 2008 103

  • Page 106
    ...11 Share-based payments Tesco PLC's equity-settled share-based payment schemes comprise various share schemes designed to reward Executive Directors. For further information on these schemes, including the valuation models and assumptions used, see note 23 to the Group financial statements. a) Share...

  • Page 107
    ...,444 - 319.65 - 346.25 - Note 12 Pensions The total cost of the pension scheme to the Group was £414m (2007 - £167m). Further disclosure relating to the Tesco PLC Pension Scheme can be found in note 24 of the Group financial statements. Tesco PLC Annual Report and Financial Statements 2008 105

  • Page 108
    ... Upon cancellation of the shares purchased as part of the share buy-back, a capital redemption reserve is created representing the nominal value of the shares cancelled. This is a non-distributable reserve. 106 Tesco PLC Annual Report and Financial Statements 2008 www.tesco.com/annualreport08

  • Page 109
    ... year * The prior period has been restated - see note 1 - Accounting policies. 4,376 135 - 4,511 3,988 152 236 4,376 1,380 - 1,380 199 (118) (792) (4) (665) 7 24 2,150 2,181 1,764 (237) 1,527 185 (105) (706) (1) (475) 5 (38) 988 1,380 Tesco PLC Annual Report and Financial Statements 2008 107

  • Page 110
    ... statements of Tesco PLC for the year ended 23 February 2008 which comprise the Balance Sheet and the related notes. These parent company financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Directors' Remuneration Report...

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    ...all processes. Designed and produced by 35 Communications. Cover: Kana and son Tesco Express, Tokyo, Japan Back Cover: Norman Fresh & Easy, Compton, California, USA â-¼ â-¼ How to find out more online Every year, more and more information is available for our shareholders, staff and customers. www...

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    Every Little Helps www.tesco.com/annualreport08