Tesco 2004 Annual Report Download - page 5

TESCO PLC 3
The Group continued to generate strong operating
cash flows. Net cash inflow from operating activities
increased by 23.9% to £2,942m (2003 – £2,375m).
Working capital improvements contributed £0.5bn
to cash flow this year, and whilst £50m is due to
the 53rd week, the rest is due to growth in the
business and management focus.
Group net debt in the year decreased by £647m
to £4,090m (2003 – £4,737m). Gearing decreased
to 51% (2003 – 73%).
Post-tax return on capital employed increased to
10.5% from 10.2% last year.
GROUP INTEREST AND TAXATION Net interest payable
was £223m (2003 – £180m). Interest cover is
now 8.2 times compared to 8.6 times last year.
Ta x has been charged at an effective rate of
31.1% (2003 – 30.5%). Prior to accounting for the
net loss on disposal of fixed assets, integration
costs and goodwill amortisation, our underlying tax
rate was 29.5% (2003 – 29.6%).
SHAREHOLDER RETURNS AND DIVIDENDS Underlying
diluted earnings per share (excluding net loss on
disposal of fixed assets, integration costs and
goodwill amortisation) increased by 16.7% to
16.31p (2003 – 13.98p).
The Board has proposed a final dividend of 4.77p
(2003 – 4.33p) giving a total dividend for the year
of 6.84p (2003 – 6.20p).This represents an increase
of 10.3% in line with our policy of strong dividend
growth while continuing to build cover.
Total recognised gains and losses in the year were
£943m (2003 – £968m), comprising profit for the
year of £1,100m and losses on foreign currency
translation of £157m.
Group shareholders’ funds, before minority
interests, increased by £1,429m. This was due to
retained profits of £584m, new shares issued less
expenses of £1,002m and losses on foreign
currency translation of £157m. As a result, return
on shareholders’ funds was 23.6%.
Total shareholder return, which is measured as the
percentage change in the share price plus the
dividend, has been 66.1% over the last five years,
compared to the FTSE 100 average of (16.5)%.
Over the last three years it has been 3.4%,
compared to the FTSE 100 average of (17.1)%.
In the last year, total shareholder return in Tesco
was 58.6% compared to the FTSE 100 average
of 25.2%.
UK Sales grew by 16.3% to £26,876m (2003 –
£23,101m as restated). On a 52-week basis, UK sales
grew by 14.2% to £26,381m. Of this, 6.7% came
from existing stores and 7.5% from net new stores.
Underlying operating profit in the UK was 17.7%
higher at £1,526m (2003 – £1,297m) and operating
margin increased to 6.2%.
The tesco.com operations achieved sales of
£577m (2003 – £447m) and excluding USA and
South Korea start-up losses, made a profit of
£28m (2003 – £12m).
As part of our store development programme we
opened 64 new stores comprising eight Extras,
20 Superstores, four Metro, 30 Express and two
T&S Stores. Including extensions and refits, we
opened an additional 1.8m sq ft of new space
and expect to open a further 1.4m sq ft in the
coming year.
INTERNATIONAL Sales are up 29%, with strong
volume growth. Profits have grown strongly by 44%,
and operating margins have increased from 4.5%
last year to 5.1%.
REST OF EUROPE In the Rest of Europe sales rose
by 27.5% to £3,834m (2003 – £3,007m as
restated) and contributed an underlying operating
profit of £184m, up from £141m last year.
Sales in the Republic of Ireland, at constant
exchange rates, grew by 10%. We have 82 stores,
giving us 1.9m sq ft and have plans for a further
eight stores next year.
In Central Europe we opened 22 hypermarkets
in the year giving us 110 in total.
ASIA In the year, our Asian businesses had sales
of £2,847m (2003 – £2,172m as restated), up
31.1% on the previous year and made an underlying
operating profit of £122m (2003 – £71m).
In Asia, we opened 22 stores in the year, giving
us 179 in total.
1 year 3 years 5 years
TOTAL SHAREHOLDER RETURN
RELATIVE TO THE FTSE 100
82.6
82.6
20.5
20.5
33.4
33.4
00 01 0302
UK SALES GROWTH %
(restated)
7.7
8.8 8.4
7.3
4.0
4.0
04
16.3 14.2
6.7
6.7
6.0
6.0
4.7
4.7
4.1
4.1
TOTAL
LIKE-FOR-LIKE
53rd WEEK
00 01 0302
UK SALES AREA OPENED
000 sq ft
1,433
1,433
04
1,778
1,296
1,296
1,298
1,298
1,216
1,216