Tesco 2009 Annual Report Download - page 43

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www.tesco.com/annualreport09 Tesco PLC Annual Report and Financial Statements 2009
41
REPORT OF THE DIRECTORS
General information
Principal activity, business review and future developments The
principal activity of the Group is retailing and associated activities in the UK,
the Republic of Ireland, Hungary, Poland, the Czech Republic, Slovakia,
Turkey, Thailand, South Korea, Malaysia, Japan, China and the US. The
Group also provides retail banking and insurance services through its
subsidiary Tesco Personal Finance.
Group results Group revenue rose by £7bn to £54.3bn, representing an
increase of 15%. Group profit before tax increased by £151m, to £2,954m.
Profit for the year was £2,166m, of which £2,161m was attributable to
equity holders of the parent company.
Dividends The Directors recommend the payment of a final dividend
of 8.39p per ordinary share, to be paid on 10 July 2009 to members on the
Register at the close of business on 1 May 2009. Together with the interim
dividend of 3.57p per ordinary share paid in December 2008, the total
dividend for the year will be 11.96p compared with 10.90p for the previous
year, an increase of 9.7%.
Fixed assets Capital expenditure (excluding business combinations)
amounted to £4.7bn compared with £3.9bn the previous year. In the
Directors’ opinion, the properties of the Group have a market value in
excess of the carrying value of £7bn included in these financial statements.
Share capital and control of the Company Details of the Company’s
share capital including changes during the year in the issued share capital
and details of the rights attaching to the Company’s ordinary shares are set
out in note 29 on page 114. Details of treasury shares held by the Company
are shown in note 30 on page 115. During the year 25,214,811 ordinary shares
were repurchased for cancellation. No shareholder holds securities carrying
special rights with regards to control of the Company and there are no
restrictions on voting rights. The Board has power to purchase its own
shares and is seeking renewal of that power at the forthcoming AGM within
the limits set out in the notice of that meeting.
Shares held by the Company’s Employee Share Incentive Plan Trust,
International Employee Benefit Trust and Tesco Ireland Share Bonus
Scheme Trust rank pari passu with the shares in issue and have no special
rights, but voting rights and rights of acceptance of any offer relating to the
shares rests with the Trustees, who may take account of any recommendation
of the Company, and are not exercisable by the employees.
The Company is not party to any significant agreements that would take
effect, alter or terminate following a change of control of the Company.
The Company does not have agreements with any Director or Officer that
would provide compensation for loss of office or employment resulting
from a takeover, except that provisions of the Company’s share plans may
cause options and awards granted under such plans to vest on a takeover.
Company’s shareholders The Company has been notified that as at the
date of this report Legal & General Investment Management Limited owns
4.55% of the issued share capital of the Company. The Company is not
aware of any other ordinary shareholders with interests of 3% or more in
the issued share capital of the Company.
Articles of Association The Company’s Articles of Association may only
be amended by special resolution at a General Meeting of the shareholders.
Directors and their interests The Directors who served during the
year were:
Mr D E Reid; Mr R F Chase CBE; Sir Terry Leahy; Mr R Brasher; Mr P A Clarke;
Mr A T Higginson; Mr T J R Mason; Mr L McIlwee; Miss L Neville-Rolfe CMG;
Mr D T Potts; Mr C L Allen CBE; Ms J Tammenoms Bakker; Mr P Cescau;
Mrs K Cook; Mr E M Davies CBE; Dr H Einsmann; Mr K J Hydon; and
Ms C McCall.
Ms C McCall resigned from the Board on 10 April 2008 and Mr E M Davies CBE
resigned from the Board on 31 October 2008. The biographical details of the
present Directors are set out on page 43 of this Report. Ms Tammenoms Bakker,
Mr Cescau, Mr Hanna and Mr McIlwee were appointed to the Board in the last
12 months and, as required by the articles of association, offer themselves for
election. Mr Allen, Mr Brasher, Mr Clarke, Dr H Einsmann and Mr Higginson
retire from the Board by rotation and, being eligible, offer themselves for
re-election. The interests of Directors and their immediate families in the
shares of Tesco PLC, along with details of Directors’ share options, are
contained in the Directors’ Remuneration Report set out on pages 50 to 64.
At no time during the year did any of the Directors have a material interest
in any significant contract with the Company or any of its subsidiaries.
A qualifying third-party indemnity provision as defined in Section 234 of
the Companies Act 2006 is in force for the benefit of each of the Directors
and the Company Secretary (who is also a Director of certain subsidiaries
of the Company) in respect of liabilities incurred as a result of their office,
to the extent permitted by law. In respect of those liabilities for which
Directors may not be indemnified, the Company maintained a Directors’
and officers’ liability insurance policy throughout the financial year.
Employment policies The Group depends on the skills and commitment
of its employees in order to achieve its objectives. Ongoing training
programmes seek to ensure that employees understand the Group’s
customer service objectives and strive to achieve them. The Group’s
selection, training, development and promotion policies ensure equal
opportunities for all employees regardless of factors such as gender, marital
status, race, age, sexual preference and orientation, colour, creed, ethnic
origin, religion or belief, or disability. All decisions are based on merit.
Internal communications are designed to ensure that employees are well
informed about the business of the Group. Employees are encouraged
to become involved in the financial performance of the Group through 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).
Political and charitable donations Cash donations to charities amounted
to £28,278,867 (2008 – £22,655,173). Contributions to community
projects including cause-related marketing, gifts-in-kind, staff time and
management costs amounted to £57,094,208 (2008 – £54,542,913).
There were no political donations (2008 – £nil). During the year, the Group
made contributions of £55,468 (2008 – £45,023) in the form of sponsorship
for political events: Labour Party £15,500; Liberal Democrat Party £6,150;
Conservative Party £8,595; Scottish National Party £7,343; Plaid Cymru
£1,880; trade unions £16,000.
Supplier payment policy Tesco PLC is a signatory to the CBI Code of
Prompt Payment. Copies of 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 on its Balance Sheet. The Group pays its creditors on a pay
on time basis which varies according to the type of product and territory
in which the suppliers operate.
Going concern The Directors consider that the Group and the Company
have adequate resources to remain in operation for the foreseeable
future and have therefore continued to adopt the going concern basis
in preparing the financial statements. As with all business forecasts, the
Directors’ statement cannot guarantee that the going concern basis will
remain appropriate given the inherent uncertainty about future events.
Events after the Balance Sheet date
There were no material events after the Balance Sheet date.
Auditors A resolution to re-appoint PricewaterhouseCoopers LLP as
auditors of the Company and the Group will be proposed at the Annual
General Meeting.
Directors’ statement of dislosure of information to auditors
Having made the requisite enquiries, the Directors in office at the date of
this Annual Report and Financial Statements have each confirmed that, so
far as they are aware, there is no relevant audit information (as defined by
Section 418 of the Companies Act 2006) of which the Group’s auditors are
unaware, and each of the Directors has taken all the steps he/she ought
to have taken as a Director to make himself/herself aware of any relevant
audit information and to establish that the Group’s auditors are aware of
that information. This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act 2006.