Tesco 2010 Annual Report Download - page 47

Tesco PLC Annual Report and Financial Statements 2010 45
Our business
General information
Principal activity, business review and future developments The
principal activity of the Group is retailing and associated activities in the
UK, China, the Czech Republic, Hungary, the Republic of Ireland, India,
Japan, Malaysia, Poland, Slovakia, South Korea, Thailand, Turkey and
the US. The Group also provides retail banking and insurance services
through its subsidiary Tesco Bank.
Group results Group revenue (excluding VAT) rose by £3bn to £56.9bn,
representing an increase of 7.1%. Group profit before tax increased by
£259m, to £3,176m. Profit for the year was £2,336m, of which £2,327m
was attributable to equity holders of the parent company.
Dividends The Directors recommend the payment of a final dividend
of 9.16p per ordinary share, to be paid on 9 July 2010 to members on
the Register at the close of business on 30 April 2010. Together with the
interim dividend of 3.89p per ordinary share paid in December 2009,
the total dividend for the year will be 13.05p compared with 11.96p for
the previous year, an increase of 9.1%.
Fixed assets Capital expenditure (excluding business combinations)
amounted to £3.1bn compared with £4.7bn the previous year. In the
Directors’ opinion, the properties of the Group have an open market value
well in excess of the carrying value of £24.8bn which has been 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 116. Details of shares held by the Company’s
Employee Benefit Trusts are shown in note 27 on page 111. During the year
no 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 the Company’s 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. Voting rights and rights of acceptance of any offer relating to the
shares held in these trusts rests with the trustees, who may take account of
any recommendation from the Company. Voting rights are not exercisable
by the employees on whose behalf the shares are held in trust.
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 Blackrock, Inc. owns 5.24%, and Legal & General
Investment Management Limited owns 3.71% of the issued share capital
of the Company. The Company is not aware of any other 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: Charles Allen CBE; Richard Brasher; Patrick Cescau; Philip Clarke;
Karen Cook; Rodney Chase CBE; Harald Einsmann; Ken Hanna; Andrew
Higginson; Ken Hydon; Sir Terry Leahy; Tim Mason; Laurie McIlwee;
Lucy Neville-Rolfe CMG; David Potts; David Reid and Jacqueline
Tammenoms Bakker. The biographical details of the present Directors
are set out on pages 36 and 37 of this Report. Ken Hydon, Tim Mason,
Lucy Neville-Rolfe, David Potts and David Reid 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 52 to 66.
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, disability or trade union affiliation. 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 £31,221,573 (2009 – £28,278,867). Total contributions to
community projects including cash, cause-related marketing, gifts-in-kind,
staff time and management costs amounted to £61,592,464 (2009 –
£57,094,208) . There were no political donations (2009 – £nil). During the
year, the Group made contributions of £49,365 (2009 – £55,468) in the
form of sponsorship for political events: Labour Party £15,000; Liberal
Democrat Party £6,300; Conservative Party £8,384; Scottish National
Party £5,500; Plaid Cymru £2,000; trade unions £12,181.
Supplier payment policy Tesco PLC is a signatory to the Prompt
Payment Code. More information about the Code can be found at
www.promptpaymentcode.org.uk. 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 disclosure 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.