Preliminary Results 2023/24
MARKET SHARE GAINS AND
RETuRN TO POSITIVE VOLUME GROWTH AS CUSTOMERS SHOP MORE AT
TESCO.
|
|
|
|
|
Performance highlights (on a
continuing operations basis)1,2
|
FY 23/24
|
FY
22/233
|
Change at actual
rates
|
Change at constant
rates
|
|
Group sales (exc. VAT, exc.
fuel)4
|
£61,477m
|
£57,216m
|
7.4%
|
7.2%
|
|
Adjusted operating
profit5
|
£2,829m
|
£2,509m
|
12.8%
|
12.7%
|
|
- Retail
|
£2,760m
|
£2,487m
|
11.0%
|
10.9%
|
|
- Tesco Bank1
|
£69m
|
£22m
|
213.6%
|
213.6%
|
|
Retail free cash
flow6
|
£2,063m
|
£2,133m
|
(3.3)%
|
|
|
Net debt6,7
|
£(9,764)m
|
£(10,493)m
|
6.9%
|
|
|
Adjusted diluted
EPS5
|
23.41p
|
20.53p
|
14.0%
|
|
|
Dividend per
share7
|
12.10p
|
10.90p
|
11.0%
|
|
|
Statutory measures
(on a continuing operations
basis)1
|
|
|
|
|
Revenue (exc. VAT, inc.
fuel)
|
£68,187m
|
£65,322m
|
4.4%
|
|
|
Operating profit
|
£2,821m
|
£1,410m
|
100.1%
|
|
|
Profit before tax
|
£2,289m
|
£882m
|
159.5%
|
|
|
Retail cash generated from
operating activities
|
£3,712m
|
£3,752m
|
(1.1)%
|
|
|
Diluted EPS
|
24.53p
|
8.81p
|
178.4%
|
|
|
Statutory measures
(including discontinued
operations)1
|
|
|
|
|
Profit for the year (after
tax)
|
£1,192m
|
£736m
|
62.0%
|
|
|
Diluted EPS
|
16.56p
|
9.85p
|
68.1%
|
|
|
|
|
|
|
|
| |
The results of our existing banking operations (credit cards,
loans and savings) have been treated as discontinued following our
9 February 2024 announcement of the proposed sale to
Barclays. As such, Tesco Bank results included in continuing
operations above refer only to the retained Tesco Bank business,
i.e. insurance and money services. Total Tesco Bank adjusted
operating profit including discontinued operations was
£148m1.
Ken Murphy, Chief Executive
"This strong performance reflects
the hard work of colleagues across the whole Tesco Group, and their
commitment to serving our customers. Customers are choosing
to shop more at Tesco, which is reflected in growing market share
as they respond to the improvements we've made to the value and
quality of our products.
Inflationary pressures have
lessened substantially, however we are conscious that things are
still difficult for many customers, so we have worked hard to
reduce prices and have now been the cheapest full-line grocer for
well over a year. We have continued to invest in helping
customers where it matters most, cutting prices on more than 4,000
products and doubling down on our powerful combination of Aldi
Price Match, Low Everyday Prices and Clubcard Prices.
Customer perception of the quality of our products is growing ahead
of the market and we continue to win customers from premium
retailers, with sales of Tesco Finest now exceeding
£2bn.
We have strong momentum in our
business, and are encouraged by signs of improving consumer
sentiment. We're excited about the opportunities ahead, with
the right plans to keep winning with customers, as well as a great
team to deliver them."
Sales growth across all markets and continued cost savings
deliver strong financial performance:
· Strong sales performance across the Group, with Retail
LFL8 sales up 6.8%; inflation fell throughout the year,
with volume growth in the UK and Republic of Ireland across the
second half
- UK
& ROI LFL sales up 7.3%, including UK up 7.7%, ROI up 6.8% and
Booker up 5.4%
- Central
Europe LFL sales up 0.2% in a challenging trading environment, with
our investments in value supporting an improving volume trajectory
during the second half
· Statutory revenue £68,187m, up 4.4%, includes impact of
(17.2)% lower fuel sales, primarily due to reduced retail
prices
· Retail adjusted operating profit5 £2,760m, up
10.9% at constant rates, including Save to Invest delivery of
c.£640m
- UK
& ROI adjusted operating profit £2,670m, up 15.7%, as a strong
trading performance and accelerated cost savings offset significant
cost headwinds and our investments in value, quality and
service
- Central
Europe adjusted operating profit £90m, down (50.0)%, primarily
driven by cost inflation headwinds and regulatory actions in
Hungary
· Statutory operating profit1 £2,821m, up 100.1%,
reflects last year's £(982)m non-cash impairment charge compared to
a £28m net release this year
· Strong retail free cash flow6 £2,063m, including a
positive working capital inflow of £418m
· Net debt6,7 reduced by £729m due to strong cash
flow and Bank special dividend of £250m; net debt/EBITDA ratio at
2.2x
· Supporting returns to shareholders through ongoing buyback
programme; £750m of shares purchased during 23/24
· Proposed final dividend of 8.25pps, with full year dividend
of 12.10pps, up 11.0% year-on-year
Winning with customers through investments in value, quality
and service:
· Strengthening brand perception in both value and quality; all
customer satisfaction measures improving
· Overall gains in both value and volume share in UK and ROI;
UK value +28bps and volume +8bps, with 12 consecutive periods of
switching gains; ROI value +73bps and volume +76bps, with 15
consecutive periods of switching gains
· Latest market share results (to 17 March 2024) strengthened
further, with UK value +53bps and volume +26bps
· Unique customer offer combining Aldi Price Match on >600
lines, Low Everyday Prices on >1,000 lines and c.8,000 exclusive
Clubcard Prices deals each week, means we have been the cheapest
full-line grocer for 16 consecutive months
· Investing in product quality and innovation, launching over
1,000 new products and improving c.2,700 existing lines
· Value for money and quality reflected in 19 consecutive
periods of net switching gains from premium retailers
Maintaining disciplined approach to investment whilst
investing in high-returning future growth & digital
capability:
· Continued store expansion & improvement, with net
increase of 87 stores (UK 74, ROI 4, CE 9) and 389 store
refreshes
· Developing AI technology solutions to drive productivity,
competitiveness and value for customers, including new range
optimisation tool which automates bespoke product selection based
on store location and demographic
· Enhanced transport scheduling system and new stock assembly
processes driving greater supply chain efficiency
· Started construction of fresh food distribution centre in
Aylesford, Kent, incorporating robotic automation
technology
· Stepped up investment to support Booker growth, including
conversion of Fareham Makro into c.120k sq.ft retail hub, unlocking
more choice for retail customers and freeing up catering
capacity
· Continuing to selectively invest in high-returning
initiatives, with total capital expenditure of £1.3bn in 23/24;
expected spend of £1.4bn in 24/25
· Entered into global grocery retail innovation partnership
with Ahold Delhaize, Sobeys, Shoprite and Woolworths, to jointly
invest in startups which accelerate growth and
sustainability
Balancing the needs of all stakeholders to create long-term,
sustainable value:
· Largest ever increase in colleague pay, in addition to 'Thank
You' payment for hourly paid colleagues and new wellbeing benefits,
including virtual GP appointments and enhanced family
leave
· Investing in skills and employment with more hours for
existing colleagues, the launch of a new retail apprenticeship
programme, and plans to create c.2,000 additional UK roles across
70 new stores and our technology and online teams
· Continued strong support for our communities with launch of
Stronger Starts programme, funding activities and nutrition in
4,000 projects, and significantly increased donations to food banks
and charities, now at 4 million meals per month
· Improving product sourcing and efficiency of supply chain
through collaboration with suppliers, contributing an additional
£75m to British agriculture; #1 position in Advantage supplier
survey for eighth year in a row
· Healthy products now 63% of sales volume in UK and ROI, well
on track to achieve 2025 target of 65%
Planned sale of banking operations and long-term strategic
partnership with Barclays announced in February
2024:
· Sale expected to complete in second half of 2024, generating
c.£700m cash (net of transaction costs) made up of c.£600m
consideration and c.£100m other net cash; planned sale results in a
remeasurement loss of £(628)m (post-tax)
· Combined with £250m special dividend paid to the Group by
Tesco Bank in August 2023, expected to deliver c.£1bn of
cash
· Total Tesco Bank adjusted operating profit for the year of
£148m, in line with guidance; including £69m from retained business
(insurance and money services), presented within continuing
operations
· Banking operations classified as discontinued, with £79m
adjusted operating profit excluded from headline
performance
· On an annualised basis, we expect the retained Tesco Bank
business to generate £80m to £100m adjusted operating profit,
including income from partnership with Barclays, enabling us to
offer Tesco-branded financial products and services
CAPITAL RETURN PROGRAMME.
Since launching our capital return
programme in October 2021, we have now purchased £1.8bn worth of
shares, including £750m in the twelve months to April 2024.
We continue to see the buyback programme as an ongoing and critical
driver of shareholder returns and we are pleased to announce that
we will buy back £1.0bn worth of shares over the next twelve
months, including £250m funded by the special dividend paid by
Tesco Bank in August 2023. A further update on our plans for
the return of the proceeds generated from the sale of our banking
operations will be provided following completion.
OUTLOOK.
The investments we've made to date
have strengthened our offer to customers, made us more efficient,
and more digitally capable, establishing a strong foundation for
future growth. We are building a consistent track record of
delivery against the performance framework we set out in October
2021.
For the 2024/25 financial year, we
expect retail adjusted operating profit of at least £2.8bn.
In addition, we expect total adjusted operating profit from the
retained Tesco Bank business of around £80m, which includes a
part-year amount of partnership income, based on the completion of
the transaction towards the end of this calendar year. We
expect to generate retail free cash flow within our guidance range
of £1.4bn to £1.8bn.
STRATEGIC PRIORITIES.
Our strategic priorities ensure
that we focus on offering great value, quality and convenience
whilst also rewarding loyalty. Through our colleagues, our
reach and our supplier relationships we are well-placed to serve
our customers whenever, wherever and however they need us.
Our strategy guides us to drive top-line growth, grow profit and
generate cash and in doing so, deliver for all our
stakeholders.
1) Magnetic Value for Customers - Re-defining value to become the customer's
favourite
· Led the way on passing savings on to customers; prices cut on
over 4,000 products by an average of c.12% over the year
· Clubcard Prices on around 8,000 products each week, saving
customers up to £360 off the annual cost of their
groceries
· Continual process of quality innovation and improvement, with
1,047 new lines introduced during the year, including our new
Finest Summer, 'Slow Cooked' and Christmas party food ranges and
meat-free Plant Chef ready meals
· Finest sales now >£2bn, up 15.7% during the year, with
volumes up 9.0% and more than 23m customers buying into our Finest
brand, including one in four customer baskets containing a Finest
product over Christmas
· Increases in all customer perception scores, including
satisfaction (+101bps), quality (+96bps) and value
(+88bps)
· Further strengthening our non-food offering with the
introduction of Paperchase and The Entertainer brands, adding
premium stationery and an even more compelling toys range to our
stores, respectively
· Quality of Booker offer reflected in winning 2023 Quality
Awards Foodservice Operator of the year
· Largest ever Booker Catering price lock on over 700 products
throughout the Christmas period, with a further 600 products locked
through to May 2024
2) I Love my Tesco Clubcard -
Creating a competitive advantage through our powerful digital
capability
· Expanding Clubcard reach: now over 22m Clubcard households in
UK, +6.2% YoY; Tesco app users increased to 16.3m across the Group:
UK 12.7m, ROI 1.0m, Central Europe 2.6m
· Clubcard sales penetration up in all markets, now at: UK 82%,
ROI 85%, Central Europe 87%, Mobile 88% and Bank 66%
· Double Clubcard points event for first time in a decade,
>10bn Clubcard points issued during January & February
event
· Growing personalisation: issuing 289m personalised coupons to
7.6m customers during the year; 'Clubcard Unpacked' shopper insight
reached over 17m customers, up from 9m last year
· Growing reach of digital media with significant increase in
number of connected screens; c.2,000 now installed
· Leveraging Clubcard insights and dunnhumby expertise to
create sophisticated digital platform; more than 17,000 campaigns
delivered in the year, with newly created team focused on growing
our retail media contribution
3) Easily the Most Convenient - Serving customers wherever, whenever and however they want
to be served
· Opened 113 stores across the Group (seven new superstores, 60
Express stores & 27 One Stop stores in UK, one superstore and
four Express stores in ROI, and 14 new stores in Central
Europe)
· UK online market share strong at c.34%; further strengthened
availability to 98.1% with 'perfect orders' up 20ppts
YoY
· Whoosh now available in 1,424 stores; available to 66% of
population; with 74% of deliveries within 30 minutes and larger
baskets now available in over 1,000 stores
· Opened a further three Urban Fulfilment Centres in Gallions
Reach, King's Lynn and Coventry; now at nine UFCs in
total
· Almost doubled number of electric home delivery vans to 571,
now at 11% of fleet; target to be fully electric in UK by
2030
· Working with 354 net new Booker retail partners; converted
existing Fareham site into c.120k sq.ft retail hub, unlocking more
choice for retail customers and freeing up catering
capacity
· Tesco Mobile ranked highest mobile brand in the UK Customer
Satisfaction index - also won overall network of the year and best
network for customer service at the 2024 Uswitch Telecoms
Awards
4) Save to Invest - Significant opportunities to simplify, become more productive
and reduce costs
· Exceeded savings target, with c.£640m of savings in 23/24 and
£1.2bn total cumulative savings over past two years
· Strong delivery across all areas: goods and services not for
resale, property, operations and central overheads
· Completed space realignment and optimisation of management
structures in large stores
· End-to-end review of promotional replenishment to strengthen
availability and deliver efficiency gains
· Further energy consumption initiatives delivered in the year,
including upgraded LED lighting
· Strong plan to deliver a further £500m of efficiency savings
in 24/25
COMMUNITIES.
During the year, we launched
Stronger Starts, our £5m grant programme, which has so far
supported around 4,000 projects for children and young people,
providing support around health, nutrition and physical
activity.
We have worked with our
redistribution partners to significantly increase the amount of
surplus food we donate to charities and local communities in the
UK, donating over four million meals per month, bringing our total
to date to over 200 million meals. In ROI, we celebrated ten
years of the Surplus Redistribution Programme, with 20 million
meals donated to date, whilst Booker have joined Tesco in being
awarded the FareShare Food Partner Logo in recognition of their
consistent food donation work.
We've made strong progress on
health in the year, with healthy products now accounting for 63% of
sales volume in the UK and ROI, well on
track towards achieving our target of 65% by 2025.
We remain
committed to making healthy options more accessible and affordable
for all our customers, and we expanded our Better Baskets campaign
in the year, with dedicated zones now in seven different aisles in
our large stores.
PLANET.
We continue to take action on
climate change and this year we became one of the first companies
globally to set validated science-based targets on all greenhouse
gas emissions across our full Group value chain, including those
originating from forests, land and agriculture (FLAG). The Science
Based Targets Initiative (SBTi) validated our stretching
commitments, as we work towards our
objective of net zero across our entire value chain by 2050,
aligned to a 1.5-degree pathway. We have made significant
progress in the year in reducing emissions in our own operations
(Scope 1 and 2), delivering a 61% reduction against our baseline,
exceeding our 2025 target of 60%. Our actions
included rolling out 278 more electric delivery vans in the UK,
moving to lower emissions refrigerant gases in our chilled
distribution network, and installing heat pumps which are now in
most of our UK Express stores and a small number of stores across
ROI and Central Europe.
We already use 100% renewable
electricity across the Group and plan to roll-out solar panels on
100 of our stores across the UK over the next three years. We
generate renewable energy as part of our partnership with EDF
Renewables and a number of other partners, through offsite power
purchase arrangements. These partnerships are expected to
generate around a third of our UK electricity demand within the
next 18 months. We are also supporting our agricultural
suppliers' transition to low-carbon fertilisers, with our second
year of trials underway and covering ten times the area of the
first year; and engaging our suppliers to better support our net
zero commitment, with over 70% (by cost of goods sold) now having
publicly set a net zero ambition.
GROUP REVIEW OF PERFORMANCE.
On a continuing operations
basis1
As set out on page 1 of this release, the results of our
existing banking operations have been treated as discontinued
following the announcement of our proposed sale to Barclays.
As such, Tesco Bank results included in the table below and within
the segmental review of performance, refer only to the retained
Tesco Bank business, i.e. insurance and money services, unless
otherwise stated.
52 weeks ended 24 February
20242,7
|
FY 23/24
|
FY
22/233
|
Change at
actual
rates
|
Change at constant
rates
|
|
Sales (exc. VAT, exc. fuel)4
|
£61,477m
|
£57,216m
|
7.4%
|
7.2%
|
|
Fuel
|
£6,710m
|
£8,106m
|
(17.2)%
|
(17.2)%
|
|
Revenue (exc. VAT, inc. fuel)
|
£68,187m
|
£65,322m
|
4.4%
|
4.2%
|
|
|
|
|
|
|
|
Adjusted operating profit5
|
£2,829m
|
£2,509m
|
12.8%
|
12.7%
|
|
Adjusting items
|
£(8)m
|
£(1,099)m
|
|
|
|
Statutory operating profit
|
£2,821m
|
£1,410m
|
100.1%
|
|
|
|
|
|
|
|
|
Net finance costs
|
£(538)m
|
£(536)m
|
|
|
|
Joint ventures and
associates
|
£6m
|
£8m
|
|
|
|
Statutory profit before tax
|
£2,289m
|
£882m
|
159.5%
|
|
|
Group tax
|
£(525)m
|
£(224)m
|
|
|
|
Statutory profit after tax
|
£1,764m
|
£658m
|
168.1%
|
|
|
|
|
|
|
|
|
Adjusted diluted
EPS5
|
23.41p
|
20.53p
|
14.0%
|
|
|
Statutory diluted EPS
|
24.53p
|
8.81p
|
178.4%
|
|
|
Dividend per share7
|
12.10p
|
10.90p
|
11.0%
|
|
|
Net debt6,7
|
£(9,764)m
|
£(10,493)m
|
6.9%
|
|
|
Retail free cash flow6
|
£2,063m
|
£2,133m
|
(3.3)%
|
|
|
Capex9
|
£1,314m
|
£1,235m
|
6.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Group sales4 increased
by 7.2% at constant rates, with growth across all segments.
The impact of inflation was evident across all markets, although
reduced gradually across the year as many global commodity prices
fell and we passed savings on to customers by cutting prices across
everyday grocery lines. Customer demand was resilient and
volume performance improved across the year, supported by our
ongoing investments in value, quality, and service. Revenue
increased by 4.2% at constant rates, including a (17.2)% decline in
fuel sales, primarily driven by lower retail prices
year-on-year.
Group adjusted operating
profit5 increased by 12.7% at constant rates, including
a further c.£640m contribution from Save to Invest in the
year. We effectively managed significant cost headwinds,
whilst our ongoing investments in the customer offer drove stronger
than expected volumes.
Group statutory operating profit
improved by 100.1% year-on-year, primarily due to a £(982)m
non-cash net impairment charge in the prior year. The
non-cash net impairment release of £28m in the current year
reflects an improvement in UK & ROI performance, partially
offset by lower property market values.
Net finance costs were broadly
flat year-on-year, with stable net interest costs and a £(98)m
increase in net pensions finance costs, being largely offset by a
£91m movement in fair value remeasurements of financial
instruments.
The higher tax charge this year
was driven mainly by an increase in UK corporation tax rates
effective from April 2023, the impact of higher retail operating
profits and a lower tax credit on adjusting items, driven by last
year's net impairment charge.
Adjusted diluted EPS5
increased by 14.0%, due to higher retail adjusted operating profits
and the ongoing benefit from our share buyback programme. We
have announced a full year dividend of 12.10 pence per ordinary
share, up 11.0% year-on-year.
We generated £2,063m of retail
free cash flow6, including a net £418m working capital
inflow. Net debt6,7 reduced by £729m to £9.8bn,
driven by this strong retail free cash flow and the £250m special
dividend from Tesco Bank. This was partially offset by cash
returned to shareholders via our ongoing share buyback programme
and dividend payments made in the year. The net debt/EBITDA
ratio was 2.2 times, compared to 2.6 times last year, driven by
strong cash generation and higher retail EBITDA.
Further commentary on these
metrics can be found below and a full income statement can be found
on page 15.
Notes:
1. Following
the announcement in February 2024 that we have reached an agreement
to sell our Banking operations, the performance of these banking
operations has been presented as a discontinued operation with
comparatives also restated. Discontinued operations are
excluded from our headline performance metrics. The assets
and liabilities related to the discontinued operations have been
classified as held for sale. Retained business (money
services and insurance) has been presented on a continuing
operations basis and therefore within headline performance
measures. Further details on discontinued operations can be
found in Note 6, starting on page 30, and please refer to Note 2
for the segmental results of the Bank.
2. The Group
has defined and outlined the purpose of its alternative performance
measures, including its performance highlights, in the Glossary
starting on page 50.
3.
Comparatives have been restated for the adoption of IFRS 17
'Insurance contracts' and to present Banking operations as a
discontinued operation. Refer to Notes 1, 6 and 22 for
further details.
4. Group
sales exclude VAT and fuel. Sales change shown on a
comparable days basis for Central Europe.
5. Adjusted
operating profit and adjusted diluted EPS exclude adjusting
items.
6. Net debt
and Retail free cash flow exclude Tesco Bank.
7. All
measures apart from Net debt and Dividend per share are shown on a
continuing operations basis unless otherwise stated. Further
information on Net debt can be found in Note 21, starting on page
45.
8.
Like-for-like (LFL) is a measure of growth in Group sales from
stores that have been open for at least a year and online sales (at
constant exchange rates, excluding VAT and fuel).
9. Capex
excludes additions arising from business combinations, property
buybacks (typically stores) and other store purchases. Refer
to page 54 for further details.
Segmental review of
performance:
Sales performance:
(exc. VAT, exc.
fuel)3,4,7
On a continuing operations
basis1
|
Sales
(£m)
|
LFL sales
change8
|
Total sales change at actual
rates3
|
Total sales change at
constant rates3
|
|
|
|
|
|
-
UK
|
44,371
|
7.7%
|
8.1%
|
8.1%
|
-
ROI
|
2,891
|
6.8%
|
9.3%
|
8.5%
|
-
Booker
|
9,082
|
5.4%
|
4.6%
|
4.6%
|
UK & ROI
|
56,344
|
7.3%
|
7.6%
|
7.6%
|
Central Europe
|
4,322
|
0.2%
|
3.1%
|
0.6%
|
Retail
|
60,666
|
6.8%
|
7.3%
|
7.0%
|
Tesco Bank
|
811
|
|
21.7%
|
21.7%
|
Group sales
|
61,477
|
|
7.4%
|
7.2%
|
Fuel
|
6,710
|
(17.3)%
|
(17.2)%
|
(17.2)%
|
Group revenue
|
68,187
|
|
4.4%
|
4.2%
|
Further information on sales
performance is included in the supplementary information starting
on page 57.
Adjusted operating profit3,5,7 performance:
|
Profit
(£m)
|
|
|
|
|
On a continuing operations
basis1
|
Change at actual
rates
|
Change at constant
rates
|
Margin % at actual
rates
|
Margin % change at actual
rates
|
|
UK & ROI
|
2,670
|
15.7%
|
15.7%
|
4.2%
|
42
bps
|
|
Central Europe
|
90
|
(50.0)%
|
(50.0)%
|
2.0%
|
(208)
bps
|
|
Retail
|
2,760
|
11.0%
|
10.9%
|
4.1%
|
25 bps
|
|
Tesco Bank
|
69
|
213.6%
|
213.6%
|
8.5%
|
520
bps
|
|
Group
|
2,829
|
12.8%
|
12.7%
|
4.1%
|
31 bps
|
|
Further information on operating
profit performance is included in Note 2 starting on page
22.
UK & ROI OVERVIEW:
In the UK, Republic of Ireland
(ROI) and Booker, like-for-like sales increased by 7.3%.
Inflation fell gradually across the year as we worked hard to cut
prices across everyday grocery lines in response to falling global
commodity prices. Volumes were stronger than anticipated
across the year and returned to growth in the second
half.
UK & ROI adjusted operating
profit was £2,670m, up 15.7% at constant rates, reflecting the
accelerated delivery of our Save to Invest programme, effective
management of inflationary cost pressures, resilient volumes, and a
strong contribution from Booker.
Adjusted operating margin was
4.2%, 42bps higher year-on-year, reflecting the cumulative effect
of our Save to Invest programme. Our current year operating
margin is now similar to pre-pandemic levels.
Further information on each of the
UK & ROI businesses follows below.
UK - Executing strongly across all areas of the shopping
trip, leading to market share gains:
Like-for-like sales grew by 7.7%,
driven by a strong performance across all formats and
channels. Sales inflation fell across the year, whilst
volumes improved as customers responded well to our efforts to cut
prices ahead of the market, our investments in service and
market-leading availability.
Overall market share grew by
+28bps year-on-year to 27.6%, with a particularly strong
performance in our large stores. We delivered eight
consecutive four-week periods of market share gains and in the
latest period (to 17 March 2024), we grew volumes ahead of the
market. We have now delivered 12 consecutive four-week
periods of switching gains, including continued gains from the
premium retailers, supported by ongoing investments in
quality. Our Finest range performed well, with volumes up
9.0% and record sales over Christmas.
Food sales grew by 9.3%, with
volume growth in the second half supported by market-leading
availability, our continued investment in price and our focus on
great quality across the range. We launched 1,047 new
products and reformulated and improved a further c.2,700, including
re-launches across our 'food for tonight' customer mission, such as
our new Tex Mex Feast range, meat-free Plant Chef ready meals and
Finest 'Dinner for Two' offer, in addition to category relaunches
across chocolate, fish and pasta. Overall brand perception
increased by 133bps at the end of the year, driven by a significant
step up across all drivers, including satisfaction (+101bps),
quality (+96bps) and value (+88bps).
We have been the cheapest of the
full-line grocers since November 2022 and our price position
strengthened again this year, including a further improvement
against the limited-range discounters. Over 4,000 products
were cheaper at the end of the year than at the start, with an
average reduction of around 12%.
Clubcard Prices continue to offer
customers exclusive access to around 8,000 great value promotions
each week. We also ran the first double Clubcard points event
in over a decade, with more than 10 billion Clubcard points issued
across January and February. Clubcard sales penetration grew
by a further 3ppts in the year to 82%.
The number of customers engaging with the Tesco
app reached 12.7 million by the end of the year and has increased
by over 40% since we completed the roll-out of Clubcard Prices in
March 2022.
Home and Clothing sales, which now
account for around 7% of total UK sales, declined by (3.4)% for the
full year, reflecting the impact of strategic ranging decisions,
including exiting low returning categories such as large
electricals. Excluding these impacts, sales were broadly
flat. Our clothing sales grew faster than the broader
store-based clothing market, with Womenswear a particular
highlight, growing 3.7%. We launched the Paperchase brand in
120 stores in time for Christmas, offering more customers access to
a range of premium stationery and cards which reflects the heritage
of the brand. In January, we announced a new partnership with
The Entertainer and we will roll-out a leading range of toy brands
to around 750 UK stores across the coming year.
Sales grew across both large and
convenience store formats, by 8.2% and 4.5% respectively. In
our large stores, we invested across key seasonal events, including
increasing the number of colleagues on the shop floor, delivering
market-leading availability, leading to an improvement across our
customer metrics, including price satisfaction and service.
Convenience sales were impacted by trading over exceptionally hot
weather in the first half and by some customers switching a greater
level of spend to our large stores. Our city-centre stores
continue to perform well, growing by 6.0%.
Online sales grew by 10.4%,
including a c.2ppts contribution from the roll-out of Tesco
Whoosh. Overall online average orders per week were up 5.3%
year-on-year to 1.2 million and we further improved the proportion
of 'perfect orders', meaning more customers received their order on
time and at full availability. Customer satisfaction scores
improved as a result, with availability up 21ppts and price
satisfaction up 9ppts year-on-year. Online sales
participation remains stable at c.13% of total UK
sales.
Tesco Whoosh, our rapid delivery
service, is now available in 1,424 stores, adding a further 424 in
the year. The number of active Tesco Whoosh customers more
than doubled year-on-year as we expanded the offer to 66% of the
population. Customers can access a range of 2,900 products on
average, with some of our larger stores offering an even broader
range. Customer satisfaction scores continue to improve,
including a particularly strong step forward in availability, with
74% of orders delivered within 30 minutes.
We opened three further Urban
Fulfilment Centres (UFC) in the year, in Gallions Reach and King's
Lynn in the first half, followed by Coventry in September, adding a
total of one million order capacity per year.
Online performance
|
|
FY 23/24
|
YoY change
|
Sales inc. VAT
|
£6.2bn
|
10.4%
|
Orders per week
|
|
1.20m
|
5.3%
|
Basket size
|
|
£99
|
4.2%
|
Online % of UK total
sales
|
|
13.1%
|
0.3ppts
|
ROI - Volume growth driving strong market share
gains:
We have now gained market share in
ROI for 24 consecutive four-week periods, taking our share to 23.6%
at the end of the year, up 73bps year-on-year.
Like-for like sales grew by 6.8%
for the full year, including three consecutive quarters of volume
growth. Total sales grew by 8.5% at constant rates, including
a 1.7ppts contribution from new stores, driven by the full-year
impact of the nine Joyce's stores we acquired in 2022, the opening
of a new superstore in Adamstown and four new Tesco Express
stores.
Food sales grew by 9.1%, including
volume growth in fresh food supported by an extensive refresh in 22
stores, with new and improved produce and bakery areas and
innovations in coffee, hot food and food-on-the-go offers.
The investments we are making in the overall quality of our
products was recognised when we won 45 awards at the 'Blas na
hÉireann' ('Taste of Ireland') awards in October, with strong
coverage across our range.
We lowered the price of over 800
essential products by an average of c.12%, through our 'Price Cuts'
campaign, leading to a gradual decline in inflation across the
year. Clubcard sales penetration
stepped up by a further 8ppts year-on-year to 85%, supported by
exclusive Clubcard Prices deals, including market-leading offers
over Christmas.
The reallocation of space towards
food through our store refresh programme impacted Home and Clothing
sales, which declined by (3.9)%.
BOOKER - Strong growth across core catering and retail;
building profitable growth capacity:
|
Sales
£m
|
LFL
|
Retail (excluding
tobacco)
|
3,205
|
11.0%
|
Tobacco
|
1,858
|
(4.3)%
|
Catering*
|
2,501
|
10.2%
|
Best Food Logistics
|
1,518
|
(0.1)%
|
Total Booker
|
9,082
|
5.4%
|
* Includes small businesses
sales
Booker delivered overall
like-for-like sales growth of 5.4%, with further growth across the
two key business streams of catering and
retail.
Retail sales (excluding tobacco)
grew by 11.0%, supported by a further 211 net new retail partners
in the second half and record levels of availability. Our
entry level ranges, Euroshopper and Jack's, performed particularly
strongly, with sales up 16% year-on-year as we expanded the number
of lines within these ranges in response to customer demand.
Customer satisfaction improved across the year due to our focus on
availability and value. Tobacco sales declined by (4.3)%
overall, reflecting an ongoing market volume
contraction.
Catering sales increased by 10.2%,
with particularly strong growth in our own label 'Chef's Essential'
and 'Chef's Larder' ranges. We launched our largest ever
Price Lock, on over 700 products throughout the festive period, and
our 'On-Trade' club now offers almost 9,000 licensed customers
access to discounted prices on some of our most popular products,
including snacks, drinks and food. We also have 45,000
customers signed up to our 'Fast Food' club, which provides them
with access to exclusive deals and discounts. Our investments
in quality were recognised when we were awarded 2023 Quality Awards
Foodservice Operator of the year.
Best Food Logistics sales declined
by (0.1)%, which includes a sales decline of (5.4)% in the second
half, driven by our actions to exit unprofitable
contracts.
In November, we repurposed a
former Makro freehold store in Fareham, converting the site to a
c.120k sq.ft. distribution centre which further centralises
fulfilment to our retail customers, offering them a broader range,
whilst creating capacity in our branches to grow our catering
business. We have plans in place to further enhance our
capacity in the current year.
CENTRAL EUROPE - Challenging backdrop across markets;
encouraging volume response to value investments:
Like-for-like sales grew by 0.2%,
reflecting a challenging trading environment due to ongoing
inflationary pressures. Inflation fell sharply across the
second half, whilst the volume trajectory improved and we delivered
volume growth over the key Christmas trading period, driven by a
strong customer response to our value investments, which included a
'Low Price Guarantee' on over 500 lines.
Food sales grew by 1.1%, with
growth across both fresh and packaged categories, including volume
growth across the fourth quarter. Non-food sales declined by
(4.8)%, mainly driven by a reduction in discretionary spending
across the markets. We launched a new 'Basics' range in
Clothing and Home, offering customers great value and quality at a
competitive, entry price point. We recently expanded this
range to all of our largest stores in the region. Clubcard
penetration is now at 87%, which is 2ppts higher than last
year.
Central Europe adjusted operating
profit was £90m, a decrease of (50.0)% year-on-year at constant
rates, primarily driven by external factors facing our business in
Hungary and a challenging trading environment across the region,
which was partially offset by a strong Save to Invest
delivery. In Hungary, local regulatory actions, such as
incremental retail taxes, price caps and
mandatory promotions on everyday grocery products remained in place
and limited our ability to recover the impact of higher operating
costs.
TESCO BANK:
Our existing banking operations
(credit cards, loans and savings), which are due to be sold to
Barclays Bank UK plc, have been treated as discontinued operations
within these results. Our headline performance measures
therefore only include those business lines which are treated as
continuing operations, i.e. insurance, ATMs, travel money and gift
cards.
Full detail on the accounting
impacts of the announced sale can be found within Note 6, starting
on page 30. The key impacts are to present banking operations
(credit cards, loans and savings) as discontinued, remeasuring
assets and liabilities as held for sale on the balance sheet to
£7.7bn and £7.1bn, respectively. In doing so, we have
recognised a post-tax loss of £(628)m, which includes a £(211)m
write-down of goodwill allocated to the banking operations and
contributes to an overall loss for the year from discontinued
operations of £(572)m after tax.
Subject to usual regulatory
approvals, the sale will generate c.£600m of proceeds on
completion, and a further c.£100m of cash after the settlement of
certain regulatory capital amounts and transaction costs.
When combined with this year's £250m special dividend paid by Tesco
Bank, the Group will have generated a total of c.£1bn of cash, the
majority of which will be returned to shareholders by means of
incremental share buybacks.
The breakdown of our overall
performance between continuing and discontinued operations is shown
in the table below.
|
FY 23/24
|
FY 22/233
|
YoY change
|
Revenue
|
£1,521m
|
£1,234m
|
23.1%
|
Continuing operations
|
£811m
|
£666m
|
21.7%
|
Discontinued operations
|
£710m
|
£568m
|
24.9%
|
Adjusted operating profit
|
£148m
|
£135m
|
9.6%
|
Continuing operations*
|
£69m
|
£22m
|
213.6%
|
Discontinued operations
|
£79m
|
£113m
|
(30.1)%
|
* Includes net investment
income associated with banking operations which will cease on
completion of the proposed sale to Barclays (FY 23/24: £12m, FY
22/23: £(6)m)
Continuing operations revenue grew
by 21.7%, primarily driven by strong growth in insurance due to
high levels of renewals and new business volumes.
The growth in adjusted operating
profit on a continuing operations basis was driven by a strong
performance in insurance, gift cards and travel money, in addition
to £15m benefit resulting from the up-front recognition of a
one-year extension of our pet insurance agreement and £12m of net
investment income which will cease following completion of the
proposed sale to Barclays. Adjusted operating profit from
discontinued operations includes a £(28)m charge relating to
customer redress provisions.
We expect the transaction to
complete in the second half of this calendar year.
Post-completion, the revenue and adjusted operating profit
contribution from the retained business will be included within
retail adjusted operating profit. For the 24/25 financial
year, we expect a contribution from the retained business of around
£80m, which includes a part-year amount of strategic partnership
income, based on the expected completion timeline. On an
on-going basis, we expect an adjusted operating profit contribution
of between £80m to £100m per year.
Adjusting items:
|
FY 23/24
£m
|
FY 22/23
£m
|
Net impairment release / (charge)
on non-current assets
|
28
|
(982)
|
Save to Invest restructuring
provisions
|
(50)
|
(132)
|
Property transactions
|
75
|
91
|
Amortisation of acquired
intangible assets
|
(74)
|
(76)
|
Other*
|
13
|
-
|
Total adjusting items in statutory operating profit
(continuing operations)
|
(8)
|
(1,099)
|
Net finance income
|
20
|
27
|
Tax
|
68
|
195
|
Total adjusting items (continuing
operations)
|
80
|
(877)
|
Adjusting items (discontinued
operations)
|
(628)
|
(13)
|
Total adjusting items
|
(548)
|
(890)
|
* Other includes the disposal of
Booker's Ritter-Courivaud Limited subsidiary, see page 27 for
further detail.
Adjusting items are excluded from
our adjusted operating profit performance by virtue of their size
and nature to provide a helpful perspective of the year-on-year
performance of the Group's ongoing business. Total adjusting
items in statutory operating profit from continuing operations
resulted in a net charge of £(8)m, compared to a £(1,099)m net
charge in the prior year.
In the current year, there was a
non-cash net impairment release on non-current assets of £28m,
primarily reflecting an improvement in UK & ROI performance,
partially offset by a reduction in property fair values due to
market factors, and a challenging performance in Central
Europe. This compares to a £(982)m non-cash net impairment
charge in the prior year as a consequence of higher discount rates,
which have remained broadly stable in the current year.
We recognised an adjusting credit
of £75m related to property transactions, including £30m generated
on exiting a leasehold site in Gateshead and a further £12m from
the remeasurement of assets held for sale. In the prior year,
we recognised an adjusting credit of £91m related to the disposal
of the Middlewich distribution centre in the UK, and 17 mall
properties and one retail park in Central Europe.
Amortisation of acquired
intangible assets is excluded from our headline performance
measures. We incurred a charge of £(74)m in the year, which
primarily relates to the intangible assets that were recognised as
a result of our merger with Booker in March 2018.
In the current year, we recognised
a £(50)m restructuring provision related to our ongoing Save to
Invest programme. In the prior year, we recognised a
provision of £(132)m which included changes made to our store
management structures and the closure of our remaining UK
counters.
Further detail on adjusting items
can be found in Note 3, starting on page 27 and on discontinued
operations in Note 6, starting on page 30.
Net finance costs:
On a continuing operations
basis
|
FY 23/24
£m
|
FY
22/233
£m
|
Net interest costs
|
(179)
|
(189)
|
Net finance expenses from
insurance contracts
|
(6)
|
(3)
|
Finance charges payable on lease
liabilities
|
(373)
|
(371)
|
Net finance costs before adjusting items
|
(558)
|
(563)
|
Fair value remeasurements of
financial instruments
|
38
|
(53)
|
Net pension finance income /
(costs)
|
(18)
|
80
|
Net finance costs
|
(538)
|
(536)
|
Net finance costs of £(538)m were
broadly flat year-on-year. Within adjusting
items, fair value remeasurements of financial instruments led to a
credit of £38m compared to a £(53)m charge in the prior year,
largely driven by non-cash mark-to-market gains on index-linked
swaps and other derivatives. This was partially offset by net
pension finance costs this year of £(18)m, compared to an income of
£80m in the prior year, which reflects the IAS 19 pension deficit
at the start of 2023/24, compared to an opening surplus in
2022/23.
Further detail on finance income
and costs can be found in Note 4 on page 28, as well as further
detail on the adjusting items in Note 3, starting on page
27.
Group tax:
On a continuing operations
basis
|
FY 23/24 £m
|
FY 22/233
£m
|
Tax on adjusted profit
|
(593)
|
(419)
|
Tax on adjusting items
|
68
|
195
|
Tax on profit
|
(525)
|
(224)
|
Tax on adjusted Group profit was
£(593)m, £(174)m higher than last year, primarily reflecting an
increase in the UK corporation tax rate from 19% to 25%, effective
from 1 April 2023, as well as stronger retail
adjusted operating profit year-on-year.
The £68m credit in tax on
adjusting items primarily relates to tax relief on impairment
charges on qualifying assets, as well as a settlement related to
our exit from the Gain Land associate in China in 2020. In
the prior year, the £195m adjusting credit was driven by tax relief
relating to the non-cash impairment charge of £(982)m.
The effective tax rate on adjusted
Group profit was 26.0%, higher than the current UK statutory rate,
primarily due to the depreciation of assets which do not qualify
for tax relief. We expect our 2024/25 effective tax rate to
be around 27%, reflecting the full-year impact of the increase in
the UK statutory rate mentioned above.
Earnings per share:
On a continuing operations
basis
|
FY 23/24
|
FY 22/233
|
YoY change
|
Adjusted diluted EPS
|
23.41p
|
20.53p
|
14.0%
|
Statutory diluted EPS
|
24.53p
|
8.81p
|
178.4%
|
Statutory basic EPS
|
24.80p
|
8.89p
|
179.0%
|
On a total basis, including
discontinued operations
|
|
|
|
Statutory diluted EPS
|
16.56p
|
9.85p
|
68.1%
|
Statutory basic EPS
|
16.74p
|
9.94p
|
68.4%
|
Adjusted diluted EPS was 23.41p,
14.0% higher year-on-year, due to an increase in retail operating
profit and the benefit from our ongoing share buyback programme,
partially offset by a higher tax charge.
Statutory diluted EPS was 24.53p, 178.4% higher year-on-year, due to a significant
reduction in adjusting items driven by the £(982)m non-cash net
impairment charge in the prior year.
On a total basis, including
discontinued operations, statutory diluted EPS was 16.56p, 68.1%
higher year-on-year. The adjusted diluted EPS growth
described above and the effect of last year's net impairment charge
were partially offset by the remeasurement loss related to the
planned sale of our banking operations, which was recognised in the
year.
Dividend:
We propose to pay a final dividend
of 8.25 pence per ordinary share, taking
the full year dividend to 12.10 pence per ordinary share. The
full year dividend is based on our 50% pay-out policy, applied to
total Group earnings per share in the year, including the
discontinued operations of Tesco Bank as it was under Group
ownership for the entire financial year. This includes the
payment of an interim dividend of 3.85 pence per ordinary share in
November 2023.
The proposed final dividend was
approved by the Board of Directors on 9 April 2024 and is subject
to the approval of shareholders at this year's
Annual General Meeting. The final dividend will be paid on 28
June 2024 to shareholders who are on the register of members at
close of business on 17 May 2024 (the Record Date).
Shareholders may elect to reinvest their dividend in the Dividend
Reinvestment Plan (DRIP). The last date for receipt of DRIP
elections and revocations will be 7 June 2024.
Summary of total indebtedness (excludes Tesco
Bank):
|
Feb-24
£m
|
Feb-23
£m
|
Movement
£m
|
Net debt before lease
liabilities
|
(2,144)
|
(2,775)
|
631
|
Lease liabilities
|
(7,620)
|
(7,718)
|
98
|
Net debt
|
(9,764)
|
(10,493)
|
729
|
Pension deficit, IAS 19 basis
(post-tax)
|
(493)
|
(300)
|
(193)
|
Total indebtedness
|
(10,257)
|
(10,793)
|
536
|
|
|
|
|
Net debt / EBITDA
|
2.2x
|
2.6x
|
|
Total indebtedness ratio
|
2.4x
|
2.7x
|
|
Net debt was £(9,764)m, a
reduction of £729m year-on-year, predominantly driven by strong
retail free cash flow generation of £2,063m and the receipt of a
£250m special dividend from Tesco Bank, which more than offset a
total of £(1.5)bn of shareholder returns, including the £(750)m
share buyback and dividend payments of £(778)m. Lease
liabilities reduced by £98m year-on-year, driven by the overall
reducing nature of our lease liability, partially offset by the
impact of rent reviews and new stores.
Total indebtedness was £(10,257)m,
a reduction of £536m year-on-year, which was primarily driven by
the £729m reduction in net debt explained above, partially offset
by a £(193)m increase in the IAS 19 pension deficit.
The IAS 19 pension
deficit does not determine the extent of pension contributions and
reflects movements in discount rate assumptions mandated by the
accounting standard, which can be volatile. The trustees of
each pension scheme, including the main Tesco Pension Scheme are
required to calculate the net surplus/deficit on the basis of
Technical Provisions issued by the Pensions Regulator.
On this basis, the
main UK scheme continues to be in surplus. The next triennial valuation
for this scheme, on a Technical Provisions basis, is scheduled in
March 2025.
We had strong levels of liquidity
at the year-end, including £3.2 billion of cash and highly liquid
short-term deposits and money market investments. In
addition, our £2.5 billion committed revolving credit facility
remained undrawn throughout the year.
Our Net debt to EBITDA ratio was
2.2 times at the end of the year, down from 2.6 times in the prior
year. The year-on-year reduction was driven by an increase in
Retail EBITDA and a decrease in net debt which includes a £250m
benefit from the special dividend paid by Tesco Bank in the first
half. The total indebtedness ratio was 2.4 times compared to
2.7 times last year-end.
Fixed charge cover was 3.7 times
at the end of the year, an improvement year-on-year, primarily
driven by an increase in Retail EBITDA.
Summary retail free cash flow:
The following table reconciles
Group adjusted operating profit to retail free cash flow.
Further details are included in Note 2, starting on page
22.
On a continuing operations
basis
|
FY 23/24
£m
|
FY
22/233
£m
|
Adjusted operating profit
|
2,829
|
2,509
|
Less: Tesco Bank adjusted
operating (profit) / loss
|
(69)
|
(22)
|
Retail adjusted operating profit
|
2,760
|
2,487
|
Add back: Depreciation and
amortisation
|
1,602
|
1,570
|
Other reconciling items
|
82
|
61
|
Pensions
|
(29)
|
(23)
|
Decrease in working
capital
|
418
|
468
|
Retail cash generated from operations before adjusting
items
|
4,833
|
4,563
|
Cash capex
|
(1,289)
|
(1,143)
|
Net interest
|
(560)
|
(573)
|
- Interest
related to Net debt before lease liabilities
|
(188)
|
(202)
|
- Interest
related to lease liabilities
|
(372)
|
(371)
|
Tax paid
|
(214)
|
(107)
|
Dividends received
|
9
|
68
|
Repayments of obligations under
leases
|
(623)
|
(589)
|
Own shares purchased for share
schemes
|
(93)
|
(86)
|
Retail free cash flow
|
2,063
|
2,133
|
Memo (not included in Retail free cash flow
definition):
|
|
|
- Special
dividend received from Tesco Bank
|
250
|
-
|
- Net
acquisitions and disposals
|
(2)
|
(281)
|
- Property
buybacks, store purchases and disposal proceeds
|
(66)
|
266
|
- Cash
impact of adjusting items
|
(98)
|
(61)
|
We delivered strong retail free
cash flow of £2,063m, significantly ahead of our medium-term target
range of between £1.4bn to £1.8bn, driven by higher retail adjusted
operating profit and another strong working capital
performance. The year-on-year reduction of £(70)m primarily
reflects the higher cash capital expenditure (Capex) and tax
paid.
Our total working capital inflow
was £418m, reflecting the strong sales performance in the year and
the impact of input cost inflation, leading to higher trade
balances.
Net interest paid was broadly flat
year-on-year.
Tax paid was £(107)m higher
year-on-year, driven by an increase in the UK statutory tax rate in
addition to higher retail profits. We continued to benefit
from in-year tax relief of £155m related to the £2.5bn one-off
pension contribution made in 2021, which was required to be spread
over four years. Moving forward, we will no longer benefit
from this relief.
Dividends received of £9m were
£(59)m lower year-on-year due to the removal of the annual dividend
received from Tesco Bank, following the announcement of the planned
sale of our existing banking operations. In the first half of
the year, Tesco Bank paid a one-off special dividend of £250m to
the Group, reflecting the strength of the Bank's balance sheet and
capital ratios. This special dividend is not included within
retail free cash flow.
Within the memo lines shown, the
net £(66)m outflow relating to property transactions results from
the buyback of three stores and two freehold sites in the UK,
partially offset by proceeds generated from held for sale sites in
Central Europe, and the exit of a leasehold site in
Gateshead. The £266m inflow in the prior year primarily
related to the sale of 17 malls and one retail park in Central
Europe and our distribution centre in Middlewich in the
UK.
The cash impact of adjusting items
of £(98)m relates to operational restructuring changes as part of
our Save to Invest programme which were announced at the end of the
prior financial year.
Capital expenditure and space:
|
UK &
ROI
|
Central
Europe
|
Tesco Bank
|
Group
|
On a continuing operations
basis
|
FY 23/24
|
FY 22/23
|
FY 23/24
|
FY 22/23
|
FY 23/24
|
FY 22/23
|
FY 23/24
|
FY 22/23
|
Capex
|
£1,171m
|
£1,069m
|
£113m
|
£115m
|
£30m
|
£51m
|
£1,314m
|
£1,235m
|
Openings (k sq ft)
|
366
|
318
|
87
|
77
|
-
|
-
|
453
|
395
|
Closures (k sq ft)
|
(204)
|
(233)
|
(22)
|
(25)
|
-
|
-
|
(226)
|
(258)
|
Repurposed (k sq ft)
|
-
|
9
|
(342)
|
(407)
|
-
|
-
|
(342)
|
(398)
|
Net space change (k sq ft)
|
162
|
94
|
(277)
|
(355)
|
-
|
-
|
(115)
|
(261)
|
'Retail Selling Space' is defined
as net space in store adjusted to exclude checkouts, space behind
checkouts, customer service desks and customer toilets. The
data above excludes space relating to franchise stores. A
full breakdown of space by segment is included in the supplementary
information starting on page 57.
Capital expenditure shown in the
table above reflects expenditure on ongoing business activities
across the Group, excluding property buybacks and store
purchases.
We have been pleased with the
results of our continued investment in our store estate, including
refreshing a total of 389 stores and opening seven superstores, 60
Tesco Express stores and 27 One Stop stores in the UK.
We also opened an
additional UFC in the second half taking our full year openings to
three and our total number of UFCs to nine. In Ireland, we opened one
superstore in Adamstown in the first half, followed by four Tesco
Express stores in the second half. In Central Europe, we opened
14 new convenience stores.
Our total capital expenditure for
the year was £1,314m, £79m higher year-on-year. This reflects increased
investment in high-returning areas such as Save to Invest and our
digital platforms, in addition to the impact of
inflation. We continue to see attractive opportunities to commit capital
to these types of high-returning investments going forwards, with
next year's overall capital investment expected to total around
£1.4bn.
Statutory capital expenditure for
the year was £1.5bn.
Further details of current space
can be found in the supplementary information starting on page
57.
Property:
|
UK &
ROI
|
Central
Europe
|
Group
|
|
Feb-24
|
Feb-23
|
Feb-24
|
Feb-23
|
Feb-24
|
Feb-23
|
Property1 - fully
owned
|
|
|
|
|
|
|
- Estimated market
value
|
£15.1bn
|
£15.4bn
|
£1.8bn
|
£1.8bn
|
£16.9bn
|
£17.2bn
|
- NBV
|
£15.2bn
|
£14.9bn
|
£1.5bn
|
£1.5bn
|
£16.7bn
|
£16.4bn
|
% store selling space
owned
|
58%
|
58%
|
68%
|
68%
|
60%
|
60%
|
% property owned by
value2
|
59%
|
59%
|
65%
|
65%
|
60%
|
60%
|
1. Stores, malls,
investment property, offices, distribution centres, fixtures and
fittings, work-in-progress. Excludes joint
ventures.
2. Excludes fixtures
and fittings.
The estimated market value of our
fully owned property as at the year-end reduced by £(0.3)bn to
£16.9bn due to a small decline in the UK property investment market
year-on-year. The market value represents a surplus of £0.2bn
over the net book value (NBV).
Our Group freehold property
ownership percentage was 60%, flat year-on-year. In January
2024, we obtained control of The Tesco Coral Limited Partnership
property joint venture, bringing back two large stores into full
ownership with the remaining two stores operating on a leased
basis, under full ownership of the previous joint venture
partner. We also repurchased two large stores as part of our
ongoing buyback strategy, Milton Cambridge and New Oscott Extra,
and purchased the freehold to two new large stores in the
UK.
In Central Europe, the market
value of fully owned property remains flat year-on-year, with small
increases in value offset by foreign exchange movements.
Contacts.
Investor Relations:
|
Chris Griffith
|
01707 940 900
|
Media:
|
Christine Heffernan
|
0330 6780 639
|
|
Teneo
|
0207 4203 143
|
This document is available
at www.tescoplc.com/prelims2024.
A webcast including a live Q&A
will be held today at 9.00am for investors and analysts and will be
available on our website at www.tescoplc.com/prelims2024.
This will be available for playback after the event.
All presentation materials, including a transcript, will be made
available on our website.
We will report our Q1 Trading
statement on 14 June 2024.
Sources.
·
UK market share based on Kantar Total Grocers
Total Till Roll on 12 week rolling basis to 18 February
2024.
·
UK Kantar net switching gains 12 w/e rolling
basis to 18 February 2024.
·
ROI market share based on Kantar Total Till Roll
on 12 week rolling basis to 18 February 2024.
·
'Latest market share' based on Kantar Total
Grocers Total Till Roll on a 4 week basis to 17 March
2024.
·
Premium retailer gains refers to Kantar net
switching gains from Waitrose & M&S on 12 week rolling
basis to 18 February 2024.
·
'Full-line grocers' refers to Tesco, Sainsbury's,
Asda and Morrisons and 'Limited-range discounters' refers to Aldi
and Lidl.
·
UK Price index is an internal measure calculated
using the retail selling price of each item on a per unit or unit
of measure basis. Competitor retail selling prices are collected
weekly by a third party. The price index includes price cut
promotions and is weighted by sales to reflect customer
importance.
·
c.£360 of savings for Clubcard: c.£360 saving is
based on the top 25% of Tesco Clubcard members and large stores
sales between 27/02/2023 - 25/02/2024. Tesco Clubcard Price savings
versus regular Tesco price.
·
Customer satisfaction and Brand Perception based
on YoY changes in YouGov BrandIndex scores for the 12 weeks ended
25 February 2024.
·
Availability based on Multi channel tracker. 3
period rolling data. Responses to question: "Had any products that
you wanted to buy sold out?".
·
63% healthy volume sales by 2025: Tesco tracks
the healthiness of its products and ranges using the UK
Government's nutrient profiling model.
·
Number of Booker retail partners and Premier
stores shown net of openings and closures.
Disclaimer.
Certain statements made in this
document are forward-looking statements. For example, statements
regarding future financial performance, market trends and our
product pipeline are forward-looking statements. Phrases such as
"aim", "plan", "intend", "should", "anticipate", "well-placed",
"believe", "estimate", "expect", "target", "consider" and similar
expressions are generally intended to identify forward-looking
statements. Forward looking statements are based on current
expectations and assumptions and are subject to a number of known
and unknown risks, uncertainties and other important factors that
could cause actual results or events to differ materially from what
is expressed or implied by those statements. Many factors may cause
actual results, performance or achievements of Tesco to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Important factors that could cause actual results,
performance or achievements of Tesco to differ materially from the
expectations of Tesco include, among other things, general business
and economic conditions globally, industry trends, competition,
changes in government and other regulation and policy, including in
relation to the environment, health and safety and taxation, labour
relations and work stoppages, interest rates and currency
fluctuations, changes in its business strategy, political and
economic uncertainty, including as a result of global pandemics. As
such, undue reliance should not be placed on forward-looking
statements. Any forward-looking statement is based on information
available to Tesco as of the date of the statement. All written or
oral forward-looking statements attributable to Tesco are qualified
by this caution. Other than in accordance with legal and regulatory
obligations, Tesco undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
Group income statement
|
|
52 weeks ended
24 February 2024
|
|
52
weeks ended
25 February 2023 (restated(a))
|
|
Notes
|
Before
adjusting
items
£m
|
Adjusting
items
(Note 3)
£m
|
Total
£m
|
|
Before
adjusting
items
£m
|
Adjusting
items
(Note
3)
£m
|
Total
£m
|
Continuing operations
|
|
|
|
|
|
|
|
|
Revenue from sale of goods and
services
|
|
67,673
|
-
|
67,673
|
|
64,864
|
-
|
64,864
|
Insurance revenue(b)
|
|
514
|
-
|
514
|
|
458
|
-
|
458
|
Revenue
|
2
|
68,187
|
-
|
68,187
|
|
65,322
|
-
|
65,322
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
(62,832)
|
(4)
|
(62,836)
|
|
(60,487)
|
(1,029)
|
(61,516)
|
Insurance service
expenses(b)
|
|
(454)
|
-
|
(454)
|
|
(408)
|
-
|
(408)
|
Net expenses from reinsurance
contracts held(b)
|
|
(48)
|
-
|
(48)
|
|
(37)
|
-
|
(37)
|
Gross profit/(loss)
|
|
4,853
|
(4)
|
4,849
|
|
4,390
|
(1,029)
|
3,361
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
(2,024)
|
(4)
|
(2,028)
|
|
(1,881)
|
(70)
|
(1,951)
|
Operating profit/(loss)
|
2
|
2,829
|
(8)
|
2,821
|
|
2,509
|
(1,099)
|
1,410
|
|
|
|
|
|
|
|
|
|
Share of post-tax profits of joint
ventures and associates
|
|
6
|
-
|
6
|
|
8
|
-
|
8
|
Finance income
|
4
|
267
|
-
|
267
|
|
87
|
-
|
87
|
Finance costs
|
4
|
(825)
|
20
|
(805)
|
|
(650)
|
27
|
(623)
|
Profit/(loss) before tax from continuing
operations
|
|
2,277
|
12
|
2,289
|
|
1,954
|
(1,072)
|
882
|
|
|
|
|
|
|
|
|
|
Taxation
|
5
|
(593)
|
68
|
(525)
|
|
(419)
|
195
|
(224)
|
Profit/(loss) for the year from continuing
operations
|
|
1,684
|
80
|
1,764
|
|
1,535
|
(877)
|
658
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year from
discontinued operations
|
6
|
56
|
(628)
|
(572)
|
|
91
|
(13)
|
78
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year
|
|
1,740
|
(548)
|
1,192
|
|
1,626
|
(890)
|
736
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
Owners of the parent
|
|
1,736
|
(548)
|
1,188
|
|
1,627
|
(890)
|
737
|
Non-controlling
interests
|
|
4
|
-
|
4
|
|
(1)
|
-
|
(1)
|
|
|
1,740
|
(548)
|
1,192
|
|
1,626
|
(890)
|
736
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing and discontinued
operations
|
|
|
|
|
|
|
|
|
Basic
|
8
|
|
|
16.74p
|
|
|
|
9.94p
|
Diluted
|
8
|
|
|
16.56p
|
|
|
|
9.85p
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing
operations
|
|
|
|
|
|
|
|
|
Basic
|
8
|
|
|
24.80p
|
|
|
|
8.89p
|
Diluted
|
8
|
|
|
24.53p
|
|
|
|
8.81p
|
(a) Comparatives have been restated following the adoption of
IFRS 17 and to present Banking operations as a discontinued
operation. Refer to Notes 1, 6 and 22 for further
details.
(b) Following the adoption of IFRS 17, the income statement has
been re-presented to separately present insurance revenue,
insurance service expenses and net expenses from reinsurance
contracts held. Refer to Note 1 for further details.
The notes on pages 20
to 49 form part of this
condensed consolidated financial information.
Group statement of comprehensive
income/(loss)
|
Notes
|
52 weeks ended 24 February
2024
£m
|
52 weeks
ended 25 February 2023 (restated*)
£m
|
Items that will not be reclassified to the Group income
statement
|
|
|
|
Change in fair value of financial
assets at fair value through other comprehensive income
|
|
-
|
2
|
Remeasurements of defined benefit
pension schemes
|
18
|
(251)
|
(3,341)
|
Net fair value gains/(losses) on
inventory cash flow hedges
|
|
(38)
|
54
|
Tax on items that will not be
reclassified
|
|
62
|
853
|
|
|
(227)
|
(2,432)
|
Items that may subsequently be reclassified to the Group
income statement
|
|
|
|
Change in fair value of financial
assets at fair value through other comprehensive income
|
|
16
|
(43)
|
Currency translation
differences:
|
|
|
|
Retranslation of net assets of
overseas subsidiaries, joint ventures and associates, net of
hedging instruments
|
|
(116)
|
120
|
Gains on cash flow
hedges:
|
|
|
|
Net fair value gains
|
|
25
|
17
|
Reclassified and reported in the
Group income statement
|
|
(56)
|
(61)
|
Finance income/(expenses) from
insurance contracts issued
|
|
(4)
|
39
|
Finance income/(expenses) from
reinsurance contracts held
|
|
1
|
(20)
|
Tax on items that may be
reclassified
|
|
(6)
|
17
|
|
|
(140)
|
69
|
Total other comprehensive income/(loss) for the
year
|
|
(367)
|
(2,363)
|
Profit/(loss) for the
year
|
|
1,192
|
736
|
Total comprehensive income/(loss) for the
year
|
|
825
|
(1,627)
|
|
|
|
|
Attributable to:
|
|
|
|
Owners of the parent
|
|
820
|
(1,632)
|
Non-controlling
interests
|
|
5
|
5
|
Total comprehensive income/(loss) for the
year
|
|
825
|
(1,627)
|
|
|
|
|
Total comprehensive income/(loss) attributable to owners of
the parent arising from:
|
|
|
|
Continuing operations
|
|
1,392
|
(1,710)
|
Discontinued operations
|
6
|
(572)
|
78
|
|
|
820
|
(1,632)
|
* Comparatives have been restated
following the adoption of IFRS 17 and to present Banking operations
as a discontinued operation. Refer to Notes 1, 6 and 22 for further
details.
The notes on pages 20 to 49
form part of this condensed consolidated
financial information.
Group balance sheet
|
Notes
|
24 February
2024
£m
|
25
February 2023 (restated*)
£m
|
26
February 2022 (restated*)
£m
|
Non-current assets
|
|
|
|
|
Goodwill and other intangible
assets
|
|
5,066
|
5,375
|
5,360
|
Property, plant and
equipment
|
9
|
17,221
|
16,862
|
17,060
|
Right of use assets
|
10
|
5,478
|
5,500
|
5,720
|
Investment property
|
|
24
|
24
|
22
|
Investments in joint ventures and
associates
|
|
102
|
93
|
86
|
Other investments
|
|
1,546
|
1,339
|
1,253
|
Trade and other
receivables
|
|
36
|
79
|
159
|
Loans and advances to
customers
|
|
-
|
3,029
|
3,141
|
Reinsurance contract
assets
|
15
|
125
|
135
|
171
|
Derivative financial
instruments
|
|
781
|
873
|
942
|
Post-employment benefit
surplus
|
18
|
22
|
6
|
3,150
|
Deferred tax assets
|
5
|
32
|
84
|
88
|
|
|
30,433
|
33,399
|
37,152
|
Current assets
|
|
|
|
|
Other investments
|
|
206
|
353
|
226
|
Inventories
|
|
2,635
|
2,510
|
2,339
|
Trade and other
receivables
|
|
1,349
|
1,235
|
1,218
|
Loans and advances to
customers
|
|
-
|
3,948
|
3,251
|
Derivative financial
instruments
|
|
55
|
57
|
69
|
Current tax assets
|
|
110
|
63
|
93
|
Short-term investments
|
12
|
2,128
|
1,628
|
2,076
|
Cash and cash
equivalents
|
12
|
2,340
|
2,465
|
2,345
|
|
|
8,823
|
12,259
|
11,617
|
Assets of the disposal group and
non-current assets classified as held for sale
|
6
|
7,783
|
210
|
368
|
|
|
16,606
|
12,469
|
11,985
|
Current liabilities
|
|
|
|
|
Trade and other
payables
|
|
(10,264)
|
(9,762)
|
(9,040)
|
Borrowings
|
14
|
(1,536)
|
(1,770)
|
(725)
|
Lease liabilities
|
10
|
(584)
|
(595)
|
(547)
|
Provisions
|
|
(306)
|
(366)
|
(283)
|
Insurance contract
liabilities
|
15
|
(526)
|
(501)
|
(588)
|
Customer deposits and deposits
from banks
|
|
(108)
|
(4,485)
|
(4,729)
|
Derivative financial
instruments
|
|
(25)
|
(99)
|
(26)
|
Current tax liabilities
|
|
(1)
|
(18)
|
(11)
|
|
|
(13,350)
|
(17,596)
|
(15,949)
|
Liabilities of the disposal group
classified as held for sale
|
6
|
(7,122)
|
(14)
|
(14)
|
Net current liabilities
|
|
(3,866)
|
(5,141)
|
(3,978)
|
Non-current liabilities
|
|
|
|
|
Trade and other
payables
|
|
(39)
|
(54)
|
(54)
|
Borrowings
|
14
|
(5,683)
|
(5,581)
|
(6,674)
|
Lease liabilities
|
10
|
(7,038)
|
(7,132)
|
(7,411)
|
Provisions
|
|
(175)
|
(194)
|
(183)
|
Customer deposits and deposits
from banks
|
|
(800)
|
(2,265)
|
(1,650)
|
Derivative financial
instruments
|
|
(241)
|
(288)
|
(357)
|
Post-employment benefit
deficit
|
18
|
(657)
|
(400)
|
(303)
|
Deferred tax
liabilities
|
5
|
(269)
|
(119)
|
(910)
|
|
|
(14,902)
|
(16,033)
|
(17,542)
|
Net assets
|
|
11,665
|
12,225
|
15,632
|
Equity
|
|
|
|
|
Share capital
|
19
|
445
|
463
|
484
|
Share premium
|
|
5,165
|
5,165
|
5,165
|
Other reserves
|
19
|
3,131
|
3,139
|
3,080
|
Retained earnings
|
|
2,930
|
3,469
|
6,919
|
Equity attributable to owners of the parent
|
|
11,671
|
12,236
|
15,648
|
Non-controlling
interests
|
|
(6)
|
(11)
|
(16)
|
Total equity
|
|
11,665
|
12,225
|
15,632
|
* Comparatives have been restated
following the adoption of IFRS 17. Refer to Notes 1 and 22 for
further details.
The notes on pages 20 to 49
form part of this condensed consolidated
financial information.
Group statement of changes in equity
|
Notes
|
Share
capital
£m
|
Share
premium
£m
|
Other
reserves
(Note 19)
£m
|
Retained earnings
£m
|
Total
£m
|
Non-controlling
interests
£m
|
Total
equity
£m
|
At 25 February 2023 (as previously
reported)
|
|
463
|
5,165
|
3,123
|
3,490
|
12,241
|
(11)
|
12,230
|
Cumulative adjustment on initial
application of IFRS 17 (net of tax)
|
|
-
|
-
|
16
|
(21)
|
(5)
|
-
|
(5)
|
At 25 February 2023 (restated*)
|
|
463
|
5,165
|
3,139
|
3,469
|
12,236
|
(11)
|
12,225
|
Profit/(loss) for the year
|
|
-
|
-
|
-
|
1,188
|
1,188
|
4
|
1,192
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
Retranslation of net assets of
overseas subsidiaries, joint ventures and associates, net of
hedging instruments
|
|
-
|
-
|
(116)
|
-
|
(116)
|
-
|
(116)
|
Change in fair value of financial
assets at fair value through other comprehensive income
|
|
-
|
-
|
-
|
16
|
16
|
-
|
16
|
Remeasurements of defined benefit
pension schemes
|
18
|
-
|
-
|
-
|
(251)
|
(251)
|
-
|
(251)
|
Gains/(losses) on cash flow
hedges
|
|
-
|
-
|
(14)
|
-
|
(14)
|
1
|
(13)
|
Cash flow hedges reclassified and
reported in the Group income statement
|
|
-
|
-
|
(56)
|
-
|
(56)
|
-
|
(56)
|
Finance income/(expenses) from
insurance contracts issued
|
|
-
|
-
|
(4)
|
-
|
(4)
|
-
|
(4)
|
Finance income/(expenses) from
reinsurance contracts held
|
|
-
|
-
|
1
|
-
|
1
|
-
|
1
|
Tax relating to components of
other comprehensive income
|
|
-
|
-
|
(4)
|
60
|
56
|
-
|
56
|
Total other comprehensive income/(loss)
|
|
-
|
-
|
(193)
|
(175)
|
(368)
|
1
|
(367)
|
Total comprehensive income/(loss)
|
|
-
|
-
|
(193)
|
1,013
|
820
|
5
|
825
|
Transfer from hedging reserve to retained
earnings
|
|
-
|
-
|
44
|
(44)
|
-
|
-
|
-
|
Inventory cash flow hedge movements
|
|
|
|
|
|
|
|
|
(Gains)/losses transferred to the
cost of inventory
|
|
-
|
-
|
79
|
-
|
79
|
-
|
79
|
Total inventory cash flow hedge movements
|
|
-
|
-
|
79
|
-
|
79
|
-
|
79
|
Transactions with owners
|
|
|
|
|
|
|
|
|
Own shares purchased for
cancellation
|
19
|
-
|
-
|
(752)
|
-
|
(752)
|
-
|
(752)
|
Own shares cancelled
|
19
|
(18)
|
-
|
770
|
(752)
|
-
|
-
|
-
|
Own shares purchased for share
schemes
|
|
-
|
-
|
(140)
|
-
|
(140)
|
-
|
(140)
|
Share-based payments
|
|
-
|
-
|
184
|
11
|
195
|
-
|
195
|
Dividends
|
7
|
-
|
-
|
-
|
(777)
|
(777)
|
-
|
(777)
|
Tax on items charged/(credited) to
equity
|
|
-
|
-
|
-
|
10
|
10
|
-
|
10
|
Total transactions with owners
|
|
(18)
|
-
|
62
|
(1,508)
|
(1,464)
|
-
|
(1,464)
|
At 24 February 2024
|
|
445
|
5,165
|
3,131
|
2,930
|
11,671
|
(6)
|
11,665
|
|
Notes
|
Share
capital
£m
|
Share
premium
£m
|
Other
reserves (Note 19)
£m
|
Retained
earnings
£m
|
Total
£m
|
Non-controlling interests
£m
|
Total
equity
£m
|
At 26 February 2022 (as previously
reported)
|
|
484
|
5,165
|
3,079
|
6,932
|
15,660
|
(16)
|
15,644
|
Cumulative adjustment on initial
application of IFRS 17 (net of tax)
|
|
-
|
-
|
1
|
(13)
|
(12)
|
-
|
(12)
|
At 26 February 2022 (restated*)
|
|
484
|
5,165
|
3,080
|
6,919
|
15,648
|
(16)
|
15,632
|
Profit/(loss) for the year*
|
|
-
|
-
|
-
|
737
|
737
|
(1)
|
736
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
Retranslation of net assets of
overseas subsidiaries, joint ventures and associates, net of
hedging instruments
|
|
-
|
-
|
120
|
-
|
120
|
-
|
120
|
Change in fair value of financial
assets at fair value through other comprehensive income
|
|
-
|
-
|
-
|
(41)
|
(41)
|
-
|
(41)
|
Remeasurements of defined benefit
pension schemes
|
18
|
-
|
-
|
-
|
(3,341)
|
(3,341)
|
-
|
(3,341)
|
Gains/(losses) on cash flow
hedges
|
|
-
|
-
|
63
|
-
|
63
|
8
|
71
|
Cash flow hedges reclassified and
reported in the Group income statement
|
|
-
|
-
|
(61)
|
-
|
(61)
|
-
|
(61)
|
Finance income/(expenses) from
insurance contracts issued*
|
|
-
|
-
|
39
|
-
|
39
|
-
|
39
|
Finance income/(expenses) from
reinsurance contracts held*
|
|
-
|
-
|
(20)
|
-
|
(20)
|
-
|
(20)
|
Tax relating to components of
other comprehensive income*
|
|
-
|
-
|
18
|
854
|
872
|
(2)
|
870
|
Total other comprehensive income/(loss)*
|
|
-
|
-
|
159
|
(2,528)
|
(2,369)
|
6
|
(2,363)
|
Total comprehensive income/(loss)*
|
|
-
|
-
|
159
|
(1,791)
|
(1,632)
|
5
|
(1,627)
|
Inventory cash flow hedge movements
|
|
|
|
|
|
|
|
|
(Gains)/losses transferred to the
cost of inventory
|
|
-
|
-
|
(127)
|
-
|
(127)
|
-
|
(127)
|
Total inventory cash flow hedge movements
|
|
-
|
-
|
(127)
|
-
|
(127)
|
-
|
(127)
|
Transactions with owners
|
|
|
|
|
|
|
|
|
Own shares purchased for
cancellation
|
19
|
-
|
-
|
(758)
|
-
|
(758)
|
-
|
(758)
|
Own shares cancelled
|
19
|
(21)
|
-
|
816
|
(795)
|
-
|
-
|
-
|
Own shares purchased for share
schemes
|
|
-
|
-
|
(188)
|
-
|
(188)
|
-
|
(188)
|
Share-based payments
|
|
-
|
-
|
157
|
(1)
|
156
|
-
|
156
|
Dividends
|
7
|
-
|
-
|
-
|
(858)
|
(858)
|
-
|
(858)
|
Tax on items charged/(credited) to
equity
|
|
-
|
-
|
-
|
(5)
|
(5)
|
-
|
(5)
|
Total transactions with owners
|
|
(21)
|
-
|
27
|
(1,659)
|
(1,653)
|
-
|
(1,653)
|
At 25 February 2023 (restated*)
|
|
463
|
5,165
|
3,139
|
3,469
|
12,236
|
(11)
|
12,225
|
* Comparatives have been restated following the adoption of
IFRS 17. Refer to Notes 1 and 22 for further details.
The notes on pages 20 to 49
form part of this condensed consolidated
financial information.
Group cash flow statement
|
Notes
|
52 weeks ended 24 February
2024
£m
|
52 weeks
ended 25 February 2023 (restated*)
£m
|
Cash flows generated from/(used in) operating
activities
|
|
|
|
Operating profit/(loss) of continuing
operations
|
|
2,821
|
1,410
|
Operating profit/(loss) of discontinued
operations
|
6
|
(659)
|
98
|
Depreciation and
amortisation
|
|
1,723
|
1,700
|
(Profit)/loss arising on sale of
property, plant and equipment, investment property, intangible
assets, assets classified as held for sale and early termination of
leases
|
|
(53)
|
(76)
|
(Profit)/loss arising from sale of
other investments
|
|
-
|
3
|
(Profit)/loss arising on sale of
joint ventures and associates
|
|
(9)
|
-
|
(Profit)/loss arising on sale of
subsidiaries
|
|
(12)
|
-
|
Net impairment (reversal)/loss on
property, plant and equipment, right of use assets, intangible
assets and investment property
|
11
|
(28)
|
982
|
Net remeasurement loss on
non-current assets held for sale
|
|
720
|
23
|
Defined benefit pension scheme
payments
|
18
|
(29)
|
(23)
|
Share-based payments
|
17
|
78
|
59
|
Fair value movements included in
operating profit/(loss)
|
|
71
|
70
|
Retail (increase)/decrease in
inventories
|
|
(150)
|
(147)
|
Retail (increase)/decrease in
trade and other receivables
|
|
(118)
|
(54)
|
Retail increase/(decrease) in
trade and other payables
|
|
714
|
643
|
Retail increase/(decrease) in
provisions
|
|
(72)
|
75
|
Retail (increase)/decrease in
working capital
|
|
374
|
517
|
Tesco Bank (increase)/decrease in
loans and advances to customers
|
|
(714)
|
(690)
|
Tesco Bank (increase)/decrease in
trade, reinsurance and other
receivables
|
|
(9)
|
83
|
Tesco Bank increase/(decrease) in
customer and bank deposits, trade, insurance liabilities and other
payables
|
|
584
|
348
|
Tesco Bank increase/(decrease) in
provisions
|
|
28
|
(7)
|
Tesco Bank (increase)/decrease in
working capital
|
|
(111)
|
(266)
|
Cash generated from/(used in) operations
|
|
4,886
|
4,497
|
Interest paid
|
|
(824)
|
(652)
|
Corporation tax paid
|
|
(223)
|
(123)
|
Net cash generated from/(used in) operating
activities
|
|
3,839
|
3,722
|
Cash flows generated from/(used in) investing
activities
|
|
|
|
Proceeds from sale of property,
plant and equipment, investment property, intangible assets and
assets classified as held for sale
|
|
55
|
342
|
Purchase of property, plant and
equipment, investment property and other long-term
assets
|
|
(1,108)
|
(971)
|
Purchase of intangible
assets
|
|
(278)
|
(279)
|
Disposal of subsidiaries, net of
cash disposed
|
|
15
|
-
|
Acquisition of subsidiaries, net
of cash acquired
|
|
(17)
|
(71)
|
Proceeds from sale of joint
ventures and associates
|
|
9
|
-
|
Increase in loans to joint
ventures and associates
|
|
(61)
|
(1)
|
Investments in joint ventures and
associates
|
|
(9)
|
(10)
|
Net (investments in)/proceeds from
sale of short-term investments
|
|
(507)
|
451
|
Proceeds from sale of other
investments
|
|
352
|
230
|
Purchase of other
investments
|
|
(390)
|
(529)
|
Dividends received from joint
ventures and associates
|
|
9
|
14
|
Interest received
|
|
249
|
70
|
Cash inflows from derivative
financial instruments
|
|
5
|
54
|
Cash outflows from derivative
financial instruments
|
|
(24)
|
(6)
|
Net cash generated from/(used in) investing
activities
|
|
(1,700)
|
(706)
|
Cash flows generated from/(used in) financing
activities
|
|
|
|
Own shares purchased for
cancellation
|
19
|
(752)
|
(781)
|
Own shares purchased for share
schemes
|
17
|
(93)
|
(86)
|
Repayment of capital element of
obligations under leases
|
|
(627)
|
(593)
|
Cash outflows exceeding the
incremental increase in assets in a property buyback
|
|
(62)
|
(21)
|
Increase in borrowings
|
|
1,232
|
-
|
Repayment of borrowings
|
|
(775)
|
(709)
|
Cash inflows from derivative
financial instruments
|
|
98
|
232
|
Cash outflows from derivative
financial instruments
|
|
(102)
|
(371)
|
Dividends paid to equity
owners
|
7
|
(778)
|
(859)
|
Net cash generated from/(used in) financing
activities
|
|
(1,859)
|
(3,188)
|
Net increase/(decrease) in cash and cash
equivalents
|
|
280
|
(172)
|
Cash and cash equivalents at the
beginning of the year
|
|
1,565
|
1,771
|
Effect of foreign exchange rate
changes
|
|
29
|
(34)
|
Cash and cash equivalents including cash held in the disposal
group at the end of the year
|
|
1,874
|
1,565
|
Less: Cash held in the disposal
group
|
|
(346)
|
-
|
Cash and cash equivalents at the end of the
year
|
12
|
1,528
|
1,565
|
* Comparatives have been restated
following the adoption of IFRS 17 and to present Banking operations
as a discontinued operation. Refer to Notes 1, 6 and 22 for further
details.
The notes on pages 20 to 49
form part of this condensed consolidated
financial information.
Notes
Note 1 Basis of preparation
This preliminary consolidated
financial information has been prepared in accordance with the
Disclosure and Transparency Rules of the UK Financial Conduct
Authority, and the principles of UK-adopted IFRS. The accounting
policies applied, and the judgements, estimates and assumptions
made in applying these policies, are consistent with those used in
preparing the Annual Report and Group financial statements 2024,
which are the same as those used in preparing the Annual Report and
Group financial statements 2023, except as noted below. The
financial year represents the 52 weeks ended 24 February 2024
(prior financial year 52 weeks ended 25 February 2023). This
preliminary consolidated financial information does not constitute
statutory consolidated financial statements for the 52 weeks ended
24 February 2024 as defined under section 434 of the Companies Act
2006.
The Annual Report and Group
financial statements for the 52 weeks ended 24 February 2024 were
approved by the Board of Directors on 9 April 2024.
The report of the auditor on those Group
financial statements was unqualified, did not contain an emphasis
of matter paragraph and did not contain any statement under section
498 of the Companies Act 2006. The Annual Report and Group
financial statements for 2024 will be filed with the Registrar in
due course.
The Annual Report and Group
financial statements for the 52 weeks ended 25 February 2023 were
approved by the Board of Directors on 12 April 2023. The report of
the auditor on those Group financial statements was unqualified,
did not contain an emphasis of matter paragraph and did not contain
any statement under section 498 of the Companies Act
2006.
The Directors have, at the time of
approving the financial statements, a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future, which reflects a period of 18
months from the date of approval of the financial statements, and
have concluded that there are no material uncertainties relating to
going concern. Thus they continue to adopt the going concern basis
of accounting in preparing the consolidated Group financial
statements. Further information on the Group's strong liquidity
position is given in the Summary of total indebtedness
section.
Adoption of new IFRSs
IFRS 17 'Insurance contracts' is
effective for the accounting period commencing 26 February 2023.
IFRS 17 has been applied fully retrospectively and comparatives for
prior periods have been restated from a transition date of 27
February 2022. Refer to Note 22 for
further details.
Other standards, interpretations
and amendments effective in the current financial year have not had
a material impact on the consolidated Group financial
statements.
The Group has not applied any
standards, interpretations or amendments
that have been issued but are not yet effective. The impact of the
following is under assessment:
- IFRS 18 'Primary
financial statements', which will become effective in the
consolidated Group financial statements for the financial year
ending 26 February 2028, subject to UK endorsement.
Other standards, interpretations
and amendments issued but not yet effective are not expected to
have a material impact on the consolidated Group financial
statements.
Discontinued operations
During the year, the Board
approved a plan to dispose of the Group's regulated Banking
operations, which form the major part of the Tesco Bank segment.
The net results of the Banking operations are presented as a
discontinued operation in the Group income statement, for which the
comparatives have been restated. The assets and liabilities of the
Banking operations disposal group are presented separately in the
Group balance sheet as held for sale. For further details, refer to
Note 6.
Accounting policies
Insurance
Classification of insurance
contracts
Contracts under which the Group
accepts significant insurance risk from another party (the
policyholder) by agreeing to compensate the policyholder or other
beneficiary if a specified uncertain future event (the insured
event) adversely affects the policyholder or other beneficiary are
classified as insurance contracts. These contracts remain insurance
contracts until all rights and obligations are extinguished or
expire. Insurance contracts may also transfer some financial
risk.
Level of aggregation
The level of aggregation for the
Group is determined firstly by dividing the business written into
motor and home portfolios. Portfolios comprise groups of contracts
with similar risks which are managed together. At initial
recognition the Group assesses whether the motor and home
portfolios are divided further into groups of contracts that are
onerous, have no significant possibility of becoming onerous, or
are neither.
In determining the level of
aggregation, the Group identifies a contract as the smallest
'unit', i.e. the lowest common denominator. No group for level of
aggregation purposes shall contain contracts issued more than one
year apart.
The Group divides portfolios of
reinsurance contracts held applying the same principles.
Insurance contracts
issued
Insurance contract liabilities
include both a liability for incurred claims (LIC), which
represents outstanding claims and incurred but not reported claims
and other incurred insurance expenses; and a liability for
remaining coverage (LRC), which represents the Group's obligation
for insured events related to the unexpired portion of the coverage
period. The LRC is measured either using the general model or a
simplified premium allocation approach (PAA).
The Group applies the PAA to all
insurance contracts issued since the acquisition of Tesco
Underwriting (TU) in May 2021. The Group qualifies to use this
approach as the coverage period of each contract in the group is
one year or less. There is no allowance for the time value of money
as the premiums are due within one year of the coverage
period.
The Group applies the general
model to all issued insurance contracts acquired on the acquisition
of TU, as the settlement of these claims and their associated
insurance risk will spread over multiple years. The Group has
recognised an acquired claims liability as part of the LRC, which
is measured at the probability-weighted average of discounted cash
flows plus a risk adjustment for non-financial risk, plus any
contractual service margin (CSM) if the fulfilment cash flows
result in a net inflow. If the fulfilment cash flows result in a
net outflow, an onerous loss is recognised in the Group income
statement. The risk adjustment reflects the compensation that the
Group requires for bearing uncertainty in respect of the amount and
timing of the cash flows from non-financial risk, whilst the CSM
represents the unearned profit in the contracts relating to
services that will be provided under the contracts in the
future.
Commission payable to agents and
other acquisition costs, which are incurred for acquiring new and
renewal insurance business that is primarily related to the
production of that business, are deferred and presented as part of
the LRC. Such deferred acquisition costs are amortised over the
period of insurance contract services on the basis of the passage
of time.
The carrying amount of the LRC
measured under the general model is updated at the end of each
reporting period to reflect current estimates of the amounts,
timing and uncertainty of future cash flows, as well as discount
rates and other financial variables.
The Group estimates the LIC as the
discounted value of expected fulfilment cash flows related to
incurred claims and other incurred insurance expenses, plus an
explicit adjustment for non-financial risk. The fulfilment cash
flows incorporate, in an unbiased way, all reasonable and
supportable information available about the amount, timing and
uncertainty of those future cash flows. Estimates of the present
value of future cash flows reflect current expectations as at the
end of the reporting period and are adjusted for events which have
occurred since actuarial valuation.
Future cash flows are assessed by
reviewing individual claims data and making an allowance for claims
incurred but not yet reported, adjusted for the effect on the
claims incurred of both internal and external foreseeable events,
such as changes in claims handling procedures, inflation, judicial
trends, substantively enacted legislative changes and past
experience and trends.
Reinsurance
The Group cedes reinsurance in the
normal course of business for the purpose of limiting its net loss
potential through the diversification of its risks. Reinsurance
ceded includes quota share, excess of loss and adverse development
cover contracts. Reinsurance arrangements do not relieve the Group
from its direct obligations to its policyholders. Only contracts
that give rise to a significant transfer of insurance risk are
accounted for as reinsurance contracts.
Reinsurance assets include
balances due from reinsurance companies for reinsurance claims.
Amounts recoverable from reinsurers are estimated in a manner
consistent with the outstanding claims provision or settled claims
associated with the reinsured policy.
The Group applies the PAA to all
reinsurance contracts that it holds, except for contracts held
prior to the acquisition of TU. The PAA is applicable for all
reinsurance contracts purchased since the acquisition of TU as the
contracts either qualify automatically in having a coverage period
of one year or less, or because there is no material difference in
their measurement between the PAA and the general model.
Modification and derecognition of
insurance and reinsurance contracts
The Group derecognises insurance
and reinsurance contracts when the rights and obligations relating
to the contract are extinguished (i.e. discharged, cancelled or
expired). When a modification is not treated as a derecognition,
the Group recognises amounts paid or received for the modification
with the contract as an adjustment to the relevant LRC or asset for
remaining coverage.
Presentation of insurance
contracts issued and reinsurance contracts held
The Group classifies all insurance
contract liabilities as current as it does not have the right to
defer settlement beyond 12 months after the reporting date. The
Group classifies its reinsurance portfolio as non-current as it
does not reasonably expect to realise its reinsurance assets within
12 months of the reporting date.
Insurance revenue
The insurance revenue recognised
is the amount of expected premium receipts allocated to the period.
For insurance contracts issued after the acquisition of TU in May
2021, the Group allocates the expected premium receipts to each
period of insurance contract services based on the passage of
time.
The insurance revenue recognised
for insurance contracts acquired as part of the acquisition of TU
comprises:
-
Claims costs incurred in the period measured at
the amounts expected at the beginning of the period;
-
Changes in the risk adjustment for non-financial
risk; and
-
The amount of the CSM recognised for services
provided in the period.
Insurance service
expenses
Insurance service expenses include
total claims cost for the period, as well as all directly
attributable insurance expenses. There are no acquisition costs for
acquired claims. Insurance acquisition cash flows arising from the
costs of selling, underwriting and starting a group of insurance
contracts are allocated to insurance service expenses based on the
passage of time.
Net income or expenses from
reinsurance contracts held
The Group separately presents
income or expenses from reinsurance contracts held from the
expenses or income from insurance contracts issued. The Group
presents the income or expenses from a group of reinsurance
contracts held as a single amount.
Insurance finance income and
expenses
Insurance finance income or
expenses comprise the change in the carrying amount of the group of
insurance contracts arising from the effect of the time value of
money, financial risk and changes in financial risk.
The impact of changes in market
interest rates on the carrying value of insurance assets and
liabilities is reflected in the Group statement of other
comprehensive income in order to minimise accounting mismatches
between the accounting for financial assets and insurance assets
and liabilities. The Group's financial assets backing both the
motor and home insurance portfolios are predominantly measured at
fair value through other comprehensive income.
The amount of insurance finance
income or expenses recognised in the Group income statement is
calculated using the discount rate curve determined at the date of
the incurred claim.
Note 2 Segmental reporting
The Group's operating segments are
determined based on the Group's organisational structure and
internal reporting to the Chief Operating Decision Maker (CODM).
The CODM has
been determined to be the Group Chief Executive, with support from
the Executive Committee, as the function primarily responsible for
the allocation of resources to segments and assessment of
performance of the segments.
The principal activities of the
Group are presented in the following
reportable segments:
- Retailing and
associated activities (Retail) in:
- UK & ROI - the
United Kingdom and Republic of Ireland; and
- Central Europe -
Czech Republic, Hungary and Slovakia.
- Retail banking,
insurance and money services through Tesco Bank in the UK (Tesco
Bank).
In February 2024, the Board
announced the sale of the Group's banking operation ('Banking
operations'), which has been consequently classified as a
discontinued operation. Refer to Note 6 for further details. The
remaining insurance business and money services are included within
continuing operations. Both continuing and discontinued elements
remain within the Tesco Bank segment, reflecting the Group's
organisational structure and internal reporting to the CODM at the
year end.
The CODM uses adjusted operating
profit, as reviewed at periodic Executive Committee meetings, as
the key measure of the segments' results as it reflects the segments'
trading performance that aids comparability over time for the
financial year under evaluation. Adjusted operating profit is a
consistent measure within the Group as defined within the Glossary.
Refer to Note 3 for adjusting items. Inter-segment revenue between
the segments is not material.
Income statement
The segment results and the
reconciliation of the segment measures to the respective statutory
items included in the Group income statement are as
follows:
52 weeks ended 24 February
2024
At constant exchange rates
|
UK &
ROI
£m
|
Central
Europe
£m
|
Total
Retail
£m
|
Tesco
Bank
£m
|
Total
segments at
constant
exchange
£m
|
Foreign
exchange
£m
|
Exclude:
Banking operations
£m
|
Continuing operations at
actual
exchange
£m
|
Revenue
|
62,864
|
4,388
|
67,252
|
1,521
|
68,773
|
124
|
(710)
|
68,187
|
Less: Fuel sales
|
(6,537)
|
(171)
|
(6,708)
|
-
|
(6,708)
|
(2)
|
-
|
(6,710)
|
Sales
|
56,327
|
4,217
|
60,544
|
1,521
|
62,065
|
122
|
(710)
|
61,477
|
Adjusted operating profit
|
2,669
|
90
|
2,759
|
148
|
2,907
|
1
|
(79)
|
2,829
|
Adjusting items (Note
3)
|
19
|
(23)
|
(4)
|
(741)
|
(745)
|
(1)
|
738
|
(8)
|
Operating profit
|
2,688
|
67
|
2,755
|
(593)
|
2,162
|
-
|
659
|
2,821
|
Adjusted operating margin
|
4.2%
|
2.1%
|
4.1%
|
9.7%
|
4.2%
|
|
11.1%
|
4.1%
|
Tesco Bank segmental revenue of
£1,521m (2023: £1,234m) comprises continuing interest income of
£94m (2023: £38m), fees and commissions income of £203m (2023:
£170m), insurance revenue of £514m (2023: £458m) and revenue within
the discontinued Banking operations of £710m (2023:
£568m).
52 weeks ended 24 February
2024
At actual exchange rates
|
UK &
ROI
£m
|
Central
Europe
£m
|
Total
Retail
£m
|
Tesco
Bank
£m
|
Total
segments
£m
|
Exclude:
Banking operations
£m
|
Continuing operations at actual exchange
£m
|
Revenue
|
62,880
|
4,496
|
67,376
|
1,521
|
68,897
|
(710)
|
68,187
|
Less: Fuel sales
|
(6,536)
|
(174)
|
(6,710)
|
-
|
(6,710)
|
-
|
(6,710)
|
Sales
|
56,344
|
4,322
|
60,666
|
1,521
|
62,187
|
(710)
|
61,477
|
Adjusted operating profit
|
2,670
|
90
|
2,760
|
148
|
2,908
|
(79)
|
2,829
|
Adjusting items (Note
3)
|
19
|
(24)
|
(5)
|
(741)
|
(746)
|
738
|
(8)
|
Operating profit
|
2,689
|
66
|
2,755
|
(593)
|
2,162
|
659
|
2,821
|
Adjusted operating margin
|
4.2%
|
2.0%
|
4.1%
|
9.7%
|
4.2%
|
11.1%
|
4.1%
|
Share of post-tax profits of joint
ventures and associates
|
|
|
|
|
|
|
6
|
Finance income
|
|
|
|
|
|
|
267
|
Finance costs
|
|
|
|
|
|
|
(805)
|
Profit before tax
|
|
|
|
|
|
|
2,289
|
52 weeks ended 25 February
2023
At actual exchange rates
|
UK &
ROI
£m
|
Central
Europe
£m
|
Total
Retail
£m
|
Tesco
Bank (restated*)
£m
|
Total
segments (restated*)
£m
|
Exclude:
Banking operations
(restated*)
£m
|
Continuing operations at actual
exchange (restated*)
£m
|
Revenue
|
60,246
|
4,410
|
64,656
|
1,234
|
65,890
|
(568)
|
65,322
|
Less: Fuel sales
|
(7,877)
|
(229)
|
(8,106)
|
-
|
(8,106)
|
-
|
(8,106)
|
Sales
|
52,369
|
4,181
|
56,550
|
1,234
|
57,784
|
(568)
|
57,216
|
Adjusted operating profit
|
2,307
|
180
|
2,487
|
135
|
2,622
|
(113)
|
2,509
|
Adjusting items (Note
3)
|
(1,058)
|
(36)
|
(1,094)
|
(11)
|
(1,105)
|
6
|
(1,099)
|
Operating profit
|
1,249
|
144
|
1,393
|
124
|
1,517
|
(107)
|
1,410
|
Adjusted operating margin
|
3.8%
|
4.1%
|
3.8%
|
10.9%
|
4.0%
|
19.9%
|
3.8%
|
Share of post-tax profits of joint
ventures and associates
|
|
|
8
|
Finance income
|
|
87
|
Finance costs
|
|
(623)
|
Profit before tax
|
|
|
|
|
882
|
|
|
|
|
|
|
|
|
|
|
| |
* Comparatives have been restated
following the adoption of IFRS 17 and re-presented to disclose
Banking operations as a discontinued operation. Refer to Notes 1, 6
and 22 for further details.
Balance sheet
The following tables show segment
net assets and net debt (cash and cash equivalents, short-term
investments, joint venture loans, bank and other borrowings, lease
liabilities, derivative financial instruments and net debt of the
disposal group). Lease liabilities, joint venture loans and
interest receivables have been allocated to each segment. All other
components of net debt have been included within the unallocated
segment to reflect how these balances are managed. Intercompany
transactions have been eliminated other than intercompany
transactions with Tesco Bank in net debt. Balances in relation to
the discontinued Banking operations have been included in the Tesco
Bank segment in both current and prior year.
.At 24
February 2024
|
UK &
ROI
£m
|
Central
Europe
£m
|
Tesco Bank
£m
|
Unallocated
£m
|
Total
£m
|
Goodwill and other intangible
assets(a)
|
4,713
|
33
|
320
|
-
|
5,066
|
Property, plant and equipment and
investment property
|
15,707
|
1,475
|
63
|
-
|
17,245
|
Right of use assets
|
5,038
|
439
|
1
|
-
|
5,478
|
Non-current assets held for
sale
|
23
|
62
|
-
|
-
|
85
|
Net assets of the disposal group
excluding net debt(b)
|
-
|
-
|
758
|
-
|
758
|
Net debt (including Tesco
Bank)(c)
|
(6,926)
|
(575)
|
(102)
|
(2,263)
|
(9,866)
|
Other net
assets/(liabilities)
|
(7,101)
|
(300)
|
300
|
-
|
(7,101)
|
Total net assets
|
11,454
|
1,134
|
1,340
|
(2,263)
|
11,665
|
(a) Refer to Note 11 for the
allocation of goodwill between remaining operations and the Banking
operations disposal group classified as held for sale.
(b) Excludes £(182)m of net debt items within the Tesco Bank
segment relating to the Banking operations disposal
group.
(c) Refer
to Note 21.
At 25 February 2023
|
UK &
ROI
£m
|
Central
Europe
£m
|
Tesco
Bank
(restated(a))
£m
|
Unallocated(b)
£m
|
Total
(restated(a))
£m
|
Goodwill and other intangible
assets
|
4,715
|
37
|
623
|
-
|
5,375
|
Property, plant and equipment and
investment property
|
15,346
|
1,468
|
72
|
-
|
16,886
|
Right of use assets
|
5,057
|
433
|
10
|
-
|
5,500
|
Assets of the disposal group and
non-current assets held for sale
|
25
|
169
|
-
|
16
|
210
|
Net debt (including Tesco
Bank)(c)
|
(7,036)
|
(553)
|
151
|
(2,904)
|
(10,342)
|
Other net
assets/(liabilities)
|
(6,414)
|
(310)
|
1,320
|
-
|
(5,404)
|
Total net assets
|
11,693
|
1,244
|
2,176
|
(2,888)
|
12,225
|
(a) Comparatives have been
restated following the adoption of IFRS 17. Refer to Notes 1 and 22
for further details.
(b) Includes £16m of assets
and £(14)m of items within net debt relating to residual properties
and leases with respect to the Group's operation in
Poland.
(c) Refer to previous table
for footnote.
Other segment
information
The table below shows the Group's
total capital expenditure, depreciation and amortisation, and
impairment loss on financial assets, reconciling to continuing
operations:
52 weeks ended 24 February
2024
|
UK &
ROI
£m
|
Central
Europe
£m
|
Tesco
Bank
£m
|
Total
segments
£m
|
Exclude:
Banking operations
£m
|
Continuing operations
£m
|
Capital expenditure (including
acquisitions through business combinations):
|
|
|
|
|
|
|
Property, plant and
equipment(a)(b)
|
1,091
|
99
|
8
|
1,198
|
-
|
1,198
|
Goodwill and other intangible
assets(c)
|
255
|
12
|
25
|
292
|
(22)
|
270
|
Depreciation and
amortisation:
|
|
|
|
|
|
|
Property, plant and
equipment
|
(802)
|
(86)
|
(11)
|
(899)
|
3
|
(896)
|
Right of use assets
|
(496)
|
(46)
|
(2)
|
(544)
|
1
|
(543)
|
Other intangible assets
|
(235)
|
(12)
|
(33)
|
(280)
|
25
|
(255)
|
Impairment:
|
|
|
|
|
|
|
(Loss)/reversal on financial
assets
|
1
|
1
|
(65)
|
(63)
|
65
|
2
|
(a) Includes
£65m of land and buildings
related to obtaining control of The Tesco Coral Limited Partnership
(2023: £248m of land and buildings related to obtaining control of
The Tesco Dorney Limited Partnership). Refer to Note
9.
(b) Includes £nil (2023: £42m) of property, plant and equipment
acquired through business combinations.
(c) Includes £17m (2023: £31m) of goodwill and
other intangible assets acquired through business
combinations.
52 weeks ended 24 February
2023
|
UK &
ROI
£m
|
Central
Europe
£m
|
Tesco
Bank(d)
£m
|
Total
segments(d)
£m
|
Exclude:
Banking operations(d)
£m
|
Continuing operations(d)
£m
|
Capital expenditure (including
acquisitions through business combinations):
|
|
|
|
|
|
|
Property, plant and
equipment(a)(b)
|
1,176
|
104
|
14
|
1,294
|
(2)
|
1,292
|
Goodwill and other intangible
assets(c)
|
259
|
12
|
37
|
308
|
(26)
|
282
|
Depreciation and
amortisation:
|
|
|
|
|
|
|
Property, plant and
equipment
|
(788)
|
(84)
|
(10)
|
(882)
|
2
|
(880)
|
Right of use assets
|
(500)
|
(37)
|
(2)
|
(539)
|
1
|
(538)
|
Investment property
|
(1)
|
-
|
-
|
(1)
|
-
|
(1)
|
Other intangible assets
|
(226)
|
(10)
|
(42)
|
(278)
|
31
|
(247)
|
Impairment:
|
|
|
|
|
|
|
(Loss)/reversal on financial
assets
|
(5)
|
(1)
|
(60)
|
(66)
|
60
|
(6)
|
(a)-(c) Refer to previous table
for footnotes.
(d) Comparatives have been
restated following the adoption of IFRS 17
and to present Banking operations as a discontinued operation.
Refer to Notes 1, 6 and 22 for further details.
Cash flow statement
The following tables provide
further analysis of the Group cash flow statement, including a
split of cash flows between Retail continuing operations, and Tesco
Bank continuing and discontinued operations.
|
|
|
Tesco Bank
|
|
|
|
Retail
|
|
Continuing
operations
|
|
Discontinued
operations
|
|
Tesco
Group
|
52 weeks ended 24 February
2024
|
Before
adjusting
items
£m
|
Adjusting
items
£m
|
Total
£m
|
|
Before
adjusting items
£m
|
Adjusting items
£m
|
Total
£m
|
|
Total
£m
|
|
Total
£m
|
|
Operating profit/(loss)
|
2,760
|
(5)
|
2,755
|
|
69
|
(3)
|
66
|
|
(659)
|
|
2,162
|
|
Depreciation and
amortisation
|
1,602
|
75
|
1,677
|
|
17
|
-
|
17
|
|
29
|
|
1,723
|
|
ATM net income
|
(9)
|
-
|
(9)
|
|
9
|
-
|
9
|
|
-
|
|
-
|
|
(Profit)/loss arising on sale of
property, plant and equipment, investment property, intangible
assets, assets held for sale and early termination of
leases
|
10
|
(63)
|
(53)
|
|
-
|
-
|
-
|
|
-
|
|
(53)
|
|
(Profit)/loss arising on sale of
joint ventures and associates
|
-
|
(9)
|
(9)
|
|
-
|
-
|
-
|
|
-
|
|
(9)
|
|
(Profit)/loss arising on sale of
subsidiaries
|
-
|
(12)
|
(12)
|
|
-
|
-
|
-
|
|
-
|
|
(12)
|
|
Net impairment (reversal)/loss on
property, plant and equipment, right of use assets, intangible
assets and investment property
|
-
|
(28)
|
(28)
|
|
-
|
-
|
-
|
|
-
|
|
(28)
|
|
Net remeasurement (gain)/loss on
non-current assets held for sale
|
-
|
(12)
|
(12)
|
|
-
|
-
|
-
|
|
732
|
|
720
|
|
Defined benefit pension scheme
payments
|
(29)
|
-
|
(29)
|
|
-
|
-
|
-
|
|
-
|
|
(29)
|
|
Share-based payments
|
75
|
-
|
75
|
|
(3)
|
-
|
(3)
|
|
6
|
|
78
|
|
Fair value movements included in
operating profit/(loss)
|
6
|
-
|
6
|
|
3
|
-
|
3
|
|
62
|
|
71
|
|
Cash generated from/(used in) operations excluding working
capital
|
4,415
|
(54)
|
4,361
|
|
95
|
(3)
|
92
|
|
170
|
|
4,623
|
|
(Increase)/decrease in working
capital
|
418
|
(44)
|
374
|
|
(105)
|
1
|
(104)
|
|
(7)
|
|
263
|
|
Cash generated from/(used in) operations
|
4,833
|
(98)
|
4,735
|
|
(10)
|
(2)
|
(12)
|
|
163
|
|
4,886
|
|
Interest paid
|
(809)
|
-
|
(809)
|
|
(14)
|
-
|
(14)
|
|
(1)
|
|
(824)
|
|
Corporation tax paid
|
(214)
|
-
|
(214)
|
|
(9)
|
-
|
(9)
|
|
-
|
|
(223)
|
|
Net cash generated from/(used in) operating
activities*
|
3,810
|
(98)
|
3,712
|
|
(33)
|
(2)
|
(35)
|
|
162
|
|
3,839
|
|
Proceeds from sale of property,
plant and equipment, investment property, intangible assets and
assets classified as held for sale
|
2
|
53
|
55
|
|
-
|
-
|
-
|
|
-
|
|
55
|
|
Purchase of property, plant and
equipment, investment property and other long-term assets -
property buybacks and store purchases
|
(66)
|
7
|
(59)
|
|
-
|
-
|
-
|
|
-
|
|
(59)
|
|
Purchase of property, plant and
equipment, investment property and other long-term assets - other
capital expenditure
|
(1,039)
|
-
|
(1,039)
|
|
(10)
|
-
|
(10)
|
|
-
|
|
(1,049)
|
|
Purchase of intangible
assets
|
(250)
|
-
|
(250)
|
|
(6)
|
-
|
(6)
|
|
(22)
|
|
(278)
|
|
Disposal of subsidiaries, net of
cash disposed
|
-
|
15
|
15
|
|
-
|
-
|
-
|
|
-
|
|
15
|
|
Acquisition of subsidiaries, net
of cash acquired
|
(17)
|
-
|
(17)
|
|
-
|
-
|
-
|
|
-
|
|
(17)
|
|
Proceeds from the sale of joint
ventures and associates
|
-
|
9
|
9
|
|
-
|
-
|
-
|
|
-
|
|
9
|
|
Increase in loans to joint
ventures and associates
|
(61)
|
-
|
(61)
|
|
-
|
-
|
-
|
|
-
|
|
(61)
|
|
Investments in joint ventures and
associates
|
(9)
|
-
|
(9)
|
|
-
|
-
|
-
|
|
-
|
|
(9)
|
|
Net (investments in)/proceeds from
sale of short-term investments
|
(507)
|
-
|
(507)
|
|
-
|
-
|
-
|
|
-
|
|
(507)
|
|
Proceeds from sale of other
investments
|
5
|
-
|
5
|
|
347
|
-
|
347
|
|
-
|
|
352
|
|
Purchase of other
investments
|
(5)
|
-
|
(5)
|
|
(385)
|
-
|
(385)
|
|
-
|
|
(390)
|
|
Dividends received from joint
ventures and associates
|
9
|
-
|
9
|
|
-
|
-
|
-
|
|
-
|
|
9
|
|
Special dividend received from
Tesco Bank
|
250
|
-
|
250
|
|
(250)
|
-
|
(250)
|
|
-
|
|
-
|
|
Interest received
|
249
|
-
|
249
|
|
-
|
-
|
-
|
|
-
|
|
249
|
|
Cash inflows from derivative
financial instruments
|
5
|
-
|
5
|
|
-
|
-
|
-
|
|
-
|
|
5
|
|
Cash outflows from derivative
financial instruments
|
(24)
|
-
|
(24)
|
|
-
|
-
|
-
|
|
-
|
|
(24)
|
|
Net cash generated from/(used in) investing
activities*
|
(1,458)
|
84
|
(1,374)
|
|
(304)
|
-
|
(304)
|
|
(22)
|
|
(1,700)
|
|
Own shares purchased for
cancellation
|
(752)
|
-
|
(752)
|
|
-
|
-
|
-
|
|
-
|
|
(752)
|
|
Own shares purchased for share
schemes
|
(93)
|
-
|
(93)
|
|
-
|
-
|
-
|
|
-
|
|
(93)
|
|
Repayment of capital element of
obligations under leases
|
(623)
|
-
|
(623)
|
|
(2)
|
-
|
(2)
|
|
(2)
|
|
(627)
|
|
Cash outflows exceeding the
incremental increase in assets in a property buyback
|
(62)
|
-
|
(62)
|
|
-
|
-
|
-
|
|
-
|
|
(62)
|
|
Increase in borrowings
|
682
|
-
|
682
|
|
-
|
-
|
-
|
|
550
|
|
1,232
|
|
Repayment of borrowings
|
(775)
|
-
|
(775)
|
|
-
|
-
|
-
|
|
-
|
|
(775)
|
|
Cash inflows from derivative
financial instruments
|
98
|
-
|
98
|
|
-
|
-
|
-
|
|
-
|
|
98
|
|
Cash outflows from derivative
financial instruments
|
(102)
|
-
|
(102)
|
|
-
|
-
|
-
|
|
-
|
|
(102)
|
|
Dividends paid to equity
holders
|
(777)
|
(1)
|
(778)
|
|
-
|
-
|
-
|
|
-
|
|
(778)
|
|
Net cash generated from/(used in) financing
activities*
|
(2,404)
|
(1)
|
(2,405)
|
|
(2)
|
-
|
(2)
|
|
548
|
|
(1,859)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
(52)
|
(15)
|
(67)
|
|
(339)
|
(2)
|
(341)
|
|
688
|
|
280
|
|
Cash and cash equivalents at the
beginning of the year
|
|
|
|
|
|
|
|
|
|
|
1,565
|
|
Effect of foreign exchange rate
changes
|
|
|
|
|
|
|
|
|
|
|
29
|
|
Cash and cash equivalents, including cash held in the
disposal group, at the end of the year
|
|
|
|
|
|
|
|
|
|
|
1,874
|
|
Less: Cash held in the disposal
group
|
|
|
|
|
|
|
|
|
|
|
(346)
|
|
Cash and cash equivalents at the end of the
year
|
|
|
|
|
|
|
|
|
|
|
1,528
|
|
* Refer to page 55
for the reconciliation of the APM: Retail free
cash flow.
|
Retail
|
|
Tesco
Bank continuing
operations (restated(a))
|
|
Discontinued
operations(b)
|
|
Tesco
Group
(restated(a))
|
52 weeks ended 25 February
2023
|
Before
adjusting
items
£m
|
Adjusting
items
£m
|
Total
£m
|
|
Before
adjusting items
£m
|
Adjusting items
£m
|
Total
£m
|
|
Total
£m
|
|
Total
£m
|
Operating profit/(loss)
|
2,487
|
(1,094)
|
1,393
|
|
22
|
(5)
|
17
|
|
98
|
|
1,508
|
Depreciation and
amortisation
|
1,570
|
76
|
1,646
|
|
19
|
-
|
19
|
|
35
|
|
1,700
|
ATM net income
|
(16)
|
-
|
(16)
|
|
16
|
-
|
16
|
|
-
|
|
-
|
(Profit)/loss arising on sale of
property, plant and equipment, investment property, intangible
assets, assets held for sale and early termination of
leases
|
13
|
(91)
|
(78)
|
|
-
|
-
|
-
|
|
2
|
|
(76)
|
(Profit)/loss arising from sale of
other investments
|
-
|
-
|
-
|
|
3
|
-
|
3
|
|
-
|
|
3
|
Net impairment loss on property,
plant and equipment, right of use assets, intangible assets and
investment property
|
-
|
982
|
982
|
|
-
|
-
|
-
|
|
-
|
|
982
|
Net remeasurement loss on
non-current assets held for sale
|
-
|
14
|
14
|
|
-
|
-
|
-
|
|
9
|
|
23
|
Defined benefit pension scheme
payments
|
(23)
|
-
|
(23)
|
|
-
|
-
|
-
|
|
-
|
|
(23)
|
Share-based payments
|
64
|
-
|
64
|
|
(2)
|
-
|
(2)
|
|
(3)
|
|
59
|
Fair value movements included in
operating profit/(loss)
|
-
|
-
|
-
|
|
15
|
-
|
15
|
|
55
|
|
70
|
Cash generated from/(used in) operations excluding working
capital
|
4,095
|
(113)
|
3,982
|
|
73
|
(5)
|
68
|
|
196
|
|
4,246
|
(Increase)/decrease in working
capital
|
468
|
52
|
520
|
|
(39)
|
(3)
|
(42)
|
|
(227)
|
|
251
|
Cash generated from/(used in) operations
|
4,563
|
(61)
|
4,502
|
|
34
|
(8)
|
26
|
|
(31)
|
|
4,497
|
Interest paid
|
(643)
|
-
|
(643)
|
|
(9)
|
-
|
(9)
|
|
-
|
|
(652)
|
Corporation tax paid
|
(107)
|
-
|
(107)
|
|
(17)
|
-
|
(17)
|
|
1
|
|
(123)
|
Net cash generated from/(used in) operating
activities(c)
|
3,813
|
(61)
|
3,752
|
|
8
|
(8)
|
-
|
|
(30)
|
|
3,722
|
Proceeds from sale of property,
plant and equipment, investment property, intangible assets and
assets classified as held for sale
|
6
|
335
|
341
|
|
1
|
-
|
1
|
|
-
|
|
342
|
Purchase of property, plant and
equipment, investment property and other long-term assets -
property buybacks
|
(14)
|
(40)
|
(54)
|
|
-
|
-
|
-
|
|
-
|
|
(54)
|
Purchase of property, plant and
equipment, investment property and other long-term assets - other
capital expenditure
|
(902)
|
-
|
(902)
|
|
(13)
|
-
|
(13)
|
|
(2)
|
|
(917)
|
Purchase of intangible
assets
|
(241)
|
-
|
(241)
|
|
(12)
|
-
|
(12)
|
|
(26)
|
|
(279)
|
Acquisition of subsidiaries, net
of cash acquired
|
(66)
|
-
|
(66)
|
|
(5)
|
-
|
(5)
|
|
-
|
|
(71)
|
Increase in loans to joint
ventures and associates
|
(1)
|
-
|
(1)
|
|
-
|
-
|
-
|
|
-
|
|
(1)
|
Investments in joint ventures and
associates
|
(10)
|
-
|
(10)
|
|
-
|
-
|
-
|
|
-
|
|
(10)
|
Net (investments in)/proceeds from
sale of short-term investments
|
451
|
-
|
451
|
|
-
|
-
|
-
|
|
-
|
|
451
|
Proceeds from sale of other
investments
|
1
|
-
|
1
|
|
229
|
-
|
229
|
|
-
|
|
230
|
Purchase of other
investments
|
(206)
|
-
|
(206)
|
|
(323)
|
-
|
(323)
|
|
-
|
|
(529)
|
Dividends received from joint
ventures and associates
|
14
|
-
|
14
|
|
-
|
-
|
-
|
|
-
|
|
14
|
Dividends received from Tesco
Bank
|
54
|
-
|
54
|
|
(54)
|
-
|
(54)
|
|
-
|
|
-
|
Interest received
|
70
|
-
|
70
|
|
-
|
-
|
-
|
|
-
|
|
70
|
Cash inflows from derivative
financial instruments
|
54
|
-
|
54
|
|
-
|
-
|
-
|
|
-
|
|
54
|
Cash outflows from derivative
financial instruments
|
(6)
|
-
|
(6)
|
|
-
|
-
|
-
|
|
-
|
|
(6)
|
Net cash generated from/(used in) investing
activities(c)
|
(796)
|
295
|
(501)
|
|
(177)
|
-
|
(177)
|
|
(28)
|
|
(706)
|
Own shares purchased for
cancellation
|
(781)
|
-
|
(781)
|
|
-
|
-
|
-
|
|
-
|
|
(781)
|
Own shares purchased for share
schemes
|
(86)
|
-
|
(86)
|
|
-
|
-
|
-
|
|
-
|
|
(86)
|
Repayment of capital element of
obligations under leases
|
(589)
|
-
|
(589)
|
|
(2)
|
-
|
(2)
|
|
(2)
|
|
(593)
|
Cash outflows exceeding the
incremental increase in assets in a property buyback
|
(21)
|
-
|
(21)
|
|
-
|
-
|
-
|
|
-
|
|
(21)
|
Repayment of borrowings
|
(608)
|
-
|
(608)
|
|
(101)
|
-
|
(101)
|
|
-
|
|
(709)
|
Cash inflows from derivative
financial instruments
|
232
|
-
|
232
|
|
-
|
-
|
-
|
|
-
|
|
232
|
Cash outflows from derivative
financial instruments
|
(365)
|
-
|
(365)
|
|
(6)
|
-
|
(6)
|
|
-
|
|
(371)
|
Dividends paid to equity
holders
|
(858)
|
(1)
|
(859)
|
|
-
|
-
|
-
|
|
-
|
|
(859)
|
Net cash generated from/(used in) financing
activities(c)
|
(3,076)
|
(1)
|
(3,077)
|
|
(109)
|
-
|
(109)
|
|
(2)
|
|
(3,188)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
(59)
|
233
|
174
|
|
(278)
|
(8)
|
(286)
|
|
(60)
|
|
(172)
|
Cash and cash equivalents at the
beginning of the year
|
|
|
|
|
|
|
|
|
|
|
1,771
|
Effect of foreign exchange rate
changes
|
|
|
|
|
|
|
|
|
|
|
(34)
|
Cash and cash equivalents at the end of the
year
|
|
|
|
|
|
|
|
|
|
|
1,565
|
(a) Comparatives have been
restated following the adoption of IFRS 17 and re-presented to
disclose Banking operations as a discontinued operation within the
Tesco Bank segment. Refer to Notes 1, 6 and 22 for further
details.
(b) Comprising Banking
operations and immaterial balances in relation to the Group's
residual properties in Poland. Refer to Note 6.
(c) Refer to page 55 for the
reconciliation of the APM: Retail free cash flow.
Note 3 Adjusting items
Group income statement
52 weeks ended 24 February 2024
Profit/(loss) for the year
included the following adjusting items:
|
Cost of sales
£m
|
Administrative expenses
£m
|
Total adjusting items
included within operating profit
£m
|
Finance
income/
(costs)
£m
|
Taxation
£m
|
Adjusting items included
within discontinued operations
£m
|
Total adjusting
items
£m
|
Property
transactions(a)
|
6
|
69
|
75
|
-
|
(18)
|
-
|
57
|
Disposal of China associate in a
prior year(b)
|
-
|
9
|
9
|
-
|
23
|
-
|
32
|
Net impairment (loss)/reversal of
non-current assets(c)
|
35
|
(7)
|
28
|
-
|
38
|
-
|
66
|
Restructuring(d)
|
(45)
|
(5)
|
(50)
|
-
|
12
|
-
|
(38)
|
Amortisation of acquired
intangible assets(e)
|
-
|
(74)
|
(74)
|
-
|
18
|
-
|
(56)
|
Disposal of
subsidiary(f)
|
-
|
12
|
12
|
-
|
-
|
-
|
12
|
Banking operations disposal
costs(g)
|
-
|
(8)
|
(8)
|
-
|
-
|
-
|
(8)
|
Net pension finance
income/(costs)(h)
|
-
|
-
|
-
|
(18)
|
5
|
-
|
(13)
|
Fair value remeasurements of
financial instruments(h)
|
-
|
-
|
-
|
38
|
(10)
|
-
|
28
|
Total adjusting items from continuing
operations
|
(4)
|
(4)
|
(8)
|
20
|
68
|
-
|
80
|
Adjusting items relating to
discontinued operations(i)
|
-
|
-
|
-
|
-
|
-
|
(628)
|
(628)
|
Total adjusting items
|
(4)
|
(4)
|
(8)
|
20
|
68
|
(628)
|
(548)
|
(a) The Group disposed of
surplus properties that generated a profit before tax of £63m
(2023: £91m). In addition, there was a £12m gain (2023: £nil)
arising from the remeasurement of assets held for sale,
subsequently reclassified to property, plant and
equipment.
(b) During the current
financial year, the Group reached a settlement with the Chinese tax
authorities in respect of the sale of the Group's 20% share of Gain
Land Limited to China Resources Holdings on 28 February 2020. As a
result of the settlement the Group released a tax provision of £23m
(2023: £nil). Additionally, final proceeds of £9m were recognised
upon settlement.
(c) Refer to Note 11 for
further details on net impairment (loss)/reversal of non-current
assets.
(d) Provisions relating to
operational restructuring changes announced as part of 'Save to
Invest', a multi-year programme which commenced in June 2022. The
total pre-tax cost of the programme to date is £(232)m (2023:
£(182)m). Future cost savings will not be reported within adjusting
items.
(e) Amortisation of acquired
intangibles relates to historical inorganic business combinations
and does not reflect the Group's ongoing trading
performance.
(f) On 30 June 2023
the Group disposed of its Booker subsidiary Ritter-Courivaud
Limited, part of the UK & ROI segment.
(g) Costs incurred within
the continuing Group in relation to the sale of Banking
operations.
(h) Net pension finance
costs and fair value remeasurements of financial instruments are
included within adjusting items, as they can fluctuate
significantly due to external market factors that are outside
management's control. Refer to Note 4 for details of finance income
and costs. Refer to Note 18 for details of pension
schemes.
(i) Refer to Note
6.
52 weeks ended 25 February 2023
Profit/(loss) for the year
included the following adjusting items:
|
Cost of
sales
£m
|
Administrative expenses
£m
|
Total
adjusting items included within operating profit
£m
|
Finance
income/
(costs)
£m
|
Taxation
£m
|
Adjusting items included within discontinued
operations
£m
|
Total
adjusting items
(restated*)
£m
|
Property transactions
|
36
|
55
|
91
|
-
|
29
|
-
|
120
|
Net impairment (loss)/reversal of
non-current assets
|
(965)
|
(17)
|
(982)
|
-
|
129
|
-
|
(853)
|
Fair value less cost of disposal
movements on assets held for sale
|
-
|
(14)
|
(14)
|
-
|
1
|
-
|
(13)
|
Restructuring
|
(107)
|
(25)
|
(132)
|
-
|
26
|
-
|
(106)
|
Disposal of Asia
operations
|
-
|
2
|
2
|
-
|
-
|
-
|
2
|
ATM business rates
refund
|
7
|
-
|
7
|
-
|
(1)
|
-
|
6
|
Release of onerous contract
provision
|
-
|
5
|
5
|
-
|
-
|
-
|
5
|
Amortisation of acquired
intangible assets
|
-
|
(76)
|
(76)
|
-
|
14
|
-
|
(62)
|
Net pension finance
income
|
-
|
-
|
-
|
80
|
(15)
|
-
|
65
|
Fair value remeasurements of
financial instruments
|
-
|
-
|
-
|
(53)
|
12
|
-
|
(41)
|
Total adjusting items from continuing
operations
|
(1,029)
|
(70)
|
(1,099)
|
27
|
195
|
-
|
(877)
|
Adjusting items relating to
discontinued operations*
|
-
|
-
|
-
|
-
|
-
|
(13)
|
(13)
|
Total adjusting items
|
(1,029)
|
(70)
|
(1,099)
|
27
|
195
|
(13)
|
(890)
|
* Comparatives have
been restated to present Banking operations as a discontinued
operation. Refer to Notes 1 and 6.
Group cash flow statement
The table below shows the impact
of adjusting items on the Group cash flow statement:
|
Cash
flows from
operating activities
|
|
Cash
flows from
investing activities
|
|
Cash
flows from
financing activities
|
|
52 weeks
2024
£m
|
52
weeks
2023
(restated(a))
£m
|
|
52 weeks
2024
£m
|
52
weeks
2023
£m
|
|
52 weeks
2024
£m
|
52
weeks
2023
£m
|
Property
transactions(b)
|
-
|
-
|
|
53
|
335
|
|
-
|
-
|
Disposal of
subsidiaries(c)
|
-
|
-
|
|
15
|
-
|
|
-
|
-
|
Restructuring(d)
|
(100)
|
(68)
|
|
-
|
-
|
|
-
|
-
|
Disposal of China
associate
|
-
|
-
|
|
9
|
-
|
|
-
|
-
|
Customer redress claims settlement
in Tesco Bank
|
-
|
(4)
|
|
-
|
-
|
|
-
|
-
|
ATM business rates
refund
|
-
|
5
|
|
-
|
-
|
|
-
|
-
|
Disposal of Asia
operations
|
-
|
(2)
|
|
-
|
-
|
|
-
|
-
|
Acquisition of property joint
venture
|
-
|
-
|
|
7
|
(40)
|
|
-
|
-
|
Special dividend
|
-
|
-
|
|
-
|
-
|
|
(1)
|
(1)
|
Total adjusting items from continuing
operations
|
(100)
|
(69)
|
|
84
|
295
|
|
(1)
|
(1)
|
Adjusting items relating to
discontinued operations
|
(1)
|
(8)
|
|
-
|
-
|
|
-
|
-
|
Total
|
(101)
|
(77)
|
|
84
|
295
|
|
(1)
|
(1)
|
(a) Comparatives have been
restated to present Banking operations as a discontinued operation.
Refer to Notes 1 and 6.
(b) Property transactions
include £14m proceeds (2023: £43m) relating to the sale of stores
in Poland not included in the sale of the corporate
business.
(c) On 30 June 2023, the
Group disposed of its Booker subsidiary Ritter-Courivaud Limited,
part of the UK & ROI segment.
(d) Cash outflows relating
to operational restructuring changes as part of the multi-year
'Save to Invest' programme, which commenced in June
2022.
Note 4 Finance income and costs
Continuing operations
|
Notes
|
52 weeks
2024
£m
|
52
weeks
2023
(restated(a))
£m
|
Finance income
|
|
|
|
Interest and similar
income
|
|
252
|
78
|
Interest income from other
investments
|
|
12
|
3
|
Finance income on net investment
in leases
|
|
2
|
4
|
Finance income from reinsurance
contracts held
|
|
1
|
2
|
Total finance income
|
|
267
|
87
|
Finance costs
|
|
|
|
GBP MTNs and loans
|
|
(190)
|
(160)
|
EUR MTNs
|
|
(113)
|
(53)
|
USD bonds
|
|
(15)
|
(18)
|
Interest expense on lease
liabilities
|
|
(373)
|
(371)
|
Finance expense from insurance
contracts issued
|
|
(7)
|
(5)
|
Other interest costs
|
|
(127)
|
(43)
|
Total finance costs before adjusting items
|
|
(825)
|
(650)
|
Fair value remeasurements of
financial instruments(b)
|
|
38
|
(53)
|
Net pension finance
income/(cost)
|
18
|
(18)
|
80
|
Total finance costs
|
|
(805)
|
(623)
|
Net finance costs
|
|
(538)
|
(536)
|
(a) Comparatives have been
restated following the adoption of IFRS 17 and re-presented to
disclose Banking operations as a discontinued operation. Refer to
Notes 1, 6 and 22 for further details.
(b) Fair value
remeasurements of financial instruments included £nil (2023: £70m gain) relating to
the repurchase of long-dated bonds.
Note 5 Taxation
Recognised in the Group income statement
Continuing operations
|
52 weeks
2024
£m
|
52
weeks
2023
(restated*)
£m
|
Current tax (credit)/charge
|
|
|
UK corporation tax
|
351
|
174
|
Overseas tax
|
71
|
78
|
Adjustments in respect of prior
years
|
(29)
|
19
|
|
393
|
271
|
Deferred tax (credit)/charge
|
|
|
Origination and reversal of
temporary differences
|
133
|
(15)
|
Adjustments in respect of prior
years
|
(4)
|
(35)
|
Change in tax rate
|
3
|
3
|
|
132
|
(47)
|
Total income tax (credit)/charge
|
525
|
224
|
* Comparatives have been restated
following the adoption of IFRS 17 and re-presented to disclose
Banking operations as a discontinued operation. Refer to Notes 1, 6
and 22 for further details.
Reconciliation of effective tax charge
Continuing operations
|
52 weeks
2024
£m
|
52
weeks
2023
(restated(a))
£m
|
Profit/(loss) before tax
|
2,289
|
882
|
Tax credit/(charge) at
24.45% (2023:
19%)
|
(560)
|
(168)
|
Effect of:
|
|
|
Non-qualifying
depreciation(b)
|
(39)
|
(5)
|
Expenses not deductible
|
(24)
|
(23)
|
Property items taxed on a
different basis to accounting entries
|
6
|
33
|
Net impairment (loss)/reversal of
non-current assets
|
46
|
(87)
|
Differences in overseas taxation
rates
|
15
|
11
|
Adjustments in respect of prior
years
|
33
|
16
|
Share of profits of joint ventures
and associates
|
2
|
2
|
Change in tax rate
|
(3)
|
(3)
|
Irrecoverable withholding
tax
|
(1)
|
-
|
Total income tax credit/(charge)
|
(525)
|
(224)
|
Effective tax rate
|
22.9%
|
25.4%
|
(a) Comparatives have been
restated following the adoption of IFRS 17 and re-presented to
disclose Banking operations as a discontinued operation. Refer to
Notes 1, 6 and 22 for further details.
(b) This figure has been
reduced by the tax effect of the super-deduction of
£3m (2023: £30m) in respect of
tax relief for fixed assets.
Reconciliation of effective tax charge on adjusted profit
before tax
Continuing operations
|
52 weeks
2024
£m
|
52
weeks
2023
(restated(a))
£m
|
Profit/(loss) before tax
|
2,289
|
882
|
Exclude: Adjusting
items
|
(12)
|
1,072
|
Adjusted profit before tax
|
2,277
|
1,954
|
Tax credit/(charge) at
24.45% (2023:
19%)
|
(557)
|
(371)
|
Effect of:
|
|
|
Non-qualifying
depreciation(b)
|
(39)
|
(5)
|
Expenses not deductible
|
(23)
|
(24)
|
Differences in overseas taxation
rates
|
19
|
10
|
Adjustments in respect of prior
years
|
10
|
(3)
|
Share of profits of joint ventures
and associates
|
2
|
2
|
Change in tax
rate(c)
|
(4)
|
(28)
|
Irrecoverable withholding
tax
|
(1)
|
-
|
Total income tax credit/(charge) before adjusting
items
|
(593)
|
(419)
|
Adjusted effective tax rate
|
26.0%
|
21.4%
|
(a)-(b) Refer to previous table
for footnotes.
(c) Change in tax rate
includes £nil (2023: £31m) in relation to provision of deferred tax
at 25% (2023: 25%) on assets qualifying for
super-deductions.
Deferred tax
The following are the major
deferred tax (liabilities)/assets recognised by the Group and
movements thereon during the current and prior financial years,
measured using the tax rates that are expected to apply when the
liability is settled or the asset realised based on the tax rates
that have been enacted or substantively enacted by the balance
sheet date. Deferred tax assets are recognised when it is probable
sufficient taxable profits will be available to utilise deductible
temporary differences or unused tax losses. This assessment is
based on the Group's three-year long-term plan which is updated and
approved annually by the Board and is consistent with the Group's
longer-term viability statement and impairment
assessments.
|
Property-related
items(a)
£m
|
Acquired
intangibles
£m
|
Post-
employment
benefits(b)
£m
|
Share-based
payments
£m
|
Other
short-term
timing
differences
£m
|
Tax
losses
£m
|
Financial
instruments
£m
|
Total
£m
|
At 26 February 2022 (as previously
reported)
|
(352)
|
(108)
|
(451)
|
39
|
45
|
6
|
(4)
|
(825)
|
Cumulative adjustment on initial
application of IFRS 17
|
-
|
-
|
-
|
-
|
3
|
-
|
-
|
3
|
At 26 February 2022
(restated(c))
|
(352)
|
(108)
|
(451)
|
39
|
48
|
6
|
(4)
|
(822)
|
(Charge)/credit to the Group
income statement
|
(89)
|
15
|
(13)
|
12
|
14
|
140
|
(32)
|
47
|
(Charge)/credit to the Group
statement of changes in equity
|
-
|
-
|
-
|
(11)
|
-
|
-
|
-
|
(11)
|
(Charge)/credit to the Group
statement of comprehensive income/(loss)
|
-
|
-
|
719
|
-
|
-
|
-
|
27
|
746
|
Discontinued operations
|
9
|
-
|
-
|
(1)
|
-
|
-
|
-
|
8
|
Foreign exchange and other
movements
|
(2)
|
(2)
|
-
|
-
|
1
|
-
|
-
|
(3)
|
At 25 February 2023
(restated(c))
|
(434)
|
(95)
|
255
|
39
|
63
|
146
|
(9)
|
(35)
|
(Charge)/credit to the Group
income statement
|
(85)
|
18
|
2
|
-
|
11
|
(73)
|
(5)
|
(132)
|
(Charge)/credit to the Group
statement of changes in equity
|
-
|
-
|
-
|
10
|
-
|
-
|
-
|
10
|
(Charge)/credit to the Group
statement of comprehensive income/(loss)
|
-
|
-
|
(95)
|
-
|
-
|
-
|
(8)
|
(103)
|
Discontinued operations
|
27
|
-
|
-
|
-
|
-
|
-
|
(3)
|
24
|
Foreign exchange and other
movements
|
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
At 24 February 2024
|
(493)
|
(77)
|
162
|
49
|
74
|
73
|
(25)
|
(237)
|
(a) Property-related items
include a deferred tax liability on rolled-over gains of
£424m (2023: £421m), deferred tax assets
on capital losses of £242m (2023: £242m) and deferred tax assets on
IFRS 16 balances of £199m (2023: £235m).
The remaining balance relates to accelerated tax
depreciation.
(b) The deferred tax asset
on post-employment retirement benefits includes a deferred tax
asset of £nil (2023: £155m) arising from a one-off contribution of
£2.5bn paid in December 2020 on which tax deductions are spread
over 4 years, resulting in the closing balance entirely relating to
pension schemes in deficit. Refer to Note 18 for further
details.
(c) Comparatives have been
restated following the adoption of IFRS 17. Refer to Notes 1 and 22
for further details.
Changes in tax law or its interpretation
The Group is within the scope of
the Organisation for Economic Co-operation and Development (OECD)
Pillar Two model rules. Pillar Two legislation has been enacted in
the UK introducing a global minimum effective tax rate of 15%. The
legislation implements a domestic top-up tax and a multinational
top-up tax, effective for accounting periods starting on or after
31 December 2023. The Group has applied the exception under IAS 12
to recognising and disclosing information about deferred tax assets
and liabilities related to top-up income taxes. Under the
legislation, the Group is liable to pay a top-up tax for the
difference between its effective tax rate per jurisdiction and the
15% minimum rate. The Group has performed an assessment of the
potential exposure to Pillar Two income taxes and there is not
expected to be a material impact on the Group's tax
charge.
Note 6 Discontinued operations
The following table presents a
breakdown of the assets and liabilities of disposal groups and
non-current assets classified as held for sale.
|
2024
|
2023(b)
|
|
Banking operations
£m
|
Other(a)
£m
|
Total
£m
|
Total
£m
|
Assets of the disposal
group
|
7,698
|
-
|
7,698
|
11
|
Non-current assets classified as held for sale(c)
|
-
|
85
|
85
|
199
|
Total assets of the disposal group and
non-current
assets classified as held for
sale
|
7,698
|
85
|
7,783
|
210
|
Liabilities of the disposal
group
|
(7,122)
|
-
|
(7,122)
|
(14)
|
Total net assets of the disposal group and
non-current
assets classified as held for
sale
|
576
|
85
|
661
|
196
|
(a) Other non-current assets
classified as held for sale consist mainly of properties in the UK
and Central Europe due to be sold within one year. Due to the
individual nature of each property, fair values are classified as
Level 3 within the fair value hierarchy.
(b) The assets and
liabilities of the disposal group in the comparative period
included £(14)m of net debt relating to residual properties and
leases with respect to the Group's operation in Poland. During the
year, the net debt and £11m of assets were reclassified from the
disposal group to continuing operations, as the residual balances
no longer met the held for sale classification criteria.
(c) The movement in other
non-current assets classified as held for sale in the current year
includes a £12m gain arising from fair value remeasurement and
£(126)m of assets reclassified to property, plant and equipment as
these balances no longer met the held for sale criteria.
Disposal of Banking operations
In February 2024, the Group
reached agreement on the terms of a proposed sale of its banking
operations, comprising personal loans, credit cards, customer
deposits, and associated operational capabilities ('Banking
operations') for consideration of £600m. The sale is subject to
regulatory approval and is expected to complete within 12 months of
the reporting date.
The related assets and liabilities
have been classified as held for sale in the Banking operations
disposal group within the Tesco Bank segment, with Group results
re-presented to present Banking operations as a discontinued
operation. Refer to Note 1 for further details.
Balance sheet of the disposal group
The following table presents a
breakdown of the assets and liabilities of the Banking operations
disposal group:
|
2024
£m
|
Loans and advances to
customers
|
7,669
|
Derivative financial
instruments
|
54
|
Trade and other
receivables
|
47
|
Cash and cash
equivalents
|
346
|
Excess loss on remeasurement of
the disposal group
|
(418)
|
Assets of the disposal group classified as held for
sale
|
7,698
|
|
|
Trade and other
payables
|
(81)
|
Borrowings
|
(549)
|
Provisions
|
(19)
|
Lease liabilities
|
(17)
|
Deposits from customers
|
(6,440)
|
Derivative financial
instruments
|
(16)
|
Liabilities of the disposal group classified as held for
sale
|
(7,122)
|
Upon classification as held for
sale, the Group recognised a £(732)m loss on remeasuring the
disposal group to fair value less costs to sell. The loss was
allocated to goodwill and other assets of the disposal group within
the scope of the measurement requirements of IFRS 5, which were
fully written off. The excess loss remaining was then
recognised as a reduction in the total assets of the disposal
group, which primarily comprise loans and advances to customers
measured under IFRS 9.
The Group has continued to measure
financial assets within the disposal group under IFRS 9, as they
are out of scope of the measurement requirements of IFRS 5. Loans
and advances to customers and customer deposits are measured at
amortised cost. Derivative financial instruments are measured at
fair value as Level 2 instruments. In the year Tesco Bank issued
£550m of notes, in relation to securitisation transactions, which
form part of the Banking operations disposal group. Interest
payable on these notes is based on sterling overnight index average
(SONIA) plus a margin of 80 to 92 basis points (2023: no notes in
issue).
Income statement of discontinued operations
|
2024
|
|
2023(a)
|
|
Banking operations
£m
|
|
Banking
operations
£m
|
Other
£m
|
Total
£m
|
Revenue
|
710
|
|
568
|
-
|
568
|
Operating costs
|
(631)
|
|
(455)
|
-
|
(455)
|
Adjusted operating profit/(loss)
|
79
|
|
113
|
-
|
113
|
Adjusted finance
(costs)/income
|
(1)
|
|
(2)
|
-
|
(2)
|
Adjusted profit/(loss) before tax
|
78
|
|
111
|
-
|
111
|
Taxation
|
(22)
|
|
(20)
|
-
|
(20)
|
Adjusted profit/(loss) after tax
|
56
|
|
91
|
-
|
91
|
Fair value remeasurement of assets
of the disposal group(b)
|
(732)
|
|
-
|
-
|
-
|
Fair value remeasurement of
non-current assets held for sale(c)
|
-
|
|
-
|
(9)
|
(9)
|
Other adjusting
items(d)
|
(11)
|
|
(4)
|
-
|
(4)
|
Tax on adjusting items
|
115
|
|
-
|
-
|
-
|
Total adjusting items
|
(628)
|
|
(4)
|
(9)
|
(13)
|
Total profit/(loss) after tax of discontinued
operations
|
(572)
|
|
87
|
(9)
|
78
|
(a) Comparatives have been
re-presented to disclose Banking operations as a discontinued
operation.
(b) Fair value remeasurement
of assets of the disposal group includes £(211)m of goodwill
impairment, £(96)m remeasurements on non-current assets, £(418)m
loss in excess of the carrying amount of the non-current assets and
£(7)m costs already incurred in relation to the sale. Refer to Note
11 for further details on goodwill.
(c) Fair value remeasurement
of non-current assets held for sale in the prior year of £(9)m
primarily relate to surplus properties in Poland.
(d) Other adjusting items of
£(11)m in the current year comprises £(6)m indirect costs incurred
in relation to the sale of Banking operations and £(5)m of costs
relating to fair value remeasurement of financial assets.
Other adjusting items of £(4)m in the prior year
primarily relate to operational restructuring changes as part of
the 'Save to Invest' programme.
Cash flow statement of discontinued
operations
|
2024
|
|
2023
|
|
Banking operations
£m
|
|
Banking
operations
£m
|
Net cash flows from operating
activities
|
162
|
|
(30)
|
Net cash flows from investing
activities
|
(22)
|
|
(28)
|
Net cash flows from financing
activities
|
548
|
|
(2)
|
Net cash flows from discontinued operations
|
688
|
|
(60)
|
Expected credit losses (ECLs) of the Banking operations
disposal group
The Banking operations disposal
group has specific risks in relation to ECLs on loans and advances
to customers. The financial risk for ECLs is that a retail customer
or counterparty to a wholesale transaction will fail to meet its
obligations in accordance with contractually agreed terms and Tesco
Bank will incur losses as a result.
To minimise the potential exposure
to bad debts that are outside risk appetite, processes, systems and
limits have been established that cover the end-to-end retail
credit risk customer life cycle. These include credit scoring,
affordability, credit policies and guides, and monitoring and
reporting. Controls and risk mitigants include daily monitoring of
exposures, investing in counterparties with investment-grade
ratings, restricting the amount that can be invested with one
counterparty and credit-rating mitigation techniques. Assessment of
the ECLs on loans and advances to customers has taken into account
a range of macroeconomic scenarios.
The table below presents the
maximum exposure of the disposal group to credit risk i.e. total
gross exposure, by stages.
|
2024
|
|
2023
(restated(a))
|
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
Total
|
|
Stage
1
|
|
Stage
2
|
|
Stage
3
|
Total
|
|
£m
|
|
Not past
due
£m
|
<30 days
past due
£m
|
>30 days
past due
£m
|
Total
£m
|
|
£m
|
|
£m
|
|
£m
|
|
Not
past
due
£m
|
<30
days
past due
£m
|
>30
days
past due
£m
|
Total
£m
|
|
£m
|
£m
|
Loans and advances to
customers
|
6,687
|
|
1,141
|
44
|
30
|
1,215
|
|
233
|
|
8,135
|
|
5,687
|
|
1,559
|
40
|
24
|
1,623
|
|
202
|
7,512
|
Loan commitments - loans and
advances to customers
|
12,257
|
|
574
|
8
|
1
|
583
|
|
10
|
|
12,850
|
|
11,508
|
|
690
|
6
|
-
|
696
|
|
8
|
12,212
|
Total gross exposure(b)
|
18,944
|
|
1,715
|
52
|
31
|
1,798
|
|
243
|
|
20,985
|
|
17,195
|
|
2,249
|
46
|
24
|
2,319
|
|
210
|
19,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss allowance(c)
|
70
|
|
189
|
18
|
17
|
224
|
|
139
|
|
433
|
|
56
|
|
258
|
19
|
14
|
291
|
|
113
|
460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net exposure - loans and advances to
customers
|
6,617
|
|
952
|
26
|
13
|
991
|
|
94
|
|
7,702
|
|
5,631
|
|
1,301
|
21
|
10
|
1,332
|
|
89
|
7,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage - loans and advances to customers
|
1%
|
|
17%
|
41%
|
57%
|
18%
|
|
60%
|
|
5%
|
|
1%
|
|
17%
|
48%
|
58%
|
18%
|
|
56%
|
6%
|
(a) Comparatives have been
restated following the adoption of IFRS 17. Refer to Notes 1 and 22
for further details.
(b) For loans and advances
to customers, the balances are based on gross carrying amounts. For
loan commitments, the amounts represent the amount for which the
Banking operations disposal group is contractually
committed.
(c) The loss allowance in
respect of loan commitments in relation to credit card products is
included within the total loss allowance for loans and advances to
customers above to the extent that it is below the gross carrying
amount of loans and advances to customers. Where the loss allowance
exceeds the gross carrying amount, any excess is included within
the liabilities of the disposal group as a provision.
There are four classifications of
credit quality for all credit exposures: high, satisfactory, low
and below standard. Credit exposures are segmented according to the
probability of default (PD), with credit impaired reflecting a PD
of 100%.
|
2024
|
|
2023
(restated*)
|
|
12-month PD
%
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total
£m
|
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total
£m
|
Loans and advances to customers:
|
|
|
|
|
|
|
|
|
|
|
High quality
|
<=3.02
|
6,212
|
389
|
-
|
6,601
|
|
5,493
|
742
|
-
|
6,235
|
Satisfactory quality
|
>3.03
- 11.10
|
464
|
570
|
-
|
1,034
|
|
186
|
610
|
-
|
796
|
Low quality and below
standard
|
=>
11.11
|
11
|
256
|
-
|
267
|
|
8
|
271
|
-
|
279
|
Credit impaired
|
100
|
-
|
-
|
233
|
233
|
|
-
|
-
|
202
|
202
|
|
|
6,687
|
1,215
|
233
|
8,135
|
|
5,687
|
1,623
|
202
|
7,512
|
* Comparatives have been restated
following the adoption of IFRS 17. Refer to Notes 1 and 22 for
further details.
The ECLs on loans and advances to
customers was updated at the reporting date to reflect changes in
credit risk. A three-stage model for impairment has been applied
and further details on ECLs are presented below.
The table below presents the
reconciliation of ECL allowances on loans and advances to
customers.
|
2024
|
|
2023
(restated*)
|
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total
£m
|
|
Stage
1
£m
|
Stage
2
£m
|
Stage
3
£m
|
Total
£m
|
Gross exposure
|
6,687
|
1,215
|
233
|
8,135
|
|
5,687
|
1,623
|
202
|
7,512
|
Loan commitments
|
12,257
|
583
|
10
|
12,850
|
|
11,508
|
696
|
8
|
12,212
|
Total exposure
|
18,944
|
1,798
|
243
|
20,985
|
|
17,195
|
2,319
|
210
|
19,724
|
|
|
|
|
|
|
|
|
|
|
Allowance for expected credit losses
|
|
|
|
|
|
|
|
|
|
At the beginning of the year
|
(56)
|
(291)
|
(113)
|
(460)
|
|
(93)
|
(266)
|
(128)
|
(487)
|
Transfers:
|
|
|
|
|
|
|
|
|
|
Transfers from stage 1 to stage
2
|
7
|
(7)
|
-
|
-
|
|
19
|
(19)
|
-
|
-
|
Transfers from stage 2 to stage
1
|
(104)
|
104
|
-
|
-
|
|
(20)
|
20
|
-
|
-
|
Transfers to stage 3
|
1
|
42
|
(43)
|
-
|
|
3
|
21
|
(24)
|
-
|
Transfers from stage
3
|
(1)
|
(1)
|
2
|
-
|
|
(1)
|
(2)
|
3
|
-
|
Movements recognised in the Group income
statement:
|
|
|
|
|
|
|
|
|
|
Net remeasurement following
transfer of stage
|
75
|
(22)
|
(57)
|
(4)
|
|
8
|
(27)
|
(54)
|
(73)
|
New financial assets
originated
|
(35)
|
(37)
|
(11)
|
(83)
|
|
(24)
|
(63)
|
(7)
|
(94)
|
Financial assets derecognised
during the current financial year
|
6
|
14
|
3
|
23
|
|
6
|
5
|
3
|
14
|
Changes in risk parameters and
other movements
|
36
|
(27)
|
(25)
|
(16)
|
|
48
|
41
|
(11)
|
78
|
Other movements:
|
|
|
|
|
|
|
|
|
|
Write-offs and asset
disposals
|
-
|
-
|
105
|
105
|
|
-
|
-
|
105
|
105
|
Transfers to provisions for
liabilities and charges
|
1
|
1
|
-
|
2
|
|
(2)
|
(1)
|
-
|
(3)
|
At the end of the year
|
(70)
|
(224)
|
(139)
|
(433)
|
|
(56)
|
(291)
|
(113)
|
(460)
|
|
|
|
|
|
|
|
|
|
|
Net exposure
|
6,617
|
991
|
94
|
7,702
|
|
5,631
|
1,332
|
89
|
7,052
|
Fair value
adjustment
|
|
|
|
(33)
|
|
|
|
|
(75)
|
Carrying value at the end of the year
|
|
|
|
7,669
|
|
|
|
|
6,977
|
* Comparatives have been restated
following the adoption of IFRS 17. Refer to Notes 1 and 22 for
further details.
Assessment of significant increase in credit
risk
At each reporting date, the change
in credit risk of the financial asset is observed using a set of
quantitative and qualitative criteria, together
with a
backstop based on arrears status. For each financial asset, Tesco
Bank compares the lifetime PD at the reporting date with the
lifetime PD that was expected at the reporting date at initial
recognition (PD threshold). Tesco Bank has established PD
thresholds for each type of product which vary depending on initial term
and term remaining. A number of qualitative criteria are in place
such as: forbearance offered to customers in financial difficulty;
risk-based pricing post-origination; credit indebtedness; credit
limit decrease; and pre-delinquency information. As a backstop,
Tesco Bank considers that if an account's contractual payments are
more than 30 days past due then a significant increase in credit
risk has taken place.
The ECLs calculation and the
measurement of significant deterioration in credit risk both
incorporate forward-looking information using a range of
macroeconomic scenarios, with key variables being the Bank of
England base rate, unemployment rate and gross domestic
product.
There are four scenarios
commissioned from a third-party provider:
Scenario
|
Scenario assumptions
|
Weighting (%)
|
Base
|
No further increase in base rate,
inflation trends downwards toward 2% target by mid-2024.
Unemployment expected to peak at 4.6%. Prospect of robust return to
growth forecasted for 2025.
|
40
|
Upside
|
Improvements in energy supply and
global supply chains leads to inflation of 2% by Q2 2024, base
rates falling in Q2 2024 and commensurate increases in business and
consumer confidence.
|
30
|
Downside 1
|
Disruption to energy supplies and
commodities from geopolitical tensions drive wholesale price rises
that are passed on to consumers leading to higher inflation, 7%
base rates in Q4 2024, and economic contraction until
2026.
|
25
|
Downside 2
|
Similar to Downside 1, but
inflation remains higher for longer and Sterling depreciates more
markedly against the Dollar, base rates reach 8.7% in early 2025
and unemployment peaks to 7.9%.
|
5
|
The economic scenarios used
include the following ranges of key indicators:
|
2024
|
2023
|
Five-year average
|
Base
40%
|
Upside
30%
|
Downside 1
25%
|
Downside 2
5%
|
Base
40%
|
Upside
30%
|
Downside
1
25%
|
Downside
2
5%
|
Bank of England base
rate(a)
|
4.1%
|
3.5%
|
5.4%
|
7.2%
|
3.8%
|
3.0%
|
4.7%
|
5.8%
|
Gross domestic
product(b)
|
1.5%
|
2.0%
|
0.8%
|
0.1%
|
1.0%
|
1.5%
|
0.4%
|
(0.1)%
|
Unemployment rate
|
4.4%
|
4.0%
|
5.5%
|
7.2%
|
5.2%
|
4.2%
|
6.5%
|
8.4%
|
Unemployment rate peak in
year
|
4.4%
|
4.0%
|
5.7%
|
7.5%
|
5.4%
|
4.2%
|
6.8%
|
8.9%
|
(a) Simple
average.
(b) Annual growth
rates.
The table below sets out the
changes in the ECL allowance that would arise from reasonably
possible changes in these assumptions from those used in the ECL
allowance calculations as at 24 February 2024 and excludes specific
management overlays which are discussed further below:
|
|
Impact
on the loss allowance
|
Key assumption
|
Reasonably possible
change
|
2024
£m
|
2023
(restated*)
£m
|
Closing ECL allowance
|
|
433
|
460
|
Macroeconomic factors (100%
weighted)
|
Upside scenario
|
(42)
|
(59)
|
|
Base scenario
|
(20)
|
(11)
|
|
Downside scenario 1
|
55
|
65
|
|
Downside scenario 2
|
170
|
161
|
Probability of default
|
Increase of 2.5% (2023:
10%)
|
30
|
32
|
|
Decrease of 2.5% (2023:
10%)
|
(29)
|
(31)
|
Loss given default
|
Increase of 2.5%
|
10
|
10
|
|
Decrease of 2.5%
|
(10)
|
(10)
|
Probability of default threshold
(staging)
|
Increase of 20%
|
(8)
|
(9)
|
|
Decrease of 20%
|
13
|
13
|
Expected lifetime (revolving
credit facility)
|
Increase of 1 year
|
4
|
3
|
|
Decrease of 1 year
|
(5)
|
(5)
|
* Comparatives have been restated
following the adoption of IFRS 17. Refer to Notes 1 and 22 for
further details.
Despite stability in the
performance of the underlying portfolio, the increased risk from a
high inflationary environment and cost-of-living crisis creates
uncertainty on future loss projections and the current model
outputs. As a result, certain specific management overlays have
been recognised to address the prevailing downside risks and ensure
the potential impacts of future stress are adequately provided for,
detailed below:
Overlay
|
Description of
adjustment
|
2024
£m
|
2023
£m
|
Underestimation risk
|
Risk that the beneficial impact of
recent credit loss trends incorporated into credit risk models are
transitive and may reverse due to the uncertain economic
climate
|
8
|
68
|
Cost of living
|
A portion of Tesco Bank's
customers may be more impacted by cost-of-living pressures, with
deterioration in their ability to repay unsecured lending
balances
|
20
|
22
|
Total overlays
|
|
28
|
90
|
Default
An account is deemed to have
defaulted when Tesco Bank considers that a customer is in
significant financial difficulty and that the customer meets
certain quantitative and qualitative criteria regarding their
ability to make contractual payments when due. This includes
instances such as when the customer makes a declaration of
significant financial difficulty; an account's contractual payments
are more than 90 days past due; or where the customer is
deceased.
A loan deemed uncollectable is
written off against the related provision after all of the
necessary procedures have been completed and the amount of the loss
has been determined. The outstanding contractual amount of such
assets written off was £99m (2023:
£115m).
Forbearance
Forbearance is relief granted by a
lender to assist customers in financial difficulty, through
arrangements which temporarily allow the customer to pay an amount
other than the contractual amounts due. The
main aim of forbearance is to support customers in returning to a
position where they are able to meet their contractual
obligations. This routinely, but not
exclusively, includes arrangements to repay arrears over a period
of time, or short-term concessions, where the borrower is allowed
to make reduced repayments (or in exceptional circumstances, no
repayments) on a temporary basis.
|
Gross
loans and
advances subject to
forbearance programmes
|
|
Forbearance programmes as a proportion of total loans and
advances by category
|
|
Proportion of forbearance programmes covered by allowance
for expected credit losses
|
|
2024
£m
|
2023
£m
|
|
2024
%
|
2023
%
|
|
2024
%
|
2023
%
|
Credit cards
|
123
|
102
|
|
3
|
3
|
|
53
|
49
|
Loans
|
40
|
30
|
|
1
|
1
|
|
44
|
31
|
Note 7 Dividends
|
2024
|
|
2023
|
|
Pence/share
|
£m
|
|
Pence/share
|
£m
|
Paid prior financial year final
dividend(a)
|
7.05
|
506
|
|
7.70
|
574
|
Paid interim
dividend(b)
|
3.85
|
271
|
|
3.85
|
284
|
Amounts recognised through equity as distributions to
owners
|
10.90
|
777
|
|
11.55
|
858
|
Paid 2021 special
dividend
|
50.93
|
1
|
|
50.93
|
1
|
Dividends paid in the financial year
|
|
778
|
|
|
859
|
|
|
|
|
|
|
Proposed final dividend at financial year
end
|
8.25
|
581
|
|
7.05
|
516
|
(a) Excludes £6m prior
financial year final dividend waived (2023: £7m) and includes the
write-back of unclaimed dividends and forfeited shares of £4m
(2023: £5m).
(b) Excludes £2m interim
dividend waived (2023: £2m).
The proposed final dividend was
approved by the Board of Directors on 9
April 2024 and is subject to the approval
of shareholders at the AGM. The proposed dividend has not been
included as a liability as at 24 February 2024.
It will be
paid on 28 June 2024 to shareholders who are on the Register of
members at close of business on 17 May 2024.
A dividend reinvestment plan (DRIP)
is available to shareholders who would prefer to invest their
dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last date
for receipt of a new election is 7 June 2024.
Note 8 Earnings/(losses) per share and diluted
earnings/(losses) per
share
For the 52 weeks ended 24 February
2024 there were 79 million (2023: 67 million) potentially dilutive share options
and awards. As the Group has recognised a profit for the year from its
continuing operations, dilutive effects have been considered in
calculating diluted earnings per share.
|
52 weeks ended 24 February
2024
|
|
52
weeks ended 25 February 2023 (restated(a))
|
|
Basic
|
Dilutive share
options and awards
|
Diluted
|
|
Basic
|
Dilutive
share
options and awards
|
Diluted
|
Profit/(loss) (£m)
|
|
|
|
|
|
|
|
Continuing
operations(b)
|
1,760
|
-
|
1,760
|
|
659
|
-
|
659
|
Discontinued operations
|
(572)
|
-
|
(572)
|
|
78
|
-
|
78
|
Total
|
1,188
|
-
|
1,188
|
|
737
|
-
|
737
|
Weighted average number of shares
(millions)
|
7,097
|
79
|
7,176
|
|
7,415
|
67
|
7,482
|
Earnings/(losses) per share (pence)
|
|
|
|
|
|
|
|
Continuing operations
|
24.80
|
(0.27)
|
24.53
|
|
8.89
|
(0.08)
|
8.81
|
Discontinued operations
|
(8.06)
|
0.09
|
(7.97)
|
|
1.05
|
(0.01)
|
1.04
|
Total
|
16.74
|
(0.18)
|
16.56
|
|
9.94
|
(0.09)
|
9.85
|
(a) Comparatives have been
restated following the adoption of IFRS 17 and re-presented to
disclose Banking operations as a discontinued operation. Refer to
Notes 1, 6 and 22 for further details.
(b) Excludes
profits/(losses) attributable to non-controlling interests
of £4m (2023:
£(1)m).
APM: Adjusted diluted earnings/(losses) per
share
Continuing operations
|
Notes
|
52 weeks
2024
|
52
weeks
2023
(restated(a))
|
Profit before tax (£m)
|
|
2,289
|
882
|
Exclude: Adjusting items
(£m)
|
3
|
(12)
|
1,072
|
Adjusted profit before tax (£m)
|
|
2,277
|
1,954
|
Adjusted profit before tax
attributable to the owners of the parent
(£m)(b)
|
|
2,273
|
1,955
|
Taxation on adjusted profit before
tax attributable to the owners of the parent (£m)
|
5
|
(593)
|
(419)
|
Adjusted profit after tax attributable to the owners of the
parent (£m)
|
|
1,680
|
1,536
|
|
|
|
|
Basic weighted average number of
shares (millions)
|
|
7,097
|
7,415
|
Adjusted basic earnings per share (pence)
|
|
23.67
|
20.71
|
|
|
|
|
Diluted weighted average number of
shares (millions)
|
|
7,176
|
7,482
|
Adjusted diluted earnings per share (pence)
|
|
23.41
|
20.53
|
(a) Comparatives have been
restated following the adoption of IFRS 17 and re-presented to
disclose Banking operations as a discontinued operation. Refer to
Notes 1, 6 and 22 for further details.
(b) Excludes
profits/(losses) before tax from non-controlling interests
of £4m (2023:
£(1)m).
Note 9 Property, plant and equipment
|
|
2024
|
|
|
|
2023
|
|
|
Land and
buildings(a)
£m
|
Other(b)
£m
|
Total
£m
|
|
Land
and
buildings(a)
£m
|
Other(b)
£m
|
Total
£m
|
Net carrying value
|
|
|
|
|
|
|
|
Opening balance
|
14,870
|
1,992
|
16,862
|
|
15,163
|
1,897
|
17,060
|
Foreign currency
translation
|
(124)
|
(21)
|
(145)
|
|
129
|
20
|
149
|
Additions(c)(d)
|
445
|
753
|
1,198
|
|
591
|
661
|
1,252
|
Acquired through business
combinations
|
-
|
-
|
-
|
|
42
|
-
|
42
|
Reclassification
|
11
|
(7)
|
4
|
|
2
|
(4)
|
(2)
|
Transfers (to)/from assets
classified as held for sale
|
103
|
5
|
108
|
|
(53)
|
(3)
|
(56)
|
Transfer to disposal group
classified as held for sale
|
(1)
|
(3)
|
(4)
|
|
-
|
-
|
-
|
Disposals
|
(17)
|
(11)
|
(28)
|
|
(52)
|
(9)
|
(61)
|
Depreciation charge for the
year
|
(449)
|
(450)
|
(899)
|
|
(434)
|
(448)
|
(882)
|
Impairment
losses(e)
|
(236)
|
(95)
|
(331)
|
|
(686)
|
(141)
|
(827)
|
Reversal of impairment
losses(e)
|
395
|
61
|
456
|
|
168
|
19
|
187
|
Closing balance
|
14,997
|
2,224
|
17,221
|
|
14,870
|
1,992
|
16,862
|
|
|
|
|
|
|
|
|
Construction in progress included
above(f)
|
109
|
280
|
389
|
|
109
|
278
|
387
|
(a) The estimated fair value
of land and buildings is £15.0bn (2023:
£15.6bn).
(b) Other assets consist of
fixtures and fittings with a net carrying value of £1,679m (2023:
£1,496m), office equipment with a net carrying value of £234m
(2023: £201m) and motor vehicles with a net carrying value of £311m
(2023: £295m). Depreciation charge for the year is £(291)m (2023:
£(292)m), £(69)m (2023: £(71)m) and £(90)m (2023: £(85)m),
respectively.
(c) Includes £65m of land
and buildings related to obtaining control of The Tesco Coral
Limited Partnership, which was not impaired on acquisition (2023:
£248m of land and buildings related to
obtaining control of The
Tesco Dorney Limited Partnership, which was impaired by £(7)m on
acquisition).
(d) Includes
£107m (2023: £29m) relating to
other property buyback and store purchase
transactions.
(e) Refer to Note
11.
(f) Construction in
progress does not include land.
Commitments for capital
expenditure contracted for, but not incurred, at 24 February 2024
were £160m (2023: £200m),
principally relating to store development.
Note 10 Leases
Group as lessee
In January 2024, the Group
obtained control of The Tesco Coral Limited Partnership, which held
four stores and was previously accounted for as a joint venture,
following the withdrawal of the joint venture partner. The
transaction was treated as an asset acquisition, with non-cash
consideration of £54m, principally comprising the elimination of
the loan to the joint venture and derecognition of pre-existing
right of use assets and lease liabilities.
Right of use assets
|
2024
|
2023
|
|
Land and
buildings
£m
|
Other
£m
|
Total
£m
|
Land
and
buildings
£m
|
Other
£m
|
Total
£m
|
Net carrying value
|
|
|
|
|
|
|
Opening balance
|
5,387
|
113
|
5,500
|
5,634
|
86
|
5,720
|
Additions (including sale and
leaseback transactions)(a)
|
305
|
39
|
344
|
378
|
64
|
442
|
Acquired through business
combinations
|
-
|
-
|
-
|
4
|
-
|
4
|
Depreciation charge for the
year
|
(508)
|
(36)
|
(544)
|
(501)
|
(38)
|
(539)
|
Impairment
losses(b)
|
(213)
|
(1)
|
(214)
|
(394)
|
-
|
(394)
|
Reversal of impairment
losses(b)
|
131
|
-
|
131
|
72
|
-
|
72
|
Derecognition on acquisition of
property joint venture
|
(17)
|
-
|
(17)
|
(198)
|
-
|
(198)
|
Transfer to disposal group
classified as held for sale
|
(9)
|
-
|
(9)
|
-
|
-
|
-
|
Other
movements(c)
|
289
|
(2)
|
287
|
392
|
1
|
393
|
Closing balance
|
5,365
|
113
|
5,478
|
5,387
|
113
|
5,500
|
(a) Prior year includes £70m
right of use assets related to obtaining control
of The Tesco Dorney Limited Partnership.
(b) Refer to Note
11.
(c) Other movements include
lease terminations, modifications and reassessments, foreign
exchange, reclassifications between asset classes and entering into
finance subleases.
Lease liabilities
The following table shows the
discounted lease liabilities included in the Group balance sheet
and the contractual undiscounted lease payments:
|
2024
£m
|
2023
£m
|
Current
|
584
|
595
|
Non-current
|
7,038
|
7,132
|
Total lease liabilities
|
7,622
|
7,727
|
Total undiscounted lease payments
|
10,757
|
10,897
|
A reconciliation of the Group's
opening to closing lease liabilities balance is presented in Note
21.
Note 11 Impairment of non-current assets
Goodwill
The Group previously held £500m of goodwill
associated with the Tesco Bank segment. On classification of the
Group's Banking operations as held for sale, £211m of goodwill was
allocated to the disposal group, £171m to the money services
business and £118m to the insurance business. Subsequent to this
allocation, an assessment of the Banking operations disposal
group's fair value less costs to sell resulted in a write down of
that goodwill to £nil. See Note 6
for further detail. There was no impairment of
the goodwill associated with money services and
insurance.
There was no impairment of other
goodwill balances in the current year (2023: £nil).
Other non-current assets
The tables below summarise the
Group's pre-tax impairment losses and reversals on other
non-current assets, aggregated by segment due to the large number
of individually immaterial store cash-generating units. This
includes any (losses)/reversals recognised immediately prior to
classifying an asset or disposal group as held for sale but
excludes any changes in fair value less costs to sell post
classification as held for sale. There were no impairment losses or
reversals in the year (2023: £nil) with respect to investments in
joint ventures and associates and no impairments in other
non-current assets in either money services or insurance (2023:
Tesco Bank segment £nil). All impairment losses and reversals are
classified as adjusting items.
|
UK &
ROI
|
|
Central
Europe
|
|
Total
|
|
Net
|
52 weeks ended 24 February
2024
|
Impairment
loss
£m
|
Impairment reversal
£m
|
|
Impairment
loss
£m
|
Impairment reversal
£m
|
|
Impairment
loss
£m
|
Impairment reversal
£m
|
|
Impairment
(loss)/reversal
£m
|
Group balance sheet
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets
|
(26)
|
13
|
|
-
|
-
|
|
(26)
|
13
|
|
(13)
|
Property, plant and
equipment
|
(306)
|
449
|
|
(25)
|
7
|
|
(331)
|
456
|
|
125
|
Right of use assets
|
(187)
|
122
|
|
(27)
|
9
|
|
(214)
|
131
|
|
(83)
|
Investment property
|
-
|
-
|
|
(1)
|
-
|
|
(1)
|
-
|
|
(1)
|
Total impairment (loss)/reversal of other non-current
assets
|
(519)
|
584
|
|
(53)
|
16
|
|
(572)
|
600
|
|
28
|
Group income statement
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
(518)
|
584
|
|
(46)
|
15
|
|
(564)
|
599
|
|
35
|
Administrative expenses
|
(1)
|
-
|
|
(7)
|
1
|
|
(8)
|
1
|
|
(7)
|
Total impairment (loss)/reversal from continuing
operations
|
(519)
|
584
|
|
(53)
|
16
|
|
(572)
|
600
|
|
28
|
|
UK
& ROI
|
|
Central
Europe
|
|
Total
|
|
Net
|
52 weeks ended 25 February
2023
|
Impairment
loss
£m
|
Impairment reversal
£m
|
|
Impairment
loss
£m
|
Impairment reversal
£m
|
|
Impairment
loss
£m
|
Impairment reversal
£m
|
|
Impairment (loss)/reversal
£m
|
Group balance sheet
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets
|
(28)
|
6
|
|
-
|
1
|
|
(28)
|
7
|
|
(21)
|
Property, plant and
equipment
|
(779)
|
181
|
|
(48)
|
6
|
|
(827)
|
187
|
|
(640)
|
Right of use assets
|
(373)
|
65
|
|
(21)
|
7
|
|
(394)
|
72
|
|
(322)
|
Investment property
|
(1)
|
2
|
|
-
|
-
|
|
(1)
|
2
|
|
1
|
Total impairment (loss)/reversal of other non-current
assets
|
(1,181)
|
254
|
|
(69)
|
14
|
|
(1,250)
|
268
|
|
(982)
|
Group income statement
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
(1,155)
|
245
|
|
(69)
|
14
|
|
(1,224)
|
259
|
|
(965)
|
Administrative expenses
|
(26)
|
9
|
|
-
|
-
|
|
(26)
|
9
|
|
(17)
|
Total impairment (loss)/reversal from continuing
operations
|
(1,181)
|
254
|
|
(69)
|
14
|
|
(1,250)
|
268
|
|
(982)
|
The gross impairment losses and
reversals for the Group largely reflect normal fluctuations
expected from store-level performance, as well as any specific
store closures. The net impairment reversal in the UK & ROI is
primarily due to a net improvement in performance across the
portfolio, partially offset by decreases in UK property fair values
and fluctuations in discount rates. The net impairment loss in
Central Europe is primarily due to a net deterioration of
performance, partially offset by a reduction in discount
rates.
Impairment methodology
The impairment methodology is unchanged in the
period from that described in Note 14 of the Annual Report and
Financial Statements 2023, other than in regards to the
determination of the groups of cash-generating units for
goodwill. The Group allocates goodwill to
groups of cash-generating units based on the lowest level at which
goodwill is monitored by management. Tesco Bank previously
represented one group, however subsequent to the classification of
Banking operations as held for sale, the Group has determined that
money services and insurance represent two separate
groups.
Key assumptions and sensitivity
Key assumptions
For value in use calculations, the
key assumptions to which the recoverable amounts are most sensitive
are discount rates, long-term growth rates
and future cash flows (incorporating sales volumes, prices and
costs). For fair value less costs of disposal
calculations, the key
assumption is property fair
values.
The discount rates and long-term
growth rates for each group of cash-generating units to which
goodwill has been allocated are:
|
UK*
|
|
ROI
|
|
Money services
|
Insurance
|
Tesco
Bank
|
|
2024
%
|
2023
%
|
|
2024
%
|
2023
%
|
|
2024
%
|
2024
%
|
2023
%
|
Pre-tax discount rates
|
8.6 -
13.9
|
8.6 -
8.8
|
|
7.8
|
7.4
|
|
14.0
|
9.8
|
16.0
|
Post-tax discount
rates
|
6.4 -
10.4
|
6.5 -
6.6
|
|
6.8
|
6.5
|
|
10.5
|
7.4
|
12.0
|
Long-term growth rates
|
2.0
|
2.0
|
|
2.0
|
2.0
|
|
1.7
|
1.7
|
1.7
|
* dunnhumby aggregated with the UK
due to materiality.
The discount rates and long-term
growth rates for the Group's portfolio of store cash-generating
units, aggregated by segment due to the large number of
individually immaterial store cash-generating units,
are:
|
UK
& ROI
|
|
Central
Europe
|
|
2024
%
|
2023
%
|
|
2024
%
|
2023
%
|
Pre-tax discount rates
|
7.8 -
8.5
|
7.4 -
8.6
|
|
8.2 -
12.6
|
8.0 -
16.8
|
Post-tax discount
rates
|
6.4 -
6.8
|
6.5
|
|
6.5 -
8.3
|
6.3 -
11.1
|
Long-term growth rates
|
2.0
|
2.0
|
|
1.8 -
3.1
|
2.0 -
3.2
|
Sensitivity
The Group has carried out
sensitivity analyses on the reasonably possible changes in key
assumptions in the impairment tests for (a) each group of
cash-generating units to which goodwill has been allocated and (b)
for its portfolio of store cash-generating units. Management has
reduced the reasonably possible movements in the future cash flows
and long-term growth rate sensitivities disclosed given the level
of volatility seen in these inputs has reduced compared to the
prior year.
(a) Neither a reasonably
possible increase of 1.0%pt in discount rates, a 5.0% decrease in
future cash flows nor a 0.5%pt decrease in long-term growth rates
would indicate impairment in any group of cash-generating units to
which goodwill has been allocated.
(b)
While there is not a significant risk of an adjustment to the
carrying amount of any one store cash-generating unit that would be
material to the Group as a whole in the next financial year, the
table below summarises the reasonably possible changes in key
assumptions which most impact the impairment of the Group's entire
portfolio of store cash-generating units, presented in aggregate
due to the large number of individually immaterial store
cash-generating units. The impairment is not highly sensitive
to the
probability weightings assigned to the cash flow
scenarios.
Key assumption
|
Reasonably possible
change
|
Impact on impairment
|
2024
£m
|
Post-tax discount
rates*
|
Increase of 1.0%pt for each
geographic region
|
Increase
|
(429)
|
|
Decrease of 1.0%pt for each
geographic region
|
Decrease
|
389
|
Future cash flows
|
Increase of 5.0% for each
geographic region
|
Decrease
|
154
|
|
Decrease of 5.0% for each
geographic region
|
Increase
|
(164)
|
Long-term growth rates
|
Increase of 0.5%pt for each
geographic region
|
Decrease
|
149
|
|
Decrease of 0.5%pt for each
geographic region
|
Increase
|
(135)
|
Property fair values
|
Increase of 10.0% for each
geographic region
|
Decrease
|
174
|
|
Decrease of 10.0% for each
geographic region
|
Increase
|
(179)
|
* Sensitivities are applied to
post-tax discount rates used to derive the pre-tax discount
rates.
Note 12 Cash and cash equivalents and short-term
investments
Cash and cash equivalents
|
2024
£m
|
2023
£m
|
Cash at bank and on
hand
|
2,300
|
2,426
|
Short-term
deposits
|
40
|
39
|
Cash and cash equivalents in the Group balance
sheet
|
2,340
|
2,465
|
Bank overdrafts
|
(812)
|
(900)
|
Cash and cash equivalents in the Group cash flow
statement
|
1,528
|
1,565
|
Short-term investments
|
2024
£m
|
2023
£m
|
Money market funds, deposits and
similar instruments
|
2,128
|
1,628
|
Cash and cash equivalents
include £30m (2023: £87m) of
restricted amounts mainly relating to the Group's pension schemes
and employee benefit trusts.
Note 13 Commercial income
Below are the commercial income
balances included within inventories and trade and other
receivables, or netted against trade and other payables. Amounts
received in advance of income being earned are included in
accruals.
|
2024
£m
|
2023
£m
|
Current assets
|
|
|
Inventories
|
(12)
|
(18)
|
Trade and other
receivables
|
|
|
Trade/other receivables
|
86
|
67
|
Accrued income
|
136
|
127
|
Current liabilities
|
|
|
Trade and other
payables
|
|
|
Trade payables
|
138
|
112
|
Accruals
|
-
|
(5)
|
Note 14 Borrowings
Borrowings are classified as
current and non-current based on their scheduled repayment dates.
Repayments of principal amounts are classified as current if the
repayment is scheduled to be made within one year of the balance
sheet date. During the 52-week period ended 24 February 2024,
within continuing operations the Group has made principal
repayments of £775m (52 weeks ended 25 February 2023: £705m), and
there have been £682m of borrowings issued (25 February 2023: £nil)
comprising a €500m bond maturing February 2031 and £250m bond
maturing February 2035. Refer to Note 6 for borrowings issued in
the Banking operations disposal group.
Current
|
|
|
|
2024
£m
|
2023
£m
|
Bank loans and
overdrafts
|
|
|
|
838
|
928
|
Borrowings*
|
|
|
|
698
|
842
|
|
|
|
|
1,536
|
1,770
|
Non-current
|
|
|
|
2024
£m
|
2023
£m
|
Borrowings*
|
|
|
|
5,683
|
5,581
|
* £nil of current (2023:
£nil) and £143m of
non-current borrowings (2023: £137m) relate to borrowings issued by
Tesco Bank.
Borrowing facilities
The Group has a £2.5bn undrawn committed facility available as at 24
February 2024 (25 February 2023: £2.5bn), in respect of which all
conditions precedent had been met as at that
date, consisting of a syndicated revolving credit facility expiring
in more than two years. The cost of the facility is linked to three
ESG targets and incurs commitment fees at market rates which would
provide funding at floating rates.
In addition, Tesco Bank has a
separate £200m committed repurchase facility, maturing in
2024.
There were no withdrawals from
either facility during the year (2023: £nil).
Note 15 Insurance
Balances disclosed in this note
relate to the Group's subsidiary, Tesco Underwriting Limited (TU),
part of the Tesco Bank operating segment.
Insurance contract liabilities and
reinsurance contract assets
The breakdown of portfolios and
groups of insurance contracts issued and reinsurance contracts held
is set out in the table below:
|
2024
|
|
2023
(restated(a))
|
|
|
Insurance contract
liabilities
£m
|
Reinsurance contracts
held
£m
|
Net
(liabilities)/
assets
£m
|
|
Insurance contract liabilities
£m
|
Reinsurance contracts held
£m
|
Net
(liabilities)/
assets
£m
|
|
(Liabilities)/assets for remaining
coverage
|
(260)
|
(178)
|
(438)
|
|
(274)
|
(107)
|
(381)
|
|
(Liabilities)/assets for incurred
claims
|
(266)
|
303
|
37
|
|
(227)
|
242
|
15
|
|
|
(526)
|
125
|
(401)
|
|
(501)
|
135
|
(366)
|
|
|
|
|
|
|
|
|
|
|
Contracts measured under
PAA
|
(364)
|
62
|
(302)
|
|
(290)
|
63
|
(227)
|
|
Contracts not measured under
PAA(b)
|
(162)
|
63
|
(99)
|
|
(211)
|
72
|
(139)
|
|
|
(526)
|
125
|
(401)
|
|
(501)
|
135
|
(366)
|
|
(a) Following the Group's adoption
of IFRS 17, comparatives have been restated. Refer to Notes 1 and
22 for further details.
(b) Contracts not measured under
the premium allocation approach (PAA) are measured using the
general measurement model.
Measurement components of
insurance contract liabilities and reinsurance contract assets are
set out in the table below. The estimate of the present value of
future cash flows is adjusted for events since the actuarial
valuation:
|
|
At 24 February
2024
|
|
At 25
February 2023 (restated*)
|
|
|
Present value of future cash
flows
£m
|
Risk
adjustment
£m
|
CSM
£m
|
Total
£m
|
|
Present
value of future cash flows
£m
|
Risk
adjustment
£m
|
CSM
£m
|
Total
£m
|
Insurance contract
liabilities
|
|
(437)
|
(16)
|
(73)
|
(526)
|
|
(417)
|
(18)
|
(66)
|
(501)
|
Reinsurance contract
assets
|
|
95
|
6
|
24
|
125
|
|
96
|
7
|
32
|
135
|
Net (liabilities)/assets
|
|
(342)
|
(10)
|
(49)
|
(401)
|
|
(321)
|
(11)
|
(34)
|
(366)
|
* Following the Group's adoption
of IFRS 17, comparatives have been restated. Refer to Notes 1 and
22 for further details.
Note 16 Financial instruments
In the current year, the tables
below exclude the assets and liabilities of the Banking operations
disposal group classified as held for sale.
The expected maturity of financial
assets and liabilities is not considered to be materially different
to their current and non-current classification.
Fair value of financial assets and liabilities measured at
amortised cost
The table excludes cash and cash
equivalents, short-term investments, trade receivables/payables,
other receivables/payables, accruals and deposits from banks where
the carrying values approximate fair value. The levels in the table
refer to the fair value measurement.
|
|
2024
|
|
2023
(restated(a))
|
|
Level
|
Carrying
value
£m
|
Fair
value(b)
£m
|
|
Carrying
value
£m
|
Fair
value(b)
£m
|
Financial assets measured at amortised cost
|
|
|
|
|
|
|
Loans and advances to
customers(c)
|
3
|
-
|
-
|
|
6,977
|
6,954
|
Investments in debt instruments at
amortised cost(d)
|
1 and
2
|
1,033
|
838
|
|
1,093
|
1,097
|
Joint ventures and associates loan
receivables(e)
|
2
|
96
|
97
|
|
106
|
111
|
Financial liabilities measured at amortised
cost
|
|
|
|
|
|
|
Borrowings
|
|
|
|
|
|
|
Amortised
cost(f)
|
1
|
(5,067)
|
(4,794)
|
|
(5,227)
|
(4,882)
|
Bonds in fair value hedge
relationships
|
1
|
(2,152)
|
(2,211)
|
|
(2,124)
|
(2,167)
|
Customer
deposits(c)
|
3
|
-
|
-
|
|
(5,770)
|
(5,640)
|
(a) Comparatives have been
restated following the adoption of IFRS 17. Refer to Notes 1 and 22
for further details.
(b) Refer to the fair value
measurement section below for details on Level 2 and 3
methodology.
(c) Loans and advances to
customers and customer deposits have been transferred to the
Banking operations disposal group classified as held for sale.
Refer to Note 6 for further details.
(d) These are principally
Level 1 instruments.
(e) Joint ventures and
associates loan receivables carrying amounts of £96m (2023: £106m) are presented in the
Group balance sheet net of deferred profits of £nil
(2023: £38m) historically arising from the sale
of property assets to joint ventures.
(f) Comparative fair
values have been restated from £(5,496)m to £(4,882)m for a
revision in the fair value methodology applied to certain
index-linked bonds, with no impact on their carrying
values.
The following tables present the
Group's financial assets and liabilities that are measured at fair
value, by level of fair value hierarchy:
- quoted prices
(unadjusted) in active markets for identical assets or liabilities
(Level 1);
- inputs other
than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2); and
- inputs for the
asset or liability that are not based on observable market data
(that is, unobservable inputs) (Level 3).
Level 2 assets and liabilities are
valued by discounting future cash flows using externally sourced
market yield curves, including interest rate curves and foreign
exchange rates from highly liquid markets. Refer to the Level 3 Instruments
section below for details on Level 3 valuation
methodology.
At 24 February 2024
|
Level 1
£m
|
Level 2
£m
|
Level 3
£m
|
Total
£m
|
Assets
|
|
|
|
|
Investments at fair value through
other comprehensive income
|
682
|
-
|
19
|
701
|
Short-term investments at fair
value through profit or loss
|
889
|
-
|
-
|
889
|
Cash and cash equivalents at fair
value through profit or loss
|
-
|
35
|
-
|
35
|
Investments at fair value through
profit or loss
|
-
|
-
|
18
|
18
|
Derivative financial
instruments:
|
|
|
|
|
Interest rate swaps
|
-
|
29
|
15
|
44
|
Cross-currency swaps
|
-
|
-
|
182
|
182
|
Index-linked swaps
|
-
|
-
|
583
|
583
|
Foreign currency forward
contracts
|
-
|
25
|
-
|
25
|
Diesel forward
contracts
|
-
|
2
|
-
|
2
|
Total assets
|
1,571
|
91
|
817
|
2,479
|
Liabilities
|
|
|
|
|
Derivative financial
instruments:
|
|
|
|
|
Interest rate swaps
|
-
|
(9)
|
(96)
|
(105)
|
Cross-currency swaps
|
-
|
-
|
(139)
|
(139)
|
Foreign currency forward
contracts
|
-
|
(20)
|
-
|
(20)
|
Diesel forward
contracts
|
-
|
(2)
|
-
|
(2)
|
Total liabilities
|
-
|
(31)
|
(235)
|
(266)
|
Net assets/(liabilities)
|
1,571
|
60
|
582
|
2,213
|
At 25 February 2023
|
Level
1
£m
|
Level
2
£m
|
Level
3
£m
|
Total
£m
|
Assets
|
|
|
|
|
Investments at fair value through
other comprehensive income
|
565
|
-
|
14
|
579
|
Short-term investments at fair
value through profit or loss
|
660
|
-
|
-
|
660
|
Cash and cash equivalents at fair
value through profit or loss
|
-
|
32
|
-
|
32
|
Investments at fair value through
profit or loss
|
-
|
-
|
20
|
20
|
Derivative financial
instruments:
|
|
|
|
|
Interest rate swaps
|
-
|
123
|
-
|
123
|
Cross-currency swaps
|
-
|
41
|
170
|
211
|
Index-linked swaps
|
-
|
119
|
432
|
551
|
Foreign currency forward
contracts
|
-
|
41
|
-
|
41
|
Diesel forward
contracts
|
-
|
4
|
-
|
4
|
Total assets
|
1,225
|
360
|
636
|
2,221
|
Liabilities
|
|
|
|
|
Derivative financial
instruments:
|
|
|
|
|
Interest rate swaps
|
-
|
(73)
|
(86)
|
(159)
|
Cross-currency swaps
|
-
|
(4)
|
(137)
|
(141)
|
Foreign currency forward
contracts
|
-
|
(72)
|
-
|
(72)
|
Diesel forward
contracts
|
-
|
(15)
|
-
|
(15)
|
Total liabilities
|
-
|
(164)
|
(223)
|
(387)
|
Net assets/(liabilities)
|
1,225
|
196
|
413
|
1,834
|
During the financial year, there
were no transfers (2023:
no transfers) between Level 1 and Level 2 fair value
measurements.
Level 3 Instruments
For Level 3 assets and
liabilities, uncollateralised derivatives are valued as per Level 2
but include certain data sources which are significantly less
liquid; whilst unlisted investments are valued based on less
observable inputs such as recent funding rounds. Uncollateralised
derivative financial instruments are held by the Group as part of
financial risk management, and include interest rate and inflation
swaps, cross-currency swaps and foreign exchange and diesel forward
contracts. These are valued using relevant inputs which are
considered observable (Level 2), such as forward rates and foreign
exchange rates from available market data, with credit risk
adjustments being incorporated in the derivative valuations, taking
into account the default risk of either party using market data such as
credit default swaps. Unobservable inputs
(Level 3) relate to the funding valuation adjustment (FVA),
which is the estimate of the adjustment to the
fair value that a market participant would make to account for
funding costs. These are calculated on the future valuation of the
derivative, based on the best estimate available to management of
suitable relevant cost of funds. A 10 basis points increase in the
cost of funds would increase the FVA by £12m (2023: £11m).
The following table presents the
changes in Level 3 instruments:
|
2024
|
|
2023
|
|
Uncollateralised
derivatives
£m
|
Unlisted
investments
£m
|
|
Uncollateralised derivatives
£m
|
Unlisted
investments
£m
|
At the beginning of the year
|
379
|
34
|
|
749
|
14
|
Gains/(losses) recognised in
finance costs(a)
|
9
|
(2)
|
|
(114)
|
-
|
Gains/(losses) recognised in other
comprehensive income not reclassified to the income
statement
|
-
|
-
|
|
-
|
2
|
Gains/(losses) recognised in other
comprehensive income that may subsequently be reclassified to the
income statement
|
15
|
-
|
|
6
|
-
|
Additions
|
-
|
5
|
|
-
|
-
|
Disposals
|
-
|
-
|
|
(39)
|
-
|
Transfers of assets/(liabilities)
to Level 3(b)(c)
|
142
|
-
|
|
(223)
|
18
|
At the end of the year
|
545
|
37
|
|
379
|
34
|
(a) All gains or losses are
unrealised.
(b) There were £nil
transfers of unlisted investments (2023: £18m) and £142m of
derivative assets (2023: £(223)m derivative liabilities) to Level 3
from Level 2 and £nil (2023: £nil) to Level 3 from Level 1.
Transfers to Level 3 relate to the FVA applied to all
uncollateralised cross-currency, interest rate and inflation rate
swaps fair value previously classified as Level 2 due to FVA being
considered unobservable inputs (Level 3).
(c) There were £nil
transfers from Level 3 to Level 2 (2023: £nil) and £nil transfers
from Level 3 to Level 1 (2023: £nil).
Note 17 Share-based payments
The table below shows amounts
charged to the Group income statement in respect of share-based
payments:
|
|
2024
£m
|
2023
£m
|
Income statement
|
|
|
|
Equity-settled share-based payment
charge*
|
|
123
|
101
|
Cash-settled National Insurance
contributions*
|
|
5
|
11
|
|
|
128
|
112
|
* Includes £8m
(2023: £2m) in relation to discontinued operations.
The table below shows amounts
included in the Group cash flow statement in relation to
share-based payments and own shares purchased for share
schemes:
|
|
2024
£m
|
2023
£m
|
Share-based payment charge included in income
statement
|
|
(128)
|
(112)
|
Share-based payments non-cash
movement
|
|
78
|
59
|
Increase/(decrease) in trade and
other payables*
|
|
50
|
53
|
Included in Group operating cash flows
|
|
-
|
-
|
|
|
|
|
Cash paid to purchase own shares
including related fees and taxes
|
|
(146)
|
(134)
|
Cash received from employees
exercising SAYE options
|
|
53
|
48
|
Included in Group financing cash flows
|
|
(93)
|
(86)
|
* Shares withheld from employees
in order to settle their tax liability and National
Insurance.
Note 18 Post-employment benefits
Pensions
The Group operates a variety of
post-employment benefit arrangements, covering both funded and
unfunded defined benefit schemes and defined contribution
schemes.
The principal defined benefit
pension scheme within the Group is the Tesco PLC Pension Scheme
(the Scheme), a UK scheme closed to future accrual. The latest
triennial actuarial pension funding valuation for the Scheme as at
31 March 2022 using a projected unit credit method showed a funding
surplus of £0.9bn. The
Scheme remained in a funding surplus as at 24 February
2024.
IFRIC 14
For schemes in an accounting
surplus position, these surpluses are recognised on the balance
sheet in line with IFRIC 14, as the Group has an unconditional
legal right to any future economic benefits by way of future
refunds following a gradual settlement.
Movement in the Group pension surplus/(deficit) during the
financial period
|
Net defined benefit surplus/(deficit)
|
|
|
|
2024
£m
|
2023
£m
|
Opening balance
|
|
(391)
|
2,847
|
Current service cost
|
|
(15)
|
(24)
|
Finance income/(cost)
|
|
(18)
|
80
|
Included in the Group income statement
|
|
(33)
|
56
|
|
|
|
|
Remeasurement
gain/(loss):
|
|
|
|
Financial assumptions
gain/(loss)
|
|
720
|
7,652
|
Demographic assumptions
gain/(loss)
|
|
261
|
(228)
|
Experience gain/(loss)
|
|
(182)
|
(1,244)
|
Return on plan assets excluding
finance income
|
|
(1,050)
|
(9,518)
|
Foreign currency
translation
|
|
-
|
(3)
|
Included in the Group statement of comprehensive
income/(loss)
|
|
(251)
|
(3,341)
|
|
|
|
|
Employer contributions
|
|
15
|
24
|
Additional employer
contributions
|
|
24
|
20
|
Benefits paid
|
|
5
|
3
|
Other movements
|
|
44
|
47
|
Closing balance
|
|
(631)
|
(391)
|
Withholding tax on
surplus(a)
|
|
(4)
|
(3)
|
Closing balance, net of withholding tax
|
|
(635)
|
(394)
|
Consisting of:
|
|
|
|
Schemes in deficit
|
|
(657)
|
(400)
|
Schemes in
surplus(b)
|
|
22
|
6
|
Deferred tax
asset/(liability)(c)
|
|
162
|
100
|
Surplus/(deficit) in schemes at the end of the period, net of
deferred tax
|
|
(473)
|
(294)
|
|
|
|
| |
(a) Recognised through other
comprehensive income in remeasurements of defined benefit pension
schemes.
(b) Schemes in surplus in
the UK are presented on the balance sheet net of a 35% withholding
tax.
(c) Including £(2)m
deferred tax liability relating to the ROI scheme
in surplus where no withholding tax is applicable (2023:
£nil).
Scheme principal assumptions
The principal assumptions, on a
weighted average basis, used by external actuaries to value the
defined benefit obligation of the Scheme were as
follows:
|
|
2024
%
|
2023
%
|
Discount
rate(a)
|
|
5.1
|
4.9
|
Price inflation
|
|
2.9
|
3.0
|
Rate of increase in deferred
pensions(b)
|
|
2.5
|
2.6
|
Rate of increase in pensions in
payment(b)
|
|
|
|
Benefits accrued before 1 June
2012
|
|
2.8
|
2.9
|
Benefits accrued after 1 June
2012
|
|
2.5
|
2.5
|
a) The discount rate for the
Scheme is determined by reference to market yields of high-quality
corporate bonds of suitable currency and term to the Scheme cash
flows and extrapolated based on the trend observable in corporate
bond yields.
b) In excess of any
guaranteed minimum pension (GMP) element.
|
2024
|
|
2023
|
Financial assumptions -
Increase/(decrease) in UK defined benefit obligation
|
Discount rate
£m
|
Inflation rate
£m
|
|
Discount
rate
£m
|
Inflation rate
£m
|
Impact of 0.1% increase of the
assumption
|
(191)
|
167
|
|
(213)
|
201
|
Impact of 0.1% decrease of the
assumption
|
191
|
(167)
|
|
226
|
(201)
|
Impact of 1.0% increase of the
assumption
|
(1,686)
|
1,770
|
|
(1,921)
|
2,147
|
Impact of 1.0% decrease of the
assumption
|
2,153
|
(1,483)
|
|
2,498
|
(1,783)
|
Movements in the defined benefit
obligation from discount rate and inflation rate changes may be
partially offset by movements in assets.
Note 19 Share capital and other reserves
Share capital
|
2024
|
|
2023
|
|
Ordinary shares of 6 ⅓p each
|
|
Ordinary shares of 6 ⅓p each
|
|
Number
|
£m
|
|
Number
|
£m
|
Allotted, called-up and fully paid:
|
|
|
|
|
|
At the beginning of the year
|
7,318,341,195
|
463
|
|
7,637,986,531
|
484
|
Shares cancelled
|
(279,410,755)
|
(18)
|
|
(319,645,336)
|
(21)
|
At the end of the year
|
7,038,930,440
|
445
|
|
7,318,341,195
|
463
|
No shares were issued during the
current or prior financial year in relation to share options or
bonus awards. 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 general meetings of the Company.
Other reserves
The tables below set out the
movements in other reserves:
|
Capital redemption
reserve
£m
|
Hedging
reserve(a)
£m
|
Translation
reserve
£m
|
Own shares
held(b)
£m
|
Merger
reserve
£m
|
Insurance finance
reserve(c)
£m
|
Total
£m
|
At 25 February 2023 (as previously
reported)
|
43
|
27
|
322
|
(359)
|
3,090
|
-
|
3,123
|
Cumulative adjustment on initial
application of IFRS 17 (net of tax)
|
-
|
-
|
-
|
-
|
-
|
16
|
16
|
At 25 February 2023
(restated)(c)
|
43
|
27
|
322
|
(359)
|
3,090
|
16
|
3,139
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
|
Retranslation of net assets of
overseas subsidiaries, joint ventures and associates, net of
hedging instruments
|
-
|
-
|
(116)
|
-
|
-
|
-
|
(116)
|
Gains/(losses) on cash flow
hedges
|
-
|
(14)
|
-
|
-
|
-
|
-
|
(14)
|
Cash flow hedges reclassified and
reported in the Group income statement
|
-
|
(56)
|
-
|
-
|
-
|
-
|
(56)
|
Finance income/(expenses) from
insurance contracts issued(c)
|
-
|
-
|
-
|
-
|
-
|
(4)
|
(4)
|
Finance income/(expenses) from
reinsurance contracts held(c)
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
Tax relating to components of
other comprehensive income
|
-
|
(5)
|
-
|
-
|
-
|
1
|
(4)
|
Total other comprehensive income/(loss)
|
-
|
(75)
|
(116)
|
-
|
-
|
(2)
|
(193)
|
Transfer from hedging reserve to retained
earnings
|
-
|
44
|
-
|
-
|
-
|
-
|
44
|
Inventory cash flow hedge movements
|
|
|
|
|
|
|
|
(Gains)/losses transferred to the
cost of inventory
|
-
|
79
|
-
|
-
|
-
|
-
|
79
|
Total inventory cash flow hedge movements
|
-
|
79
|
-
|
-
|
-
|
-
|
79
|
Transactions with owners
|
|
|
|
|
|
|
|
Own shares purchased for
cancellation
|
-
|
-
|
-
|
(752)
|
-
|
-
|
(752)
|
Own shares cancelled
|
18
|
-
|
-
|
752
|
-
|
-
|
770
|
Own shares purchased for share
schemes
|
-
|
-
|
-
|
(140)
|
-
|
-
|
(140)
|
Share-based payments
|
-
|
-
|
-
|
184
|
-
|
-
|
184
|
Total transactions with owners
|
18
|
-
|
-
|
44
|
-
|
-
|
62
|
At 24 February 2024
|
61
|
75
|
206
|
(315)
|
3,090
|
14
|
3,131
|
(a) Movements in cost of
hedging reserve in the 52 weeks ended and balances as at 24
February 2024 were £nil (25 February 2023: £nil).
(b) Includes
70.0 million shares held by the Employee Benefit
Trust (2023: 55.6 million). Number of shares held by the Employee
Benefit Trust represents 0.99% of called-up share capital at the
end of the year (2023: 0.76%).
(c) Comparatives have been
restated following the adoption of IFRS 17. Refer to Notes 1 and 22
for further details.
|
Capital
redemption reserve
£m
|
Hedging
reserve(a)
£m
|
Translation
reserve
£m
|
Own
shares
held(b)
£m
|
Merger
reserve £m
|
Insurance finance reserve(c)
£m
|
Total
£m
|
At 26 February 2022 (as previously
reported)
|
22
|
130
|
202
|
(365)
|
3,090
|
-
|
3,079
|
Cumulative adjustment on initial
application of IFRS 17 (net of tax)
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
At 26 February 2022
(restated(c))
|
22
|
130
|
202
|
(365)
|
3,090
|
1
|
3,080
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
|
Retranslation of net assets of
overseas subsidiaries, joint ventures and associates, net of
hedging instruments
|
-
|
-
|
120
|
-
|
-
|
-
|
120
|
Gains/(losses) on cash flow
hedges
|
-
|
63
|
-
|
-
|
-
|
-
|
63
|
Cash flow hedges reclassified and
reported in the Group income statement
|
-
|
(61)
|
-
|
-
|
-
|
-
|
(61)
|
Finance income/(expenses) from
insurance contracts issued(c)
|
-
|
-
|
-
|
-
|
-
|
39
|
39
|
Finance income/(expenses) from
reinsurance contracts held(c)
|
-
|
-
|
-
|
-
|
-
|
(20)
|
(20)
|
Tax relating to components of
other comprehensive income
|
-
|
22
|
-
|
-
|
-
|
(4)
|
18
|
Total other comprehensive income/(loss)
|
-
|
24
|
120
|
-
|
-
|
15
|
159
|
Inventory cash flow hedge movements
|
|
|
|
|
|
|
|
(Gains)/losses transferred to the
cost of inventory
|
-
|
(127)
|
-
|
-
|
-
|
-
|
(127)
|
Total inventory cash flow hedge movements
|
-
|
(127)
|
-
|
-
|
-
|
-
|
(127)
|
Transactions with owners
|
|
|
|
|
|
|
|
Own shares purchased for
cancellation
|
-
|
-
|
-
|
(758)
|
-
|
-
|
(758)
|
Own shares cancelled
|
21
|
-
|
-
|
795
|
-
|
-
|
816
|
Own shares purchased for share
schemes
|
-
|
-
|
-
|
(188)
|
-
|
-
|
(188)
|
Share-based payments
|
-
|
-
|
-
|
157
|
-
|
-
|
157
|
Total transactions with owners
|
21
|
-
|
-
|
6
|
-
|
-
|
27
|
At 25 February 2023
|
43
|
27
|
322
|
(359)
|
3,090
|
16
|
3,139
|
Refer to previous table for
footnotes.
Own shares held
The table below presents the
reconciliation of own shares purchased for cancellation between the
Group statement of changes in equity and the Group cash flow
statement:
|
2024
|
2023
|
Own shares
purchased for cancellation
|
£m
|
£m
|
Included in the Group statement of changes in
equity(a)
|
(752)
|
(758)
|
Payments in relation to prior year
financial liabilities
|
-
|
(23)
|
Included in the Group cash flow
statement(b)
|
(752)
|
(781)
|
(a) 279.4 million (2023:
319.6 million) shares, representing 4.0% of the called-up share
capital as at 24 February 2024 (25 February 2023: 4.4%), with total
consideration of £752m (2023: £795m) including expenses of £2m
(2023: £9m), were cancelled and charged to retained
earnings.
(b) 279.4 million (2023:
314.8 million) shares purchased at an average price of £2.69 per
share (2023: £2.48).
Insurance finance reserve
Insurance finance reserve includes
the impact of changes in market discount rates on insurance and
reinsurance contract assets and liabilities.
Note 20 Related party transactions
Transactions between the Company
and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
Transactions between the Group and its joint ventures and
associates are disclosed below:
Transactions
|
Joint
ventures
|
|
2024
£m
|
2023
£m
|
Sales to related
parties
|
606
|
599
|
Purchases from related
parties
|
126
|
122
|
Dividends received
|
9
|
14
|
Injection of equity
funding
|
9
|
10
|
Sales to related parties consist
of service/management fees and loan interest.
Transactions between the Group and
the Group's pension plans are disclosed in Note 18.
Balances
|
Joint
ventures
|
|
2024
£m
|
2023
£m
|
Amounts owed to related
parties
|
(7)
|
(7)
|
Amounts owed by related
parties
|
80
|
27
|
Lease liabilities payable to
related parties(a)
|
(1,844)
|
(1,950)
|
Loans to related parties (net of
deferred profits)(b)
|
96
|
106
|
(a) Lease liabilities
payable to related parties represent leases entered into by the
Group for properties held by joint ventures.
(b) Loans to related parties of £96m (2023: £106m) are presented
net of deferred profits of £nil (2023: £38m), historically arising
from the sale of property assets to joint ventures.
For loans to related parties, a 12-month ECL allowance is recorded
on initial recognition. In the current and prior financial years,
the ECL allowance was immaterial.
Amounts owed to and owed by
related parties are measured at amortised cost and the carrying
values approximate fair value. The undiscounted cash flow amounts
owed to related parties are due within one year and do not differ
from the amounts included in the table above.
There were no transactions or
balances held with associates in the current or prior financial
year.
Note 21 Analysis of changes in net debt
The Net debt APM, as defined in
the Glossary, excludes the net debt of Tesco Bank and includes the
net debt of Retail discontinued operations. Balances and movements
in respect of the total Group and Tesco Bank are presented to allow
reconciliation between the Group balance sheet and the Group cash
flow statement.
|
2024
|
|
2023
|
|
Group
|
Tesco Bank
|
Retail
|
|
Group
|
Tesco
Bank
|
Retail
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Bank and other borrowings,
excluding overdrafts(a)
|
(6,407)
|
(380)
|
(6,027)
|
|
(6,451)
|
(375)
|
(6,076)
|
Lease liabilities
|
(7,622)
|
(2)
|
(7,620)
|
|
(7,727)
|
(23)
|
(7,704)
|
Net financing
derivatives
|
544
|
(3)
|
547
|
|
472
|
(9)
|
481
|
Share purchase
obligations
|
-
|
-
|
-
|
|
(55)
|
-
|
(55)
|
Liabilities from financing activities
|
(13,485)
|
(385)
|
(13,100)
|
|
(13,761)
|
(407)
|
(13,354)
|
Cash and cash equivalents in the
balance sheet
|
2,340
|
442
|
1,898
|
|
2,465
|
444
|
2,021
|
Overdrafts(b)
|
(812)
|
-
|
(812)
|
|
(900)
|
-
|
(900)
|
Cash and cash equivalents
(including overdrafts) in the cash flow statement
|
1,528
|
442
|
1,086
|
|
1,565
|
444
|
1,121
|
Short-term investments
|
2,128
|
-
|
2,128
|
|
1,628
|
-
|
1,628
|
Joint venture loans
|
96
|
-
|
96
|
|
106
|
-
|
106
|
Interest and other
receivables
|
23
|
-
|
23
|
|
8
|
-
|
8
|
Net operating and investing
derivatives
|
26
|
23
|
3
|
|
71
|
114
|
(43)
|
Net debt of disposal
group(c)
|
(182)
|
(182)
|
-
|
|
(14)
|
-
|
(14)
|
Exclude: Share purchase
obligations
|
-
|
-
|
-
|
|
55
|
-
|
55
|
Net debt APM
|
|
|
(9,764)
|
|
|
|
(10,493)
|
(a) Retail bank and other
borrowings is presented net of a £235m long-term intercompany loan
with Tesco Bank (2023: £235m).
(b) Overdraft balances are
included within borrowings in the Group balance sheet, and within
cash and cash equivalents in the Group cash flow statement. Refer
to Note 12.
(c) £(14)m of items within
net debt in the prior year relate to residual properties and leases
with respect to the Group's operation in Poland.
The table below sets out the
movements in liabilities arising from financing
activities:
|
Bank and other borrowings,
excluding overdrafts
£m
|
Lease
liabilities
£m
|
Net financing
derivatives(a)
£m
|
Share purchase
obligations(b)
£m
|
Liabilities from Group
financing activities(c)
£m
|
At 25 February 2023
|
(6,451)
|
(7,727)
|
472
|
(55)
|
(13,761)
|
Cash flows arising from financing
activities
|
(457)
|
627
|
4
|
807
|
981
|
Cash flows arising from operating
activities:
|
|
|
|
|
|
Interest paid
|
308
|
373
|
125
|
-
|
806
|
Non-cash movements:
|
|
|
|
|
|
Fair value
gains/(losses)
|
(124)
|
-
|
50
|
-
|
(74)
|
Foreign exchange
|
101
|
46
|
-
|
-
|
147
|
Interest
income/(charge)
|
(333)
|
(373)
|
(108)
|
-
|
(814)
|
Acquisitions and
disposals
|
-
|
3
|
-
|
-
|
3
|
Lease additions, terminations,
modifications and reassessments
|
-
|
(588)
|
-
|
-
|
(588)
|
Share purchase
agreements
|
-
|
-
|
-
|
(752)
|
(752)
|
Transfer to disposal
group
|
549
|
17
|
1
|
-
|
567
|
At 24 February 2024
|
(6,407)
|
(7,622)
|
544
|
-
|
(13,485)
|
(a) Net financing
derivatives comprise those derivatives which hedge the Group's
exposures in respect of lease liabilities and borrowings. Net
operating and investing derivatives, which form part of the Group's
Net debt APM, are not included.
(b) Share purchase
obligations form part of the liabilities arising from the Group's
financing activities, but do not form part of Net debt. Cash flows
arising from financing activities exclude £(91)m (2023: £(29)m)
cash outflows relating to other cancellable arrangements and
prepayments, and £53m (2023: £48m) cash received from employees
exercising SAYE options.
(c) Liabilities from Group
financing activities include liabilities from share purchase
obligations of £nil (2023: £(55)m) and
exclude net operating and investing derivatives of £26m (2023:
£71m).
|
Bank and
other borrowings, excluding overdrafts
£m
|
Lease
liabilities
£m
|
Net
financing derivatives(a)
£m
|
Share
purchase obligations(b)
£m
|
Liabilities from Group financing
activities(c)
£m
|
At 26 February 2022
|
(6,825)
|
(7,958)
|
553
|
(73)
|
(14,303)
|
Cash flows arising from financing
activities
|
709
|
593
|
139
|
886
|
2,327
|
Cash flows arising from operating
activities:
|
|
|
|
|
|
Interest paid
|
241
|
373
|
44
|
-
|
658
|
Non-cash movements:
|
|
|
|
|
|
Fair value
gains/(losses)
|
199
|
-
|
(170)
|
-
|
29
|
Foreign exchange
|
(160)
|
(45)
|
-
|
-
|
(205)
|
Interest
income/(charge)
|
(227)
|
(373)
|
(55)
|
-
|
(655)
|
Acquisitions and
disposals(d)
|
(388)
|
381
|
(39)
|
-
|
(46)
|
Lease additions, terminations,
modifications and reassessments
|
-
|
(698)
|
-
|
-
|
(698)
|
Share purchase
agreements
|
-
|
-
|
-
|
(868)
|
(868)
|
At 25 February 2023
|
(6,451)
|
(7,727)
|
472
|
(55)
|
(13,761)
|
(a)-(c) Refer to previous table
for footnotes.
(d) Acquisitions and
disposals in the prior year include a derecognition of £385m of
lease liabilities and an increase of £(384)m in borrowings and
£(39)m in net financing derivatives from the acquisition of The
Tesco Dorney Limited Partnership.
Note 22 Changes in accounting policies - IFRS 17 'Insurance
contracts'
This note explains the impact of
the adoption of IFRS 17 'Insurance contracts' on the Group's
financial position, financial performance and cash flows. IFRS 17
primarily impacts Tesco Bank and there is no material impact on the
Retail segment.
IFRS 17 is effective for the
accounting period commencing 26 February 2023. IFRS 17 has been
applied fully retrospectively and comparatives for prior periods
have been restated from a transition date of 27 February 2022.
Refer to Note 1 for the Group's insurance accounting
policies.
The Group applies the premium
allocation approach to measure its portfolio of insurance contracts
issued and reinsurance contracts purchased,
except for claims liabilities acquired as part of the acquisition
of Tesco Underwriting Limited on 4 May 2021. Unlike
post-acquisition contracts issued with a
term of one year, the Group has applied the general measurement
model (GMM) to the acquired claims liabilities because the
settlement of these claims and their associated insurance risk will
spread over multiple years. This measurement leads to the
recognition of revenue and expenses in relation to these acquired
claims over a longer period of time. It includes a contractual
service margin (CSM), which represents the
difference between the consideration paid for the acquired claims
at acquisition and the risk-adjusted discounted fulfilment cash flows and will be allocated to the Group
income statement over time to reflect the pattern of actual claims
settlement.
To aid comparability, the tables
below also include the impact of the restatements resulting from
the classification of the Group's Banking operations ('Banking
operations') as a discontinued operation, as described in Note
6.
Group income statement restatement
The table below sets out the
impact of IFRS 17 and restatements to present Banking operations as
a discontinued operation on the comparative period Group income
statement for the 52 weeks ended 25 February 2023.
|
Reported(a)
Total
|
IFRS 17
restatements
|
Discontinued operation(b)
|
Restated
Total
|
|
£m
|
Reclassification
£m
|
Remeasurements
£m
|
Re-presentation
£m
|
£m
|
Continuing operations
|
|
|
|
|
|
Revenue from sale of goods and
services
|
65,453
|
(21)
|
-
|
(568)
|
64,864
|
Insurance revenue
|
309
|
21
|
128
|
-
|
458
|
Revenue
|
65,762
|
-
|
128
|
(568)
|
65,322
|
|
|
|
|
|
|
Cost of sales
|
(61,877)
|
5
|
1
|
355
|
(61,516)
|
Insurance service
expenses
|
(175)
|
(84)
|
(149)
|
-
|
(408)
|
Net expenses from reinsurance
contracts held
|
(49)
|
-
|
12
|
-
|
(37)
|
Gross profit/(loss)
|
3,661
|
(79)
|
(8)
|
(213)
|
3,361
|
|
|
|
|
|
|
Administrative expenses
|
(2,136)
|
79
|
-
|
106
|
(1,951)
|
Operating profit/(loss)
|
1,525
|
-
|
(8)
|
(107)
|
1,410
|
|
|
|
|
|
|
Share of post-tax profits of joint
ventures and associates
|
8
|
-
|
-
|
-
|
8
|
Finance income
|
85
|
-
|
2
|
-
|
87
|
Finance costs
|
(618)
|
-
|
(5)
|
-
|
(623)
|
Profit/(loss) before tax
|
1,000
|
-
|
(11)
|
(107)
|
882
|
|
|
|
|
|
|
Taxation
|
(247)
|
-
|
3
|
20
|
(224)
|
Profit/(loss) for the year from continuing
operations
|
753
|
-
|
(8)
|
(87)
|
658
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
Profit/(loss) for the year from
discontinued operations
|
(9)
|
-
|
-
|
87
|
78
|
|
|
|
-
|
|
|
Profit/(loss) for the year
|
744
|
-
|
(8)
|
-
|
736
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
Owners of the parent
|
745
|
-
|
(8)
|
-
|
737
|
Non-controlling
interests
|
(1)
|
-
|
-
|
-
|
(1)
|
|
744
|
-
|
(8)
|
-
|
736
|
|
|
|
|
|
|
Earnings per share from continuing and discontinued
operations
|
|
|
|
|
|
Basic
|
10.05p
|
-
|
(0.11)p
|
-
|
9.94p
|
Diluted
|
9.96p
|
-
|
(0.11)p
|
-
|
9.85p
|
|
|
|
|
|
|
Earnings per share from continuing
operations
|
|
|
|
|
|
Basic
|
10.17p
|
-
|
(0.11)p
|
(1.17)p
|
8.89p
|
Diluted
|
10.08p
|
-
|
(0.11)p
|
(1.16)p
|
8.81p
|
(a) The income
statement has been re-presented to separately present insurance
revenue, insurance service expenses and net expenses from
reinsurance contracts held.
(b) In addition to the
adoption of IFRS 17, comparatives have also been re-presented to
present Banking operations as a discontinued operation. Refer to
Notes 1 and 6 for further details.
IFRS 17 impact
|
Description
|
Reclassification
|
Primarily relates to directly
attributable insurance expenses, previously included in
administrative expenses and cost of sales, which were reclassified
to insurance service expenses.
|
Remeasurements
|
Primarily relates to the impact of
acquired claims and other remeasurements under IFRS 17. Under the
GMM, the profit in relation to acquired claims is deferred on the
balance sheet at the transition date and recognised in the income
statement in subsequent periods. The unwinding of the related CSM
balance accordingly increased revenue and profit in the comparative
period. However, this increase was offset by the deferral of net
gains on the release of claims reserves in relation to acquired
claims.
|
Group balance sheet restatement
The table below sets out the
impact of IFRS 17 on the transition balance sheet at
27 February 2022 and on the
comparative period balance sheet as at 25 February
2023.
|
25
February 2023
|
|
26
February 2022
|
|
Reported
£m
|
Reclassification
£m
|
Remeasurements
£m
|
Restated
£m
|
|
Reported
£m
|
Reclassification
£m
|
Remeasurements
£m
|
Restated
£m
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
Reinsurance contract
assets
|
145
|
(36)
|
26
|
135
|
|
184
|
(46)
|
33
|
171
|
Deferred tax assets
|
82
|
-
|
2
|
84
|
|
85
|
-
|
3
|
88
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
1,315
|
(80)
|
-
|
1,235
|
|
1,263
|
(45)
|
-
|
1,218
|
Loans and advances to
customers
|
4,052
|
(105)
|
1
|
3,948
|
|
3,349
|
(100)
|
2
|
3,251
|
Reinsurance contract
assets
|
72
|
(72)
|
-
|
-
|
|
61
|
(61)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
(9,818)
|
53
|
3
|
(9,762)
|
|
(9,181)
|
138
|
3
|
(9,040)
|
Insurance contract
liabilities
|
(570)
|
106
|
(37)
|
(501)
|
|
(623)
|
87
|
(52)
|
(588)
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
(153)
|
99
|
-
|
(54)
|
|
(53)
|
-
|
(1)
|
(54)
|
Insurance contract
liabilities
|
(35)
|
35
|
-
|
-
|
|
(27)
|
27
|
-
|
-
|
Net assets impact
|
|
-
|
(5)
|
|
|
|
-
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Other reserves
|
3,123
|
-
|
16
|
3,139
|
|
3,079
|
-
|
1
|
3,080
|
Retained earnings
|
3,490
|
-
|
(21)
|
3,469
|
|
6,932
|
-
|
(13)
|
6,919
|
Equity impact
|
|
-
|
(5)
|
|
|
|
-
|
(12)
|
|
IFRS 17 impact
|
Description
|
Reclassification
|
Before the transition, the rights
and obligations arising from a portfolio of insurance contracts and
reinsurance contracts were presented in various line items in the
Group balance sheet depending on their nature. IFRS 17 requires all
insurance and reinsurance related balances to be classified within
either insurance contract liabilities or reinsurance contract
assets. Premiums receivable, previously included in loans and
advances to customers, were reclassified to insurance contract
liabilities (2023: £105m and 2022: £100m); and funds withheld
arising from quota share arrangements, previously included in trade
and other payables, were reclassified to reinsurance contract
assets (2023: £124m and 2022: £115m). All other relevant balances
have also been reclassified accordingly.
All insurance contract liabilities
have been classified as current and all reinsurance contract assets
as non-current, as contracts are now considered on a portfolio
basis rather than on an individual contract basis and are not
permitted to be split between current and non-current.
|
Remeasurements
|
Primarily relates to the
recognition and allocation of CSM in relation to acquired claims,
deferred acquisition cost balances and the impact of the risk
adjustment and discounting.
|
Group cash flow statement restatement
The table below sets out the
impact of IFRS 17 and restatements to present Banking operations as
a discontinued operation on the comparative period Group cash flow
statement for the 52 weeks ended 25 February 2023.
|
52
weeks ended 25 February 2023
|
|
Reported
£m
|
IFRS 17
impact
£m
|
Discontinued operations
re-presentation*
|
Restated
£m
|
Cash flows generated from/(used in) operating
activities
|
|
|
|
|
Operating profit/(loss) of continuing
operations
|
1,525
|
(8)
|
(107)
|
1,410
|
Operating profit/(loss) of discontinued
operations
|
(9)
|
-
|
107
|
98
|
Tesco Bank (increase)/decrease in
loans and advances to customers
|
(696)
|
6
|
-
|
(690)
|
Tesco Bank (increase)/decrease in
trade, reinsurance and other receivables
|
60
|
23
|
-
|
83
|
Tesco Bank increase/(decrease) in
customer and bank deposits, trade, insurance liabilities and other
payables
|
369
|
(21)
|
-
|
348
|
Tesco Bank increase/(decrease) in
provisions
|
(7)
|
-
|
-
|
(7)
|
Tesco Bank (increase)/decrease in
working capital
|
(274)
|
8
|
-
|
(266)
|
Cash generated from/(used in) operations
impact
|
|
-
|
-
|
|
* In addition to the
adoption of IFRS 17, comparatives have been re-presented to present
Banking operations as a discontinued operation. Refer to Notes 1
and 6 for further details.
IFRS 17 has no impact on net cash
generated from operating, investing and financing activities for
the year, or cash and cash equivalents at the end of the
year.
Note 23 Contingent liabilities
As previously reported, Tesco
Stores Limited (TSL) (along with all the major supermarkets) has
received claims from current and former hourly-paid store
colleagues alleging that they do equal work to that of colleagues
working in its distribution centres and that differences in terms
and conditions relating to pay are not objectively justifiable (the
Equal Pay Claims). The claimants are seeking the differential
between the pay terms looking back, and equivalence of pay terms
moving forward. As at the date of this disclosure, there are
approximately 49,000 claims against TSL, with the number of claims
expected to continue to increase as the litigation
progresses.
UK equal pay law provides that an
employee is entitled to the same terms in relation to pay as those
of a comparator of the opposite sex in the same employment if they
are employed to do equal work. The legislation achieves this by
implying a clause into the contract of employment, which has the
effect of importing into the employee's contract the more
favourable term(s) of the comparator.
Equal pay claims are typically
heard in three stages and the claimants have to win at every stage
in order to succeed. The first stage is comparability, which is
effectively a technical gateway to the claims proceeding. The
claimants have to show that there is a valid basis in law for
comparing their pay and the pay of any comparator. One of the legal
bases here is that pay terms are set by the same body. Following a
European court ruling on this, TSL has made a concession on
comparability.
The subsequent stages comprise an
equal work assessment and the consideration of TSL's material
factor defences (non-discriminatory reasons for differentials in
pay terms). The Equal Pay Claims have been split into three
tranches (with tranche 1 being heard first) and the stages apply to
each tranche. Although the claims that have been heard to date
involve female claimants, male store workers (being close to 50% of
the current store worker population) may also bring claims by
comparing themselves against any successful female claimants.
Male claimants who have pre-emptively brought such claims currently
make up approximately 45% of the Equal Pay Claims against TSL in
the employment tribunal. The ultimate determination of all claims
is likely to take many years, including as a result of
appeals.
At present, the total number of
Equal Pay Claims that may be received, the merits, and likely
outcome of those claims and of TSL's defences to them, and the
potential impact on the Group, are subject to various and
substantial uncertainties. There are multiple factual and legal
defences to these claims and the Group intends to defend them
vigorously, while at the same time taking appropriate steps to
mitigate the risks. The Group therefore cannot make an assessment
of the likely outcome of the litigation, or the potential quantum
of its liability or the potential impact on the Group at this
stage. Depending on the outcome at the various stages of the Equal
Pay Claims, and dependent on the number of any ultimately
successful claims, the potential quantum of its liability could be
material.
There are a number of other
contingent liabilities that arise in the normal course of business,
which if realised, are not expected to result in a material
liability to the Group.
Note 24 Events after the reporting period
There were no material events after
the reporting period requiring disclosure.
Glossary - Alternative performance measures
Introduction
In the reporting of financial
information, the Directors have adopted various Alternative
performance measures (APMs).
These measures are not defined by
International Financial Reporting Standards (IFRS) and therefore
may not be directly comparable with other companies' APMs,
including those in the Group's industry. APMs should be considered
in addition to, and are not intended to be a substitute for, or
superior to, IFRS measures.
Purpose
The Directors believe that these
APMs assist in providing additional useful information on the
trends, performance and position of the Group. APMs aid
comparability between geographical units or provide measures that
are widely used across the industry. They also aid comparability
between reporting periods; adjusting for certain costs or incomes
that derive from events or transactions that fall within the normal
activities of the Group but which, by virtue of their size or
nature, are adjusted, can provide a helpful alternative perspective
on year-on-year trends, performance and position that aids
comparability over time.
The alternative view presented by
these APMs is consistent with how management views the business,
and how it is reported internally to the Board and Executive
Committee for performance analysis, planning, reporting,
decision-making and incentive-setting purposes.
Further information on the Group's
adjusting items, which is a critical accounting judgement, can be
found in Note 3.
Some of the Group's IFRS measures
are translated at constant exchange rates. Constant exchange rates
are the average actual periodic exchange rates for the previous financial period and are used to eliminate
the effects of exchange rate fluctuations in assessing performance.
Actual exchange rates are the average actual periodic exchange
rates for that financial period.
All income statement measures are
presented on a continuing operations basis.
Changes to APMs
To align with how management
consider property disposals, store buybacks, and properties
acquired through business combinations, the Directors have amended
the Retail free cash flow and Capex definitions to exclude store
property purchases. These transactions are excluded because of
their unpredictable or irregular timing.
During the financial year, Tesco
Bank paid a £250m special dividend that represented a one-off
return of excess capital from the Bank to the Retail segment. As
this is not expected to recur, management have excluded it from the
Retail free cash flow measure, as this best helps comparability of
the Retail segment over time.
In addition to the change
described above, the Retail free cash flow description and
reconciliation has been simplified to list the investing cash flows
that are included in the APM rather than those that are
excluded.
The Directors have clarified the
definition of Net debt in light of Banking operations (within the
Tesco Bank segment) being classified as discontinued. Net debt
continues to exclude Tesco Bank. Only Retail continuing and
discontinued operations are included in Net debt.
The Directors have also removed Net
interest margin from the APMs, as it no longer forms part of how
management considers the long-term performance of the
business.
Group APMs
APM
|
Closest equivalent IFRS
measure
|
Adjustments to reconcile to IFRS
measure
|
|
Definition and purpose
|
Income statement
|
Revenue measures
|
|
|
|
|
Sales
|
Revenue
|
-
Fuel sales
|
|
-
Excludes the impact of fuel sales made at petrol
filling stations to demonstrate the Group's performance in the
Retail and financial services businesses. It removes volatilities
outside of the control of management, associated with the movement
in fuel prices.
-
This is a key management incentive
metric.
-
This measure is also presented on a Retail and
Tesco Bank basis.
|
Growth in sales
|
No direct equivalent
|
-
Ratio N/A
|
|
-
Growth in sales is a ratio that measures
year-on-year movement in Group sales for continuing operations for
52 weeks. It
shows the annual rate of increase in the Group's sales and is
considered a good indicator of how rapidly the Group's core business is
growing.
|
Like-for-like (LFL)
|
No direct equivalent
|
-
Ratio N/A
|
|
-
Like-for-like is a measure of growth in Group
online sales and sales from stores that have
been open for
at least a year (but excludes prior year sales of stores closed
during the year) at constant foreign exchange rates. It is a widely
used indicator of a retailer's current trading performance and is
important when comparing growth between retailers that have
different profiles of expansion, disposals and closures.
|
APM
|
Closest equivalent
IFRS measure
|
Adjustments to reconcile to IFRS
measure
|
|
Definition and purpose
|
|
Profit measures
|
|
|
|
|
|
Adjusted operating
profit
|
Operating profit from continuing
operations(a)
|
-
Adjusting items(b)
|
|
-
Adjusted operating profit is the headline measure
of the Group's performance, based on operating profit from
continuing operations before the impact of adjusting items. Refer
to the APM Purpose section of the Glossary for further information
on adjusting items.
- Amortisation of acquired intangibles is included within
adjusting items because it relates to historical inorganic business
combinations and does not reflect the Group's ongoing trading
performance (related revenue and other costs from acquisitions are
not adjusted).
- This
is a key management incentive metric.
- This
measure is also presented on a Retail basis.
|
|
Adjusted total finance
costs
|
Finance costs
|
-
Adjusting items(b)
|
|
-
Adjusting items within finance costs include net
pension finance income/costs and fair value remeasurements on
financial instruments. Net pension finance income/costs are
impacted by corporate bond yields, which can fluctuate
significantly and are reset each year based on external market
factors that are outside management's control. Fair value
remeasurements are impacted by changes to credit risk and various
market indices, applying to financial instruments resulting from
liability management exercises, which can fluctuate significantly
outside of management's control. This measure helps to provide an
alternative view of year-on-year trends in the Group's finance
costs.
|
Adjusted profit before
tax
|
Profit before tax
|
-
Adjusting items(b)
|
|
-
This measure is the summation of the impact of
all adjusting items on profit before tax. Refer to the APM Purpose
section of the Glossary.
|
Adjusted operating
margin
|
No direct equivalent
|
-
Ratio N/A
|
|
-
Operating margin is calculated as adjusted
operating profit divided by revenue. Progression in operating
margin is an important indicator of the Group's operating
efficiency.
|
Adjusted diluted
earnings
per share
|
Diluted earnings per share from
continuing operations
|
-
Adjusting items(b)
|
|
-
This metric shows the adjusted profit after tax
from continuing operations attributable to owners of the parent
divided by the weighted average number of ordinary shares
in issue
during the financial period, adjusted for the effects of dilutive
share options.
|
Retail EBITDA (earnings before
adjusting items, interest, tax, depreciation and
amortisation)
|
Retail operating profit from
continuing operations(a)
|
-
Adjusting items(b)
-
Depreciation and amortisation
|
|
-
This measure is widely used by analysts,
investors and other users of the accounts to evaluate comparable
profitability of companies, as it excludes the impact of differing
capital structures and tax positions, variations in tangible asset
portfolios and differences in identification and recognition of
intangible assets. It is used to derive the Net debt/EBITDA and
Total indebtedness ratios, and Fixed charge cover APMs.
|
Tax measures
|
|
|
|
|
Adjusted effective tax
rate
|
Effective tax
rate
|
-
Adjusting items(b)
|
|
-
Adjusted effective tax rate is calculated as
total income tax credit/(charge) excluding the tax impact of
adjusting items, divided by adjusted profit before tax. This APM
provides an indication of the ongoing tax rate across the
Group.
|
|
|
|
|
|
|
| |
(a) Operating profit is
presented on the Group income statement. It is not defined per
IFRS, however, is a generally accepted profit measure.
(b) Refer to Note
3.
APM
|
Closest equivalent
IFRS measure
|
Adjustments to reconcile
to IFRS measure
|
|
Definition and purpose
|
Balance sheet measures
|
Net debt
|
No direct equivalent
|
- N/A
|
|
- Net debt
excludes the net debt of Tesco Bank and includes the net debt of
Retail discontinued operations to reflect the net debt obligations
of the Retail business.
- Net debt
comprises bank and other borrowings, lease liabilities and net derivative
financial instruments, offset by cash and cash equivalents,
short-term investments, joint venture loans, and interest and other
receivables.
- It is a
useful measure of the progress in generating cash and strengthening
of the Group's balance sheet position, and is a measure widely used
by credit
rating agencies.
|
Net debt/EBITDA ratio
|
No direct equivalent
|
- Ratio
N/A
|
|
- Net
debt/EBITDA ratio is calculated as Net debt divided by the rolling
12-month Retail EBITDA. It is a measure of the Group's ability to
meet its payment obligations, showing how long it would take the
Group to repay its current net debt if both net debt and EBITDA remained
constant. It is widely used by analysts and credit rating
agencies.
|
Total indebtedness
|
No direct equivalent
|
- N/A
|
|
- Total
indebtedness is Net debt plus the IAS 19 deficit in any pension
schemes (net of associated deferred tax) to provide
an overall
view of the Group's obligations, including the long-term
commitments to the Group's pension schemes. Pension surpluses are
not included. It is an important measure of the long-term
obligations of the Group and is a measure widely used by credit
rating agencies.
|
Total indebtedness
ratio
|
No direct equivalent
|
- Ratio
N/A
|
|
- Total
indebtedness ratio is calculated as Total indebtedness divided by
the rolling 12-month Retail EBITDA. It is a measure of the Group's
ability to meet its payment obligations and is widely used by
analysts and credit rating agencies.
|
Fixed charge cover
|
No direct equivalent
|
- Ratio
N/A
|
|
- Fixed
charge cover is calculated as the rolling 12-month Retail EBITDA
divided by the sum of net finance costs (excluding net pension
finance costs, finance charges payable on lease liabilities,
capitalised interest and fair value remeasurements on financial
instruments) and all lease liability payments from continuing
operations. It is a measure of the Group's ability
to meet its
payment obligations and is widely used by analysts
and credit
rating agencies.
|
Capex
|
Property, plant and equipment,
intangible asset, and investment property additions, excluding
those from business combinations
|
- Additions relating to property buybacks and store
purchases
- Additions relating to decommissioning provisions and similar
items
|
|
- Capex
excludes additions arising from business combinations, buybacks of
properties (typically stores), purchases of store properties, as
well as additions relating to decommissioning provisions and
similar items.
- Property
buybacks and purchases of store properties are variable in timing,
with the number and value of transactions dependent on
opportunities that arise within any given financial year. Excluding
property buybacks and store property purchases therefore gives an
alternative view of trends in capital expenditure in the Group's
ongoing trading operations.
- Additions relating to decommissioning provisions and similar
items are adjusted because they do not result in near-term cash
outflows.
|
Cash flow measures
|
|
|
|
|
Retail free cash flow
|
No direct equivalent
|
- N/A
|
|
Retail free cash flow
includes:
- Continuing cash flows from
operating activities of the Retail business less adjusting Retail
operating cash flows.
- Retail investing cash
flows relating to: the purchase of property, plant and equipment,
investment property and other long-term assets (excluding property
buybacks and store purchases); purchase of intangible assets
and investment property; dividends received from Tesco Bank
(excluding special dividends); dividends received from joint
ventures and associates; and interest received.
- Financing cash flows
relating to: market purchase of shares net of proceeds from shares
issued in relation to share schemes; and Retail repayment of
obligations under leases.
- Directors and management
believe this provides a view of free cash flow generated by the
Group's retail trading operations that is more predictable and
comparable over time, and reflects the cash available to
shareholders.
- This is a key management
incentive metric.
|
(a) Operating profit is
presented on the Group income statement. It is not defined per
IFRS, however, is a generally accepted profit measure.
(b) Refer to Note
3.
APMs: Reconciliation of income statement
measures
Retail EBITDA
Continuing operations
|
Notes
|
APM
2024
£m
|
APM
2023
(restated*)
£m
|
Operating profit
|
2
|
2,821
|
1,410
|
Exclude: Adjusting
items
|
2
|
8
|
1,099
|
Adjusted operating profit
|
2
|
2,829
|
2,509
|
Exclude: Tesco Bank adjusted
segmental profit
|
2
|
(148)
|
(22)
|
Exclude: Tesco Bank adjusted
operating profit from discontinued operations
|
2
|
79
|
-
|
Retail adjusted operating profit
|
2
|
2,760
|
2,487
|
Include: Retail depreciation and
amortisation before adjusting items
|
2
|
1,602
|
1,570
|
Retail EBITDA
|
|
4,362
|
4,057
|
* Comparatives
have been restated following the adoption of IFRS 17 and to present
Banking operations as a discontinued operation. Refer to Notes 1, 6
and 22 for further details.
APMs: Reconciliation of balance sheet
measures
Net debt
A reconciliation of Net debt is
provided in Note 21.
Reconciliation from Retail free cash flow to Net
debt
|
Notes
|
APM
2024
£m
|
APM
2023
£m
|
Opening Net debt
|
21
|
(10,493)
|
(10,516)
|
|
|
|
|
Retail free cash flow
|
|
2,063
|
2,133
|
|
|
|
|
Other cash movements:
|
|
|
|
Own shares purchased for
cancellation
|
2
|
(752)
|
(781)
|
Dividends paid to equity
owners
|
2
|
(778)
|
(859)
|
Special dividends received from
Tesco Bank
|
2
|
250
|
-
|
Adjusting items included in
operating cash flow activities
|
2
|
(98)
|
(61)
|
Retail repayments of capital
element of obligations under leases
|
2
|
623
|
589
|
Retail interest paid on lease
liabilities
|
|
372
|
371
|
Retail net other interest
paid/(received)
|
2
|
188
|
202
|
Retail proceeds from sale of
property, plant and equipment, investment property, intangible
assets and assets held for sale
|
2
|
55
|
341
|
Cash outflows attributable to
property buybacks and store purchases
|
2
|
(121)
|
(75)
|
Other investing cash
movements
|
2
|
(2)
|
(281)
|
|
|
|
|
Non-cash movements in Net debt:
|
|
|
|
Retail fair value
movements
|
|
(71)
|
(18)
|
Retail foreign exchange
movements
|
|
126
|
(191)
|
Retail net interest
charge
|
|
(161)
|
(187)
|
Retail non-cash movements in lease
liabilities
|
|
(914)
|
(1,113)
|
Retail movement in net debt of
disposal group
|
|
14
|
-
|
Retail non-cash movement arising
from acquisitions and disposals
|
|
(68)
|
(46)
|
Other non-cash
movements
|
|
3
|
(1)
|
Closing Net debt
|
21
|
(9,764)
|
(10,493)
|
Net debt/EBITDA and Total indebtedness
ratio
|
Notes
|
APM
2024
£m
|
APM
2023
(restated*)
£m
|
Net debt
|
21
|
9,764
|
10,493
|
Retail EBITDA
|
|
4,362
|
4,057
|
Net debt/EBITDA ratio
|
|
2.2
|
2.6
|
|
|
|
|
Net debt
|
21
|
9,764
|
10,493
|
Include: Defined benefit pension
deficit, net of deferred tax
|
18
|
493
|
300
|
Total indebtedness
|
|
10,257
|
10,793
|
Retail EBITDA
|
|
4,362
|
4,057
|
Total indebtedness ratio
|
|
2.4
|
2.7
|
* Comparatives
have been restated following the adoption of IFRS 17 and to present
Banking operations as a discontinued operation. Refer to Notes 1, 6
and 22 for further details.
Fixed charge cover
|
Notes
|
APM
2024
£m
|
APM
2023
(restated*)
£m
|
Net finance costs
|
4
|
538
|
536
|
Exclude: Net pension finance
income/(costs)
|
4
|
(18)
|
80
|
Exclude: Fair value remeasurements
of financial instruments
|
4
|
38
|
(53)
|
Adjusted total finance costs
|
|
558
|
563
|
Exclude: Finance charges payable
on lease liabilities
|
4
|
(373)
|
(371)
|
Adjusted total finance cost, excluding capitalised interest
and finance charges payable on lease liabilities
|
|
185
|
192
|
Include: Total lease liability
payments
|
|
1,000
|
966
|
Exclude:
Discontinued operations total lease liability payments
|
|
(3)
|
(2)
|
|
|
1,182
|
1,156
|
Retail EBITDA
|
|
4,362
|
4,057
|
Fixed charge cover (ratio)
|
|
3.7
|
3.5
|
* Comparatives have been
restated following the adoption of IFRS 17 and to present Banking
operations as a discontinued operation. Refer to Notes 1, 6 and 22
for further details.
Capex
|
Notes
|
APM
2024
£m
|
APM
2023
£m
|
Property, plant and equipment
additions(a)
|
9
|
1,198
|
1,252
|
Other intangible asset
additions(a)
|
|
275
|
277
|
Exclude: Additions from obtaining
control of property joint venture(b)
|
|
(65)
|
(248)
|
Exclude: Additions from property
buybacks
|
|
(78)
|
(29)
|
Exclude: Additions from store
purchases
|
|
(29)
|
-
|
Exclude: Additions relating to
decommissioning provisions and similar items
|
|
13
|
(17)
|
Capex
|
|
1,314
|
1,235
|
(a) Excluding amounts
acquired through business combinations.
(b) Acquisition of The Tesco
Coral Limited Partnership in 2024 and The Tesco Dorney Limited
Partnership in 2023.
APMs: Reconciliation of cash flow measures
|
Notes
|
APM
2024
£m
|
APM
2023
£m
|
Cash generated from/(used in) operating
activities
|
2
|
3,839
|
3,722
|
Exclude: Cash (generated
from)/used in operating activities in Tesco Bank
|
2
|
35
|
-
|
Exclude: Cash (generated
from)/used in operating activities in discontinued
operations
|
2
|
(162)
|
30
|
Retail cash generated from/(used in) operating
activities
|
2
|
3,712
|
3,752
|
Exclude: Retail adjusting net cash
(generated from)/used in operating activities
|
2
|
98
|
61
|
Retail adjusted cash generated from/(used in) operating
activities
|
|
3,810
|
3,813
|
|
|
|
|
Include the following cash flows
generated from/(used in) investing activities:
|
|
|
|
Retail purchase of property, plant
and equipment, investment property and other long-term assets -
other capital expenditure(a)
|
2
|
(1,039)
|
(902)
|
Retail purchase of intangible
assets
|
2
|
(250)
|
(241)
|
Dividends received from joint
ventures and associates
|
2
|
9
|
14
|
Dividends received from Tesco
Bank(b)
|
2
|
-
|
54
|
Retail interest
received
|
2
|
249
|
70
|
Include the following cash flows
generated from/(used in) financing activities:
|
|
|
|
Own shares purchased for share
schemes
|
2
|
(93)
|
(86)
|
Retail repayment of capital
element of obligations under leases
|
2
|
(623)
|
(589)
|
Retail free cash flow
|
|
2,063
|
2,133
|
(a) Excludes property
buybacks and store purchases.
(b) Excludes Tesco Bank
special dividends.
The following table reconciles the
Retail free cash flow APM to that previously presented for
remuneration purposes.
|
Notes
|
APM
2024
£m
|
APM
2023
£m
|
Retail free cash flow
|
2
|
2,063
|
2,133
|
Retail proceeds from sale of
property, plant and equipment, investment property, intangible
assets and assets classified as held for sale
|
2
|
55
|
341
|
Retail purchase of property, plant
and equipment and investment property - property buybacks and store
purchases
|
2
|
(59)
|
(54)
|
Retail cash outflows exceeding the
incremental increase in assets in a property buyback
|
2
|
(62)
|
(21)
|
Retail disposal of subsidiaries,
net of cash disposed
|
2
|
15
|
-
|
Retail acquisition of businesses,
net of cash acquired
|
2
|
(17)
|
(66)
|
Special dividend received from
Tesco Bank
|
2
|
250
|
-
|
Retail (investments in)/proceeds
from sale of joint ventures and associates
|
2
|
-
|
(10)
|
Retail (investments in)/proceeds
from sale of other investments
|
2
|
-
|
(205)
|
Retail adjusting net cash
generated from/(used in) operating activities
|
2
|
(98)
|
(61)
|
Memo: Retail free cash flow including cash flows from
acquisitions and disposals, cash flows from the sale or buyback of
properties and Retail adjusting cash flows from operating
activities
|
|
2,147
|
2,057
|
Glossary - Other
Dividend per share
This is calculated as interim
dividend per share paid plus final dividend per share declared in
respect of that financial year.
Expected credit loss (ECL)
Credit loss represents the portion
of the debt that a company is unlikely to recover. The expected
credit loss is the projected future losses based on
probability-weighted calculations.
ESG
Environmental, social and
governance.
MTN
Medium-term note.
Net promoter score (NPS)
This is a loyalty measure based on
a single question requiring a score between 0-10. The NPS is
calculated by subtracting the percentage of detractors (scoring
0-6) from the percentage of promoters (scoring 9-10). This
generates a figure between -100 and 100 which is the
NPS.
Retail capital employed
This is calculated as Retail net
assets excluding the pension deficit/surplus net of deferred tax,
net assets of the disposal group and non-current assets classified
as held for sale less Net debt.
Retail return on capital employed (ROCE)
Retail adjusted operating profit
divided by the average of opening and closing Retail capital
employed.
Total capital ratio
This is calculated by dividing
total regulatory capital by total risk‐weighted assets.
Supplementary information (unaudited)
One-year like-for-like sales performance (exc. VAT, exc.
fuel)
|
Like-for-like sales
|
|
Q1
2023/24
|
Q2
2023/24
|
Q3
2023/24
|
Q4
2023/24
|
H1
2023/24
|
H2
2023/24
|
FY
2023/24
|
UK & ROI
|
8.8%
|
8.0%
|
7.3%
|
5.2%
|
8.4%
|
6.2%
|
7.3%
|
UK
|
9.0%
|
8.4%
|
7.9%
|
5.8%
|
8.7%
|
6.8%
|
7.7%
|
ROI
|
7.3%
|
6.5%
|
8.3%
|
5.4%
|
6.9%
|
6.7%
|
6.8%
|
Booker
|
8.4%
|
6.6%
|
3.9%
|
2.5%
|
7.5%
|
3.2%
|
5.4%
|
Central Europe
|
1.1%
|
0.7%
|
(1.4)%
|
0.2%
|
0.9%
|
(0.5)%
|
0.2%
|
Total Retail
|
8.2%
|
7.5%
|
6.6%
|
4.8%
|
7.8%
|
5.7%
|
6.8%
|
Total sales performance (exc. VAT, exc.
fuel)
|
Actual
rates
|
|
Constant rates
|
|
H1
2023/24
|
H2
2023/24
|
FY
2023/24
|
|
H1
2023/24
|
H2
2023/24
|
FY
2023/24
|
UK & ROI
|
8.9%
|
6.3%
|
7.6%
|
|
8.8%
|
6.4%
|
7.6%
|
UK
|
9.1%
|
7.2%
|
8.1%
|
|
9.1%
|
7.2%
|
8.1%
|
ROI
|
13.0%
|
6.1%
|
9.3%
|
|
10.0%
|
7.3%
|
8.5%
|
Booker
|
6.9%
|
2.2%
|
4.6%
|
|
6.9%
|
2.2%
|
4.6%
|
Central Europe
|
6.7%
|
(0.2)%
|
3.1%
|
|
1.4%
|
(0.1)%
|
0.6%
|
Total Retail
|
8.7%
|
5.8%
|
7.3%
|
|
8.2%
|
5.9%
|
7.0%
|
Country detail - Retail
|
Revenue
(exc. VAT, inc. fuel)
|
|
|
|
|
Local
currency
(m)
|
£m
|
|
Average
exchange
rate
|
Closing
exchange
rate
|
UK
|
50,907
|
50,907
|
|
1.0
|
1.0
|
ROI
|
3,340
|
2,891
|
|
1.2
|
1.2
|
Booker
|
9,082
|
9,082
|
|
1.0
|
1.0
|
Czech Republic
|
43,384
|
1,554
|
|
27.9
|
29.7
|
Hungary
|
665,208
|
1,512
|
|
440.0
|
455.5
|
Slovakia
|
1,652
|
1,430
|
|
1.2
|
1.2
|
UK sales area by size of store
|
24 February
2024
|
|
25
February 2023
|
Store size (sq. ft.)
|
No. of
stores
|
Million sq.
ft.
|
% of total
sq. ft.
|
|
No. of
stores
|
Million
sq. ft.
|
% of
total
sq.
ft.
|
0-3,000
|
2,675
|
5.8
|
14.9%
|
|
2,605
|
5.6
|
14.6%
|
3,001-20,000
|
279
|
2.9
|
7.5%
|
|
276
|
2.9
|
7.6%
|
20,001-40,000
|
288
|
8.3
|
21.3%
|
|
286
|
8.2
|
21.2%
|
40,001-60,000
|
182
|
8.8
|
22.6%
|
|
182
|
8.8
|
22.8%
|
60,001-80,000
|
119
|
8.4
|
21.6%
|
|
119
|
8.4
|
21.6%
|
80,001-100,000
|
45
|
3.7
|
9.5%
|
|
45
|
3.7
|
9.6%
|
Over 100,000
|
8
|
1.0
|
2.6%
|
|
8
|
1.0
|
2.6%
|
Total*
|
3,596
|
38.9
|
100.0%
|
|
3,521
|
38.6
|
100.0%
|
* Excludes Booker and franchise
stores.
Group space summary
Actual Group space - store
numbers(a)
|
2022/23
year
end
|
Openings
|
Closures/
disposals
|
Net
gain/
(reduction)(b)
|
2023/24
year
end
|
Repurposing/
extensions(c)
|
Large(d)
|
806
|
7
|
(4)
|
3
|
809
|
-
|
Convenience(d)
|
1,997
|
60
|
(9)
|
51
|
2,048
|
-
|
Dotcom only
|
6
|
-
|
-
|
-
|
6
|
-
|
Total Tesco
|
2,809
|
67
|
(13)
|
54
|
2,863
|
-
|
One Stop(e)
|
712
|
27
|
(6)
|
21
|
733
|
-
|
Booker
|
191
|
-
|
(1)
|
(1)
|
190
|
-
|
UK(e)
|
3,712
|
94
|
(20)
|
74
|
3,786
|
-
|
ROI
|
166
|
5
|
(1)
|
4
|
170
|
-
|
UK & ROI(e)
|
3,878
|
99
|
(21)
|
78
|
3,956
|
-
|
Czech
Republic(e)
|
187
|
2
|
(5)
|
(3)
|
184
|
6
|
Hungary
|
197
|
-
|
-
|
-
|
197
|
21
|
Slovakia(e)
|
157
|
12
|
-
|
12
|
169
|
9
|
Central Europe(e)
|
541
|
14
|
(5)
|
9
|
550
|
36
|
Group(e)
|
4,419
|
113
|
(26)
|
87
|
4,506
|
36
|
UK (One Stop)
|
291
|
43
|
(17)
|
26
|
317
|
-
|
Czech Republic
|
124
|
3
|
(8)
|
(5)
|
119
|
-
|
Slovakia
|
25
|
6
|
(31)
|
(25)
|
-
|
-
|
Franchise stores
|
440
|
52
|
(56)
|
(4)
|
436
|
-
|
Total Group
|
4,859
|
165
|
(82)
|
83
|
4,942
|
36
|
Actual Group space - '000 sq.
ft.(a)
|
2022/23
year
end
|
Openings
|
Closures/
disposals
|
Repurposing/
extensions(c)
|
Net
gain/
(reduction)
|
2023/24
year end
|
Large(d)
|
31,427
|
128
|
(50)
|
-
|
78
|
31,505
|
Convenience(d)
|
5,344
|
151
|
(40)
|
-
|
111
|
5,455
|
Dotcom only
|
716
|
-
|
-
|
-
|
-
|
716
|
Total Tesco
|
37,487
|
279
|
(90)
|
-
|
189
|
37,676
|
One Stop(e)
|
1,169
|
49
|
(10)
|
-
|
39
|
1,208
|
Booker
|
8,181
|
-
|
(87)
|
-
|
(87)
|
8,094
|
UK(e)
|
46,837
|
328
|
(187)
|
-
|
141
|
46,978
|
ROI
|
3,478
|
38
|
(17)
|
-
|
21
|
3,499
|
UK & ROI(e)
|
50,315
|
366
|
(204)
|
-
|
162
|
50,477
|
Czech
Republic(e)
|
4,146
|
20
|
(22)
|
(43)
|
(45)
|
4,101
|
Hungary
|
5,670
|
-
|
-
|
(298)
|
(298)
|
5,372
|
Slovakia(e)
|
3,147
|
67
|
-
|
(1)
|
66
|
3,213
|
Central Europe(e)
|
12,963
|
87
|
(22)
|
(342)
|
(277)
|
12,686
|
Group(e)
|
63,278
|
453
|
(226)
|
(342)
|
(115)
|
63,163
|
UK (One Stop)
|
420
|
61
|
(22)
|
-
|
39
|
459
|
Czech Republic
|
114
|
3
|
(9)
|
-
|
(6)
|
108
|
Slovakia
|
23
|
6
|
(29)
|
-
|
(23)
|
-
|
Franchise stores
|
557
|
70
|
(60)
|
-
|
10
|
567
|
Total Group
|
63,835
|
523
|
(286)
|
(342)
|
(105)
|
63,730
|
(a) Continuing
operations.
(b) The net gain/(reduction)
reflects the number of store openings less the number of store
closures/disposals.
(c) Repurposing of retail
selling space.
(d) 2022/23 UK store numbers
have been updated to reflect an extension of a Convenience store to
a Large store and to reflect the conversion of Jack's stores last
year.
(e) Excludes franchise
stores.
Group space forecast to 22 February 2025 - '000 sq.
ft.(a)
|
2023/24
year end
|
Openings
|
Closures/ disposals
|
Repurposing/
extensions(b)
|
Net
gain/
(reduction)(c)
|
2024/25
year end
|
Large
|
31,505
|
61
|
-
|
5
|
66
|
31,571
|
Convenience
|
5,455
|
201
|
(29)
|
-
|
172
|
5,627
|
Dotcom only
|
716
|
-
|
-
|
-
|
-
|
716
|
Total Tesco
|
37,676
|
262
|
(29)
|
5
|
238
|
37,914
|
One Stop(d)
|
1,208
|
57
|
(13)
|
-
|
44
|
1,252
|
Booker
|
8,094
|
-
|
-
|
-
|
-
|
8,094
|
UK(d)
|
46,978
|
319
|
(42)
|
5
|
282
|
47,260
|
ROI
|
3,499
|
100
|
-
|
-
|
100
|
3,599
|
UK & ROI(d)
|
50,477
|
419
|
(42)
|
5
|
382
|
50,859
|
Czech
Republic(d)
|
4,101
|
61
|
-
|
(38)
|
23
|
4,124
|
Hungary
|
5,372
|
2
|
-
|
(108)
|
(106)
|
5,266
|
Slovakia(d)
|
3,213
|
51
|
-
|
(31)
|
20
|
3,233
|
Central Europe(d)
|
12,686
|
114
|
-
|
(177)
|
(63)
|
12,623
|
Group(d)
|
63,163
|
533
|
(42)
|
(172)
|
319
|
63,482
|
UK (One Stop)
|
459
|
129
|
(14)
|
-
|
115
|
574
|
Czech Republic
|
108
|
1
|
(4)
|
-
|
(3)
|
105
|
Slovakia
|
-
|
-
|
-
|
-
|
-
|
-
|
Franchise stores
|
567
|
130
|
(18)
|
-
|
112
|
679
|
Total Group
|
63,730
|
663
|
(60)
|
(172)
|
431
|
64,161
|
(a) Continuing
operations.
(b) Repurposing of retail
selling space.
(c) The net gain/(reduction)
reflects the number of store openings less the number of store
closures/disposals and repurposing/extensions.
(d) Excludes franchise
stores.
Tesco Bank income statement
|
2024(a)
£m
|
2023(a)
(restated(b))
£m
|
Revenue
|
|
|
Interest income
|
94
|
38
|
Fees and commissions
income
|
203
|
170
|
Insurance revenue
|
514
|
458
|
|
811
|
666
|
Direct costs
|
|
|
Interest payable
|
(67)
|
(34)
|
Fees and commissions
expense
|
(1)
|
-
|
Insurance service
expenses(c)
|
(454)
|
(408)
|
Net expenses from reinsurance
contracts held
|
(48)
|
(37)
|
|
(570)
|
(479)
|
Other income/(expenses)
|
(1)
|
(5)
|
Gross profit
|
240
|
182
|
|
|
|
Other expenses
|
|
|
Staff costs
|
(50)
|
(46)
|
Premises and equipment
|
(37)
|
(36)
|
Other administrative
expenses
|
(72)
|
(64)
|
Depreciation and
amortisation(c)
|
(12)
|
(14)
|
Adjusted operating profit
|
69
|
22
|
|
|
|
Adjusting
items(d)
|
(3)
|
(5)
|
Operating profit/(loss)
|
66
|
17
|
|
|
|
Finance income/(costs): movements
on derivatives and hedge accounting
|
5
|
-
|
Finance income/(costs):
interest
|
(15)
|
(8)
|
Finance income/(costs):
insurance
|
(6)
|
(3)
|
Profit/(loss) before tax from continuing
operations
|
50
|
6
|
|
|
|
Discontinued operations
|
|
|
Profit/(loss) before tax from
discontinued operations
|
(665)
|
107
|
Profit/(loss) before tax
|
(615)
|
113
|
(a) These results are for
the 12 months ended 29 February 2024 and the previous period
represents the 12 months ended 28 February 2023.
(b) Comparatives have been restated following the adoption of
IFRS 17 and re-presented to disclose Banking operations as a
discontinued operation. Refer to Notes 1, 6 and
22 for further details.
(c) Depreciation and
amortisation of £(5)m (2023: £(5)m) form part of insurance service
expenses.
(d) Adjusting items
of £nil in 2024 (2023:
£(5)m) relate to operational restructuring changes, as part of the
multi-year 'Save to Invest' programme.
Refer to Note 3 for further details.