a business for  
a new decade
t esco plc annual report and financial statements 2010  20089
‡
52 weeks ended 27 february 2010  200910 52 weeks 53 weeks
group sales £m including vat  62537 58570 59426
group revenue £m excluding vat  56910 53115 53898
group trading profit £m  3412 3039 3086
underlying profit before tax £m   3395 3083 3124
group profit before tax £m  3176 2876 2917
underlying diluted earnings  
 per share p   3166 2850 2887
dividend per share p   1305 – 1196
group enterprise value £bn  
 market capitalisation plus net debt  414 – 359
return on capital employed  121 – 128
  group sales inc vat excludes the accounting impact of ifric 13 customer loyalty programmes
  growth in underlying diluted eps calculated on a constant tax rate basis
‡   restated for the impact of ifric 13 and ifrs 2
 
wwwtescocomannualreport2010
financial highlights
all growth figures reported on a 52week basis
group sales 
including vat  68
underlying profit 
before tax 10 1
group profit
before tax 104
underlying diluted 
earnings per share  91
diluted earnings 
per share 98
dividend 
per share 91
overview 
chairman’s statement 1
a business for a new decade 2
tesco at a glance 6
chief executive’s review 8
report of the directors
our business  9
our strategy 9
international 10
core uk 16
nonfood 20
retailing services 24
community 28
our people 32
our board of directors 36
key performance indicators 38
group financials 40
risks and uncertainties 41
general information 45
corporate governance 46
remuneration report 52
financial statements  67
statement of directors’ responsibilities 68
independent auditors’ report to the 
members of tesco plc 69
group income statement 70
group statement of comprehensive income 71
group balance sheet 72
group statement of changes in equity 73
group cash flow statement 74
reconciliation of net cash flow to movement in 74
net debt note 
notes to the group financial statements 75
five year record 121
tesco plc – parent company balance sheet 122
notes to the parent company financial statements 123 
independent auditors’ report to the members of  
tesco plc 131
financial calendar 132
contents overview
t esco plc annual report and financial statements 2010 1
over the past decade t esco has transformed 
itself into a diverse international business – 
and by following our consistent strategy we 
are well positioned for longterm growth
thailand – and for the first time we 
now have more clubcard holders 
internationally than in the uk 
it has been another significant year 
for our work on the environment and 
within local communities as we grow 
our customers increasingly look to 
tesco to take the lead in these areas 
– and we are 
in january we opened the world’s 
first zerocarbon store at ramsey in 
cambridgeshire – the latest step in 
our journey to reduce the carbon 
footprint of our business over the 
past year we have made significant 
progress towards our longterm goals 
by reducing our emissions by 78 
on our baseline 20067 store and 
distribution portfolio
this year we donated over £60m to 
charities – once again exceeding our 
target to give the equivalent of 1 
of our profits to good causes 
these good results are testament 
to the hard work of our people the 
tesco team is now 472000 strong – 
and we remain united by our goal to 
improve the shopping trip for our 
customers i would like to thank all 
our people for their hard work which 
i know will continue in the year ahead
david reid
chairman
i am pleased to report that 
the tesco team has once again 
delivered a good set of results 
– guided by experienced 
management who have steered 
the business through recessions 
before as markets around the 
world are emerging from this 
recession each part of our business 
is well positioned to pursue our 
strategy for growth
we have continued to grow sales 
profits and market share over the 
past year we’ve also significantly 
strengthened our balance sheet
our acquisition in south korea 
is performing well and delivering 
excellent results we’ve opened 
our first three tesco lifespace 
shopping malls in china and we 
have made good progress building 
the infrastructure and developing 
new products for tesco bank
i am also pleased to announce that we 
again increased our dividend – for the 
26th consecutive year this consistent 
track record of delivering dividend 
growth for shareholders is unrivalled 
in the ftse 100
the strong group results over the last 
year have been achieved through a 
constant focus on what matters most 
to customers in challenging times 
around the world a good example 
of this has been our renewed focus 
on rewarding loyalty – at home and 
abroad – which has been a great 
success with customers
in the uk we increased our clubcard 
investment with double points – 
giving customers even greater reward 
for their loyalty 
internationally we launched clubcard 
in three more countries during the 
year – in poland slovakia and  2 tesco plc annual report and financial statements 2010
a growth busi 
01 02 03 04 05 06 07 08 09 2010
472
237
people
000s
472000
01 02 03 04 05 06 07 08 09 2010
94
28
international
uk
sales area
m sq ft
94m sq ft overview
t esco plc annual report and financial statements 2010 3
our position amongst the leading global retailers 
hasn’t happened by chance for well over a decade 
our longterm strategy has been delivering strong 
and consistent growth 
 ness
total shareholder return

01 02 03 04 05 06 07 08 09 2010
625
228
group sales
£bn
£625bn
01 02 03 04 05 06 07 08 09 2010
35
12
operating profit
£bn
£35bn
0
50
100
150
200
250
300
350
400
09 2010 08 07 06 05 04 03 02 01 00
tesco
ftse 100
eurofirst food  drug  index rebased to 100 we are committed to being carbonneutral 
by 2050 and helping our customers halve 
their own carbon footprint by 2020
in 2000 t esco was operating in markets 
representing 8 of global gdp today 
it’s 53
t oday 65 of our selling space is 
outside the uk
4 tesco plc annual report and financial statements 2010
through diversification into new geographies 
new product areas and new services we’re 
developing a business for the future – with 
sustainable growth for years to come
for a new de 
53 zero 65 overview
48 of our space is less than 
five years old
our flexible range of formats helps us 
to adapt our approach to local customers – 
wherever they are – from extra hypermarkets 
to express convenience stores
we’ve learnt how to be ‘local’ in south korea 
our largest international business we have 
over 22000 employees and just six 
uk expats
customers expect to be able to shop where 
and when they want – as well as having great 
stores we’re the most profitable online 
grocery retailer in the world
we’re starting to unlock the benefits 
of being a global group
•  global sourcing volumes have grown 
threefold in six years
•  clubcard is now in seven countries
•  ff clothing is in ten countries
•   group shared services centre 
in bangalore
t esco plc annual report and financial statements 2010 5
 cade
no 1
48
local
global
multiformat 6 tesco plc annual report and financial statements 2010
t esco in numbers
group sales
underlying profit 
before tax
£34bn
group sales group profit
stores 
worldwide
people 
worldwide
countries
4811
£625bn
472000
14
group space 
by region
group sales 
£bn
uk
71
tesco bank
7
international
22
europe
£100bn
us
£04bn
tesco bank
£09bn
asia
£91bn
uk
£423bn
2010
625
2008
518
2007
466
2006
431
2009
594
uk
351
europe
295
asia
338
us 
15
by remaining focused on our 
strategy and helping customers to 
save money t esco has weathered 
the economic storm well  t esco plc annual report and financial statements 2010 7
overview
t esco around the world
 euro pe
region revenue stores employees
  £m  
republic of ireland 2282 119 14158 
poland 1942 336 23655
hungary  1698 176 20079
czech republic 1287 136 12949
slovakia 891 81 8105
turkey 595 105 7630
total 8695 953 86576
 uk
  revenue stores employees
  £m
total 38558 2482 287669
asia
region revenue stores employees
  £m
south korea 4162 305 22739 
thailand 2344 663 34775 
china 844 88 22668 
malaysia 633 32 9423 
japan  449 142 4636
total 8432 1230 94241
 us
  revenue stores employees
  £m
total 349 145 3246
 india
in india we have an exclusive franchise agreement 
with trent the retail arm of the tata group we are 
supporting the development of their star bazaar format 
we plan to open our first cash and carry store by the 
end of the year
 in 200910 there were an additional 362 people working 
in other locations such as international buying global hubs
store numbers exclude one store in calais france
total revenue for europe excludes france
total revenue for asia excludes india
 revenues are sales excluding vat watch the video
wwwtescocomannualreport2010
resultspresentation
8 tesco plc annual report and financial statements 2010
chief executive’s
review
business by 2050 to reduce the 
carbon impact of the products in our 
supply chain by 30 by 2020 and to 
help our customers halve their own 
carbon footprint by 2020 and we’re 
making good progress already
we’re delivering for all stakeholders 
an improved shopping trip for 
customers training and good careers 
for our staff growth and innovation 
with our suppliers in local communities 
we’re supporting causes that matter 
to customers and we’re delivering 
good returns to shareholders
looking forward
the outlook for shareholder returns 
is encouraging we have a strong 
core uk business growing well our 
international businesses offer significant 
upside from recovery in the short 
term and maturity in the longer term 
our balance sheet is strengthening 
and we’re creating value through 
good property development
our positions in highgrowth 
international economies and nonfood 
meant we were always likely to face 
strong headwinds during the recession 
but it will be these parts of our business 
which will grow fastest in the recovery 
and beyond
i am confident that with the prospect 
of an improving global economy and 
recent investments in acquisitions and 
new selling space making a greater 
contribution going forward returns 
will improve significantly – starting 
this year
sir terry leahy
chief executive
each element of our strategy – uk 
international nonfood retailing 
services and community – is stronger 
now than this time last year 
in international our businesses have 
made good progress in a challenging 
global economic environment our 
strategy is working – we’ve grown 
sales profits and market shares and 
we’ve continued to invest in the drivers 
of future growth our performance 
in asia was particularly pleasing 
our business in europe held up 
well despite the obvious economic 
challenges and i believe the startup 
losses in our us business will now 
begin to reduce as fresh  easy 
establishes itself
our uk business had a good year 
by remaining focused on helping 
customers spend less and encouraging 
loyalty with an increased investment 
in clubcard our uk business has 
delivered a solid performance in our 
core grocery operations we’re growing 
ahead of the industry as a whole and 
we have been less affected by falling 
inflation than the market at large
in nonfood we have made good 
progress in the uk we achieved a 
particularly strong performance in 
electricals entertainment and toys 
our clothing range is becoming an 
international success led by our ff 
range which is growing rapidly in our 
european markets and this year was 
launched in four countries in asia 
our retailing services have grown 
sales and profits once again we’ve 
also been building the platforms for 
future growth particularly in tesco 
bank which is making good progress 
in developing its own systems and 
people capabilities as well as working 
on a broader product range as it 
moves towards becoming a full
service retail bank
in the same way that we’ve stuck 
to our strategy in other parts of 
the business we’ve also remained 
committed to our work on community 
and the environment in october we 
set ourselves three challenging long
term targets to become a zerocarbon 
this year’s results show another 
solid performance from across 
the group by staying focused 
on doing the right thing for 
customers we have weathered 
the economic storm well and by 
remaining committed to our long
term strategy we are emerging 
from recession stronger – with 
good building blocks in place 
for future growth our business
                core uk
nonfood
retailing services
international
community
t esco plc annual report and financial statements 2010 9
our strategy
our wellestablished and consistent strategy 
for growth has given the business momentum 
to grow through the downturn
business review
this business review analyses the 
performance of the tesco group 
in the financial year ended 
27 february 2010 it also explains 
other aspects of the group’s 
markets results and operations 
including strategy and risk 
management
the directors present their annual 
report to shareholders on the affairs 
of the group and company together 
with the audited financial statements 
of the company for the 52 weeks 
ended 27 february 2010
longterm strategy
tesco has a wellestablished and 
consistent strategy for growth 
the rationale for the strategy is 
to broaden the scope of the business 
to enable it to deliver strong 
sustainable longterm growth by 
following customers into large 
expanding markets at home – such 
as financial services nonfood 
and telecoms – and new markets 
abroad initially in central europe 
and asia and more recently in the 
united states 
the strategy has five elements 
reflecting our four established areas 
of focus plus tesco’s commitments 
on community and the environment
•  to be a successful international 
retailer
•  to grow the core uk business
•  to be as strong in nonfood as 
in food
•  to develop retailing services and
•  to put community at the heart of 
what we do
the strategy to diversify the 
business has been the foundation 
of tesco’s growth in recent years 
it was laid down in 1997 with the 
fifth element – community – being 
added in 2007 many of the new 
businesses that have been created 
and developed over the last 13 years 
as part of this strategy are now 
of significant scale and highly 
profitable – in fact we are now 
market leader in many of our 
markets outside the uk in 1997 our 
international business generated 
18 of the group’s profits and we 
had only just entered the retailing 
services markets today these parts 
of our business represent 22 and 
16 of profits respectively
importantly the strategy has 
given the business momentum to 
grow well through the economic 
downturn by continuing to invest 
through the recession – in the 
customer offer in infrastructure and 
in our people – we are now well 
placed to grow faster and improve 
shareholder returns as the global 
economic environment improves 10 tesco plc annual report and financial statements 2010
countries 
china
czech republic 
hungary
india
japan
malaysia
poland 
republic of ireland
slovakia
south korea 
thailand
turkey
united states
international at a glance
our international business has delivered a strong performance despite 
many of our markets feeling the impact of the global recession
sales trading profit
regional results
sales up trading
profit up 
new space
5 1m sq ft
£194bn £749m
new stores
324
88 56
asia
actual rates constant rates
£m  growth  growth
sales including vat 9072 197 153
trading profit 440 239 189
trading margin 52 02 02
europe
actual rates constant rates
£m  growth  growth
sales including vat 9997 07 09
trading profit 474 40 57
trading margin 54 02 03
us
actual rates constant rates
£m  growth  growth
sales including vat 354 727 580
trading profit 165 179 79 t esco plc annual report and financial statements 2010 11
our business
lifespace – our unique 
approach in china
destination providing shopping 
including a 100000 sq ft tesco 
hypermarket entertainment dining 
and leisure 
we are partnering with investors to 
share the capital commitment on some 
of these projects enabling us to roll out 
more sites faster
international
delivering 
great value for 
customers
on the quality and resilience of our 
assets and local management teams 
and strengthens our confidence in our 
international strategy and longterm 
growth prospects 
asia
we have delivered a strong 
performance in asia despite 
challenging economic conditions in 
the region we have grown sales and 
profits well – driven by new space 
and the excellent performance of the 
stores acquired in south korea in 
2008 which are now profitable as 
economies generally in asia start to 
recover we are seeing improving sales 
trends in all our businesses except 
japan where economic conditions 
remain subdued with overall likefor
like sales for asia turning positive in 
the fourth quarter profits in asia grew 
by 24 with margins strengthening 
significantly in the second half 61 
compared to 43 in the first half 
in international we have delivered 
a resilient performance in the 
face of challenging economic 
headwinds our businesses have 
made good progress – delivering 
for customers today and at the 
same time investing in the drivers 
of future growth our strategy is 
working – and we ended this year 
stronger than we started it
each of our businesses has adapted 
itself to the demands of its local market 
– with strong local management 
teams finding ways to lower costs 
and deliver great value for customers 
increasingly our international 
businesses are also utilising the scale 
and skill of the tesco group – with 
more international sourcing discount 
brands now in seven markets ff 
clothing now in ten countries clubcard 
introduced in seven countries with 
more clubcard holders internationally 
than in the uk – and the tesco 
operating model sharing our global 
best practice to the benefit of all 
our businesses
after a very tough first half of the year 
we are now seeing encouraging sales 
trends across almost all our markets 
we saw strong improvements in like
forlike sales in the fourth quarter 
compared to the third 
with clear signs that our international 
markets are starting to recover we are 
planning to resume a faster pace of 
new space opening in the coming 
year in 200910 we opened 51m sq ft 
of new space and in 201011 we will 
open 85m sq ft in addition to nine 
shopping malls in china the 
performance of our international 
businesses through this severe 
recession has provided reassurance 
our asian markets offer a significant 
longterm opportunity we have 
continued to invest through the 
downturn to ensure that we will be 
in an even stronger position as the 
economies recover this year we 
opened 30m sq ft of new space 
across the region – an increase of 
more than 10 – and we plan to 
open 49m sq ft next year excluding 
shopping malls we have also 
continued to make good progress 
towards developing a strong brand in 
our most developed asian markets 
with further expansion of clubcard 
and our retailing services businesses
the size and scale of china provides 
unique challenges for a retailer but also 
offers a huge opportunity for a business 
prepared to show flexibility and vision 
our strategy is to expand into less 
developed second and third tier cities 
by opening hypermarkets in leading 
shopping malls we’ve found it hard to 
find locations with the right facilities in 
some cities – giving us an opportunity 
to develop our own malls to ensure they 
are the right size location and design 
to meet the needs of the new 
chinese consumer
during the year we opened our first 
three tesco lifespace shopping malls 
in fushun pictured qingdao and 
qinhuangdao and we will open nine 
more this year each mall comprises 
approximately 500000 sq ft of retail 
space over five floors and is a onestop  12 tesco plc annual report and financial statements 2010
international
continued 
investing in 
the drivers of 
future growth
watch the video
wwwtescocomtescoworksforme
throughout the year we opened 
63 new stores in south korea bringing 
our total number of stores to 305
south korea
homeplus in south korea delivered 
another very good performance this 
year with total sales growth of 33 
including 3 on a likeforlike basis 
and profits up more than 50 the 
integration of the former homever 
stores has been completed successfully 
ahead of plan with the stores now 
trading profitably with doubledigit 
likeforlike sales growth in the fourth 
quarter south korea also opened 63 
new stores in the year the acquisition 
in 2008 has helped homeplus grow 
its market share and close the gap 
with the market leader we opened 
our first franchise store in february 
2010 with more scheduled to open 
in this financial year south korea is 
our largest international business 
with sales of £45bn and profits of 
almost £300m 
thailand
tesco lotus in thailand has delivered 
a good performance – despite a 
background of continued political 
uncertainty – with doubledigit 
profit growth on a constant exchange 
rate basis a strong store opening 
programme has helped drive our sales 
growth this year in a market in which 
we remain the clear market leader 
strong productivity gains have enabled 
us to make significant investments in 
lowering prices for customers whilst 
still delivering good margins and 
positive cash flow the launch of 
clubcard in august 2009 marked a 
new stage in the development of our 
business and takeup from customers 
has been excellent with four million 
customers signed up so far
china
in china we are laying the 
foundations for longterm growth 
with further investments in new 
stores supply chain infrastructure 
and management we have focused 
on three regions – each with its own 
management team – and with a focus 
on expansion into second and third 
tier cities we opened 17 hypermarkets 
in the year including in our first 
three lifespace shopping centre 
developments in fushun qingdao 
and qinhuangdao with average tenant 
occupancy over 80 at opening 
we plan to open 23 hypermarkets in 
201011 of which nine will be in new 
lifespace malls the mall development 
programme will be funded in part 
through joint ventures with thirdparty 
investors the first such joint venture 
– incorporating three malls – was 
established in november 2009 with a 
syndicate of leading asian investors
malaysia
our business in malaysia made good 
progress with sales growing 9 this 
year – increasing our market share 
we continue to invest in clubcard with 
more than one million customers 
signed up and with a dunnhumby 
team working with us locally to 
provide insight on pricing range and 
promotions we grew our space by 
11 this year but with the economy 
starting to show signs of recovery 
we plan to step this up to 27 growth 
in 201011
japan
in our 20089 annual report we 
stated that with the challenging 
market conditions in japan we 
had only limited headroom on the 
carrying value of our japan assets 
given the further deterioration in the 
retail market it became appropriate 
to make impairments against the 
goodwill arising on the acquisition 
we made to enter the market in 2003 
resulting in a £131m charge to the 
income statement £82m in the first 
half and £49m in the second half
our team in japan continues to 
make good progress in developing 
the business our new convenience 
format is receiving good feedback 
from customers who like the focus on 
fresh food and new features helping 
us to differentiate our offer such as 
the instore bakery an extensive wine 
range and our first 400 ownlabel 
products – which after only a few 
months already account for 10 
of sales
india 
our early plans in india are progressing 
well our local management team is 
helping our franchise partner trent 
to develop its star bazaar hypermarket 
operation which is currently achieving 
likeforlike sales of c40 and buys 
more than 70 of its products from 
tesco’s wholesale business plans for 
our cash and carry business are also 
on track with our first store expected 
to open towards the end of this year 
there are more 
clubcard holders 
internationally 
than in the uk t esco plc annual report and financial statements 2010 13
our business
 “ i get special 
    offers with my 
   member card”
tesco 
works 
 for me
ji
tesco customer
shanghai china 14 tesco plc annual report and financial statements 2010
international
continued
our flagship my narodni 
department store in prague 
reopened in september 2009
after a major refit
europe
europe overall delivered a robust 
performance against strong economic 
headwinds in the form of a sharp 
downturn in economic activity 
causing a slowdown in customer 
expenditure sales growth varied 
across the region with a good 
contribution from new space helping 
sales grow in poland and turkey and 
stay stable in the czech republic and 
hungary significant price deflation 
and crossborder shopping driven by 
rapid movements in exchange rates 
resulted in sales declining in slovakia 
and ireland overall however the 
sales trends are now improving each 
of our european businesses showed 
an improvement in likeforlike sales 
growth in the fourth quarter 
we have made market share gains 
across our central european markets 
by reducing costs and lowering prices 
for customers and by continuing to 
invest in new space profitability in the 
region as a whole declined slightly 
compared with last year but was 
resilient given the severity of recession 
we are continuing to invest in the 
region opening 18m sq ft of new 
space during the year – less than 
originally expected primarily as a 
result of the economic environment 
with the outlook improving we will 
be stepping up the rate of opening 
with a plan to add 31m sq ft of new 
space across the region in 201011
republic of ireland
in ireland we have made substantial 
changes to our business which was 
facing the dual challenge of a severe 
recession and crossborder trading by 
integrating more of our international 
brand buying with our uk business we 
have been able to reduce the prices 
of 12500 products by an average 
of around 20 
customers are responding 
enthusiastically to our improved 
pricing and range significant uplifts 
in volumes have now offset the impact 
of lower prices resulting in positive 
likeforlike sales growth in the last 
few weeks of the year and a growing 
market share these changes 
combined with a substantial cost 
reduction programme have enabled 
tesco ireland to deliver a steady 
financial performance despite the 
economic headwinds and significant 
selfimposed price deflation the 
cost of the exceptional restructuring 
activities was £33m in total for 
the year
hungary
our business in hungary continues 
to perform well – with sales levels 
being maintained despite a very weak 
economy in which unemployment 
levels increased by more than 25 
and consumers were hit with a 5 
increase in sales tax we are continuing 
to execute our strategy of investing 
in the shopping trip for customers 
helping our overall market share to 
grow again in the last year further 
consolidating our market leadership 
poland
in poland we have had another good 
year with strong growth in sales and 
profits on a constant exchange rate 
basis a good performance from the 
converted leader price stores the 
popularity of our discount brands – 
now in one in three baskets – and 
our clothing range which achieved 
likeforlike sales growth of more than 
20 have helped our business 
maintain positive expetrol likefor
like sales growth overall the launch 
of clubcard in august 2009 has been 
very well received with 18 million 
customers signing up so far 
czech republic
in the czech republic our strong 
new store opening programme has 
helped us maintain sales at levels 
similar to last year and improve our 
share of a market affected by high 
unemployment and price deflation 
our express and 10000 sq ft format 
stores continue to do well with 
positive likeforlike sales growth 
but as in most markets growth in 
the larger stores remains subdued as 
customers curtail their spending on 
nonfood in the current environment 
the outstanding category in non
food has been clothing with double
digit sales growth our flagship my 
narodni department store in prague 
was reopened after a major refit 
project and we are pleased with the 
results to date 
the first t esco 
outside the uk 
opened just 15 years 
ago – in hungary with growing sales and improvements 
in productivity waste and distribution 
costs store economics are improving 
steadily overall trading losses were in 
line with guidance provided last year 
and reflect the fact that fresh  easy 
has been built with the infrastructure 
to support hundreds of stores 
we expect to open new stores at a 
rate of around one per week this year 
with a focus on areas where the local 
economy has been less severely hit 
and where we are seeing substantially 
stronger sales performance one of 
the benefits of the downturn is a 
slightly softer property market we 
are now able to buy more freehold 
properties and the overall cost of 
building a store has fallen by 
approximately 20 a combination 
of new space and organic sales 
growth means that sales growth this 
year will be more than 50
although we do not expect losses to 
be much lower in 201011 we believe 
they have now peaked
t esco plc annual report and financial statements 2010 15
our business
145 fresh  easy 
stores by end of 
200910
asia
1230
europe
954
 us
145
international stores
slovakia
in slovakia the overall retail market 
has been very challenging with rising 
unemployment and sharp falls in 
industrial output crossborder 
shopping remained significant for 
much of the first half but abated in 
the second half after we reduced 
our prices within slovakia to bring 
them more closely into line with 
neighbouring countries likeforlike 
sales growth is recovering strongly 
from negative double digit for the 
first half to positive growth in the final 
few weeks of the year 
a good store opening programme 
combined with investments in the 
shopping trip and customer loyalty – 
with clubcard launching in slovakia 
in september 2009 – have helped us 
extend our marketleading position 
further during the year we have 
recently refitted and rebranded one of 
our large hypermarkets in bratislava 
as an ‘extra’ adding new departments 
such as pharmacy photo processing 
opticians and phone shop this is the 
first of its type in central europe
turkey
in turkey whilst we slowed our rate 
of new store growth it remained 
strong enough to offset the likefor
like sales decline helping us to grow 
overall sales during the year with 
the economy showing early signs of 
recovery we are planning to resume 
a faster rate of expansion this year 
turkey remains an important 
strategic longterm opportunity for 
us as a large growing and relatively 
underdeveloped retail market
united states
in the united states fresh  easy has 
been making good progress despite 
prolonged weakness in the california 
nevada and arizona economies 
customers are enthusiastic about 
our range particularly the fresh food 
prepared in the fresh  easy kitchen 
the store environment and the 
friendly service as with any of our 
new businesses we are adapting and 
improving our offer in response to 
customer feedback during the year 
we’ve broadened the range in some 
key categories – like cereals and pet 
food – and added larger pack sizes 
for families we have also introduced 
a range of lowerpriced house brands 
to help families on a budget
with the improvements to our range 
implemented and with the number 
of stores growing 145 stores by end 
of 200910 we launched media 
campaigns – in september 2009 and 
january 2010 – focusing on how 
fresh  easy can offer both high 
quality and low prices a combination 
of increased customer awareness and 
the improvements we have made in
store helped to drive stronger positive 
likeforlike sales growth in the second 
half of the year  16 tesco plc annual report and financial statements 2010
core uk at a glance
our marketleading uk business has continued to grow well 
by helping customers to spend less during the downturn
clubcard –
15 years of loyalty
clubcard is our unique way of saying thank you 
to our customers for shopping with us launched 
in 1995 clubcard now has 15 million active 
members in the uk clubcard not only rewards 
our customers for their loyalty but it also provides 
us with valuable insight into changing shopping 
patterns by monitoring this data and spotting 
trends early we’re able to respond quickly and 
ensure that we’re always providing customers 
with what they want when and where they want it
this year clubcard became even more rewarding 
by increasing our investment with double points 
customers earned £550m in total in vouchers 
double points has encouraged more customers 
to sign up a clubcard is now used with a higher 
proportion of transactions than before and 18 
more uk households are redeeming vouchers 
than a year ago
the knowledge and expertise of operating 
clubcard – combined with insight and analysis 
from dunnhumby – is now being adopted across 
our international businesses we now have 
clubcard in seven of our international markets 
– in fact we now have more clubcard holders 
overseas than in the uk
trading profit
sales
trading 
profit up
sales up 
£24bn
£423bn
67
active clubcard holders
42
15m
uk results
1
 £m  growth
sales including vat 42254 42
uk trading profit 2413 67
trading margin 62 01
 55 sales growth expetrol
1  tescocom tesco telecoms and dunnhumby are included in the uk 
segment and tesco bank is excluded from the uk segment under ifrs 8
space by format 
express
8
metro
6
superstore
42
extra
42
homeplus
2 availability
975
965
955
945

mar may july sept nov jan
2009
2005
 based on our dotcom picking availability measure
t esco plc annual report and financial statements 2010 17
our business
core uk
sustainable 
profitable growth
 based on our dotcom picking availability measure
our uk business delivered a solid 
performance in competitive 
market conditions we are 
growing faster than the industry 
as a whole and we have achieved 
this by remaining focused – as 
always – on customers 
our strategy of earning their loyalty 
by helping them to spend less – with 
low prices and affordable new products 
such as the discount brands – deflated 
sales growth initially but it was the 
right thing to do for customers by 
encouraging and rewarding loyalty – 
through an increased investment 
in clubcard – we have maintained 
steadier sales growth during the year 
than the industry as a whole which 
has seen a significant slowdown with 
the steep decline in inflation
excluding petrol and adjusting for 
vat likeforlike sales were 37 in 
the first half and 27 in the second 
half driven by a strong volume 
performance achieving our target of 
opening 2m sq ft of new space during 
the year ensured that sales from new 
space made a good contribution to 
total sales growth which was 65 
for the first half and 57 for the 
second half excluding petrol and 
adjusted for vat 
delivering for customers through 
recession is not just about lowering 
prices and offering great promotions 
it’s about delivering all elements of 
the shopping trip consequently we 
have continued to invest in availability 
service range and quality with 
pleasing results
availability
availability has improved again this 
year as a result of a number of 
initiatives to improve stock 
management including more 
efficient ordering systems a greater 
focus on clearing promotional and 
discontinued lines better instore 
monitoring processes and storing 
stock on the top of shelves on the 
shop floor rather than in the 
warehouse the results have not 
only increased availability based on 
our dotcom picking measure and 
reduced evening gaps in fresh food 
by 18 but the resulting reduction 
in stock across our store network has 
made a significant contribution to our 
improved working capital position
service
service remains a key differentiator 
our oneinfront initiative – where if 
there is more than one customer 
queuing at a single checkout we open 
another – and increased investment 
in selfservice checkouts which now 
account for a quarter of all transactions 
continue to keep us ahead of the 
industry on customer measures of 
checkout service we trained more 
than 200000 staff to help them 
respond better to customer needs and 
our ‘every comment helps’ initiative 
which encourages customers to give 
instant feedback via text or email has 
given us the benefit of 60000 
customer comments to help us 
improve our offer and service 
range
tesco’s diverse and adaptable range 
allows us to offer a wide choice for 
every customer whatever their 
budget through the recession we 
have helped customers with lower
priced ranges such as discount 
brands and market value and we 
have also offered them affordable 
treats such as the finest restaurant 
collection ready meals which have 
been very popular we continue to 
innovate our range with over 2600 
new or improved ownlabel food lines 
launched this year as the economy 
starts to emerge from recession we 
are seeing customers buy more from 
our finest range which returned to 
positive likeforlike sales growth in 
the year
2600 new or 
improved ownlabel 
food lines launched 
this year
200000 staff 
trained in ‘every 
little helps’ skills watch the video
wwwtescocomtescoworksforme
18 tesco plc annual report and financial statements 2010
at tesco we’re constantly striving to 
make things better simpler and cheaper 
that’s why we’ve launched three 
innovative and popular iphone apps 
customers no longer have to worry 
about forgetting their clubcard as 
our latest app enables them to scan 
their clubcard on their iphone 
this app is proving extremely popular 
with customers with over 200000 
downloads in the first three weeks 
and there will soon be versions for 
other smartphones too
store finder app enables customers to 
find their nearest stores and then locate 
products complete with prices within 
the store – to the exact aisle 
our wine app allows customers to take 
a photo of a wine they like and uses 
image recognition software to identify 
iphone apps – making life easier 
for customers
the wine providing full product 
information and allowing customers 
to order from their phone
coming soon is another tescocom 
app which will enable customers to do 
their tescocom grocery ordering from 
their phone
core uk
continued 
delivering an 
 ‘every little helps’ 
shopping trip
quality
quality – particularly in fresh food – 
remains important to customers even 
in tough times and as we emerge 
from recession this will become even 
more important that’s why we have 
been investing in our fresh food offer 
with a wideranging change 
programme improved technical 
standards additional specialist staff 
training closer relationships with our 
suppliers and significant changes to 
the way we merchandise some key 
products are helping us deliver a 
stronger range and better shopping 
experience for customers these and 
other initiatives helped tesco win the 
‘fresh produce retailer of the year’ 
award in 2009
step change
our uk step change programme 
is in its thirteenth year and continues 
to go from strength to strength 
this year we met our £550m savings 
target step change is not just about 
generating savings – each project must 
be ‘better’ for customers ‘simpler’ for 
staff and ‘cheaper’ for tesco our stock 
reduction programme is an excellent 
example of this
•  it’s better for customers because 
it has driven a large improvement 
in availability for both food and 
nonfood 
•  it’s simpler for staff because it is 
now easier to locate stock to fill 
the shelves and stock errors can 
be identified more easily and
•  it’s cheaper for tesco because 
stores now hold less stock and 
fewer hours are needed to replenish 
the shelves for example a typical 
tesco extra now holds 8 less 
stock and we are now looking at 
releasing backroom space which 
can be redeployed for retailing 
services or nonfood 
this year we aim to complete a 
global programme that will deliver 
savings of £800m and we’ll invest 
most of these savings back into our 
offer for customers 
new space
through the experience and 
expertise of our property teams we 
have developed over a number of 
years a good pipeline of new space 
opportunities as a result we have 
the opportunity to unwind some of 
the workinprogress we have built 
up and will be stepping up the rate 
of expansion in 201011 we will 
be investing £16bn of capital in 
the uk economy this year and 
will create thousands of jobs for 
people including the longterm 
unemployed through our 
regeneration partnerships 
sustainable strategy
our customer strategy is sustainable 
for the long term because we can 
differentiate tesco in a unique way 
with clubcard and because our low 
prices and improvements to the 
customer shopping trip are based on 
permanent productivity gains 
our growth strategy for the uk is also 
sustainable as it is based on taking a 
balanced approach to the key building 
blocks of topline growth solid like
forlike performance and a consistent 
contribution from new stores 
customers earned 
£550m in clubcard 
vouchers
£550m in step 
change savings t esco plc annual report and financial statements 2010 19
our business
 “  t esco express – 
   it’s the easiest thing 
   at lunchtime”
kevin and allan
tesco customers
east ham and islington
tesco 
works 
 for us 20 tesco plc annual report and financial statements 2010
nonfood at a glance
our general merchandise offer is growing in sophistication with 
improved ranges and prices more global sourcing and a stronger 
online presence
sales in toys up
in the uk
sales
tesco tech support 
advisors in 
uk stores
ff items sold in 
central europe
likeforlike clothing 
sales in central europe 
up 14
sales up 
25
£131bn
1000
68m
14
62
products available online through tesco direct
ff sold in 10 countries
15500
10
we sell 1 in every 4 
smallscreen tvs sold 
in the uk 1 in 4
sales £bn
200910
131
20078
118
20067
104
20089
125 t esco plc annual report and financial statements 2010 21
our business
nonfood 
significant 
market share 
gains in key 
categories
as our uk nonfood business continues 
to grow we’ve worked hard to create 
innovative solutions to increase storage 
and distribution capacity and efficiency 
whilst reducing our impact on the 
environment 
our first ever purposebuilt import 
storage facility which opened in 
middlesbrough in august fulfils both 
these objectives whilst also creating 
800 jobs in the local community
the 910000 sq ft teesport distribution 
centre offers a traditional low bay 
assembly operation and high density 
storage within a fully automated high 
bay warehouse providing a capability of 
holding 160000 pallets and assembling 
up to 45 million cases per week the 
scale of teesport along with its port 
location and onsite rail infrastructure 
has helped reduce costs in our 
t eesport – helping us get better 
simpler and cheaper
distribution network which in turn 
helps us keep prices low for customers
teesport has also delivered major 
environmental benefits by removing 
over 12000 lorry journeys per year 
from the uk’s roads this has made a 
significant step towards our target to 
halve distribution emissions of each 
case delivered by 2012 against a 
baseline of 2006
sales
uk
£90bn
international
£41bn
our nonfood performance has 
been very resilient through the 
downturn in some key categories 
we have made significant market 
share gains as more customers 
have been encouraged to try our 
nonfood range in the search for 
great value and as some competitors 
have felt the strain 
group nonfood sales rose 62 to 
£131bn with £90bn in the uk and 
£41bn in international
we delivered a very strong nonfood 
performance in the uk with steadily 
improving likeforlike sales during 
the year a number of categories had 
particularly strong growth
electricals 
with competitive prices a great range 
– instore and online – and over 1000 
tesco tech support advisors in our uk 
stores to help customers make their 
choice we are rapidly growing our 
presence in the electricals market we 
now sell one in every six microwaves 
in the uk and one in four smallscreen 
tvs our sales in electricals have 
doubled in the last four years and 
around 20 are online
entertainment
our market share in games has 
doubled in the last year as a result 
of allocating it more space instore 
revamping the range and layout 
and being more competitive on 
new releases 
as part of our drive to lower prices 
for customers we make every effort 
to cut out the middlemen and source 
products from manufacturers or 
developers for example we teamed 
up with dreamworks studio for 
the exclusive rights to sell the short 
animated christmas film merry 
madagascar this groundbreaking 
relationship was the first of its kind 
in the industry and enabled tesco 
to sell over one million merry 
madagascar dvds 
toys
our sales in toys have grown 25 
this year with online sales up more 
than 60 
clothing 
sales grew by 73 including positive 
likeforlike growth to reach £1bn 
in sales for the first time helped by a 
15 increase in children’s wear and 
the launch of our online clothing range 
we sell 1 in 6 
microwaves sold 
in the uk tesco 
works 
 for me
22 tesco plc annual report and financial statements 2010
“ everything is in one 
   location – i just bought 
   a washing line”
sasha with schmoo
tesco customer
friern barnet t esco plc annual report and financial statements 2010 23
our business
nonfood 
continued
resilient 
through the 
downturn
our ambition is to make ff a leading 
global fashion brand offering unbeatable 
value for money not compromised by 
quality design or provenance
ff launched in the uk in 2001 and has 
expanded rapidly since then with sales 
last year of £540m in the uk – supported 
by the launch of our online clothing site 
in october 
ff launched in central europe in 2008 
and we’re already making excellent 
progress ff is rapidly becoming 
established in the region with customer 
awareness of the brand growing from 
34 to 61 in the last year 
across our markets in central europe 
tesco is already one of the largest 
clothing retailers in fact during the year 
we sold more ff items – 68 million – 
than the combined populations of our 
ff – a global brand
four countries in the region poland 
hungary czech republic and slovakia
we’re now building on the success in the 
uk and central europe to launch ff 
across our asian markets this year we 
launched in china malaysia south korea 
and thailand
as with any brand ff can’t afford to 
stand still which is why we’re broadening 
the brand’s appeal with new ranges – 
ff couture and ff jewellery 
international clothing
clothing is becoming a global 
strength and a good example of how 
we are bringing global scale and skill 
to our international businesses
in our four central european markets 
clothing likeforlike sales grew 14 
this year – following strong growth 
the previous year – in a market which 
has been declining overall in the 
recession we’ve also introduced ff 
ranges to four asian markets this year 
– another step in developing ff into 
a global brand
joint buying – whereby 95 of the 
supplier base in central europe is 
the same as ireland and the uk – 
has brought the benefits of group 
expertise and scale helping to 
improve quality and costs
online
shopping habits are changing – 
customers want to buy online as well 
as from stores and catalogues – and 
many will use a combination of these 
to research before buying with an 
integrated multichannel approach 
we’re making it easy for customers 
whichever way they want to shop 
in addition to the 15500 products 
available online through tesco direct 
we now have two new specialist 
websites launched in october 
•  www  t e s c o  c o m  c l o t h i n g 
our new clothing site combines 
familiar tesco labels such as 
cherokee and ff with some new 
tesco lines exclusively offered online 
plus a number of other brands 
the site became one of the top 
ten most visited clothing websites 
within weeks of its launch so far 
the customer feedback has been 
very strong particularly on value 
for money and ease of shop
•  wwwtescocomentertainment 
the launch of tesco entertainment 
brought together for the first time 
our entire physical and digital 
entertainment offer in a new 
and easytouse onestop site 
customers are now able to buy 
a cd dvd or game and a film 
or album download all in one 
transaction from the outset the 
new website has proved popular 
with customers
1000 tesco tech 
support advisors 
in uk stores
watch the video
wwwtescocomtescoworksforme tescocom
dunnhumby serves other 
retailers and manufacturers 
in 26 international markets 26
24 tesco plc annual report and financial statements 2010
retailing services at a glance
we’ve made good progress this year in our retailing services 
businesses tesco bank tescocom telecoms and dunnhumby 
tescocom – a leading 
online retailer
including both our grocery and nonfood offer 
tescocom is one of the largest online retailers 
in the uk with sales of more than £2bn just as 
in our stores our success comes from listening 
to customers and a constant drive to ensure 
that we provide an online ‘every little helps’ 
shopping experience
with more than a million active customers our 
online grocery business is the market leader and 
the most profitable business of its kind in the 
world it continues to grow strongly – last year we 
delivered over one billion items we have put ease 
of use at the heart of our online shopping trip – for 
example our ‘favourites’ feature which makes 
shopping online easier by using clubcard to 
remember a customer’s favourite instore and 
online purchases we also continue to innovate 
with our ‘price match’ on any substituted products 
and our ‘shorter than we’d like’ code life guarantee
tesco direct extends the reach of our nonfood 
offer with over 15500 products available to 
customers via the internet and catalogues 
customers can choose to have goods delivered to 
their home or they can pick them up at one of our 
261 instore direct desks this year we relaunched 
our online entertainment site enabling customers 
to buy downloads alongside the physical product 
and we launched our online clothing website with 
a range of 2500 fashionable items of which 
1000 were exclusively online
sales
trading 
profit up
£36bn
176
new customer 
accounts over 
the past year
tesco bank
13 1
400000
telecoms
dunnhumby
trading profit up
grocery items 
delivered last year
profits up
tesco mobile 
customers
phone 
shops
1bn
2m
26
100 t esco plc annual report and financial statements 2010 25
our business
retailing
services
laying the 
foundations for 
further growth
following the announcement in 
july 2008 of our intention to take 
full ownership of tesco bank 
we set a target to grow the 
profitability of our retailing 
services businesses from a little 
under £400m in 20078 to £1bn 
this year we made good progress 
in attracting new customers and 
growing sales and profits while 
at the same time laying the 
foundations for further growth 
total retailing services sales were 
£36bn up 42 on last year and 
profits were £540m up 176
tesco bank
overall tesco bank has delivered a 
good performance in a challenging 
retail banking market growing profits 
by 13 to £250m bad debt levels 
rose during the year but have now 
stabilised and throughout have 
remained below industry averages 
we have absorbed additional costs as 
we begin the process of moving the 
business onto its own infrastructure 
and build the team as we prepare the 
business for faster growth 
commercial performance
we grew the number of customer 
accounts by more than 400000 in 
the last year – to a total of more than 
62 million across all products we 
have achieved doubledigit customer 
growth in our banking products 
including 27 growth in personal 
loans in insurance we held our 
number of policies broadly flat in a 
very competitive market the number 
of motor insurance policies declined 
– partly as a result of a planned 
reduction in our exposure to highrisk 
drivers – but the number of policies 
in home pet and life insurance 
increased our 130 instore travel 
bureaux saw an increase in 
transactions of more than 80 
and the number of atms in our 
network grew to over 2800 
profit
gross profit grew 19 to £749m with 
a good performance in banking being 
partly offset by lower profitability 
in insurance primarily as a result of 
lower investment income linked to the 
current low interest rate environment 
trading profit was up 131 to £250m 
compared to £221m in 20089 on a 
pro forma basis profit before tax was 
£114m – with the primary deduction 
from operating profit being the 
previously announced £127m non
cash amortisation of intangibles 
arising on acquisition this profit 
performance was achieved after an 
increase in operating costs – as a 
result of the change of ownership as 
the business prepares for expansion 
– and against the background of a 
32 increase in bad debts – to £177m 
which was in part offset by a credit 
relating to the unwind of the fair value 
adjustment created on acquisition
capital and liquidity
the tier 1 capital ratio at the end 
of 200910 was 130 the funding 
and liquidity position of the business 
remained robust throughout the 
period with customer deposits in 
excess of customer lending this is 
further supported by a highquality 
liquid asset portfolio net shortterm 
wholesale cash and investment 
grade assets worth £13bn 
management team
during the year good progress 
has been made in completing 
the recruitment of an experienced 
management team in all areas 
of the bank finance risk legal 
commercial treasury and it all 
senior roles have now been filled 
infrastructure
in september 2009 we entered into 
an agreement with fortis uk ltd to 
help us build the operational platform 
and technical expertise required 
to further develop our insurance 
business we have also selected the 
core technology platforms for the 
banking products the migration 
programmes for both sides of the 
business are progressing well and we 
expect to be writing business on the 
new systems by the end of 201011 
we have secured new premises for 
banking and insurance operations in 
glasgow and newcastle which will 
open in mid 2010 creating 1800 jobs
new product development
subject to regulatory approval we 
anticipate launching new savings 
products and mortgages by the end 
of financial year 201011 with current 
accounts to follow in the second half 
of 2011 
62 million tesco 
bank customers
doubledigit 
customer growth 
in our banking 
products 26 tesco plc annual report and financial statements 2010
retailing
services
continued
growing sales 
and profits
tescocom 
our online businesses – including 
dotcom grocery and direct – delivered 
another strong performance achieving 
a 14 increase in sales with profits 
rising 26 to £136m 
in a little over a decade we have built 
a substantial profitable business that 
has sales of £21bn and employs 
20000 people our website is the 
third most visited retail website in the 
uk and last year our online grocery 
business delivered over a billion items
the number of active customers 
in our online grocery business has 
grown to over one million and basket 
size has increased record levels of 
availability and innovations such as 
price matching on substitutions are 
improving the customer experience 
and helping to reduce the number 
of lapsed customers and calls to the 
service centre we are reducing costs 
and carbon emissions by improving 
fuel consumption per order by 10 
for the second year running through 
implementing new technology to 
improve driving and routing efficiency
tesco direct extends the reach of our 
nonfood offer to customers via the 
internet by phone and catalogues 
customers can choose to have goods 
delivered to their home or they can 
pick them up at one of our 261 in
store direct desks tesco direct had 
another good year making good 
progress on its customer service offer 
growing sales by 28 and continuing 
on its path towards profitability
tesco telecoms
profit from our telecoms business 
grew driven primarily by tesco 
mobile which achieved a 14 
increase in customer numbers – to 
more than two million – in a declining 
prepay phone market tesco mobile 
also successfully entered the ‘pay 
monthly’ market this year with 
innovative tariffs and generous credit 
rewards picking up the ‘best tariff’ 
accolade at the 2009 mobile choice 
awards tesco mobile remained the 
number one payasyougo operator 
for customer satisfaction throughout 
2009 in december 2009 tesco 
mobile broadend its appeal further by 
becoming only the third uk operator 
to offer the iphone for which sales 
have been encouraging
we have made good progress in 
rolling out our instore phone shops 
with 105 open at year end and a 
further 100 planned by the end of 
this year the phone shops are 
transforming our ability to sell 
products that require an assisted sale 
– particularly contract mobile phones
also in 2009 we signed a wholesale 
broadband agreement with cable 
 wireless which will enable us 
to relaunch our broadband offer 
to customers in 2010 with higher 
bandwidth speeds and lower prices 
dunnhumby
this year marks dunnhumby’s 20th 
anniversary in addition to supporting 
tesco’s clubcard in seven countries 
around the world dunnhumby serves 
other retailers and manufacturers in 
26 international markets in fact tesco 
now represents only around 15 of 
its sales 
dunnhumby is growing fast – with 
profits up 28 in the year – helped 
by new engagements in the united 
states macy’s canada metro and 
colombia exito dunnhumby now 
touches the lives of over 350 million 
consumers through its client 
relationships
t esco mobile 
no 1 for customer 
satisfaction
source customer service index
watch the video
wwwtescocomtescoworksforme
t elecoms t esco plc annual report and financial statements 2010 27
our business
“ i have my cat insured  
   with t esco – they were  
   very reasonable”
sue with lexi
tesco customer
muswell hill
tesco 
works 
 for me 28 tesco plc annual report and financial statements 2010
carbonfootprinted 
products in the uk 
and south korea 
500
we helped 62 million 
people get active 
worldwide
62m
of store waste in the uk diverted from 
going directly to landfill
100
we are committed to become 
a zerocarbon business by 2050
zero
community 
promises
caring for the 
environment
actively supporting 
local communities
buying and 
selling products 
responsibly
giving customers 
healthy choices
creating good jobs 
and careers
community at a glance
we’re continuing to lead the way in caring for the environment 
supporting local communities and encouraging healthy lifestyles
ramsey – 
the world’s first zero 
carbon store
tesco has been continuously developing stores 
with lower carbon footprints since 2005 and 
our new store at ramsey in cambridgeshire is 
the latest step on this journey the store emits 
zero net co
2
 in its operations
the building is designed to use as little energy 
as possible the frame is made from sustainably 
sourced wood which requires much less energy 
to produce than steel we use roof windows and 
sun pipes to bring natural daylight flooding into 
the customer and staff areas
any energy that the store does need is generated 
by a combined heat and power plant on site 
which is powered from renewable sources we 
sell any excess electricity to the national grid
carbon emissions reduction 
from our baseline 2007 
portfolio of stores and 
distribution centres 
78
community 
champions
suppliers responding to 
our survey saying we treat 
them with respect
jobs created in 
uk regeneration 
partnerships
100
270
91
380
100 of eligible own 
brand products now have 
nutritional labelling t esco plc annual report and financial statements 2010 29
our business
community
increasingly 
important for 
our growth
we succeeded in 
getting 62 million 
people active across 
the world
throughout the 
year we gave over 
£60m in donations 
to charities
we are committed to being 
a responsible neighbour within 
our local communities and 
taking a leadership role on the 
environment this is something 
our customers expect and we 
believe is increasingly important 
for our growth
caring for the environment
over the past few years we have 
played a leadership role amongst 
large businesses in tackling climate 
change through our own actions and 
in collaboration with our customers 
suppliers ngos and governments 
around the world we have made 
great progress this year in reducing 
co
2
 emissions across our business 
globally emissions from our baseline 
2007 store and distribution centre 
portfolio have fallen by 78 over 
the past year and new stores and 
distribution centres built since 20067 
are on average emitting 288 less 
co
2
 than their equivalents in 20067
we have delivered on our promise 
to divert 100 of store waste in the 
uk from going directly to landfill
in 2007 tesco invested £25m to 
create a new sustainable consumption 
institute sci at the university of 
manchester the sci aims to answer 
some of the fundamental questions 
about how to make a consumer 
society sustainable 
in october the sci held a conference 
to launch its first major report 
‘consumers the key to a low
carbon world’ at that conference 
we committed ourselves to a new set 
of challenging longterm targets to 
become a zerocarbon business by 
2050 to reduce the carbon impact of 
products in our supply chain by 30 
by 2020 and to help our customers 
halve their own footprints by 2020
actively supporting local 
communities
our values at tesco mean that we 
listen to our customers and respond 
to what we hear customers tell us 
that being part of a local community 
is important to them and they look 
to us to play an active role being at 
the heart of successful thriving 
neighbourhoods is not just in the 
interest of our customers it is in our 
interest too we aim to use our size 
as a force for good in society
throughout the year we gave 
over £60m in donations to charities 
and contributions to community 
projects including causerelated 
marketing giftsinkind staff time 
and management costs once again 
we have donated the equivalent of 
more than 1 of our profits to good 
causes additionally including our 
charity of the year partnerships 
which go from strength to strength 
this year our staff raised over £7m 
for charity across the group 
we have continued to roll out 
community champions right across 
the group community champions 
are staff members who dedicate paid 
hours to coordinate store activities in 
their local communities the champions 
support local charities organisations 
schools and causes that local people 
really care about we now have 
champions in seven countries
 
as part of the tesco for schools and 
clubs scheme in the uk this year 
we gave away £137m of equipment 
to 35000 schools and clubs a rise 
of about 50 in both the value of 
the equipment and the numbers 
participating 
in the us we ran our ‘shop for 
schools’ project for a second year 
in this scheme we give participating 
schools us1 for every us20 spent 
at fresh  easy stores the first year 
of the project helped raise over 
us130000 for schools in california 
arizona and nevada with the school 
that raised the most money in each 
state receiving a us5000 bonus
in turkey our computers for schools 
programme distributed 264 products 
including computers printers and 
projectors to 60 schools in poland 
more than 600 schools took part in 
our tesco for schools programme 
an environmental contest for schools 
where children create a piece of art 
with an environmental theme julia with krystian
tesco customer
krakow poland
30 tesco plc annual report and financial statements 2010
“  t esco is 
  environmentally
  friendly”
tesco 
works 
 for me watch the video
wwwtescocomtescoworksforme
t esco plc annual report and financial statements 2010 31
our business
community
continued
we aim to act 
responsibly in 
everything we do
we now have ethical 
action managers in 
south africa and 
bangladesh
in poland we sell 
more than 6000 
regional products
buying and selling products 
responsibly
we are committed to buying and 
selling our products responsibly and 
treating our suppliers fairly this is not 
just the right thing to do it is also in 
our business interest we know that 
if you treat people decently they 
perform better this approach also 
helps to improve the sustainability 
of our supply chain by investing for 
the long term in businesses that 
understand our needs our customers 
benefit through better products and 
our suppliers’ employees benefit 
through more stable and secure jobs
in 2009 over 3300 suppliers covering 
all our markets responded to our 
groupwide anonymous supplier 
survey – supplier viewpoint at least 
90 agreed that we pay on time we 
are professional we treat them with 
respect and we are committed to 
meeting customer requirements
we have launched our trading fairly 
programme and recruited our first 
ethical action managers in south 
africa and bangladesh who work 
with our local suppliers to improve 
conditions across the supply chain 
we have also introduced ‘trading 
fairly’ awards for our produce and 
clothing suppliers which reward 
suppliers making particularly strong 
efforts to improve conditions 
for their employees
at tesco product safety is of 
paramount importance we have a 
team of over 900 technical specialists 
working to raise standards in our 
supplier base around the world 
they help ensure that all our products 
– from tagliatelle to tvs – are safe 
legal ethical and of the highest 
quality for our customers
we know that many of our customers 
want to buy products that support 
their local businesses and economy 
particularly in the current economic 
climate they are also concerned 
about the environmental impact 
of the products they buy in the uk 
we have dedicated local buying 
marketing and technical teams in 
each of our regional buying offices 
we stock more than 4000 local 
lines and work with over 400 local 
and national suppliers we’re also 
doing more local buying in our 
international businesses for example 
in poland we sell more than 6000 
regional products
giving customers healthy choices
we are committed to helping our 
customers and staff adopt healthy 
lifestyles we aim to provide better 
information on the nutritional value 
of products so customers can make 
informed choices to improve their 
health across the group we have 
exceeded our target of nutritional 
labelling on ownbrand products – 
we now label 100 of eligible 
products – giving customers the tools 
they need to make healthy choices
as part of our strategy to encourage 
customers to lead more active lives 
we run a range of programmes 
around the world from aerobic 
competitions in thailand to charity 
‘runs for life’ in slovakia and the 
czech republic this year we 
succeeded in getting 62 million 
people active across the world
creating good jobs and careers
we are dedicated to creating good 
jobs wherever we are 
during the year we opened a further 
three regeneration partnership stores 
in the uk in oldham birmingham 
and litherland near liverpool 
creating 380 jobs for the longterm 
unemployed since 2009 we have 
opened 26 regeneration partnership 
stores and created more than 3200 
jobs for people who have previously 
been longterm unemployed half the 
jobs for each partnership are reserved 
for local people who have been 
unemployed for at least six months 
including those with low levels of 
numeracy and literacy skills and 
people with disabilities 
we were also one of the first 
companies to work with the uk 
government in local employment 
partnerships designed to provide 
jobs for the longterm unemployed
we will create 16000 new jobs this 
year including 9000 in the uk 32 tesco plc annual report and financial statements 2010
our people at a glance
as we grow our business we’re developing our people to become 
leaders for the future
china graduate 
programme – 
recruiting tomorrow’s 
leaders today
we believe that businesses perform best when 
they are run by local people for local customers 
however we also understand the importance of 
sharing knowledge and experience around the 
group our china graduate programme helps 
balance both these requirements whilst ensuring 
that we recruit top talent for the future to grow 
with the business
each year we recruit a small number of high
potential graduates who are fluent in both english 
and mandarin the graduates spend seven 
months being trained supported and developed 
in the uk before taking up a specific role in china 
as with all our graduates we are committed to 
equipping these individuals with both the 
technical and leadership skills they will need to 
progress through the business 
this unique scheme has been running for four 
years now and is gaining a strong reputation 
amongst university leavers last year we attracted 
almost 1000 applicants for just 12 places previous 
years’ graduates have gone on to managerial roles 
across a variety of functions in china
people
472000 4m
in shares awarded 
under shares in 
success scheme £98m
195000
of our people 
have a personal 
stake in tesco
new graduates recruited this year
of people on 
the boards of 
our international 
businesses 
are local to 
that country 50
810
international
627
uk
183
improved attendance levels put 
an additional four million hours 
into uk stores and depots t esco plc annual report and financial statements 2010 33
our business
our people 
our people 
are crucial to 
our success
our values are ‘noone tries harder 
for customers’ and ‘we treat 
people how we like to be treated’ 
these values are interlinked and 
underpin everything we do at 
tesco we know that by managing 
our people well – in a culture of 
trust and respect – they will in turn 
try their hardest for customers 
by offering competitive pay and 
benefits and an opportunity to 
develop a longterm varied career 
with good training we are able to 
keep our people motivated committed 
and excited about working at tesco 
in the uk for example in our internal 
‘viewpoint’ staff survey this year 
we improved on 24 out of the 
25 measures and attendance levels 
improved again putting an additional 
four million hours into our stores 
and depots
rewards and benefits
our people are crucial to our 
success and it is essential that 
they feel rewarded for the work 
they do and supported in their 
development we offer good pay 
across all our businesses as well as 
benefits in each market that reflect 
employees’ priorities 
despite the tough global market in 
2009 we continued to invest in pay 
at the annual review we focused 
on our core rates and in a tough 
financial year our pay competitiveness 
improved in most markets
in many developing markets 
employees place most value on good 
basic pay and being paid fairly for 
overtime and these are our priorities 
in malaysia for example where there 
is no legal minimum wage the 
minimum a tesco employee will 
receive is 30 more than the poverty 
line index in thailand this year we 
introduced a staff discount linked 
to clubcard
in the uk our reward package leads 
the market on pay and benefits we 
are one of the few ftse businesses 
to still have an open defined benefit 
pension scheme which is greatly 
valued by staff we regularly offer 
staff the opportunity to experience 
our brand for example we offer staff 
great deals on our retailing services 
– tesco mobile offers exclusive staff 
tariffs and tesco bank offers deals on 
home insurance life insurance and 
travel money – which not only reward 
our staff but encourage them to 
become advocates for our services 
through share ownership and share 
incentive schemes 195000 of our 
people have a personal stake in tesco 
employees were awarded shares 
worth a record £98m last may 
through our shares in success 
scheme over 55000 staff were able 
to benefit when save as you earn 
schemes matured in february giving 
them access to shares worth £144m
training and development
we are committed to providing 
opportunities for our people to get 
on and turn their jobs into careers 
last year we had more people on 
development programmes than 
ever before
we have continued to develop our 
apprenticeship training in the uk 
since 2004 83 of the employees 
who embarked on the scheme have 
been awarded an apprenticeship in 
retail skills – equating to five gcses 
at grades a to c this training is 
completed entirely in the workplace 
the first 17 students to complete the 
tesco foundation degree graduated 
in july the foundation degree in 
retail – delivered and awarded by 
manchester metropolitan university 
– is a twoyear development 
programme aimed at providing work 
focused retail training to managers at 
tesco we now have 60 people on the 
scheme and are working on ways to 
make it grow
we believe that even in difficult times 
it is essential to invest in future talent 
that’s why this year while many other 
businesses were cutting their graduate 
schemes we increased our graduate 
intake to 810 including 535 in asia 
tesco academy
as a leading global company tesco 
aims to offer the very best training 
and development for all its employees 
the tesco academy helps provide an 
opportunity to get on for all our 
people it develops thousands of 
worldclass leaders through excellent 
training in leadership management 
and technical skills
‘noone tries harder 
for customers’ 34 tesco plc annual report and financial statements 2010
our people
continued
everyone 
is welcome 
at tesco 
location of our 
480 directors 
watch the video
wwwtescocomtescoworksforme
uk
50
international
50
over the coming year we will be 
investing nearly £30m in a purpose
built carbon neutral training facility 
in south korea set to become our 
tesco academy hub for asia the 
new academy will help ensure that 
the development of our people in 
asia keeps pace with the rapidly 
growing business
in the uk our european academy 
provides a hub to bring our managers 
and directors from around the world 
to the uk we annually bring our 
100 most senior leaders together 
to share the longterm strategy 
develop their leadership skills and 
build their network the aim is to 
develop confident leaders and create 
a community of experts
developing leaders
as our business grows and diversifies 
we need more leaders to run the 
many substantial businesses and 
functions within the group several of 
which would rank as major companies 
in their own right 
we now have 480 people at director 
level in the business of these 50 
work in our international business – 
a combination of local hires and 
people moving from the uk business 
we also understand the importance 
of increasing mobility as a global 
business we’re developing leaders 
with a global perspective and now 
have 34 of our directors with at 
least one year of experience outside 
their home country 
this year we enrolled our second 
group of senior directors on to our 
advanced leadership programme – 
an 18month course aiming to 
accelerate capability and prepare 
individuals to become future business 
leaders the first intake graduated 
earlier this year by july all will have 
been promoted with two thirds 
working outside the uk
our work level 3 to 4 options 
programme is our main vehicle for 
the internal development of our future 
directors programmes have been 
running very successfully in the uk 
for around three years and we have 
rolled the programme out to asia 
europe and the us in the last year
whistleblowing
our whistleblowing policy and 
helpline is now in place in all countries 
‘protector line’ is a 24hour 
confidential telephone line and email 
address for employees to raise ethical 
issues and also report grievances 
all calls are logged and investigated 
by the appropriate function and all 
serious matters are brought to the 
attention of the ceo the feedback 
is monitored by the compliance 
committee in each business the 
group audit committee annually 
reviews the number of calls and the 
quality of investigation and reviews 
plans to ensure our staff are aware 
of the facility 
in 2009 we received around 1700 
employmentrelated calls to the 
helpline across the group this is an 
increase from last year showing that 
employees are gaining confidence in 
the service most calls relate to 
personnel issues commercial issues 
security and trading law personnel 
issues are referred back to the store or 
resolved through grievance procedures
diversity and inclusivity 
we strive to provide an inclusive 
environment where all difference 
is valued people are able to be 
themselves enjoy coming to work 
and realise their full potential 
regardless of their gender marital 
status race age sexual orientation 
creed ethnic origin religion or belief 
or disability
three women in tesco are currently 
being coached as part of the ftse 
100 crosscompany mentoring 
programme the programme 
launched in 2003 involves ftse 100 
chairmen and ceos acting as 
mentors to senior women just below 
board level in other ftse companies 
the mentors guide and advise 
women in the management of their 
careers so that they are better 
positioned to be considered for board 
appointments our chairman david 
reid is currently working with his 
second mentee from outside tesco
‘we treat people 
how we like to be 
treated’ t esco plc annual report and financial statements 2010 35
our business
marcia
tesco employee
cheshunt
“ you are given 
  the opportunity to 
  go as far as you want”
tesco 
works 
 for me ken hanna tim mason rodney chase lucy nevillerolfe david potts ken hydon patrick cescau terry leahy jacqueline tammenons 
bakker
36 tesco plc annual report and financial statements 2010
david reid – 63 •
nonexecutive chairman
david reid became nonexecutive 
chairman on 2 april 2004 prior to his 
appointment he was deputy chairman 
of tesco plc and has served on the 
tesco board since 1985 david is a 
nonexecutive director of reed elsevier 
group plc and chairman of both kwik
fit group and whizzkidz
rodney chase cbe – 66 •
deputy chairman and senior 
nonexecutive director
rodney chase was appointed a 
nonexecutive director on 1 july 2002 
he is nonexecutive chairman of 
petrofac limited and a nonexecutive 
director of computer sciences 
corporation in los angeles nalco 
company in chicago and tesoro 
corporation in san antonio
sir terry leahy – 53 •
chief executive
terry leahy became chief executive 
in 1997 joining tesco in 1979 he 
held a number of marketing and 
commercial positions prior to being 
appointed to the board of tesco plc 
on 5 october 1992
key
•   member of the 
nominations 
committee
   member of the 
audit committee
   member of the 
remuneration 
committee
richard brasher – 48
commercial and marketing director
richard brasher was appointed to the 
board on 15 march 2004 he joined 
tesco in 1986 he has held a number 
of marketing commercial and store 
operations positions most recently 
nonfood commercial director
philip clarke – 49
international and it director
philip clarke was appointed to the 
board on 16 november 1998 prior to 
his appointment he held a number of 
roles in store operations commercial 
and marketing he is a nonexecutive 
director of whitbread plc
andrew higginson – 52
chief executive of retailing services 
and group strategy director
andrew higginson was appointed 
to the board on 17 november 1997 
he is now chief executive of retailing 
services retaining his responsibilities 
for tesco group strategy he is 
chairman of tesco bank and a non
executive director of bskyb plc
tim mason – 52
president and chief executive officer 
fresh  easy
tim mason has been president and 
chief executive officer fresh  easy 
neighborhood market since january 
2006 he was appointed to the board 
on 16 february 1995 he joined tesco 
in 1982
laurie mcilwee – 47
group finance director
laurie mcilwee was appointed to the 
board on 27 january 2009 he joined 
tesco in 2000 as uk finance director 
and became distribution director 
in 2005 laurie is a chartered 
management accountant
lucy nevillerolfe cmg – 57
corporate  legal affairs director
lucy nevillerolfe was appointed to 
the board on 14 december 2006 she 
joined tesco in 1997 from the cabinet 
office she is deputy chair of the 
british retail consortium a non
executive director of the carbon trust 
and a member of the china britain 
business council the uk india business 
council and the corporate leaders 
group on climate change
our board of directors philip clarke charles allen richard brasher david reid laurie mcllwee karen cook harald 
einsmann
andrew 
higginson
jonathan lloyd
t esco plc annual report and financial statements 2010 37
our business
david potts – 52
retail and logistics director
david potts was appointed to the 
board on 16 november 1998 he joined 
tesco in 1973 from 1997 he directed 
the integration of our businesses in 
northern ireland and the republic of 
ireland before returning to the uk in 
2000 as director responsible for uk 
retail operations from 2004 david’s 
responsibilities have included the 
uk supply chain and the republic 
of ireland
charles allen cbe – 53 •
nonexecutive director
charles allen was appointed a non
executive director on 19 february 
1999 he was chief executive of itv plc 
from 2004 to 2007 he is chairman of 
global radio chairman of emi music a 
nonexecutive director of the olympic 
games and paralympic games ltd and 
a senior advisor to goldman sachs
patrick cescau – 61 •
nonexecutive director
patrick cescau was appointed a non
executive director on 1 february 2009 
he was group chief executive of 
unilever from 2005 to 1 january 2009 
and prior to this he was chairman of 
unilever plc and vice chairman of
unilever nv he has also been a non
executive director of pearson plc 
since 2002 patrick was appointed 
a chevalier de la légion d’honneur 
in 2005 in june 2009 patrick joined 
the board of insead
karen cook – 56 •
nonexecutive director
karen cook was appointed a non
executive director on 1 october 2004 
she is a managing director of goldman 
sachs international and president of 
goldman sachs europe she is also 
a member of the firm’s european 
management committee and 
partnership committee
dr harald einsmann – 76 •
nonexecutive director
dr harald einsmann was appointed a 
nonexecutive director on 1 april 1999 
he is on the board of carlson group 
of companies harman international 
industries inc and checkpoint systems 
inc in the united states he is also
on the board of rezidor ab in sweden
ken hanna – 56 •
nonexecutive director
ken hanna was appointed a non
executive director on 1 april 2009 
he is chairman of inchcape plc he 
was previously chief financial officer 
of cadbury plc until march 2009 and 
prior to that an operating partner 
of compass partners and cfo and 
then ceo of dalgety plc he has 
also been cfo of united distillers 
and avis europe plc
ken hydon – 65 •
nonexecutive director
ken hydon was appointed a non
executive director on 23 february 
2004 he is also a nonexecutive 
director of reckitt benckiser plc 
the royal berkshire nhs foundation 
trust and pearson plc
jacqueline tammenoms bakker 
– 56 •
nonexecutive director
jacqueline tammenoms bakker was 
appointed a nonexecutive director 
on 1 january 2009 she was a director 
general at the ministry of transport 
in the netherlands from 2001 to 2007 
and has held senior positions at quest 
international mckinsey  co and shell 
jacqueline was appointed a chevalier 
de la légion d’honneur in 2006
jonathan lloyd – 43
company secretary
jonathan lloyd was appointed 
company secretary to the board in
december 2006 he joined tesco as 
deputy company secretary in april 
2005 from freshfields bruckhaus 
deringer jonathan is also company 
secretary of tesco bank 38 tesco plc annual report and financial statements 2010
key performance indicators kpis

we operate a balanced scorecard approach to managing the 
business that is known internally within the group as our ‘steering 
wheel’ this unites the group’s resources and in particular focuses 
the efforts of our staff around our customers people operations 
finance and the community its prime focus is as a management tool 
for the company so that there is appropriate balance in the trade
offs that need to be made between the main levers of management 
– such as operations measures financial measures or delivery of 
customer metrics
it therefore enables the business to be operated and monitored 
on a balanced basis with due regard to the needs of all stakeholders 
for the owners of the business it is simply based around the 
philosophy that if we look after customers and staff well and operate 
efficiently and effectively then shareholders’ interests will always be 
best served by the inevitable outputs of those – growth in sales profits 
and returns
 2010 2009 2008
sales growth   
change in group sales over the year including value added tax 68 151 111
uk sales growth 42 95 67
international sales growth 88 306 253
international sales growth at constant exchange rates 66 136 225
retailing services sales growth 42 11 –
profit before tax £3176m £2917m

£2803m
underlying profit before tax £3395m £3124m

£2846m
trading margin   
uk trading margin 62 62 59
international trading margin excluding the united states 53 53 56 
trading margin is calculated from the trading profit expressed as a percentage of group revenue sales excluding value 
added tax and excluding the impact of ifric 13 it is a measure of profit generation from sales and is a comparable 
performance measure with other companies this is how much we made from trade in our stores taking account of the 
cost of the products sold wages and salaries expenses associated with running the stores depots and head office and the 
cost of depreciation of the assets used to generate the profits trading profit is stated after adjusting operating profit for 
the impact of ias 19 ias 32 and ias 39 principally pension costs and the marking to market of financial instruments 
it also excludes the noncash elements of ias 17 ‘leases’ relating to the impact of annual uplifts in rents and rentfree 
periods and the ifrs 3 amortisation charge on intangible assets arising on the acquisition of tesco personal finance tpf
net cash outflowinflow £739m £1601m £801m
net cash outflowinflow is the cash received less cash spent during the financial period after financing activities    
capital expenditure £31bn £47bn £39bn
this is the amount invested in purchasing fixed assets   
uk £15bn £26bn £23bn
international £15bn £21bn £16bn
tesco bank £01bn – –
net borrowings and gearing   
net borrowings £79bn £96bn £62bn
gearing 54 74 52
return on capital employed roce 121 128

 129
‡
roce is calculated as profit before interest less tax divided by the average of net assets plus net debt plus dividend 
creditor less net assets held for sale roce is a relative profit measurement that not only incorporates the funds 
shareholders have invested but also funds invested by banks and other lenders and therefore shows the productivity 
of the assets of the group
underlying diluted earnings per share 3166p
§
2887p

 2702p
underlying diluted earnings per share is the calculation of profit after tax and minority interest divided by the diluted 
weighted average number of shares in issue during the year it is the amount which could be paid out on each share 
if the company decided to distribute all its profits as dividends instead of retaining some for future expansion
 all kpis are for 52 weeks ended 27 february 2010 53 weeks ended 28 february 2009 and 52 weeks ended 23 february 2008 unless otherwise stated 
 restated for ifrs 2 and ifric 13
‡ using ‘normalised’ tax rate before startup costs in the us and tesco direct and excludes the impact of foreign exchange in equity and our acquisition of a majority share of dobbies
§ underlying diluted earnings per share grew by 97 on a statutory basis
community    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
customer
the staff 
are great
i don’t queue
the prices
are good
i can get 
what i want
the aisles 
are clear
earn lifetime
loyal ty
operations
we always save
time and money
we know
how vital our
jobs are
we make our
jobs easier
to do
we deliver
consistently
 every day
we try to
get it right
 first time
creating
good jobs and
careers
giving customers
healthy choices
caring for the
environment
buying and selling our
 products responsibly
actively
supporting local
communities
people
an opportunity
to get on
an interesting 
job
a manager who 
helps me
to be treated 
with respect
manage our
investment
maximise 
profit
grow sales
finance
treat people how we like to be treated
noone tries harder for customers t esco plc annual report and financial statements 2010 39
our business
 2010 2009 2008
total shareholder return 95 80 228
total shareholder return is the notional return from a share and is measured as the percentage change in the share price 
plus the dividend paid this is measured over the last five years 
full year dividend per share 1305p 1196p 1009p
the dividend is paid in two instalments
we monitor a wide range of kpis both financial and nonfinancial individual business units have their own versions of the steering wheel which 
incorporate their own priorities and kpis some of the group kpis below are tracked through the steering wheel and those above are tracked as 
a monitor of investor return
across the group kpis are set for local markets with oversight from the executive directors to ensure they are tailored to drive the priorities 
of each business 
the following are some kpis for the uk and group operations
 2010 2009 2008
uk market share   
grocery market share
 
225 222 218
new nonfood market share
†
41 36 35
employee retention 90 87 84
this measure shows the percentage of employees who have stayed with the business for longer than one year it is one 
measure that we use to monitor employee loyalty and satisfaction and we aim to exceed 80 retention of experienced staff
reduction in co
2
 emissions
††
   
uk 69 36 36
group 78 48 46
this measure shows the overall yearonyear reduction in greenhouse gas emissions from existing stores and distribution 
centres built before 20067 adjusted to exclude emissions from acquisitions and extensions
reduction in co
2
 emissions intensity of new stores and distribution centres
††
   
group 288 253 147
intensity is measured as greenhouse gas emissionssq ft the measure indicates the average reduction in emissions 
intensity of all new stores and distribution centres built since 20067 the base year carbon footprint reporting has been 
assured by environmental resources management erm 
 this is measured as the share of all spend by all shoppers through kantar worldpanel total till roll data
†  source verdict research nonfood in grocers ‘new nonfood’ defined as nonfood retail sales excluding household and health  beauty categories all figures are reported on 
a calendar year basis
†† 2009 figures adjusted for 52week comparison 40 tesco plc annual report and financial statements 2010
these results are for the 52 weeks ended 27 february 2010 in the 
last full financial year we reported a 53week period for the uk 
republic of ireland and the united states us and a 52week period 
for the rest of the group growth rates in these results are expressed 
for the uk republic of ireland and us to coincide with the 
comparable 52 weeks last year
statutory numbers include the adoption of ifric 13 customer loyalty 
programmes all other numbers are shown excluding ifric 13 
consistent with internal management reporting more information 
can be found in note 1 to the group financial statements
group sales including vat increased by 68 to £625bn at 
constant exchange rates sales increased by 61 including petrol 
and 77 excluding petrol
underlying profit before tax rose to £3395m an increase of 101 
group trading profit was £3412m up 123 on last year and group 
trading margin at 59 rose 25 basis points these were helped 
by the fact that tesco bank was fully consolidated in 2010 and 
accounted for as a joint venture for most of 2009
group operating profit rose by 107 to £3457m group profit 
before tax increased 104 to £3176m
on a statutory 52week basis compared to 53 weeks last year 
group operating profit rose by 91 to £3457m and group profit 
before tax rose by 89 to £3176m
cash flow and balance sheet tesco liquidity has improved 
significantly during the year through strong cash generation tight 
control of capital expenditure and working capital improvements 
arising from better inventory management net debt has 
consequently reduced by £17bn to £79bn
excluding the effects of currency fluctuations we expect to reduce 
net debt to £75bn by the end of the 201011 financial year
the strength of our propertybacked balance sheet was 
further demonstrated with profitable marketleading sale and 
leaseback transactions
group capital expenditure was £31bn last year £47bn this reduced 
level of spend was achieved whilst still delivering 8 growth in 
group selling space this year we plan to invest around £35bn in 
capital expenditure
excluding tesco bank cash flow from operating activities totalled 
£54bn £51bn in 2009 including a £06bn improvement in 
working capital
finance costs and tax net finance costs after net favourable ifrs 
adjustments of £103m reduced to £314m £356m last year on a 
consistent 52week basis a reduction in the underlying interest 
charge is expected next year total group tax has been charged at 
an effective rate of 264 last year 267 we expect the tax rate 
in 201011 to be around 26
dividend underlying diluted earnings per share increased by 92 
to 1662p in the second half calculated using a constant tax rate the 
board has approved a final dividend of 916p per share taking the full
year dividend to 1305p this represents an increase of 91 on last 
year’s fullyear dividend which is in line with the growth in underlying 
diluted earnings per share at constant exchange rates the final 
dividend will be paid on 9 july 2010 to shareholders on the register 
of members at the close of business on 30 april 2010
property we are continuing to release value created through the long
term development of our property portfolio in the year we completed 
deals with total proceeds of £18bn and we expect to divest a similar 
amount this year the strong demand for these assets and the good 
yields achieved initial yields between 50 and 52 for stores 
demonstrate the strong underlying value of our property and the 
strength of the tesco covenant profits from property in the year were 
£377m our property mix remains strong – over 70 of our property is 
freehold – supported by substantial new capital investment in freehold 
assets each year our latest property assets valuation of £346bn 
reflects recent firming yields across the market and confirms that our 
assets are worth well in excess of their book value
pension our awardwinning definedbenefit careeraverage pension 
scheme is an important part of our competitive benefits package 
which helps tesco recruit and retain the best people in the uk we have 
160000 employees in the scheme as at february 2010 under the 
ias 19 methodology of pension liability valuation the scheme had a 
deficit on a posttax basis of £13bn compared to £14bn at the half 
year the last actuarial valuation of the scheme’s assets and liabilities 
showed a small and manageable deficit
return on capital employed we have continued to invest during 
the recession which has put pressure on returns in the short term but 
is enabling us to make good progress in all our markets during the 
financial year 2010 our posttax return on capital employed roce 
fell from 128 to 121
having raised roce from 102 in 2003 to 126 in 2006 we 
committed in april 2006 to increase roce a further 200 basis points 
to 146 we are reaffirming this commitment with confidence 
that with the prospect of an improving global economy and recent 
significant investments in acquisitions and new space making a greater 
contribution going forward returns will improve in the coming few 
years starting in 201011
  £151m benefit from ias 32 and ias 39 fair value of derivatives partially offset by 
£48m cost as a result of ias 19 pensions
  in 2009 roce on a 52week comparable basis was 127 on a 53week basis 
it was 128 restated for the impact of ifric 13 ifrs 2 and goodwill adjustments
group financials t esco plc annual report and financial statements 2010 41
our business
risks and uncertainties
introduction risk is an accepted part of doing business the real 
challenge for any business is to identify the principal risks it faces and to 
develop and monitor appropriate controls a successful risk management 
process balances risks and rewards and relies on a sound judgement of 
their likelihood and consequence the board has overall responsibility for 
risk management and internal control within the context of achieving the 
group’s objectives our process for identifying and managing risks is set 
out in more detail from page 49 of the corporate governance section of 
the annual report and financial statements the key risks faced by the 
group and relevant mitigating factors are set out below
business strategy if our strategy follows the wrong direction or is not 
effectively communicated then the business may suffer we need to 
understand and properly manage strategic risk in order to deliver longterm 
growth for the benefit of all our stakeholders our strategy is based on  
five elements to become a successful international retailer to grow the 
core uk business be as strong in nonfood as in food develop retailing 
services and put the community at the heart of what we do pursuit of this 
fivepart strategy has allowed the business to diversify and at a strategic 
level diversification and pursuit of growth in emerging markets have the 
effect of reducing overall risk by avoiding reliance on a small number of 
business areas however by its very nature diversification also introduces 
new risks to be managed in areas of the business that are less mature and 
less fully understood
to ensure the group continues to pursue the right strategy the board 
discusses strategic issues at every board meeting and dedicates two full 
days a year to reviewing the group’s strategy the executive committee 
also discusses strategy on a regular basis we have structured programmes 
for engaging with all our stakeholders including customers employees 
investors suppliers government media and nongovernmental 
organisations we also invest significant resources in ensuring our strategy 
is communicated well and understood by the parties who are key to 
delivering it the business operates a steering wheel a balanced scorecard 
process whereby we set goals for different areas of the business and assess 
our overall progress on a quarterly basis in all countries and significant 
business units to help manage performance and deliver business strategy
financial strategy and group treasury risk the main financial risks of 
the group relate to the availability of funds to meet business needs the 
risk of default by counterparties to financial transactions and fluctuations 
in interest and foreign exchange rates the risks associated with operating 
tesco bank are covered under financial services risks below
the treasury function is mandated by the board to manage the financial 
risks that arise in relation to underlying business needs the function has 
clear policies and operating parameters and its activities are routinely 
reviewed and audited the function does not operate as a profit centre and 
the undertaking of speculative transactions is not permitted a description 
of the role of the finance committee internal audit and external audit is 
set out in the corporate governance section on page 50
financial services risks through tesco bank the group is subject to 
certain risks relating to the personal financial services industry in the uk 
tesco bank is subject to significant legislative and regulatory oversight  
in particular tesco bank is subject to supervision by the financial services 
authority fsa which has substantial powers of intervention and requires 
it to satisfy certain capital adequacy and liquidity ratios if tesco bank is 
unable to or fails to satisfy these ratios in the future it could lose its licence 
and consequently its ability to transact business
tesco bank became a wholly owned subsidiary of tesco on 19 december 
2008 in preparation for this change its risk management and treasury 
capabilities were materially strengthened all policies pertaining to risk 
within the bank are now subject to tesco bank specific governance 
procedures which are owned by the tesco bank board 
tesco bank has a banking business predominantly in the uk with the 
three main products being credit cards unsecured personal loans and 
savings it has also developed a significant insurance business with motor 
home and pet insurance being the main products
tesco bank is subject to various risks associated with the provision of 
financial services in relation to its insurance business tesco bank may 
experience a concentration of risks from natural or manmade disasters  
in addition market conditions may not allow it to purchase the amount  
of reinsurance it considers necessary on terms it considers acceptable 
actual claims may exceed the claims provisions that have been made on 
the basis of past experience tesco bank’s credit card receivables and 
personal loan portfolio may be subject to changes in credit quality due  
to a general deterioration in economic conditions or to failures in its credit 
assessment process which could adversely impact its ability to recover 
amounts due furthermore there is significant competition in the financial 
services industry which could adversely affect tesco bank’s profitability 
legal developments changes in legal interpretation or precedent and 
changes in public policy may result in new risks emerging in addition to 
those anticipated
tesco bank is in the process of building new banking and insurance 
systems and until these are complete there is an increased element  
of operational risk as most operations are outsourced to royal bank of 
scotland tesco bank retains the risk to its insurance activities posed  
by external factors such as a large weatherrelated event 
tesco bank is an fsaregulated entity and so its treasury function is run 
independently from the rest of the group tesco bank’s treasury risks 
include liquidity risk and interest rate risk in particular in the interest rate 
margin realised between lending and borrowing costs tesco bank  
is also subject to the risk of unexpected losses arising from operational 
failure whether as a result of human error systems failures fraud or 
inadequate controls
tesco bank monitors these risks through its governance structures assessing 
any potential impact and action required to manage them the work of the 
risk committee focuses on systemic risks such as funding credit risk and 
risks in the insurance business while the tesco bank audit committee 
considers internal controls and assurance 
operational threats and performance risk in the business there is a 
risk that our business may not deliver the stated strategy in full particularly 
since like all retailers the business is susceptible to economic downturn 
that could affect consumer spending the continuing acquisition and 
development of property sites also forms an intrinsic part of our strategy 
and this carries inherent risks 42 tesco plc annual report and financial statements 2010
risks and uncertainties continued
we aim to deliver what customers want better than our competitors by 
understanding and responding to their needs all of our business units 
have stretching targets based on the steering wheel and the performance 
of business units is monitored continually and reported regularly to the 
board we manage the acquisition and development of our property  
assets carefully we consider and assess in detail every site at each stage  
of acquisition and development and ensure that relevant action is taken  
to minimise any risks
competition and consolidation the retail industry is highly competitive 
the group competes with a wide variety of retailers of varying sizes and 
faces increased competition from uk retailers as well as international 
operators in the uk and overseas 
failure to compete with competitors on areas including price product 
range quality and service could have an adverse effect on the group’s 
financial results
we aim to have a broad appeal on price range and store format in a way 
that allows us to compete in different markets we track performance 
against a range of measures that customers tell us are critical to their 
shopping trip experience and we constantly monitor customer perceptions  
of ourselves and our competitors to ensure we can respond quickly if we 
need to
people capabilities employees are our greatest asset it is critical to our 
success to attract retain develop and motivate the best people with the 
right capabilities at all levels of operations we review our people policies 
regularly and are committed to investing in training and development and 
incentives for our people our ‘talent planning’ process helps individuals 
achieve their full potential we also carry out succession planning to ensure 
that the future needs of the business are considered and provided for 
there are clear processes for understanding and responding to employees’ 
needs through our people matters group staff surveys regular performance 
reviews involvement of trade unions in relevant markets and regular 
communication of business developments we take a proactive approach 
to encouraging diversity at all levels within the business
reputational risk as the largest retailer in the uk expectations of the 
group are high failure to protect the group’s reputation and brand could 
lead to a loss of trust and confidence this could result in a decline in the 
customer base and affect the ability to recruit and retain good people
like other companies we must consider potential threats to our reputation 
and the consequences of reputational damage emotional loyalty to the 
tesco brand has helped us diversify into new areas like retail services and 
nonfood and we recognise the commercial imperative to do the right 
thing for all our stakeholders and avoid the loss of such loyalty the  
tesco values are embedded in the way we do business at every level  
and our group code of business conduct guides our behaviour in our 
dealings with customers employees and suppliers
we engage with stakeholders in every sphere to take into account their 
views and we try to ensure our strategy reflects them since the launch  
of the community plan in 2006 we have demonstrated our commitment 
to tackling a wide range of societal and environmental issues we have 
high level committees including the executive committee corporate 
responsibility committee and group compliance committee to help 
guide and monitor our policies
environmental risks the main environmental risk we face is the threat 
of climate change and it is essential that we work to mitigate it through 
energy efficiency the sustainable management of other resources and 
waste minimisation we engage with key stakeholders and experts in 
developing environmental policy including through the sustainable 
consumption institute we have endowed at manchester university 
environmental strategy and policies are reviewed regularly by the 
corporate responsibility committee our climate change strategy is driven 
by a belief that proactive environmental performance will be rewarded by 
consumers and that providing the means by which consumers can adopt 
lowcarbon lifestyles will increasingly be a route to competitive advantage
product safety the safety and quality of our products is of paramount 
importance to tesco as well as being essential for maintaining customer 
trust and confidence a breach of confidence could affect the size of our 
customer base and hence financial results
we have detailed and established procedures for ensuring product 
integrity at all times especially for our ownlabel products there are  
strict product safety processes and regular management reports we  
work in partnership with suppliers to ensure mutual understanding of  
the standards required we also monitor developments in areas such as 
health safety and nutrition in order to respond appropriately to changing 
customer trends and new legislation we have clear processes for crisis 
management pulling together expert teams should we need to respond 
quickly on issues
health and safety risks the safety of our staff and customers is of the 
utmost importance to us if we are unable to provide safe environments  
for our staff and customers this could lead to injuries or loss of life
we operate stringent health and safety processes in line with best  
practice in our stores distribution centres and offices which are monitored 
and audited regularly kpis for health and safety help prevent incidents 
and form an intrinsic part of our steering wheel across the business 
performance against these kpis is reported quarterly our group 
compliance committee and the compliance committees in our business 
units monitor the level of compliance with both health and safety laws  
and our internal policies on a regular basis
ethical risks in the supply chain millions of people around the world 
work directly for suppliers to tesco and the supply chain is made of 
complex relationships – from individual farmers and growers through  
to processors manufacturers and distributors at the heart of our values  
is our belief that we should treat people as we like to be treated and we 
have a responsibility to help workers in our supply chain enjoy fair labour 
standards we therefore require our suppliers to meet strict criteria on 
labour standards and as a founder member of the ethical trading initiative 
eti  we expect all our suppliers to follow the eti base code and guarantee 
their workers the rights set out within it there is however a risk that any 
part of the supply chain might not adhere to these high standards t esco plc annual report and financial statements 2010 43
our business
to minimise this risk we only work with suppliers who can demonstrate 
that they are committed to the eti base code and share our values we 
use supplier ethical data exchange sedex to carry out risk assessment 
of all our direct suppliers and all medium and highrisk suppliers must 
undergo an extensive independent ethical audit we continue to operate  
a comprehensive programme of audit improvements including more 
unannounced audits and an industryleading auditor recognition 
programme we have also sought to involve more multistakeholder 
representatives on our audits to improve workforce engagement and 
enable activists to see and give feedback on our approach we work with 
suppliers to identify any problems and where they exist support suppliers 
in taking action to improve standards for their workers
we have invested heavily in building the labour standards capabilities of 
our suppliers and our own commercial teams in the last year including 
rolling out extensive training to help them identify and avoid issues before 
they arise we also work with businesses governments nongovernmental 
organisations ngos and others to tackle complex and systemic problems 
that we cannot solve on our own as well as having a key role in the eti we 
also work closely with the global social compliance programme and other 
groups in specific industries and regions
fraud and compliance as the business grows in size and geographical 
spread the risk of the occurrence of fraudulent behaviour by our 
employees increases whilst the vast majority of our staff are completely 
honest there remains the potential for fraud and other dishonest activity 
at all levels of the business from the shop floor to senior management
the group takes extensive steps to reduce this risk relevant accounting 
and other procedures and controls at all levels are clearly set out and 
audited across the business to reduce the risk of fraud the group gives 
clear guidance on behaviour to employees through the tesco values and 
the group code of business conduct internal audit undertakes detailed 
investigations into all areas of the business and highlights its findings  
to the audit committee the compliance committee formulates and 
monitors the implementation of and compliance with appropriate policies 
on key areas of ethical behaviour including fraud
property we have stretching targets for delivering new space in all of our 
markets and may face challenges in finding suitable sites and obtaining 
planning or other consents to enable sites to be acquired and developed 
the complexity of many of our property developments is increasing 
especially the growing number of malls and mixeduse schemes we also 
have to comply with design and construction standards which vary 
significantly from country to country
our property acquisition committee and other related committees in  
the uk europe asia and the us closely control all aspects of the property 
acquisition planning and construction processes to ensure that applicable 
standards are met and financial risks are minimised our group and 
country compliance committees also monitor compliance with applicable 
legal and regulatory requirements in all aspects of our property activities
nonfood risks as the proportion of our business represented by 
nonfood products increases there is a risk that a downturn in consumer 
confidence may affect the level of demand for products which consumers 
may regard as nonessential 
we make every effort to ensure that our nonfood products are 
competitively priced and offer a broad range of products ranging from 
value to the luxury end of the market in order to cater for the needs of  
as wide a range of customers as possible
it systems and infrastructure the business is dependent on efficient 
information technology it systems any significant failure in the it 
processes of our retail operations eg barcode scanning or supply chain 
logistics would impact our ability to trade we recognise the essential  
role that it plays across our operations in allowing us to trade efficiently 
and achieve commercial advantage through implementing it innovations  
that improve the shopping trip for customers and make life easier for 
employees we have extensive controls in place to maintain the integrity 
and efficiency of our it infrastructure and we share systems from across 
our international operations to ensure consistency of delivery
regulatory political and economic environment we are subject to a 
wide variety of regulations in the different countries in which we operate 
because of the diverse nature of our business tesco may be impacted by 
regulatory changes in key areas such as planning laws trading hours and 
tax rules as well as by scrutiny by the competition authorities who have 
been carrying out enquiries in the uk ireland and elsewhere we may also 
be impacted by political developments and the economic environment in 
the countries in which we operate we consider these uncertainties in the 
external environment when developing strategy and reviewing performance 
we remain vigilant to future changes as part of our daytoday operations 
we engage with governmental and nongovernmental organisations to 
ensure the views of our customers and employees are represented and try 
to anticipate and contribute to important changes in public policy wherever 
we operate
activism and terrorism a major incident or terrorist event incapacitating 
management systems or stores could impact on the group’s ability to 
trade in addition to contingency plans we have security systems and 
processes that reflect best practice
pension risks the group’s pension arrangements are an important part 
of our employees’ overall benefits package we see them as a strong 
contributor to our ability to attract and retain good people since the 
implementation of ias 19 there is a risk that the accounting valuation 
deficit which is recorded as a liability on the group balance sheet  
could increase if returns on corporate bonds are higher than the 
investment return on the pension scheme’s assets the group has 
considered its pension risks and has taken action by reducing risk in  
its investment strategy
financial review
the main financial risks faced by the group relate to the availability  
of funds to meet business needs the risk of default by counterparties  
to financial transactions fluctuations in interest and foreign exchange  
rates and credit rating risks these risks are managed as described below  
the group balance sheet position at 27 february 2010 is representative  
of the position throughout the year
funding and liquidity the group finances its operations by a 
combination of retained profits long and mediumterm debt capital 
market issues commercial paper bank borrowings and leases the 
objective is to ensure continuity of funding the policy is to smooth the 
debt maturity profile to arrange funding ahead of requirements and to 
maintain sufficient undrawn committed bank facilities and a strong credit 
rating so that maturing debt may be refinanced as it falls due tesco group 
has a longterm rating of a3 with a negative outlook by moody’s and a  
by standard  poor’s new funding of £23bn was arranged during the 
year including a net £18bn from property transactions and £05bn from 
longterm debt at the year end net debt was £79bn last year £96bn 44 tesco plc annual report and financial statements 2010
risks and uncertainties continued
interest rate risk management our objective is to limit our exposure to 
increases in interest rates while retaining the opportunity to benefit from 
interest rate reductions forward rate agreements interest rate swaps 
caps and collars are used to achieve the desired mix of fixed and floating 
rate debt
our policy is to fix or cap a minimum of 40 of actual and projected debt 
interest costs of the group excluding tesco bank at the year end £56bn  
of debt was in fixed rate form 2009 – £63bn with a further £01bn of  
debt capped or collared therefore 72 2009 – 72 of net debt is fixed 
capped or collared the remaining balance of our debt is in floating rate 
form the average rate of interest paid on an historic cost basis this year 
excluding joint ventures and associates was 54 2009 – 52
foreign currency risk management our principal objective is to reduce 
the effect of exchange rate volatility on shortterm profits transactional 
currency exposures that could significantly impact the group income 
statement are hedged typically using forward purchases or sales of 
foreign currencies and currency options at the year end forward foreign 
currency transactions designated as cash flow hedges equivalent to 
£1083bn were outstanding 2009 – £211bn as detailed in note 22 we 
hedge the majority of our investments in our international subsidiaries via 
foreign exchange transactions in matching currencies our objective is to 
maintain a low cost of borrowing and hedge against material movements 
in our group balance sheet value during the year currency movements 
increased the net value of the group’s overseas assets by £477m last year 
increase of £480m we translate overseas profits at average foreign 
exchange rates which we do not currently seek to hedge
credit risk the objective is to reduce the risk of loss arising from 
default by parties to financial transactions across an approved list  
of counterparties of good credit quality the group’s positions with  
these counterparties and their credit ratings are routinely monitored
credit risk arising from tesco bank’s unsecured lending is managed using  
all the normal credit assessment and collections and recoveries systems  
in terms of liquidity risk tesco bank has implemented a conservative 
approach to the minimum amount of liquid assets its holds and to its  
net stable funding ratio
insurance we purchased assets earnings and combined liability 
protection from the open insurance market at ‘catastrophe’ level only  
the risk not transferred to the insurance market is retained within the 
business by using our captive insurance companies tesco insurance 
limited in guernsey and valiant insurance company limited in the 
republic of ireland tesco insurance limited covers assets and earnings 
while valiant insurance company limited covers combined liability
statement of compliance
this business review has been prepared in accordance with the requirements 
for a business review under the companies act 2006 the business review’s 
intent is to provide information to shareholders and should not be relied  
on by any other party or for any other purpose
cautionary statement regarding forwardlooking information
where this review contains forwardlooking statements these are made  
by the directors in good faith based on the information available to them 
at the time of their approval of this report these statements should be 
treated with caution due to the inherent risks and uncertainties underlying 
any such forwardlooking information
the group cautions investors that a number of important factors including 
those in this document could cause actual results to differ materially from 
those contained in any forwardlooking statement such factors include 
but are not limited to those discussed under ‘risks and uncertainties’ on 
pages 41 to 44 of this document t esco plc annual report and financial statements 2010 45
our business
general information
principal activity business review and future developments the 
principal activity of the group is retailing and associated activities in the 
uk china the czech republic hungary the republic of ireland india 
japan malaysia poland slovakia south korea thailand turkey and  
the us the group also provides retail banking and insurance services 
through its subsidiary tesco bank 
group results group revenue excluding vat rose by £3bn to £569bn 
representing an increase of 71 group profit before tax increased by 
£259m to £3176m profit for the year was £2336m of which £2327m 
was attributable to equity holders of the parent company 
dividends the directors recommend the payment of a final dividend 
of 916p per ordinary share to be paid on 9 july 2010 to members on  
the register at the close of business on 30 april 2010 together with the 
interim dividend of 389p per ordinary share paid in december 2009  
the total dividend for the year will be 1305p compared with 1196p for  
the previous year an increase of 91 
fixed assets capital expenditure excluding business combinations 
amounted to £31bn compared with £47bn the previous year in the 
directors’ opinion the properties of the group have an open market value 
well in excess of the carrying value of £248bn which has been included in 
these financial statements 
share capital and control of the company details of the company’s 
share capital including changes during the year in the issued share capital 
and details of the rights attaching to the company’s ordinary shares are 
set out in note 29 on page 116 details of shares held by the company’s 
employee benefit trusts are shown in note 27 on page 111 during the year 
no ordinary shares were repurchased for cancellation no shareholder 
holds securities carrying special rights with regards to control of the 
company and there are no restrictions on voting rights the board has 
power to purchase the company’s shares and is seeking renewal of that 
power at the forthcoming agm within the limits set out in the notice of 
that meeting 
shares held by the company’s employee share incentive plan trust 
international employee benefit trust and tesco ireland share bonus 
scheme trust rank pari passu with the shares in issue and have no special 
rights voting rights and rights of acceptance of any offer relating to the 
shares held in these trusts rests with the trustees who may take account of 
any recommendation from the company voting rights are not exercisable 
by the employees on whose behalf the shares are held in trust 
the company is not party to any significant agreements that would take 
effect alter or terminate following a change of control of the company 
the company does not have agreements with any director or officer that 
would provide compensation for loss of office or employment resulting 
from a takeover except that provisions of the company’s share plans may 
cause options and awards granted under such plans to vest on a takeover 
company’s shareholders the company has been notified that as at 
the date of this report blackrock inc owns 524 and legal  general 
investment management limited owns 371 of the issued share capital  
of the company the company is not aware of any other shareholders 
with interests of 3 or more in the issued share capital of the company 
articles of association the company’s articles of association may only 
be amended by special resolution at a general meeting of the shareholders 
directors and their interests the directors who served during the year 
were charles allen cbe richard brasher patrick cescau philip clarke 
karen cook rodney chase cbe harald einsmann ken hanna andrew 
higginson ken hydon sir terry leahy tim mason laurie mcilwee  
lucy nevillerolfe cmg david potts david reid and jacqueline 
tammenoms bakker the biographical details of the present directors  
are set out on pages 36 and 37 of this report ken hydon tim mason 
lucy nevillerolfe david potts and david reid retire from the board by 
rotation and being eligible offer themselves for reelection 
the interests of directors and their immediate families in the shares of 
tesco plc along with details of directors’ share options are contained  
in the directors’ remuneration report set out on pages 52 to 66 
at no time during the year did any of the directors have a material interest 
in any significant contract with the company or any of its subsidiaries  
a qualifying thirdparty indemnity provision as defined in section 234 of 
the companies act 2006 is in force for the benefit of each of the directors 
and the company secretary who is also a director of certain subsidiaries 
of the company in respect of liabilities incurred as a result of their office 
to the extent permitted by law in respect of those liabilities for which 
directors may not be indemnified the company maintained a directors’ 
and officers’ liability insurance policy throughout the financial year 
employment policies the group depends on the skills and commitment 
of its employees in order to achieve its objectives ongoing training 
programmes seek to ensure that employees understand the group’s 
customer service objectives and strive to achieve them the group’s 
selection training development and promotion policies ensure equal 
opportunities for all employees regardless of factors such as gender 
marital status race age sexual preference and orientation colour creed 
ethnic origin religion or belief disability or trade union affiliation all 
decisions are based on merit internal communications are designed  
to ensure that employees are well informed about the business of the 
group employees are encouraged to become involved in the financial 
performance of the group through a variety of schemes principally the 
tesco employee profitsharing scheme shares in success the savings
related share option scheme save as you earn and the partnership  
share plan buy as you earn 
political and charitable donations cash donations to charities 
amounted to £31221573 2009 – £28278867 total contributions to 
community projects including cash causerelated marketing giftsinkind 
staff time and management costs amounted to £61592464 2009 – 
£57094208  there were no political donations 2009 – £nil during the 
year the group made contributions of £49365 2009 – £55468 in the 
form of sponsorship for political events labour party £15000 liberal 
democrat party £6300 conservative party £8384 scottish national 
party £5500 plaid cymru £2000 trade unions £12181
supplier payment policy tesco plc is a signatory to the prompt 
payment code more information about the code can be found at  
wwwpromptpaymentcodeorguk payment terms and conditions are 
agreed with suppliers in advance tesco plc has no trade creditors on  
its balance sheet the group pays its creditors on a pay on time basis 
which varies according to the type of product and territory in which the 
suppliers operate
going concern the directors consider that the group and the company 
have adequate resources to remain in operation for the foreseeable  
future and have therefore continued to adopt the going concern basis  
in preparing the financial statements as with all business forecasts the 
directors’ statement cannot guarantee that the going concern basis will 
remain appropriate given the inherent uncertainty about future events 
events after the balance sheet date 
there were no material events after the balance sheet date 
auditors a resolution to reappoint pricewaterhousecoopers llp as 
auditors of the company and the group will be proposed at the annual 
general meeting 
directors’ statement of disclosure of information to auditors 
having made the requisite enquiries the directors in office at the date of 
this annual report and financial statements have each confirmed that  
so far as they are aware there is no relevant audit information as defined 
by section 418 of the companies act 2006 of which the group’s auditors 
are unaware and each of the directors has taken all the steps heshe ought  
to have taken as a director to make himselfherself aware of any relevant 
audit information and to establish that the group’s auditors are aware of 
that information this confirmation is given and should be interpreted in 
accordance with the provisions of section 418 of the companies act 2006 corporate governance
directors’ report on corporate governance
tesco plc is committed to the highest standards of corporate governance 
as we recognise that strong governance is crucial in helping the business  
to deliver its strategy generating shareholder value and safeguarding our 
shareholders’ longterm interests
below board level the company fosters a strong culture of good governance 
including maintaining high ethical standards and strong personal integrity 
this is formalised in the group code of business conduct which sets out 
our expectations of employees clearly all businesses within the group are 
required to monitor their compliance with the group governance framework 
and this information is reviewed at board level
compliance with the combined code
the combined code on corporate governance sets out guidance in the 
form of principles and provisions on how companies should be directed 
and controlled to follow good governance practice the financial services 
authority fsa requires companies listed in the uk to disclose in relation 
to section 1 of the combined code how they have applied the principles 
and whether they have complied with its provisions throughout the 
financial year where the provisions have not been complied with 
companies must provide an explanation for this
the board considers that tesco plc complied in full with the combined 
code principles of corporate governance and code of best practice for the 
whole of the year ended 27 february 2010 with the exception of provision 
a32 in respect of which the company was not in compliance for part of 
the year 
provision a32 requires that at least half of the board excluding the 
chairman should comprise nonexecutive directors determined by the 
board to be independent the board recognises the importance of a 
balanced board with an appropriate level of independence due to 
unexpected changes to the board in the previous year with the resignation 
of carolyn mccall and mervyn davies as nonexecutive directors the 
board was not in balance at the beginning of the year
at that stage ken hanna’s impending appointment to the board had 
already been announced and he joined the board with effect from  
1 april 2009 at which point the board became balanced and once again 
fully compliant with provision a32
further information on the combined code can be found at wwwfrcorguk 
board composition and independence 
as at 27 february 2010 the board of tesco plc comprised eight executive 
directors eight independent nonexecutive directors and david reid 
nonexecutive chairman rodney chase is deputy chairman and senior 
independent director the size of the board is appropriate given the 
diverse markets the business operates in and the breadth of operations 
and services offered in each market
the structure of the board and the integrity of the individual directors ensure 
that no single individual or group dominates the decision making process
biographies for the directors can be found on pages 36 and 37 of this report
changes to the board since 1 march 2009 are as follows
ken hanna nonexecutive director appointed 1 april 2009
election of directors
all directors have to submit themselves for reelection at least every three 
years if they wish to continue serving and are considered by the board  
to be eligible the company’s articles of association require all new 
directors to be submitted for election by shareholders in their first year 
following appointment 
the chairman
clear divisions of accountability and responsibility exist and operate 
effectively for the positions of chairman and chief executive the 
chairman has primary responsibility for leading the board and setting 
its agenda while the chief executive has executive responsibilities for the 
operations and results of the group and making proposals to the board  
for the strategic development of the group
senior independent director
the board has appointed one nonexecutive director rodney chase  
to act as senior independent director the senior independent director  
is available to shareholders to assist in resolving concerns should the 
alternative channels be inappropriate the senior independent director  
is also required to lead the discussion in relation to assessing the 
effectiveness of the chairman’s performance
nonexecutive directors
the nonexecutive directors bring a wide range of skills and experience  
as well as independent judgement on strategy risk and performance to  
the company
the independence of each nonexecutive director is assessed at least 
annually the combined code suggests that a nonexecutive director 
should be independent in character and judgement and be free from 
relationships or circumstances which are likely to affect or could appear  
to affect the director’s judgement
the terms and conditions of appointment of nonexecutive directors are 
available for inspection at the company’s registered office
board responsibilities
the board held 8 meetings in the year it also held a two day offsite 
meeting which considered the group’s strategy the board has set out a 
clear schedule of matters reserved for board decision in order to ensure 
its overall control of the group’s affairs these include the approval of
• the company’s strategic and operating plans
• annual and interim financial statements
• major acquisitions and disposals
• authority levels for expenditure
• treasury policies
• risk management and internal control systems
• group governance policies and 
• succession planning for senior executives 
the board delegates to management the detailed planning and 
implementation of these matters in accordance with appropriate risk 
parameters the board monitors compliance with policy and achievement 
against objectives by holding management accountable for its activities 
through regular updates in addition each substantial business within the 
group is required to present to the board on a regular basis giving it the 
opportunity to understand and explore issues as deemed necessary
during the year ended 27 february 2010 the board’s scheduled activities 
included the following
• approving interim and full year results
•  receiving reports from the remuneration committee audit committee 
and nominations committee
•  receiving reports from other key committees within the group including 
the compliance committee corporate responsibility committee and 
finance committee
•  receiving reports on governance issues affecting the group including 
stakeholder management
•  receiving regular reports on risk management within the group 
including the key risk register
•  discussing and approving group strategy
•  receiving a report on the effectiveness of the board
•  receiving reports from key businesses within the group and
•  receiving regular reports on the financial position of the group and the 
various businesses within the group
46 tesco plc annual report and financial statements 2010 corporate governance
all directors have access to the services of the company secretary and 
may take independent professional advice at the company’s expense  
in conducting their duties the company provides insurance cover and 
indemnities for its directors and officers 
attendance at meetings
the board scheduled 8 meetings in the year ended 27 february 2010  
and ad hoc meetings were also convened to deal with matters between 
scheduled meetings as appropriate it is expected that all directors attend 
board and relevant committee meetings unless they are prevented from 
doing so by prior commitments and that all directors will attend the agm 
where directors are unable to attend meetings due to conflicts in their 
schedules they receive the papers scheduled for discussion in the relevant 
meetings giving them the opportunity to relay any comments to the 
chairman in advance of the meeting directors leave the meeting where 
matters relating to them or which may constitute a conflict of interest  
to them are being discussed the table below shows the attendance  
of directors at scheduled board meetings and at meetings of the audit 
remuneration and nominations committees during the year 
board processes
the board governs through a number of board committees – in particular 
the audit remuneration and nominations committees – to which certain 
responsibilities and duties are delegated these committees are properly 
authorised under the constitution of the company to take decisions and 
act on behalf of the board within the parameters laid down by the board 
the board is kept fully informed of the work of these committees and any 
issues requiring resolution are referred to the full board as appropriate  
a summary of the operations of these committees is set out below the 
effectiveness of the audit remuneration and nominations committees is 
underpinned by their nonexecutive director membership which provides 
independent insight on governance matters a copy of each committee’s 
terms of reference is available on our website wwwtescocomboardprocess 
the board is serviced by the company secretary who reports to the 
chairman in respect of his core duties to the board 
     full board  audit  remuneration  nomination
     meetings  committee  committee  committee
number of meetings    actual possible actual possible actual possible actual possible
nonexecutive directors          
david reid chairman   8 8 – – – – 1 1
charles allen cbe    8 8 – – 7 7 1 1
patrick cescau     8 8 4 4 7 7 1 1
rodney chase cbe senior independent director 8 8 4 4 7 7 1 1
karen cook    8 8 – – 6 7 1 1
harald einsmann    8 8 – – 6 7 1 1
ken hanna appointed 1409
1
    6 8 3 4 6 7 1 1
ken hydon    8 8 4 4 – – 1 1
jacqueline tammenoms bakker   8 8 – – – – 1 1
executive directors
sir terry leahy    8 8 – – – – 1 1
richard brasher    8 8 – – – – – –
philip clarke    8 8 – – – – – –
andrew higginson    8 8 – – – – – –
tim mason    8 8 – – – – – –
laurie mcilwee    8 8 – – – – – –
lucy nevillerolfe cmg   8 8 – – – – – –
david potts    8 8 – – – – – –
 
1  ken hanna was unable to attend two board meetings one audit committee meeting and one remuneration committee meeting due to prior commitments arranged before he 
commenced his role at tesco
plc board
executive committee
monitoring committees
• corporate responsibility
 committee
• compliance committee
• finance committee
main committees
• audit committee
• remuneration committee
• nominations committee
joint v enture boards operational committees subsidiary boards
  reports are discussed by the plc board on a regular basis
t esco plc annual report and financial statements 2010 47 corporate governance continued
nominations committee 
members 
• david reid chairman
• charles allen
• patrick cescau
• rodney chase
• karen cook
• dr harald einsmann
• ken hanna from 1 april 2009
• ken hydon
• jacqueline tammenoms bakker
• sir terry leahy
the nominations committee leads the process 
for board appointments and the reelection  
and succession of directors as well as making 
recommendations for the membership of the 
audit and remuneration committees 
the committee is chaired by david reid and the company secretary  
also attends meetings in his capacity as secretary of the committee 
where matters discussed relate to the chairman the senior independent 
director chairs the meeting 
the nominations committee met formally once in the year to discuss  
the ongoing shape and capability of the board there were also a number 
of ad hoc meetings during the year as well as reviewing the performance 
and development of the executive directors and the senior executive levels 
below the board the committee also regularly considers
• the board structure size and composition
•  the skills experience and knowledge of the board and identifies 
candidates to fill board vacancies and enhance its capability
•  succession planning for directors and other senior executives in the 
course of its work taking into account the challenges and opportunities 
facing the company and what skills and expertise are therefore needed 
on the board in the future
•  the time commitment required from nonexecutive directors
•  the leadership needs of the organisation both executive and 
nonexecutive with a view to ensuring the continued ability of  
the organisation to compete effectively in the marketplace and
•  strategic issues and commercial changes affecting the group and the 
market in which it operates
individual members of the committee were involved during the year  
in interviewing candidates for board and senior executive positions 
full terms of reference of the tesco plc nominations committee are 
available at wwwtescocomboardprocess
remuneration committee
members all independent nonexecutive 
directors
• charles allen chairman
• patrick cescau
• rodney chase
• karen cook
• dr harald einsmann
• ken hanna from 1 april 2009
the remuneration committee’s role is to 
determine and recommend to the board the 
remuneration of the executive directors  
it also monitors the levels and structure of 
remuneration for senior management and 
seeks to ensure that the remuneration 
arrangements are designed to attract retain 
and motivate the executive directors needed 
to run the company successfully 
at the invitation of the committee the chairman of the board normally 
attends meetings and the chief executive attends as appropriate 
representatives of the group’s personnel and finance functions attend  
as appropriate to provide support and the company secretary also attends 
in his capacity as secretary of the committee
the committee met seven times this year each year it conducts a review 
of the committee’s own effectiveness and its terms of reference the 
responsibilities of the remuneration committee and an explanation of 
how it applies the directors’ remuneration principles of the combined 
code are set out in the directors’ remuneration report on pages 52 to 66
full terms of reference of the tesco plc remuneration committee are 
available at wwwtescocomboardprocess
audit committee 
members all independent nonexecutive 
directors
• ken hydon chairman
• patrick cescau
• rodney chase
• ken hanna from 1 april 2009
other regular attendees at the invitation 
of the committee include
• chairman of the board
• finance director and his representatives
• head of internal audit
• corporate and legal affairs director
• relevant executive directors
• external auditors
the company secretary also attends in his 
capacity as secretary of the committee 
the combined code requires the audit committee to include at least one 
member with recent and relevant financial experience the committee 
chairman fulfils this requirement and all other committee members have 
an appropriate understanding of financial matters
the audit committee’s primary responsibilities are
• to review the financial statements
• to review the group’s internal control and risk assurance processes
•  to consider the appointment of the external auditors their reports to 
the committee and their independence which includes an assessment 
of their appropriateness to conduct any nonaudit work and
• to review the programme of internal audit
the committee met formally four times this year there was also an 
additional ad hoc meeting while fulfilling the above responsibilities 
during the year the committee received presentations from significant 
businesses within the group as well as on fraud bribery and corruption 
business continuity it controls and governance and whistleblowing each 
year the committee conducts a review of its own effectiveness and its 
terms of reference the committee also had regular private meetings 
with the external auditors and the head of internal audit during the year 
the need for training is kept under review and the annual agenda  
ensures time is dedicated to technical updates which are generally 
provided by external experts this year training was provided on 
accounting and reporting developments under ifrs and ias and 
governance developments proposed by the frc with respect to tesco 
bank training was provided on regulatory accounting governance  
and risk management requirements training is also provided to meet 
specific individual needs of committee members
full terms of reference of the tesco plc audit committee are available  
at wwwtescocomboardprocess
david reid  
chairman
charles allen 
chairman
ken hydon
chairman
48 tesco plc annual report and financial statements 2010 corporate governance
management of the group – executive committee
the board delegates responsibility for formulating and implementing the 
group’s strategic plan and for management of the group to the executive 
committee which is chaired by the chief executive and comprises the 
eight executive directors and a senior executive colin holmes who was 
appointed as a member of the committee on 7 september 2009 the 
committee has authority for decisionmaking in all areas except those  
set out in the schedule of matters reserved for board decision and meets 
formally on a regular basis a number of other senior executives also  
attend the committee and their valuable operational experience helps 
broaden the debate their attendance facilitates the communication  
of the committee’s decisions to the rest of the group the company 
secretary attends in his capacity as secretary of the committee
the executive committee is responsible for implementing group strategy 
and policy and for monitoring the performance and compliance of the 
business drawing on the work of relevant committees and reporting on 
these matters in full to the board
the executive committee has set up further committees – including the 
finance compliance and corporate responsibility committees which are 
described in more detail below – and operational groups which have 
responsibility for implementing the key elements of the group’s strategic 
plan and managing its uk and international operations joint ventures 
property acquisitions finance funding and people matters these 
committees and groups have as members an appropriate mixture of 
executive directors and senior management from relevant functions 
procedures to deal with directors’ conflicts of interest
the company has procedures in place to deal with the situation where  
a director has a conflict of interest as part of these procedures members 
of the board are required to
• consider each conflict situation separately on its particular facts
•  consider the conflict situation in conjunction with the rest of their 
duties under companies act 2006
•  keep records and board minutes as to authorisation granted by 
directors and the scope of any approvals given and
• regularly review conflict authorisation
training and development
all new directors receive a personalised induction programme tailored  
to their experience background and particular areas of focus which is 
designed to develop their knowledge and understanding of the group’s 
culture and operations the programme has evolved taking into account 
feedback from new directors and will usually include an overview of the 
business model and board processes meetings with the executive team 
and senior managers site visits at home and abroad and briefings on  
key issues including social ethical and environmental see issues 
directors also receive an induction to those board committees he or she  
will serve on 
the need for director training is regularly assessed by the board and 
regular training sessions are arranged to provide an opportunity for 
upskilling of the directors on a variety of areas relevant to the group’s 
business including see issues in the last year the board received training 
focusing inter alia on the regulatory and governance issues associated 
with operating a financial services business following the acquisition of 
tesco bank in the previous year
the board usually meets overseas once each year to facilitate the directors’ 
understanding of the group’s international operations in february 2010  
the board visited china and korea to view first hand the progress and 
direction of the business in these markets in july 2009 the company  
held its annual general meeting in scotland and the board took the 
opportunity to visit some strategically significant parts of the business  
in this region
board performance evaluation 
the performance of the board is a fundamental component of the group’s 
success the board regularly reviews its own performance during the year 
ended 27 february 2010 the board assessed its own performance this 
assessment was coordinated and directed by the chairman with the 
support of the company secretary the chairman and the company 
secretary carried out indepth interviews with each director the results of 
the evaluation were considered by the board and confirmed the strength 
of the strategic and entrepreneurial leadership of the company a sound 
governance framework and practices compliant with the combined code
the chief executive reviews the performance of each executive director 
the chairman reviews the performance of the chief executive and each 
nonexecutive director during the year the chairman met several times 
with the nonexecutive directors without the executive directors present 
to discuss board issues and how to build the best possible team the senior 
independent director met with the nonexecutive directors in the absence 
of the chairman to assess the chairman’s performance
risk management and internal controls 
accountabilities 
accepting that risk is an inherent part of doing business our risk 
management systems are designed both to encourage entrepreneurial 
spirit and also provide assurance that risk is fully understood and managed 
the board has overall responsibility for risk management and internal 
control within the context of achieving the group’s objectives executive 
management is responsible for implementing and maintaining the 
necessary control systems the role of internal audit is to monitor the 
overall internal control systems and report on their effectiveness to 
executive management as well as to the audit committee in order  
to facilitate its review of the systems 
background 
the group has a fiveyear rolling business plan to support the delivery of 
its strategy of longterm growth and returns for shareholders every business 
unit and support function derives its objectives from the fiveyear plan and 
these are cascaded to managers and staff by way of personal objectives 
key to delivering effective risk management is ensuring our people have  
a good understanding of the group’s strategy and our policies procedures 
values and expected performance we have a structured internal 
communications programme that provides employees with a clear 
definition of the group’s purpose and goals accountabilities and the  
scope of permitted activities for each business unit as well as individual 
line managers and other employees this ensures that all our people 
understand what is expected of them and that decisionmaking takes 
place at the appropriate level we recognise that our people may face 
ethical dilemmas in the normal course of business so we provide clear 
guidance based on the tesco values the values set out the standards  
that we wish to uphold in how we treat people these are supported  
by the group code of business conduct which was launched this year 
replacing the code of ethics and offers guidance on relationships  
between the group and its employees suppliers and contractors
we operate a balanced scorecard approach that is known within the  
group as our steering wheel this unites the group’s resources around  
our customers people operations community and finance the steering 
wheel operates at all levels throughout the group it enables the business 
to be operated and monitored on a balanced basis with due regard for  
all stakeholders 
risk management 
the group maintains a key risk register the register contains the key 
risks faced by the group including their impact and likelihood as well as 
the controls and procedures implemented to mitigate these risks the 
content of the register is determined through regular discussions with 
senior management and reviewed by the executive committee and the full 
board a balanced approach allows the degree of controllability to be taken 
into account when we consider the effectiveness of mitigation recognising 
that some necessary activities carry inherent risk which may be outside  
t esco plc annual report and financial statements 2010 49 corporate governance continued
the group’s control where our risk management process identifies 
opportunities to improve the business these are built into our future plans  
our key risks are summarised on pages 41 to 44 of the business review 
the risk management process is cascaded through the group with 
operating subsidiary boards maintaining their own risk registers and 
assessing their own control systems the same process also applies 
functionally in those parts of the group requiring greater oversight for 
example the audit committee’s terms of reference require it to oversee 
the finance risk register the board assesses significant social ethical 
and environmental see risks to the group’s shortterm and longterm 
value and incorporates see risks on the key risk register where they are 
considered material or appropriate
we recognise the value of the abi guidelines on responsible investment 
disclosure and confirm that as part of its regular risk assessment 
procedures the board takes account of the significance of see matters  
to the business of the group we recognise that a number of investors  
and other stakeholders take a keen interest in how companies manage 
see matters and so we report more detail on our see policies and 
approach to managing material risks arising from see matters and the 
kpis we use both on our website wwwtescocomcr2010 and in our 
corporate responsibility report 2010 to provide further assurance  
the group’s corporate responsibility kpis are audited on a regular  
basis by internal audit
internal controls 
the board is responsible for the company’s system of internal control and 
for reviewing the effectiveness of such a system we have a groupwide 
process for clearly establishing the risks and responsibilities assigned to 
each level of management and the controls which are required to be 
operated and monitored 
the ceos of subsidiary businesses are required to certify by way of  
annual governance returns that appropriate governance and compliance 
processes have been adopted for certain joint ventures the board places 
reliance upon the internal control systems operating within our partners’ 
infrastructures and the obligations upon partners’ boards relating to the 
effectiveness of their own systems 
such a system is designed to manage rather than eliminate the risk of 
failure to achieve business objectives and can only provide reasonable  
and not absolute assurance against material misstatement or loss 
the board has reviewed the effectiveness of internal controls and is 
satisfied that the controls in place remain appropriate
monitoring 
the board oversees the monitoring system and has set specific 
responsibilities for itself and the various committees as set out below both 
internal audit and our external auditors play key roles in the monitoring 
process as do several other committees including the finance committee 
compliance committee and corporate responsibility committee  
the minutes of the audit committee and the various other committees 
finance compliance and corporate responsibility committees are 
distributed to the board and each committee submits a report for formal 
discussion at least once a year these processes provide assurance that  
the group is operating legally ethically and in accordance with approved 
financial and operational policies 
audit committee 
the audit committee reports to the board each year on its review of the 
effectiveness of the internal control systems for the financial year and the 
period to the date of approval of the financial statements throughout  
the year the committee receives regular reports from the external auditors 
covering topics such as quality of earnings and technical accounting 
developments the committee also receives updates from internal audit 
and has dialogue with senior managers on their control responsibilities it 
should be understood that such systems are designed to provide reasonable 
but not absolute assurance against material misstatement or loss 
internal audit 
the internal audit department is fully independent of business operations 
and has a groupwide mandate it undertakes a programme to address 
internal control and risk management processes with particular reference 
to the turnbull guidance it operates a riskbased methodology ensuring 
that the group’s key risks receive appropriate regular examination its 
responsibilities include maintaining the key risk register reviewing and 
reporting on the effectiveness of risk management systems and internal 
control with the executive committee the audit committee and ultimately 
to the board internal audit facilitates oversight of risk and control systems 
across the group through risk committees in asia and europe and audit 
committees in a number of our international businesses and joint ventures 
the head of internal audit also attends all audit committee meetings 
external audit 
pricewaterhousecoopers llp who have been the company’s external 
auditor for a number of years contributes a further independent 
perspective on certain aspects of our internal financial control systems 
arising from its work and reports to both the board and the audit 
committee our policy in relation to the reappointment of the external 
auditors is to consider their engagement and independence annually  
the committee has satisfied itself that pricewaterhousecoopers llp  
is independent and there are adequate controls in place to safeguard its 
objectivity one such measure is the nonaudit services policy that sets  
out criteria for employing external auditors and identifies areas where it is 
inappropriate for pricewaterhousecoopers llp to work nonaudit services 
work carried out by pricewaterhousecoopers llp is predominantly the 
review of subsidiary undertakings’ statutory accounts transaction work 
and corporate tax services where their services are considered to be the 
most appropriate pricewaterhousecoopers llp also follows its own  
ethical guidelines and continually reviews its audit team to ensure its 
independence is not compromised  
finance committee 
membership of the finance committee includes nonexecutive directors 
with relevant financial expertise executive directors and members of 
senior management the committee is chaired by sir terry leahy ceo 
the committee usually meets twice a year and its role is to review and 
agree the finance plan on an annual basis review reports of the treasury 
and tax functions and to review and approve treasury limits and 
delegations 
compliance committee 
membership of the compliance committee includes three executive 
directors and members of senior management the committee is chaired 
by lucy nevillerolfe corporate and legal affairs director the committee 
normally meets six times a year and its remit is to ensure that the group 
complies with all necessary laws and regulations and other compliance 
policies in all of its operations worldwide the committee has established 
a schedule for the regular review of operational activities and legal 
exposure each business in the group has a compliance committee 
designed to ensure compliance with both local and group policies and 
each compliance committee reports to the group compliance committee 
at least once a year 
corporate responsibility committee 
the corporate responsibility committee is chaired by the corporate  
and legal affairs director lucy nevillerolfe and membership is made  
up of senior executives from across the group it meets at least four times 
a year to support develop and monitor policies on see issues and to 
review threats and opportunities for the group progress in developing 
community initiatives is monitored by the use of relevant kpis for the 
businesses within the group the board formally discusses the work of  
the committee on a regular basis including progress in implementing  
our community plan 
the corporate and legal affairs department and the trading law and 
technical department provide assurance and advice on legal compliance 
health and safety and see matters these functions report on their work 
on a regular basis and escalate matters as appropriate 
50 tesco plc annual report and financial statements 2010 corporate governance
whistleblowing
the group operates a whistleblowing policy and has a confidential 
‘protector line’ service accessible to concerned employees where they  
can report anonymously if necessary on issues of malpractice within  
the business such issues include illegal and unethical behaviour such as 
fraud dishonesty and any practices that endanger our staff customers  
or the environment 
complaints made are treated as confidential and are investigated where 
appropriate matters will be escalated to the director of group security  
for further action
management 
in our fast moving business trading is tracked on a daily and weekly basis 
financial performance is reviewed weekly and monthly and the steering 
wheel is reviewed quarterly steering wheels are operated in business 
units across the group and reports are prepared of performance against 
target kpis covering the five segments of the steering wheel customer 
operations community people and finance on a quarterly basis 
enabling management to measure performance all major initiatives 
require business cases normally covering a minimum period of five years 
postinvestment appraisals carried out by management determine the 
reasons for any significant variance from expected performance 
relations with stakeholders
we are committed to having a constructive dialogue with stakeholders to 
ensure we understand what is important to them and allow ourselves the 
opportunity to present our position engagement helps us identify new 
risks and opportunities to ensure that our longterm strategy is sustainable 
in some instances we find that working with stakeholders in partnership 
can help deliver shared goals we might not be able to satisfy all stakeholder 
concerns all the time but through engagement we can do our best to 
balance competing demands we know that customers need to be able  
to trust our business and they will only trust us if they believe that we are 
engaging on an appropriate basis with our stakeholders 
our programme of engaging with stakeholders including customers  
staff suppliers investors government regulators nongovernmental 
organisations and others is set out in more detail in our corporate 
responsibility report 2010 and on our website wwwtescocomcr2010 
shareholder engagement
we are committed to maintaining a good dialogue with shareholders 
through proactively organising meetings and presentations as well as 
responding to a wide range of enquiries we seek shareholder views on  
a range of issues from strategy to corporate governance and see issues 
we recognise the importance of communicating appropriately any 
significant company developments
during the year the chairman chief executive and finance director  
met with most of our leading shareholders to discuss issues relating to  
the board strategy and governance matters as well as new developments 
within the business the chairman’s meetings with major shareholders 
took place independently from the executive team in addition to this  
our investor relations team engage with shareholders on a regular basis 
and on a wide range of issues the corporate secretariat team also 
organise regular meetings on both a onetoone and group basis with 
socially responsible investors sris to discuss the work the group is  
doing on corporate responsibility and governancerelated issues these 
meetings are attended as appropriate by directors and other members  
of senior management
an investor relations report is produced for the board periodically this 
report summarises feedback from shareholders particularly in terms of  
our management and strategy and ensures the board has a balanced 
perspective on the views of our major shareholders
it is normal that institutional shareholders may be in more regular contact 
with the group than other shareholders but care is exercised to ensure 
that any pricesensitive information is released to all shareholders 
institutional and private at the same time in accordance with applicable 
legal and regulatory requirements all major presentations to institutional 
shareholders are made available to private shareholders through the 
tesco plc website
every shareholder may choose to receive a full annual report and  
financial statements or the annual review and summary financial 
statements either in paper or electronic form these reports together 
with publiclymade trading statements are available on the group’s 
website wwwtescocomannualreport2010
the tesco plc agm
the annual general meeting offers the opportunity for the board to 
communicate directly to shareholders our last annual general meeting  
in july 2009 was held in glasgow the 2010 agm will be held in london  
at 1030am on friday 2 july the choice of location is based on our policy 
of widening the opportunity for our shareholders around the country to 
attend the agm by moving to a different location in the uk each year
the whole board attends the meeting and is available to answer questions 
from shareholders present to encourage shareholder participation we 
offer electronic proxy voting and voting through the crest electronic 
proxy appointment service at our last annual general meeting all 
resolutions were voted by way of electronic poll this follows best practice 
guidelines and allows the company to count all votes not just those  
of shareholders attending the meeting the chairman announces  
the provisional voting results at the meeting and the final results are 
announced the same day through the regulatory news services and  
the tesco plc website
by order of the board 
mr jonathan lloyd
company secretary
5 may 2010
tesco plc 
registered number 445790 
registered in england and wales 
registered office tesco house delamare road cheshunt 
hertfordshire en8 9sl 
vat registration number gb 220 4302 3
t esco plc annual report and financial statements 2010 51 directors’ remuneration report
this report sets out the remuneration policy for the executive and non
executive directors of tesco plc and describes the individual remuneration  
of the directors for the year ended 27 february 2010 the report has been 
drawn up in accordance with the combined code on corporate governance 
schedule 8 of the large and medium sized companies and groups 
accounts and reports regulations 2008 and the financial services 
authority listing rules
executive summary
tesco aims to deliver sustainable and profitable longterm growth  
despite challenging economic conditions across our markets tesco has 
again delivered a strong performance against targets this year in doing  
so tesco has continued to build on the track record it has established  
over several years
sales profit and roce performance over 5 years
2006 2007 2008 2009 2010
625
431
466
518
594
2006 2007 2008 2009 2010
121
127
126
129 128

2006 2007 2008 2009 2010
32
22
27
28
29
sales £bn
roce 
profit before tax £bn
 restated for the impact of ifric 13 and ifrs 2
tesco is already a large and profitable company a 10 increase in 
company value equates to some £3bn in additional shareholder value 
equivalent to the value of a top 50 ftse organisation over the last  
5 years tesco has delivered more than £10bn of additional shareholder  
value through dividends and share price growth continuing to grow 
profitability from such a high base is demanding but forms the core  
of tesco’s strategy and its supporting processes including executive 
remuneration our remuneration strategy is intended to foster a culture  
of outstanding performance taking into account both the shortterm  
and longterm needs of the business
in determining the level of executive reward the remuneration committee 
continues to be conscious of the economic background and widespread 
concern about executive remuneration being appropriately justified by 
company performance it has therefore sought to ensure reward outcomes 
are proportionate to tesco’s performance outcome
the strong result against targets in 200910 included improvement on 
most of the underlying performance measures relating to productivity  
and growth against this performance background the main aspects  
of executive remuneration policy and practice for the year are as follows
•  operational executive director salaries were increased from 1 july 2009 
by an average of 258 after the normal review against an average 
across the group of 25
•  annual bonus payouts ranged from 75 to 95 of maximum reflecting 
strong performance during the year against financial and strategic 
milestones the maximum potential bonus was 250 of salary for the 
group ceo 300 of salary for the us ceo and 200 of salary for 
other executive directors
•  longterm incentive payout was 124 of a potential maximum of 150 
of salary
•  share options vested in full reflecting sustained strong earnings delivery
•  no material changes were made to policy remuneration mix or scale 
of incentives
•  deferred awards already earned from prior years representing 
45 million shares became available to directors 
•  there have been no substantial changes to the commercial structure 
of the terms of existing awards however a number of shares have  
been released from awards already earned from prior years to satisfy  
tax liabilities crystallised in the year
•  minor changes to remuneration arrangements relating to leaving 
conditions were approved by shareholders and
•  there continued to be a high level of share ownership by 
executive directors
executive director remuneration strategy
tesco has a longstanding policy of valuing talent and experience we seek 
to provide incentives for delivering high sustainable and profitable growth 
which leads to a strong increase in additional value for shareholders we 
operate in a keenly competitive and rapidly changing retail environment 
business success depends on the skills of each member of the key team 
but outstanding business performance comes from teamwork tesco has a 
stable and successful management team and incentivising and rewarding 
that team at senior levels to deliver ever higher levels of performance is 
vital to our ongoing success and our ability to create shareholder value  
we believe our incentives should support the continued progress and  
the strengthening of our returns from across the group as well as the 
creation and development of significant new businesses 
base salary
cash bonus deferred 
share bonus
performance
share plan 
group  
international
share 
options
us l tip group new
business
incentive plan
c1233 depending on
individual incentive arrangements
and performance c6788 depending on individual incentive arrangements and performance
performancerelated elements fixed element
balance of fixed and performance related remuneration
shortterm performance longterm performance
52 tesco plc annual report and financial statements 2010 remumeration report
the remuneration committee believes that the majority of total 
remuneration should be performancerelated and delivered largely  
in shares closely to align the interests of shareholders and executive 
directors in determining the balance between the fixed and variable 
elements of the executive directors’ remuneration packages the 
committee takes into account both policy and market practice
total remuneration levels for executive directors are reviewed annually by 
the committee taking into account their value to the company in terms of 
continuing strong performance potential and competitive market practice 
consideration is also given to reward levels at the next tier of management 
and across the group in order to sustain a common sense of purpose and 
sharing of success as well as to ensure that executive arrangements remain 
appropriate in the context of wider group remuneration when setting the 
remuneration of executive directors the committee considers the group’s 
performance against a mixture of corporate objectives and financial 
measures these corporate objectives include specific measures based  
on environmental social and governance esg factors an integral part  
of the corporate strategy inclusion of these specific measures in a number 
of parts of the remuneration structure helps to reinforce positive and 
responsible behaviour by senior management to find out more go to 
wwwtescocomannualreport2010
performance related remuneration
the remuneration structures for executive directors and other key 
executives are tailored to emphasise the delivery of strong yearonyear 
earnings growth as well as sustained performance in the longer term  
more than twothirds of total remuneration excluding pension is linked  
to the performance of the business longterm performance is rewarded 
through delivery of shares and shortterm performance through a 
combination of cash and compulsorily deferred shares this combines 
emphasis on strong yearonyear performance with longterm executive 
share ownership providing a strong link between the incentives received 
and shareholder value
performance measures
the executive directors have a range of performance targets across the 
various incentive plans which reflect the objectives of the group and their 
own responsibilities and are aligned with longterm shareholder value 
creation targets are generally set to reward performance improvement 
compared to prior periods with maximum awards only paying out for 
delivery of strong performance
the measures are summarised in the table below and are based on
•  delivery of improved bottomline financial results measured through 
earnings both in the present year and sustainably over time
•  enhancement of efficient profitability measured through return on 
capital whilst growing the business
•  improving share price via the use of share options throughout the 
organisation
•  achievement of durable improvements in the underlying drivers 
of performance such as cost reduction energy efficiency reduced 
environmental impact and sales growth captured through various 
corporate measures and
•  laying foundations for future performance through measures such 
as accessing new sales footage developing people and implementing 
community programmes which are also captured through the  
corporate measures
the sustainability of our business is key and the remuneration committee 
is satisfied that the measures and targets do not incentivise executive 
directors to take an inappropriate level of risk
shortterm performance measures
measures participation incentivises maximum potential 
 of salary
performance period delivered via
earnings per share all executive 
directors
year on year  
earnings growth
125 us ceo 625 one year annual cash and 
annual deferred  
share bonuses  
3year deferral
corporate objectives all executive 
directors
delivery of strategic 
business priorities 
entrepreneurial  
spirit and building 
framework for  
future growth
55 us ceo 275 one year annual cash and 
annual deferred  
share bonuses  
3year deferral
total shareholder 
return
all executive 
directors
share price and 
dividend growth 
versus competitors
20 us ceo 10 one year annual deferred  
share bonuses  
3year deferral
specific us 
objectives
us ceo delivery against 
financial and 
strategic milestones 
for us business
200 one year annual cash and 
annual deferred  
share bonuses  
3year deferral
specific us 
objectives
group ceo delivery against 
financial and 
strategic milestones 
for us business
50 one year annual deferred  
share bonuses  
3year deferral
t esco plc annual report and financial statements 2010 53 directors’ remuneration report continued
participation in the various elements is governed by the remuneration 
committee and individual executive directors are awarded incentives 
under the elements which are most relevant to their sphere of responsibility
if performance is lower than the maximum targets incentive payments will 
reduce accordingly and will be zero if threshold levels of performance are 
not attained the committee has reviewed the performance conditions for 
each of the incentive arrangements against the group’s business strategy 
its growing global leadership its position as one of the companies at the 
top of the ftse 100 and the intensely competitive sector in which it operates 
and has concluded that they provide a set of comprehensive and robust 
measures of management’s effort and success in creating shareholder value
share ownership guidelines
the remuneration committee believes that executive directors holding 
shares aligns their interests with shareholders and reinforces their 
commitment to the business executive directors are required to build  
and maintain a shareholding with a value at least equal to their basic  
salary shares held in plans which are not subject to forfeiture are included  
in this measurement new appointees will typically be allowed three  
years to establish this shareholding full participation in the longterm 
performance share plan is conditional upon maintaining the minimum 
shareholding all executive directors satisfy this requirement apart from 
laurie mcilwee who was appointed to the board on 27 january 2009
shares held by executive directors 
as at 27 february 2010
0 1 million 2 million 3 million 4 million 5 million 6 million 7 million 8 million
ordinary shares psp eip
richard brasher
philip clarke
andrew higginson
tim mason
laurie mcllwee
lucy nevillerolfe
david potts
sir t erry leahy
includes ordinary shares and awards of shares and nil cost options made to directors which 
remain subject only to a holding period excludes unexercised vested executive share options
funding of equity awards
executive incentive arrangements are funded by a mix of newly issued 
shares and shares purchased in the market where shares are newly issued 
the company complies with abi dilution guidelines on their issue currently 
shares to be issued in respect of executive plans are equivalent to c4 of 
shares in issue
fixed remuneration
basic pay
basic pay is designed to attract and retain talented individuals it needs  
to reflect individual capability and any changes in responsibilities as the 
group faces new opportunities and challenges as the group continues  
to diversify into new product areas and services as well as expanding 
internationally it seeks to reflect this in the benchmarking that is used  
we examine salary levels at the major retailers the leading ftse 
companies and ensure consideration is given to key international 
competitors we also take into account pay conditions throughout the 
group as well as the prevailing economic climate in deciding executive 
annual salary increases the average increase for senior management 
below board level last year was 258 in line with the average increase  
for other staff which was typically around 25 pay levels groupwide  
are determined with consideration to a number of factors including the 
prevailing economic environment discussions with employee 
representation groups and market practice
basic salaries are typically increased with effect from 1 july each year  
and the remuneration committee will again be taking into account the 
prevailing economic climate in setting executive director salaries for the 
coming year
   basic salary 1 july 2009 
director   £000
richard brasher     812
philip clarke     812
andrew higginson     812
sir terry leahy     1410
tim mason     812
laurie mcilwee     609
lucy nevillerolfe     609
david potts     812
  laurie mcilwee and lucy nevillerolfe’s basic salaries were increased by 107 and 99 
respectively reflecting their increased experience since their appointment
longterm performance measures
measures participation incentivises maximum potential 
 of salary unless 
otherwise stated
performance period delivered via
eps relative to rpi all executive 
directors
longerterm 
earnings growth
200 three years executive share 
options
group roce all executive 
directors
longterm business 
success and 
shareholder returns
100 three years performance share 
plan
international roce all executive 
directors except  
us ceo
longterm business 
success and 
shareholder returns
50 three years performance share 
plan
us ebit and roce us ceo establishment of 
successful us 
business
2 million shares 201011 – 201314 us long term 
incentive plan
us ebit and roce 
group roce 
international roce
group ceo entrepreneurial spirit 
and establishment of 
new businesses within 
whole group 
performance
25 million shares 201011 – 201314 group new business 
incentive plan
  this is the amount on which the number of shares under option is calculated the actual realisable value of these options will depend on any growth in share price between the date of grant 
and the date of exercise
 dividends accrue on these awards in the form of dividend equivalents
54 tesco plc annual report and financial statements 2010 remumeration report
pensions
pension provision is central to our ability to foster loyalty and retain 
experience which is why tesco wants to ensure that the tesco plc pension 
scheme is a highly valued benefit all executive directors are members  
of the tesco plc pension scheme which provides a pension of up to  
twothirds of base salary on retirement normally at age 60 dependent  
on service the final salary scheme is now closed to new entrants but has 
been replaced throughout the organisation by a different definedbenefit 
pension scheme based on career average earnings since april 2006 
following implementation of the regulations contained within the finance 
act 2004 executive directors have been eligible to receive the maximum 
pension that can be provided from the registered pension scheme the 
balance of any pension entitlement for all executive directors is delivered 
through an unapproved retirement benefits scheme surbs except for 
tim mason the surbs is ‘secured’ by using a fixed charge over a cash 
deposit in a designated account
over the last few years pension contributions by our executive directors 
have been increasing progressively in 200910 the level of contribution 
was 8 of salary which is in line with senior management’s contribution 
levels contributions will rise over the next two years to 10 by 201112 
further details of the pension benefits earned by the directors can be 
found on page 58
all employee share schemes
the executive directors are eligible to participate in the company’s all 
employee share schemes on the same terms as other uk employees 
•   shares in success shares in the company are allocated to participants 
in the scheme up to hmrc approved limits currently £3000 per 
annum the amount of profit allocated to the scheme is determined  
by the board taking account of company performance
•  buy as you earn an hmrc approved share purchase scheme under 
which employees invest up to a limit of £110 on a fourweekly basis  
to buy shares at market value in tesco plc
•  save as you earn an hmrc approved savingsrelated share option 
scheme under which employees save up to a limit of £250 on a four 
weekly basis via a bankbuilding society with an option to buy shares  
in tesco plc at the end of a threeyear or fiveyear period at a discount 
of up to 20 of the market value there are no performance conditions 
attached to saye options
other benefits
the executive directors are eligible for car benefits life assurance 
disability and health insurance and staff discount
200910 performance measurement
shortterm performance 200910
earnings per share
the reported underlying diluted group eps for 200910 was 3166p  
an increase of 91 on last year
corporate objectives
the corporate objectives are based on our balanced scorecard known  
as the steering wheel corporate objectives for the awards made in 
respect of the financial year 200910 included increasing sales from  
new space specific profit targets for international businesses and for 
retailing services likeforlike sales growth and the development of the 
nonfood business focus on developing trading models internationally 
enhancing talent management and capability embedding the new 
international community plans and community promises and reducing 
our environmental impact performance against most targets was within 
the target range
total shareholder return
the graph below highlights the group’s total shareholder return 
performance over the last five financial years relative to the ftse 100 
index of companies this index has been selected to provide an established 
and broadbased comparator group of retail and nonretail companies of  
a similar scale to tesco
total shareholder return tsr 1 march 2005 to 27 february 2010
feb 05 feb 06 feb 07 feb 08 feb 09 feb 10
t esco
ftse 100
95
120
145
170
195
tsr is the notional return from a share or index based on share price 
movements and declared dividends
the committee considers tsr performance against the ftse 100 and a 
comparator group of international retailers that includes ahold carrefour 
j sainsbury metro morrisons safeway inc target and walmart 
following the remuneration committee’s consideration of the extent to 
which the various performance measures eps corporate objectives and 
tsr in respect of the 200910 award were achieved the executive directors 
have been awarded 95 of the potential maximum for the cash element 
and 94 of the potential maximum for the deferred shares element of their 
annual bonus the committee believes that this level of bonus appropriately 
reflects the strong performance against financial and strategic milestones
us objectives
additional awards are made to tim mason and sir terry leahy subject to 
performance conditions which measure the progress of the us business 
against a range of aggressive targets related to the development of  
this business during 200910 advances were made on most measures 
including store development sales growth cost management and 
customer factors however the ongoing economic downturn did continue 
to act as a constraint over the year on the pace of growth against the 
demanding development objectives
the remuneration committee has assessed the bonus outturn for 
200910 and tim mason has been awarded 65 of the potential 
maximum for both the cash and deferred shares elements of that part  
of his annual bonus which is measured by reference to usspecific targets 
sir terry leahy has been awarded 65 of the potential maximum  
for that part of his annual bonus which is measured by reference to 
usspecific targets and which is satisfied in deferred shares
longterm performance 200910
earnings per share
the threeyear performance period for the 20078 executive option grant 
over shares with a value of 200 of salary at the date of grant ended at 
the financial year end 200910 vesting of these options was conditional  
on the achievement of earnings per share performance conditions with 
the first 100 subject to the achievement of underlying diluted eps 
growth of at least rpi plus 9 over three years with the balance vesting 
for achieving growth of at least rpi plus 15 there is no retesting of 
performance the increase in underlying diluted eps relative to rpi over 
the three years from 20078 to 200910 exceeded 15 and these options 
will therefore vest in full on the third anniversary of their grant
return on capital employed
following the completion of the threeyear performance period for the 
20078 psp award the committee considered the level of performance 
against the target for the first 75 of the psp award of achieving posttax 
group roce of 142 by the end of 200910 posttax roce calculated  
on a likeforlike basis with the target originally set at the end of 200910 
was 142 so the full amount of the first 75 of the award will vest  
the committee also exercised its judgement as to the extent to which  
the remaining 25 of the psp award should vest as a result of superior 
roce performance taking into account factors including the level of 
t esco plc annual report and financial statements 2010 55 directors’ remuneration report continued
roce achieved the expected roce for additional and existing capital 
investment whether capital spend was in line with strategic objectives  
and balanced shortterm and longterm investment needs the level  
of sales and underlying profit growth and whether this reflected other 
developments in the marketplace having considered these factors  
in detail the committee concluded that all of the remaining 25 of the 
award should vest a total of 100 of the 20078 psp award measured  
on group performance will therefore vest
for the 50 of salary award which related to international roce 
performance the committee considered the level of performance against 
the target for the first 75 of the international psp award of achieving 
posttax international roce of 81 by the end of 200910 posttax 
international roce calculated on a likeforlike basis with the target 
originally set at the end of 200910 was 69 so 231 of the first 75 of 
the award will vest the committee also exercised its judgement as to the 
extent to which the remaining 25 of the psp award should vest as a 
result of superior roce performance taking into account the factors 
outlined above the committee concluded that all of the remaining 25  
of the international psp award should vest a total of 481 of the 20078 
psp award measured on international performance will therefore vest
future performance measures
the committee has determined that no change is required for the coming 
year in the form of incentive arrangements nor in the relative balance 
between them the maximum opportunity under incentive arrangements 
will remain the same for the 201011 year as set out on pages 53 and 54 
the same principles as described earlier were also adopted in the 
determination of performance targets 
shortterm performance targets
we do not disclose specific future targets for reasons of commercial 
sensitivity however it is intended that performance will continue to be 
measured against stretching eps tsr and corporate objective targets 
aligned with the delivery of our strategy the continuing difficult market 
conditions in the us have led to the startup phase of the us business 
lasting longer than originally envisaged and so the group ceo and  
us ceo will continue to have the opportunity to receive an annual bonus 
relating to the achievement of financial strategic and operational targets 
which measure the earlystage development of the us business success 
against these measures will contribute to building a strong platform for 
longterm sustainable growth of the us business
longterm performance
earnings per share
options were granted in 200910 to executive directors over shares  
with a value of 200 of salary with an exercise price equal to the market 
value at the date of grant and any gain is therefore dependent on 
increasing the share price between the date of grant and exercise vesting 
of these options is conditional on the achievement of earnings per share 
performance conditions with the first 100 subject to the achievement  
of underlying diluted eps growth of at least rpi plus 9 over three years 
and the balance vesting for achieving growth of at least rpi plus 15 
performance against this target will be measured at the end of 201112  
to determine the level of vesting
return on capital employed – group and international
the rules of the performance share plan allow awards to be made over 
shares up to 150 of salary in the year ended 27 february 2010 awards 
were made to all the executive directors except tim mason over tesco plc 
shares equal to a total of 150 of salary an award was made to tim mason 
over tesco plc shares equal to a total of 100 of salary for all the 
executive directors awards over up to 100 of salary will vest together 
with reinvested dividends subject to the achievement of group roce 
targets the awards over the equivalent of a further 50 of salary made  
to the executive directors other than tim mason will vest together with 
reinvested dividends subject to the achievement of targets based on 
international roce in order to incentivise and reward delivery of higher 
returns from invested capital outside the uk but excluding the us
the first 75 of the awards will vest on a straightline basis at the end  
of the threeyear performance period with 25 vesting for baseline 
performance and the full 75 vesting for maximum performance against 
target the target in respect of the first 75 of the 200910 psp award is 
achievement of 133 group roce and 70 international roce at the 
end of the threeyear performance period in 201112 the remaining 25 
of the awards will vest for superior roce performance as judged by the 
remuneration committee taking into account the factors outlined above
if the remuneration committee exercises its judgement to allow some  
or all of the remaining 25 of the psp awards to vest we will describe  
in the directors’ remuneration report in the relevant year those factors 
taken into account in determining the level of the award which would vest 
there is no retesting of performance in respect of any targets
return on capital employed – us
the group is seeking to build a substantial presence in the us which  
in time has the potential to become a significant source of value for  
our shareholders
the tesco plc us long term incentive plan 2007 the us ltip has been 
designed to deliver reward only if the us business realises this potential 
the us ceo was made an award of two million shares under the us ltip 
in 2007 awards were also made to other senior members of the us 
management team no other executive directors will participate in the 
plan awards under the plan vest based on the roce and ebit performance 
of the us business as set out on page 63 
a key part of the group’s longterm strategy is to consider new business 
ventures which have the potential for significant longterm value creation 
for our shareholders the group new business incentive plan group plan 
supports this initiative initially only the group ceo will participate in the 
group plan however awards may be made to other employees at the 
discretion of the remuneration committee in the future where this is 
appropriate to do so in order to support the group’s new business ventures
as the company’s us venture is currently the most developed new 
business initiative the award made to the group ceo under the group  
plan is focused on the performance of the us venture although the 
remuneration committee has the flexibility to consider and include other 
new business development opportunities within the proposed award an 
award of 25 million shares was made to the group ceo in november 2007 
this award will vest based on the roce and ebit performance of the  
us business as set out on page 63 however the plan also requires group 
and international roce targets to be met and any payouts under this plan 
will be scaled back on a pro rata basis to the extent they are not met in 
addition the remuneration committee will consider the findings of the 
governance oversight committee described below and opinions of the 
audit committee as to whether the level of reported results achieved reflects 
the underlying financial performance of the company when considering if 
and the extent to which the award made to the group ceo will vest
service agreements
the executive directors all have rolling service agreements with no fixed 
expiry date these contracts are terminated on notice of 12 months by  
the company and six months’ notice by the executive if an executive 
director’s employment is terminated other than pursuant to the notice 
provisions in the service agreement or by reason of resignation or 
unacceptable performance or conduct the company will pay a sum 
calculated on the basis of basic salary and the average annual bonus paid 
for the last two years no account will be taken of pension termination 
payments will be subject to mitigation this means that amounts will  
be paid in instalments to permit mitigation if the termination occurs  
within one year of retirement the termination payment will be reduced 
accordingly to reflect his length of service with tesco and the early age  
of his appointment as ceo sir terry leahy’s service agreement provides 
for his full pension entitlement to become available on retirement on or 
after his 57th birthday 
the remuneration committee has agreed that new appointments  
of executive directors will normally be on a notice period of 12 months  
the committee reserves the right to vary this period to 24 months for the 
initial period of appointment and for the notice period to then revert to 
12 months the service agreements are available to shareholders to view  
on request from the company secretary 
56 tesco plc annual report and financial statements 2010 remumeration report
outside appointments
tesco recognises that its executive directors may be invited to become 
nonexecutive directors of other companies such nonexecutive duties 
can broaden experience and knowledge which can benefit tesco 
subject to approval by the board executive directors are allowed to  
accept nonexecutive appointments and retain the fees received provided 
that these appointments are not likely to lead to conflicts of interest
executive directors’ biographies which include details of any outside 
appointments can be found on pages 36 and 37 of this report fees 
retained for any nonexecutive directorships are set out below
 company in which  fee retained 
 nonexecutive  in 200910 
director directorship held £000
philip clarke whitbread plc 55
andrew higginson bskyb plc 63
lucy nevillerolfe the carbon trust 18
nonexecutive directors
nonexecutive directors have letters of appointment setting out their 
duties and the time commitment expected the letters are available to 
shareholders to view from the company secretary upon request
the chairman meets with each nonexecutive director separately to 
review individual performance all nonexecutive directors are subject  
to reelection by shareholders every three years at the annual general 
meeting and their appointment can be terminated by either party without 
notice the remuneration of the nonexecutive directors is determined  
by the chairman and the executive committee after considering external 
market research and individual contribution nonexecutive directors 
receive a basic fee of £65000 per annum the chairs of the audit and 
remuneration committees receive £30000 in addition to their basic  
nonexecutive fee and nonexecutive directors who are members of 
these committees receive an additional £12000 for each committee  
the senior independent director rodney chase who is also the deputy 
chairman receives a total fee of £135000 per annum the remuneration 
committee determines the chairman’s remuneration having regard to  
time commitment and packages awarded to chairmen of other companies 
of a similar size and complexity david reid nonexecutive chairman 
receives an annual fee of £610000 and has the benefit of a company car 
and chauffeur
the remuneration committee
the remuneration committee the committee is governed by formal 
terms of reference which are reviewed annually the terms of reference 
are available from the company secretary upon request or can be viewed 
at wwwtescocomboardprocess
composition of the committee
the committee consists entirely of independent nonexecutive directors 
the members of the committee during the year were charles allen 
chairman of the committee patrick cescau rodney chase karen cook 
harald einsmann and ken hanna ken hanna was appointed a member of 
the remuneration committee effective from 1 april 2009 the directors’ 
biographies can be found on pages 36 and 37 of this report
no member of the committee has any personal financial interest in the 
matters being decided other than as a shareholder nor any daytoday 
involvement in running the business of tesco jonathan lloyd the company 
secretary is secretary to the committee david reid nonexecutive 
chairman sir terry leahy chief executive of the group and laurie mcilwee 
group cfo all attend meetings at the invitation of the committee they 
are not present when their own remuneration is being discussed
the committee is supported by the group personnel and finance 
functions and has continued to use the services of deloitte llp whom it 
appointed as an external independent advisor deloitte llp also provided 
advisory services in respect of corporate tax planning share schemes 
international taxation corporate finance and treasury to the group during 
the year members’ attendance at committee meetings is listed in the 
corporate governance section on page 47 of this report
to find out more go to wwwtescocomannualreport2010
role of the committee
the committee’s purpose is to
•  determine and recommend to the board the remuneration policy for the 
chairman and executive directors
•  ensure the level and structure of remuneration is designed to attract 
retain and motivate the executive directors needed to run the company
•  agree performance frameworks and targets and review performance 
against these
•  monitor the level and structure of remuneration for senior management 
ensuring it is aligned with shareholders interests and
•  ensure the remuneration relationship between the executive directors 
and senior executives of the company below this level is appropriate
the committee normally meets at least four times a year and has a rolling 
schedule of items within its remit in the financial year ended 27 february 
2010 the committee met 7 times and there was also an offsite meeting 
to consider remuneration strategy 
key activities
during the year the key activities of the committee included
• approval of the 200809 directors’ remuneration report
•  review and approval of awards made under the executive incentive plan 
performance share plan and discretionary share option plan
•  annual review of all elements of the executive directors’ reward 
packages and those of senior management
•  review of all share plan performance measures against 200809 
performance targets
•  agreement of final vesting amounts of the 2006 performance share 
plan award and 2006 discretionary share option plan award
• design and targets for 200910 annual bonus
• consideration of targets for the 2009 performance share plan
•  review of its performance and agreement of steps to enhance its 
effectiveness
• review of compliance with director shareholding guidelines 
•  consideration of developments in best practice and updated guidelines 
on executive compensation from shareholder advisory bodies and
• review of the chairman’s pay and benefits
governance oversight committee
the governance oversight committee goc has been established  
to review and report at the end of each financial year on the allocation  
of capital and other group resources the goc comprises the senior 
independent director of the company who chairs the goc the  
chairman of the audit committee and the chairman of the remuneration 
committee the chairman of the group also attends the goc and the 
company secretary serves as its secretary the goc reports its findings  
to the remuneration committee each year the remuneration committee 
takes these into account along with the view of the audit committee  
to ensure that financial performance against targets is indicative of strong 
and robust business performance if appropriate vesting under the  
plans may be adjusted by the remuneration committee in respect of 
executive directors or the board in respect of all other employees who  
are participants in accordance with the combined code any such 
adjustments to vesting for executive directors will be reported to 
shareholders in the directors’ remuneration report at the relevant time 
compliance
in carrying out its duties the remuneration committee gives full 
consideration to best practice the committee was constituted and 
operated throughout the period in accordance with the principles outlined 
in the listing rules of the financial services authority derived from the 
combined code on corporate governance the auditors’ report set out on 
page 69 covers the disclosures referred to in this report that are specified 
for audit by the companies act 2006 this report also complies with 
disclosures required by the director remuneration report regulations 
2002 details of directors’ emoluments and interests are set out on  
pages 58 to 66 of this report
charles allen 
chairman of the remuneration committee
t esco plc annual report and financial statements 2010 57 directors’ remuneration report continued
table 1 directors’ emoluments
 fixed emoluments performancerelated emoluments
        shortterm  
       shortterm deferred  total total
    salary allowances benefits
2
 cash shares longterm
3
 200910 20089
    £000 £000 £000 £000 £000 £000 £000 £000
executive directors         
richard brasher    805  –   63   771  763  –   2402  2267 
philip clarke    805  –   38   771  763  324  2701   2720 
andrew higginson    805  –   56   771  763  329  2724   2754 
sir terry leahy    1398  –   115  1340 1784   583   5220   5102 
 tim mason – base salary
1
   816 305 343 914 909  329   3616  3225 
 tim mason – supplement
1
   200  –   –  225  224  –   649   560 
tim mason – total     1016   305   343  1139  1133  329   4265   3785 
laurie mcilwee     588   –   50  579 572   –   1789  91 
lucy nevillerolfe     589   –   69  579 572   –   1809   1606 
david potts     805   –   45  771 763   324  2708   2719 
nonexecutive directors
charles allen     95   –   –   –   –   –   95   91 
patrick cescau     89   –   –   –   –   –   89   5 
rodney chase     135   –   –   –   –   –   135  129 
karen cook     77   –   –   –   –   –   77  73 
harald einsmann     77   –   –   –   –   –   77   73 
ken hanna
4
     79   –   –   –   –   –   79  –
ken hydon     95   –   –   –   –   –   95   91 
david reid chairman    610   –  67  –   –   –   677   657 
jacqueline tammenoms bakker    65   –   –   –   –   –  65   9 
total     8133   305   846   6721 7113 1889  25007  22172 
         
1  tim mason’s salary is made up of a base salary and a nonpensionable salary supplement shown separately allowances are made up of compensation payments for additional tax due 
on equity awards made prior to his move to the us tim mason’s benefits are made up of car travel medical tax related costs and services and free shares awarded under the all employee 
share incentive plan         
2  with the exception of tim mason benefits are made up of car benefits chauffeurs disability and health insurance staff discount gymleisure club membership and free shares awarded 
under the all employee share incentive plan         
3  the longterm bonus figures shown in table 1 relate to the additional 125 enhancements allocated in april 2009 and february 2010 on longterm awards under the old bonus scheme 
the longterm bonuses awarded on 15 october 2009 under the performance share plan were awarded in the form of nil cost options with the exception of tim mason who received an 
unfunded promise to deliver shares details of these awards are shown in table 6
4  ken hanna was apppointed during the year the figure in table 1 is from his date of appointment
table 2 directors’ pension details
executive directors are members of the tesco plc pension scheme which provides a pension of up to twothirds of base salary on retirement normally 
at the age of 60 dependent upon service the scheme also provides for dependants’ pensions and lump sums on death in service the scheme is a 
defined benefit pension scheme which is approved by hmrc
      a 
      increase in  transfer transfer  
      accrued transfer value of value of  transfer  
    total increase pension value of a at total accrued total accrued value of increase
    accrued in accrued during 27 february pension at pension at total accrued in transfer
    pension at pension the year  2010 less 28 february 28 february pension at value less
  age at years of 27 february  during net of director’s 2009 2009 27 february director’s
  27 february company 2010
1 2
 the year inflation
5
 contributions old basis
3
 new basis
3
  2010 contributions
  2010 service £000 £000 £000 £000 £000 £000 £000 £000
richard brasher  48 23 359 27 27 366 3030 4133 4842 709
philip clarke  49 35 390 27 27 384 3530 4793 5579 786
andrew higginson  52 12 329 37 37 581 3354 4265 5202 937
sir terry leahy
4
  53 31 832 57 57 1014 12130 13767 15924 2157
tim mason  52 28 424 29 29 450 4493 5734 6662 928
laurie mcllwee  47 9 178 73 73 944 918 1257 2306 1049 
lucy nevillerolfe  57 13 244 39 39 722 3216 3442 4452 1010
david potts  52 37 428 29 29 465 4705 5932 6891 959
1 the accrued pension is that which would be paid annually on retirement at 60 based on service to 27 february 2010
2 some of the executive directors’ benefits are payable from an unapproved pension arrangement this is secured by a fixed and floating charge on a cash deposit
3  the basis used for calculating transfer values was revised during the year because changes in financial conditions meant that the previous basis for calculating transfer values used since 2008 
no longer produced reasonable values transfer values at 28 february 2009 have been restated using the new basis for comparative purposes
4  sir terry leahy is entitled to retire at any age from 57 to 60 inclusive with an immediate pension of twothirds of base salary
5 inflation over the year has been allowed for using the september 2009 statutory revaluation order
tables 111 are audited information
58 tesco plc annual report and financial statements 2010 remumeration report
table 3 gains made on executive share options
2 3
           value realisable
1
         market 
       number of  option  price at   
    date  date  date of  options  price  exercise 200910 20089
    of grant exercisable  exercise exercised pence pence £000 £000
richard brasher    260600 260603 241109 106613  20500   42736  237 –
     260401 260404 241109 101215  24700   42736  183 –
     150402 150405 241109 100386  25900   42736  169 –
     140403 140406 241109 151900  19750   42787  350 –
     300404 300407 241109 296150  25325   42787  517 –
     220405 220408 241109 255795  31275   42787  294 –
     080506 080509 241109 345261  31860   42787  377 –
philip clarke     –   –   –   –   –   –  – –
andrew higginson    300404 300407 280709 434353  25325   36913  503  –
sir terry leahy    301199 301102 271109 228901  17300   42686  581 260
     200400 200403 230210 17673  20950   42388  38  –
     260600 260603 230210 780487  20500   42388  1708 –
tim mason    150402 150405 120110 358301  25900   42640  600  –
     300404 300407 120110 434353  25325   42640  752  –
     220405 220408 120110 379856  31275   42640  432  –
     080506 080509 120110 404896  31860   42640  436  –
laurie mcilwee    220405 220408 230210 105500  31275   42388  117  –
     080506 080509 230210 108286  31860   42388  114  –
lucy nevillerolfe    220405 220409 171109 108050  31275   43064  127  –
     080506 080509 171109 116133  31860   43064  130  –
david potts     –  –   –   –   –   –   –  –
total       4834109   7665 260
1  the value realisable from shares acquired on exercise is the difference between the market value at exercise and the exercise price of the option although the shares may have been retained 
2 gains made on save as you earn share options are not included above these are detailed in table 5
3 gains made on nil cost options awarded under the performance share plan and the executive incentive plan are not included above these are detailed in table 6 and table 9
table 4 share options held by directors and not exercised at 27 february 2010 
executive share option schemes 1994 and 1996 and discretionary share option plan 2004
     options as at  options  options  options as at  exercise date from 
     28 february  granted  exercised  27 february  price  which  expiry
     date of grant 2009 in year
1
 in year
2
 2010 pence exercisable date
richard brasher    26062000 106613 – 106613 – 20500 26062003 26062010
     26042001 101215 – 101215 – 24700 26042004 26042011
     15042002 100386 – 100386 – 25900 15042005 15042012
     14042003 151900 – 151900 – 19750 14042006 14042013
     30042004 296150 – 296150 – 25325 30042007 30042014
     22042005 255795 – 255795 – 31275 22042008 22042015
     08052006 345261 – 345261 – 31860 08052009 08052016
     08052007 278627 – – 278627 47375 08052010 08052017
     12052008 353114 – – 353114 42700 12052011 12052018
     06052009  – 467848 – 467848 33840 06052012 06052019
total     1989061 467848 1357320 1099589   
philip clarke    22042005 379856 – – 379856 31275 22042008 22042015
     08052006 404896 – – 404896 31860 08052009 08052016
     08052007 298844 – – 298844 47375 08052010 08052017
     12052008 353114 – – 353114 42700 12052011 12052018
     06052009  – 467848 – 467848 33840 06052012 06052019
total     1436710 467848 – 1904558   
andrew higginson    30042004 434353 – 434353 – 25325 30042007 30042014
     22042005 379856 – – 379856 31275 22042008 22042015
     08052006 404896 – – 404896 31860 08052009 08052016
     08052007 298844 – – 298844 47375 08052010 08052017
     12052008 353114 – – 353114 42700 12052011 12052018
     06052009  – 467848 – 467848 33840 06052012 06052019
total     1871063 467848 434353 1904558   
t esco plc annual report and financial statements 2010 59 directors’ remuneration report continued
table 4 share options held by directors and not exercised at 27 february 2010 continued
executive share option schemes 1994 and 1996 and discretionary share option plan 2004
     options as at  options  options  options as at  exercise date from 
     28 february  granted  exercised  27 february  price  which  expiry 
    date of grant 2009 in year
1
 in year
2
 2010 pence exercisable date
sir terry leahy    30111999 228901 – 228901 – 17300 30112002 30112009
     20042000 17673 – 17673 – 20950 20042003 20042010
     26062000 780487 – 780487 – 20500 26062003 26062010
     26042001 647773 – – 647773 24700 26042004 26042011
     15042002 642471 – – 642471 25900 15042005 15042012
     14042003 939747 – – 939747 19750 14042006 14042013
     30042004 766041 – – 766041 25325 30042007 30042014
     22042005 658673 – – 658673 31275 22042008 22042015
     08052006 709353 – – 709353 31860 08052009 08052016
     08052007 523556 – – 523556 47375 08052010 08052017
     12052008 618548 – – 618548 42700 12052011 12052018
     06052009  – 812647 – 812647 33840 06052012 06052019
total     6533223 812647 1027061 6318809   
tim mason    15042002 358301 – 358301 – 25900 15042005 15042012
     30042004 434353 – 434353 – 25325 30042007 30042014
     22042005 379856 – 379856 – 31275 22042008 22042015
     08052006 404896 – 404896 – 31860 08052009 08052016
     10082007 333319 – – 333319 42475 10082010 10082017
     12052008 353114 – – 353114 42700 12052011 12052018
     06052009  – 467848 – 467848 33840 06052012 06052019
total     2263839 467848 1577406 1154281   
laurie mcilwee
2
    22042005 105500 – 105500 – 31275 22042008 22042015
     08052006 108286 – 108286 – 31860 08052009 08052016
     08052007 77192 – – 77192 47375 08072010 08052017
     12052008 91335 – – 91335 42700 12052011 12052018
     06052009  – 325059 – 325059 33840 06052012 06052019
total     382313 325059 213786 493586   
lucy nevillerolfe     22042005 108050 – 108050 – 31275 22042008 22042015
     08052006 116133 – 116133 – 31860 08052009 08052016
     08052007 189973 – – 189973 47375 08052010 08052017
     12052008 231850 – – 231850 42700 12052011 08052018
     06052009  – 327494 – 327494 33840 06052012 06052019
total     646006 327494 224183 749317   
david potts    22042005 379856 –  379856 31275 22042008 22042015
     08052006 404896 – – 404896 31860 08052009 08052016
     08052007 298844 – – 298844 47375 08052010 08052017
     12052008 353114 – – 353114 42700 12052011 12052018
     06052009  – 467848 – 467848 33840 06052012 06052019
total     1436710 467848 – 1904558   
total     16558925 3804440 4834109 15529256   
1  executive share options are subject to performance conditions measured over three years as set out on page 56 eps growth for the period 20067 to 20089 exceeded rpi by 31 
therefore share options awarded on 8 may 2006 vested in full on 8 may 2009 executives have until the tenth anniversary of the date of grant to exercise their options 
2  the market price at exercise is shown in table 3 the share price as at 27 february 2010 was 42000p the share price during the 52 weeks to 27 february 2010 ranged from  
30140p to 43705p 
60 tesco plc annual report and financial statements 2010 remumeration report
table 5 share options held by directors and not exercised at 27 february 2010 
savingsrelated share option scheme 1981
           value value  
     as at  options  options  as at exercise realisable realisable 
     28 february granted exercised 27 february price 200910 20089
    date of grant 2009 in year in year
1
 2010 pence £000 £000
richard brasher    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
philip clarke    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
andrew higginson    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
sir terry leahy    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
tim mason    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
laurie mcilwee    08112006 615 – 615 – 3070 1 –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      2511 948 615 2844  1 3
lucy nevillerolfe    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
david potts    04112004 1424 – 1424 – 2320 3 –
     02112005 1298 – – 1298 2480 – –
     08112006 1066 – – 1066 3070 – –
     07112007 819 – – 819 4100 – –
     05112008 1077 – – 1077 3110 – –
     11112009 – 948 – 948 3280 – –
      5684 948 1424 5208  3 2
total     42299 7584 10583 39300   
1  save as you earn is an all employee share scheme options are not subject to performance conditions all options are exercisable from 1 february in the year which is 6 years from the 
year of grant all options expire 6 months from their exercise date ie on 1 august of the relevant year all directors exercised their 041104 options on 1 february 2010 when the market 
price was 42230p no options lapsed in the year
t esco plc annual report and financial statements 2010 61 directors’ remuneration report continued
table 6 longterm performance share plan
1
           
      shares options    date of  
     share price as at  awarded  exercised  as at  releasedate 
    date of award on award date  28 february  options shares released  shares 27 february from which  expiry
   grant pence 2009 granted in year in year
7
 lapsed
4
 2010 exercisable date
richard brasher   28072004 25345 118367 – 118367 – – 28072008 –
    12102005 30275 197648  7721  205369 – – 12072009 –
    20072006
5
 34625 203056  7694  –  20861  189889 20072010 –
    14112007 47110 247667  9674  – – 257341 14072010 14112017
    08072008 35376 339360  13256  – – 352616 08072011 08072018
    15102009 37400 –  329382  – – 329382 15072012 15102019
total     1106098  367727  323736 20861 1129228  
philip clarke   28072004  25345  175774 – 175774 – – 28072008 –
    12102005  30275  231787  9055  240842 – – 12072009 –
    20072006
6
  34625  217789  8253  83503  22375  120164 20072010 –
    14112007  47110  247667  9674  – – 257341 14072010 14112017
    08072008  35376  339360  13256  – – 352616 08072011 08072018
    15102009  37400  –  329382  – – 329382 15072012 15102019
total     1212377  369620  500119 22375 1059503  
andrew higginson
 
  28072004 25345 175774 – 175774 – – 28072008 –
    12102005 30275 231787  6339  238126 – – 12072009 –
    20072006
6
 34625 217789  8253  83503  22375  120164 20072010 –
    14112007 47110 247667  9674  – – 257341 14072010 14112017
    08072008 35376 339360  13256  – – 352616 08072011 08072018
    15102009 37400 –  329382  – – 329382 15072012 15102019
total     1212377  366904  497403 22375 1059503  
sir terry leahy   28072004 25345 304794 –  304794  – – 28072008 –
    12102005 30275 406080  15865   421945  – – 12072009 –
    20072006
5
 34625 381553  14459  –  39199  356813 20072010 –
    14112007 47110 433836  16948  – – 450784 14072010 14112017
    08072008 35376 589465  23029  – – 612494 08072011 08072018
    15102009 37400 –  571958  – – 571958 15072012 15102019
total     2115728  642259  726739 39199 1992049  
tim mason
2
   28072004 25345 90431 –  90431  – – 28072008 –
    12102005 30275 124226  4852   129078  – – 12072009 –
    25082006 34625 217789  8253  –  22375  203667 20072010 –
    14112007 47110 165111  6450  – – 171561 14072010  –
    08072008 35376 226240  8838  – – 235078 08072011  –
    15102009 37400 –  219588  – – 219588 15072012  –
total     823797  247981  219509 22375 829894  
laurie mcilwee
3
   20072006 34625 52808  1221  48748  5281  – 20072009 –
    10102007 46550 41890  1354  – – 43244 10072010  –
    08072008 35376 62141  2092  – – 64233 08072011  –
    15102009 37400 –  247036  – – 247036 15072012 15102019
total     156839  251703  48748  5281  354513  
lucy nevillerolfe
3
   20072006 34625  59235   1370  54901  5704  – 20072009 –
    14112007 47110  162613   6352  – – 168965 14072010 14112017
    08072008 35376  237552   9280  – – 246832 08072011 08072018
    15102009 37400 –  247036  – – 247036 15072012 15102019
total     459400 264038 54901 5704 662833  
david potts   28072004 25345  175774  –  175774  –  –  28072008 –
    12102005 30275  231787  9055  240842  –  –  12072009 –
    20072006
6
 34625  217789  8253  83503  22375  120164  20072010 –
    14112007 47110  247667  9674 – –  257341  14072010 14112017
    08072008 35376  339360  13256 – –  352616  08072011 08072018
    15102009 37400 – 329382 – –  329382  15072012 15102019
total     1212377 369620 500119 22375  1059503   
total     8298993 2879852 2871274 160545 8147026  
1  the performance share plan replaced the longterm executive incentive scheme the first award under the new plan was made in 2004 all awards except those described in notes 23 
and 56 have been made in the form of nil cost options
2 tim mason’s awards since 2006 have been made in the form of unfunded promises to deliver shares 
3  laurie mcilwee was appointed on 27 january 2009 his 2006 2007 and 2008 awards were made in the form of conditional shares under the senior management performance share plan 
lucy neville rolfe’s 2006 award was also made in the form of conditional shares under the senior management performance share plan on 20 july 2009 53531 shares were released to 
lucy nevillerolfe and 47527 shares were released to laurie mcilwee at a share price of 36995p on 12 august 2009 1370 shares were released to lucy nevillerolfe and 1221 shares 
were released to laurie mcilwee at a share price of 36905p
62 tesco plc annual report and financial statements 2010 remumeration report
table 6 longterm performance share plan
1
 continued
4  the awards are subject to performance conditions based on return on capital employed targets the group roce for 20089 was 1334 therefore targets for psp awards granted  
on 20 july 2006 were partially met and 90 of these awards vested the balance of the awards 10 lapsed executives are required to retain the vested awards for a further 12 months 
with the exception of the circumstances covered in notes 5 and 6 shareholder approval was obtained at the 2007 agm for the removal of the requirement for any vested shares to be 
retained for a further 12 months and this applies to awards made after july 2007 all awards are increased to reflect dividend equivalents as each dividend is paid with the exception of  
the 2004 award on which no dividends accrue
5  following approval by the remuneration committee executives were offered the opportunity to surrender the nil cost options awarded on 20 july 2006 in exchange for an equivalent 
number of restricted shares and to fund the income tax and national insurance due on these awards at the point of exchange 27 november 2009 the balance of shares shown is in the 
form of restricted shares and remains subject to the retention period which ends on 20 july 2010
6  following approval by the remuneration committee executives were given the opportunity to surrender the nil cost options awarded on 20 july 2006 in exchange for an award of an 
equivalent number of restricted shares on 25 february 2010 and to sell sufficient shares to cover the tax liability due the post tax number of shares under award remains subject to the 
retention period and will not be released until 20 july 2010 the share price on 25 february 2010 was 416175p
7 directors exercised psp awards as follows
 director date price pence options exercised value realised £000 director date price pence options exercised value realised £000  
 richard brasher 241109 428325  321420  1377 sir terry leahy 271109 429275  721980  3099 
  230210 421225  2316  10  230210 421225  4759  20
 philip clarke 120509 35085  175774  617 tim mason 190509 35503  90431  321
  291209 43000  238126  1024  181109 42485  127623  542
  230210 421225  2716  11  230210 421225  1455  6
  250210 416175  83503  348 david potts 230210 421225  416616 1755
 andrew higginson 280709 36840  413900  1525  250210 416175  83503  348
  250210 416175  83503  348
table 7 group new business incentive plan
       shares options 
     share  awarded exercised 
      price on as at  options shares as at date from
    date of award date 28 february granted released 27 february  which  expiry 
    awardgrant pence 2009 in year in year 2010 exercisable date
sir terry leahy    14112007 48200 2579393 100779 – 2680172 four 
           tranches 
           20112014 14112017
total       100779 – 2680172 
1  the group new business incentive plan 2007 was approved by shareholders on 29 june 2007 the awards made under this plan will normally vest in four tranches four five six and 
seven years after the date of award for nil consideration the award is in the form of nil cost options awards may be adjusted to take account of any dividends paid or that are payable  
in respect of the number of shares earned 
2  the vesting of the award made to the group ceo under this plan will be conditional upon achievement against group and international performance conditions the performance 
conditions under this award will be aligned with the targets set for awards made under the performance share plan psp in each of the years 2007 to 2009 which will become capable  
of vesting between 2010 and 2012 if less than threshold performance is achieved for each of these psp awards then no portion of the group plan award will become capable of vesting  
if maximum group and international performance is achieved for each of these psp awards ie the 2007 – 2009 psp awards vest in full in 2010 – 2012 then the whole of the group plan 
award will become eligible for vesting subject to achievement of the appropriate new business performance targets referred to below if group and international performance for any  
of these psp awards is between threshold and maximum levels then the group award will become eligible for vesting on a pro rata basis subject always to the achievement of the 
appropriate new business targets referred to below         
3  once performance against the group and international targets has been determined the extent to which the award made to the group ceo under this plan is capable of vesting will be 
conditional on the financial performance of the specified new business venture as determined by the remuneration committee    
summary of us business performance conditions
roce hurdle       201011 201112 201213 201314
maximum performance      6 roce 9 roce 11 roce 12 roce
target performance       4 roce 6 roce 8 roce 10 roce
vesting percentage  of maximum award
vesting levels at maximum performance     up to 25 up to 50 up to 75 up to 100
vesting levels at target performance     up to 625 up to 10 up to 125 up to 1875
table 8 us long term incentive plan
         
         
       share price on as at  shares shares as at 
     date of award date 28 february awarded released 27 february  date of
     awardgrant pence 2009 in year in year 2010 release
tim mason    14112007 48200 2063514 80622 – 2144136 four tranches 20112014
total       80622 – 2144136
1  the us long term incentive plan 2007 was approved by shareholders on 29 june 2007 the awards made under this plan will normally vest in four tranches four five six and seven 
years after the date of award for nil consideration vesting will normally be conditional on the achievement of specified performance targets related to the return on capital employed  
in the us business over the sevenyear plan the targets are set out under table 7
2  the maximum number of shares which may be awarded under the us ltip is two million shares to the us ceo and 15 million shares to any other participant an award of two million 
shares was made to tim mason us ceo in november 2007 awards may be adjusted to take account of any dividends paid or that are payable in respect of the number of shares earned 
the extent to which awards will vest under the us ltip is conditional on the financial performance of the company’s us business based on the achievement of stretching earnings before 
interest and tax ebit and return on capital employed roce targets set by reference to the us longterm business plan
3  a percentage of the ebit of the us business for the relevant years may be allocated to an ebit pool the ‘profit pool’ the profit pool will be capped at 10 in any one year and is 
expected to be approximately 5 of cumulative ebit over the four measurement years 201011 to 201314 the portion of an award which may vest will be determined by reference to 
the value of the ebit pool as well as performance against the roce hurdles for the relevant year as outlined in the table above to the extent that the roce hurdles for any one year are 
met either in full or in part but there is insufficient value in the profit pool to fund the vesting of awards then the actual vesting in that year will be scaled back so that the profit pool is 
not exceeded that portion of the award that has not paid out in that year due to the profit pool being restricted may vest in future years provided that the profit pool in any later year 
permits this
4  the targets for the us ltip have been based on the business plan in respect of the initial phase of the us business the remuneration committee has the responsibility to review these 
targets in light of the scale and scope of the us business in order to ensure that they remain appropriate and challenging in particular the remuneration committee will seek the input of 
the audit committee and the governance oversight committee in order to ensure that financial performance against the targets is indicative of strong and robust business performance 
any material adjustments made in respect of the targets will be reviewed and approved by the audit committee and will be disclosed in the directors’ remuneration report 
t esco plc annual report and financial statements 2010 63 directors’ remuneration report continued
table 9 executive incentive plan
1
        shares shares  date of  
       share price as at  awarded released as at  releasedate 
      date of on award  28 february  options options 27 february from which
      awardgrant pence 2009 granted
3
 exercised
4 6 7
 2010 exercisable
richard brasher     20052005 31100 105865 4133 109998 – 20052008
      26052006 31850 178436 6971 185407 – 26052009
      24052007
5
 45675 150216 5868 – 156084 24052010
      02052008
5
 42405 149192 5828 – 155020 02052011
      19052009 35116 – 204291 79336 124955 19052012
total        583709 227091 374741 436059 
philip clarke     20052005 31100 157210 4321 161531 – 20052008
      26052006 31850 209257 8175 217432 – 26052009
      24052007
6
 45675 161118 6294 68639 98773 24052010
      02052008
6
 42405 149192 5828 63559 91461 02052011
      19052009 35116 – 204291 79336 124955 19052012
total        676777 228909 590497 315189 
andrew higginson     20052005 31100 157210 4272 161482 – 20052008
      26052006 31850 209257 5723 214980 – 26052009
      24052007
6
 45675 161118 6294 68639 98773 24052010
      02052008
6
 42405 149192 5828 63559 91461 02052011
      19052009 35116 – 204291 79336 124955 19052012
total        676777 226408 587996 315189 
sir terry leahy
 
    20052005 31100 272606 10645 283251 – 20052008
      26052006 31850 366610 14323 380933 – 26052009
      24052007
5
 45675 282268 11028 – 293296 24052010
      02052008
5
 42405 403030 15746 – 418776 02052011
      19052009 35116 – 443564 172255 271309 19052012
total        1324514 495306 836439 983381
tim mason
2
     20052005 31100 157210 4321 161531 – 20052008
      24052007 45675 183105 7154 – 190259 24052010
      02052008 42405 299078 11685 – 310763 02052011
      19052009 35116 – 257040 – 257040 19052012
total        639393 280200 161531 758062 
lucy nevillerolfe     24052007
5
 45675 76815 3000 – 79815 24052010
      02052008
5
 42405 97957 3827 – 101784 02052011
      19052009 35116 – 143003 55535 87468 19052012
total        174772 149830 55535 269067 
david potts     20052005 31100 157210 6138 163348 – 20052008
      26052006 31850 209257 8175 217432 – 26052009
      24052007
6
 45675 161118 6294 68639 98773 24052010
      02052008
6
 42405 149192 5828 63559 91461 02052011
      19052009 35116 – 204291 79336 124955 19052012
total        676777 230726 592314 315189 
total       4752719 1838470 3199053 3392136 
1  the executive incentive plan replaced the shortterm executive incentive scheme the first award under the new plan was made in 2005 the awards are subject to performance 
conditions based on tsr earnings per share and corporate objectives
2  since 2007 tim mason’s awards have been made in the form of an unfunded promise to deliver shares his 2005 award was made in the form of nil cost options
3 the awards are increased to reflect dividends equivalents as each dividend is paid
4 no options lapsed in the year under the executive incentive plan
5  following approval by the remuneration committee executives were offered the opportunity to surrender the nil cost options awarded on 24 may 2007 and 2 may 2008 in exchange for 
awards of an equivalent number of restricted shares and to fund the income tax and national insurance due on these awards at the point of exchange 27 november 2009 the balance 
of shares shown is in the form of restricted shares and will not be released until the date specified in the table
6  following approval by the remuneration committee executives were given the opportunity to surrender the nil cost options awarded on 24 may 2007 and 2 may 2008 in exchange for 
awards of an equivalent number of restricted shares on 25 february 2010 and to sell sufficient shares to cover the tax liability due the post tax number of shares under award remains 
subject to the retention period and will not be released until the date specified in the table the share price on 25 february 2010 was 416175p
7  for all directors except for tim mason the 2009 award was made in the form of restricted shares the remuneration committee gave approval for executives to sell sufficient shares to 
cover the tax liability due at the time of award the post tax number of shares will not be released until 19 may 2012
8 directors exercised eip awards as follows
 director date price pence options exercised value realised £000 director date price pence options exercised value realised £000 
 richard brasher 241109 428325  292058  1251 sir terry leahy 271109 429275  656652  2819 
  230210 421225  3347  14  230210 421225  7532  32
 philip clarke 120509 35085  157210  552 tim mason 190509 35503  157210  558
  291209 43000  219252  943  181109 42485 4272  18
  230210 421225  2501  11  230210 421225  49  0
  250210 416175  132198 550 david potts 230210 421225  380780 1604
 andrew higginson 280709 36840  376462  1276  250210 416175  132198 550
  250210 416175  132198 550 
64 tesco plc annual report and financial statements 2010 remumeration report
table 10 directors’ interests in the longterm incentive plan
1
     number of    number of  value of   
     shares as at    shares as at  shares   market price
   year of  award 28 february  shares  shares  27 february  released release  on release
   release date 2009 awarded released 2010 £000 date
3
 pence
philip clarke   2010 090403 252901 40811 293712 – 1258 180210 428275
    2011 040504 208291 63849 272140 – 1166 180210 428275
total     461192 104660 565852 – 2424
andrew higginson   2010 090403 264143 42625 306768 – 1314 180210 428275
    2011 040504 208291 63849 272140 – 1166 180210 428275
total     472434 106474 578908 – 2480
sir terry leahy   2010 090403 474135 76512 550647 – 2358 180210 428275
    2011 040504 367350 112609 479959 – 2056 180210 428275
total     841485 189121 1030606 – 4414  
tim mason   2010 090403 264143 42625 306768 – 1314 180210 428275
    2011 040504 208291 63849 272140 – 1166 180210 428275
total     472434 106474 578908 – 2480  
laurie mcilwee
234 
  2010 240507 58863 1902 24914 35851 104 240510 –
    2011 210508 62383 2206 26482 38107 110 210511 –
    2012 200509 – 80230 32894 47336 137 200512 –
total     121246 84338 84290 121294 351  
david potts   2010 090403 252901 40811 293712 – 1258 180210 428275
    2011 040504 208291 63849 272140 – 1166 180210 428275
total     461192 104660 565852 – 2424  
total     2829983 695727 3404416 121294 14573  
1  this plan has been replaced by the performance share plan and executive incentive plan 
2  bonus shares shown for laurie mcilwee were awarded under the senior management bonus scheme before he joined the board these shares cannot be retained for an additional  
three year period and enhanced 
3  following approval by the remuneration committee all remaining shares awarded under this plan were released and executives were allowed to sell a sufficient number of shares to 
cover the tax liability due on release executives agreed not to sell the post tax number of shares until the original release date
4  following approval by the remuneration committee laurie mcilwee surrendered his conditional shares for an equivalent number of restricted shares on 25 february 2010 and sold 
sufficient shares to cover the tax liability due the post tax number of shares for each award remains subject to the original holding period the share price on 25 february 2010 was 
416175p and the total value of shares sold to settle the tax liability was £351278
date of award    090403 040504 240507 210508 200509
award price pence    19725 24875 45663 41545 35605
t esco plc annual report and financial statements 2010 65 directors’ remuneration report continued
table 11 disclosable interests of the directors including family interests in tesco plc 5p ordinary shares
         28 february 2009 
        27 february 2010 or on appointment if later
         options   options
         to acquire   to acquire
        ordinary  ordinary ordinary ordinary 
        shares
13
 shares
23
 shares
1 
shares
2
executive directors
richard brasher        1186704 2044136 189825 3684552
philip clarke        1811821 2849105 1344598 3331548
andrew higginson        1586895 2849105 1287438 3765901
sir terry leahy        7806736 10639425 5992724 12558542
tim mason        4134570 1159489 4365664 2641390
laurie mcilwee         237241  743466 320878 384824
lucy nevillerolfe        443091 1417358 197903 1226627
david potts        2559979 2849105 1737555 3331548
nonexecutive directors      
charles allen        – – – –
patrick cescau
5
        – – – –
rodney chase        – – – –
karen cook        – – – –
harald einsmann
5
        355984 – 303209 –
ken hanna
4
        – – – –
ken hydon        30093 – 30093 –
david reid        194080 – 193825 –
jacqueline tammenoms bakker       – – – –
total        20347 194 24551189 15963712 30924932
1  ordinary shares shown in this table include restricted shares held under the performance share plan shown in table 6 restricted shares held under the executive incentive plan shown in 
table 9 shares held under the longterm incentive plan shown in table 10 and shares held under a promise by tim mason under the performance share plan us longterm incentive 
plan and executive incentive plan shown in tables 6 8 and 9 respectively between 28 february 2010 and 30 april 2010 353 shares were purchased by executive directors as part of the 
buy as you earn scheme tim mason sold 157520 shares at 4401p on 22 april 2010 and david potts exercised options over 784752 shares on 22 april 2010 and sold the shares at 44000p
2  options to acquire ordinary shares shown in this table comprise options held under the executive share option scheme and discretionary share option plan shown in table 4 save as 
you earn scheme shown in table 5 and nil cost options held under the performance share plan group new business incentive plan and executive incentive plan shown in tables 6 7 and 
9 respectively
3  during the year a number of awards were reclassified from nil cost options to restricted shares after executive directors agreed to exchange awards already earned under the performance 
share plan and the executive incentive plan to crystallise their tax due while the commercial structure of the awards remained the same the restricted shares are now classified under 
ordinary shares      
4  ken hanna was appointed on 1 april 2009      
5  on 21 april 2009 patrick cescau purchased a nominal amount of £160000 of tesco plc 6625 121010 bonds at a price of 10575p per bond on 15 may 2009 harald einsmann purchased 
a nominal amount of £110000 tesco plc 500 240214 bonds at a price of 10440p per bond further information on tesco bonds can be found in note 21 of the group financial statements
66 tesco plc annual report and financial statements 2010 financial statements
financial statements 
statement of directors’ responsibilities 68
independent auditors’ report to the  
members of tesco plc 69
group income statement 70
group statement of comprehensive income 71
group balance sheet 72
group statement of changes in equity 73
group cash flow statement 74
reconciliation of net cash flow to movement in 
net debt note 74
notes to the group financial statements 75
five year record 121
tesco plc – parent company balance sheet 122
notes to the parent company financial statements 123
independent auditors’ report to the members  
of tesco plc 131
financial calendar 132
contents
wwwtescocomannualreport2010
t esco plc annual report and financial statements 2010 67 statement of directors’ responsibilities
the directors are required by the companies act 2006 to prepare financial 
statements for each financial year which give a true and fair view of the 
state of affairs of the company and the group as at the end of the financial 
year and of the profit or loss of the group for the financial year under that 
law the directors are required to prepare the group financial statements in 
accordance with international financial reporting standards ifrss as 
endorsed by the european union eu and have elected to prepare the 
company financial statements in accordance with uk accounting standards 
 in preparing the group and company financial statements the directors 
are required to
• select suitable accounting policies and then apply them consistently 
• make reasonable and prudent judgements and estimates 
•  for the group financial statements state whether they have been 
prepared in accordance with ifrs as endorsed by the eu 
•  for the company financial statements state whether applicable uk 
accounting standards have been followed and 
•  prepare the financial statements on the going concern basis unless it is 
inappropriate to presume that the group and the company will continue 
in business
the directors confirm that they have complied with the above 
requirements in preparing the financial statements
the directors are responsible for keeping proper accounting records which 
disclose with reasonable accuracy at any time the financial position of  
the company and the group and which enable them to ensure that the 
financial statements and the directors’ remuneration report comply with 
the companies act 2006 and as regards the group financial statements 
article 4 of the ias regulation
the business review includes a fair review of the business and important 
events impacting it as well as a description of the principal risks and 
uncertainties of the business
the directors are responsible for the maintenance and integrity of the 
annual review and summary financial statement and annual report  
and financial statements published on the group’s corporate website 
legislation in the uk concerning the preparation and dissemination of 
financial statements may differ from legislation in other jurisdictions
the directors have general responsibility for taking such steps as are 
reasonably open to them to safeguard the assets of the group and of  
the company and to prevent and detect fraud and other irregularities
68 tesco plc annual report and financial statements 2010 financial statements
independent auditors’ report to the members of tesco plc
we have audited the group financial statements of tesco plc for the 
52 weeks ended 27 february 2010 which comprise the group income 
statement the group statement of comprehensive income the group 
balance sheet the group cash flow statement the group statement  
of changes in equity and the related notes the financial reporting 
framework that has been applied in their preparation is applicable law  
and international financial reporting standards ifrss as adopted by  
the european union 
respective responsibilities of directors and auditors 
as explained more fully in the statement of directors’ responsibilities set 
out on page 68 the directors are responsible for the preparation of the 
group financial statements and for being satisfied that they give a true 
and fair view our responsibility is to audit the group financial statements 
in accordance with applicable law and international standards on auditing 
uk and ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors 
this report including the opinions has been prepared for and only for the 
company’s members as a body in accordance with chapter 3 of part 16  
of the companies act 2006 and for no other purpose we do not in giving 
these opinions accept or assume responsibility for any other purpose or to 
any other person to whom this report is shown or into whose hands it may 
come save where expressly agreed by our prior consent in writing
scope of the audit of the financial statements 
an audit involves obtaining evidence about the amounts and disclosures  
in the financial statements sufficient to give reasonable assurance that the 
financial statements are free from material misstatement whether caused 
by fraud or error this includes an assessment of whether the accounting 
policies are appropriate to the group’s circumstances and have been 
consistently applied and adequately disclosed the reasonableness of 
significant accounting estimates made by the directors and the overall 
presentation of the financial statements
opinion on financial statements 
in our opinion the group financial statements 
•  give a true and fair view of the state of the group’s affairs as at 
27 february 2010 and of its profit and cash flows for the 52 weeks  
then ended 
•  have been properly prepared in accordance with ifrss as adopted 
by the european union and 
•  have been prepared in accordance with the requirements of the 
companies act 2006 and article 4 of the las regulation 
opinion on other matters prescribed by the companies act 2006 
in our opinion
•  the information given in the directors’ report for the 52 weeks ended 
27 february 2010 for which the group financial statements are prepared 
is consistent with the group financial statements
matters on which we are required to report by exception 
we have nothing to report in respect of the following 
under the companies act 2006 we are required to report to you if in  
our opinion 
•  certain disclosures of directors’ remuneration specified by law are not 
made or 
•  we have not received all the information and explanations we require 
for our audit or
•  a corporate governance statement has not been prepared by the parent 
company
under the listing rules we are required to review 
•  the directors’ statement set out on page 45 in relation to going 
concern and 
•  the part of the corporate governance statement relating to the 
company’s compliance with the nine provisions of the june 2008 
combined code specified for our review 
other matter 
we have reported separately on the parent company financial statements 
of tesco plc for the 52 weeks ended 27 february 2010 and on the 
information in the directors’ remuneration report that is described as 
having been audited 
richard winter senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
london
5 may 2010
t esco plc annual report and financial statements 2010 69 group income statement
          52 weeks 53 weeks
          2010 2009
           restated 
year ended 27 february 2010       notes £m £m
continuing operations
revenue sales excluding vat            2 56910 53898
cost of sales                52303 49713
gross profit               4607 4185
administrative expenses               1527 1252
profit arising on propertyrelated items            3 377 236
operating profit               3457 3169
share of posttax profits of joint ventures and associates          13 33 110
finance income             5 265 116
finance costs             5 579 478
profit before tax             3 3176 2917
taxation              6 840 779
profit for the year             2336 2138
 
attributable to
owners of the parent              2327 2133
minority interests              9 5
                2336 2138
 
earnings per share
basic              9 2933p 2714p
diluted           9 2919p 2696p
 see note 1 accounting policies
nongaap measure underlying profit before tax
          52 weeks 53 weeks 
          2010 2009 
           restated 
         notes £m £m
profit before tax                3176 2917
adjustments for
 ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements        15 151 88
 ias 19 noncash income statement charge for pensions          28 24 27   
 ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods    1 41 27
 ifrs 3 amortisation charge from intangible assets arising on acquisition      1 127 32
 ifric 13 ‘customer loyalty programmes’ – fair value of awards     1 14 33
exceptional items
 ias 36 impairment of goodwill arising on acquisitions     1 131 –
 restructuring costs        1 33 –
underlying profit before tax         1 3395 3124
 see note 1 accounting policies
the notes on pages 75 to 120 form part of these financial statements
70 tesco plc annual report and financial statements 2010 group statement of comprehensive income
financial statements
          52 weeks 53 weeks
          2010 2009
           restated 
year ended 27 february 2010       notes £m £m
change in fair value of availableforsale financial assets and investments         1 3
currency translation differences              343 275
total loss on defined benefit pension schemes           28 322 629
lossesgains on cash flow hedges                
 net fair value lossesgains             168 505
 reclassified and reported in the group income statement           5 334
tax relating to components of other comprehensive income          6 54 375
total other comprehensive income              87 355
profit for the year               2336 2138
total comprehensive income for the year         2249 1783
 
attributable to            
 owners of the parent               2222 1784
 minority interests               27 1
               2249 1783
 see note 1 accounting policies
t esco plc annual report and financial statements 2010 71 group balance sheet
         27 february 28 february 24 february
         2010 2009 2008
          restated restated 
        notes  £m £m £m
noncurrent assets
goodwill and other intangible assets           10 4177 4076 2336
property plant and equipment           11 24203 23152 19787
investment property            12 1731 1539 1112
investments in joint ventures and associates          13 152 62 305
other investments            14 863 259 4
loans and advances to customers      17 1844 1470 –
derivative financial instruments           22 1250 1478 216
deferred tax assets            6 38 49 104
                  34258 32085 23864
current assets
inventories        15 2729 2669 2430
trade and other receivables      16 1888 1820 1311
loans and advances to customers      17 2268 1918 –
loans and advances to banks and other financial assets        18 144 1541 –
derivative financial instruments           22 224 382 97
current tax assets             6 9 6
shortterm investments             1314 1233 360
cash and cash equivalents           19 2819 3509 1788
                 11392 13081 5992
noncurrent assets classified as held for sale          7 373 398 308
                 11765 13479 6300
current liabilities
trade and other payables            20 9442 8665 7359
financial liabilities
  borrowings            21 1529 3471 2084
  derivative financial instruments and other liabilities        22 146 525 443
customer deposits       24 4357 4538 –
deposits by banks       25 30  24 –
current tax liabilities             472 362 455
provisions             26 39 10 4
                16015 17595 10345
net current liabilities             4250 4116 4045
noncurrent liabilities
financial liabilities
  borrowings            21 11744 12391  5972
  derivative financial instruments and other liabilities        22 776  302 322
postemployment benefit obligations           28 1840 1494 838
deferred tax liabilities            6 795 676  791
provisions             26 172 200 23
                 15327 15063 7946
net assets           14681 12906 11873
equity
share capital            29 399 395 393
share premium account             4801 4638 4511
other reserves            40 40 40
retained earnings            9356  7776 6842
equity attributable to owners of the parent           14596 12849 11786
minority interests            85 57 87
total equity           14681 12906 11873
 see note 1 accounting policies
sir terry leahy
laurie mcilwee
directors
the financial statements on pages 70 to 120 were authorised for issue by the directors on 5 may 2010 and are subject to the approval of the 
shareholders at the annual general meeting on 2 july 2010
72 tesco plc annual report and financial statements 2010 group statement of changes in equity
financial statements
 attributable to owners of the parent
  issued   capital      
  share share other redemption hedging translation treasury retained  minority total 
  capital premium reserves reserve reserve reserve shares earnings total interests equity 
  £m £m £m £m £m £m £m £m £m £m £m
at 28 february 2009 restated 395 4638 40 13 175 173 229 7644 12849 57 12906
profit for the year  – – – – – – – 2327 2327 9 2336
other comprehensive income
change in fair value of   
availableforsale financial assets – – – – – – – 1 1 – 1
currency translation differences – – – – – 325 – – 325 18 343
loss on defined benefit schemes – – – – – 2  320 322 – 322 
loss on cash flow hedges  – – – – 163 – – – 163 – 163
tax on components of other   
comprehensive income   – – – – – 33 – 87 54 – 54
total other comprehensive income – – – – 163 290 – 232 105 18 87
total comprehensive income  – – – – 163 290 – 2095 2222 27 2249
transactions with owners
purchase of treasury shares  – – – – – – 24 – 24 – 24
sharebased payments  – – – – – – 73 168 241 – 241
issue of shares  4 163 – – – – – – 167 – 167 
purchase of minority interest  – – – – – – – 91 91 3 94
dividends paid to minority interests – – – – – – – – – 2 2
dividends authorised  in the year – – – – – – – 968 968 – 968
tax on items charged to equity – – – – – – – 18 18 – 18
transactions with owners   4 163 – – – – 49 691 475 1 474
at 27 february 2010  399 4801 40 13 12 463 180 9048 14596 85 14681
 attributable to owners of the parent
  issued   capital      
  share share other redemption hedging translation treasury retained  minority total 
  capital premium reserves reserve reserve reserve shares earnings total interests equity 
  £m £m £m £m £m £m £m £m £m £m £m
at 23 february 2008   393 4511 40 12 4 245 204 6814 11815 87 11902
ifric 13 restatement  – – – – – – – 29 29 – 29
at 23 february 2008 restated 393 4511 40 12 4 245 204 6785 11786 87 11873
profit for the year  – – – – – – – 2133 2133 5 2138
other comprehensive income
change in fair value of   
availableforsale investments – – – – – – – 3 3 – 3
currency translation differences – – – – – 269 – – 269 6 275
loss on defined benefit schemes – – – – – 2 – 627 629 – 629 
gains on cash flow hedges  – – – – 171 – – – 171 – 171
tax on components of other   
comprehensive income  – – – – – 199 – 176 375 – 375
total other comprehensive income – – – – 171 72 – 448 349 6 355
total comprehensive income  – – – – 171 72 – 1685 1784 1 1783
transactions with owners
purchase of treasury shares  – – – – – – 165 – 165 – 165
sharebased payments  – – – – – – 140 68 208 – 208 
issue of shares  3 127 – – – – – – 130 – 130 
share buybacks  1 – – 1 – – – – – – – 
purchase of minority interest  – – – – – – – – – 26 26
dividends paid to minority interests – – – – – – – – – 3 3
fair value reserve arising  
on acquisition of tesco bank  – – – – – – – 71 71 – 71
dividends authorised  in the year – – – – – – – 883 883 – 883
tax on items charged to equity – – – – – – – 60 60 – 60
transactions with owners  2 127 – 1 – – 25 826 721 29 750
at 28 february 2009 restated 395 4638 40 13 175 173 229 7644 12849 57 12906
 see note 1 accounting policies
t esco plc annual report and financial statements 2010 73 group cash flow statement
          52 weeks 53 weeks
          2010 2009
year ended 27 february 2010       notes £m £m
cash flows from operating activities
cash generated from operations             31 5947 4978
interest paid               690 562
corporation tax paid               512 456
net cash from operating activities               4745 3960
cash flows from investing activities                 
acquisition of subsidiaries net of cash acquired              65 1275
proceeds from sale of property plant and equipment          1820 994
purchase of property plant and equipment and investment property          2855 4487
proceeds from sale of intangible assets        4 –
purchase of intangible assets              163 220
increase in loans to joint ventures              45 242
investments in joint ventures and associates             4 30
investments in shortterm and other investments             1918 1233
proceeds from sale of shortterm investments             1233 360
dividends received               35 69
interest received                81 90
net cash used in investing activities               1877 5974
cash flows from financing activities 
proceeds from issue of ordinary share capital              167 130
increase in borrowings         862 7387
repayment of borrowings            3601 2733
repayment of obligations under finance leases             41 18
dividends paid               968 883
dividends paid to minority interests              2 3
own shares purchased                24 265
net cash from financing activities               3607 3615
net decreaseincrease in cash and cash equivalents            739 1601
cash and cash equivalents at beginning of year             3509 1788
effect of foreign exchange rate changes           49 120
cash and cash equivalents at end of year         19 2819 3509
reconciliation of net cash flow to movement in net debt note
          52 weeks 53 weeks
           2010 2009
year ended 27 february 2010       note £m £m
net decreaseincrease in cash and cash equivalents             739 1601
investment in tesco bank         230 –
elimination of net increase in tesco bank cash and cash equivalents       167 37
debt acquired on acquisition of homever             – 611
transfer of joint venture loan receivable on acquisition of tesco bank         – 91
net cash inflowoutflow from debt and lease financing           2780 4636
dividend received from tesco bank        150 –
increase in shortterm investments              81 873
increase in joint venture loan receivables             45 242
other noncash movements              249 759
decreaseincrease in net debt in the year            1671 3418
opening net debt             32 9600 6182
closing net debt          32 7929 9600
nb the reconciliation of net cash flow to movement in net debt note is not a primary statement and does not form part of the cash flow statement and forms part of the notes to the 
financial statements
74 tesco plc annual report and financial statements 2010 financial statements
notes to the group financial statements
general information
tesco plc is a public limited company incorporated and domiciled in the 
united kingdom under the companies act 2006 registration number 
445790 the address of the registered office is tesco house delamare 
road cheshunt hertfordshire en8 9sl uk
the financial year represents the 52 weeks ended 27 february 2010 prior 
financial year 53 weeks ended 28 february 2009 and includes 53 weeks of 
trading for the uk republic of ireland roi and united states of america 
us businesses
as described in the report of the directors the main activity of the group 
is that of retailing retailing services and financial services
statement of compliance
the consolidated financial statements have been prepared in accordance 
with international financial reporting standards ifrs and international 
financial reporting interpretation committee ifric interpretations as 
endorsed by the european union and those parts of the companies act 
applicable to companies reporting under ifrs
basis of preparation
the financial statements are presented in pounds sterling generally 
rounded to the nearest million they are prepared on the historical cost 
basis except for certain financial instruments sharebased payments 
customer loyalty programmes and pensions that have been measured  
at fair value
the accounting policies set out below have been applied consistently  
to all periods presented in these consolidated financial statements
basis of consolidation
the group financial statements consist of the financial statements of  
the ultimate parent company tesco plc all entities controlled by the 
company its subsidiaries and the group’s share of its interests in joint 
ventures and associates
where necessary adjustments are made to the financial statements of 
subsidiaries joint ventures and associates to bring the accounting policies 
used into line with those of the group
subsidiaries
a subsidiary is an entity whose operating and financing policies are 
controlled directly or indirectly by tesco plc
the accounts of the parent company’s subsidiary undertakings are 
prepared to dates around the group year end
the financial statements of subsidiaries are included in the consolidated 
financial statements from the date that control commences until the date 
that control ceases
intragroup balances and any unrealised gains and losses or income and 
expenses arising from intragroup transactions are eliminated in preparing 
the consolidated financial statements
joint ventures and associates
a joint venture is an entity in which the group holds an interest on a long
term basis and which is jointly controlled by the group and one or more 
other venturers under a contractual agreement
an associate is an undertaking not being a subsidiary or joint venture  
over which the group has significant influence and can participate in the 
financial and operating policy decisions of the entity
the group’s share of the results of joint ventures and associates is included 
in the group income statement using the equity method of accounting 
investments in joint ventures and associates are carried in the group balance 
sheet at cost plus postacquisition changes in the group’s share of the net 
assets of the entity less any impairment in value the carrying values of 
investments in joint ventures and associates include acquired goodwill
if the group’s share of losses in a joint venture or associate equals or 
exceeds its investment in the joint venture or associate the group does 
not recognise further losses unless it has incurred obligations to do so or 
made payments on behalf of the joint venture or associate
unrealised gains arising from transactions with joint ventures and 
associates are eliminated to the extent of the group’s interest in the entity
use of assumptions and estimates
the preparation of the consolidated financial statements requires 
management to make judgements estimates and assumptions that affect 
the application of policies and reported amounts of assets and liabilities 
income and expenses the estimates and associated assumptions are 
based on historical experience and various other factors that are believed 
to be reasonable under the circumstances the results of which form the 
basis of making judgements about carrying values of assets and liabilities 
that are not readily apparent from other sources actual results may differ 
from these estimates
the estimates and underlying assumptions are reviewed on an ongoing 
basis revisions to accounting estimates are recognised in the period in 
which the estimate is revised if the revision affects only that period or in 
the period of the revision and future periods if the revision affects both 
current and future periods
critical estimates and assumptions are made in particular with regard to 
establishing uniform depreciation and amortisation periods for the group 
impairment testing including loans provisions for onerous leases and other 
provisions assumptions for measuring pension provisions and fair value of 
sharebased payments determination of the fair value of obligations to 
purchase minority interests and fair value of derivative financial instruments 
classification of leases as operating leases versus finance leases including on 
sale and leasebacks the likelihood that tax assets can be realised and the 
classification of certain operations as held for sale
changes in accounting policy and disclosure
the group has adopted the following new and amended standards and 
interpretations as of 1 march 2009
•  ifric 13 ‘customer loyalty programmes’ effective for annual periods 
beginning on or after 1 july 2008 requires customer loyalty awards to 
be accounted for as a separate component of the sales transaction in 
which they are granted part of the fair value of the consideration 
received relating to the customer loyalty awards is deferred and 
subsequently recognised over the period in which the awards are 
redeemed the results for the 53 weeks ended 28 february 2009 have 
been restated accordingly the impact on the group income statement 
for the year ended 28 february 2009 is a £429m reduction in total 
revenue £396m reduction in cost of sales and a £9m decrease to the 
taxation charge for the year the net impact is a decrease of £33m to 
profit before tax and £24m to profit after tax the net impact to the 
group balance sheet as at 28 february 2009 is a £53m reduction in 
shareholders’ equity £73m increase in trade and other payables and  
a £20m reduction in the provision for deferred tax the net impact to 
the group balance sheet as at 24 february 2008 is a £29m reduction in 
shareholders’ equity £40m increase in trade and other payables and  
an £11m reduction in the provision for deferred tax the prior year effect 
of the restatement on basic and diluted earnings per share is a reduction 
of 036p per share and 035p per share respectively
•  amendment to ifrs 2 ‘sharebased payment’ – vesting conditions 
and cancellations effective for annual periods beginning on or after 
1 january 2009 clarifies that only service and performance conditions 
are vesting conditions any other conditions are nonvesting conditions 
which have to be taken into account to determine the fair value of the 
equity instruments granted the award must be treated as a cancellation 
where the award does not vest as a result of a failure to meet a non
vesting condition that is within the control of either the group or the 
counterparty cancellations are treated as accelerated vestings and all 
remaining future charges are immediately recognised in the group 
income statement with the credit recognised directly in equity the 
results for the year ended 28 february 2009 have been restated 
accordingly the impact on the group income statement group 
balance sheet basic and diluted earnings per share for the prior year 
was not material
note 1 accounting policies
t esco plc annual report and financial statements 2010 75 notes to the group financial statements continued
•  ifrs 8 ‘operating segments’ effective for annual periods beginning 
on or after 1 january 2009 replaces ias 14 ‘segment reporting’ and 
requires operating segments to be reported in a manner consistent with 
the internal reporting provided to the chief operating decisionmaker 
the chief operating decisionmaker who is responsible for resource 
allocation and assessing performance of the operating segments the 
key performance measure being trading profit has been identified as 
the executive committee of the board of directors 
•  ias 1 revised ‘presentation of financial statements’ effective for 
annual periods beginning on or after 1 january 2009 prohibits the 
presentation of items of income and expenses that is ‘nonowner 
changes in equity’ in the group statement of changes in equity  
and requiring ‘nonowner changes in equity’ to be presented in a 
performance statement the group has elected to present two 
statements a group income statement and a group statement of 
comprehensive income the consolidated financial information has 
been prepared under the revised disclosure requirements there was  
no impact on the results or net assets of the group due to the adoption 
of ifric 13 and the amendments to ifrs 2 a group balance sheet as  
at 24 february 2008 has been presented as required by ias 1 revised 
when there is a retrospective restatement 
•  amendments to ifrs 7 ‘financial instruments – disclosures’ effective 
for annual periods beginning on or after 1 january 2009 requires 
enhanced disclosures about fair value measurement and liquidity risk
sale and repurchase agreement tesco bank
•  in order to align with emerging industry practice the treasury bills and 
related medium term notes previously recognised have been restated in 
group balance sheet as at 28 february 2009 these balances arose as a 
result of a securitisation and associated sale and repurchase agreement 
entered into as part of the special liquidity scheme during the year 
ended 28 february 2009 the effect of the change in the prior year is a 
reduction in loans and advances to banks and other financial assets of 
£588m with a related reduction in current borrowings
ifrs 3 business combinations 
under ifrs 3 ‘business combinations’ any adjustments to the provisional 
fair values allocated within 12 months of an acquisition date are calculated 
as if the fair value at the acquisition date had been recognised from  
that date as a result goodwill relating to the following acquisitions has 
been restated
•  homever acquired 30 september 2008 – the net impact of the 
restatement is an increase in goodwill of £14m increase in trade  
and other receivables of £22m increase in trade and other payables  
of £2m and increase in noncurrent provisions of £34m
•  tesco bank acquired on 19 december 2008 – the net impact of the 
restatement is an increase in goodwill of £35m increase in deferred  
tax assets of £28m increase in noncurrent provisions of £99m and  
a decrease in retained earnings of £36m
revenue
retailing
revenue consists of sales through retail outlets
revenue is recorded net of returns relevant vouchersoffers and value
added taxes when the significant risks and rewards of ownership have 
been transferred to the buyer relevant vouchersoffers include moneyoff 
coupons conditional spend vouchers and offers such as buy one get one 
free bogof and 3 for 2
commission income is recorded based on the terms of the contracts and  
is recognised when the service is provided
financial services
revenue consists of interest fees and commission receivable
interest income on financial assets that are classified as loans and 
receivables is determined using the effective interest rate method this is 
the method of calculating the amortised cost of a financial asset or for a 
group of assets and of allocating the interest income over the expected 
life of the asset the effective interest rate is the rate that discounts the 
estimated future cash flows to the instrument’s initial carrying amount 
calculation of the effective interest rate takes into account fees receivable 
that are an integral part of the instrument’s yield premiums or discounts 
on acquisition or issue early redemption fees and transaction costs 
fees in respect of services are recognised on an accruals basis as service  
is provided the arrangements are generally contractual and the cost of 
providing the service is incurred as the service is rendered the price is 
usually fixed and always determinable significant fee types include credit 
card related services fees such as interchange late payment and balance 
transfer fees 
the group receives insurance commission from the sale of general 
insurance policies which is dependent on the profitability of the underlying 
insurance policies
clubcard and loyalty initiatives
the cost of clubcard and loyalty initiatives is treated as a deduction from 
sales and part of the fair value of the consideration received is deferred and 
subsequently recognised over the period that the awards are redeemed
the fair value of the points awarded is determined with reference to the 
fair value to the customer and considers factors such as redemption via 
clubcard deals versus moneyoffinstore including double up and 
redemption rate
computers for schools and sport for schools and club vouchers are issued 
by tesco for redemption by participating schoolsclubs and are part of our 
overall community plan the cost of the redemption ie meeting the 
obligation attached to the vouchers is treated as a cost rather than a 
deduction from sales  
other income
finance income excluding income arising from financial services is 
recognised in the period to which it relates using the effective interest rate 
method dividends are recognised when a legal entitlement to receive 
payment arises
operating profit
operating profit is stated after profit arising on propertyrelated items but 
before the share of results of joint ventures and associates finance income 
and finance costs
property plant and equipment
property plant and equipment assets are carried at cost less accumulated 
depreciation and any recognised impairment in value 
property plant and equipment assets are depreciated on a straightline 
basis to their residual value over their anticipated useful economic lives
the following depreciation rates are applied for the group
 •  freehold and leasehold buildings with greater than 40 years unexpired – 
at 25 of cost
 •  leasehold properties with less than 40 years unexpired are depreciated 
by equal annual instalments over the unexpired period of the lease and
 •  plant equipment fixtures and fittings and motor vehicles – at rates 
varying from 9 to 50
assets held under finance leases are depreciated over their expected useful 
lives on the same basis as owned assets or when shorter over the term of 
the relevant lease
all property plant and equipment are reviewed for impairment in 
accordance with ias 36 ‘impairment of assets’ when there are indications 
that the carrying value may not be recoverable
note 1 accounting policies continued
76 tesco plc annual report and financial statements 2010 financial statements
borrowing costs
borrowing costs directly attributable to the acquisition or construction  
of qualifying assets are capitalised qualifying assets are those that 
necessarily take a substantial period of time to prepare for their intended 
use all other borrowing costs are recognised in the group income 
statement in finance costs excluding those arising from financial services 
in the period in which they occur for tesco bank finance cost on financial 
liabilities is determined using the effective interest rate method and is 
recognised in cost of sales 
investment property
investment property is property held to earn rental income andor for 
capital appreciation rather than for the purpose of group operating 
activities investment property assets are carried at cost less accumulated 
depreciation and any recognised impairment in value the depreciation 
policies for investment property are consistent with those described for 
owneroccupied property
leasing
leases are classified as finance leases whenever the terms of the lease 
transfer substantially all the risks and rewards of ownership to the lessee 
all other leases are classified as operating leases 
the group as a lessor
amounts due from lessees under finance leases are recorded as 
receivables at the amount of the group’s net investment in the leases 
finance lease income is allocated to accounting periods so as to reflect a 
constant periodic rate of return on the group’s net investment in the lease
rental income from operating leases is recognised on a straightline basis 
over the term of the relevant lease
the group as a lessee
assets held under finance leases are recognised as assets of the group at 
their fair value or if lower at the present value of the minimum lease 
payments each determined at the inception of the lease the corresponding 
liability is included in the group balance sheet as a finance lease obligation 
lease payments are apportioned between finance charges and reduction 
of the lease obligations so as to achieve a constant rate of interest on the 
remaining balance of the liability finance charges are charged to the 
group income statement
rentals payable under operating leases are charged to the group income 
statement on a straightline basis over the term of the relevant lease
sale and leaseback
a sale and leaseback transaction is one where a vendor sells an asset and 
immediately reacquires the use of that asset by entering into a lease with 
the buyer the accounting treatment of the sale and leaseback depends 
upon the substance of the transaction by applying the lease classification 
principles described above and whether or not the sale was made at the 
asset’s fair value
for sale and finance leasebacks any apparent profit or loss from the  
sale is deferred and amortised over the lease term for sale and operating 
leasebacks generally the assets are sold at fair value and accordingly  
the profit or loss from the sale is recognised immediately in the group 
income statement
following initial recognition the lease treatment is consistent with those 
principles described above
business combinations and goodwill
all business combinations are accounted for by applying the purchase 
method
on acquisition the assets including intangible assets liabilities and 
contingent liabilities of an acquired entity are measured at their fair value 
the interest of minority shareholders is stated at the minority’s proportion 
of the fair values of the assets and liabilities recognised
the group recognises intangible assets as part of business combinations at 
fair value on the date of acquisition the determination of these fair values 
is based upon management’s judgement and includes assumptions on the 
timing and amount of future incremental cash flows generated by the 
assets acquired and the selection of an appropriate cost of capital the 
useful lives of intangible assets are estimated and amortisation charged 
on a straightline basis
goodwill arising on consolidation represents the excess of the cost of an 
acquisition over the fair value of the group’s share of the net assetsnet 
liabilities of the acquired subsidiary joint venture or associate at the  
date of acquisition if the cost of acquisition is less than the fair value  
of the group’s share of the net assetsnet liabilities of the acquired entity 
ie a discount on acquisition then the difference is credited to the group 
income statement in the period of acquisition 
at the acquisition date of a subsidiary goodwill acquired is recognised as 
an asset and is allocated to each of the cashgenerating units expected to 
benefit from the business combination’s synergies and to the lowest level 
at which management monitors the goodwill goodwill arising on the 
acquisition of joint ventures and associates is included within the carrying 
value of the investment
goodwill is reviewed for impairment at least annually by assessing the 
recoverable amount of each cashgenerating unit to which the goodwill 
relates the recoverable amount is the higher of fair value less costs to sell 
and value in use when the recoverable amount of the cashgenerating 
unit is less than the carrying amount an impairment loss is recognised
any impairment is recognised immediately in the group income statement 
and is not subsequently reversed
on disposal of a subsidiary joint venture or associate the attributable 
amount of goodwill is included in the determination of the profit or loss  
on disposal 
goodwill arising on acquisitions before 29 february 2004 the date of 
transition to ifrs was retained at the previous uk gaap amounts subject 
to being tested for impairment at that date goodwill written off to 
reserves under uk gaap prior to 1998 has not been restated and will not 
be included in determining any subsequent profit or loss on disposal
intangible assets
acquired intangible assets
acquired intangible assets such as software pharmacy licences customer 
relationships contracts and brands are measured initially at cost and are 
amortised on a straightline basis over their estimated useful lives at 
2100 of cost per annum
internallygenerated intangible assets – research and development 
expenditure
research costs are expensed as incurred 
development expenditure incurred on an individual project is carried 
forward only if all the criteria set out in ias 38 ‘intangible assets’ are  
met namely
 •  an asset is created that can be identified such as software or new 
processes
 •  it is probable that the asset created will generate future economic 
benefits and
 •  the development cost of the asset can be measured reliably
following the initial recognition of development expenditure the cost  
is amortised over the project’s estimated useful life usually at 1425  
of cost per annum
impairment of tangible and intangible assets excluding goodwill
at each balance sheet date the group reviews the carrying amounts of its 
tangible and intangible assets to determine whether there is any indication 
that those assets are impaired if such indication exists the recoverable 
note 1 accounting policies continued
t esco plc annual report and financial statements 2010 77 notes to the group financial statements continued
amount of the asset is estimated in order to determine the extent of  
the impairment loss if any where the asset does not generate cash  
flows that are independent from other assets the group estimates  
the recoverable amount of the cashgenerating unit to which the  
asset belongs 
the recoverable amount is the higher of fair value less costs to sell and 
value in use if the recoverable amount of an asset or cashgenerating 
unit is estimated to be less than its carrying amount the carrying amount 
of the asset or cashgenerating unit is reduced to its recoverable amount 
an impairment loss is recognised as an expense immediately
where an impairment loss subsequently reverses the carrying amount of 
the asset or cashgenerating unit is increased to the revised estimate of 
the recoverable amount but so that the increased carrying amount does 
not exceed the carrying amount that would have been determined if no 
impairment loss had been recognised for the asset or cashgenerating 
unit in prior years a reversal of an impairment loss is recognised as a 
credit to the group income statement immediately
other investments
other investments in the group balance sheet comprise loan receivable 
and availableforsale financial assets refer to the financial instruments 
accounting policy for further detail
loan receivables are recognised at amortised cost and availableforsale 
financial assets are recognised at fair value
inventories
inventories comprise goods held for resale and properties held for or in the 
course of development and are valued at the lower of cost and fair value 
less costs to sell using the weighted average cost basis
shortterm investments
shortterm investments in the group balance sheet consist of deposits 
with money market funds 
cash and cash equivalents
cash and cash equivalents in the group balance sheet consist of cash at 
bank in hand and demand deposits with banks together with shortterm 
deposits with an original maturity of three months or less
noncurrent assets held for sale
noncurrent assets and disposal groups are classified as held for sale if 
their carrying amount will be recovered through sale rather than 
continuing use this condition is regarded as met only when the sale is 
highly probable and the asset or disposal group is available for immediate 
sale in its present condition management must be committed to the sale 
and it should be expected to be completed within one year from the date 
of classification
noncurrent assets and disposal groups classified as held for sale are 
measured at the lower of carrying amount and fair value less costs to sell
pensions and similar obligations
the group accounts for pensions and other postemployment benefits 
principally private healthcare under ias 19 ‘employee benefits’
in respect of defined benefit plans obligations are measured at discounted 
present value using the projected unit credit method whilst plan assets 
are recorded at fair value the operating and financing costs of such plans 
are recognised separately in the group income statement service costs 
are spread systematically over the expected service lives of employees and 
financing costs are recognised in the periods in which they arise actuarial 
gains and losses are recognised immediately in the group statement of 
comprehensive income
payments to defined contribution schemes are recognised as an expense 
as they fall due
sharebased payments
employees of the group receive part of their remuneration in the form  
of sharebased payment transactions whereby employees render services 
in exchange for shares or rights over shares equitysettled transactions or 
in exchange for entitlements to cash payments based on the value of the 
shares cashsettled transactions
the fair value of employee share option plans is calculated at the grant 
date using the blackscholes model in accordance with ifrs 2 ‘share
based payment’ the resulting cost is charged to the group income 
statement over the vesting period the value of the charge is adjusted  
to reflect expected and actual levels of vesting
taxation
the tax expense included in the group income statement consists of 
current and deferred tax 
current tax is the expected tax payable on the taxable income for the year 
using tax rates enacted or substantively enacted by the balance sheet  
date tax is recognised in the group income statement except to the 
extent that it relates to items recognised in other comprehensive income  
or directly in equity in which case it is recognised other comprehensive 
income or equity respectively 
deferred tax is provided using the balance sheet liability method  
providing for temporary differences between the carrying amounts of 
assets and liabilities for financial reporting purposes and the amounts  
used for taxation purposes 
deferred tax is calculated at the tax rates that have been enacted or 
substantively enacted by the balance sheet date deferred tax is charged  
or credited in the group income statement except when it relates to items 
charged or credited directly to equity or other comprehensive income in 
which case the deferred tax is also recognised in equity or other 
comprehensive income respectively
deferred tax assets are recognised to the extent that it is probable that 
taxable profits will be available against which deductible temporary 
differences can be utilised
the carrying amount of deferred tax assets is reviewed at each balance 
sheet date and reduced to the extent that it is no longer probable that 
sufficient taxable profits will be available to allow all or part of the asset to 
be recovered
deferred tax assets and liabilities are offset against each other when there 
is a legally enforceable right to setoff current taxation assets against 
current taxation liabilities and it is the intention to settle these on a net basis
foreign currencies
transactions in foreign currencies are translated at the exchange rate on 
the date of the transaction at each balance sheet date monetary assets 
and liabilities that are denominated in foreign currencies are retranslated at 
the rates prevailing on the balance sheet date all differences are taken to 
the group income statement for the period
the financial statements of foreign subsidiaries are translated into pounds 
sterling according to the functional currency concept of ias 21 ‘the effects 
of changes in foreign exchange rates’ since the majority of consolidated 
companies operate as independent entities within their local economic 
environment their respective local currency is the functional currency 
therefore assets and liabilities of overseas subsidiaries denominated in 
foreign currencies are translated at exchange rates prevailing at the date  
of the group balance sheet profits and losses are translated into pounds 
sterling at average exchange rates for the relevant accounting periods 
exchange differences arising if any are classified as equity and transferred 
to the group’s translation reserve such translation differences are 
recognised as income or expenses in the period in which the operation  
is disposed of
note 1 accounting policies continued
78 tesco plc annual report and financial statements 2010 financial statements
goodwill and fair value adjustments arising on the acquisition of a foreign 
entity are treated as assets and liabilities of the foreign entity and 
translated at the closing rate
financial instruments
financial assets and financial liabilities are recognised on the group’s 
balance sheet when the group becomes a party to the contractual 
provisions of the instrument
trade receivables
trade receivables are non interestbearing and are recognised initially at 
fair value and subsequently at amortised cost using the effective interest 
rate method reduced by appropriate allowances for estimated 
irrecoverable amounts
investments
investments are recognised at trade date investments are classified as 
either held for trading or availableforsale and are recognised at fair value
there are no investments classified as held for trading
for availableforsale investments gains and losses arising from changes  
in fair value are recognised directly in equity until the security is disposed 
of or is determined to be impaired at which time the cumulative gain or 
loss previously recognised in equity is included in the net result for the 
period interest calculated using the effective interest rate method is 
recognised in the group income statement dividends on an availablefor
sale equity instrument are recognised in the group income statement 
when the entity’s right to receive payment is established
loans and advances
loans and advances are nonderivative financial assets with fixed or 
determinable payments that are not quoted in an active market and 
include amounts due from customers and amounts due from other banks 
the group has no intention of trading these loans and advances and 
consequently they are not classified as held for trading or designated  
as fair value through profit and loss loans and advances are initially 
recognised at fair value plus directly related transaction costs subsequent 
to initial recognition these assets are carried at amortised cost using the 
effective interest method less any impairment losses income from these 
financial assets is calculated on an effective yield basis and is recognised  
in the group income statement
impairment of loans and advances
at each balance sheet date the group reviews the carrying amounts of  
its loans and advances to determine whether there is any indication that 
those assets have suffered an impairment loss an impairment loss has 
been incurred if there is objective evidence that an event or events since 
initial recognition of the asset have adversely affected the amount or 
timing of future cash flows from the asset
if there is objective evidence that an impairment loss on a financial asset  
or group of financial assets classified as loans and advances has been 
incurred the group measures the amount of the loss as the difference 
between the carrying amount of the asset or group of assets and the 
present value of estimated future cash flows from the asset or group of 
assets discounted at the effective interest rate of the instrument at initial 
recognition impairment losses are assessed individually for financial assets 
that are individually significant and collectively for assets that are not 
individually significant in making collective assessments of impairment 
financial assets are grouped into portfolios on the basis of similar risk 
characteristics future cash flows from these portfolios are estimated on 
the basis of the contractual cash flows and historical loss experience for 
assets with similar credit risk characteristics historical loss experience is 
adjusted on the basis of current observable data to reflect the effects of 
current conditions not affecting the period of historical experience
impairment losses are recognised in the group income statement and the 
carrying amount of the financial asset or group of financial assets reduced 
by establishing an allowance for impairment losses if in a subsequent 
note 1 accounting policies continued
period the amount of the impairment loss reduces and the reduction 
can be ascribed to an event after the impairment was recognised the 
previously recognised loss is reversed by adjusting the allowance once 
an impairment loss has been recognised on a financial asset or group of 
financial assets interest income is recognised on the carrying amount 
using the rate of interest at which estimated future cash flows were 
discounted in measuring impairment
loan impairment provisions are established on a portfolio basis taking 
into account the level of arrears security past loss experience credit 
scores and defaults based on portfolio trends the most significant 
factors in establishing the provisions are the expected loss rates and the 
related average life the portfolios include credit card receivables and 
other personal advances the future credit quality of these portfolios is 
subject to uncertainties that could cause actual credit losses to differ 
materially from reported loan impairment provisions these uncertainties 
include the economic environment notably interest rates and their 
effect on customer spending the unemployment level payment 
behaviour and bankruptcy trends
financial liabilities and equity instruments
financial liabilities and equity instruments are classified according to  
the substance of the contractual arrangements entered into an equity 
instrument is any contract that gives a residual interest in the assets of 
the group after deducting all of its liabilities
interestbearing borrowings
interestbearing bank loans and overdrafts are initially recorded at  
fair value net of attributable transaction costs subsequent to initial 
recognition interestbearing borrowings are stated at amortised cost 
with any difference between cost and redemption value being 
recognised in the group income statement over the period of the 
borrowings on an effective interest basis
trade payables
trade payables are non interestbearing and are stated at amortised cost
equity instruments
equity instruments issued by the group are recorded at the proceeds 
received net of direct issue costs
derivative financial instruments and hedge accounting
the group uses derivative financial instruments to hedge its exposure  
to foreign exchange interest rate and commodity risks arising from 
operating financing and investing activities the group does not hold  
or issue derivative financial instruments for trading purposes however  
if derivatives do not qualify for hedge accounting they are accounted for 
as such
derivative financial instruments are recognised and stated at fair value 
the fair value of derivative financial instruments is determined by 
reference to market values for similar financial instruments by 
discounted cash flows or by the use of option valuation models where 
derivatives do not qualify for hedge accounting any gains or losses  
on remeasurement are immediately recognised in the group income 
statement where derivatives qualify for hedge accounting recognition 
of any resultant gain or loss depends on the nature of the hedge 
relationship and the item being hedged
in order to qualify for hedge accounting the group is required to 
document from inception the relationship between the item being 
hedged and the hedging instrument the group is also required to 
document and demonstrate an assessment of the relationship between 
the hedged item and the hedging instrument which shows that the 
hedge will be highly effective on an ongoing basis this effectiveness 
testing is performed at each period end to ensure that the hedge 
remains highly effective
derivative financial instruments with maturity dates of more than one 
year from the balance sheet date are disclosed as noncurrent
t esco plc annual report and financial statements 2010 79 notes to the group financial statements continued
fair value hedging
derivative financial instruments are classified as fair value hedges when 
they hedge the group’s exposure to changes in the fair value of a 
recognised asset or liability changes in the fair value of derivatives that  
are designated and qualify as fair value hedges are recorded in the group 
income statement together with any changes in the fair value of the 
hedged item that is attributable to the hedged risk
derivative financial instruments qualifying for fair value hedge accounting 
are principally interest rate swaps and cross currency swaps
cash flow hedging
derivative financial instruments are classified as cash flow hedges when 
they hedge the group’s exposure to variability in cash flows that are either 
attributable to a particular risk associated with a recognised asset or 
liability or a highly probable forecasted transaction
the effective element of any gain or loss from remeasuring the derivative 
instrument is recognised directly in equity
the associated cumulative gain or loss is removed from equity and 
recognised in the group income statement in the same period or periods 
during which the hedged transaction affects the group income statement 
the classification of the effective portion when recognised in the group 
income statement is the same as the classification of the hedged 
transaction any element of the remeasurement of the derivative 
instrument which does not meet the criteria for an effective hedge is 
recognised immediately in the group income statement within finance 
income or costs
derivative instruments qualifying for cash flow hedging are principally 
forward foreign exchange transactions and interest rate swaps
hedge accounting is discontinued when the hedging instrument expires  
or is sold terminated or exercised or no longer qualifies for hedge 
accounting at that point in time any cumulative gain or loss on the 
hedging instrument recognised in equity is retained in equity until the 
forecasted transaction occurs or the original hedged item affects the 
group income statement if a forecasted hedged transaction is no longer 
expected to occur the net cumulative gain or loss recognised in equity is 
transferred to the group income statement
net investment hedging
derivative financial instruments are classified as net investment hedges 
when they hedge the group’s net investment in an overseas operation 
the effective element of any foreign exchange gain or loss from remeasuring 
the derivative instrument is recognised directly in equity any ineffective 
element is recognised immediately in the group income statement gains 
and losses accumulated in equity are included in the group income 
statement when the foreign operation is disposed of
derivative instruments qualifying for net investment hedging are 
principally forward foreign exchange transactions
treatment of agreements to acquire minority interests
the group has entered into a number of agreements to purchase the 
remaining shares of subsidiaries with minority shareholdings
under ias 32 ‘financial instruments presentation’ the net present value of 
the expected future payments are shown as a financial liability at the end 
of each period the valuation of the liability is reassessed with any changes 
recognised in the group income statement within finance income or costs 
for the year where the liability is in a currency other than pounds sterling 
the liability has been designated as a net investment hedge any change in 
the value of the liability resulting from changes in exchange rates is 
recognised directly in equity
provisions 
provisions are recognised when there is a present legal or constructive 
obligation as a result of a past event for which it is probable that a transfer 
of economic benefits will be required to settle the obligation and where  
a reliable estimate can be made of the amount of the obligation
provisions for onerous leases are recognised when the group believes  
that the unavoidable costs of meeting the lease obligations exceed the 
economic benefits expected to be received under the lease where 
material these leases are discounted to their present value provisions  
for dilapidation costs are recognised on a lease by lease basis
other recent accounting developments
standards amendments and interpretations effective in 2010 or issued 
and early adopted 
in preparing the group financial statements for the current year the group 
has adopted the following new and amended standards and 
interpretations which have no impact on the results or net assets of the 
group unless otherwise stated
•  amendment to ias 23 ‘borrowing costs’ effective for annual periods 
beginning on or after 1 january 2009 the standard has been revised to 
require capitalisation of borrowing costs when such costs relate to a 
qualifying asset 
•  amendment to ias 32 ‘financial instruments presentation’ and ias 1 
‘presentation of financial statements’– puttable instruments and 
instruments with obligations arising on liquidation effective for annual 
periods beginning on or after 1 january 2009
•  amendment to ias 32 ‘financial instruments presentation’ – 
presentation on classification of rights issues effective for annual 
periods beginning on or after 1 january 2009
•  amendments to ifrs 1 ‘firsttime adoption of ifrss’ and ias 27 
‘consolidated and separate financial statements’ – cost of an 
investment of a subsidiary jointly controlled entity or associate 
effective for annual reporting periods beginning on or after  
1 january 2009
•  ifric 9 ‘reassessment of embedded derivatives’ and ias 39 ‘financial 
instruments recognition and measurement – embedded derivatives 
amendments’ effective for annual periods beginning on or after  
1 july 2008
•  ifric 14 ‘the limit on a defined benefit asset minimum funding 
requirements and their interaction’ effective for annual periods 
beginning on or after 1 january 2008 
•  ifric 15 ‘agreements for the construction of real estate’ effective for 
annual periods beginning on or after 1 january 2009 
•  ifric 16 ‘hedges of a net investment in a foreign operation’ effective 
for annual periods beginning on or after 1 october 2008 
standards amendments and interpretations not yet effective and 
under review as to their impact on the group
•  amendments to ifrs 2 ‘sharebased payment’ – group cashsettled 
transactions effective for annual periods beginning on or after 
1 january 2010 in addition to incorporating ifric 8 ‘scope of ifrs 2’  
and ifric 11 ‘ ifrs 2 – group and treasury share transactions’ the 
amendments expand on the guidance of ifric 11 to address the 
classification of group arrangements that were not covered by that 
interpretation the new guidance is not expected to have a material 
impact on the group’s financial statements
•  ias 27 revised ‘consolidated and separate financial statements’ 
effective for annual periods beginning on or after 1 july 2009 the 
revised standard requires the effects of all transactions with non
controlling interests to be recorded in equity if there is no change in 
control and these transactions will no longer result in goodwill or gains 
and losses the standard also specifies the accounting when control of 
an entity is lost any remaining interest in the entity is remeasured to fair 
value and a gain or loss is recognised in the income statement the 
group will apply ias 27 revised prospectively to transactions with non
controlling interests from 28 february 2010
note 1 accounting policies continued
80 tesco plc annual report and financial statements 2010 financial statements
•  ifrs 3 revised ‘business combinations’ effective for business 
combinations for which the acquisition date is on or after the beginning 
of the first annual reporting period beginning on or after 1 july 2009 
the revised standard continues to apply the acquisition method to 
business combinations with some significant changes including all 
payments to purchase a business are to be recorded at fair value at the 
acquisition date with the contingent payments that are classified as 
debt subsequently remeasured through the group income statement 
there is a choice on an acquisitionbyacquisition basis to measure the 
noncontrolling interest in the acquiree either at fair value or at the non
controlling interest’s proportionate share of the acquirer’s net assets  
all acquisitionrelated costs should be expensed the group will apply 
ifrs 3 revised prospectively to all business combinations from 
28 february 2010
•  amendment to ias 39 ‘financial instruments recognition and 
measurement’ – eligible hedged items effective for annual periods 
beginning on or after 1 july 2009 the amendment provides clarification 
on how the principles that determine whether a hedged risk or portion 
of cash flows is eligible for designation should be applied in particular 
situations
•  ifrs 9 ‘financial instruments’ effective for annual periods beginning on 
or after 1 january 2013 this is the first part of a new standard on 
classification and measurement of financial assets that will replace ias 39
•  amendment to ias 24 ‘related party disclosures’ effective for annual 
periods beginning on or after 1 january 2011
•  ifric 17 ‘distributions of noncash assets to owners’ effective for 
annual periods beginning on or after 1 july 2009 
•  ifric 18 ‘transfers of assets from customers’ effective for transfers of 
assets from customers received on or after 1 july 2009
•  ifric 19 ‘extinguishing financial liabilities with equity instruments’ 
effective for annual periods beginning on or after 1 july 2010
the group continually reviews amendments to the standards made under 
the iasb’s annual improvements project
use of nongaap profit measures – underlying profit before tax
the directors believe that underlying profit before tax and underlying 
diluted earnings per share measures provide additional useful information 
for shareholders on underlying trends and performance these measures 
are used for internal performance analysis underlying profit is not defined 
by ifrs and therefore may not be directly comparable with other 
companies’ adjusted profit measures it is not intended to be a substitute 
for or superior to ifrs measurements of profit
the adjustments made to reported profit before tax are
 •  ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements – 
under ias 32 and ias 39 the group applies hedge accounting to its 
various hedge relationships when allowed under the rules of ias 39  
and when practical to do so sometimes the group is unable to apply 
hedge accounting to the arrangements but continues to enter into  
these arrangements as they provide certainty or active management  
of the exchange rates and interest rates applicable to the group  
the group believes these arrangements remain effective and 
economically and commercially viable hedges despite the inability  
to apply hedge accounting
   where hedge accounting is not applied to certain hedging 
arrangements the reported results reflect the movement in fair value of 
related derivatives due to changes in foreign exchange and interest 
rates in addition at each period end any gain or loss accruing on open 
contracts is recognised in the group income statement for the period 
regardless of the expected outcome of the hedging contract on 
termination this may mean that the group income statement charge is 
highly volatile whilst the resulting cash flows may not be as volatile the 
underlying profit measure removes this volatility to help better identify 
underlying business performance during 2010 there was no impact 
2009 – £10m of the ias 32 and ias 39 charge arose in the share of 
posttax profit of joint ventures and associates with the remainder in 
finance incomecosts 
note 1 accounting policies continued
•   ias 19 income statement charge for pensions – under ias 19 
‘employee benefits’ the cost of providing pension benefits in the 
future is discounted to a present value at the corporate bond yield 
rates applicable on the last day of the previous financial year 
corporate bond yield rates vary over time which in turn creates 
volatility in the group income statement and group balance sheet 
ias 19 also increases the charge for young pension schemes such as 
tesco’s by requiring the use of rates which do not take into account 
the future expected returns on the assets held in the pension scheme 
which will fund pension liabilities as they fall due the sum of these 
two effects can make the ias 19 charge disproportionately higher and 
more volatile than the cash contributions the group is required to 
make in order to fund all future liabilities therefore within underlying 
profit we have included the ‘normal’ cash contributions for pensions 
but excluded the volatile element of ias 19 to represent what the 
group believes to be a fairer measure of the cost of providing post
employment benefits
 •  ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods 
– the amount charged to the group income statement in respect of 
operating lease costs and incentives is expected to increase significantly 
as the group expands its international business the leases have been 
structured in a way to increase annual lease costs as the businesses 
expand ias 17 ‘leases’ requires the total cost of a lease to be 
recognised on a straightline basis over the term of the lease 
irrespective of the actual timing of the cost the impact of this 
treatment in 2010 was a charge of £41m 2009 – £27m to the group 
income statement after deducting the impact of the straightline 
treatment recognised as rental income within share of posttax profits 
of joint ventures and associates
•  ifrs 3 amortisation charge from intangible assets arising on 
acquisition – under ifrs 3 ‘business combinations’ intangible assets 
are separately identified and valued the intangible assets are 
required to be amortised on a straightline basis over their useful 
economic lives and as such is a noncash charge that does not reflect 
the underlying performance of the business acquired
•  ifric 13 ‘customer loyalty programmes’ – this new interpretation 
requires the fair value of customer loyalty awards to be measured  
as a separate component of a sales transaction the underlying profit 
measure removes this fair value allocation to present underlying 
business performance and to reflect the performance of the 
operating segments as measured by management 
•  exceptional items – due to their significance and special nature 
certain other items which do not reflect the group’s underlying 
performance have been excluded from underlying profit these gains 
or losses can have a significant impact on both absolute profit and 
profit trends consequently they are excluded from the underlying 
profit of the group for the year ended 27 february 2010 exceptional 
items are as follows 
 –  ias 36 impairment of goodwill arising on acquisitions – the carrying 
value of goodwill relating to japan was not fully recoverable 
resulting in an impairment charge of £131m 2009 – £nil and as 
such is a noncash charge that does not reflect the underlying 
performance of the business the recoverable amount for japan 
was based on value in use calculated from cash flow projections for 
five years using data from the group’s latest internal forecasts the 
results of which are reviewed by the board
 –  restructuring costs – these relate to certain costs associated with 
the group’s restructuring activities for the year ended 27 february 
2010 the group incurred £33m 2009 – £nil relating to 
restructuring activities
there were no exceptional items in 2009
t esco plc annual report and financial statements 2010 81 notes to the group financial statements continued
note 2 segmental reporting
ifrs 8 requires operating segments to be determined based on the group’s internal reporting to the chief operating decision maker ‘codm’  
the codm has been determined to be the executive committee of the board of directors as it is primarily responsible for the allocation of resources  
to segments and the assessment of performance of the segments previously segments were determined and presented in accordance with ias 14 
‘segment reporting’
the codm uses trading profit as reviewed at monthly executive committee meetings as the key measure of the segments’ results as it reflects the 
segments’ underlying trading performance for the period under evaluation trading profit is a consistent measure within the group 
segmental trading profit is an adjusted measure of operating profit which measures the performance of each segment before exceptional items 
goodwill impairment and restructuring charges profit arising on propertyrelated items impact on leases of annual uplifts in rent and rentfree periods 
amortisation charges from intangible assets arising on acquisition adjustments to fair value of customer loyalty awards and replaces the ias 19 pension 
charge with the ‘normal’ cash contributions for pensions
on the adoption of ifrs 8 the group revised its operating and reporting segments the group’s operating segments were previously defined 
geographically – uk rest of europe asia and us the group’s operations retail and retailing services are managed by geography with tesco bank  
as a separate reporting segment because of its different regulatory environment accordingly the segments under ifrs 8 are uk rest of europe roe 
comprises republic of ireland hungary poland the czech republic slovakia and turkey asia comprising thailand south korea malaysia china 
japan and india us and tesco bank
comparative information has been restated to reflect these new segments
segment assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis unallocated is comprised 
mainly of derivative receivables interestbearing loan receivables and taxationrelated assets
intersegment turnover between the operating segments is not material
the segment results for the year ended 27 february 2010 for the year ended 28 february 2009 and the reconciliation of the segment measures to the 
respective statutory items included in the consolidated financial information are as follows
         total at  total 
        tesco constant foreign at actual 
year ended 27 february 2010
  uk roe asia us bank exchange exchange exchange
at constant exchange rates  £m £m £m £m £m £m  £m £m
continuing operations          
sales inc vat excluding ifric 13   42254   9979    8737    324    860    62154     383   62537
revenue excluding ifric 13  39104  8704     8148    319    860     57135    367    57502
effect of ifric 13   546     19     25     –    –    590     2     592
revenue     38558    8685    8123   319     860   56545 365 56910
trading profitloss    2413     466     422     151     250     3400    12    3412
trading margin   62    54   52    473   291    59    –    59
   
           total 
        tesco   at actual 
year ended 27 february 2010
  uk roe asia us bank   exchange
at actual exchange rates   £m £m £m £m  £m   £m
continuing operations          
sales inc vat excluding ifric 13  42254 9997 9072 354 860   62537
revenue excluding ifric 13  39104 8724  8465   349   860     57502
effect of ifric 13   546 20 26 – –   592
revenue    38558 8704 8439 349 860   56910
trading profitloss   2413 474 440    165    250      3412
trading margin   62 54  52    473   291     59 
         total at  total 
        tesco constant foreign at actual 
year ended 28 february 2009
  uk roe asia us bank exchange exchange exchange
at constant exchange rates  £m £m £m £m  £m £m £m £m
continuing operations          
sales inc vat excluding ifric 13  41357 8373 7020 181 163  57094 2332 59426 
revenue excluding ifric 13  38028 7335 6552 179 163 52257 2070  54327 
effect of ifric 13   378 26 18  –    –   422 7  429
revenue    37650 7309 6534 179 163 51835 2063  53898
trading profitloss    2309    411    345    123   68  3010 76   3086
trading margin    61   56   53   687   417  58   57
 trading margin is based on revenue excluding ifric 13
82 tesco plc annual report and financial statements 2010 financial statements
note 2 segmental reporting continued
           total 
        tesco   at actual 
year ended 28 february 2009
  uk roe asia us bank   exchange
at actual exchange rates   £m £m £m £m  £m   £m
continuing operations          
sales inc vat excluding ifric 13   41357   10120   7578   208   163    59426 
revenue excluding ifric 13   38028   8862   7068   206   163     54327 
effect of ifric 13    378   31   20   –   –     429
revenue     37650   8831   7048   206   163     53898
trading profitloss    2309   496   355   142   68     3086
trading margin    61   56   50   689   417     57
 trading margin is based on revenue excluding ifric 13
reconciliation of trading profit to profit before tax
          2010 2009
           restated 
          £m £m
trading profit for reportable segments         3412   3086 
adjustments for     
profit arising on propertyrelated items        377  236
ias 19 noncash group income statement charge for pensions       24   52 
ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods      51   36 
ifrs 3 ‘business combinations’ – amortisation charge from intangible assets arising on acquisition    127   32
ifric 13 ‘customer loyalty programmes’ – fair value of awards       14   33 
exceptional items     
 ias 36 impairment of goodwill arising on acquisitions       131   – 
 restructuring costs          33   – 
operating profit          3457   3169 
share of posttax profit from joint ventures and associates       33   110 
finance income         265   116 
finance costs          579  478
profit before tax          3176   2917 
taxation          840   779 
profit for the year          2336   2138
segment assets
           total 
          tesco other at actual 
     uk roe asia us  bank unallocated exchange 
at 27 february 2010    £m £m £m £m  £m  £m £m
total segment noncurrent assets   14741 6588 7115 790 3738 1286 34258
total segment noncurrent assets includes
 investments in joint ventures and associates  55  –   95   –  2  –  152
           total 
          tesco other at actual 
     uk roe asia us  bank  unallocated exchange 
at 28 february 2009    £m £m £m £m  £m  £m £m
total segment noncurrent assets   15441 5748 5883 721 2748 1467 32008
restatement of acquisitions through  
 business combinations    – – 14 – 63 – 77
total segment noncurrent assets – restated  15441 5748 5897 721 2811 1467 32085
total segment noncurrent assets includes        
 investments in joint ventures and associates  49   –   13   –   –  –  62 
t esco plc annual report and financial statements 2010 83 notes to the group financial statements continued
note 2 segmental reporting continued
other segment information
           total 
           tesco at actual 
      uk roe asia us  bank  exchange 
year ended 27 february 2010    £m £m £m £m  £m  £m
capital expenditure including acquisitions through business combinations
 property plant and equipment      1485 518 736 141 44 2924
 investment property       – 8 8 – – 16
 goodwill and other intangible assets      124 21 91 – 25 261
depreciation
 property plant and equipment      570 260 226 29 6 1091
 investment property       – 8 8 – – 16
amortisation of intangible assets      116 20 14 – 127 277
goodwill impairment losses recognised in the group income statement – – 131 – – 131
impairment losses recognised in the group income statement   27 18 6 – – 51
reversal of prior period impairment losses through the  
 group income statement    27 40 10 – – 77
other segment information
           total 
           tesco at actual 
      uk roe asia us  bank  exchange 
year ended 28 february 2009 – restated   £m £m £m £m  £m  £m
capital expenditure including acquisitions through business combinations
 property plant and equipment      2392 852 1404 305 25 4978
 investment property       – 48 152 – – 200
 goodwill and other intangible assets      217 15 399 – 1060 1691
depreciation
 property plant and equipment      565 249 176 20 1 1011
 investment property       – 9 16 – – 25
amortisation of intangible assets      99 16 6 – 32 153
goodwill impairment losses recognised in the group income statement – – – – – –
impairment losses recognised in the group income statement    21  41 4 – – 66
reversal of prior period impairment losses through the  
 group income statement    21 50 17 – – 88
note 3 income and expenses
           2010 2009
from continuing operations        £m £m
profit before tax is stated after chargingcrediting the following
profit arising on propertyrelated items              377 236
rental income of which £351m 2009 – £304m relates to investment properties         461 349
direct operating expenses arising on rental earning investment properties         103 91
costs of inventories recognised as an expense             42504 40779
stock losses                1000 870
depreciation of property plant and equipment and investment property     1107 1036
net reversal of impairment of property plant and equipment and impairment of investment property     26 22
amortisation of internallygenerated development intangible assets         103 88
amortisation of other intangibles              174 65
operating lease expenses
†
              927 738
† operating lease expenses include £83m 2009 – £81m for hire of plant and machinery
84 tesco plc annual report and financial statements 2010 financial statements
note 3 income and expenses continued
during the year the group including its overseas subsidiaries obtained the following services from the group’s auditor pricewaterhousecoopers llp 
and network firms
           2010 2009
          £m £m
audit services
fees payable to the company’s auditor for the audit of the parent company and group financial statements     06 06
nonaudit services
fees payable to the company’s auditor and network firms for other services
 the audit of the accounts of the company’s subsidiaries pursuant to legislation         35 31
 other services pursuant to such legislation            01  01
 other services relating to taxation              04 08
 other services relating to corporate finance transactions            01 13
 all other services               06 06
total auditor remuneration              53 65
in addition to the amounts shown above the auditors received fees of £01m 2009 – £01m for the audit of the main group pension scheme
a description of the work of the audit committee is set out in the corporate governance report on page 46 and includes an explanation of how 
objectivity and independence is safeguarded when nonaudit services are provided by pricewaterhousecoopers llp 
note 4 employment costs including directors’ remuneration
           2010 2009 
           restated 
          £m £m
wages and salaries               5057 4707
social security costs               435 410
postemployment benefits note 28              403 439
sharebased payments expense note 27             300 246
                   6195 5802
the average number of employees by operating segment during the  
year was
  average number average number of
  of employees fulltime equivalents
    restated  restated 
   2010 2009 2010 2009
uk 287266 286092 196604 194135
rest of europe 86642 86760 77847 78914
asia 94536 92773 94248 88099
us 3246 2583 3246 2583
tesco bank 404 300 393 284
total 472094 468508 372338 364015
  the comparatives have been restated to reflect tesco bank as a separate segment  
in 2009 tesco bank employees were included in the uk reporting segment
t esco plc annual report and financial statements 2010 85 notes to the group financial statements continued
note 5 finance income and costs
           2010 2009
          £m £m
finance income
bank interest receivable and similar income on cash and cash equivalents        114 91
net pension finance income note 28              – 25
total finance income on historical cost basis            114 116
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements          151 –
total finance income               265 116
finance costs
interest payable on shortterm bank loans and overdrafts repayable within five years        135 152
finance charges payable under finance leases and hire purchase contracts         9 13
6 125m gbp mtn 2008              – 2
525 500m eur mtn 2008              – 4
5125 192m gbp mtn 2009              8 10
6625 150m gbp mtn 2010              10 10
475 750m eur mtn 2010              25 26
3875 500m eur mtn 2011              13 14
5625 1500m eur mtn 2012        74 35
5 600m gbp mtn 2014        30 1
5125 600m eur mtn 2015        27 1
4 rpi gbp mtn 2016
a
               12 23
5875 1500m eur mtn 2016        72 33
55 850m usd bond 2017              23 23
55 350m gbp mtn 2019              19 20
6125 900m gbp mtn 2022        55 1
5 515m gbp mtn 2023               26 21
3322 lpi gbp mtn 2025
b
              11 20
6 200m gbp mtn 2029              12 12
55 200m gbp mtn 2033              11 11
1982 rpi gbp mtn 2036
c
              5 14
615 1150m usd bond 2037              34 35
5 300m gbp mtn 2042              15 15
5125 600m eur mtn 2047              21 21
52 500m gbp mtn 2057              26 26
other mtns               13 9
capitalised interest note 11              155 152
total finance costs on historical cost basis             531 400
net pension finance cost note 28        48 –
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements          – 78
total finance costs               579 478
a interest payable on the 4 rpi gbp mtn 2016 includes £1m 2009 – £13m of retail price index rpi related amortisation
b interest payable on the 3322 lpi gbp mtn 2025 includes £2m 2009 – £11m of rpi related amortisation
c interest payable on the 1982 rpi gbp mtn 2036 includes £1m 2009 – £10m of rpi related amortisation
finance income of £20m 2009 – finance costs of £30m resulted from hedge ineffectiveness
86 tesco plc annual report and financial statements 2010 financial statements
note 6 taxation
recognised in the group income statement
          2010 2009
           restated 
          £m £m
current tax expense
uk corporation tax               566 673
foreign tax                128 88
adjustments in respect of prior years              91 164
                   603 597
deferred tax expense
origination and reversal of temporary differences             110 110
adjustments in respect of prior years              124 97
change in tax rate               3 25
                   237 182
total income tax expense               840 779
uk corporation tax is calculated at 280 2009 – 282 of the estimated assessable profit for the year taxation in other jurisdictions is calculated at 
the rates prevailing in the respective jurisdictions
reconciliation of effective tax charge
          2010 2009
           restated 
          £m £m
profit before tax               3176 2917
effective tax charge at 280 2009 – 282             889 823 
effect of
  nondeductible expenses              13 190
  differences in overseas taxation rates            93 111
  adjustments in respect of prior years              33 67 
  share of results of joint ventures and associates             5 31 
  change in tax rate               3  25 
total income tax charge for the year             840 779
effective tax rate               264 267
tax on items credited directly to equity
          2010 2009
          £m £m
current tax credit on 
  sharebased payments               15 46
deferred tax credit on
  sharebased payments               3 14
total tax on items credited to equity              18 60
tax relating to components of other comprehensive income
          2010 2009
          £m £m
current tax chargecredit on 
  foreign exchange movements              33 199
deferred tax credit on
  pensions                87 176
total tax on items credited to other comprehensive income          54 375
t esco plc annual report and financial statements 2010 87 notes to the group financial statements continued
note 6 taxation continued
deferred tax
the following are the major deferred tax assetsliabilities recognised by the group and movements thereon during the current and prior year
          other 
     accelerated  retirement  shortterm   prepost 
     tax  benefit sharebased timing  ias 32 and tax temporary 
     depreciation obligation payments differences tax losses ias 39 differences total 
     £m £m £m £m £m £m £m £m
at 23 february 2008 restated   1068 233 76 36 12 13 11 687
chargecredit to the  
 group income statement   194 7 46 70 1 8 12 182
credit directly to equity    – – 14  –  –  –  – 14
credit to other comprehensive income  – 176 – – – – – 176
acquisition of subsidiaries   12  –  – 14  – 42  – 40
foreign exchange translation  3  1  – 2 3  – 7 12
at 28 february 2009 restated  1247 417 44 90 16 47 6 627
chargecredit to the  
 group income statement  257 7 9 7 21 11 1 237
credit directly to equity   – – 3 – – – – 3
credit to other comprehensive income  – 87 – – – – – 87
acquisition of subsidiaries   – – – – 2 – – 2
foreign exchange and other movements 8 – – 8 2 – 3 15
at 27 february 2010   1496 511 56 91 41 36 4 757
certain deferred tax assets and liabilities have been offset the following is the analysis of the deferred tax balances after offset for financial  
reporting purposes
          2010 2009
           restated 
           £m £m
deferred tax assets               38 49
deferred tax liabilities               795 676
                   757 627
the impact of adopting ifric 13 on the 2009 opening balance sheet was an £11m reduction in deferred tax liabilities
no deferred tax is recognised on the unremitted earnings of overseas subsidiaries and joint ventures because the earnings are continually reinvested by 
the group and no tax is expected to be payable on them in the foreseeable future the temporary difference unrecognised at the year end amounted to 
£2766m 2009 – £1726m furthermore the introduction of a dividend exemption in the uk tax legislation with effect from 1 july 2009 means that 
earnings can be remitted from certain subsidiary undertakings where no tax will be payable on repatriation
unrecognised deferred tax assets
deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profits will be available 
against which the group can utilise the benefits
          2010 2009
           £m £m
deductible temporary differences              1 12
tax losses                 286 192
                   287 204
as at 27 february 2010 the group has unused trading tax losses of £1019m 2009 – £744m available for offset against future profits a deferred tax 
asset has been recognised in respect of £142m 2009 – £58m of such losses no deferred tax asset has been recognised in respect of the remaining  
£877m 2009 – £686m due to the unpredictability of future profit streams included in unrecognised tax losses are losses of £297m 2009 – £32m in 
2013 that will expire in 2014 and £550m 2009 – £647m between 2014 and 2029 that will expire between 2015 and 2030 other losses will be carried 
forward indefinitely
in addition the group has uk capital losses of £342m 2009 – £310m in respect of which no deferred tax asset has been recognised 
note 7 noncurrent assets classified as held for sale
          2010 2009
           £m £m
noncurrent assets classified as held for sale             373 398 
the noncurrent assets classified as held for sale consist mainly of properties in the united kingdom due to be sold within one year
88 tesco plc annual report and financial statements 2010 financial statements
note 8 dividends
         52 weeks ended  53 weeks ended 
         27 february 2010  28 february 2009
         penceshare £m penceshare £m
amounts recognised as distributions to owners in the year
final dividend for the prior financial year         839 660 770 603
interim dividend for the current financial year         389 308 357 280
               1228 968 1127 883
  
proposed final dividend for the current financial year         916 731  839 662
the proposed final dividend was approved by the board of directors on 19 april 2010 and is subject to the approval of shareholders at the annual 
general meeting the proposed dividend has not been included as a liability as at 27 february 2010 in accordance with ias 10 ‘events after the 
balance sheet date’ it will be paid on 9 july 2010 to shareholders who are on the register of members on 1 may 2010
note 9 earnings per share and diluted earnings per share
basic earnings per share amounts are calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary 
shares in issue during the year
diluted earnings per share amounts are calculated by dividing the profit attributable to owners of the parent by the weighted average number of 
ordinary shares in issue during the year adjusted for the effects of potentially dilutive options
the dilution effect is calculated on the full exercise of all potentially dilutive ordinary share options granted by the group including performancebased 
options which the group considers to have been earned
all operations are continuing for the years presented
        52 weeks ended   53 weeks ended 
        27 february 2010   28 february 2009
           restated
       potentially    potentially
        dilutive    dilutive
       basic share options diluted basic share options diluted
profit £m      2327 – 2327 2133 – 2133
weighted average number of shares millions   7933 39 7972  7859 53 7912
earnings per share pence    2933 014 2919  2714 018 2696
there have been no transactions involving ordinary shares between the reporting date and the date of approval of these financial statements which 
would significantly change the earnings per share calculations shown above
reconciliation of nongaap underlying diluted earnings per share
         52 weeks ended  53 weeks ended 
         27 february 2010  28 february 2009
           restated
         £m penceshare £m penceshare
profit            2327 2919 2133 2696
adjustments for
 ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements     151 190 88 111
 total ias 19 noncash group income statement charge for pensions      24 030 27 034
 ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods      41 052 27 034
 ifrs 3 amortisation charge from intangible assets arising on acquisition   127 159 32 041
 ifric 13 ‘customer loyalty programmes’ – fair value of awards    14 018 33 041
exceptional items
 ias 36 impairment of goodwill arising on acquisitions    131 164 – –
 restructuring costs       33 041 – –
tax effect of adjustments at the effective rate of tax 2010 – 254 2009 – 267    22 027 56 070
underlying earnings from operations          2524 3166 2284 2887
 the effective tax rate of 254 excludes the adjustment for goodwill impairment
t esco plc annual report and financial statements 2010 89 notes to the group financial statements continued
note 10 goodwill and other intangible assets
        internally  pharmacy 
        generated and other 
        development  software intangible 
        costs licences assets goodwill total 
        £m £m £m £m £m
cost
at 28 february 2009         879 310 318 3283 4790
restatement of acquisitions through business combinations   – – – 49 49
at 28 february 2009 restated     879 310 318 3332 4839
foreign currency translation        9 11 14 136 170
additions          111 50 2 98 261
reclassification across categories        136 1 1 1 137
disposals          2 2 – 1 5
at 27 february 2010          1133 368 335 3566 5402
accumulated amortisation and impairment losses
at 28 february 2009         426 197 42 98 763
foreign currency translation        3 6 3 1 13
amortisation for the year         103 43 131 – 277
reclassification across categories        42 3 4 1 42
impairment charge for the year     – – – 131 131
d i sp o s a ls           –  1  – –  1 
at 27 february 2010         574 242 180 229 1225
net carrying value
at 27 february 2010         559 126 155 3337 4177
at 28 february 2009 restated        453  113  276 3234  4076  
cost
at 23 february 2008         691 278 48 1927 2944
foreign currency translation        6 7 4 205 214
additions          192 26 2 – 220
acquisitions through business combinations – restated      – – 270 1201 1471
reclassification across categories        2 – 2 – –
disposals          8 1 – 1 10
at 28 february 2009 restated       879 310 318 3332 4839
accumulated amortisation and impairment losses
at 23 february 2008         340 163 7 98 608
foreign currency translation        – 4 – – 4
amortisation for the year         88 31 34 – 153
reclassification across categories        1 – 1 – –
d i s p o s a ls           1 1 – –  2 
at 28 february 2009 restated        426 197 42 98 763
net carrying value
at 28 february 2009 restated       453 113 276 3234 4076
at 23 february 2008         351 115 41 1829 2336
there are no intangible assets other than goodwill with indefinite useful lives
90 tesco plc annual report and financial statements 2010 financial statements
note 10 goodwill and other intangible assets continued
impairment of goodwill
goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis or more frequently if there are indications 
that goodwill may be impaired goodwill acquired in a business combination is allocated to groups of cashgenerating units according to the level at 
which management monitor that goodwill
recoverable amounts for cashgenerating units are based on the higher of value in use and fair value less costs to sell in 2010 recoverable amounts  
are based on value in use value in use is calculated from cash flow projections for generally five years using data from the group’s latest internal 
forecasts the results of which are reviewed by the board the key assumptions for the value in use calculations are those regarding discount rates 
growth rates and expected changes in margins management estimate discount rates using pretax rates that reflect the current market assessment  
of the time value of money and the risks specific to the cashgenerating units changes in selling prices and direct costs are based on past experience 
and expectations of future changes in the market given the current economic climate a sensitivity analysis has been performed in assessing the 
recoverable amounts of goodwill
the carrying amount for japan has been reduced to its recoverable amount through the recognition of an impairment loss of £131m against goodwill 
this has been included in cost of sales in the group income statement the key assumptions for japan include a longterm growth rate of 11  
2009 – 15 and a pretax discount rate of 61 2009 – 73 
the forecasts are extrapolated beyond five years based on estimated longterm average growth rates of generally 1 to 4 2009 – 2 to 10
in the case of poland it is reasonably possible that a change in key assumptions would cause the goodwill to exceed its value in use with headroom  
of £46m 2009 – £84m and assuming a 106 pretax discount rate 2009 – 113 a 03 2009 – 04 increase in the discount rate would cause 
goodwill to exceed its value in use
the pretax discount rates used to calculate value in use range from 614 2009 – 7 to 24 on a posttax basis the discount rates ranged from 
4 to 13 2009 – 5 to 19 these discount rates are derived from the group’s posttax weighted average cost of capital as adjusted for the specific 
risks relating to each geographical region
in february 2010 and 2009 impairment reviews were performed by comparing the carrying value of goodwill with the recoverable amount of the cash
generating units to which goodwill has been allocated 
the components of goodwill are as follows
          2010 2009
           restated 
          £m £m
uk                645 616
tesco bank                802 802
thailand                157 153
south korea               489 392
japan                55 196
china                594 540
malaysia                77 76
poland                424 354
czech republic               35 47
turkey                54 53
other                5 5
                   3337 3234
t esco plc annual report and financial statements 2010 91 notes to the group financial statements continued
note 11 property plant and equipment
          land and 
          buildings other
a
 total
          £m £m £m
cost
at 28 february 2009             22349 7495 29844
foreign currency translation            793 234 1027
additions
b
              2189 735 2924
transfers              279 71 208
classified as held for sale        2 4 6
disposals              1669 141 1810
at 27 february 2010             23385 8398 31783
accumulated depreciation and impairment losses
at 28 february 2009             2540 4152 6692
foreign currency translation            80 121 201
charge for the year             354 737 1091
transfers              34 48 82
classified as held for sale        39 1 38
disposals              178 83 261
impairment losses             51 – 51
reversal of impairment losses            74 – 74
at 27 february 2010             2700 4880 7580 
net carrying value
cde
at 27 february 2010            20685 3518 24203
at 28 february 2009             19809 3343 23152
capital work in progress included above
f 
at 27 february 2010             1652 193 1845
a  other assets consist of plant equipment fixtures and fittings and motor vehicles
b  includes £155m 2009 – £152m in respect of interest capitalised principally relating  
to land and building assets the capitalisation rate used to determine the amount of  
finance costs capitalised during the year was 51 2009 – 51 interest capitalised  
is deducted in determining taxable profit in the year in which it is incurred
c  net carrying value includes
  i capitalised interest at 27 february 2010 of £805m 2009 – £910m
  ii assets held under finance leases which are analysed below
  2010  2009
  land and  land and
  buildings other
a
 buildings other
a
  £m £m £m £m
cost  139 582 121 578
accumulated depreciation 
 and impairment losses 36 430 22 390
net carrying value 103 152 99 188
these assets are pledged as security for the finance lease liabilities
   
d the net carrying value of land and buildings comprises
 
    2010 2009
    £m £m
freehold     17855 17332
long leasehold – 50 years or more     971 1450
short leasehold – less than 50 years  1859 1027
net carrying value     20685 19809
e  carrying value of land and buildings includes £3m 2009 – £4m relating to the  
prepayment of lease premiums
f capital work in progress does not include land
92 tesco plc annual report and financial statements 2010 financial statements
note 11 property plant and equipment continued
         land and 
          buildings other
a
 total
          £m £m £m
cost
at 23 february 2008             19210 6340 25550
foreign currency translation            434 191 625
additions
b
              3345 1013 4358
acquisitions through business combinations           586 34 620
reclassification across categories            305 45 260
classified as held for sale             74 8 82
disposals              847 120 967
at 28 february 2009             22349 7495 29844
 
accumulated depreciation and impairment losses
at 23 february 2008             2280 3483 5763
foreign currency translation            55 103 158
charge for the year             352 659 1011
reclassification across categories            5 – 5 
classified as held for sale             18 3 15 
disposals              128 90 218
impairment losses             56 – 56
reversal of impairment losses            88 – 88 
at 28 february 2009             2540 4152 6692
net carrying value
cde
at 28 february 2009            19809 3343 23152
at 23 february 2008             16930 2857 19787
capital work in progress included above
f
at 28 february 2009             1375 159 1534
impairment of property plant and equipment
the group has determined that for the purposes of impairment testing each store is a cashgenerating unit cashgenerating units are tested for 
impairment if there are indications of impairment at the balance sheet date
recoverable amounts for cashgenerating units are mainly based on value in use which is generally calculated from cash flow projections for five to 
twenty years using data from the group’s latest internal forecasts the results of which are reviewed by the board the key assumptions for the value in 
use calculations are those regarding discount rates growth rates and expected changes in margins management estimate discount rates using pretax 
rates that reflect the current market assessment of the time value of money and the risks specific to the cashgenerating units changes in selling prices 
and direct costs are based on past experience and expectations of future changes in the market
the forecasts are extrapolated beyond five years based on estimated longterm growth rates of generally 1 to 4 2009 – 2 to 10
the pretax discount rates used to calculate value in use range from 6 to 14 2009 – 7 to 24 depending on the specific conditions in which each 
store operates these discount rates are derived from the group’s posttax weighted average cost of capital
t esco plc annual report and financial statements 2010 93 notes to the group financial statements continued
note 11 property plant and equipment continued
the following amounts have been chargedcredited to cost of sales in the group income statement
           2010 2009
           £m £m
impairment losses
uk               27 21
rest of europe              18 31
asia               6 4
                  51 56
reversal of impairment losses
uk               27 21
rest of europe              37 50
asia               10 17 
                  74 88
net reversal of impairment losses             23 32
the impairment losses relate to stores whose recoverable amounts do not exceed the asset carrying values in all cases impairment losses arose due to 
stores performing below forecasted trading levels
the reversal of previous impairment losses arose principally due to improvements in stores’ performances over the last year which increased the net 
present value of future cash flows
note 12 investment property 
           2010 2009
           £m £m
 
cost
at beginning of year               1660 1190
foreign currency translation              172 24
additions                16 114
acquisitions through business combinations             – 86
transfers                71 260
classified as held for sale               – 10
disposals                – 4
at end of year                1919 1660
accumulated depreciation and impairment losses
at beginning of year               121 78
foreign currency translation              14 3
charge for the period               16 25
transfers                40 5
impairment losses         – 10
reversal of impairment losses        3 –
at end of year               188 121
net carrying value               1731 1539
the net carrying value at 23 february 2008 was £1112m
94 tesco plc annual report and financial statements 2010 financial statements
note 12 investment property continued
the following amounts have been creditedcharged to operating costs in the group income statement
          2010 2009
           £m £m
 
impairment losses
rest of europe              – 10
impairment losses              – 10
          2010 2009
           £m £m
 
reversal of impairment losses
rest of europe              3 –
reversal of impairment losses             3 –
net reversal of impairment lossesimpairment charge      3 10
the impairment losses relate to malls whose recoverable amounts do not exceed the asset carrying values in all cases impairment losses arose due to 
the malls performing below forecasted trading levels
the reversal of previous impairment losses arose principally due to improvements in the performance of malls over the last year which increased the net 
present value of cash flows
the estimated fair value of the group’s investment property is £28bn 2009 – £32bn this fair value has been determined by applying an appropriate 
rental yield to the rentals earned by the investment property a valuation has not been performed by an independent valuer
  note 1 3 g r ou p e n t i t i e s 
principal subsidiaries
the group consolidates its subsidiary undertakings and its principal subsidiaries are 
  share of issued country of incorporation 
   ordinary share capital   and principal country 
  business activity and voting rights of operation
tesco stores limited  retail  100   england
one stop stores limited
a
  retail   100  england
tesco ireland limited  retail   100  republic of ireland
tescoglobal stores privately held co limited  retail   99  hungary
tesco polska sp z oo retail   100  poland
tesco stores c
ˇ
 r as retail  100  czech republic
tesco stores s r as  retail  100  slovakia
tesco kipa kitle paza rlama ticaret ve gide sanai as ¸
a
 retail  93  turkey
samsung tesco co limited retail  94  south korea
homever tesco co limited retail 100 south korea
ekchai distribution system co limited retail   86
b
  thailand
tesco stores malaysia sdn bhd retail   70  malaysia
tesco japan co limited retail   100  japan
shanghai kancheng storage co limited retail  100  people’s republic of china
dobbies garden centres plc retail   100  scotland
fresh  easy neighborhood market inc retail 100 usa
tesco personal finance group limited
a
 
trading as tesco bank financial services 100 scotland
tesco distribution limited distribution  100  england
tesco property holdings limited property  100  england
tesco international sourcing limited purchasing  100  hong kong
dunnhumby limited data analysis 90  england
elh insurance limited formerly tesco insurance limited selfinsurance  100  guernsey
valiant insurance company limited selfinsurance  100  republic of ireland
a held by the parent company all other principal subsidiaries are held by an intermediate subsidiary
b the group has 86 of voting rights and 39 of issued ordinary share capital in ekchai distribution system co limited
the accounting period ends of the subsidiary undertakings consolidated in these financial statements are on or around 27 february 2010 a full list  
of the group’s subsidiary undertakings will be annexed to the next annual return filed at companies house there are no significant restrictions on  
the ability of subsidiary undertakings to transfer funds to the parent other than those imposed by the companies act 2006
t esco plc annual report and financial statements 2010 95 notes to the group financial statements continued
note 13 group entities continued
interests in joint ventures and associates
the group uses the equity method of accounting for joint ventures and associates the following table shows the aggregate movement in the group’s 
investment in joint ventures and associates 
          joint ventures associates total 
          £m £m £m
at 24 february 2008            295 10 305
foreign currency translation            4 – 4
share of profit of joint ventures and associates           106 4 110
income received from joint ventures and associates           68 1 69
transferred to amounts owed by subsidiary undertakings      37 – 37
transferred to investment in subsidiary undertakings            251 – 251
at 28 february 2009        49 13  62
additions             83 – 83
foreign currency translation            9 – 9
share of profit of joint ventures and associates           29 4 33
income received from joint ventures and associates           34 1 35
at 27 february 2010             136 16 152
 
transferred to investment in subsidiary undertakings
during the year ended 28 february 2009 the group acquired the remaining 50 of the share capital of tesco personal finance group limited trading 
as tesco bank previously a joint venture making the company a whollyowned subsidiary entity which has been consolidated within the group results 
from the date of acquisition onwards
significant joint ventures 
the group’s principal joint ventures are
    share of issued share  country of incorporation  
    capital loan capital and  and principal country  
   business activity debt securities of operation
tesco mobile limited telecommunications   50   england
shopping centres limited
a
 property investment   50   england
blt properties limited
a
 property investment   50   england
tesco british land property partnership property investment   50   england
tesco red limited partnership property investment   50   england
tesco aqua limited partnership property investment   50   england
tesco jade limited partnership property investment   50   england
tesco coral limited partnership property investment   50   england
tesco blue limited partnership property investment 50 england
tesco atrato limited partnership property investment 50  england
fushun jinxiu real estate development co limited property investment 50  people’s republic of china
anshan real estate development co limited property investment 50 people’s republic of china
tesco qinhuangdo property limited property investment 50 people’s republic of china
arena jersey management limited property investment   50   jersey
the tesco property limited partnership property investment   50  england
the tesco property no 2 limited partnership property investment   50   jersey
a held by the parent company all other principal subsidiaries are held by an intermediate subsidiary
the accounting period ends of the joint ventures consolidated in these financial statements range from 31 december 2009 to 28 february 2010 
accounting period end dates different from those of the group arise for commercial reasons and depend upon the requirements of the joint venture 
partner as well as those of the group 
96 tesco plc annual report and financial statements 2010 financial statements
note 13 group entities continued
the share of the assets liabilities revenue and profit of the joint ventures which are included in the consolidated financial statements are as follows
           2010 2009
           £m £m
noncurrent assets               2216 1637
current assets               359 281
current liabilities               411 426
noncurrent liabilities               2041 1458
goodwill                1 1
cumulative unrecognised losses              12 14
                   136 49
revenue                355 549
expenses                326 443
profit for the year               29 106
the unrecognised share of losses made by joint ventures during the year ended 27 february 2010 was £3m 2009 – £7m 
associates 
the group’s principal associate is
     share of issued share capital  country of incorporation  
     loan capital and debt  and principal country  
    business activity securities of operation
greenergy international limited
†
  fuel supplier  21   england
† held by an intermediate subsidiary
although the group only holds a 213 nonvoting shareholding in greenergy international limited it is treated as an associate as the board of 
greenergy international limited requires the consent of the group on certain reserve matters as specified in the company’s articles of association
the share of the assets liabilities revenue and profit of the group’s associates which are included in the consolidated financial statements are as follows
           2010 2009
           £m £m
assets                156 163
liabilities                142 152
goodwill                2 2
                   16 13
revenue                473 540
profit for the year               4 4
the accounting period ends of the associates consolidated in these financial statements range from 31 december 2009 to 31 january 2010 the 
accounting period end dates of the associates are different from those of the group as they also depend upon the requirements of the parent 
companies of those entities
there are no significant restrictions on the ability of associated undertakings to transfer funds to the parent other than those imposed by the 
companies act 2006
note 14 other investments 
           2010 2009
           £m £m
loan receivable           259 259
availableforsale financial assets          604 –
           863 259
the loan receivable comprises an interestfree subordinated loan made by tesco bank to direct line group limited this loan has no interest receivable 
and no fixed repayment date 
no impairment charge was recognised on the loan during the year 2009 – £nil
included in availableforsale financial assets is £224m which is current
t esco plc annual report and financial statements 2010 97 notes to the group financial statements continued
note 14 other investments continued
the following table shows the aggregate movement in the group’s other investments during the year
           2010 2009
           £m £m
at beginning of year               259 4
additions          603 –
acquisitions through business combinations             – 259
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements         1 4
at end of year               863 259
note 15 inventories
           2010 2009
           £m £m
goods held for resale               2726 2656
development properties               3 13
                   2729 2669
note 16 trade and other receivables
           2010 2009
           restated 
           £m £m
prepayments and accrued income              337 419
other receivables               1236 1125
amounts owed by joint ventures and associates note 30            315 276
                   1888 1820
included within trade and other receivables are the following amounts receivable after more than one year
           2010 2009
           £m £m
prepayments and accrued income              31 14
other receivables               346 275
amounts owed by joint ventures and associates note 30            309 262
                   686 551
trade and other receivables are generally noninterest bearing credit terms vary by country and the nature of the debt and can be from 7 to 60 days 
trade receivables are recorded at amortised cost reduced by estimated allowances for doubtful debts
provision for impairment of receivables
            £m
at 23 february 2008                 29
foreign currency translation                2
charge for the year                 21
uncollectible amounts written off                3
recoveries of amounts previously written off               5
at 28 february 2009                 44
foreign currency translation                5
charge for the year                 3
uncollectible amounts written off                –
recoveries of amounts previously written off               5
at 27 february 2010                47
98 tesco plc annual report and financial statements 2010 financial statements
note 16 trade and other receivables continued
as at 27 february 2010 trade and other receivables of £49m 2009 – £45m were past due and impaired the amount of the provision was £47m  
2009 – £44m the ageing analysis of these receivables is as follows 
           2010 2009
           £m £m
up to three months past due             8 3
three to six months past due              4 3
over six months past due               37 39
                   49 45
as at 27 february 2010 trade and other receivables of £115m 2009 – £97m were past due but not impaired the ageing analysis of these receivables is 
as follows
          2010 2009
           £m £m
up to three months past due             97 71
three to six months past due              10 15
over six months past due               8 11
                   115 97
no receivables have been renegotiated in the current or prior year
note 17 loans and advances to customers 
tesco bank has loans and advances to customers  
          2010 2009
           £m £m
current              2268 1918
noncurrent           1844 1470
               4112 3388
the maturity of these loans and advances is as follows
          2010 2009
           £m £m
repayable on demand or at short notice          1 1
within three months            2370 2021
greater than three months but less than one year          70 38
greater than one year but less than five years          1504 1061
after five years             481 517
           4426 3638
provision for impairment of loans and advances       314 250
              4112 3388
loans and advances include amounts subject to securitisation of £1459m 2009 – £1468m during 2009 the group entered into a securitisation 
transaction and issued debt securities which the group subsequently purchased the purpose of the transaction was to allow the group to enter into the 
special liquidity scheme whereby it would enter into a sale and repurchase agreement acquiring treasury bills issued by the uk government and using 
the debt securities as security as at 27 february 2010 the group held £500m 2009 – £588m in respect of this transaction the treasury bills do not 
meet the recognition criteria of ias 39 and are not recognised on the group balance sheet 
provision for impairment of loans and advances
               £m
acquisition through business combination           229
charge for the period             130
uncollectible amounts written off            109
recoveries of amounts previously written off           7
unwind of discount          7
at 28 february 2009             250
charge for the period             177
uncollectible amounts written off            119
recoveries of amounts previously written off           10
unwind of discount          4
at 27 february 2010            314
 tesco personal finance group limited trading as tesco bank was acquired on 19 december 2008
t esco plc annual report and financial statements 2010 99 notes to the group financial statements continued
note 17 loans and advances to customers continued
at 27 february 2010 tesco bank’s noninterest bearing loans were £373m 2009 – £291m loan impairment provisions of £314m 2009 – £250m were 
held against these loans during the year ended 27 february 2010 the gross income not recognised but which would have been recognised under the 
original terms of noninterest bearing loans was £29m 2009 – £25m
at 27 february 2010 loans and advances to customers of £75m 2009 – £82m were past due but not impaired the ageing analysis of these loans and 
advances is as follows
          2010 2009
           £m £m
up to one month past due        55 58
one to three months past due           13 15
over three months past due           7  9
           75 82
note 18 loans and advances to banks and other financial assets        
tesco bank has loans and advances to banks and other financial assets with the following maturity   
          2010 2009
            restated 
          £m £m
within three months            144 1509
greater than three months but less than one year          –  3 
greater than one year but less than five years          – 29
               144 1541
there are no loans and advances to banks and other financial assets which are past due and impaired 
note 19 cash and cash equivalents  
          2010 2009
           £m £m
cash at bank and in hand               2062 2112
shortterm deposits               757 1397
                   2819 3509
cash of £1314m 2009 – £1233m held on money market funds is classed as shortterm investments
note 20 trade and other payables
           2010 2009
           restated 
           £m £m
trade payables              5084 4748
other taxation and social security               487 334
other payables                 2014 2054
amounts payable to joint ventures and associates note 30            42 162
accruals and deferred income              1815 1367
                    9442 8665
included in other payables are amounts of £160m 2009 – £68m which are noncurrent
the impact of adopting ifric 13 on the 2009 opening balance sheet was to increase other payables by £38m and accruals and deferred income by £2m 
overall trade and other payables increased to £7359m
100 tesco plc annual report and financial statements 2010 financial statements
note 21 borrowings
current
           2010 2009
          maturity  restated 
        par value year £m £m
bank loans and overdrafts           –  –  575 3014
loan from joint ventures note 30           –  –  23 20
5125 mtn       £192m 2009  – 198
6625 mtn           £150m 2010 158 –
475 mtn            €750m 2010  704 –
other mtns           –  – 24 192
finance leases note 35           –  –  45  47
                   1529 3471 
noncurrent
          maturity 2010 2009
         par value year £m £m
finance leases note 35           – – 164  196
6625 mtn           £150m 2010 – 154
475 mtn            €750m 2010 – 689
3875 mtn           €500m 2011 479 476
5625 mtn       €1500m 2012 1375 1362
libor  133 bond – tesco bank      £225m 2012 224 225
5 mtn        £600m 2014 604 592
5125 mtn       €600m 2015 539 522
4 rpi mtn
a
           £263m 2016 270 268
5875 mtn       €1500m 2016 1520 1488
55 usd bond           850m 2017 621 678
55 mtn            £350m 2019 351 351
6125 mtn       £900m 2022 890 901
5 mtn            £515m 2023 520 515
3322 lpi mtn
b
           £265m 2025 269 267
6 mtn            £200m 2029 212 216
55 mtn            £200m 2033 210 216
1982 rpi mtn
c
           £221m 2036 222 221
615 usd bond           1150m 2037 834 977
5 mtn            £300m 2042 306 306
5125 mtn           €600m 2047 587 628
52 mtn            £500m 2057 500 500
other mtns           – – 267 285
other loans            – – 780 358
               11744 12391
a the 4 rpi mtn is redeemable at par indexed for increases in the retail price index rpi over the life of the mtn 
b  the 3322 lpi mtn is redeemable at par indexed for increases in the rpi over the life of the mtn the maximum indexation of the principal in any one year is 5 with a minimum of 0
c the 1982 rpi mtn is redeemable at par indexed for increases in the rpi over the life of the mtn 
borrowing facilities
the group has the following undrawn committed facilities available at 27 february 2010 in respect of which all conditions precedent had been met as at 
that date
           2010 2009
           £m £m
expiring within one year               – 100
expiring between one and two years              1000 –
expiring in more than two years             1600 2600
               2600 2700
all facilities incur commitment fees at market rates and would provide funding at floating rates 
t esco plc annual report and financial statements 2010 101 notes to the group financial statements continued
note 22 financial instruments 
derivatives are used to hedge exposure to market risks and those that are held as hedging instruments are formally designated as hedges as defined in 
ias 39 derivatives may qualify as hedges for accounting purposes and the group’s hedging policies are further described below 
finance income of £20m 2009 – finance costs of £30m resulted from hedge ineffectiveness
fair value hedges 
the group maintains interest rate and crosscurrency swap contracts as fair value hedges of the interest rate and currency risk on fixed rate debt issued 
by the group changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the group income statement 
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk the gain or loss on the hedging 
instrument and hedged item is recognised in the group income statement within finance income or costs if the hedge no longer meets the criteria for 
hedge accounting the adjustment to the carrying value of the hedged item is amortised to the group income statement under the effective interest 
rate method
a loss of £65m on hedging instruments was recognised during the year offset by a gain of £85m on hedged items 2009 – a gain of £1197m on hedging 
instruments was offset by a loss of £1227m on hedged items
cash flow hedges
the group uses forward foreign currency contracts to hedge the cost of future purchases of goods for resale where those purchases are denominated in 
a currency other than the functional currency of the purchasing company where these contracts qualify for hedge accounting marktomarket gains 
and losses are deferred in equity
the hedging instruments are primarily used to hedge purchases in euros and us dollars the cash flows hedged will occur and will affect the group 
income statement within one year of the balance sheet date 
when a hedging instrument expires or is sold or when a hedge no longer meets the criteria for hedge accounting any cumulative gain or loss existing  
in equity at that time remains in equity and is recognised when the forecast transaction is recognised in the group income statement when a  
forecast transaction is no longer expected to occur the cumulative gain or loss that was reported in equity is immediately transferred to the group 
income statement
net investment hedges 
the group uses forward foreign currency contracts currency denominated borrowings and currency swaps to hedge the exposure of a proportion of its 
nonsterling denominated assets against changes in value due to changes in foreign exchange rates
the group has a south korean won denominated liability relating to the future purchase of the minority shareholding of its subsidiary samsung tesco 
co limited this liability has been designated as a net investment hedge of a proportion of the assets of samsung tesco co limited
gains and losses accumulated in equity are included in the group income statement on disposal of the overseas operation
financial instruments not qualifying for hedge accounting
the group’s policy is not to use derivatives for trading purposes however some derivatives do not qualify for hedge accounting or are specifically not 
designated as a hedge where gains and losses on the hedging instrument and the hedged item offset in the group income statement
these instruments include caps interest rate swaps and forward foreign currency contracts changes in the fair value of any derivative instruments that 
do not qualify for hedge accounting are recognised immediately in the group income statement within finance income or costs
the group has a liability relating to the future purchase of the minority shareholding of its subsidiary dunnhumby limited changes in the value of the 
liability are recognised immediately in the group income statement within finance income or costs
the fair value of derivative financial instruments have been disclosed in the group balance sheet as follows
         2010  2009
         asset liability asset liability
        £m £m £m £m
current            224 146 382 525
noncurrent         1250 776 1478 302
             1474 922 1860 827
102 tesco plc annual report and financial statements 2010 financial statements
note 22 financial instruments continued
the fair value and notional amounts of derivatives analysed by hedge type are as follows
         2010    2009
       asset  liability  asset  liability
       fair value notional fair value notional fair value notional fair value notional
       £m £m £m £m £m £m £m £m
fair value hedges
interest rate swaps and similar instruments  10 685 88 2304 6 307 67 2123
cross currency swaps   1130 4513 45 259 1219 3957 39 825
cash flow hedges
interest rate swaps and similar instruments  – – 40 555 – 100 66 400
cross currency swaps   129 315 205 1064 227 357 1 171
forward foreign currency contracts  19 483 15 600 101 1762 24 348
net investment hedges
forward foreign currency contracts  19 244 172 1037 92 2623 194 2767
cross currency swaps   – – 30 124 – – – –
future purchases of minority interests  – – 105 – – – 167 –
derivatives not in a formal hedge relationship
interest rate swaps and similar instruments  140 1140 114 1350 1 774 35 3740
cross currency swaps   2 204 25 533 25 411 47 639
forward foreign currency contracts  25 635 42 1254 189 2784 154 2767
future purchases of minority interests  – – 41 – – – 33 –
total     1474 8219 922 9080 1860 13075 827 13780
the carrying value and fair value of financial assets and liabilities are as follows
         2010  2009
         carrying fair carrying fair
        value value value value 
          restated restated 
        £m £m £m £m
assets
cash and cash equivalents        2819 2819 3509 3509
loans and advances to customers – tesco bank         4112 4325 3388 3388
loans and advances to banks and other financial assets – tesco bank     144 144 1541 1541
shortterm investments           1314 1314 1233 1233
other investments – tesco bank         863 848 259 259
joint venture loan receivables note 30          309 309 262 262
derivative financial assets            
 interest rate swaps and similar instruments       150 150 7 7
 cross currency swaps            1261 1261 1471 1471
 forward foreign currency contracts          63 63 382 382
total financial assets         11035 11233 12052 12052
 
liabilities
shortterm borrowings
 amortised cost         771 770 3191 3190
 bonds in fair value hedge relationships         713 683 233 223
longterm borrowings        
 amortised cost           5513 5617 5248 5028
 bonds in fair value hedge relationships       6067 5992 6947 6147
finance leases group as lessee – note 35        209 209 243 243
customer deposits – tesco bank        4357 4357 4538 4538
deposits by banks – tesco bank          30 30 24 24
derivative and other financial liabilities        
 interest rate swaps and similar instruments         242 242 168 168
 cross currency swaps         305 305 87 87
 forward foreign currency contracts          229 229 372 372
 future purchases of minority interests         146 146 200 200
total financial liabilities           18582 18580 21251 20220
total           7547 7347 9199 8168
t esco plc annual report and financial statements 2010 103 notes to the group financial statements continued
note 22 financial instruments continued
the fair values of financial instruments have been determined by reference to prices available from the markets on which the instruments are traded 
the fair value of all other items have been calculated by discounting expected future cash flows at prevailing interest rates the above table excludes 
other receivablespayables which have fair values equal to their carrying values
financial assets and liabilities by category
the accounting classifications of each class of financial assets and liabilities as at 27 february 2010 and 28 february 2009 are as follows
         loans and   
         receivables fair value 
        available other financial through 
        forsale liabilities profit or loss total 
at 27 february 2010       £m £m £m £m
cash and cash equivalents      – 2819 – 2819
loans and advances to customers – tesco bank     – 4112 – 4112 
loans and advances to banks and other financial assets – tesco bank   – 144 – 144
shortterm investments        – 1314 – 1314 
other investments – tesco bank      604 259 – 863 
joint venture loan receivables note 30      – 309 – 309
customer deposits – tesco bank      – 4357 – 4357
deposits by banks – tesco bank      – 30 – 30
shortterm borrowings       – 1484 – 1484
longterm borrowings       – 11580 – 11580
finance leases group as lessee – note 35     – 209 – 209
derivative financial instruments         
 interest rate swaps and similar instruments     – – 92 92
 cross currency swaps       – – 956 956
 forward foreign currency contracts      – – 166 166
 future purchases of minority interests     – – 146 146
          604 8703 552 7547
          loans and   
         receivables fair value 
         other financial through 
         liabilities profit or loss total 
         restated restated restated 
at 28 february 2009        £m £m £m
cash and cash equivalents       3509 – 3509
loans and advances to customers – tesco bank      3388 – 3388 
loans and advances to banks and other financial assets – tesco bank    1541 – 1541
shortterm investments         1233 – 1233 
other investments – tesco bank       259 – 259 
joint venture loan receivables note 30       262 – 262
customer deposits – tesco bank       4538 – 4538
deposits by banks – tesco bank       24 – 24 
shortterm borrowings        3424 – 3424 
longterm borrowings        12195 – 12195
finance leases group as lessee – note 35      243 – 243 
derivative financial instruments        
 interest rate swaps and similar instruments      – 161 161
 cross currency swaps        – 1384 1384
 forward foreign currency contracts       – 10 10
 future purchases of minority interests      – 200 200
           10232 1033 9199
fair value measurement
effective from 1 march 2009 the group adopted the amendment to ifrs 7 for financial instruments that are measured in the group balance sheet at 
fair value this requires disclosure of fair value measurements by level of the following fair value measurement 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
104 tesco plc annual report and financial statements 2010 financial statements
note 22 financial instruments continued
the following table presents the group’s financial assets and liabilities that are measured at fair value at 27 february 2010
        level 1 level 2 level 3 total 
        £m £m £m £m
assets           
availableforsale financial assets      – 604 – 604
derivative financial instruments
 interest rate swaps and similar instruments     – 150 – 150
 cross currency swaps       – 1261 – 1261
 forward foreign currency contracts      – 63 – 63
total assets        – 2078 – 2078
 
liabilities           
derivative financial instruments       
 interest rate swaps and similar instruments     – 242 – 242
 cross currency swaps       – 305 – 305
 forward foreign currency contracts      – 229 – 229
 future purchases of minority interests     – – 146 146
total liabilities       – 776 146 922
total        – 1302 146 1156
the following table presents the changes in level 3 instruments for the year ending 27 february 2010
            £m
opening balance          200
losses recognised in finance costs in the group income statement       26
losses recognised in reserves         11
cash flow           91
closing balance          146
note 23 financial risk factors
the main financial risks faced by the group relate to fluctuations in interest and foreign exchange rates the risk of default by counterparties to financial 
transactions and the availability of funds to meet business needs these risks are managed as described below the group balance sheet position at  
27 february 2010 is representative of the position throughout the year
risk management is carried out by a central treasury department under policies approved by the board of directors the board provides written 
principles for risk management as described in the business review on pages 41 to 44
interest rate risk
interest rate risk arises from longterm borrowings debt issued at variable rates exposes the group to cash flow interest rate risk debt issued at fixed 
rates exposes the group to fair value risk our interest rate management policy is explained on page 44
the group has rpi debt where the principal is indexed to increases in the rpi index rpi debt is treated as floating rate debt the group also has lpi 
debt where the principal is indexed to rpi with an annual maximum increase of 5 and a minimum of 0 lpi debt is treated as fixed rate debt
for interest rate risk relating to tesco bank please refer to the separate section on tesco bank financial risk factors
t esco plc annual report and financial statements 2010 105 notes to the group financial statements continued
note 23 financial risk factors continued
during 2010 and 2009 net debt was managed using derivative instruments to hedge interest rate risk as follows
        2010   2009
       fixed floating total fixed floating  total 
         restated restated restated 
       £m £m £m £m £m £m
cash and cash equivalents     – 2819 2819 – 3509 3509
loans and advances to customers – tesco bank     1827 2285 4112 3388 – 3388 
loans and advances to banks and other financial assets – tesco bank  144 – 144 – 1541 1541
shortterm investments       – 1314 1314 – 1233 1233
other investments – tesco bank      581 282 863 259 – 259 
joint venture loan receivables      – 309 309 – 262 262
finance leases      83 126 209 84 159 243
bank and other borrowings     11806 1258 13064 11540 4079 15619
customer deposits – tesco bank     – 4357 4357 – 4538 4538
deposits by banks – tesco bank     30 – 30 – 24 24
future purchases of minority interests      146 – 146 200 – 200
derivative effect         
 interest rate swaps       2215 2215 – 415 415 –
 cross currency swaps       6677 6677 – 4524 4524 –
 caps and collars      120 120 – 774 774 –
total        4931 3314 8245 3294  7138  10432 
credit risk 
credit risk arises from cash and cash equivalents trade and other receivables customer deposits financial instruments and deposits with banks and 
financial institutions the group policy on credit risk is described on page 44
the counterparty exposure under derivative contracts is £1474m 2009 – £1860m the group policy is to transact derivatives only with counterparties 
rated at least a1 by moody’s
the group considers its maximum credit risk to be £110bn 2009 – £121bn being the group’s total financial assets
for credit risk relating to tesco bank please refer to the separate section on tesco bank financial risk factors on page 109
liquidity risk 
liquidity risk is managed by shortterm and longterm cash flow forecasts in addition the group has committed facility agreements for £26bn  
2009 – £27bn which mature between 2011 and 2014
the group has a european medium term note programme of £150bn of which £106bn was in issue at 27 february 2010 2009 – £110bn plus  
a euro commercial paper programme of £20bn none of which was in issue at 27 february 2010 2009 – £16bn and a us commercial paper 
programme of 40bn none of which was in issue at 27 february 2010 2009 – £nil 
for liquidity risk relating to tesco bank please refer to the separate section on tesco bank financial risk factors on page 109
106 tesco plc annual report and financial statements 2010 financial statements
note 23 financial risk factors continued
the following is an analysis of the undiscounted contractual cash flows payable under financial liabilities and derivatives the potential cash outflow of 
£156bn is considered acceptable as it is offset by financial assets and trade receivables of £129bn 2009 – £169bn offset by financial assets and trade 
receivables of £139bn
the undiscounted cash flows will differ from both the carrying values and fair value floating rate interest is estimated using the prevailing rate at the 
balance sheet date cash flows in foreign currencies are translated using spot rates at the balance sheet date for indexlinked liabilities inflation is 
estimated at 3 for the life of the liability 
         due  due  due due  
        due  between  between between between due 
        within  1 and 2  2 and 3 3 and 4 4 and 5 beyond 
        1 year  years  years years years 5 years 
at 27 february 2010      £m  £m  £m £m £m £m
nonderivative financial liabilities
bank and other borrowings       1484 1078 1615 845 637 7267
interest payments on borrowings       554 518 491 405 370 4605
customer deposits – tesco bank    4357 – – – – –
deposits by banks – tesco bank    30 – – – – –
finance leases        49 47 33 11 10 178
trade and other payables       9282 56 26 4 7 67
derivative and other financial liabilities          
net settled derivative contracts – receipts     71 50 50 48 21 19
net settled derivative contracts – payments     164 119 59 35  56 695
gross settled derivative contracts – receipts     1966 1747 757 867 759 5273
gross settled derivative contracts – payments     1703 1362 689 866 653 3792
future purchases of minority interests       – 131 25 – – –
total        15586 1514 2131 1251 953 11312
        due  due  due due  
       due  between  between between between due 
       within  1 and 2  2 and 3 3 and 4 4 and 5 beyond 
       1 year  years  years years years 5 years 
at 28 february 2009  restated    £m  £m  £m £m £m £m
nonderivative financial liabilities
bank and other borrowings       3028 971 873 1931 225 7943
interest payments on borrowings       560 549 514 486 411 5045
customer deposits – tesco bank    4538 – – – – –
deposits by banks – tesco bank    24 – – – – –
finance leases         55  51 48 32 9 172
trade and other payables       8522 34 5 2 4 23
derivative and other financial liabilities             
net settled derivative contracts – receipts     104 17 9 5 4 1
net settled derivative contracts – payments     245 30 19 23 13 112
gross settled derivative contracts – receipts     4657 1186 1247 404 708 5707
gross settled derivative contracts – payments     4577 957 1053 313 671 4652
future purchases of minority interests       93 – 87 20 – –
total        16881  1389 1343 2398 621 12239
foreign exchange risk
the group is exposed to foreign exchange risk principally via
•  transactional exposure from the cost of future purchases of goods for resale where those purchases are denominated in a currency other than the 
functional currency of the purchasing company transactional exposures that could significantly impact the group income statement are hedged 
these exposures are hedged via forward foreign currency contracts which are designated as cash flow hedges the notional and fair value of these 
contracts is shown in note 22
•  net investment exposure from the value of net investments outside the uk the group hedges a proportion of its investments in its international 
subsidiaries via foreign currency transactions and borrowings in matching currencies which are formally designated as net investment hedges
•  loans to nonuk subsidiaries these are hedged via foreign currency transactions and borrowings in matching currencies which are not formally 
designated as hedges as gains and losses on hedges and hedged loans will naturally offset
t esco plc annual report and financial statements 2010 107 notes to the group financial statements continued
note 23 financial risk factors continued
the impact on group financial statements from foreign currency volatility is shown in the sensitivity analysis below
sensitivity analysis
the analysis excludes the impact of movements in market variables on the carrying value of pension and other postemployment obligations and on  
the retranslation of overseas net assets as required by ias 21 ‘the effects of changes in foreign exchange rates’ however it does include the foreign 
exchange sensitivity resulting from all local entity nonfunctional currency financial instruments
the sensitivity analysis has been prepared on the basis that the amount of net debt the ratio of fixed to floating interest rates of the debt and derivatives 
portfolio and the proportion of financial instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 
27 february 2010
it should be noted that the sensitivity analysis reflects the impact on income and equity due to all financial instruments held at the balance sheet date  
it does not reflect any change in sales or costs that may result from changing interest or exchange rates
the following assumptions were made in calculating the sensitivity analysis
 •  the sensitivity of interest payable to movements in interest rates is calculated on net floating rate debt deposits and derivative instruments with no 
sensitivity assumed for rpilinked debt
•  changes in the carrying value of derivative financial instruments designated as fair value hedges from movements in interest rates or foreign exchange 
rates have an immaterial effect on the group income statement and equity due to compensating adjustments in the carrying value of debt
•  changes in the carrying value of derivative financial instruments designated as net investment hedges from movements in foreign exchange rates are 
recorded directly in equity
•  changes in the carrying value of derivative financial instruments not designated as hedging instruments only affect the group income statement
•  all other changes in the carrying value of derivative financial instruments designated as hedging instruments are fully effective with no impact on the 
group income statement
•  debt with a maturity below one year is floating rate for the interest payable part of the calculation and
•  the floating leg of any swap or any floating rate debt is treated as not having any interest rate already set therefore a change in interest rates affects 
a full 12month period for the interest payable portion of the sensitivity calculations
using the above assumptions the following table shows the illustrative effect on the group income statement and equity that would result from 
changes in uk interest rates and in exchange rates
         2010  2009
         income equity income equity
        gainloss gainloss gainloss gainloss
        £m £m £m £m
1 increase in gbp interest rates 2009 – 1        38 – 59 –
 
15 appreciation of the euro 2009 – 25         13 43 22 22
10 appreciation of the south korean won 2009 – 20       – 82  1 222
25 appreciation of the us dollar 2009 – 25        1 8  11 218
25 appreciation of the thai baht 2009 – 25        – 1  – 1
10 appreciation of the czech koruna 2009 – 25        – 31  – 204
5 appreciation of the polish zloty 2009 – 15        – –  14 –
a decrease in interest rates and a depreciation of foreign currencies would have the opposite effect to the impact in the table above
the impact on equity from changing exchange rates results principally from foreign currency deals used as net investment hedges the impact on equity 
will largely be offset by the revaluation in equity of the hedged assets for changes in the usdgbp exchange rate the impact on equity results 
principally from forward purchases of us dollars as cash flow hedges
capital risk
the group’s objectives when managing capital defined as net debt plus equity are to safeguard the group’s ability to continue as a going concern in 
order to provide returns to shareholders and benefits for other stakeholders while maintaining a strong credit rating and headroom whilst optimising 
return to shareholders through an appropriate balance of debt and equity funding the group manages its capital structure and makes adjustments  
to it in light of changes to economic conditions and the strategic objectives of the group
to maintain or adjust the capital structure the group may adjust the dividend payment to shareholders buy back shares and cancel them or issue new 
shares in april 2006 the group outlined its plan to release cash from its property assets via a sequence of property joint ventures and other transactions 
and return significant value to shareholders either through enhanced dividends or share buybacks the target for the value of share buybacks was 
increased from £15bn to £30bn over a fiveyear period from april 2007 whilst the group continued with the policy at the beginning of 2009 it 
subsequently used the proceeds from property divestment to pay down debt following the two major acquisitions in 2009 homever and tesco bank 
during 2009 the group purchased and cancelled £100m ordinary shares in the financial year 2010 the group continued to use the proceeds from the 
sale of property to pay down debt which it expects to continue in 2011
the policy for debt is to ensure a smooth debt maturity profile with the objective of ensuring continuity of funding this policy continued during the 
current year with bonds redeemed of £390m 2009 – £524m and new bonds issued totalling £nil 2009 – £4901m the group borrows centrally and 
locally using a variety of capital market issues and borrowing facilities to meet the requirements of each local business
108 tesco plc annual report and financial statements 2010 financial statements
note 23 financial risk factors continued
tesco bank
interest rate risk
interest rate risk arises where assets and liabilities in tesco bank’s banking activities have different repricing dates tesco bank policy seeks to minimise 
the sensitivity of net interest income to changes in interest rates potential exposures to interest rate movements in the medium to long term are 
measured and controlled through position and sensitivity limits shortterm exposures are measured and controlled in terms of net interest income 
sensitivity over 12 months to a 1 parallel movement in interest rates tesco bank also use value at risk var for risk management purposes with a  
time horizon of one trading day and a confidence interval of 95 interest rate risk is managed using interest rate swaps as the main hedging instrument
credit risk
credit risk is the probability of customers and counterparties failing to meet their obligations to tesco bank and arises principally from tesco bank’s 
lending activities but also from other transactions involving on and offbalance sheet instruments limits have been established for all counterparties 
based on their respective credit ratings the limits and proposed counterparties are reviewed and approved by the risk management committee rmc 
of tesco bank
internal reporting and oversight of risk assets is principally differentiated by credit ratings internal ratings are used to assess the credit quality of 
borrowers customers are assigned credit ratings based on various credit grading models that reflect the probability of default
liquidity risk 
liquidity risk is managed on a consolidated basis within tesco bank’s banking activities and adheres to the liquidity requirements set by the financial 
services authority fsa from time to time to meet regulatory requirements a diversified portfolio of high quality liquid and marketable assets is 
maintained cash flow commitments and marketable asset holdings are measured and managed on a daily basis tesco bank has credit facilities sufficient 
to meet all foreseeable outflow requirements as they fall due and its liquidity risk is further mitigated by its well diversified retail deposit base
expressed as an annual probability of default the upper and lower boundaries and the midpoint for each of the asset quality grades are as follows
at 27 february 2010 and 28 february 2009
          annual probability of default
        minimum midpoint maximum sp 
asset quality grade          equivalent
aq1        000 010 020 aaa to bbb
aq2        021 040 060 bb to bb
aq3        061 105 150 bb to b
aq4        151 325 500 b to b
aq5        501 5250 10000 b and below
        accruing  non impairment  
   aq1 aq2 aq3 aq4 aq5 past due accrual provision total 
at 27 february 2010  £m £m £m £m £m £m £m £m £m
assets        
other investments  863 – – – – – – – 863 
loans and advances to customers 501 381 762 1495 838 76 373 314 4112
loans and advances to banks  
and other financial assets  144 – – – – – – – 144
total assets    1508  381 762 1495 838 76 373 314 5119 
commitments note 33  3926 1329 573 452 184 – – – 6464 
total off balance sheet  3926 1329 573 452 184 – – – 6464 
        accruing  non impairment  
   aq1 aq2 aq3 aq4 aq5 past due accrual provision total 
at 28 february 2009 restated £m £m £m £m £m £m £m £m £m
assets        
other investments  259 – – – – – – – 259 
loans and advances to customers 352 652 828 870 563 82 291 250 3388
loans and advances to banks  
and other financial assets  1541 – – – – – – – 1541
total assets   2152  652 828 870 563 82 291 250 5188 
commitments note 33  3103 1451 744 305 129 – – – 5732 
total off balance sheet  3103 1451 744 305 129 – – – 5732 
t esco plc annual report and financial statements 2010 109 notes to the group financial statements continued
note 23 financial risk factors continued
insurance risk 
tesco bank is exposed to insurance risk indirectly through its profit sharing commission arrangement with the royal bank of scotland group plc 
insurance risk is the risk of fluctuations in the timing frequency or severity of insured events relative to the expectations at the time of underwriting
the frequency and severity of claims and the sources of uncertainty for the key classes that tesco bank is exposed to are as follows
motor insurance 
claims experience is quite variable due to a wide range of factors but the principal ones are age gender and driving experience type and nature  
of vehicle use of vehicle and area there are many sources of uncertainty that will affect tesco bank’s experience under motor insurance including 
operational risk reserving risk premium rates not matching claims inflation rates the weather the social economic and legislative environment  
and reinsurance failure risk
property insurance 
the major causes of claims for property insurance are theft flood escape of water fire storm subsidence and various types of accidental damage 
the major source of uncertainty is the volatility of weather
note 24 customer deposits
          2010 2009
              £m £m
customer deposits            4357 4538
customer deposits are recorded at amortised cost and are repayable on demand
note 25 deposits by banks
the group has deposits by banks with the following maturity 
          2010 2009
              £m £m
within three months            30 24
deposits by banks are recorded at amortised cost
note 26 provisions
         property other  
         provisions provision total 
         £m £m £m
at 23 february 2008             27 – 27
foreign currency translation            3 – 3
acquisitions through business combinations restated     93 99 192
amount utilised in the year            12 – 12
at 28 february 2009 restated           111 99 210
foreign currency translation            12 – 12
amount provided in the year       – 1 1
amount utilised in the year            12 – 12
at 27 february 2010            111 100 211
property provisions comprise future rents payable net of rents receivable on onerous and vacant property leases provisions for terminal dilapidations and 
provisions for future rents above market value on unprofitable stores the majority of the provision is expected to be utilised over the period to 2020
the other provision balance relates to a provision for customer redress in respect of potential customer complaints this is likely to be utilised over several years
the balances are analysed as follows
          2010 2009 
           restated 
          £m £m
current                39 10
noncurrent               172 200
                   211 210
110 tesco plc annual report and financial statements 2010 financial statements
note 27 sharebased payments
the total group income statement charge for the year recognised in respect of sharebased payments is £300m 2009 restated – £246m which is made 
up of share option schemes and share bonus payments of this amount £241m 2009 restated – £208m will be equitysettled and £59m 2009 – £38m 
cashsettled
a share option schemes
the company had nine share option schemes in operation during the year all of which are equitysettled schemes
i   the savingsrelated share option scheme 1981 permits the grant to employees of options in respect of ordinary shares linked to a building 
societybank saveasyouearn contract for a term of three or five years with contributions from employees of an amount between £5 and £250  
per fourweekly period options are capable of being exercised at the end of the three or fiveyear period at a subscription price not less than  
80 of the average of the middlemarket quotations of an ordinary share over the three dealing days immediately preceding the offer date
ii   the irish savingsrelated share option scheme 2000 permits the grant to irish employees of options in respect of ordinary shares linked to a 
building societybank saveasyouearn contract for a term of three or five years with contributions from employees of an amount between €12  
and €320 per fourweekly period options are capable of being exercised at the end of the three or fiveyear period at a subscription price not less 
than 80 of the average of the middlemarket quotations of an ordinary share over the three dealing days immediately preceding the offer date 
iii    the approved executive share option scheme 1994 was adopted on 17 october 1994 the exercise of options granted under this scheme will 
normally be conditional upon the achievement of a specified performance target related to the growth in earnings per share over a threeyear 
period no further options will be granted under this scheme and it has been replaced by the discretionary share option plan 2004 there were 
no discounted options granted under this scheme
iv    the unapproved executive share option scheme 1996 was adopted on 7 june 1996 the exercise of options granted under this scheme will 
normally be conditional upon the achievement of a specified performance target related to the growth in earnings per share over a threeyear 
period no further options will be granted under this scheme and it has been replaced by the discretionary share option plan 2004 there were 
no discounted options granted under this scheme
v    the international executive share option scheme 1994 was adopted on 20 may 1994 this scheme permits the grant to selected nonuk 
executives of options to acquire ordinary shares on substantially the same basis as their uk counterparts the exercise of options granted under this 
scheme will normally be conditional on the achievement of a specified performance target related to the growth in earnings per share over a three
year period no further options will be granted under this scheme and it has been replaced by the discretionary share option plan 2004 there 
were no discounted options granted under this scheme 
vi     the executive incentive plan 2004 was adopted on 5 july 2004 this scheme permits the grant of options in respect of ordinary shares to selected 
executives options are normally exercisable between three and ten years from the date of grant for nil consideration
vii  the performance share plan 2004 was adopted on 5 july 2004 and amended on 29 june 2007 this scheme permits the grant of options in 
respect of ordinary shares to selected executives options granted before 29 june 2007 are normally exercisable between four and ten years from 
the date of grant for nil consideration options granted after 29 june 2007 are normally exercisable between three and ten years from the date of 
grant for nil consideration the exercise of options will normally be conditional on the achievement of specified performance targets related to the 
return on capital employed over a threeyear period
viii  the discretionary share option plan 2004 was adopted on 5 july 2004 this scheme permits the grant of approved unapproved and international 
options in respect of ordinary shares to selected executives options are normally exercisable between three and ten years from the date of grant at  
a price not less than the middlemarket quotation or average middlemarket quotations of an ordinary share for the dealing day or three dealing days 
preceding the date of grant the exercise of options will normally be conditional on the achievement of a specified performance target related to the 
annual percentage growth in earnings per share over a threeyear period there will be no discounted options granted under this scheme
ix   the group new business incentive plan 2007 was adopted on 29 june 2007 this scheme permits the grant of options in respect of ordinary 
shares to selected executives options will normally vest in four tranches four five six and seven years after the date of grant and will be exercisable 
for up to two years from the vesting dates for nil consideration the exercise of options will normally be conditional on the achievement of specified 
performance targets related to the return on capital employed over the sevenyear plan
the following tables reconcile the number of share options outstanding and the weighted average exercise price waep
for the year ended 27 february 2010
 savingsrelated irish savingsrelated approved unapproved international executive nil cost 
 share option scheme share option scheme share option scheme share option scheme share option scheme share options
  options waep options waep options waep options waep options waep options waep
outstanding at 
 28 february  
  2009 142810097 30621 5418903 31567 15868920 35056 81299884 33997 43898205 36661 14323708 000
granted 38117516 32800 1752363 32800 2844857 33840 26542534 33842 19097981 33882 3093147 000
forfeited 9476452 31543 873617 31496 581769 40975 3213394 40929 2147644 40374 2299256 000
exercised 33216641 25720 842581 27060 3581117 28654 18721402 27316 5967794 29166 5932144 000
outstanding at 
  27 february  
  2010 138234520 32337 5455068 32670 14550891 36157 85907622 35146 54880748 36364 9185455 000
exercisable as at  
  27 february 
  2010 6287764 26610 369370 28275 5868560 28229 32430807 28029 15277598 28905 – –
exercise price   19500 to   19500 to   19750 to    19750 to    19750 to  
  range pence   30700   30700   38875   41550   31860   –
weighted average  
  remaining  
  contractual  
  life years   018   015   426  453  475  –
t esco plc annual report and financial statements 2010 111 notes to the group financial statements continued
note 27 sharebased payments continued
for the year ended 28 february 2009
 savingsrelated irish savingsrelated approved unapproved international executive nil cost 
 share option scheme share option scheme share option scheme share option scheme share option scheme share options
  options waep options waep options waep options waep options waep options waep
outstanding at 
  23 february  
  2008 153361820 28140 5083009 30071 16229846 32445 77043605 30700 36970259 33322 10838238 000
granted 38531375 31100 1642089 31100 3308213 42679 18297370 42682 13664591 42288 3591855 000
forfeited 10351962 29964 485512 29384 901163 38434 2768871 38851 3268614 32765 – –
exercised 38731136 21448 820683 22680 2767976 27755 11272220 24372 3468031 26907 106385 000
outstanding at 
  28 february  
  2009 142810097 30621 5418903 31567 15868920 35056 81299884 33997 43898205 36661 14323708 000
 
exercisable as at  
  28 february 
  2009 6553484 22072 398093 23361 5574827 25954 36205357 26009 12340929 26872 2048225 000 
exercise price   15900 to   15900 to   19750 to   16400 to   17670 to 
  range pence   24800   24800   31350   31350   31275   000
weighted average  
  remaining  
  contractual  
  life years   018   015   399   463   476       583
share options were exercised on a regular basis throughout the year the average share price during the year ended 27 february 2010 was 38005p 
2009 – 37206p
the fair value of share options is estimated at the date of grant using the blackscholes option pricing model the following table gives the assumptions 
applied to the options granted in the respective periods shown no assumption has been made to incorporate the effects of expected early exercise
        2010   2009
       savings   savings 
      related executive  related executive 
      share share nil cost share share nil cost
      option option option option option option
      schemes schemes schemes schemes schemes schemes
expected dividend yield       36 3639 00 33 33 00
expected volatility        2631 25 25 2530 25 25
riskfree interest rate        2028 2833 29 3238 3249 4649
expected life of option years      3 or 5 6 6 3 or 5 6 6
weighted average fair value of options granted pence   8674 6424 37400  8928 9390 41809
probability of forfeiture      1416 10 0 2025 10 0
share price pence      37800 34523 37400  36100 42520 41809
weighted average exercise price pence    32800 33858 000 31100 42520 000
volatility is a measure of the amount by which a price is expected to fluctuate during a period the measure of volatility used in the group’s option 
pricing models is the annualised standard deviation of the continuously compounded rates of return on the share over a period of time in estimating the 
future volatility of the company’s share price the board considers the historical volatility of the share price over the most recent period that is generally 
commensurate with the expected term of the option taking into account the remaining contractual life of the option
b share bonus schemes
eligible uk employees are able to participate in shares in success an allemployee profitsharing scheme each year shares are awarded as a percentage 
of earnings up to a statutory maximum of £3000 eligible republic of ireland employees are able to participate in a share bonus scheme an all
employee profit sharing scheme each year employees receive a percentage of their earnings as either cash or shares
senior management also participate in performancerelated bonus schemes the amount paid to employees is based on a percentage of salary and is 
paid partly in cash and partly in shares bonuses are awarded to eligible employees who have completed a required service period and depend on the 
achievement of corporate targets the accrued cash element of the bonus at the balance sheet date is £52m 2009 – £33m
selected senior management participate in the senior management performance share plan awards made under this plan will normally vest three years 
after the date of the award for nil consideration vesting will normally be conditional on the achievement of specified performance targets related to the 
return on capital employed over a three year performance period
senior management in the us business also participate in the us longterm incentive plan 2007 which was adopted on 29 june 2007 the awards 
made under this plan will normally vest in four tranches four five six and seven years after the date of award for nil consideration vesting will normally 
be conditional on the achievement of specified performance targets related to the return on capital employed in the us business over the sevenyear plan
112 tesco plc annual report and financial statements 2010 financial statements
note 27 sharebased payments continued
the executive directors participate in shortterm and longterm bonus schemes designed to align their interests with those of shareholders full details 
of these schemes can be found in the directors’ remuneration report 
the fair value of shares awarded under these schemes is their market value on the date of award expected dividends are not incorporated into the fair 
value except for awards under the us longterm incentive plan
the number and weighted average fair value wafv of share bonuses awarded during the period were
         2010  2009
        shares wafv shares wafv
        number pence number pence
shares in success          28661004 34966  21295232 43105
executive incentive scheme         13731567 35551  10996677 41568
performance share plan          2120058 37537 2123237 35376
us longterm incentive plan         80622 48200  673716 40380
note 28 postemployment benefits
pensions
the group operates a variety of postemployment benefit arrangements covering both funded defined contribution and funded and unfunded defined 
benefit schemes the most significant of these are the funded defined benefit pension schemes for the group’s employees in the uk and the republic 
of ireland
defined contribution plans
the contributions payable for defined contribution schemes of £12m 2009 – £11m have been fully expensed against profits in the current year 
defined benefit plans
united kingdom 
the principal plan within the group is the tesco plc pension scheme which is a funded defined benefit pension scheme in the uk the assets of which 
are held as a segregated fund and administered by trustees towers watson limited an independent actuary carried out the latest triennial actuarial 
assessment of the scheme as at 31 march 2008 using the projected unit method 
at the date of the last actuarial valuation the actuarial deficit was £275m the market value of the schemes’ assets was £3987m and these assets 
represented 94 of the benefits that had accrued to members after allowing for expected increases in earnings and pensions in payment
during the year the one stop senior executive pension scheme was merged into the tesco plc pension scheme as the one stop scheme was already 
part of the group there has been no impact on the overall disclosures the one stop scheme had a net liability of £46m at 28 february 2009
overseas
the most significant overseas scheme is the funded defined benefit pension scheme which operates in the republic of ireland an independent actuary 
using the projected unit method carried out the latest actuarial assessment of the scheme as at 1 april 2007 
the valuations used for ias 19 have been based on the most recent actuarial valuations and updated by towers watson limited to take account of the 
requirements of ias 19 in order to assess the liabilities of the schemes as at 27 february 2010 the schemes’ assets are stated at their market values as at 
27 february 2010 towers watson limited have updated the most recent republic of ireland valuation the liabilities relating to retirement healthcare 
benefits have also been determined in accordance with ias 19 and are incorporated in the following tables
principal assumptions 
the valuations used have been based on the most recent actuarial valuations and updated by towers watson limited to take account of the 
requirements of ias 19 in order to assess the liabilities of the schemes as at 27 february 2010 the major assumptions on a weighted average basis 
used by the actuaries were as follows
          2010 2009
            
rate of increase in salaries             36 37
rate of increase in pensions in payment            34 31
rate of increase in deferred pensions            36 32
rate of increase in career average benefits           36  32
discount rate             59  65
price inflation             36  32
 in excess of any guaranteed minimum pension gmp element
the main financial assumption is the real discount rate the excess of the discount rate over the rate of price inflation if this assumption increased 
decreased by 01 the uk defined benefit obligation would decreaseincrease by approximately £140m and the annual uk current service cost would 
decreaseincrease by approximately £17m 
t esco plc annual report and financial statements 2010 113 notes to the group financial statements continued
note 28 postemployment benefits continued
uk mortality assumptions 
the company conducts analysis of mortality trends under the tesco plc pension scheme in the uk as part of the triennial actuarial valuation of the 
scheme at the latest triennial actuarial valuation as at 31 march 2008 the following assumptions were adopted for funding purposes
base tables
 pma92c00 for male members with cohort improvements to 2000 and members taken to be one year younger than actual age
 pfa92c00 for female members with cohort improvements to 2000 and members taken to be half a year older than actual age
these assumptions were used for the calculation of the pension liability as at 27 february 2010 for the main uk scheme
as at 27 february 2010 the mortality assumptions have been strengthened the base tables have been updated in line with medium cohort projections 
with a minimum improvement of 1 per annum from 31 march 2008 to 27 february 2010 in addition the allowance for future mortality improvements 
has been changed to incorporate medium cohort projections with a minimum improvement of 1 per annum
the following table illustrates the expectation of life of an average member retiring at age 65 at the balance sheet date and a member reaching age 65 
at the same date 25 years 
          2010 2009
          in years in years
 
retiring at reporting date at age 65  male          216 215
       female          234 233
retiring at reporting date 25 years at age 65 male          240 239
       female         259  258
rates of return on scheme assets 
the assets in the defined benefit pension schemes and the expected nominal rates of return were
         2010  2009
        longterm market longterm market
        rate of return value rate of return value
         £m  £m
equities          87 2521 89 1482
bonds          51 1233 55 1080
property          70 343 73 342
other alternative assets         87 484 89 383
cash          41 115 37 133
total market value of assets         4696   3420
the expected rate of return on assets is a weighted average based on the actual plan assets held and the respective returns expected on the separate 
asset classes the expected rate of return on equities and cash have both been set having regard to expected returns over the medium term as 
calculated by the company’s independent actuary the expected rate of return on bonds was measured directly from actual yields for gilts and corporate 
bond stocks the above rate takes into account the actual mix of uk gilts uk corporate bonds and overseas bonds held at the balance sheet date 
movement in pension deficit during the year 
changes in the fair value of defined benefit pension plan assets are as follows
          2010 2009
          £m £m
opening fair value of plan assets            3420 4089
expected return             265 338
actuarial gainslosses             733 1270
contributions by employer            415 376
actual member contributions            9 8
foreign currency translation            2 11
benefits paid             144 132
closing fair value of plan assets             4696 3420
114 tesco plc annual report and financial statements 2010 financial statements
note 28 postemployment benefits continued
changes in the present value of defined benefit obligations are as follows
          2010 2009
          £m £m
opening defined benefit obligation             4914 4927
current service cost              391 428
interest cost               313 313
lossgain on change of assumptions             1052 760
experience losses              1 117
foreign currency translation             – 13
benefits paid              144 132
actual member contributions             9 8
closing defined benefit obligation             6536 4914
the amounts that have been charged to the group income statement and group statement of comprehensive income for the year ended  
27 february 2010 are set out below
          2010 2009
          £m £m
analysis of the amount charged to operating profit        
current service cost              391 428
total charge to operating profit             391 428
analysis of the amount chargedcredited to finance costincome        
expected return on pension schemes’ assets            265 338
interest on pension schemes’ liabilities             313 313
net pension finance costincome note 5            48 25
total charge to the group income statement            439 403
analysis of the amount recognised in the group statement of comprehensive income    
actual return less expected return on pension schemes’ assets          733 1270
experience losses arising on the schemes’ liabilities            1 117
foreign currency translation             2 2
changes in assumptions underlying the present value of the schemes’ liabilities        1052 760
total loss recognised in the group statement of comprehensive income       322 629
the cumulative losses recognised through the group statement of comprehensive income since the date of transition to ifrs are £1323m 2009 –  £1001m
summary of movements in deficit during the year
          2010 2009
          £m £m
deficit in schemes at beginning of the year            1494 838
current service cost              391 428
other finance costincome             48 25
contributions by employer             415 376
foreign currency translation             2 2
actuarial loss              320 627
deficit in schemes at end of the year             1840 1494
history of movements 
the historical movement in defined benefit pension schemes assets and liabilities and history of experience gains and losses are as follows
       2010 2009 2008 2007 2006
       £m £m £m £m £m
total market value of assets         4696 3420 4089 4007 3448
present value of liabilities relating to unfunded schemes       54 39 34 27 17
present value of liabilities relating to partially funded schemes      6482 4875 4893 4930 4642
pension deficit          1840 1494 838 950 1211
 
experience gainslosses on scheme assets       733 1270 465 82 309
experience losses on plan liabilities         1 117  20 41 24
t esco plc annual report and financial statements 2010 115 notes to the group financial statements continued
note 28 postemployment benefits continued
postemployment benefits other than pensions 
the company operates a scheme offering retirement healthcare benefits the cost of providing these benefits has been accounted for on a similar basis 
to that used for defined benefit pension schemes
the liability as at 27 february 2010 of £12m 2009 – £10m was determined in accordance with the advice of independent actuaries in 2010  
£07m 2009 – £07m has been charged to the group income statement and £05m 2009 – £05m of benefits were paid 
a change of 10 in assumed healthcare cost trend rates would have the following effect
          2010 2009
          £m £m
 
effect of a 1 increase in assumed healthcare cost trend rate on            
  service and interest cost             01 01
  defined benefit obligation             15 16
effect of a 1 decrease in assumed healthcare cost trend rate on            
  service and interest cost             01 01
  defined benefit obligation             15 13
 
expected contributions 
a formal actuarial valuation is carried out triennially for the scheme trustees by a professionally qualified independent actuary the purpose of the 
valuation is to agree a funding plan to ensure that present and future contributions should be sufficient to meet future liabilities the actuarial 
valuation of approved schemes as at 31 march 2008 has been concluded and the group’s contributions are increasing to 111 from 109 on this 
basis the group expects to make contributions of approximately £430m to defined benefit pension schemes in the year ending 27 february 2011
note 29 called up share capital
        2010   2009
       ordinary shares of 5p each ordinary shares of 5p each
         number £m number £m
authorised
at beginning of year        10858000000 543 10858000000 543
authorised during the year       2500000000 125 – –
at end of year         13358000000 668 10858000000 543
 
allotted called up and fully paid
at beginning of year        7895344018 395 7863498783 393
share options        62329535 3 57060046 3
share bonus scheme     27370504 1 – –
share buyback        – – 25214811 1
at end of year        7985044057 399 7895344018 395
during the financial year 62 million 2009 – 57 million shares of 5p each were issued in relation to share options for aggregate consideration of  
£166m 2009 – £130m 
during the financial year 27 million 2009 – nil shares of 5p each were issued in relation to share bonus awards for consideration of £1m 2009 – £nil
during the year the company purchased and subsequently cancelled no shares of 5p each during 2009 the company purchased and subsequently 
cancelled 25214811 shares of 5p each representing 0 of the called up share capital at an average share price of 398 per share the total 
consideration including expenses £100m the excess of the consideration over the nominal value was charged to retained earnings 
between 28 february 2010 and 16 april 2010 options over 3722750 ordinary shares have been exercised under the terms of the savingsrelated  
share option scheme 1981 and the irish savingsrelated share option scheme 2000 between 28 february 2010 and 16 april 2010 options over  
5592493 ordinary shares have been exercised under the terms of the executive share option schemes 1994 and 1996 and the discretionary share  
option plan 2004
as at 27 february 2010 the directors were authorised to purchase up to a maximum in aggregate of 7901 million 2009 – 7848 million ordinary shares
the owners of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings  
of the company
capital redemption reserve
upon cancellation of the shares purchased as part of the share buyback a capital redemption reserve is created representing the nominal value  
of the shares cancelled this is a nondistributable reserve
116 tesco plc annual report and financial statements 2010 financial statements
note 30 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 
i trading transactions
     sales to purchases from amounts owed amounts owed 
     related parties related parties by related parties to related parties
     2010 2009 2010 2009 2010 2009 2010 2009
     £m £m £m £m £m £m £m £m
joint ventures   154 183 360 290 6 14 18 6
associates    – – 1313 1175 – – 24 156
sales to related parties consists of servicesmanagement fees and loan interest 
purchases from related parties include £226m 2009 – £174m of rentals payable to the group’s joint ventures including those joint ventures formed as 
part of the sale and leaseback programme
purchases from associates include £1312m 2009 – £1171m of fuel purchased from greenergy international limited
ii nontrading transactions
     sales to loans to loans from injection of 
     related parties related parties related parties equity funding
     2010 2009 2010 2009 2010 2009 2010 2009
     £m £m £m £m £m £m £m £m
joint ventures   87 465 309 262 23 20 83 –
transactions between the group and the group’s pension plans are disclosed in note 28 
a number of the group’s subsidiaries are members of one or more partnerships to whom the provisions of the partnerships accounts regulations 2008 
‘regulations’ apply the accounts for those partnerships have been consolidated into these accounts pursuant to regulation 7 of the regulations
on 25 june 2009 the group formed a limited partnership with tesco pension trustees the limited partnerships contain twelve stores and two 
distribution centres which have been sold from and leased back to the group the group sold assets for net proceeds of £386m to the limited 
partnership the group’s share of the profit realised from this transaction is included within profit arising on propertyrelated items
on 23 september 2009 the group formed a limited partnership with a third party the limited partnerships contain fifteen stores and two distribution 
centres which have been sold from and leased back to the group the group sold assets for net proceeds of £460m to the limited partnership the 
group’s share of the profit realised from this transaction is included within profit arising on propertyrelated items
iii transactions with key management personnel
only members of the board of directors of tesco plc are deemed to be key management personnel it is the board who have responsibility for planning 
directing and controlling the activities of the group key management personnel compensation is disclosed in the audited section of the directors’ 
remuneration report
transactions on an arm’s length basis with tesco bank during the year were as follows
        credit card and 
        personal loan balances saving deposit accounts
         number of key  number of key  
        management  management  
        personnel £m personnel £m
at 28 february 2009         2 – 2 –
at 27 february 2010         – – 4 1
during the current and prior year there were no other material transactions or balances between the group and its key management personnel or their 
close family members
t esco plc annual report and financial statements 2010 117 notes to the group financial statements continued
note 31 reconciliation of profit before tax to cash generated from operations
          2010 2009 
           restated 
          £m £m
profit before tax               3176 2917
net finance costs               314 362
share of posttax profits of joint ventures and associates            33 110
operating profit               3457 3169
depreciation and amortisation              1384 1189
profit arising on propertyrelated items              377 236
loss arising on sale of non propertyrelated items       5 3
impairment of goodwill         131 –
net reversal of impairment of property plant and equipment          26 22
adjustment for noncash element of pensions charge          24 52
sharebased payments               241 208
decreaseincrease in inventories             34 95
decrease in trade and other receivables              124 79
increase in trade and other payables              453 724
increase in trade and other receivables – tesco bank       28 –
increase in trade and other payables – tesco bank       75 –
increase in loans and advances to customers             724 20
decreaseincrease in loans and advances to banks other financial assets and receivables       1397 1538
decreaseincrease in customer deposits payables and other financial liabilities          175 1465
increase in working capital              1156 619
cash generated from operations              5947 4978
the increase in working capital includes the impact of translating foreign currency working capital movements at average exchange rates rather than 
period end exchange rates
note 32 analysis of changes in net debt 
       at tesco bank at  other  at
       28 february 28 february  noncash elimination 27 february 
       2009 2009  cash flow movements of tesco bank 2010
        restated
       £m £m £m £m £m £m
cash and cash equivalents       3472 37 739 49 204 2615
shortterm investments       1233 – 81 – – 1314
joint venture loan and other receivables      262 – 45 13 – 320
derivative financial instruments and other financial assets     1858 2 78 308 2 1472
cash and receivables       6825 39 691 246 206 5721
bank and other borrowings       3424 – 2909 969 256 1228
finance lease payables       47 – 41 39 – 45
derivative financial instruments and other liabilities     483 42 51 430 14 132
debt due within one year       3954 42 2899 578 270 1405
bank and other borrowings       11973 222 392 1007 224 11356
finance lease payables       196 – – 32 – 164
derivative financial instruments and other liabilities     302 – 10 464 51 725
debt due after one year       12471 222 402 575 275 12245
           9600 225 1806 249 339 7929
note 33 commitments and contingencies
capital commitments
at 27 february 2010 there were commitments for capital expenditure contracted for but not provided of £1835m 2009 – £1551m principally relating 
to the store development programme
118 tesco plc annual report and financial statements 2010 financial statements
note 33 commitments and contingencies continued
contingent liabilities
the company has irrevocably guaranteed the liabilities as defined in section 5c of the republic of ireland amendment act 1986 of various subsidiary 
undertakings incorporated in the republic of ireland
for details of assets held under finance leases which are pledged as security for the finance lease liabilities see note 11
there are a number of 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 the group recognises provisions for liabilities when it is more likely than not a settlement will be required and the value of such a payment 
can be reliably estimated 
in september 2007 the office of fair trading issued its provisional findings in its statement of objections relating to the alleged collusion between 
certain large supermarkets and dairy processors on 30 april 2010 the office of fair trading announced that it had decided to drop the allegations 
against the group in relation to milk and butter in the dairy investigation the office of fair trading agreed a discretionary penalty discount of 10  
for the group not contesting the two remaining allegations which related to cheese the group has however made no admission of wrongdoing  
the discounted fine will become payable after the oft issues its decision later this year and is immaterial to the group and therefore no provision  
has been recognised in the group’s financial statements
tesco bank
at 27 february 2010 tesco bank has commitments of formal standby facilities credit lines and other commitments to lend totalling £65bn 2009 – 
£57bn the amount is intended to provide an indication of the potential volume of business and not of the underlying credit or other risks
the financial services compensation scheme fscs is the uk statutory fund of last resort for customers of authorised financial services firms  
and pays compensation if a firm is unable to pay claims against it the fscs has borrowed from hm treasury to fund these compensation costs 
associated with institutions that failed in 2008 and will receive receipts from asset sales surplus cash flow and other recoveries from these institutions 
in the future
the fscs meets its obligations by raising management expense levies these include amounts to cover the interest on its borrowings and compensation 
levies on the industry each deposittaking institution contributes in proportion to its share of total protected deposits the levy is calculated based on 
deposit balances held as at 31 december in each year and as such this is seen as the ‘trigger event’ under accounting rules 
if the fscs does not receive sufficient funds from the failed institutions to repay hm treasury in full it will raise compensation levies at this time it is 
not possible to estimate the amount or timing of any shortfall resulting from the cash flows received from the failed institutions and accordingly no 
provision for compensation levies has been made in these financial statements
note 34 capital resources 
the following table shows the composition of regulatory capital resources of tesco personal finance plc being the regulated entity at the balance 
sheet date
          2010 2009
              £m £m
tier 1 capital           
shareholders’ funds and minority interests        576 521
tier 2 capital         
qualifying subordinated debt         235 205
other interests in tier 2 capital        21 19
supervisory deductions          263 259
total regulatory capital          569 486
the movement of tier 1 capital during the year is analysed as follows
          2010 2009
              £m £m
beginning of the year          521 514
share capital and share premium        230 –
profit attributable to shareholders        37 7
ordinary dividends         153 –
increase in intangible assets        59 –
end of the year          576 521
 tesco personal finance plc was acquired as part of tesco personal finance group limited on 19 december 2008
it is tesco personal finance plc’s tpf policy to maintain a strong capital base to expand it as appropriate and to utilise it efficiently throughout its 
activities to optimise the return to shareholders while maintaining a prudent relationship between the capital base and the underlying risks of the 
business in carrying out this policy tpf has regard to the supervisory requirements of the financial services authority ‘fsa’ the fsa uses risk asset 
ratio ‘rar’ as a measure of capital adequacy in the uk banking sector comparing a bank’s capital resources with its riskweighted assets the assets 
and offbalance sheet exposures are ‘weighted’ to reflect the inherent credit and other risks by international agreement the rar should be not less 
than 8 with a tier 1 component of not less than 4 tpf has complied with the fsa’s capital requirements throughout the year
t esco plc annual report and financial statements 2010 119 notes to the group financial statements continued
note 35 leasing commitments
finance lease commitments – group as lessee
the group has finance leases for various items of plant equipment fixtures and fittings there are also a small number of buildings which are held 
under finance leases the fair value of the group’s lease obligations approximate to their carrying value
future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments 
are as follows
         present value of 
        minimum lease payments minimum lease payments
        2010 2009 2010 2009
        £m £m £m £m
within one year           49 55 45 47
greater than one year but less than five years         101 140 90 114
after five years           178 172 74 82
total minimum lease payments          328 367 209 243
less future finance charges          119 124
present value of minimum lease payments         209 243
  
analysed as
current finance lease payables          45 47
noncurrent finance lease payables          164 196
               209 243
operating lease commitments – group as lessee
future minimum rentals payable under noncancellable operating leases are as follows
          2010 2009
          £m £m
within one year              1043 754
greater than one year but less than five years             3702 3069
after five years               10004 9170
total minimum lease payments              14749 12993
operating lease payments represent rentals payable by the group for certain of its retail distribution and office properties and other assets such as 
motor vehicles the leases have varying terms purchase options escalation clauses and renewal rights 
the group has lease break options on certain sale and leaseback transactions which are exercisable if an existing option to buy back leased assets at 
market value at a specified date is also exercised no commitment has been included in respect of the buyback option as the option is at the group’s 
discretion the group is not obliged to pay lease rentals after that date and so minimum lease payments exclude those falling after the buyback date
operating lease commitments with joint ventures 
since 1988 the group has entered into several joint ventures and sold and leased back properties to and from these joint ventures the terms of these 
sale and leasebacks vary however common factors include the sale of the properties to the joint venture at market value options within the lease for 
the group to repurchase the properties at market value market rent reviews and 2030 year lease terms the group reviews the substance  
as well as the form of the arrangements when making the judgement as to whether these leases are operating or finance leases all of the leases under 
these arrangements are operating leases
operating lease receivables – group as lessor
the group both rents out its properties and also sublets various leased buildings under operating leases at the balance sheet date the following future 
minimum lease payments are contractually receivable from tenants 
          2010 2009
          £m £m
within one year               259 201
greater than one year but less than five years             566 445
after five years               348 335
total minimum lease payments              1173 981
120 tesco plc annual report and financial statements 2010 financial statements
five year record
2006
1
 2007 2008
 
 2009
  restated
 2010 
 
financial statistics
group sales including vat £m 43137 46611 51773 59426 62537
revenue excluding vat £m
uk 29990 32665 34858
6
37650
3
38558
rest of europe 5095 5559 6872 8831
5
8704
asia 4369 4417 5552 7048
3
8439
us –– 16 
6
206 349
tesco bank ––– 163
6
860
total group 39454 42641 47298 53898 56910
group operating profit
2
 £m 2280 2648 2791 3169
3
3457
group operating profit margin
2
58 62 59 59 61
share of results of joint ventures and associates £m 82 106 75 110 33
profit on sale of investment in associates £m – 25 – – –
net finance costs £m 127 126 63 362 314
profit before tax £m 2235 2653 2803 2917
3
3176
taxation £m 649 772 673 779 840
minority interests £m 6 7 6 5 9
lossprofit for the period from discontinued operation
45
 £m 10 18 – – –
profit for the financial year attributable to owners of the parent £m 1570 1892 2124 2133
3
2327
underlying profit before tax
5
 £m 2277 2545 2846 3124 3395
 
enterprise value
7
 £m 30841 40469 37656 35907 41442
basic earnings per share
8
2020p 2361p 2695p 2714p
3
2933p
diluted earnings per share
8
1992p 2331p 2661p 2696p
3
2919p
dividend per share
9
863p 964p 1090p 1196p 1305p
return on shareholders’ funds
10
249 267 251 235
3
230
return on capital employed
11
127 126 
16
127 
17
128 
20
121
group statistics
number of stores 2672 3263 3751 4332 4811
total sales area – 000 sq ft
12
55215 68189 76338 88451 93985
average employees 368213 413061 444127 468508 472094
average fulltime equivalent employees 273024 318283 345737 364015 372338
uk retail statistics
number of stores
18
1898 1988 2115 2282     2482
total sales area – 000 sq ft
1218
25919 27785 29549 31285   32991
average store size sales area – sq ft
1318
32816 34209 35055 35215  35485
average fulltime equivalent employees 175459 184461 193917 194420 196604
uk retail productivity £
revenue per employee
14
170923 177084 179840 196436
3
196120
profit per employee
14
10190 11292 10814 
19
13065
3
14303
weekly sales per sq ft
15
2506 2548 2543 2534
3
2522
 1 results for the year ended 25 february 2006 include 52 weeks for the uk and roi and 14 months for the majority of the remaining international businesses
 2 operating profit includes integration costs and profitloss arising on sale of fixed assets operating margin is based upon revenue excluding vat
 3  the group adopted ifric 13 ‘customer loyalty programmes’ and the amendments to ifrs 2 ‘sharebased payment’ from 24 february 2008 periods before this date have not  
been restated
 4 consists of the net result of the taiwanese business which was sold during 2007
 5  ifrs underlying profit excludes ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements the ias 19 group income statement charge which is replaced by the ‘normal’ 
cash contributions for pensions ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods ifrs 3 amortisation charge from intangible assets arising on acquisition 
ifric 13 ‘customer loyalty programmes’ – fair value of awards and exceptional items 
for further details of this measure see page 81 
 6 results have been restated to reflect the us and tesco bank as separate segments
 7 market capitalisation plus net debt
 8 basic and diluted earnings per share are on a continuing operations basis
 9 dividend per share relating to the interim and proposed final dividend
10 profit before tax divided by average shareholders’ funds
11 the numerator is profit before interest less tax the denominator is the calculated average of net assets plus net debt plus dividend creditor less net assets held for sale
12 store sizes exclude lobby and restaurant areas
13 average store size excludes express and one stop stores
14 based on average number of fulltime equivalent employees in the uk revenue exclusive of vat and operating profit
15 based on weighted average sales area and sales excluding property development
16 excludes oneoff gain from ‘pensions aday’ with this oneoff gain roce was 136
17 using a ‘normalised’ tax rate before startup costs in the us and tesco direct and excluding the impact of foreign exchange in equity and our acquisition of a majority share of dobbies
18 excluding dobbies stores
19  excluding startup costs in the us and tesco direct and adjusting average number of fulltime equivalent employees in the uk to exclude us and tesco direct employees – profit per 
employee would be £11317
20  excluding acquisition of tesco bank and homever and india startup costs and after adjusting for assets held for sale calculated on a 52week basis roce for 2009 is 128
t esco plc annual report and financial statements 2010 121 tesco plc – parent company balance sheet
          2010 2009
27 february 2010        notes £m £m
noncurrent assets
investments             5 11716 10975
derivative financial instruments            10  1250 1473
                  12966 12448
current assets
derivative financial instruments            10 208 291
debtors              6 14184 8815
current asset investments            7 1997 2970
                   16389 12076
creditors – amounts falling due within one year
borrowings              9 932 1981
derivative financial instruments            10 116 373 
other creditors             8 8950 2569 
                   9998 4923
net current assets               6391 7153
total assets less current liabilities             19357 19601
creditors – amounts falling due after more than one year
borrowings              9 10805 11750
derivative financial instruments            10 621 194
                   11426 11944
net assets                7931 7657
capital and reserves
called up share capital             13 399 395
share premium account             14 4801 4638
profit and loss reserve             14 2731 2624
total equity               7931 7657
accounting policies and notes forming part of these financial statements are on pages 123 to 130
sir terry leahy
laurie mcilwee
directors 
the parent company financial statements on pages 122 to 130 were authorised for issue by the directors on 5 may 2010 and are subject to the approval 
of the shareholders at the annual general meeting on 2 july 2010
tesco plc 
registered number 00445790
122 tesco plc annual report and financial statements 2010 financial statements
notes to the parent company financial statements
basis of preparation
these financial statements have been prepared under uk gaap using the 
historical cost convention modified for the revaluation of certain financial 
instruments and in accordance with applicable accounting standards and 
the companies act 2006
the financial year represents the 52 weeks ended 27 february 2010  
prior financial year 53 weeks ended 28 february 2009
a summary of the company’s significant accounting policies are set  
out below
exemptions
the directors have taken advantage of the exemption available under 
section 408 of the companies act 2006 and not presented a profit and 
loss account for the company alone
the company has also taken advantage of the exemption from preparing 
a cash flow statement under the terms of frs 1 ‘cash flow statement’ 
the cash flows of the company are included in the tesco plc group 
financial statements
the company is also exempt under the terms of frs 8 ‘related parties’ 
from disclosing related party transactions with entities that are part of  
the tesco plc group 
changes in accounting policies
the company has adopted the following new and amended standards  
and interpretations as of 1 march 2009
•  amendments to frs 20 ‘sharebased payment’ – vesting conditions 
and cancellations effective for annual periods beginning on or after 
1 january 2009 early adoption is permitted clarifies that only service 
and performance conditions are vesting conditions any other conditions 
are nonvesting conditions which have to be taken into account to 
determine the fair value of the equity instrument granted this award 
must be treated as a cancellation where the award does not vest as a 
result of a failure to meet a nonvesting condition that is within the 
control of either the company or the counterparty cancellations are 
treated as accelerated vestings and all remaining future charges are 
immediately recognised in the parent company profit and loss account 
with the credit recognised directly in equity the results for the year 
ended 28 february 2009 have been restated accordingly the impact  
on the parent company’s profit and loss account and balance sheet  
is immaterial for both years
•  amendments to frs 29 ‘financial instruments – disclosures’ effective 
for annual periods beginning on or after 1 january 2009 required 
enhanced disclosures about fair value measurement and liquidity risk  
current asset investments
these relate to money market deposits which are stated at cost all income 
from these investments is included in the parent company profit and loss 
account as interest receivable and similar income
investments in subsidiaries and joint ventures
investments in subsidiaries and joint ventures are stated at cost less where 
appropriate provisions for impairment
foreign currencies
assets and liabilities in foreign currencies are translated into pounds 
sterling at the exchange rates at the end of the financial year
sharebased payments
employees of the company receive part of their remuneration in the form 
of sharebased payment transactions whereby employees render services 
in exchange for shares or rights over shares equitysettled transactions or 
in exchange for entitlements to cash payments based on the value of the 
shares cashsettled transactions
the fair value of employee share option plans is calculated at the grant 
date using the blackscholes model in accordance with frs 20 ‘share
based payment’ the resulting cost is charged to the parent company  
profit and loss account over the vesting period the value of the charge  
is adjusted to reflect expected and actual levels of vesting 
where the company awards options to employees of subsidiary entities 
this is treated as a capital contribution
financial instruments
financial assets and financial liabilities are recognised on the parent 
company’s balance sheet when the company becomes a party to the 
contractual provisions of the instrument
debtors 
debtors are non interestbearing and are recognised initially at fair  
value and subsequently at amortised cost using the effective interest  
rate method reduced by appropriate allowances for estimated 
irrecoverable amounts
investments 
investments are classified as either held for trading or availableforsale 
and are measured at subsequent reporting dates at fair value there are  
no investments classified as held for trading gains and losses arising from 
changes in fair value for availableforsale investments are recognised 
directly in equity until the security is disposed of or is determined to be 
impaired at which time the cumulative gain or loss previously recognised 
in equity is included in the net result for the period 
financial liabilities and equity 
financial liabilities and equity instruments are classified according to the 
substance of the contractual arrangements entered into an equity 
instrument is any contract that gives a residual interest in the assets of the 
company after deducting all of its liabilities
interestbearing borrowings 
interestbearing bank loans and overdrafts are initially recorded at the 
value of the amount received net of attributable transaction costs 
subsequent to initial recognition interestbearing borrowings are stated  
at amortised cost with any difference between cost and redemption value 
being recognised in the parent company profit and loss account over the 
period of the borrowings on an effective interest basis
creditors 
creditors are non interestbearing and are stated at amortised cost
equity instruments 
equity instruments issued by the company are recorded at the proceeds 
received net of direct issue costs
note 1 accounting policies 
t esco plc annual report and financial statements 2010 123 notes to the parent company financial statements continued
derivative financial instruments and hedge accounting 
the company uses derivative financial instruments to hedge its exposure 
to foreign exchange and interest rate risks arising from operating financing 
and investing activities the company does not hold or issue derivative 
financial instruments for trading purposes however if derivatives do not 
qualify for hedge accounting they are accounted for as such
derivative financial instruments are recognised and stated at fair value 
the fair value of derivative financial instruments is determined by 
reference to market values for similar financial instruments by discounted 
cash flows or by the use of option valuation models where derivatives do 
not qualify for hedge accounting any gains or losses on remeasurement 
are immediately recognised in the parent company profit and loss 
account where derivatives qualify for hedge accounting recognition of 
any resultant gain or loss depends on the nature of the hedge relationship 
and the item being hedged
in order to qualify for hedge accounting the company is required to 
document from inception the relationship between the item being hedged 
and the hedging instrument the company is also required to document 
and demonstrate an assessment of the relationship between the hedged 
item and the hedging instrument which shows that the hedge will be 
highly effective on an ongoing basis this effectiveness testing is 
performed at each period end to ensure that the hedge has remained 
highly effective
derivative financial instruments with maturity dates of more than one year 
from the balance sheet date are disclosed as falling due after more than 
one year
fair value hedging 
derivative financial instruments are classified as fair value hedges when 
they hedge the company’s exposure to changes in the fair value of a 
recognised asset or liability changes in the fair value of derivatives that  
are designated and qualify as fair value hedges are recorded in the parent 
company profit and loss account together with any changes in the fair 
value of the hedged item that is attributable to the hedged risk
derivative financial instruments qualifying for fair value hedge accounting 
are principally interest rate swaps and cross currency swaps
cash flow hedging 
derivative financial instruments are classified as cash flow hedges when 
they hedge the company’s exposure to variability in cash flows that are 
either attributable to a particular risk associated with a recognised asset  
or liability or a highly probable forecasted transaction
the effective element of any gain or loss from remeasuring the derivative 
instrument is recognised directly in equity 
the associated cumulative gain or loss is removed from equity and 
recognised in the parent company profit and loss account in the same 
period or periods during which the hedged transaction affects the parent 
company profit and loss account the classification of the effective 
portion when recognised in the parent company profit and loss account  
is the same as the classification of the hedged transaction any element  
of the remeasurement of the derivative instrument which does not meet 
the criteria for an effective hedge is recognised immediately in the parent 
company profit and loss account
derivative instruments qualifying for cash flow hedging are principally 
forward foreign exchange transactions and cross currency options
hedge accounting is discontinued when the hedging instrument expires or 
is sold terminated or exercised or no longer qualifies for hedge accounting 
at that point in time any cumulative gain or loss on the hedging instrument 
recognised in equity is retained in equity until the forecasted transaction 
occurs or the original hedged item affects the parent company profit and 
loss account if a forecasted hedged transaction is no longer expected to 
occur the net cumulative gain or loss recognised in equity is transferred  
to the parent company profit and loss account
net investment hedging 
derivative financial instruments are classified as net investment hedges 
when they hedge the company’s net investment in an overseas operation 
the effective element of any foreign exchange gain or loss from 
remeasuring the derivative instrument is recognised directly in equity any 
ineffective element is recognised immediately in the parent company 
profit and loss account gains and losses accumulated in equity are 
included in the parent company profit and loss account when the foreign 
operation is disposed of
derivative instruments qualifying for net investment hedging are principally 
forward foreign exchange transactions and cross currency options
pensions 
the company participates in the tesco plc pension scheme which is a 
multiemployer scheme within the tesco group and cannot identify its 
share of the underlying assets and liabilities of the scheme accordingly  
as permitted by frs 17 ‘retirement benefits’ the company has accounted 
for the scheme as a defined contribution scheme and the charge for the 
period is based upon the cash contributions payable 
taxation 
corporation tax payable is provided on the taxable profit for the year using 
tax rates enacted or substantively enacted by the balance sheet date
deferred tax is recognised in respect of all timing differences that have 
originated but not reversed at the balance sheet date and would give rise 
to an obligation to pay more or less taxation in the future
deferred tax assets are recognised to the extent that they are recoverable 
they are regarded as recoverable to the extent that on the basis of all 
available evidence it is regarded as more likely than not that there will be 
suitable taxable profits from which the future reversal of the underlying 
timing differences can be deducted
deferred tax is measured on a nondiscounted basis at the tax rates that 
are expected to apply in the periods in which the timing differences 
reverse based on tax rates and laws that have been substantively enacted 
by the balance sheet date
recent accounting developments
standards amendments and interpretations adopted following new 
amendments to frs interpretations these have not had a significant 
impact on the results or net assets of the company
•  amendments to uitf abstract 42 and frs 26 – embedded derivatives 
effective for periods beginning on or after 1 january 2009
standards amendments and interpretations not yet effective but not 
expected to have a significant impact on the company
•  amendment to frs 25 ‘financial instruments presentation’ on 
‘puttable financial instruments and obligations arising on liquidation’ 
effective for periods beginning on or after 1 january 2010  
•  amendment to frs 25 ‘financial instruments presentation’ – 
presentation on classification of rights issues effective for annual 
periods beginning on or after 1 february 2010 and  
•  amendment to frs 26 ‘financial instruments recognition and 
measurement’ on eligible hedged items effective for periods beginning 
on or after 1 july 2009  
note 1 accounting policies continued
124 tesco plc annual report and financial statements 2010 financial statements
note 2 auditor remuneration 
          2010 2009
          £m £m
fees payable to the company’s auditor for the audit of the parent company and group financial statements     06 0 6
note 3 employment costs including directors’ remuneration
          2010 2009
          £m £m
wages and salaries               18 15
social security costs               2 1
pension costs               1 1
sharebased payment expense              30 18
                   51 35
the average number of employees all directors of the company during the year was 17 2009 – 14 
the schedule vi requirements for directors’ remuneration are included within the directors’ remuneration report on pages 52 to 66
note 4 dividends
for details of equity dividends see note 8 in the group financial statements
note 5 investments
         shares in group shares in  
         undertakings joint ventures total 
         £m £m £m
cost            
at 28 february 2009              11186 16 11202
additions              1118 – 1118
at 27 february 2010             12304 16 12320
 
impairment
at 28 february 2009             227 – 227
charge for the year             377 – 377
at 27 february 2010             604 – 604
 
net carrying value
at 27 february 2010             11700 16 11716
at 28 february 2009             10959 16 10975
for a list of the company’s principal operating subsidiary undertakings and joint ventures see note 13 in the group financial statements
the impairment charge for the year relates to a subsidiary whose net assets have been reduced below its carrying amount in the parent company 
balance sheet resulting from a dividend payment
t esco plc annual report and financial statements 2010 125 notes to the parent company financial statements continued
note 6 debtors
          2010 2009
          £m £m
amounts owed by group undertakings              13948 8587
amounts owed by joint ventures and associates
a
             128 106
other debtors               100 112
deferred tax asset
b 
              8 10
total                14184 8815
a the amounts due from joint ventures and associates of £128m 2009 – £106m are due after more than one year 
b the deferred tax asset recognised by the company and the movements thereon during the year are as follows
         frs 25 other timing 
         and frs 26 differences total 
         £m £m £m
at 28 february 2009            11 1 10
charge to profit and loss account for the year           1 1 2
at 27 february 2010            10 2 8
note 7 current asset investments
          2010 2009
          £m £m
bonds and deposits              1997 2970
note 8 other creditors
          2010 2009
          £m £m
 
amounts falling due within one year          
other tax and social security             1 –
amounts owed to group undertakings             8639  2141
other liabilities              310  421
accruals and deferred income             –  7 
                  8950 2569
126 tesco plc annual report and financial statements 2010 financial statements
note 9 borrowings
         maturity 2010 2009
        par value year £m £m
bank loans and overdrafts          – – 27 1494
loans from joint ventures           – – 17 9
5125 mtn           £192m 2009 – 198
6625 mtn           £150m 2010 158 154
475 mtn            €750m 2010 704 689
3875 mtn           €500m 2011 479 476
5625 mtn       €1500m 2012 1375 1362
5 mtn        £600m 2014 604 592
5125 mtn       €600m 2015 539 522
4 rpi mtn
a
           £263m 2016 270 268
5875 mtn       €1500m 2016 1520 1488
55 usd bond           850m 2017 621 678
55 mtn            £350m 2019 351 351
6125 mtn       £900m 2022 890 901
5 mtn            £515m 2023 520 515
3322 lpi mtn
b
           £265m 2025 269 267
6 mtn            £200m 2029 212 216
55 mtn            £200m 2033 210 216
1982 rpi mtn
c 
         £221m 2036 222 221
615 usd bond           1150m 2037 834 977
5 mtn            £300m 2042 306 306
5125 mtn           €600m 2047 587 628
52 mtn            £500m 2057 500 500
other mtns           – – 291 477
other loans        – – 231 226
                   11737 13731
a the 4 rpi mtn is redeemable at par indexed for increases in the retail price index rpi over the life of the mtn
b  the 3322 lpi mtn is redeemable at par indexed for increases in the rpi over the life of the mtn the maximum indexation of the principal in any one year is 5 with a minimum of 0
c the 1982 rpi mtn is redeemable at par indexed for increases in the rpi over the life of the mtn
          2010 2009
          £m £m
repayment analysis
amounts falling due within one year              932 1981
                   932 1981
amounts falling due after more than one year
amounts falling due between one and two years             699 867
amounts falling due between two and five years             2795 2784
amounts falling due after more than five years             7311 8099
                   10805 11750
                   11737 13731
 
t esco plc annual report and financial statements 2010 127 notes to the parent company financial statements continued
note 10 derivative financial instruments
the fair value of derivative financial instruments has been disclosed in the company’s balance sheet as
         2010  2009
         asset liability asset liability
        £m £m £m £m
current        208 116 291 373
noncurrent       1250 621 1473 194
total         1458 737 1764 567
        2010    2009
       asset  liability  asset  liability
     fair value notional fair value notional fair value notional fair value notional
     £m £m £m £m £m £m £m £m
fair value hedges
interest rate swaps and similar instruments 10 665 32 400 6 257 31 1000
cross currency swaps   1131 4513 44 258 1218 3957 40 825
cash flow hedges
interest rate swaps and similar instruments – – 39 400 – – 66 400
cross currency swaps   129 315 206 1042 226 336 1 171
forward foreign currency contracts  9 218 – 1 19 656 23 283
net investment hedges
cross currency swaps   – – 30 124 – – – –
forward foreign currency contracts  19 244 172 1037 92 2623 194 2767
derivatives not in a formal  
hedge relationship
interest rate swaps and similar instruments 140 1115 112 1025 1 774 30 3280
cross currency swaps   1 173 22 457 20 219 47 639 
future purchases of minority interest  – – 41 – – – – –
forward foreign currency contracts  19 376 39 1070 182 2632 135 2561
total     1458 7619 737 5814 1764 11454 567 11926
note 11 sharebased payments
tesco plc’s equitysettled sharebased payment schemes comprise various share schemes designed to reward executive directors for further 
information on these schemes including the valuation models and assumptions used see note 27 to the group financial statements
a share option schemes 
the number of options and weighted average exercise price waep of share option schemes relating to tesco plc employees are
  savingsrelated approved unapproved nil cost 
  share option scheme share option scheme share option scheme share options
for the year ended 27 february 2010   options waep options waep options waep options waep
outstanding at 
 28 february 2009   37066 29406 53381 28099 14681115 32692 14430093 000
granted     7584 32800 – – 3804440 33840 3093147 000
forfeited    – – – – – – 2299256 000
exercised     8544 23200 – – 3936026 26141 6038529 000
outstanding at 
 27 february 2010   36106 31587 53381 28099 14549529 34765 9185455 000
exercisable as at 
  27 february 2010   – – 53381 28099 6240433 28185 – –
exercise price range          19750 to    19750 to 
 pence    – – – 31860 – 31860 – –
weighted average remaining  
  contractual life years   – – – 477 – 440 – –
128 tesco plc annual report and financial statements 2010 financial statements
note 11 sharebased payments continued
  savingsrelated approved unapproved nil cost 
  share option scheme share option scheme share option scheme share options
for the year ended 28 february 2009   options waep options waep options waep options waep
outstanding at 
 23 february 2008   37652 26929 53381 28099 12191979 30375 10838238 000
granted     7539 31100 – – 2615968 42700 3591855 000
exercised     8125 19500 – – 126832 16400 – –
outstanding at 
 28 february 2009   37066 29406 53381 28099 14681115 32692 14430093 000
exercisable as at 
  28 february 2009   – – 43965 27293 7511677 25810 2050588 000
exercise price range           19750 to  17300 to 
 pence    – –  – 31275 – 31275 – 000
weighted average remaining  
  contractual life years   – – – 547 – 429 – 582
b share bonus schemes 
the number and weighted average fair value wafv of share bonuses awarded during the period relating to tesco plc employees are
         2010  2009
         shares wafv shares wafv
        number pence number pence
shares in success          6684 34966  5568 43105
executive incentive scheme         1660771 35116  304713 42465
performance share plan          243129 37400  238024 35605
us longterm incentive plan         80622 48200  63514 48200
note 12 pensions
the total cost of the pension scheme to the group was £439m 2009 – £403m further disclosure relating to the tesco plc pension scheme can be 
found in note 28 of the group financial statements
note 13 called up share capital
        2010   2009
       ordinary shares of 5p each ordinary shares of 5p each
         number £m number £m
authorised
at beginning of year        10858000000 543 10858000000 543
authorised during the year         2500000000 125 – –
at end of year        13358000000 668 10858000000 543
  
allotted called up and fully paid
at beginning of year        7895344018 395 7863498783 393
share options        62329535 3 57060046 3
share awards      27370504 1  – –
share buyback          – – 25214811 1
at end of year        7985044057 399 7895344018 395
during the financial year 62 million 2009 – 57 million shares of 5p each were issued in relation to share options for aggregate consideration of  
£166m 2009 – £130m 
during the financial year 27 million 2009 – nil shares of 5p each were issued in relation to share bonus awards for consideration of £1m 2009 – £nil
during the year the company purchased and subsequently cancelled no shares of 5p each 2009 – 25214811 representing 0 2009 – 0 of the 
called up share capital at an average price of £nil 2009 – £398 per share the total consideration including expenses was £nil 2009 – £100m  
the excess of the consideration over the nominal value has been charged to retained earnings 
t esco plc annual report and financial statements 2010 129 notes to the parent company financial statements continued
note 13 called up share capital continued
between 28 february 2010 and 16 april 2010 options over 3722750 ordinary shares have been exercised under the terms of the savingsrelated  
share option scheme 1981 and the irish savingsrelated share option scheme 2000 between 28 february 2010 and 16 april 2010 options over  
5592493 ordinary shares have been exercised under the terms of the executive share option schemes 1994 and 1996 and the discretionary share  
option plan 2004
as at 27 february 2010 the directors were authorised to purchase up to a maximum in aggregate of 7901 million 2009 – 7848 million ordinary shares
the owners of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings  
of the company
capital redemption reserve
upon cancellation of the shares purchased as part of the share buyback a capital redemption reserve is created representing the nominal value of the 
shares cancelled this is a nondistributable reserve
note 14 reserves
          2010 2009
          £m £m
    
share premium account
at beginning of year              4638  4511
premium on issue of shares less costs             163  127
at end of year              4801  4638
  
profit and loss reserve
at beginning of year              2624  2181
sharebased payments              234  204
purchase of treasury shares             –  165
dividend               968  883
change in fair value of availableforsale financial assets           –  3
share buyback capital redemption             –  1
lossesgains on cash flow hedges              82 105
profit after tax for the year              923 1178
at end of year               2731 2624
note 15 contingent liabilities
the company has irrevocably guaranteed the liabilities as defined by section 5 c of the republic of ireland amendment act 1986 of various 
subsidiary undertakings incorporated in the republic of ireland
130 tesco plc annual report and financial statements 2010 financial statements
independent auditors’ report to the members of tesco plc
we have audited the parent company financial statements of tesco plc 
for the 52 weeks ended 27 february 2010 which comprise the parent 
company balance sheet and the related notes the financial reporting 
framework that has been applied in their preparation is applicable law  
and united kingdom accounting standards united kingdom generally 
accepted accounting practice
respective responsibilities of directors and auditors 
as explained more fully in the statement of directors’ responsibilities set 
out on page 68 the directors are responsible for the preparation of the 
parent company financial statements and for being satisfied that they  
give a true and fair view our responsibility is to audit the parent company 
financial statements in accordance with applicable law and international 
standards on auditing uk and ireland those standards require us to 
comply with the auditing practices board’s ethical standards for auditors 
this report including the opinions has been prepared for and only for the 
company’s members as a body in accordance with chapter 3 of part 16 of 
the companies act 2006 and for no other purpose we do not in giving 
these opinions accept or assume responsibility for any other purpose or  
to any other person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent in writing
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and disclosures  
in the financial statements sufficient to give reasonable assurance that the 
financial statements are free from material misstatement whether caused 
by fraud or error this includes an assessment of whether the accounting 
policies are appropriate to the parent company’s circumstances and have 
been consistently applied and adequately disclosed the reasonableness  
of significant accounting estimates made by the directors and the overall 
presentation of the financial statements
opinion on financial statements 
in our opinion the parent company financial statements 
•  give a true and fair view of the state of the company’s affairs as at 
27 february 2010
•  have been properly prepared in accordance with united kingdom 
generally accepted accounting practice and 
•  have been prepared in accordance with the requirements of the 
companies act 2006 
opinion on other matters prescribed by the companies act 2006 
in our opinion 
•  the part of the directors’ remuneration report to be audited has been 
properly prepared in accordance with the companies act 2006 and 
•  the information given in the directors’ report for the 52 weeks ended 
27 february 2010 for which the parent company financial statements 
are prepared is consistent with the parent company financial 
statements 
matters on which we are required to report by exception 
we have nothing to report in respect of the following matters where the 
companies act 2006 requires us to report to you if in our opinion 
•  adequate accounting records have not been kept by the parent 
company or returns adequate for our audit have not been received 
from branches not visited by us or 
•  the parent company financial statements and the part of the directors’ 
remuneration report to be audited are not in agreement with the 
accounting records and returns or 
•  certain disclosures of directors’ remuneration specified by law are not 
made or 
•  we have not received all the information and explanations we require 
for our audit 
other matter 
we have reported separately on the group financial statements of  
tesco plc for the 52 weeks ended 27 february 2010 
richard winter senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
london 
5 may 2010
t esco plc annual report and financial statements 2010 131 financial calendar
financial year end 200910 27 february 2010
final exdividend date 28 april 2010
record date 30 april 2010
q1 interim management statement    june 2010
annual general meeting 2 july 2010
final dividend payment date 9 july 2010
half year end 201011 28 august 2010
interim results october 2010
q3 interim management statement december 2010
christmas and new year trading statement january 2011
financial year end 201011 26 february 2011
please note that dates are provisional and may be liable to change
132 tesco plc annual report and financial statements 2010  tesco plc
tesco house
delamare road
cheshunt
hertfordshire en8 9sl
wwwtescocomannualreport2010
printed on revive pure a 100 recycled paper 
with fsc certification printed by pureprint
designed and produced by 35 communications tesco plc annual review and summary financial statement 2010
a business for  
a new decade overview
chairman’s statement 1
a business for a new decade 2
tesco at a glance 6
chief executive’s review 8
our business
longterm strategy and  
business highlights  10
international 12
core uk 14
nonfood 16
retailing services 18
community 20
our people 22
summary financial statement
summary report of the directors 24
group financials 26
our board of directors 29
wwwtescocomannualreview2010
contents financial highlights
group sales 
including vat 68
underlying profit 
before tax 101
group profit
before tax 104
underlying diluted 
earnings per share 91
diluted earnings 
per share 98
dividend 
per share 91
all growth figures reported on a 52week basis
 20089
‡
52 weeks ended 27 february 2010 200910 52 weeks 53 weeks
group sales £m including vat 62537 58570 59426
group revenue £m excluding vat 56910 53115 53898
group trading profit £m  3412 3039 3086
underlying profit before tax £m  3395 3083 3124
group profit before tax £m  3176 2876 2917
underlying diluted earnings per share p  3166 2850 2887
dividend per share p  1305 – 1196
group enterprise value £bn market 
 capitalisation plus net debt 414 – 359
return on capital employed  121 – 128
  group sales inc vat excludes the accounting impact of ifric 13 customer loyalty programmes
 growth in underlying diluted eps calculated on a constant tax rate basis
‡
  restated for the impact of ifric 13 and ifrs 2 tesco plc annual review and summary financial statement 2010 1
it has been another significant 
year for our work on the 
environment and within local 
communities as we grow our 
customers increasingly look to 
tesco to take the lead in these 
areas – and we are 
in january we opened the world’s 
first zerocarbon store at ramsey 
in cambridgeshire – the latest 
step in our journey to reduce the 
carbon footprint of our business 
over the past year we have made 
significant progress towards 
our longterm goals by reducing 
our emissions by 78 on our 
baseline 20067 store and 
distribution porfolio
this year we donated over 
£60 million to charities – once 
again exceeding our target to 
give the equivalent of 1 of our 
profits to good causes 
these good results are testament 
to the hard work of our people 
the tesco team is now 472000 
strong – and we remain united by 
our goal to improve the shopping 
trip for our customers i would 
like to thank all our people for 
their hard work which i know will 
continue in the year ahead
david reid
chairman
we have continued to grow 
sales profits and market share 
over the past year we’ve also 
significantly strengthened our 
balance sheet
our acquisition in south korea 
is performing well and delivering 
excellent results we’ve opened 
our first three tesco lifespace 
shopping malls in china and we 
have made good progress building 
the infrastructure and developing 
new products for tesco bank
i am also pleased to announce 
that we again increased our 
dividend – for the 26th consecutive 
year this consistent track record 
of delivering dividend growth 
for shareholders is unrivalled in 
the ftse 100
the strong group results over 
the last year have been achieved 
through a constant focus on 
what matters most to customers 
in challenging times around the 
world a good example of this 
has been our renewed focus on 
rewarding loyalty – at home and 
abroad – which has been a great 
success with customers
in the uk we increased our 
clubcard investment with double 
points – giving customers even 
greater reward for their loyalty 
internationally we launched 
clubcard in three more countries 
during the year – in poland 
slovakia and thailand – and for 
the first time we now have more 
clubcard holders internationally 
than in the uk 
over the past decade tesco has transformed 
itself into a diverse international business – 
and by following our consistent strategy we 
are well positioned for longterm growth
i am pleased to report that 
the tesco team has once 
again delivered a good set of 
results – guided by experienced 
management who have steered 
the business through recessions 
before as markets around the 
world are emerging from this 
recession each part of our 
business is well positioned to 
pursue our strategy for growth 2 tesco plc annual review and summary financial statement 2010
01 02 03 04 05 06 07 08 09 2010
472
237
01 02 03 04 05 06 07 08 09 2010
94
28
international
uk
a growth business
people
000s
472000
sales area
m sq ft
94m sq ft
01 02 03 04 05 06 07 08 09 2010
94
28
international
uk tesco plc annual review and summary financial statement 2010 3
our position amongst the leading global retailers  
hasn’t happened by chance for well over a decade 
our longterm strategy has been delivering strong 
and consistent growth 
a growth business
total shareholder return group sales
£625bn
operating profit
£35bn
01 02 03 04 05 06 07 08 09 2010
625
228
01 02 03 04 05 06 07 08 09 2010
35
12
£bn £bn
0
50
100
150
200
250
300
350
400
t esco
ftse 100
eurofirst food  drug  index rebased to 100
09 2010 08 07 06 05 04 03 02 01 00
0
50
100
150
200
250
300
350
400
t esco
ftse 100
eurofirst food  drug  index rebased to 100
09 2010 08 07 06 05 04 03 02 01 00 4 tesco plc annual review and summary financial statement 2010
through diversification into new geographies 
new product areas and new services we’re 
developing a business for the future – with 
sustainable growth for years to come
for a new de cade
in 2000 tesco was operating in  
markets representing 8 of global  
gdp today it’s 53
53
today 65 of our selling space is 
outside the uk
65
we are committed to being carbon
neutral by 2050 and helping our 
customers halve their own carbon 
footprint by 2020
zero tesco plc annual review and summary financial statement 2010 5
for a new de cade
we’re starting to unlock the  
benefits of being a global group
•  global sourcing volumes have 
grown threefold in six years
•  clubcard is now in seven countries
•  ff clothing is in ten countries
•  group shared services centre 
in bangalore
global 
our flexible range of formats helps 
us to adapt our approach to local 
customers – wherever they are –  
from extra hypermarkets to express 
convenience stores
multiformat
customers expect to be able to shop 
where and when they want – as well  
as having great stores we’re the most 
profitable online grocery retailer  
in the world
no 1
48 of our space is less than 
five years old
48
we’ve learnt how to be ‘local’ in  
south korea our largest international 
business we have over 22000 
employees and just six uk expats
local 6 tesco plc annual review and summary financial statement 2010
tesco in numbers
group sales
£34bn
£625bn
stores 
worldwide 
underlying profit
before tax
people 
worldwide
countries
4811
472000
14
group sales 
group space 
by region
group profit
group sales 
£bn
2010
625
2009
594
2008
518
2007
466
2006
431
international
22
uk
71
uk 
£423bn
us 
£04bn
tesco bank 
£09bn
tesco bank 
7
europe
£100bn
asia
£91bn
uk 
351
us 
15
europe
295
asia
338
by remaining focused on our strategy and 
helping customers to save money tesco  
has weathered the economic storm well  europe
 
region revenue stores employees
  £m  
republic of ireland 2282 119 14158 
poland 1942 336 23655
hungary  1698 176 20079
czech republic 1287 136 12949
slovakia 891 81 8105
turkey 595 105 7630
total 8695 953 86576
uk
  revenue stores employees
  £m
total 38558 2482 287669
asia
 
region revenue stores employees
  £m
south korea 4162 305 22739 
thailand 2344 663 34775 
china 844 88 22668
malaysia 633 32 9423 
japan  449 142 4636
total 8432 1230 94241
india
in india we have an exclusive franchise agreement  
with trent the retail arm of the tata group we are  
supporting the development of their star bazaar format  
we plan to open our first cash and carry store by the  
end of the year
us
  revenue stores employees
  £m
total 349 145 3246 
 in 200910 there were an additional 362 people working 
in other locations such as international buying global hubs 
store numbers exclude one store in calais france
total revenue for europe excludes france
total revenue for asia excludes india
  revenues are sales excluding vat
tesco plc annual review and summary financial statement 2010 7
tesco around the world 8 tesco plc annual review and summary financial statement 2010
                core uk
nonfood
retailing services
international
community
our wellestablished and consistent strategy 
for growth has given the business momentum 
to grow through the downturn
sir terry leahy
chief executive tesco plc annual review and summary financial statement 2010 9
chief executive’s 
review
watch the video
wwwtescocomannualreview2010
resultspresentation
a solid performance in our core 
grocery operations we’re growing 
ahead of the industry as a whole 
and we have been less affected  
by falling inflation than the market 
at large
in nonfood we have made good 
progress in the uk we achieved a 
particularly strong performance in 
electricals entertainment and toys 
our clothing range is becoming 
an international success led by 
our ff range which is growing 
rapidly in our european markets 
and this year was launched in  
four countries in asia 
our retailing services have 
grown sales and profits once 
again we’ve also been building 
the platforms for future growth 
particularly in tesco bank which 
is making good progress in 
developing its own systems and 
people capabilities as well as 
working on a broader product 
range as it moves towards 
becoming a fullservice retail bank
in the same way that we’ve stuck  
to our strategy in other parts of  
the business we’ve also remained 
committed to our work on 
community and the environment 
in october we set ourselves three 
challenging longterm targets  
to become a zerocarbon business  
by 2050 to reduce the carbon 
impact of the products in our 
supply chain by 30 by 2020  
and to help our customers halve 
their own carbon footprint by 
2020 and we’re making good  
progress already
we’re delivering for all stakeholders 
an improved shopping trip for 
customers training and good 
careers for our staff growth and 
this year’s results show 
another solid performance 
from across the group by 
staying focused on doing the 
right thing for customers we 
have weathered the economic 
storm well and by remaining 
committed to our longterm 
strategy we are emerging  
from recession stronger –  
with good building blocks  
in place for future growth
each element of our strategy –  
uk international nonfood 
retailing services and community  
– is stronger now than this time  
last year 
in international our businesses 
have made good progress in a 
challenging global economic 
environment our strategy is 
working – we’ve grown sales 
profits and market shares and 
we’ve continued to invest in the 
drivers of future growth our 
performance in asia was particularly 
pleasing our business in europe 
held up well despite the obvious 
economic challenges and i believe 
the startup losses in our us 
business will now begin to reduce 
as fresh  easy establishes itself
our uk business had a good year 
by remaining focused on helping 
customers spend less and 
encouraging loyalty with an 
increased investment in clubcard 
our uk business has delivered  
innovation with our suppliers in 
local communities we’re supporting 
causes that matter to customers 
and we’re delivering good returns 
to shareholders
looking forward
the outlook for shareholder 
returns is encouraging we have a 
strong core uk business growing 
well our international businesses  
offer significant upside from 
recovery in the short term and 
maturity in the longer term our 
balance sheet is strengthening 
and we’re creating value through 
good property development
our positions in highgrowth 
international economies and  
nonfood meant we were always 
likely to face strong headwinds 
during the recession but it will  
be these parts of our business 
which will grow fastest in the 
recovery and beyond
i am confident that with the 
prospect of an improving global 
economy and recent investments 
in acquisitions and new selling 
space making a greater contribution 
going forward returns will 
improve significantly – starting 
this year
sir terry leahy 
chief executive core uk international
10 tesco plc annual review and summary financial statement 2010
longterm strategy
our international business  
has delivered a strong 
performance despite many  
of our markets feeling the 
impact of the global recession
sales
regional results
£194bn
sales up
88
sales up
42
new space
51m sq ft
new stores
324
trading profit
£24bn
the first tesco outside  
the uk opened just  
15 years ago – in hungary
15
asia £m
  
growth
sales inc vat 9072 197
trading profit 440 239
trading margin 52 02
 
europe £m
  
growth
sales inc vat 9997 07
trading profit 474 40
trading margin 54 02
 
us £m
  
growth
sales inc vat 354 727
trading profit 165 179
 
our marketleading uk 
business has continued  
to grow well by helping 
customers to spend less 
during the downturn
sales
trading profit up
uk results
1
£423bn
67
15m
active clubcard holders
 £m

growth
sales inc vat 42254 42
trading profit 2413 67
trading margin 62 01
  55 sales growth expetrol 
1  tescocom tesco telecoms and dunnhumby 
are included in the uk segment and tesco 
bank is excluded from the uk segment  
under ifrs 8
 
tesco has a wellestablished and 
consistent strategy for growth  
the rationale for the strategy is to 
broaden the scope of the business  
to enable it to deliver strong 
sustainable longterm growth by 
following customers into large 
expanding markets at home – such 
as financial services nonfood  
and telecoms – and new markets 
abroad initially in central europe 
and asia and more recently in the 
united states
the strategy has five elements reflecting our four 
established areas of focus plus tesco’s commitments  
on community and the environment
•  to be a successful international retailer
•  to grow the core uk business
•  to be as strong in nonfood as in food
•  to develop retailing services and
•  to put community at the heart of what we do
the strategy to diversify the business has been the 
foundation of tesco’s growth in recent years it was laid 
down in 1997 with the fifth element – community – being 
added in 2007 many of the new businesses that have 
been created and developed over the last 13 years as  
part of this strategy are now of significant scale and highly 
profitable – in fact we are now market leader in many  
of our markets outside the uk in 1997 our international 
business generated 18 of the group’s profits and we 
had only just entered the retailing services markets  
today these parts of our business represent 22 and  
16 of profits respectively
importantly the strategy has given the business momentum 
to grow well through the economic downturn by continuing 
to invest through the recession – in the customer offer in 
infrastructure and in our people – we are now well placed  
to grow faster and improve shareholder returns as the global 
economic environment improves retailing services community nonfood our people
tesco plc annual review and summary financial statement 2010 11
as we grow our business 
we’re developing our 
people to become leaders 
for the future
we’re continuing to lead  
the way in caring for the 
environment supporting local 
communities and encouraging 
healthy lifestyles
people store waste in the uk diverted 
from going directly to landfill
carbonfootprinted  
products in the uk  
and south korea
472000 100
500
ff sold in 10 countries
10
tescocom
grocery items 
delivered last year
1bn
we’ve made good progress 
this year in our retailing 
services businesses  
tesco bank tescocom 
telecoms and dunnhumby 
sales
tesco bank
£36bn
our general merchandise  
offer is growing in 
sophistication with improved 
ranges and prices and  
more global sourcing
sales
£131bn
1 in 4
we sell 1 in every 4 small
screen tvs sold in the uk
1000
tesco tech support  
advisors in uk stores
14
likeforlike clothing sales  
in central europe up 14
400000
new customer accounts  
over the past year
100
phone shops
4m
improved attendance 
levels put an additional  
four million hours into 
uk stores and depots
17
the first 17 students 
completed the tesco 
foundation degree  
in july
195000
of our people have a 
personal stake in tesco
50
of people on the boards  
of our international 
businesses are local to 
that country
270
community  
champions
810
new graduates recruited  
this year
62m
we helped 62 million people 
get active worldwide
100
100 of eligible own 
brand products now have 
nutritional labelling
26
profits up
sales up
62 trading profit up
176
tesco mobile customers
telecoms
2m
dunnhumby serves other 
retailers and manufacturers 
in 26 international markets
dunnhumby
26
 £m

growth
sales inc vat 42254 42
trading profit 2413 67
trading margin 62 01
  55 sales growth expetrol 
1  tescocom tesco telecoms and dunnhumby 
are included in the uk segment and tesco 
bank is excluded from the uk segment  
under ifrs 8
 
in shares awarded under 
shares in success scheme
£98m
working with
the carbon trust
compared
to ambient
juice
240g
co2
150g
per 250ml serving there are more 
clubcard holders 
internationally  
than in the uk 
12 tesco plc annual review and summary financial statement 2010
and resilience of our assets  
and local management teams  
and strengthens our confidence  
in our international strategy and 
longterm growth prospects 
in asia we have delivered a  
strong performance despite 
challenging economic conditions  
in the region we have grown 
sales and profits well – driven  
by new space and the excellent 
performance of the stores 
acquired in south korea in 2008 
which are now profitable 
europe overall delivered a robust 
performance against strong 
economic headwinds in the form 
of increasing unemployment and 
price deflation by reducing costs 
and lowering prices for customers 
and by continuing to invest in new 
space we have made market share 
gains across our markets
a good example is ireland where 
we have made substantial 
changes to our business which 
was facing the dual challenge  
of a severe recession and cross
border trading by integrating 
more of our international brand 
buying with our uk business we 
have been able to reduce the 
prices of 12500 products by an 
average of around 20 
in the united states fresh  easy 
has been making good progress 
despite prolonged weakness in the 
california nevada and arizona 
economies losses were broadly 
in line with guidance and reflect 
the fact that fresh  easy has 
been built with the infrastructure 
to support hundreds of stores 
although we do not expect losses 
to be much lower in 201011 we 
believe they have now peaked
in international we have 
delivered a resilient performance 
in the face of challenging 
economic headwinds our 
businesses have made good 
progress – delivering for 
customers today and at the 
same time investing in the 
drivers of future growth  
our strategy is working –  
and we ended this year 
stronger than we started it
each of our businesses has 
adapted itself to the demands of 
its local market – with strong local 
management teams finding ways 
to lower costs and deliver great 
value for customers increasingly 
our international businesses are 
also utilising the scale and skill  
of the tesco group – with more 
international sourcing discount 
brands now in seven markets  
ff clothing now in ten countries 
clubcard introduced in seven 
countries with more clubcard 
holders internationally than in the 
uk – and the tesco operating 
model sharing our global best 
practice to the benefit of all  
our businesses
with clear signs that our 
international markets are starting  
to recover we are planning to 
resume a faster pace of new  
space opening in the coming year 
in 200910 we opened 51m sq ft  
of new space and in 201011 we 
will open 85m sq ft in addition  
to nine shopping malls in  
china the performance of our 
international businesses through 
this severe recession has provided 
reassurance on the quality  
international our international business has delivered  
a strong performance despite many  
of our markets feeling the impact of the 
global recession
lifespace – our unique approach in china
the size and scale of china provides 
unique challenges for a retailer but also 
offers a huge opportunity for a business 
prepared to show flexibility and vision 
our strategy is to expand into less 
developed second and third tier cities 
by opening hypermarkets in leading 
shopping malls we’ve found it hard to 
find locations with the right facilities in 
some cities – giving us an opportunity 
to develop our own malls to ensure 
they are the right size location and 
design to meet the needs of the new 
chinese consumer
during the year we opened our first 
three tesco lifespace shopping malls  
in fushun pictured qingdao and 
qinhuangdao and we will open nine 
more this year each mall comprises 
approximately 500000 sq ft of retail 
space over five floors and is a one 
stop destination providing shopping 
including a 100000 sq ft tesco 
hypermarket entertainment dining 
and leisure 
we are partnering with investors to share 
the capital commitment on some of 
these projects enabling us to roll out 
more sites faster tesco plc annual review and summary financial statement 2010 13
“ i get special 
  offers with my 
  member card”
t esco 
works  
 for me
watch the video
wwwtescocomtescoworksforme
ji  
tesco customer
shanghai china 14 tesco plc annual review and summary financial statement 2010
kevin and allan  
tesco customers
east ham and 
islington
“  t esco express – 
  it’s the easiest thing  
  at lunchtime”
watch the video
wwwtescocomtescoworksforme
t esco 
works  
 for us tesco plc annual review and summary financial statement 2010 15
customers earned 
£550m in clubcard 
vouchers
clubcard is our unique way of saying 
thank you to our customers for 
shopping with us launched in 1995 
clubcard now has 15 million active 
members in the uk clubcard not only 
rewards our customers for their loyalty 
but it also provides us with valuable 
insight into changing shopping patterns 
by monitoring this data and spotting 
trends early we’re able to respond 
quickly and ensure that we’re always 
providing customers with what they 
want when and where they want it
this year clubcard became even more 
rewarding by increasing our investment 
with double points customers earned 
£550 million in total in vouchers 
double points has encouraged more 
customers to sign up a clubcard is  
now used with a higher proportion  
of transactions than before and 
clubcard – 15 years of loyalty 
18 more uk households are 
redeeming vouchers than a year ago
the knowledge and expertise of 
operating clubcard – combined with 
insight and analysis from dunnhumby –  
is now being adopted across our 
international businesses we now have 
clubcard in seven of our international 
markets – in fact we now have more 
clubcard holders overseas than in  
the uk
quality – particularly in fresh food  
– remains important to customers 
even in tough times and as we 
emerge from recession this will 
become even more important 
that’s why we have been investing 
in our fresh food offer with a  
wideranging change programme 
improved technical standards 
additional specialist staff training 
closer relationships with our 
suppliers and significant changes  
to the way we merchandise some 
key products are helping us 
deliver a stronger range and 
better shopping experience for 
customers these and other 
initiatives helped tesco win the 
‘fresh produce retailer of the 
year’ award in 2009
transactions continue to keep us 
ahead of the industry on customer 
measures of checkout service we 
trained more than 200000 staff  
to help them respond better to 
customer needs and our ‘every 
comment helps’ initiative which 
encourages customers to give 
instant feedback via text or email 
has given us the benefit of 60000 
customer comments to help us 
improve our offer and service 
tesco’s diverse and adaptable 
range allows us to offer a wide 
choice for every customer whatever 
their budget through the recession 
we have helped customers with 
lowerpriced ranges such as 
discount brands and market value 
and we have also offered them 
affordable treats such as the finest 
restaurant collection ready meals 
which have been very popular  
we continue to innovate our range 
with over 2600 new or improved 
ownlabel food lines launched  
this year
our strategy of earning 
customers’ loyalty by helping 
them to spend less – with low 
prices and affordable new 
products such as the discount 
brands – deflated sales growth 
initially but it was the right 
thing to do for customers 
by encouraging and rewarding 
loyalty – through an increased 
investment in clubcard – we have 
maintained steadier sales growth 
during the year than the industry 
as a whole which has seen 
significant slowdown with the 
steep decline in inflation
whilst focusing on lowering prices 
and offering great promotions  
has been a real priority during the 
recession delivering for customers 
is also about providing an ‘every 
little helps’ shopping trip that’s 
why we have continued to invest 
in availability service range  
and quality
we understand how important  
it is to our customers that their 
favourite items are available every 
time they shop over the past year 
we have introduced a number of 
new initiatives to improve stock 
management and reduce further 
the number of gaps on our shelves 
by developing more efficient 
ordering systems introducing better 
instore monitoring processes and 
changing the way we store our stock 
we have reduced evening gaps in 
fresh food by 18 
we’ve also stayed ahead of our 
competitors on key customer 
service measures our oneinfront 
initiative – where if there is more 
than one customer queuing at a 
single checkout we open another – 
and increased investment in self
service checkouts which now 
account for a quarter of all 
core uk our marketleading uk business has 
continued to grow well by helping customers  
to spend less during the downturn 16 tesco plc annual review and summary financial statement 2010
ff – a global brand
our ambition is to make ff a  
leading global fashion brand offering 
unbeatable value for money not 
compromised by quality design  
or provenance
ff launched in the uk in 2001 and 
has expanded rapidly since then with 
sales last year of £540 million in the  
uk – supported by the launch of our 
online clothing site in october 
ff launched in central europe in 2008 
and we’re already making excellent 
progress ff is rapidly becoming 
established in the region with customer 
awareness of the brand growing from 
34 to 61 in the last year 
across our markets in central europe 
tesco is already one of the largest 
clothing retailers in fact during the 
year we sold more ff items – 
68 million – than the combined 
populations of our four countries in  
the region poland hungary czech 
republic and slovakia 
we’re now building on the success in 
the uk and central europe to launch 
ff across our asian markets this year 
we launched in china malaysia south 
korea and thailand 
as with any brand ff can’t afford to 
stand still which is why we’re broadening 
the brand’s appeal with new ranges – 
ff couture and ff jewellery
•  wwwtescocomclothing 
combines familiar tesco labels – 
such as cherokee and ff – with 
new tesco lines offered exclusively 
online plus a number of other 
brands it became one of the top 
ten most visited clothing websites 
within a few weeks of its launch
•  wwwtescocomentertainment 
has brought together for the 
first time our entire physical and 
digital entertainment offer in a 
new and easy to use onestop 
site customers can buy a cd 
dvd or game and a film or 
album download all in one 
transaction from the outset  
the new site has proved popular 
with customers
we are also bringing global scale 
and skill to our nonfood business 
for example in europe the use of 
joint buying for clothing – whereby 
95 of the supplier base in central 
europe is the same as ireland and 
the uk – enables us to reduce 
supply chain costs helping us to 
maximise quality whilst minimising 
prices for customers 
shopping habits are changing – 
customers want to buy online as 
well as from stores and catalogues 
– and many will use a combination  
of these to research before buying 
with an integrated multichannel 
approach we’re making it easy for 
customers whichever way they 
want to shop in addition to the 
15500 products available online 
through tesco direct we now  
have two new specialist websites 
launched in october 
by remaining focused on 
providing customers with 
excellent quality and value our 
nonfood business has been 
resilient through the downturn 
in some key categories we have 
made significant market share 
gains as more customers have 
been encouraged to try our  
nonfood range in the search  
for great value and as some 
competitors have felt the strain 
with our growing range instore 
customers are recognising the 
convenience of buying nonfood 
items with their weekly groceries 
rather than making a special trip  
to the high street our sales in toys 
for example continue to grow 
rapidly – up 25 this year
in entertainment products we’re 
reducing prices and differentiating 
our range by signing deals directly 
with film studios this year we 
signed a groundbreaking deal with 
dreamworks for the exclusive 
rights to the short animated film 
merry madagascar which sold over 
one million copies over christmas
in some areas such as electricals 
customers are looking for specialist 
impartial advice that’s why we 
now employ over 1000 specially 
trained tesco tech support 
advisors in our largest stores in the 
uk this team has helped tesco 
double turnover in electricals in the 
last four years we now sell one in 
every six microwaves in the uk and 
one in four smallscreen tvs 
nonfood our general merchandise offer is growing  
in sophistication with improved ranges and 
prices more global sourcing and a stronger 
online presence tesco plc annual review and summary financial statement 2010 17
t esco 
works  
 for me
“ everything is in one 
  location – i just bought 
  a washing line”
sasha with schmoo
tesco customer
friern barnet
watch the video
wwwtescocomtescoworksforme 18 tesco plc annual review and summary financial statement 2010
“ i have my cat
  insured with t esco 
  – they were very 
  reasonable” 
sue with lexi
tesco customer
muswell hill
watch the video
wwwtescocomtescoworksforme
t esco 
works  
 for me tesco plc annual review and summary financial statement 2010 19
tescocom – a leading online retailer
including both our grocery and nonfood 
offer tescocom is one of the largest 
online retailers in the uk with sales  
of more than £2 billion just as in our 
stores our success comes from listening 
to customers and a constant drive  
to ensure that we provide an online 
‘every little helps’ shopping experience
with more than a million active 
customers our online grocery business is 
the market leader and the most profitable 
business of its kind in the world it 
continues to grow strongly – last year  
we delivered over one billion items  
we have put ease of use at the heart of 
our online shopping trip – for example 
our ‘favourites’ feature which makes 
shopping online easier by using 
clubcard to remember a customer’s 
favourite instore and online purchases 
we also continue to innovate with our 
‘price match’ on any substituted 
products and our ‘shorter than we’d  
like’ code life guarantee
tesco direct extends the reach of  
our nonfood offer with over 15500 
products available to customers via the 
internet and catalogues customers 
can choose to have goods delivered  
to their home or they can pick them up 
at one of our 261 instore direct desks 
this year we relaunched our online 
entertainment site enabling customers 
to buy downloads alongside the 
physical product and we launched our 
online clothing website with a range  
of 2500 fashionable items of which 
1000 were exclusively online
year making good progress on its 
customer service offer growing 
sales by 28 and continuing on 
its path towards profitability
tesco telecoms
profit from our telecoms business 
grew driven primarily by tesco 
mobile which achieved a 14 
increase in customer numbers –  
to more than two million – in a 
declining prepay phone market 
tesco mobile also successfully 
entered the ‘pay monthly’ market 
this year and in december 
broadend its appeal further by 
becoming only the third uk 
operator to offer the iphone  
for which sales have been 
encouraging
we have made good progress  
in rolling out our instore phone 
shops with 105 open at year end 
and a further 100 planned by  
the end of this year phone shops 
are transforming our ability to  
sell products that require an 
assisted sale particularly contract 
mobile phones
also in 2009 we signed a wholesale 
broadband agreement with cable 
 wireless which will enable us to 
relaunch our broadband offer  
to customers in 2010 with higher 
bandwidth speeds and lower prices 
dunnhumby
this year marks dunnhumby’s 
20th anniversary in addition to 
supporting tesco’s clubcard in 
seven countries around the  
world dunnhumby serves other 
retailers and manufacturers in  
26 international markets in fact 
tesco now represents only around 
15 of its sales dunnhumby  
is growing fast – with profits  
up 28 in the year dunnhumby 
now touches the lives of over 
350 million consumers through  
its client relationships
following the announcement  
in july 2008 of our intention  
to take full ownership of tesco 
bank we set a target to grow 
the profitability of our retailing 
services businesses from a little 
under £400 million in 20078 to  
£1 billion this year we made 
good progress in attracting new 
customers and growing sales 
and profits while at the same 
time laying the foundations  
for further growth 
tesco bank
overall tesco bank has delivered 
a good performance in a challenging 
retail banking market growing 
profits by 13 to £250 million 
bad debt levels rose during the 
year but have now stabilised and 
throughout have remained below 
industry averages we grew the 
number of customer accounts by 
more than 400000 in the last 
year – to a total of more than 
62 million across all products 
we’ve made good progress in 
developing the systems we’ll need 
to operate tesco bank on a stand
alone basis selecting partners for 
both our banking and insurance 
platforms subject to regulatory 
approval we anticipate launching 
new savings products and 
mortgages by the end of financial 
year 201011 with current accounts 
to follow by the second half of 2011
tescocom 
our online businesses –  
including dotcom grocery and 
direct – delivered another strong 
performance achieving a 14 
increase in sales with profits  
rising 26 to £136 million 
the number of active customers 
in our online grocery business  
has grown to over one million and 
basket size has increased tesco 
direct also had another good  
retailing services we’ve made good progress this year  
in our retailing services businesses 20 tesco plc annual review and summary financial statement 2010
throughout the 
year we gave over 
£60m in donations 
to charities
the key to a lowcarbon world’ 
at that conference we committed 
ourselves to a new set of challenging 
longterm targets to become  
a zerocarbon business by 2050 
to reduce the carbon impact of 
products in our supply chain by 
30 by 2020 and to help our 
customers halve their own 
footprints by 2020
actively supporting local 
communities
throughout the year we gave  
over £60 million in donations to 
charities and contributions to 
community projects including 
causerelated marketing giftsin
kind staff time and management 
costs once again we have donated 
the equivalent of more than 1  
of our profits to good causes 
additionally including our charity 
of the year partnerships which go 
from strength to strength this year 
our staff raised over £7 million for 
charity across the group 
we have continued to roll out 
community champions right 
across the group community 
champions are staff members 
who dedicate paid hours to 
coordinate store activities in their 
local communities the champions 
support local charities organisations 
schools and causes that local people 
really care about we now have 
champions in seven countries 
buying and selling products 
responsibly
in 2009 over 3300 suppliers 
covering all our markets 
responded to our groupwide 
anonymous supplier survey – 
supplier viewpoint at least 90 
agreed that we pay on time  
we are professional we treat  
them with respect and we are 
committed to meeting customer 
requirements
we have launched our trading 
fairly programme and recruited 
our first ethical action managers 
in south africa and bangladesh 
who work with our local suppliers 
to improve conditions across  
the supply chain we have also 
introduced ‘trading fairly’  
awards for our produce and 
clothing suppliers which reward 
suppliers making particularly 
strong efforts to improve 
conditions for their employees
giving customers  
healthy choices
across the group we have exceeded 
our target of nutritional labelling on 
ownbrand products – we now label 
100 of eligible products – giving 
customers the tools they need to 
make healthy choices
as part of our strategy to encourage 
customers to lead more active 
lives we run a range of programmes 
around the world from aerobic 
competitions in thailand to charity 
‘runs for life’ in slovakia and  
the czech republic this year we 
succeeded in getting 62 million 
people active across the world
creating good jobs and careers
we are dedicated to creating 
good jobs wherever we are  
we will create 16000 new jobs 
this year including 9000 in the 
uk and 380 for the longterm 
unemployed
we are committed to being a 
responsible neighbour within 
our local communities and 
taking a leadership role on the 
environment this is something 
our customers expect and  
we believe is increasingly 
important for our growth
caring for the environment
over the past few years we have 
played a leadership role amongst 
large businesses in tackling 
climate change through our own 
actions and in collaboration with 
our customers suppliers ngos 
and governments around the world 
we have made great progress this 
year in reducing co
2
 emissions 
across our business globally 
emissions from our baseline 2007 
store and distribution centre 
portfolio have fallen by 78 over 
the past year and new stores and 
distribution centres built since 
20067 are on average emitting 
288 less co
2
 than their 
equivalents in 20067
we have delivered on our promise 
to divert 100 of store waste in the 
uk from going directly to landfill
we opened the world’s first  
zerocarbon supermarket in ramsey 
cambridgeshire in january this 
year deploying a range of energy
efficiency measures natural 
refrigeration and renewable 
energy technology
in 2007 tesco invested £25 million 
to create a new sustainable 
consumption institute sci  
at the university of manchester  
the sci aims to answer some  
of the fundamental questions 
about how to make a consumer 
society sustainable 
in october the sci held a 
conference to launch its first  
major report ‘consumers  
community we’re continuing to lead the way in  
caring for the environment supporting  
local communities and encouraging  
healthy lifestyles tesco plc annual review and summary financial statement 2010 21
julia with 
krystian
tesco customer
krakow poland
“  t esco is 
  environmentally 
  friendly”
watch the video
wwwtescocomtescoworksforme
t esco 
works  
 for me 22 tesco plc annual review and summary financial statement 2010
marcia
tesco employee
cheshunt
watch the video
wwwtescocomtescoworksforme
t esco 
works  
 for me
“ you are given 
  the opportunity to  
  go as far as you want” tesco plc annual review and summary financial statement 2010 23
‘noone tries 
harder for 
customers’
‘we treat people 
how we like to be 
treated’
despite the tough global market 
in 2009 we continued to invest  
in pay at the annual review we 
focused on our core rates and  
in a tough financial year our pay 
competitiveness improved in  
most markets
in many developing markets 
employees place most value on 
good basic pay and being paid 
fairly for overtime and these are 
our priorities in malaysia for 
example where there is no legal 
minimum wage the minimum a 
tesco employee will receive is 
30 more than the poverty line 
index in thailand this year we 
introduced a staff discount linked 
to clubcard
in the uk our reward package 
leads the market on pay and 
benefits we are one of the few 
ftse businesses to still have an 
open defined benefit pension 
scheme which is greatly valued  
by staff 
we are committed to providing 
opportunities for our people  
to get on and turn their jobs  
into careers last year we had 
more people on development 
programmes than ever before
the first 17 students to complete 
the tesco foundation degree 
graduated in july the foundation 
degree in retail – delivered  
and awarded by manchester 
metropolitan university – is a two
year development programme 
aimed at providing workfocused 
retail training to managers at tesco 
we have now have 60 people on 
the scheme and are working on 
ways to make it grow
we believe that even in difficult 
times it is essential to invest in 
future talent that’s why this year 
while many other businesses were 
cutting their graduate schemes 
we increased our graduate intake 
to 810 including 535 in asia 
we now have 480 people at 
director level in the business  
of these 50 work in our 
international business –  
a combination of local hires  
and people moving from the  
uk business 
we also understand the importance 
of increasing mobility as a global 
business we’re developing leaders 
with a global perspective and now 
have 34 of our directors with at 
least one year of experience 
outside their home country 
over the coming year we will  
be investing nearly £30 million  
in a purposebuilt training facility 
in south korea set to become  
our tesco academy hub for asia 
the new academy will help  
ensure that the development of 
our people in asia keeps pace with 
the rapidly growing business
we strive to provide an inclusive 
environment where all difference 
is valued people are able to be 
themselves enjoy coming to work 
and realise their full potential 
regardless of their gender marital 
status race age sexual orientation 
creed ethnic origin religion or 
belief or disability
our values are ‘noone tries 
harder for customers’ and  
‘we treat people how we like  
to be treated’ these values  
are interlinked and underpin 
everything we do at tesco  
we know that by managing  
our people well – in a culture  
of trust and respect – they  
will in turn try their hardest  
for customers 
by offering competitive pay and 
benefits and an opportunity to 
develop a longterm varied career 
with good training we are able  
to keep our people motivated 
committed and excited about 
working at tesco in the uk  
for example in our internal 
‘viewpoint’ staff survey this year 
we improved on 24 out of the  
25 measures and attendance 
levels improved again putting  
an additional four million hours 
into our stores and depots
our people are crucial to our 
success and it is essential that  
they feel rewarded for the work 
they do and supported in their 
development we offer good pay 
across all our businesses as well  
as benefits in each market that 
reflect employees’ priorities 
our people as we grow our business we’re developing 
our people to become leaders for the future 24 tesco plc annual review and summary financial statement 2010
summary report of the directors
principal activity and business review
the principal activity of the group is retailing and associated activities in the uk china the czech republic hungary the republic of ireland india japan 
malaysia poland slovakia south korea thailand turkey and the us the group also provides retail banking and insurance services through its subsidiary  
tesco bank the summary of the group financials is on pages 26 to 28
dividends
the directors recommend the payment of a final dividend of 916 pence per ordinary share to be paid on 9 july 2010 to members on the register at the close  
of business on 30 april 2010 together with the interim dividend of 389 pence per ordinary share paid in december 2009 the total dividend for the year will  
be 1305 pence compared with 1196 pence for the previous year an increase of 91
directors
details of the current members of the board are shown on the inside back cover
david reid lucy nevillerolfe david potts ken hydon and tim mason retire from the board and being eligible offer themselves for reelection at the annual 
general meeting agm ken hanna joined the board on 1 april 2009
corporate governance
tesco plc is committed to the highest standards of corporate governance 
the board considers that tesco plc complied in all respects with the combined code on corporate governance for the year ended 27 february 2010 with the 
exception of provision a32 in respect of which the company was not in compliance for part of the year
provision a32 requires that at least half of the board excluding the chairman should comprise nonexecutive directors determined by the board to be 
independent the board recognises the importance of a balanced board with an appropriate level of independence due to unexpected changes to the board in 
the previous year with the resignation of carolyn mccall and mervyn davies as nonexecutive directors the board was not in balance at the beginning of the year 
at this stage ken hanna’s impending appointment to the board had already been announced and he joined the board with effect from 1 april 2009 at which 
point the board became balanced and once again fully compliant with provision a32
a full corporate governance statement is contained in the annual report and financial statements 2010 
summary report of the directors on remuneration
 
remuneration policy
it is the role of the remuneration committee to determine and recommend to the board the remuneration policy for the chairman and executive directors 
tesco has a longstanding policy of valuing talent and experience and seeks to provide incentives for delivering high sustainable and profitable growth which 
leads to a strong increase in value for shareholders the remuneration strategy is tailored to reward the delivery of strong yearonyear earnings growth as well  
as sustained performance in the longer term
compliance
in carrying out its duties the remuneration committee gives full consideration to best practice the committee was constituted and operated throughout  
the year in accordance with the principles outlined in the listing rules of the financial services authority derived from the combined code on corporate 
governance the remuneration report complies with the disclosures required by the directors’ remuneration report regulations 2002
a summary of directors’ emoluments and interests is set out on page 25 the full remuneration report is provided in the annual report and financial 
statements 2010
independent auditors’ statement to the members  
of tesco plc
we have examined the summary financial statement 
which comprises the summary consolidated income 
statement summary consolidated balance sheet 
summary consolidated statement of comprehensive 
income summary consolidated cash flow statement 
and the summary directors’ remuneration report  
set out on pages 24 to 28
respective responsibilities of directors  
and auditors
the directors are responsible for preparing the 
summarised annual review and summary financial 
statement in accordance with applicable united  
kingdom law 
our responsibility is to report to you our opinion on  
the consistency of the summary financial statement 
within the summarised annual review with the full 
annual financial statements the directors’ report 
and the directors’ remuneration report and its 
compliance with the relevant requirements of section 
428 of the companies act 2006 and the regulations 
made thereunder 
we also read the other information contained  
in the summarised annual review and consider  
the implications for our statement if we become  
aware of any apparent misstatements or  
material inconsistencies with the summary  
financial statement the other information  
comprises only the other items listed on the  
contents page
this statement including the opinion has been 
prepared for and only for the company’s members  
as a body in accordance with section 428 of the 
companies act 2006 and for no other purpose  
we do not in giving this opinion accept or assume 
responsibility for any other purpose or to any other 
person to whom this statement is shown or into 
whose hands it may come save where expressly 
agreed by our prior consent in writing
we conducted our work in accordance with bulletin 
20083 issued by the auditing practices board  
our reports on the company’s full annual financial 
statements describes the basis of our audit opinions  
on those financial statements the directors’ report 
and the directors’ remuneration report 
opinion
in our opinion the summary financial statement is 
consistent with the full annual financial statements 
the directors’ report and the directors’ remuneration 
report of tesco plc for the year ended 27 february 2010 
and complies with the applicable requirements of 
section 428 of the companies act 2006 and the 
regulations made thereunder
pricewaterhousecoopers llp 
chartered accountants and statutory auditors 
london 5 may 2010 
notes
a  the maintenance and integrity of the tesco plc  
web site is the responsibility of the directors the 
work carried out by the auditors does not involve 
consideration of these matters and accordingly the 
auditors accept no responsibility for any changes 
that may have occurred to the full annual financial 
statements or the summary financial statement 
since they were initially presented on the web site
b  legislation in the united kingdom governing the 
preparation and dissemination of financial statements 
may differ from legislation in other jurisdictions tesco plc annual review and summary financial statement 2010 25
directors’ emoluments
fixed emoluments performancerelated emoluments
 
salary
£000
allowances
£000
benefits
2
£000
shortterm
cash
£000
shortterm
deferred shares
£000
longterm
3
£000
total
200910
£m
total
20089
£000
executive directors        
richard brasher 805 –  63  771 763 –  2402 2267 
philip clarke 805 –  38  771 763 324 2701  2720 
andrew higginson 805 –  56  771 763 329 2724  2754 
sir terry leahy 1398 –  115 1340 1784  583  5220  5102 
 tim mason – base salary
1
816 305 343 914 909 329  3616 3225 
 tim mason – supplement
1
200 –  – 225 224 –  649  560 
tim mason – total 1016  305  343 1139 1133 329  4265  3785 
laurie mcilwee 588  –  50 579 572  –  1789 91 
lucy nevillerolfe 589  –  69 579 572  –  1809  1606 
david potts 805  –  45 771 763  324 2708  2719 
nonexecutive directors        
charles allen 95  –  –  –  –  –  95  91 
patrick cescau 89  –  –  –  –  –  89  5 
rodney chase 135  –  –  –  –  –  135 129 
karen cook 77  –  –  –  –  –  77 73 
harald einsmann 77  –  –  –  –  –  77  73 
ken hanna
4
 79  –  –  –  –  –  79 –
ken hydon 95  –  –  –  –  –  95  91 
david reid chairman 610  – 67 –  –  –  677  657 
jacqueline tammenoms bakker 65  –  –  –  –  – 65  9 
total 8133  305  846  6721 7113 1889 25007 22172 
1  tim mason’s salary is made up of a base salary and a nonpensionable salary supplement shown separately allowances are made up of compensation payments for additional tax due on 
equity awards made prior to his move to the us tim mason’s benefits are made up of car travel medical tax related costs and services and free shares awarded under the all employee 
share incentive plan
2  with the exception of tim mason benefits are made up of car benefits chauffeurs disability and health insurance staff discount gymleisure club membership and free shares awarded 
under the all employee share incentive plan 
3  the longterm bonus figures relate to the additional 125 enhancements allocated in april 2009 and february 2010 on longterm awards under the old bonus scheme
4  ken hanna was appointed during the year the figure shown is from his date of appointment
 
disclosable interests of the directors including family interests
 
options held at
28 february 2009
1
or on appointment 
if later granted exercised
lapsed
exchanged
4
options held
at 27 february
2010
1 3
value realised
during 200910
£000
ordinary shares
at 27 february
2010
2
 
executive directors       
richard brasher 3684552 859323 1977885 521854 2044136 4782 1186704
philip clarke 3331548 863034 1012704 332773 2849105 4059 1811821
andrew higginson 3765901 857817 1441840 332773 2849105 4205 1586895
sir terry leahy 12558542 1608375 2419408 1108084 10639425 8300 7806736
tim mason 2641390 477969 1959870 0 1159489 3668 4134570
laurie mcilwee 384824 573043 214401 0 743466 232 237241
lucy nevillerolfe 1226627 597937 225607 181599 1417358 260 443091
david potts 3331548 864851 1014521 332773 2849105 4260 2559979
nonexecutive directors       
charles allen – – – – – – –
patrick cescau – – – – – – –
rodney chase – – – – – – –
karen cook – – – – – – –
harald einsmann – – – – – – 355984
ken hanna – – – – – – –
ken hydon – – – – – – 30093
david reid chairman – – – – – – 194080
jacqueline tammenoms bakker – – – – – – –
total 30924932 6702349 10266236 2809856 24551189 29766 20347194
1  options to acquire ordinary shares shown above comprise options held under the executive share option scheme discretionary share option plan save as you earn scheme and nil cost 
options under the performance share plan psp executive incentive plan eip and group new business incentive plan
2  ordinary shares shown in this table include shares held as part of incentive plans and shares held under a promise as part of the psp 
3 the exercise price of outstanding options ranges from 0p to 47375p
4  during the year a number of awards were reclassified from nil cost options to restricted shares after executive directors agreed to exchange awards already earned under incentive plans  
to crystallise the tax due full details can be found in the annual report and financial statements 2010 26 tesco plc annual review and summary financial statement 2010
group financials
these results are for the 52 weeks ended 27 february 2010 in the last full financial year we reported a 53week period for the uk republic of ireland and the 
united states us and a 52week period for the rest of the group growth rates in these results are expressed for the uk republic of ireland and us to coincide 
with the comparable 52 weeks last year
statutory numbers include the adoption of ifric 13 customer loyalty programmes all other numbers are shown excluding ifric 13 consistent with internal 
management reporting more information can be found in note 1 to the group financial statements in the annual report and financial statements
group sales including vat increased by 68 to £625 billion at constant exchange rates sales increased by 61 including petrol and 77 excluding petrol
underlying profit before tax rose to £3395 million an increase of 101 group trading profit was £3412 million up 123 on last year and group trading 
margin at 59 rose 25 basis points these were helped by the fact that tesco bank was fully consolidated in 2010 and accounted for as a joint venture for most 
of 2009
group operating profit rose by 107 to £3457 million group profit before tax increased 104 to £3176 million
on a statutory 52week basis compared to 53 weeks last year group operating profit rose by 91 to £3457 million and group profit before tax rose by 89 
to £3176m
cash flow and balance sheet tesco liquidity has improved significantly during the year through strong cash generation tight control of capex and working 
capital improvements arising from better inventory management net debt has consequently reduced by £17 billion to £79 billion
excluding the effects of currency fluctuations we expect to reduce net debt to £75 billion by the end of the 201011 financial year
the strength of our property backed balance sheet was further demonstrated with profitable market leading sale and leaseback transactions
group capital expenditure was £31 billion last year £47 billion this reduced level of spend was achieved whilst still delivering 8 growth in group selling 
space this year we plan to invest around £35 billion in capital expenditure
excluding tesco bank cash flow from operating activities totalled £54 billion £51 billion in 2009 including a £06 billion improvement in working capital
finance costs and tax net finance costs after net favourable ifrs adjustments of £103 million reduced to £314 million £356 million last year on a consistent 
52week basis a reduction in the underlying interest charge is expected next year total group tax has been charged at an effective rate of 264 last year 
267 we expect the tax rate in 201011 to be around 26
dividend underlying diluted earnings per share increased by 92 to 1662p in the second half calculated using a constant tax rate the board has approved a 
final dividend of 916p per share taking the fullyear dividend to 1305p this represents an increase of 91 on last year’s fullyear dividend which is in line with 
the growth in underlying diluted earnings per share at constant exchange rates the final dividend will be paid on 9 july 2010 to shareholders on the register of 
members at the close of business on 30 april 2010
property we are continuing to release value created through the longterm development of our property portfolio in the year we completed deals with total 
proceeds of £18bn and we expect to divest a similar amount this year the strong demand for these assets and the good yields achieved initial yields between 50 
and 52 for stores demonstrate the strong underlying value of our property and the strength of the tesco covenant profits from property in the year were £377m 
our property mix remains strong – over 70 of our property is freehold – supported by substantial new capital investment in freehold assets each year our latest 
property assets valuation of £346bn reflects recent firming yields across the market and confirms that our assets are worth well in excess of their book value
pension our awardwinning definedbenefit careeraverage pension scheme is an important part of our competitive benefits package which helps tesco recruit 
and retain the best people in the uk we have 160000 employees in the scheme as at february 2010 under the ias 19 methodology of pension liability valuation 
the scheme had a deficit on a posttax basis of £13bn compared to £14bn at the half year the last actuarial valuation of the scheme’s assets and liabilities 
showed a small and manageable deficit
return on capital employed we have continued to invest during the recession which has put pressure on returns in the short term but is enabling us to make 
good progress in all our markets during the financial year 2010 our posttax return on capital employed roce fell from 128 to 121
having raised roce from 102 in 2003 to 126 in 2006 we committed in april 2006 to increase roce a further 200 basis points to 146 we are 
reaffirming this commitment with confidence that with the prospect of an improving global economy and recent significant investments in acquisitions and new 
space making a greater contribution going forward returns will improve in the coming few years starting in 201011
the summary financial statement on pages 27 and 28 and the summary report of the directors on pages 24 and 25 are a summary of information in the 
annual report and financial statements 2010 this summary financial statement does not contain sufficient information to allow as full an understanding of 
the results of the group and state of affairs of the group and of its policies and arrangements concerning directors’ remuneration as is provided by the annual 
report and financial statements 2010
the directors’ report the financial statements and auditors’ report on those financial statements which is unqualified are contained in a separate publication 
entitled annual report and financial statements 2010 copies may be obtained free of charge by writing to
the company secretary tesco plc tesco house delamare road cheshunt hertfordshire en8 9sl
shareholders wishing to receive the annual report and financial statements as well as the annual review and summary financial statement in future years 
should write to this address the summary financial statement was approved by the board on 5 may 2010
sir terry leahy laurie mcilwee 
directors
  £151 million benefit from ias 32 and ias 39 fair value of derivatives partially offset by £48 million cost as a result of ias 19 pensions
  in 20089 roce on a 52week comparable basis was 127 on a 53week basis it was 128 restated for the impact of ifric 13 ifrs 2 and goodwill adjustments tesco plc annual review and summary financial statement 2010 27
summary group income statement
52 weeks ended 27 february 2010
 
2010
£m
2009
restated
£m
continuing operations  
revenue sales excluding vat 56910 53898
cost of sales 52303 49713
gross profit 4607 4185
administrative expenses 1527 1252
profit arising on propertyrelated items 377 236
operating profit 3457 3169
share of posttax profits of joint ventures and associates 33 110 
finance income 265 116
finance costs 579 478
profit before tax 3176 2917
taxation 840 779
profit for the year 2336 2138
attributable to  
owners of the parent 2327 2133
minority interests 9 5
  2336 2138
earnings per share  
basic 2933p 2714p
diluted 2919p 2696p
nongaap measure underlying profit before tax 
2010
£m
2009
restated
£m
profit before tax 3176 2917
adjustments for  
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements 151 88
ias 19 noncash group income statement charge for pensions 24 27
ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods 41 27
ifrs 3 amortisation charge from intangibles arising on acquisition  127 32
ifric 13 ‘customer loyalty programmes’ – fair value of awards 14 33
exceptional items  
ias 36 impairment of goodwill arising on acquisitions 131 –
restructuring costs 33 –
underlying profit before tax 3395 3124
  see note 1 accounting policies of the group financial statements in the annual report and financial statements 28 tesco plc annual review and summary financial statement 2010
group financials continued
summary group balance sheet
27 february 2010
 
2010
£m
2009
restated
£m
noncurrent assets 34258 32085
current assets including noncurrent assets held for sale 11765 13479
current liabilities 16015 17595
net current liabilities 4250 4116
total assets less current liabilities 30008 27969
noncurrent liabilities 15327 15063
net assets 14681 12906
equity attributable to owners of the parent 14596 12849
minority interests 85 57
total equity 14681 12906
  see note 1 accounting policies of the group financial statements in the annual report and financial statements
balance sheet net assets have increased by £1775 million to £14681 million noncurrent assets increased by £2173 million after charging depreciation and 
amortisation of £1384 million
group capital expenditure was £31 billion uk capital expenditure was £15 billion tesco bank capital expenditure was £01 billion total international capital 
expenditure rose to £15 billion £08 billion in asia £06 billion in europe and £01 billion in the us in the year ahead we forecast group capital expenditure to  
be around £35 billion
summary group cash flow statement
52 weeks ended 27 february 2010
 
2010
£m
2009
restated
£m
cash generated from operations 5947 4978
interest paid 690 562
corporation tax paid 512 456
net cash from operating activities 4745 3960
net cash used in investing activities 1877 5974 
cash flows from financing activities  
dividends paid 968 883
other net cash flows from financing activities 2639 4498
net cash from financing activities 3607 3615
  see note 1 accounting policies of the group financial statements in the annual report and financial statements
reconciliation of net cash flow to movement in net debt
52 weeks ended 27 february 2010
 
2010
£m
2009
£m
net decreaseincrease in cash and cash equivalents 739 1601
investment in tesco bank 230 –
elimination of net increase in tesco bank cash and cash equivalents 167 37
debt acquired on acquistion of homever – 611
transfer of joint venture loan receivable on acquisition of tesco bank – 91
net cash inflowoutflow from debt and lease financing 2780 4636
dividend received from tesco bank 150 –
increase in shortterm investments  81 873
increase in joint venture loan receivables 45 242
other noncash movements 249 759
decreaseincrease in net debt in the year 1671 3418
opening net debt 9600 6182
closing net debt 7929 9600
nb the reconciliation of net cash flow to movement in net debt note is not a primary statement and does not form part of the cash flow statement and forms part of the notes 
to the group financial statements 15 7 2 9 10 16 12 3 17 5 11 4 1 8 13 14 6 18
our board of directors
1 david reid 
nonexecutive chairman 63 
david reid became nonexecutive 
chairman on 2 april 2004 prior to his 
appointment he was deputy chairman  
of tesco plc and has served on the  
tesco board since 1985 david is a  
nonexecutive director of reed elsevier 
group plc and chairman of both  
kwikfit group and whizzkidz
2 rodney chase cbe
deputy chairman and senior  
nonexecutive director 66 
rodney chase was appointed a  
nonexecutive director on 1 july 2002 
 he is nonexecutive chairman of 
petrofac limited and a nonexecutive 
director of computer sciences 
corporation in los angeles nalco 
company in chicago and tesoro 
corporation in san antonio
3 sir terry leahy 
chief executive 53 
terry leahy became chief executive in 
1997 joining tesco in 1979 he held a 
number of marketing and commercial 
positions prior to being appointed to the 
board of tesco plc on 5 october 1992
4 richard brasher 
commercial and marketing director 48 
richard brasher was appointed to the 
board on 15 march 2004 he joined  
tesco in 1986 he has held a number  
of marketing commercial and store 
operations positions most recently  
nonfood commercial director
5 philip clarke
international and it director 49 
philip clarke was appointed to the board 
on 16 november 1998 prior to his 
appointment he held a number of roles  
in store operations commercial and 
marketing he is a nonexecutive director 
of whitbread plc
6 andrew higginson
chief executive of retailing services  
and group strategy director 52 
andrew higginson was appointed to the 
board on 17 november 1997 he is now 
chief executive of retailing services 
retaining his responsibilities for tesco 
group strategy he is chairman of tesco 
bank and a nonexecutive director of 
bskyb plc
7 tim mason
president and chief executive officer 
fresh  easy 52 
tim mason has been president and  
chief executive officer fresh  easy 
neighborhood market since january 
2006 he was appointed to the board  
on 16 february 1995 he joined tesco  
in 1982
8 laurie mcilwee
group finance director 47 
laurie mcilwee was appointed to the 
board on 27 january 2009 he joined 
tesco in 2000 as uk finance director  
and became distribution director  
in 2005 laurie is a chartered 
management accountant
9 lucy nevillerolfe cmg
corporate  legal affairs director 57 
lucy nevillerolfe was appointed to the 
board on 14 december 2006 she joined 
tesco in 1997 from the cabinet office 
she is deputy chair of the british retail 
consortium a nonexecutive director  
of the carbon trust and a member  
of the china britain business council  
the uk india business council and  
the corporate leaders group on  
climate change
10 david potts
retail and logistics director 52 
david potts was appointed to the board  
on 16 november 1998 he joined tesco  
in 1973 from 1997 he directed the 
integration of our businesses in northern 
ireland and the republic of ireland before 
returning to the uk in 2000 as director 
responsible for uk retail operations  
from 2004 david’s responsibilities have 
included the uk supply chain and the 
republic of ireland
nonexecutive directors
11 charles allen cbe
nonexecutive director 53
12 patrick cescau
nonexecutive director 61
13 karen cook
nonexecutive director 56
14 dr harald einsmann
nonexecutive director 76
15 ken hanna
nonexecutive director 56
16 ken hydon
nonexecutive director 65
17 jacqueline tammenoms bakker
nonexecutive director 56
18 jonathan lloyd
company secretary 43 tesco plc
tesco house
delamare road
cheshunt
hertfordshire en8 9sl
wwwtescocomannualreview2010
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Summary:
 watch the video
wwwtescocomannualreport2010
resultspresentation
8 tesco plc annual report and financial statements 2010
chief executive’s
review
business by 2050 to reduce the 
carbon impact of the products in our 
supply chain by 30 by 2020 and to 
help our customers halve their own 
carbon footprint by 2020 and we’re 
making good progress already
we’re delivering for all stakeholders 
an improved shopping trip for 
customers training and good careers 
for our staff growth and innovation 
with our suppliers in local communities 
we’re supporting causes that matter 
to customers and we’re delivering 
good returns to shareholders
looking forward
the outlook for shareholder returns 
is encouraging we have a strong 
core uk business growing well our 
international businesses offer significant 
upside from recovery in the short 
term and maturity in the longer term 
our balance sheet is strengthening 
and we’re creating value through 
good property development
our positions in highgrowth 
international economies and nonfood 
meant we were always likely to face 
strong headwinds during the recession 
but it will be these parts of our business 
which will grow fastest in the recovery 
and beyond
i am confident that with the prospect 
of an improving global economy and 
recent investments in acquisitions and 
new selling space making a greater 
contribution going forward returns 
will improve significantly – starting 
this year
sir terry leahy
chief executive
each element of our strategy – uk 
international nonfood retailing 
services and community – is stronger 
now than this time last year 
in international our businesses have 
made good progress in a challenging 
global economic environment our 
strategy is working – we’ve grown 
sales profits and market shares and 
we’ve continued to invest in the drivers 
of future growth our performance 
in asia was particularly pleasing 
our business in europe held up 
well despite the obvious economic 
challenges and i believe the startup 
losses in our us business will now 
begin to reduce as fresh  easy 
establishes itself
our uk business had a good year 
by remaining focused on helping 
customers spend less and encouraging 
loyalty with an increased investment 
in clubcard our uk business has 
delivered a solid performance in our 
core grocery operations we’re growing 
ahead of the industry as a whole and 
we have been less affected by falling 
inflation than the market at large
in nonfood we have made good 
progress in the uk we achieved a 
particularly strong performance in 
electricals entertainment and toys 
our clothing range is becoming an 
international success led by our ff 
range which is growing rapidly in our 
european markets and this year was 
launched in four countries in asia 
our retailing services have grown 
sales and profits once again we’ve 
also been building the platforms for 
future growth particularly in tesco 
bank which is making good progress 
in developing its own systems and 
people capabilities as well as working 
on a broader product range as it 
moves towards becoming a full
service retail bank
in the same way that we’ve stuck 
to our strategy in other parts of 
the business we’ve also remained 
committed to our work on community 
and the environment in october we 
set ourselves three challenging long
term targets to become a zerocarbon 
this year’s results show another 
solid performance from across 
the group by staying focused 
on doing the right thing for 
customers we have weathered 
the economic storm well and by 
remaining committed to our long
term strategy we are emerging 
from recession stronger – with 
good building blocks in place 
for future growth