annual report and financial statements 2009 tesco plc
wwwtescocomannualreport09
tesco plc
tesco house
delamare road
cheshunt
hertfordshire en8 9sl
value
travels
annual report and 
financial statements 2009 printed on revive a 100 recycled 
paper with fsc certification 
printed by ctd using an alcohol 
free process the printing inks  
are made with nonhazardous 
vegetable oil from renewable 
sources over 90 of solvents and 
developers are recycled for further 
use and recycling initiatives are in 
place for all other waste associated 
with this production ctd are fsc 
and iso 14001 certified with strict 
procedures in place to safeguard the 
environment through all processes 
designed and produced by  
35 communications
 go online
every year more and more
information is available for 
our shareholders staff and 
customers online
 go online
every year more and more
information is available for 
our shareholders staff and 
customers online
introduction 
financial highlights 2
chairman’s statement 3
tesco at a glance 4
chief executive’s qa 5
report of the directors  6
business review 6
longterm strategy 6
markets served and business model 7
international 8
core uk 12
nonfood 16
retailing services 20
community 24
people 28
resources and relationships 30
group performance 32
key performance indicators 36
risks and uncertainties 38
financial review 40
general information 41
our board of directors 42
corporate governance 44
directors’ remuneration report 50
financial statements  65
statement of directors’ responsibilities 66
independent auditors’ report to the
 members of tesco plc 67
group income statement 68
group statement of recognised income and expense 69
group balance sheet 70
group cash flow statement 71
reconciliation of net cash flow to movement in 
 net debt note 71
notes to the group financial statements 72
five year record 124
tesco plc – parent company financial statements 126
independent auditors’ report to the members 
 of tesco plc 136 1 welcome to tesco plc
tesco plc annual report and financial statements 2009
value travels – tesco is about 
creating value for customers  
to earn their lifetime loyalty  
we understand that this is more 
important than ever as our 
customers around the world  
are looking to us to help them 
spend less 
so whether they are looking for 
lighter meal options clothing 
mobile phone tariffs or savings 
accounts they can trust tesco  
to deliver great value
more information is available online at  
wwwtescocomannualreport09 2
tesco plc annual report and financial statements 2009
financial hig hlig hts
151
group sales 
including vat
         2009 
      2009 52 weeks  
      53 weeks proforma 2008
group sales £m including value added tax      59426  58588 51773
group revenue £m excluding value added tax      54327  53552 47298
underlying group profit before tax £m
†
      3128  3093 2846
group profit before tax £m      2954  2920 2803
underlying diluted earnings per share p

      2892 – 2702
dividend per share p      1196 – 1090
group enterprise value £m market capitalisation plus net debt      35907 –  37656
return on capital employed      130
‡
 –  129
§
 sales  profit growth reported on a consistent basis 12 months versus 12 months for china 
 growth in underlying diluted eps has been adjusted to reflect a constant tax rate year on year growth was 70 on a statutory basis
†  adjusted for ias 32 ias 39 the net difference between the ias 19 income statement charge and ‘normal’ cash contributions for pensions ias 17 ‘leases’ impact of annual uplifts  
in rent and rentfree periods and the ifrs 3 amortisation charge on intangible assets arising on the acquisition of tesco personal finance tpf
‡ excluding acquisitions of tpf and homever india startup costs and after adjusting for assets held for sale
§  using a ‘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
100
underlying group profit 
before tax†
55
group profit before tax
110
underlying diluted earnings
per share
26
diluted earnings per share
97
dividend per share
good financial management and leading market 
positions have served us well this year in the 
face of a challenging consumer environment 
we will continue to pursue our longterm 
strategy which will put us in an even stronger 
position once our markets emerge from the 
economic downturn
all growth figures reported on a 53week basis 3
tesco plc annual report and financial s tatements 2009
ch airman’s statement
i am pleased to report that despite the extraordinary economic 
environment we find ourselves in tesco has once again delivered 
a good set of results this demonstrates that tesco is coping well 
with the downturn despite the challenging conditions around 
the globe we have remained resilient and are growing as fast as 
any major international retailer
we’ve made several new appointments to the t esco board in the year 
including l aurie mcilwee who takes on the role of g roup finance 
director replacing andrew higginson who has been appointed c hief 
executive of retailing s ervices whilst retaining his responsibility for 
g roup s trategy 
l aurie has been with t esco for nine years and has a very strong track
record in both finance and operations in his most recent role as 
distribution director l aurie was responsible for transforming our 
network – a tremendous achievement his appointment shows once 
again how careful management succession planning works in t esco 
and i have every confidence he will do an outstanding job as our g roup 
finance director 
we’ve also appointed three strong new n onexecutive directors in 
recent months – jacqueline t ammenoms bakker a former director 
g eneral at the ministry of t ransport in the n etherlands who has also 
held senior positions at mckinsey  c o and s hell patrick c escau 
former ceo of unilever and ken hanna c hairman of inchcape plc and 
former c fo of c adbury t hey bring with them a wealth of international 
commercial and financial experience which will further strengthen our 
board and support our plans for the longterm growth of the g roup
whilst the downturn has presented many challenges it has also opened 
up some opportunities we have made two very significant acquisitions 
this year
we have acquired the remaining 50 of t esco personal finance from 
royal bank of s cotland a move which will enable us to develop an 
already very successful financial services offer towards our objective  
of becoming a fullservice retail bank
in s outh korea we purchased 36 hypermarkets from eland mostly in 
s eoul which has put us in a very strong position to challenge for market 
leadership in one of our most successful markets
most of our growth has again been organic – we’ve opened nine  
million square feet of new space this year excluding the acquisition in 
s outh korea in august we announced our entry into india with plans 
to establish a cash  carry operation and a franchise agreement with 
t rent to support their s tar bazaar hypermarkets t his complements our 
entries into c hina and the united s tates giving us access to another of 
the world’s most important economies
whilst many of our customers are focused on managing their shopping 
budgets it is still important to them that we behave responsibly in the 
communities we serve we now have a c ommunity plan for each 
country and earlier in the year we launched our c ommunity promises 
t hese are actively supporting local communities buying and selling 
our products responsibly caring for the environment giving customers 
healthy choices and creating good jobs and careers
we’ve made some great progress this year – we’ve opened our 
greenest ever store at c heetham hill in manchester with a carbon 
footprint that is 70 smaller than a typical store – bringing our total 
number of green stores across the g roup to 37 t his will be a blueprint 
for how we build stores in the future
o ur work to encourage customers to make greener decisions is going 
well t hrough green c lubcard points we have reduced the number of 
singleuse carrier bags in the uk by 50 and we are finding innovative 
ways to use green c lubcard elsewhere – for example by rewarding 
customers for cycling to our stores in s outh korea
i’m also pleased to announce that in the uk we have once again broken 
our ‘c harity of the year’ record raising a remarkable £62 million for 
marie c urie c ancer c are
although it was impossible to predict the scale of the global economic 
slowdown t esco has responded well by adjusting our business to this 
environment o ur 470000 strong team have done a fantastic job – 
staying close to customers and reacting quickly to their changing needs 
around the world
i am confident that this hard work will continue as we press on with our 
longterm strategy which i believe will put us in an even stronger 
position once economies start to recover
david reid chairman 36
33
30
uk 
europe
asia 
us 
1
2005 2006 2007 2008 2009
370
431
466
518
59 4
india
south korea
china
uk
poland
slovakia       
japan
malaysia
czech republic
hungary
us
t urkey
thailand
republic 
of ireland
4 t esco at a glance
tesco plc annual report and financial statements 2009
£594bn
group sales
no 3
 third largest grocery retailer in the world
470000
people
4331
stores worldwide
14
countries
geographic locations
market staff numbers store numbers
china 19452 70
czech republic 12677 113
hungary 21356 149
japan 4007 135
malaysia 9872 29
poland 23569 319
rep ireland 13764 116
market staff numbers store numbers
slovakia 8286 70
south korea 20626 242
thailand 38166 571
turkey 7025 96
uk 286394 2306
us 2583 115
group sales £bn group space by region
in 20089 there were an additional 731 people working in other global locations such as international buying hubs
store numbers exclude one store in calais france india
south korea
china
uk
poland
slovakia       
japan
malaysia
czech republic
hungary
us
t urkey
thailand
republic 
of ireland
5
tesco plc annual report and financial s tatements 2009
ch ief exec utive’s q a
these actions combined with our core strengths – in selling  
food and everyday essentials owning our own property and 
having a broad business base – are helping us to cope well with  
the effects of the downturn we are also pleased with the early 
performance of tesco personal finance under our ownership and 
with the converted homever stores in south korea as a result  
we have delivered a solid sales and profit performance both in  
the uk and internationally whilst continuing to invest in our long
term strategy for growth we have made a good start to the new 
financial year and i am confident tesco will continue to make good 
progress even in the current global economic environment 
q it has been a very tough time for the economy but the good 
news is it has been very sturdy growth for tesco how have you 
managed that
a it has been a very good year and mainly of course that is the dividend of 
having a longterm consistent strategy we’ve invested into this slowdown 
and that has given us good momentum through the recession we are 
growing fast in our overseas countries laying out networks of stores 
and we are still opening new space in the uk as well in addition to that 
of course people have to eat – we’re blessed in that sense so we don’t 
face the worst of the slowdown we’ve also adjusted our business both in 
the uk and around the world to make sure that we offer better value 
and better ranges which keeps customers in the stores and helps 
volume in the business 
q you’re very much in the front line when it comes to knowing 
what customers are thinking how they are behaving are there 
any signs that we have perhaps reached the bottom of the 
recession what lies in store for the economy do you think
a it is very fluid at the moment – changes are happening over weeks  
so i don’t think you can see any clear direction yet what i would say is 
that it looks as if things are stabilising on the consumer front in the uk 
the lower interest rates help as do the lower fuel prices and energy  
prices and coupled with the work that we have done in reducing food 
prices for customers – this helps rebuild confidence in c entral europe  
the economies had a big decline early in the summer and the autumn  
of 2008 – that feels as if it has levelled out which is encouraging in asia  
it is too early to say t heir decline came later with the destocking of the 
supply chain and so for them it really hit around december t hese are 
strong economies and the destocking will end and we’ll start to get  
restocking in the pipeline which will help 
q priorities change during a recession – for business and 
customers alike is there a risk that the focus on green and 
corporate responsibility slips somewhat
a it is important that it doesn’t and it’s one of the reasons we lay  
such emphasis within t esco on our ‘s teering wheel’ – our balanced 
scorecard – so that whatever is going on in the outside world we  
keep focused on the things that matter long term o f course price  
and trading is important at the moment but there are big longterm 
objectives around community and the environment that we have got  
to stay committed to t esco has to help customers change from mass 
consumption to green consumption o n climate change we’ve got to 
learn how to run this business on 80 less carbon we have got great 
plans and we are making great progress o f course it helps the business 
too – not wasting things is a very good habit at a time like this and one 
of the reasons our energy bills are down £100 million this year is because 
of all of the green initiatives we’ve been working on over several years 
q bearing in mind what you have seen in the us so far are you 
pleased with the progress 
a i am yes because there’s lots to be pleased about c learly nobody  
would have chosen to open into the scale of recession that we’ve seen 
there which is particularly stiff in the western united states but the 
customers love the stores and they appeal right across the income range 
and the age range and that bodes very well for their longterm appeal 
fresh  easy is more than just a niche retailer – it’s a new and different 
form of retailing c ustomers obviously like the fresh foods and they  
like the ownbrand products but also are increasingly recognising the 
tremendous prices that are on offer and of course that is very important 
at the moment t he operation is very good and it’s strong we really 
have created the business that we set out to create in terms of the 
highest freshest quality in the market at the best prices in the local 
neighbourhood we are expanding the business at a good rate and 
morale is high 
q what excites you most about the year ahead
a first of all we’re growing – and we’re serving more customers t hey 
have needs they are just different needs at a time like this it’s what 
t esco is for – to stay close to customers and change as their needs 
change t hat’s got to take a different form in different categories or in 
different parts of the world it’s important you have strong confident 
local leadership teams who take the responsibility to make those 
changes i believe that is happening if you look at our businesses – 
whether it’s nonfood financial services or in our international markets 
– we are growing strongly and we are growing market share t here’s 
more that we have to do from place to place but confidence is high 
people know what they have to do and have the authority to do it 
at a time when customers everywhere are 
feeling the economic strain we are responding  
to their changing needs in all our markets by 
lowering prices introducing more affordable 
products and offering even sharper promotions
sir terry leahy chief executive
to see a full video interview go to
wwwtescocomannualreport09presentations 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
activel y
supporting local
communities
people
an opportunity
to get on
an interesting 
job
a manager who 
helps me
to be treated 
with respect
finance
manage our
investment
maximise 
profit
grow sales
treat people how we like to be treated
noone tries harder for customers
6 repo rt o f t he directo rs
t he directors present their annual report to shareholders on the  
affairs of the g roup and c ompany together with the audited financial 
statements of the c ompany for the 53 weeks ended 28 february 2009
longterm strategy
t esco has a wellestablished and consistent strategy for growth which 
has allowed us to strengthen our core uk business and drive expansion 
into new markets t he rationale for the strategy is to broaden the scope 
of the business to enable it to deliver strong sustainable longterm 
growth by following the customer into large expanding markets at 
home – such as financial services nonfood and telecoms – and new 
markets abroad initially in c entral europe and asia and more recently 
in the united s tates
t he strategy to diversify the business was laid down in 1997 and has been 
the foundation of t esco’s success in recent years t he new businesses 
which have been created and developed over the last 12 years as part 
of this strategy now have scale they are competitive and profitable – in 
fact we are now market leader in many of our markets outside the uk
t he g roup has continued to make good progress with this strategy which 
has five elements reflecting our four established areas of focus and  
also t esco’s longterm commitments on community and environment 
importantly the momentum which it has given the business has allowed 
the g roup to continue to grow well through the economic downturn
t he objectives of the strategy are
• 	 t o 	 b e 	 a 	 s u c c e ss f u l 	 in t e r n a t i o n a l 	 r e t a i le r 
• 	 t o 	 g r o w 	 t he 	 c o r e 	 u k 	 b u s ine ss
• 	 t o 	 b e 	 a s 	 st r o ng 	 in 	 no n  f o o d 	 a s 	 in 	 f o o d 
• 	 	 t o 	 d e v e lo p 	 r e t a i ling 	 s e r v i c e s 	 – 	 s u c h 	 a s 	 t e s c o 	 p e r s o n a l 	 f in anc e 	
t elecoms and tescocom and
•	 to 	 p ut 	 c ommunit y 	 at 	 t he 	 hear t 	 of 	 w hat 	 we 	 do 
in 20089 t esco has again delivered a good performance with all  
parts of the strategy contributing we have sustained solid growth in 
the uk and coped well with the challenges of recession and improving 
competitors in our international operations we have made good 
progress completing a large programme of new store openings and 
carefully adjusting our businesses locally to the effects of the global 
economic slowdown we have also acquired 36 hypermarkets in  
s outh korea our largest market outside the uk in a move which has 
significantly strengthened our market position there and begun the 
groundwork for a wholesale cash  carry business in india 
in nonfood we continue to grow sales and market share and maintain 
profitability against a background of a declining general retail market 
and we have seen excellent growth from t esco direct which extends 
our reach in selling a broad range of products on the internet and via  
this business review analyses 
the performance of the tesco 
group in the financial year  
ended 28 february 2009 it also 
explains other aspects of the 
group’s markets results and 
operations including strategy 
and risk management
business review
we operate a balanced scorecard approach to managing the 
business that is known 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 purpose is to ensure tesco puts 
appropriate balance into the tradeoffs that need to be made  
all the time between the main levers of management – such as 
delivery of customer metrics operations measures and financial 
measures it 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 well and operate 
efficiently and effectively shareholders’ interests will always be 
best served by the inevitable outputs of those – growth in sales 
profits and returns
our longterm strategy
international
tesco is an international retailer and wherever we operate we 
focus on giving local customers what they want page 8
core uk
the uk is our biggest market and the core of our business  
we aim to provide all our customers with excellent value and 
choice page 12
nonfood
our aim is to be as strong in nonfood as in food this means 
offering the same great quality range price and service for  
our customers as we do in our food business page 16
retailing services
tesco has followed its customers into the growing world of 
retailing services aiming to bring simplicity and value to 
sometimes complex markets page 20
community
tesco is a responsible business we aim to take a leadership role 
in tackling climate change and believe in playing a positive role  
in all the communities we serve page 24
our steering wheel 47
30
21
uk 
europe
asia 
us
2
£415bn
£101bn
£7 6bn
uk 
europe 
asia  
us 
£02bn
7 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
a catalogue o ur retailing services have delivered another good year 
with tescocom growing strongly t esco personal finance making good 
progress and t elecoms continuing to build its customer base strongly 
and grow profits finally our work on community and environment 
continues – we have recently opened our latest blueprint green store at 
c heetham hill manchester which has a carbon footprint 70 lower 
than a normal store
markets served and business model
t esco’s growth driven by this strategy has been predominantly  
organic and we have used our skills and knowledge in understanding 
customers property development supply chain management new 
product development store formatting and adapting to local customer 
needs – to create strong business models in our chosen markets where 
we do not have all the required skills ourselves to be successful we 
regularly partner with existing businesses – and these relationships 
have formed the basis of some of our most successful operations –  
for example with s amsung in s outh korea
t he uk grocery retail market remains our largest source of revenue 
representing some 50 of last year’s £594 billion of sales international 
retail sales – from our 12 markets in europe asia and the united s tates 
comprise a further 30 of g roup revenues and nonfood in a variety 
of categories from health and beauty to electronics accounts for most 
of the remainder o ur services businesses have comparatively small 
revenue streams but they are increasingly material to our earnings base 
we have given them a renewed focus this year – deploying more capital 
and management resources a first key step in making these already 
successful businesses much larger and more significant to the g roup  
was the acquisition of royal bank of s cotland’s share of t esco personal 
finance – and we expect these businesses including our online shopping 
channels t elecoms and dunnhumby our consumer research business 
to deliver £1 billion a year of profit for the g roup within the next few years
at the core of t esco’s business model is a focus on trying to improve what 
we do for customers we aim to make their shopping experience as easy 
as possible lower prices where we can to help them spend less give 
them more choice about how they shop – in small stores large stores or 
online – and seek to bring simplicity and value to sometimes complicated 
markets we aim to be a good neighbour in the communities we serve 
be responsible fair and honest in our dealings and give customers the 
information and products they need to make greener choices we are 
also an inclusive business – everyone is welcome at t esco
underpinning this approach is a relentless attitude to being the lowest 
cost provider of goods and services in our chosen sectors – and this 
combination of qualities is the reason we have been successful in some 
of the world’s most competitive markets we have recognised skills and 
proprietary systems in key areas which help us deliver a low cost model 
– particularly in customer relationship management justintime supply 
chain and distribution property development and store formatting  
in some of our newer markets – such as telecoms or financial services our 
willingness to partner with established businesses has given us access 
to their existing investment in systems and infrastructure and enabled 
t esco to develop competitive profitable business models quickly and 
at the same time limit our own investment and risk in the early years  
in the case of financial services having successfully partnered with  
royal bank of s cotland for a decade we now have the experience to take 
sole ownership in order to pursue our aim of becoming a fullservice retail 
bank and give t esco personal finance the focus that this will require
my main challenge is to maintain the balance between staying on 
strategy while living within our means for a growth company like 
tesco it is vital of course that we meet the challenges posed by the 
economic downturn – and the priorities there are the same as for 
any finance director in the current environment – in helping the 
business to find the resources to invest for customers by keeping  
a good grip on costs and cash
at the same time though i need to do what i can to help sustain tesco’s 
investment in future growth by investing in the right opportunities 
protecting ourselves from unpredictable capital markets and trading 
in a sustainable way we should exit this recession as an even stronger 
company that’s how tesco emerged as a winner from the last 
recession exciting opportunities are there to be grasped – for example 
land and property are already significantly cheaper our online 
businesses are not capital intensive and given the loss of confidence in 
the banking sector our very conservative straightforward approach in 
tesco personal finance may be exactly what customers are looking for
laurie mcllwee group finance director
sales by region sales growth contribution by region
as group finance director what are your 
priorities at the moment 8 repo rt o f t he directo rs
we’ve long understood that retailing is 
local each team on the ground is able to 
adjust our offer to each market because 
customers in china for example aren’t the 
same as those in poland or south korea 
so we’ve never tried to run the international 
business from our office in the uk in fact 
we have very few expats working outside 
the uk – in south korea just six out of a 
team of over 20000 people as we face 
into some strong economic headwinds  
it’s more important than ever to stay  
close to customers and be able to adapt 
quickly locally as their needs change 
we have people in each of our markets 
who have a wealth of experience and  
are able to make the decisions that  
really matter 
a big part of my job is about making sure 
we’ve got the right people in each country 
sharing experience around the business 
and empowering people to do the right 
things for their customers 
philip clarke international and it director
how do you run successful 
businesses in so many countries
international 
sales up
31 9 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
across our markets customers are changing their shopping habits as 
they are affected to varying degrees by the global economic downturn 
in this kind of environment it is more important than ever to listen to 
customers and adapt quickly to their changing needs
each of our markets is different so it’s up to the individual businesses to 
adjust their offer locally using customer insight allows our experienced 
teams on the ground to make decisions based on real customer data 
we have spent many years developing our customer insight skills 
particularly through dunnhumby the consumer research company 
behind our loyalty scheme c lubcard t hrough careful analysis of sales 
and loyalty card data we can better understand what is important to 
our customers t his year we have been using this unique insight across 
most parts of our business so we don’t have to guess what our 
customers want we know
in all our markets it’s helping us select the most important items for 
pricesensitive or costconscious shoppers so we can invest in lowering 
prices on the most important items to help customers through tough 
economic times for example in malaysia we have reviewed our  
range of staple foods and groceries and as a result we have introduced 
27 new products to the basket which we know are among the most 
important for customers we now make sure that we are not beaten  
on price for these products
t his insight is also helping us to make things simpler for customers to 
shop in our stores for example in asia we have worked with our leading 
supplier of baby milk by reviewing the sales data we discovered that 
displaying the products by brand rather than by age was important so 
we are changing the layout on the shelves to make it easier for customers 
to find the products they want 
whilst it is important to invest in the shopping trip we are also 
continuing to invest for future growth t his is a strategy that has served 
us well in the past for example we entered t hailand and s outh korea 
during the asian economic crisis in the 1990s and emerged stronger 
once the economies started to recover we are now market leader in 
t hailand and following our acquisition of 36 hypermarkets in s outh 
korea we are now in a very strong position to challenge for market 
leadership there as well
we also announced our entry into the indian market last year we are 
establishing a cash  carry business that will offer a comprehensive range 
of great value fresh food grocery and nonfood products to small 
retailers restaurants kirana stores and other business owners we will 
also provide farmers and other suppliers with a highly efficient route to 
market in addition we have signed an exclusive franchise agreement 
with t rent the retail arm of the t ata g roup t rent currently operates four 
s tar bazaar hypermarkets with plans to grow to 50 stores over the next 
five years we will supply these hypermarkets with products but also 
offer our retail expertise and technical capability to support the 
development of their business
t he overall performance of our international businesses during the year 
has been strong particularly against the background of increasingly 
challenging trading conditions in all of our markets as the effects of  
the economic downturn on consumers have grown and spread around 
the world 
we have delivered very good sales and profit growth and our investment 
returns have held up well importantly we have grown share in all of our 
markets and in some countries we have made more rapid progress this 
year by sticking to our strategy as competitors falter by continuing to focus 
on doing the right things for customers – lowering prices introducing more 
affordable products offering even stronger promotions – they have 
rewarded us with good sales and market share growth by keeping our 
costs low and pushing on with expansion we aim to take the opportunity 
to strengthen further our market positions during the recession 
international
it’s been another good year for our international business which 
now spans 13 countries across asia europe and the united states 
as customers around the world are feeling the effects of the global 
economic slowdown we are successfully adjusting our offer in all 
our markets to help customers who are feeling the pinch
loyalty card schemes
we have national loyalty card schemes based on clubcard in 
ireland malaysia south korea and china and pilot schemes  
in slovakia poland thailand and turkey 10 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
in most of our markets we are now amongst the largest most profitable 
and fastest growing businesses – and this is a good platform from 
which to make further progress even in tough times o ur experience  
in hungary of trading profitably and growing well during an already 
prolonged recession which began in 2006 also gives us confidence  
that by applying what we have learned there in our other markets the 
business can perform well through the current environment 
europe – including ireland t urkey and the four c entral european 
countries – and the western us have seen the most marked effects  
of the economic downturn although more recently as the exportled 
economies of asia – particularly s outh korea and c hina – have also 
slowed trading conditions there too have deteriorated
in europe these challenges have been joined by the consequences of 
substantial exchange rate movements between the euro or eurolinked 
currencies and other currencies within the european union t hese 
movements have encouraged very significant increases in crossborder 
shopping by consumers in several regions – the clearest examples 
being ireland into n orthern ireland c zech republic into g ermany and 
s lovakia into poland o ur stores located close to these borders have 
seen material sales impacts as customers take advantage of devalued 
currencies and this has affected the rate of sales growth overall in  
these markets
although in some markets we have moderated our rate of growth in space 
overall we have chosen to sustain strong growth in selling area – and this 
will continue with reductions in site build and fitting costs for stores – 
these have fallen substantially since last year – we are able to use our 
capital more efficiently and this should be helpful to longterm returns
at the end of february our operations in asia and europe were trading 
from 1911 stores including 608 hypermarkets with a total of 550m sq ft 
of selling space t his year we plan to open 320 new stores with a total 
of 54m square feet of sales area in these markets and a further  
06m sq ft is planned to open in the us 
asia
we have delivered a strong performance in asia t his has been achieved 
whilst absorbing planned integration costs and initial trading losses 
during conversion on the newlyacquired homever stores in s outh korea 
with all the stores now converted to our homeplus format we expect 
this acquisition to provide a good underpinning to growth in asia as  
a whole in the current year and beyond as we realise the synergies  
and scale benefits from the deal t he underlying business in s outh 
korea delivered solid profit growth and elsewhere in asia we saw 
excellent progress in malaysia and t hailand partly offset by a small 
trading loss in japan 
•	 	 i n 	china having studied the market carefully and developed our 
longterm strategy we have begun to accelerate store and 
infrastructure development in the economically important and 
populous coastal provinces centred on the major cities o ur first 
multilevel freehold shopping centre development will open in 
foshun in a few months’ time with a further three planned in the 
current year s ites have been secured for a further 14 we saw  
strong sales including good likeforlike growth in the year as a 
whole – although sales slowed in the final quarter partly driven  
by food price deflation – and we made a modest profit similar  
to last year
•	 	 japan’s already difficult retail market saw a further sharp 
deterioration towards the end of 2008 t he new team in japan is 
building on last year’s introduction of the t esco operating model –  
a suite of systems and processes which is being rolled out across  
our markets – by strengthening distribution range and pricing 
management o ur strategic focus remains on building a strong  
offer for customers in the convenience sector based on express  
and on our t surukame small discount supermarket format and  
this work is making progress 13 new stores including six of our  
new 24hour express stores opened during the year
•	 	 h omeplus 	 in 	south korea – which celebrates its tenth anniversary 
this year – delivered another very good performance coping well 
with the twin challenges of subdued consumer spending and the 
task of integrating the 36 homever stores which were acquired in 
s eptember including the acquired stores 39m square feet of space 
– an increase of 63 – was opened during the year s ome of last 
year’s organic development was deferred whilst we focused on 
integrating homever and our programme of new space this year will 
reflect this t he customer response to the conversion of the stores  
to homeplus has been excellent with sales uplifts on the converted 
stores averaging well over 50 t he performance of our express 
stores which saw sales growth of 64 in the year has also been  
very encouraging
•	 malaysia has had an exceptional year – achieving rapid progress in 
sales profits and returns as it delivers the full benefits of the makro 
acquisition in early 2007 t his success combined with a fast rate of 
organic expansion has enabled us to become market leader in a 
country which we entered only in 2001 although economic growth  
has slowed in recent months our strong market position plus a good 
pipeline of seven planned new hypermarkets in the current year 
mean we can extend our lead c lubcard which was launched at the  
end of 2007 is being very wellreceived by customers
•	 	 t esc o 	 l o t us 	 in 	thailand has delivered strong growth against the 
background of sustained political uncertainty and a weakening 
economy c onsumer confidence levels are low but our continued 
investment in improving our offer for customers has served the 
business well and we are continuing to outperform our major 
competitors o ur small format stores – particularly t alad 
supermarkets and express stores which are very popular with 
customers in the larger cities – have seen very good growth in  
both sales and profit 
international continued
poland
in poland we have launched the first phase of 
our new discount range designed to compete 
with local limited range discounters 11 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
europe
o ur european growth for the year as a whole has been strong helped 
overall by favourable exchange rate movements during the second 
half the effects of the global economic slowdown have been felt in all 
of our markets – reflected in slowing g dp growth and deteriorating 
consumer confidence and spending levels 
inevitably our businesses have been impacted resulting in slower 
growth in sales and profit at constant exchange rates from last autumn 
onwards whilst our food and grocery categories have remained robust 
– and we have seen excellent market share performances across our 
markets – nonfood sales principally of hardlines have been subdued 
and this has held back hypermarket growth in particular o ur multi
format approach has helped to mitigate this and we have seen very 
good growth in our smallerformat stores particularly in c entral 
europe and these remain a priority in our expansion plans
t he work we have done on paneuropean sourcing of t esco ownbrand 
and general merchandise has further strengthened our competitive 
position in the region we have fully launched the equivalent of our uk 
‘discount brands’ in several markets and customer feedback has been 
very encouraging t he performance of c herokee and ff clothing in 
europe has also been pleasing and we have taken significant market 
share o verall clothing sales are up 11 including 6 likeforlike 
growth – with children’s garment sales increasing by 43
•	 	 i n 	 t he 	czech republic levels of consumer demand have been 
affected both by the slowdown in the economy and by the increasing 
scale of crossborder shopping into neighbouring g ermany driven by 
the strength of the koruna despite this good cost control offsetting 
investment in lower prices better pay rates and improved service 
levels and continued expansion delivered solid growth in profits  
in the year o ur early express stores have been wellreceived by 
customers in central prague and we are continuing a programme  
of refits – and in some cases major redevelopments – of our 
department stores t his included the complete remodelling of our 
large department store in l eberec which was completed last month
•	 hungary has endured a serious economic recession for approaching 
three years however our strategy of cutting costs and investing in 
lowering prices and expanding our store network is continuing to 
yield good results and we have been able to sustain profit growth  
this year in very challenging circumstances l ikeforlike sales growth 
expetrol was positive and we are outperforming most of our 
competitors with our market share growing to 17 o ur new store 
opening programme delivered a 13 increase in our space through 
14 large hypermarkets and 12 smaller format stores
•	 	 i n 	poland our business has delivered a very strong performance 
including robust growth in sales and profits t his was achieved in  
the context of competitive trading conditions and significant wage 
investment and energy cost inflation during the year having 
successfully completed the integration of the former l eader price 
stores – where the cumulative sales uplift on conversion is now 
approaching 60 – we have resumed faster organic expansion  
with six large new hypermarkets and 12 compact hypermarkets 
opened in the year o verall likeforlike growth was solid with  
small formats seeing stronger growth than hypermarkets we have 
recently introduced a new range of 700 ‘discount brand’ products 
and these are proving very popular with customers
•	 	 a 	 solid 	 per f or manc e 	 f r om 	 t esc o 	ireland produced another year of 
growth despite the extremely difficult economic climate and trading 
conditions have worsened in recent months a combination of very 
tight cost control and more international buying have helped us 
invest in lowering prices for customers t hese investments have 
become even more necessary given the steep rise in crossborder 
shopping into n orthern ireland encouraged by the decline in s terling 
relative to the euro – which has seen an estimated 4 of the total 
market move over the border t he benefits of our new distribution 
centre at donabate have delivered substantial efficiencies and 
improved stock management and we have also seen a strong 
performance from our new stores
•	 	 i n 	slovakia we saw excellent growth although the adoption of the 
euro in january 2009 gave rise to conversion costs and given the 
weakening currencies relative to the euro in bordering countries  
we saw the emergence of crossborder shopping towards the end of 
the year t his has impacted sales in recent months from our strong 
marketleading position and with an excellent and growing network 
of multiformat stores we have coped well with the tougher market 
conditions and achieved good market share gains
•	 	 i n 	turkey kipa which is one of our smallest but fastestgrowing 
businesses has seen strong sales driven by the growth of new space 
but pressure on margins resulting from the sharp contraction in the 
economy and consumer demand during recent months we are 
continuing to see growth in share in a very fragmented market but 
given the severity of the downturn in t urkey we have decided  
to slow our rate of expansion for the time being t urkey remains  
an important strategic longerterm opportunity for us as a large 
growing and relatively underdeveloped retail market
united states
fresh  easy has made good progress we are now trading from  
115 stores and the early openings have moved strongly into likeforlike 
growth whilst it is still early days and the economic environment into 
which we originally launched the business has markedly changed 
customers’ very positive feedback on our offer has continued to surpass 
our expectations research confirms that they love the quality and 
freshness of our ranges as well as the prices and the convenient 
locations of the stores
t he normal process of adapting a new format to fully meet the needs 
of customers locally has resulted in some changes to the product 
ranges the introduction of a limited number of promotions and special 
offers as well as improvements to the ambience of the stores t hese 
changes have been wellreceived and consequently we are seeing very 
strong growth in customer numbers per store 
g iven the scale of the economic downturn particularly in l as vegas 
phoenix and the inland empire region of c alifornia we are also  
seeing increased demand from customers looking to make stretched 
household budgets go further – through more affordable products 
larger pack sizes and additional range in some categories such as 
grocery and frozen food we are looking to meet these needs by 
making further changes to the stores
as previously announced we are taking a more cautious approach to 
expansion by maintaining instead of accelerating the rate of new store 
opening until economic conditions start to improve in the western 
states in which we operate we opened 62 new stores in the year with 
06m square feet of selling space and we expect to open a similar 
number during the current year mostly in the second half 
l ast april with our preliminary results we said that initial us trading 
losses would total around £100m in the 20089 financial year  
us trading losses in 20089 were higher than expected at £142m 
principally as a result of the adverse movement in the dollar s terling 
exchange rate during the second half and higher overhead costs linked 
to our more prudent rate of new store opening we expect a similar loss 
in the current year
to find out more go to 
wwwtescocomannualreport09 12 repo rt o f t he directo rs
making many small improvements in 
everything we do is what ‘every little 
helps’ is about because when we all work 
together on the little things it amounts  
to a great deal it’s more important today 
than it’s ever been – it keeps us focused  
on what matters most to customers
they are shopping around more and price 
is clearly a priority for many – so we need 
to put the right effort and investment  
into price – but not sacrifice all the other 
things that are so important to customers 
such as not having to queue and being 
able to get everything that they want
so we’ve continued to make lots of  
small improvements and they’re making  
a big difference for example through  
a number of initiatives to achieve a  
better and more efficient service at our 
checkouts many more customers didn’t 
have to queue last year and customers 
continue to rank us best for speed of 
service at the checkouts
david potts retail and logistics director
is ‘every little helps’ still 
important
 
£540m
in productivity savings 13 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
it’s been a tough year for many of our customers c onsumer confidence 
has fallen as people worry about unemployment and are struggling to 
manage their household budgets n ot surprisingly there has been a 
shift in our customers’ priorities – our research has shown that price  
is ranked as the most important by a margin not seen in two decades 
t herefore we believe our job is to be on the side of customers listening 
to them and doing what we can to help them spend less 
at the time of the last recession we launched value lines – the  
famous blue and white stripes – so we’ve long been able to provide  
the cheapest grocery shop in the country discounters included
t his recession has provided a new challenge because although 
customers tend to shop around more for the best prices when times  
are hard – it doesn’t mean they want to compromise on quality of the 
shopping trip or on choice t hat is why this year we made the biggest 
change to our range in a decade launching around 500 new products 
as part of our ‘discount brands at t esco’ initiative t he new range 
means that every customer can have a product to match their budget 
without compromising on choice or quality it creates a completely  
new way to shop for customers who want to spend less
as well as introducing more affordable products we have been working 
hard to cut prices across the store t o help us do this we have been keeping 
very good control of costs and have put more focus on our efficiency 
saving programme we call s tepc hange t his programme has delivered 
£540 million of productivity and other savings in the year most of which 
have been reinvested in improving our shopping trip for customers
t his programme involves many projects right across the business  
which change the way we do things to drive efficiency many of today’s 
savings were conceived and planned years ago and they are a result  
of productivity projects that span the whole business from stores and 
depots to the office t hey range from reducing the amount of energy 
we use in our stores to introducing better ways of working to improve 
our efficiency by making things better for customers simpler for staff 
and cheaper for t esco for example in the last year we have saved 
52000 deliveries to our stores by using largerfill doubledecked 
vehicles which in turn have also saved 12 million road miles 
we’ve also introduced innovative technology which allows us to 
electronically checkin bread and milk deliveries at our depots 
eliminating substantial paperwork and administration
we have picked up the pace on a number of these longterm  
crossfunctional s tepc hange projects and plan to deliver similar 
savings in the current year of around £550 million t hese savings  
will continue to go back into improving our offer for customers 
making things better simpler and cheaper is part of our culture at  
t esco and all our people are encouraged to suggest new ideas on how  
we can achieve this 
core uk
everyone in the business understands the way we work – to make 
things better for customers simpler for staff and cheaper for tesco 
at a time when customers are feeling the pinch and our competitors 
have improved this philosophy is more important than ever
30
around 30 of our customers buy something from our  
‘discount brands at tesco’ every time they shop
12m 
road miles saved with 
doubledecked trucks
oneinfront promise
millions more customers didn’t have to queue at the checkout  
last year thanks to our oneinfront promise 14 repo rt o f t he directo rs
s ome examples of these projects which have delivered substantial 
savings in the year include
• 	 	 s a v ings 	 in 	 t he 	 s u p p l y 	 c h a in 	 – 	 f r o m 	 m o r e 	 s he l f  r ea d y 	 p ac k ag ing 	 an d	
reconfiguring of our depot network to increased vehicle utilisation and 
more productive work methods in depots and stores – mean that  
for example distribution costs have been held in cash terms and 
reduced in percentage of sales terms t his has been achieved despite 
higher fuel costs
• 	 	 w e 	 h a v e 	 s i g n i f i c an t l y 	 inc r ea s e d 	 t he 	 le v e l 	 o f 	 c ap i t a l 	 in v e st m e n t 	 in	
energysaving projects across the business – in new refrigeration 
store lobbies and lighting – delivering significant reductions in 
consumption and helping us to absorb rising utility costs energy 
consumption in t esco fell by 8 last year despite business growth
• 	 	 w e 	 no w 	 h a v e 	 3  1 0 0 	 e m p lo y e e s 	 a t 	 o u r 	 h in d u st an 	 g lo b a l 	 su p p o r t	
c entre in bangalore india which provides it and administrative 
support to our uk and international operations – from software 
development to management accounting and payroll
• 	 	 t he 	 in t r o d u c t i o n 	 o f 	 ne w 	 c he c k o u t 	 t e c hno lo g y 	 f o r 	 st o r e s  	 w h i c h 	 i s	
faster more accurate and easier for staff has continued to reduce 
costs and improve customer service for example around 25 of  
our uk customer transactions are through selfservice checkouts
uk performance
in the uk t esco coped well with recovering competitors and a difficult 
nonfood market particularly in the second half to deliver solid 
progress in the year uk retail sales grew by 91 including a likefor
like increase including petrol of 43 30 excluding petrol both 
customer numbers and spend per visit increased and we also delivered 
robust margin and profit improvement 
core uk continued
£400m
we have given our clubcard customers over £400 million 
worth of vouchers in the year
tesco plc annual report and financial s tatements 2009
70
of our products are delivered to stores in retailready packaging 
including all of our new ‘discount brands’ saving many hours  
of staff time refilling shelves 000
real 
basket 
results
t e s co s ains bury’s
221000
bask ets
cheaper
b ased on a sample of 10 of all clubcard transactions in store 020409 compared with prices at s ainsbury’s exact figures are t esco cheaper 168317 baskets 
s ainsbury’s would have been cheaper 22048 baskets  closest match applied includes promotions excludes multibuys non matches express  selected metro s ainsbury’s
prices checked online 020409 clubcard points awarded quarterly  minimum clubcard spend £1 t o verify contact t esco price en8 9sl or see ww w tesco  com
newprice cuts andselected discount brand products available in 1500stores 
t es cosa ves
y oumone y
with clubcard
at t esco we compare prices on the things you actually put in your 
shopping basket – like bread milk meat and fruit and veg and on 
thursday 2nd april we found that over 1 680000 of your baskets 
were cheaper at t esco than they would have been at sainbury ’ s
1 683 000
ba sk ets
cheaper
15 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
in the current year we expect to trade the business harder to give what 
help we can to families whose budgets have become stretched and 
who are worried about their jobs o ur competitive offer is strong and 
we are investing more in cutting prices sharpening our promotions  
and putting even more affordable products on our shelves particularly 
through the launch of more ‘discount brands’ whilst price and value 
matter more to many customers at times like these as always we  
are improving all aspects of the shopping trip including service and 
availability as part of this we are planning to relaunch and invest 
substantially more in c lubcard – our unique way of saying ‘thank you’ 
to our customers – in the coming weeks
new space
we opened a total of 20m square feet of new sales area in 20089 of 
which 362000 square feet was in store extensions principally for extra 
we opened another 11 extra hypermarkets – six from extensions to 
existing stores and five new stores bringing the total to 177 with a 
further 15 planned this year extra now represents 40 of our total 
sales area we also opened 21 new superstores and 125 new express 
stores bringing the overall total number of t esco stores to 2282
in the current year we aim to open a similar amount of new space 
across our formats – equivalent to an additional 64 of sales area
25 
of our customer 
transactions are through 
selfservice checkouts
to reflect our customers’ need to spend less we have 
invested millions of pounds in cutting prices and 
introduced more promotions as well as launching new 
ranges of affordable products in both our value range  
and our new ‘discount brands’ 
although there are many different conflicting claims on 
price in the marketplace we have focused on comparing  
the prices of real customers’ baskets from clubcard on  
the products people buy most often these baskets clearly  
show that tesco is cheaper on the real baskets people 
actually buy and is the most comprehensive survey in  
the marketplace today 
in order to continue to reduce our prices our efficiency 
programme stepchange generated £540m of savings in  
the last year which we have been reinvesting back in our 
offer and will be doing more of this in the year ahead
some of your competitors 
say that they are cheaper 
than t esco why aren’t you 
doing more to cut prices
to find out more go to 
wwwtescocomannualreport09 16 repo rt o f t he directo rs
across the nonfood market customers 
have been cutting back on nonessential 
purchases but they have been buying 
when they see real value and as a 
consequence we have increased our 
market share as customers appreciate  
the convenience of buying nonfood from 
tesco and the value that we offer 
we’ve been adding new ranges with lower 
pricepoints and extending ranges that 
consumers see as essentials and we’ve 
seen real success on ownbrand products 
such as technika in electricals and 
cherokee and ff in our clothing offer
our online catalogue nonfood offer 
tesco direct has been very popular and we 
have seen strong growth with our latest 
springsummer range which included 
1500 price cuts compared to our autumn
winter catalogue with the benefit of  
high footfall great value ranges and the 
option to shop in store or online we are 
wellplaced to continue to grow both sales  
and market share in a difficult market
richard brasher commercial and marketing director
lots of high street retailers have 
been cutting prices can i still get 
the best deals at tesco
 
£125bn
group nonfood sales 17 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
n onfood remains an important part of our strategy and we continue  
to grow both sales and market share 
in our experience customers will buy where they see value t o help 
customers we have been making changes to our ranges and cutting 
prices for example in the uk sales of our t echnika ownbrand 
televisions have been very strong as customers trade away from big 
brands and we now have a 10 share of the television market we’ve 
also been promoting our slow cooking appliances as customers have 
been buying cheaper cuts of meat and cooking from scratch – half of  
all slow cookers bought in the runup to c hristmas were sold in t esco
o ur online nonfood business t esco direct continues to grow rapidly 
increasing sales by more than 50 in the year t he latest spring
summer catalogue and website includes over 1500 products that are 
cheaper than they were last year in the current year we also plan to 
introduce an online clothing offer – making our fashionable affordable 
clothes easier to buy for many more customers 
t o ensure that we offer the best possible prices for customers we buy 
many products globally so that we benefit from our scale we have an 
international sourcing office based in hong kong which is responsible 
for buying 100000 nonfood products for the g roup t he international 
sourcing operation has seen rapid growth in the last few years and now 
sources 60 of our clothing in the uk and 40 of hardlines including 
electricals homewares entertainment toys and books in europe it 
provides over 25 of our hardlines and 85 of our clothing and we 
have recently started to source products for asia in the last year our 
international sourcing team shipped 72000 containers from 54 ports
we also have sourcing hubs in c hina india s ri l anka bangladesh  
and t urkey with smaller offices in t hailand c zech republic and italy 
we have invested in buying hubs where we have a critical mass of 
suppliers and shipment volumes it helps to be close to our suppliers  
so that we can ensure great quality products delivered from ethical 
sources on time and at the best price
where possible we try to source products direct from factories rather 
than through agents or middlemen t his way we can ensure the lowest 
possible cost price as well as making sure that our products are sourced 
safely and fairly we also manage to strip out more costs by consolidating 
freight volumes t his gives us the best shipping and transportation rates 
which can be passed on to the customer in the form of lower prices
nonfood
it’s been a challenging year for nonfood as consumers around  
the globe have been hit by the economic downturn and are cutting 
back on nonessential purchases – but by keeping our prices low 
improving our offer in key categories like electricals and clothing and 
giving customers more choice about how they shop such as through 
tesco direct – we have outperformed the market 
 no 5
technika is the fifth largest  
tv brand in the uk
gaming sales up
30
clothing sales in 
central europe up
11  18 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
market leader
we are market leader for clothing in 
hungary and the czech republic
53m
last year our international buying office 
sourced over 53 million pairs of socks for 
the group
t esco’s large general merchandise business has been resilient despite 
the challenges posed by weakening demand as consumers cut back  
on discretionary spending price reductions stronger promotions – 
particularly of smaller ticket items – and a focus on particular categories 
such as electronics plus an excellent performance from t esco direct 
have supported good market share growth t he profitability of our 
nonfood business has also been pleasing
uk nonfood sales rose by 5 in the year compared with 9 in 
20078 with total nonfood sales increasing to £87 billion included in 
reported uk sales s econd half likeforlike was encouraging showing 
a small improvement versus quarter 2 with a stable performance in 
quarter 4 compared with quarter 3 
we saw growth in some hardlines categories – particularly in  
electrical goods games and entertainment – and also in pharmacy 
home related categories reflecting the slowdown in the housing 
market were more challenging – particularly furniture diy and 
cookware o n a likeforlike basis clothing sales reduced by 2  
in the year but outperformed the market – with good growth in 
menswear and an improving trend in childrenswear with a stronger 
second half performance
nonfood continued
nonfood is an important part of a longterm strategy for growth 
it is a market which is similar in size to food and in which we only 
have a small share so we see it as a big opportunity for us in the 
future irrespective of the economic climate 
last year we opened over 600000 square feet of new space for 
nonfood in the uk alone – including our latest nonfoodonly 
homeplus stores in edinburgh and nottingham – which means 
more customers than ever have access to our offer in store with 
tesco direct we have made our widest nonfood range available  
to millions of customers who can’t get to one of our larger stores 
in fact we get around 15 million visits to the website each week 
and we’ve continued to rollout direct collection desks in store  
so customers have the convenience of collecting their purchases  
at the same time as doing their weekly shop as well as having the 
opportunity to have them delivered directly to their homes 
have you cut back on the 
amount of new space you 
are adding for nonfood 2005 2006 2007 2008 2009
60
68
104
118
12 5
19 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
t esco direct which is managed within tescocom is designed to extend 
the reach of our nonfood offer by making it more available to customers 
via the internet and catalogues and is now established and thriving  
it has delivered excellent sales growth and reduced losses as planned  
we issued 115 million catalogues last year and now have 12500 
products available online t he popularity of our instore direct desks 
which are now in 231 stores continues to increase as more customers 
order and collect items from their local t esco we plan to add clothing 
to our online offer later this year
g roup nonfood sales rose 6 to £125 billion including £38 billion  
in international 
15m 
energyefficient
light bulbs sold 
in the uk
we want all of our products to be sourced responsibly and fairly 
but it is more challenging to achieve for general merchandise 
because of the global nature of the supply base we’re building 
stronger relationships with our global nonfood suppliers by 
reducing the number we work with 
we’ve improved the quality of supplier audits and now have  
730 authorised independent auditors around the world to ensure 
that audits are representative we have made a significant shift 
from announced to surprise audits where suppliers are given  
a one month window when auditors may visit 
in october we were highly commended for the fashion ethical 
cotton award – the only major retailer nominated in any category
to find out more go to wwwtescocomcrreport09
nonfood sales £bn
how do you ensure  
that your products are 
ethically sourced in  
places like bangladesh
tesco tech support teams
we have tesco tech support teams in our largest stores who are 
specially trained to help customers with technical queries about 
everything from tvs and digital switchover to computing and 
wireless networking to cameras and sat navs
to find out more go to 
wwwtescocomannualreport09 20 repo rt o f t he directo rs
we believe in creating value for all our 
customers because that is how we earn 
their loyalty over time customers have 
come to trust tesco to deliver value 
whether they are buying their weekly shop 
or opening a savings account their trust 
is very important to us so we take the 
same approach to financial services as  
we do to all other parts of our business 
and that means offering competitive 
straightforward products with no 
confusing small print and hidden charges 
unlike many of the high street banks tpf 
is well funded – we never got involved in 
any of the complicated financial products 
and toxic debt that has caused so many 
problems for the banking sector so while 
many banks now have to grow their margins 
and rebuild their balance sheets we can 
concentrate on offering competitive rates 
across our savings loans credit cards and 
insurance products 
we are aiming to add more value by 
rewarding our loyal customers with 
clubcard points which is of course  
unique to tesco looking further ahead  
it’s clear that customers want us to 
provide a real alternative to other banks 
and that means a broader product range 
including a current account
andrew higginson chief executive of retailing services 
and group strategy director
can tesco really offer the same 
value as my bank
6m
tesco personal finance 
customer accounts 21 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
tescocom
is the world’s most successful  
online grocery retailer
developing retailing s ervices has been part of our strategy for over  
a decade – with the aim of bringing value and simplicity to customers 
through services such as telecoms and financial products after ten 
years of success we have given it a renewed focus and in july we 
announced that andrew higginson would relinquish his role as g roup 
finance director to take on the role of c hief executive of retailing 
s ervices he has assembled an experienced team to really drive  
forward this part of the strategy which we believe has the potential  
to deliver £1 billion of annual profit in the next few years
t he aim is to develop our services business to offer customers the  
same convenience we have brought to food shopping to all the other 
products and services we offer o ur dotcom grocery business and now 
our online nonfood offer t esco direct have already added more 
convenient options for customers to shop – particularly those with  
very busy lives or limited access to transport t he growing power of  
the internet means increasingly that people look to this channel to  
buy everyday services and goods
however many people still like the reassurance of being able to talk  
to someone knowledgeable about the products and services they buy 
we believe in offering customers the choice – to shop in the way which 
most suits their needs whether that is online in store or by phone  
t hat is why we now have 40 phone shops in our stores and we plan  
to have around 100 open by the end of this year t his means more 
customers than ever can access our popular telecoms offer we remain 
one of the fastest growing providers for prepay mobiles and we are 
now attracting more customers through our new contract mobile deals
in december we completed the acquisition of the remaining 50  
of tp f from royal bank of s cotland g roup plc rbsg  t his was an 
important move for t esco allowing us to build on the success of tp f 
and eventually offer customers the products you would expect from  
a fullservice retail bank t his will mean growing our existing customer 
base across the 28 simple products we offer from home insurance to 
credit cards but also attracting new customers at a time when many 
have lost trust in their high street bank
all our current financial products are available to buy online and at 
present over 50 of our customers choose to buy this way however  
in the same way as customers value the service offered by our telecoms 
centres we understand that many would like to discuss their financial 
needs with someone knowledgeable we plan to increase our presence  
for tp f by extending the trial of our instore branches which offer 
customers the opportunity to talk to our specially trained finance 
advisors in a convenient location
retailing services
it has been a big year for retailing services which includes our 
online shopping channels tescocom and tesco direct telecoms 
tesco personal finance tpf and dunnhumby – our consumer 
research business
100000
new savings account customers 50
25
10
15
t esco personal finance

tescocom
telecoms
dunnhumby
22 repo rt o f t he directo rs
retailing services – profit contribution
 a ssumes tp f is fully consolidated for the year
t his year has seen an increased focus on our strategy for growth in 
retailing services – where we now have substantial profitable businesses 
with longterm potential both in the uk and internationally at the time 
of our announcement last july of our acquisition from rbsg of its  
50 shareholding in tp f we set a target to grow the profitability of  
the services businesses from a little under £400 million in 20078 to  
£1 billion during the next few years we are committing more capital 
management and other resources to support this growth
tesco personal finance we completed the acquisition of tp f on  
19 december 2008 for cash consideration of around £950m t he 
business is profitable and wellcapitalised which is a strong platform 
from which to pursue our plans to develop tp f from a successful 
popular collection of financial products to a fullservice retail bank in 
the years ahead t he new team combining experienced management 
from t esco and from the banking industry is coming together well 
t heir focus for the time being is on migrating systems and customer 
support over to our own platforms beginning the development of  
a branch network in t esco stores and growing the business both 
through existing and new products
o verall tp f has delivered a good performance despite the challenging 
conditions in its markets and the protracted period between the 
announcement of the acquisition and its completion t he following 
commentary on the performance of the business relates to the  
tp f proforma income statement and actual balance sheet which  
can be found in our preliminary results s tatement appendix 1 at  
wwwtescocominvestorcentre covering the year to 28 february 2009
•	 	 profit underlying profit before tax which excludes the amortisation  
of intangible assets linked to the acquisition was £244 million t his 
performance was achieved against the background of an increase in 
bad debts particularly during the second half of the year although 
tp f’s bad debt experience remains significantly better than the 
banking industry average profit before tax and minority interest was 
£212 million which was also a pleasing performance in the context of 
the broader economic conditions under ifrs  we are required to 
amortise intangible assets arising on acquisition t his noncash 
charge for the period was £32 million and we expect this to increase 
to approximately £130 million in 200910 and reduce thereafter
  t otal revenue was £949 million – generated by a combination of 
interest income and fees t he key products generating interest income 
savings loans and credit cards all held up well in the current climate 
in fee income there was good growth from both credit cards and the 
atm estate underlying costs included an increased investment in 
t esco c ompare and the planned rise in overhead cost as the business 
prepares for a faster rate of growth impairment losses on the cards 
and loans portfolios increased in the second half against the 
background of deteriorating market conditions
retailing services continued
tesco plc annual report and financial s tatements 2009
15m
tesco personal finance has over 15 million  
car and home insurance customers 23 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
•	 	 capital and liquidity tp f’s core t ier 1 capital ratio is 12 l ooking 
forward tp f has strong earnings retention to support planned 
business growth and the funding and liquidity position of the business 
has also improved as a result of the successful relaunch of tp f as a 
savings brand t his is demonstrated by the neardoubling of balances 
from £25 billion in mido ctober to in excess of £45 billion by the 
yearend c ombined with securing longterm wholesale funding  
this has transformed tp f’s liquidity position – providing high quality 
liquid assets and net shortterm wholesale cash over £2 billion as  
at yearend  
•	 	 commercial average lending balances grew slightly in the year 
even after tightening lending criteria to reflect the deteriorating 
economic conditions g ood growth has been maintained in the 
customer base with total accounts and policies increasing by 8  
t he atm network continues to grow with over 2700 now located 
across the t esco store portfolio which account for 12 of total 
market volumes t he insurance business continues to be a significant 
contributor to the overall profits accounting for over 65 of the 
underlying profit n ew asset quality has remained stable over 2008 
and portfolio performance remains favourable to the industry  
tp f continues to monitor closely portfolio and new business quality 
however the challenging economic conditions throughout the year 
have resulted in some increase in bad debt levels and fraud t he 
reduction in bank rates in recent months has however helped 
lending margins a trend which has continued into 200910  
tp f uses a range of techniques to ensure that risk and reward is 
balanced and remains committed to responsible lending
 tescocom delivered another excellent performance with our online 
businesses achieving a 20 increase in sales to £19bn with profits 
after initial startup losses on t esco direct rising to £109m we are 
continuing to see robust growth in customer and order numbers and 
operationally the business made further progress with improved 
product availability and strong productivity g rowth in the international 
businesses – in s outh korea and ireland – was very strong
telecoms had a good year with particularly robust growth in t esco 
mobile mobile saw doubledigit growth in customer numbers in a flat 
prepay phone market and an encouraging early performance from our 
new paymonthly tariffs which were launched during the year t esco 
mobile retained its status as the best service in the market for overall 
customer satisfaction
18m
tesco mobile customers
to find out more go to 
wwwtescocomannualreport09 24 repo rt o f t he directo rs
we understand that many of our 
customers are facing real financial 
pressures at the moment and they’re 
looking to us to help them spend less 
however when customers shop with  
us they don’t leave their ethics at the  
door and they’re telling us it is still really 
important to them that we behave 
responsibly and honestly they want  
to see tesco doing the right things  
on community and the environment  
at the same time as providing them  
with the value they expect from us
we’ve made some great progress  
this year and one of the things i’m most  
proud of is the work we have done in 
getting unemployed people back to  
work which is especially important in  
light of rising unemployment in the uk  
and elsewhere last year we recruited  
over 3000 longterm unemployed  
people and other disadvantaged  
job seekers up on nearly 500 the  
previous year
lucy nevillerolfe corporate  legal affairs director
how much do customers really 
care about community when they 
are struggling with the recession
250
community champions 25 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
we understand the importance of behaving responsibly in all our 
operations o ver the past year we have worked even harder to be  
a good neighbour and have strengthened our contribution to the  
wider communities we serve
all communities have their own individual concerns and priorities  
and so each of our countries has its own c ommunity plan whilst  
the goals and targets are tailored specifically to each country each  
plan is underpinned by five core promises actively supporting local 
communities buying and selling our products responsibly caring  
for the environment giving customers healthy choices and creating 
good jobs and careers 
o ur success depends on listening to our customers and responding  
to their feedback by giving them what they want o ften the most 
significant contributions we can make to communities are at the  
truly local level and so over the past year we have appointed over  
250 c ommunity c hampions in stores and depots across six countries 
t hese members of staff are dedicated to working with local schools 
charities and services to support the causes that matter most to  
our customers 
we have made a stepchange in our work on climate change and 
environmental responsibility by taking clear leadership in these vital 
areas in 2007 we set ambitious targets to reduce emissions in our  
own buildings and distribution networks and we continue to make 
good progress o ver the past year we have continued to rollout 
initiatives to save energy and lower our carbon footprint in all our 
operations and we now have environmental stores in every country  
in which we operate s ince 20067 we have reduced our carbon 
intensity of new stores by 21 
o ur aim is to give customers choice by providing them with the 
information they need to make informed decisions when they shop 
through initiatives such as carbon and g uideline daily amounts  
g da labelling 
in addition we have continued to work hard to help our customers to 
lead healthy lifestyles by providing information and services such as 
t esco diets our online dieting weight loss and healthy eating service 
and improving nutritional content in all our foods we also continue  
to find innovative ways to help customers get active in t hailand for 
example our g etting active with t esco l otus programme has inspired 
24 million people to get involved in activities such as aerobics
t o provide the best quality choice and value for money for our customers 
we need strong and constructive relationships with our suppliers we 
continue to make good progress in building these longterm relationships 
as we recognise that our success is linked to theirs t rading fairly is 
essential in all our operations and last year we met with the uksi f the 
sustainable investment and finance association to discuss our ethical 
trading approach t hey benchmarked us against a number of peers and 
concluded that we were in a leadership position in terms of good 
factory labour standards
community
we recognise that running our business responsibly is important  
to our customers and increasingly crucial to our growth we are 
working within communities to develop our own plans as well as 
involve customers in the journey
500
we will measure the carbon footprint 
of 500 more products this year
200
our greener living brand helps our customers to make greener 
choices the range comprises 200 products as diverse as energy 
saving light bulbs paper goods and kitchenware tesco plc annual report and financial s tatements 2009
26 repo rt o f t he directo rs
actively supporting our local communities
we play a positive role in our local communities and work hard to be  
a good neighbour
we now have c ommunity c hampions in 65 stores and five depots in the 
uk each working with local schools charities and services to support 
the causes that matter most to our customers where they live t he 
c hampions have a strong positive impact on our customers in recent 
research over 60 of customers who are aware of these activities tell 
us they believe their community has benefited and they feel more 
favourable to t esco as a result we are already rolling out c ommunity 
c hampions in the c zech republic s lovakia c hina and malaysia
o ur staff broke all records for our c harity of the year raising over  
£6 million for marie c urie c ancer c are to fund an additional  
300000 hours of nursing care for over 5000 terminally ill patients  
and their families
o ur new t esco for s chools and c lubs scheme is now running in our uk 
stores with a catalogue spanning five different areas of the curriculum 
customers can collect vouchers for anything their local school needs 
whether that is a laptop a new set of skipping ropes or a composting 
bin we have had successful schools programmes in ireland for 11 years 
now in poland for eight and this year is the first year of ‘s hop for 
s chools’ in the us 
in recent months we have also moved some £11 million worth of 
business back to uk suppliers supporting domestic orderbooks and 
production and safeguarding employment
caring for the environment
we opened our greenest store yet at c heetham hill in manchester with 
a carbon footprint 70 below that of a typical store in 2006 t his is the 
latest step in our quest for a zerocarbon store with environmental 
stores opening in all countries
we have significantly increased the level of capital investment in 
energysaving projects across the business – in new refrigeration store 
lobbies and lighting – delivering significant reductions in consumption 
and helping us to absorb rising utility costs energy consumption in 
t esco fell 8 last year despite business growth
g reen c lubcard points have encouraged our customers to recycle  
with recycling rates doubling where we have our automated recycling 
machines and over 95 million c lubcard customers now reusing their 
bags in the uk o ur customers are now using 50 fewer plastic bags 
than they did in may 2006 saving three billion bags since we introduced 
our green c lubcard points in august 2006 t his july t esco malaysia 
became the first country outside the uk to launch green c lubcard 
points to help customers use fewer carrier bags issuing over 14000 
points in the first week of the reward scheme
we were the first retailer in the world to carbon label products with  
100 products labelled in the uk already and many more in the pipeline 
ireland is following suit with 14 products and s outh korea is starting 
carbon labelling this year
o ur leadership on climate change has been recognised through a 
number of awards internationally including the prestigious business  
in the c ommunity l eadership in the environment award and the 
sustainable management award in s outh korea
giving customers healthy choices
we have met our target of getting two million people active three  
years early with 750000 women running race for l ife half a million 
children signed up to the fa s kills programme and 750000 taking part 
in the t esco g reat s chool run o ur g etting active with t esco l otus 
programme has inspired 24 million people in t hailand to take part in 
activities such as aerobics and we have charitable running and walking 
initiatives in the c zech republic s lovakia and malaysia as well as our 
soccer camps in the uk and c hina
buying and selling our products responsibly
we have continued to evolve our n urture scheme which was first 
launched in 1992 t he independently accredited quality standard 
assures our customers that t esco fruit and vegetables are grown  
in an environmentally and ethically responsible way we now work  
with 15000 growers in 70 countries across the world 
good jobs and careers
as part of our promise to our people to provide ‘an opportunity to get 
on’ during the year 65 of senior managers were appointed internally 
we also appointed 3741 new managers for stores and 149 for depots  
in the uk alone – with 86 coming from within t esco
community continued
24m
people in thailand took part in activities including aerobics 
as part of our getting active with tesco lotus programme tesco plc annual report and financial s tatements 2009
27 repo rt o f t he directo rs
looking ahead
• 	 	 t h i s 	 y ear  	 w e 	 p l an 	 t o 	 c r ea t e 	 1 1  0 0 0 	 ne w 	 j o b s 	 d ir e c t l y 	 in 	 t he 	 u k 	 a s	 
we continue to open new stores and expand our services businesses 
particularly tp f indirectly our investment in new stores refits and 
extensions will sustain more than 7300 jobs in construction 
maintenance and related areas we also plan to create a further 
15000 jobs in our international businesses
• 	 	 t h i s 	 s u m m e r  	 w e 	 w i ll 	 p i lo t 	 c o m m u n i t y 	 f a ir s 	 a t 	 st o r e s 	 ac r oss 	 t he	
country – fun days for the whole community to support local charities 
and featuring local suppliers
3bn
since launching green clubcard points in august 2006 
to reward customers who reuse their bags they have 
helped us to save over three billion bags
• 	 	 w e 	 w i ll 	 m a k e 	 c o m m u n i t y 	 c h am p i o n s 	 a 	 st r o ng e r 	 p ar t 	 o f 	 m o r e 	 st o r e s	
and in more communities
• 	 	 w e 	 w i ll 	 a im 	 t o 	 g e t 	 5  3 	 mi lli o n 	 p e o p le 	 ac t i v e 	 w i t h 	 t e s c o 	 ac t i v i t y	
programmes around the world
• 	 	 w e 	 w i ll 	 c o n t in u e 	 t o 	 he l p 	 c u st o m e r s 	 b e 	 g r e e n 	 an d 	 s a v e 	 m o ne y 	
through more recycling facilities and by reducing plastic bag usage 
even further we will also work with our suppliers to reduce carbon 
emissions in our supply chain
• 	 	 w e 	 w i ll 	 m ea s u r e 	 t he 	 c ar b o n 	 f o o t p r in t 	 o f 	 5 0 0 	 m o r e 	 p r o d u c t s 	 an d	
communicate the findings to our customers we will also continue  
to grow our range of green products making it easy and affordable 
for our customers to make green choices
• 	 	 w e 	 w i ll 	 r o ll 	 o u t 	 t he 	 f ir st 	 p h a s e 	 o f 	 o u r 	 t r a d ing 	 f a ir l y 	 p r o g r am m e 	
ensuring our values live throughout our supply chain and improving 
labour standards at the farms and factories that supply us
• 	 	 w e 	 w i ll 	 p r o v i d e 	 o p p o r t u n i t i e s 	 f o r 	 t he 	 lo ng t e r m 	 u ne m p lo y e d 	 t hr o u g h	
three new regeneration partnerships
sustainable consumption institute
in 2007 we committed £25 million to create a new sustainable 
c onsumption institute sci  at the university of manchester  
t he sci aims to answer some of the fundamental questions  
about how to make a consumer society sustainable 
2008 the first year of the sci  was devoted to building a team  
and establishing the initial research streams a total of 12 academic 
appointments have now been made including five at professorial 
level 11 phd students from around the world have been recruited 
and £23 million committed to 24 projects so far an extensive 
multidisciplinary multifaculty network of academics is being 
established and prestigious sci independent research fellowships 
are being awarded
t he sci is committed to publishing its research findings on an 
open access basis wwwmanchesteracuksci
we believe in encouraging customers to make greener 
decisions by providing clear information to help them make 
better choices 
we’ve been working with the carbon trust as well as  
some of our main suppliers to develop a universal carbon 
footprint label which not only helps inform customers but 
also helps our suppliers – by identifying opportunities to 
reduce emissions we started trialling carbon labels in the 
uk and ireland last year on products such as orange juice 
light bulbs washing detergents and potatoes and the 
results have been encouraging – more than half our 
customers say that wider application of the labels could 
change their purchasing decisions
does carbon labelling 
really make a difference
to find out more go to 
wwwtescocomcrreport09 28 repo rt o f t he directo rs
having started a business from scratch  
in the us – one of the world’s largest 
markets – i know how important it  
is to have a strong team around you 
developing talent is crucial to any  
growing business particularly retail  
which is a peopleintensive industry 
 as a group we’re still investing hard 
and growing through the downturn with 
sales growing by 15 last year to handle 
that growth well we need to bring skilled 
experienced people through all the time  
to fill the thousands of jobs it creates  
take fresh  easy where our team has 
grown from 65 to over 2500 in less than 
two years hundreds more will join us this 
year so we can’t rely on bringing people  
in from other parts of the business we 
need to develop our own talent locally  
and equip our people with the skills  
they need to be able to do the job and  
lead others that’s why we’re absolutely 
committed to putting the best training 
plans in place making sure that all of 
our people have the opportunity to get  
on in the business
tim mason president and ceo of fresh  easy
is training and developing staff 
still a priority
470000
people 29 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
t his year we brought together over 2000 managers from across the 
whole business at our triennial conference it was an opportunity to 
look back at the tremendous growth in the business in the last three 
years but also to look ahead it has been a challenging year for our 
people but with a clear strategy underpinned by our values they have 
never been clearer on what we need to do
t he theme of the conference was ‘l iving the values’ we first launched 
our values a decade ago and they have been the glue that has held us 
together as we have rapidly grown the business t hey ensure that every 
person understands our culture and goals in the last year we have 
spent a lot of time talking to our people across the business to make 
sure that they are still as relevant today as they were ten years ago and 
that they are universally understood it was clear that not only do our 
values remain relevant but that they have travelled because things like 
trust and respect for example are universal – they are as important to 
our people in t okyo as to those in t orquay 
our values
noone tries harder for customers 
• 	 u nd er st and 	 c u st o mer s 
• 	 b e 	 f ir st 	 t o 	 m e e t 	 t he ir 	 ne e d s 
•	 a c t 	 r es pons ibl y 	 f or 	 o ur 	 c ommunit ies
we treat people how we like to be treated 
•	 w or k 	 as 	 a 	 team 
• 	 t r u st 	 an d 	 r e s p e c t 	 eac h 	 o t he r 
•	 l isten  	 suppor t 	 and 	 s ay 	 t hank 	 yo u 
• 	 s h ar e 	 k no w le d g e 	 an d 	 e x p e r i e nc e 
so we can enjoy our work
as the business continues to grow it is important that we build capability 
through training and development o ver 3500 new management 
appointments were made in the uk last year through o ptions a 
tailored programme for our people who have been identified as having 
the potential to move to a bigger job and our training academies  
we also have our highest ever number of people on o ptions – 7680 – 
which includes over 500 in our depots o ur g raduate o ptions programme 
was externally recognised winning a t imes g raduate recruitment award 
in 2008 for g raduate employer of c hoice in g eneral management
we’re also doing more to recruit graduates across our international 
business we have plans to recruit 1000 graduates in asia and 300  
in c entral europe to ensure that we have a great pool of talent to 
support our future growth
people
over 470000 people now work for tesco across 14 countries  
it’s been a challenging year for our people and they have worked 
harder than ever to deliver an ‘every little helps’ shopping trip
80
of our uk staff agree they have the 
opportunity to get on in tesco
137
in china we have developed a leadership development 
programme to help us meet the needs of our rapid expansion  
this year 137 people completed the programme which is  
tailored to meet the development needs of each person and 
prepare them for leadership roles 30 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
customers
t his year hundreds of thousands of customers have told us what they 
want from an ‘every l ittle helps’ shopping trip we’ve held over 200 
‘c ustomer question t ime’ forums in our stores in addition to many 
other focus groups we have also launched ‘s hopper t houghts’ a 
proprietary online panel of 64000 customers who provide us with rapid 
and detailed feedback on everything from the range of products we sell 
to the friendliness of our staff o ur latest trial feedback initiative is 
called fizzback which allows customers to tell us what they think via 
free text message phone email or comment card c lubcard also helps 
us to understand what our customers want whilst allowing us to thank 
them for shopping with us – this year we gave away over £400 million  
in c lubcard vouchers we have national loyalty card schemes based  
on c lubcard in ireland malaysia s outh korea and c hina and pilot 
schemes in s lovakia poland t hailand and t urkey
we don’t always get it right but we try to make our customers’ shopping 
trip as easy as possible reduce prices where we can to help them spend 
less and give them the convenience of shopping when and where they 
want – in small stores large stores or online
employees
with 470000 staff in 14 countries we play an important role in creating 
employment fostering skills and generating economic development 
o ur people are our most important asset and never more so than in the 
current economic environment l ooking after our staff so that they can 
look after our customers is one of the core values of the business we 
are committed to providing marketleading working conditions for our 
staff and we encourage our suppliers to do the same
training and development
we are committed to developing our people to bring out the best in 
everyone and do what we can to enable all our people to reach their 
potential all our staff have access to training programmes and personal 
development planning to ensure that they have the right skills to do 
their job
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
in the uk we offer our staff a marketleading package of pay  
and benefits
employee share schemes
t hrough share ownership and share incentive schemes over 170000 
of our people have a personal stake in t esco s taff were awarded shares 
worth a record £91 million last may under our s hares in s uccess scheme 
52000 staff were able to benefit when s ave as you earn schemes 
matured in february giving them access to shares worth £126 million
resources and relationships 
customer question time 
we have been holding forums in our stores in europe to ask 
customers how the economic slowdown is affecting them
170000
over 170000 of our uk staff have a personal stake in tesco 
through our share ownership and share incentive schemes 31 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
suppliers
t o be a successful sustainable business we have to ensure that our 
drive to bring cheaper prices is achieved without compromising our 
standards reducing quality damaging the environment or harming  
the suppliers and workers who produce the goods we sell s o we  
take a partnership approach to working with suppliers – sharing our 
knowledge and listening to suppliers’ feedback t his includes providing 
technical expertise advice and insight into customer trends and  
making regular payments on time
we are one of four signatories to the uk g overnment’s statutory 
supermarkets c ode of practice s ince the c ode’s introduction we have 
run tailored training for all t esco buyers to promote understanding and 
compliance if problems do arise in supplier relationships we aim to air 
and resolve them through constructive discussion and when necessary 
with the support of our c ode c ompliance o fficer we support the 
c ompetition c ommission on a number of changes that are planned  
to the c ode including its wider application in the grocery retail sector
we hope that our annual supplier v iewpoint survey encourages 
suppliers to give us more feedback on our relationships we surveyed 
more than 6000 suppliers during the year and more than 90 of them 
agreed that we pay on time are committed to meeting customers’ 
requirements are professional and that we treat them with respect
90
of our suppliers say that we pay on time are committed 
to meeting customers’ requirements are professional 
and that we treat them with respect
we carry out ethical audits and target ourselves to cover 100 of our 
high risk own brand suppliers and ensure all commercial teams have 
received training on supply chain labour standards t his year we carried 
out significantly more audits than the previous year – 1233 compared to 
445 whilst we risk assessed 100 of high risk sites we fell short on our 
audit targets with 87 of highrisk sites being audited up on 73 in 
2007 we have put in place resources to improve performance in 2009
t esco does not have any contractual or other arrangements which are 
essential to the business of the company
we’re a growing business and because we know how 
important local jobs are to communities we advertise all  
our new jobs through the local jobcentre plus we let them 
know well in advance so that they have time to prepare 
candidates for interview there is growing uncertainty 
about jobs at the moment and it’s even harder for people 
who have been out of work for a long time that’s why we 
were one of the first companies to sign up for the 
government’s local employment partnership programme 
which offers roles to job seekers who have previously 
struggled to find work 
in the last year we recruited over 3000 longterm 
unemployed and other disadvantaged job seekers 
compared with 434 in 2007 we want tesco to be a great 
place to work for all our people so our new staff members 
will be given all the support and training they need to 
harness the potential and talent they can bring to our 
diverse workforce 
how exactly are you 
helping the unemployed 
get back to work
to find out more go to 
wwwtescocomannualreport09 32 repo rt o f t he directo rs
tesco plc annual report and financial s tatements 2009
t hese results are for the 53 weeks ended 28 february 2009 for the uk ireland and the united s tates us  and for the 52weeks ended  
28 february 2009 for the rest of the g roup t his compares with the 52week period ending 23 february 2008 where appropriate growth  
rates are provided on a comparable 52week basis
g rowth in sales and profit growth is reported on a consistent basis 12 months versus 12 months for c hina l ast year’s numbers for g roup 
international and for a sia have been restated to reflect this change
g roup sales including vat  increased by 151 to £594bn last year £516bn at constant exchange rates sales increased by 106 o n a 52week 
comparable basis g roup sales growth was 135
in 2006 following our transition to ifrs  we introduced an underlying profit measure which excludes the impact of the volatile noncash 
elements of ias 19 ias 32 ias 39 and ias 17 principally pension costs the marking to market of financial instruments and the impact of annual 
uplifts in rents and rentfree periods and now also excludes the amortisation charge on intangible assets arising on acquisition this year relating  
to t esco personal finance underlying profit before tax rose to £3128m in the year last year £2843m an increase of 100 o n a 52week 
comparable basis underlying profit before tax rose by 88
in the same year we also began reporting segmental trading profit which excludes property profits and as our underlying profit measure does 
also excludes the noncash element of the ias 19 pension charge the noncash element of the ias 17 lease charge and the amortisation charge 
on intangible assets arising on acquisition g roup trading profits were £3090m last year £2748m up 124 on last year and g roup trading 
margin at 57 reduced slightly on last year excluding initial us losses and the impact of the homever acquisition integration costs and  
preconversion losses g roup trading margin rose by 11 basis points o n a 52week comparable basis g roup trading profits increased by 109
g roup operating profit rose by 150 to £3206m last year £2788m within this total net g roup property profits were £236m in the year  
last year £188m comprising £263m in the uk and a loss of £27m in international g roup profit before tax increased 55 to £2954m last year 
£2800m and growth was held back by an increase in noncash ias 32 and 39 adjustments based on statutory numbers reported last year  
g roup operating profit rose by 149 to £3206m last year £2791m and g roup profit before tax rose by 54 to £2954m last year £2803m 
group performance 
group results        actual rates constant
       ch 52week  ch  ch
g roup sales inc vat          £59426m 151 135 106
g roup profit before tax         £2954m 55 43 28
g roup operating profit         £3206m 150 135 123
g roup underlying profit before tax         £3128m 100 88 74
g roup trading profit         £3090m 124 109 97
t rading margin          57 – – –
international
o ur international business delivered a very strong performance helped in part by favourable exchange rate movements during the year and 
excluding the united s tates us  contributed 51 of the growth in g roup sales and 45 of the growth in g roup trading profit underlying margins 
improved excluding the impact of the homever acquisition and excluding the us  
t otal international sales grew strongly – by 306 at actual exchange rates to £179bn last year £137bn and by 136 at constant exchange rates 
o n a 52week comparable basis actual and constant exchange rate growth was 303 and 133 respectively s ales growth slowed in europe 
during the second half which reflected deteriorating economic conditions in a number of markets
in contrast sales growth in a sia accelerated driven by the acquisition of the 36 homever stores in s outh korea at the start of the second half t hese 
contributed some £350m to sales including the strong uplifts achieved on the initial conversions to our homeplus format and this represented  
26 percentage points of the year’s total international growth at actual rates 
us segmental reporting of sales and trading results within international began with our interim results in s eptember for these preliminary results 
sales and initial trading losses in the united s tates are reported within international for the first time l ast year’s numbers both for international and 
for the uk have been restated to reflect this change
international results – excluding us       actual rates constant
       ch 52week  ch  ch
international sales inc vat          £17698m 293 290 124
international trading profit         £851m 219 215 83
t rading margin         53 – – –
international contributed £709m to trading profit in the year last year £636m up 115 after charging £33m of homever integration costs and  
preconversion losses before these costs trading profit grew by 167 excluding initial us trading losses international trading profits grew by 219 
or by 215 on a 52week comparable basis at constant exchange rates and excluding initial us losses international trading profits grew by 83 
international ebit da rose to £1157m excluding the us  international ebit da rose to £1293m
 ebit da is calculated by adding depreciation and amortisation charges of £491m to international operating profit of £666m tesco plc annual report and financial s tatements 2009
33 repo rt o f t he directo rs
to find out more go to 
wwwtescocomannualreport09
in asia sales grew by 294 at actual exchange rates and by 199 at constant rates to £76bn last year £59bn t rading profit increased by 179 
at actual rates and by 146 at constant rates to £355m last year £301m after £33m of integration costs and preconversion losses in s outh korea 
t he acquired homever stores contributed 60 percentage points of sales growth in a sia at actual rates excluding homever trading margins rose to 
58 driven by strong performances in t hailand and malaysia c hina made a small trading profit in the year after absorbing additional overhead 
costs linked to its regional expansion strategy
asia results       actual rates constant
       ch 52week  ch  ch
a sia sales inc vat          £7578m 294 294 199
a sia trading profit         £355m 179 179 146
t rading margin          50 – – –
in europe sales rose by 291 at actual rates and by 69 at constant rates to £101bn last year £78bn o n a 52week comparable basis sales grew 
by 286 t rading profit increased by 249 at actual rates to £496m last year £397m and by 35 at constant rates t rading margins fell slightly 
europe overall delivered solid growth although we saw a weakening pattern of consumer demand particularly in nonfood as the year progressed 
despite deteriorating trading conditions in several markets and the unhelpful effects of increased crossborder shopping being felt particularly in 
ireland and the c zech and s lovak republics our businesses delivered a pleasing increase in profit helped by favourable movements in s terling 
exchange rates 
europe results       actual rates constant
       ch 52week  ch  ch
europe sales inc vat          £10120m 291 286 69
europe trading profit         £496m 249 242 35
t rading margin         56 – – –
a segmental report on the united states is included in international in respect of the full year for the first time with these results us sales and 
initial trading losses were previously reported within the uk segment 
us sales were £208m in the year including likeforlike growth of 30 and trading losses were £142m last year u s trading losses were £62m  
at constant exchange rates trading losses were £123m higher than our guidance provided last year reflecting the more challenging trading environment 
in the western states and our decision not to open stores in n orthern c alifornia for the time being s ales overall were lower than anticipated at the 
time of last year’s preliminary results as a consequence of our previously announced decision to maintain rather than accelerate our rate of new 
store expansion during the second half given the severity of the economic downturn in some geographic markets in the western us 
us trading losses reflect the fact that the u s business – which has now been trading for 16 months – has been built with the necessary infrastructure 
in place from the beginning to support hundreds of stores at this stage it is therefore operating with high overhead and other costs in relation to 
the scale of the business whilst also trading from immature stores
united states results       actual rates constant
       ch 52week  ch  ch
us sales inc vat          £208m nm nm nm
us trading profitloss         £142m 1290 1242 984
t rading margin         na – – – tesco plc annual report and financial s tatements 2009
repo rt o f t he directo rs 34
group performance continued 
uk in competitive market conditions our core business delivered a year of solid progress uk sales increased by 95 to £415bn last year £379bn 
including likeforlike growth of 43 27 growth from net new stores a contribution of 21 from the 53rd week and a firsttime contribution 
from the consolidation of tp f excluding petrol likeforlike sales grew by 30 with increases of 20 and 27 in the third and fourth quarters 
respectively adjusting for the reduction in vat rates which came into effect in early december likeforlike growth excluding petrol was 37 in the 
fourth quarter
t he pattern of our trading during the year was affected by a number of factors inflation reduced during the second half and our rate of growth  
was also impacted by a sharp increase during the year in the level of downtrading by customers seeking to spend less on their weekly shop t esco 
supported both of these trends by cutting prices and introducing more affordable products – including our successful new ‘discount brand’ ranges  
a combination of recovering competitors and more subdued customer demand in some nonfood product categories continued to hold back sales 
progress in the second half although nonfood sales growth remained positive in a subdued market and broadly stable in likeforlike terms
increased productivity and good expense control enabled us to maintain solid margins and deliver good profit growth despite these challenges 
whilst also absorbing initial trading losses totalling around £22m on t esco direct after these costs uk trading profit rose 127 to £2381m last 
year £2112m with trading margins at 62 including tp f slightly up on last year o n a 52week comparable basis uk trading profit rose 107
in december we completed as planned the acquisition of t he royal bank of s cotland g roup plc ’s 50 shareholding in t esco personal finance 
tp f and on becoming a subsidiary its results were consolidated into our uk business for the final ten weeks of the financial year during this period 
it contributed £163m to uk sales and made a small contribution to trading profit tp f’s results to the date of acquisition are reported as usual within 
joint v entures and a ssociates 
uk results         ch 52week  ch
uk sales inc vat            £41520m 95 74
uk trading profit           £2381m 127 107
t rading margin           62 – –
joint ventures and associates o ur share of profit net of tax and interest for the year was £110m an increase of £35m compared with last year 
t esco personal finance delivered a good performance in a challenging financial services market and profit was reported within joint v entures and 
a ssociates for 50 weeks 50 share underlying growth in the business was encouraging – with the number of customer accounts rising to six 
million – and the new management team demonstrating that there is significant growth potential for tp f within the financial services sector 
particularly amongst loyal t esco customers and as we build our portfolio of products although we are seeing rises in credit card arrears and bad 
debts tp f is wellprovisioned 
t esco mobile our joint venture with o 2 saw strong growth with a pleasing rise in profits during the year reflecting excellent increases in customer 
numbers and revenues
finance costs and tax n et finance costs rose substantially to £362m last year £63m reflecting principally increased average net debt levels linked 
to acquisitions and foreign exchange movements higher coupon rates on commercial paper and unfavourable changes in the noncash ifrs 
elements of the interest charge t he interest charge excluding ifrs adjustments rose by £150m
t otal g roup tax has been charged at an effective rate of 267 last year 240 t his increase in tax rate is primarily due to last year’s oneoff tax 
reimbursement reflecting settlement of prior year tax items with hmrc  we also benefited in the prior year from an adjustment of deferred tax 
balances as a result of the lowering of the rate of uk corporation tax from 30 to 28 with effect from 1 april 2008 we expect the effective tax 
rate for the current year to be around 27
underlying diluted earnings per share increased by 70 to 2892p last year 2702p despite the significantly lower than normal effective tax 
rate in the prior year using a constant tax rate underlying diluted earnings per share rose by 110 or by 97 on a 52week comparable basis
dividend t he board has proposed a final dividend of 839p per share last year 770p t his represents an increase of 90 and takes the full year 
increase in dividend to 97 t his rise in dividend is in line with the 52week growth in underlying diluted earnings per share which are inclusive of 
net property profits using a constant tax rate g oing forward we intend to continue with our policy of growing annual dividends broadly in line with 
underlying diluted earnings per share growth
t he final dividend will be paid on 10 july 2009 to shareholders on the register of members at the close of business on 1 may 2009 
cash flow and balance sheet t esco has a strong propertybacked balance sheet with sufficient funding in place to meet our needs including no 
material bond maturities during the current financial year we plan to fund the growth of the g roup predominantly from internal sources – recognising 
the current uncertainties in financial markets – and this will be achieved by reducing capital expenditure to below our operating cash flow
g roup capital expenditure excluding acquisitions rose to £47bn last year £39bn slightly higher than the forecast made at our interim results 
t his increase compared with last year was attributable principally to the purchase of a small number of trading stores from a competitor and investment 
in new mixeduse development schemes in the uk combined with higher international capital expenditure including our initial investment in freehold 
shopping centre developments in c hina furthermore international capital spending and as a result total g roup expenditure was impacted by the 
decline in s terling relative to most of our trading currencies
uk capital expenditure was £26bn last year £23bn t otal international capital expenditure rose to £21bn last year £16bn comprising £09bn  
in a sia £09bn in europe and £03bn in the us  2005 2006 2007 2008 2009
19
23
25
28
31
2005 2006 2007 2008 2009
2334
2672
3263
3751
4  33 2
tesco plc annual report and financial s tatements 2009
35 repo rt o f t he directo rs
underlying profit before tax £bn number of stores
to find out more go to 
wwwtescocomannualreport09
we are now reducing uk capital spend on large mixeduse development schemes and we have purchased fewer existing trading stores from 
competitors allowing uk capital expenditure to revert to the levels of four years ago importantly this is being achieved whilst continuing to meet 
our objective of adding some 6 to 7 to our uk selling space annually in some of our markets such as the us  we are taking a more cautious 
approach to expansion during the downturn and we are also seeing substantial falls in store site and build costs t aken together these changes 
mean that we are able to plan for g roup capital expenditure to reduce substantially this year to around £35bn whilst still delivering strong organic 
growth in g roup selling space of around 9 in the current year 
c ash flow from operating activities totalled £50bn last year £41bn including an improvement of £582m within working capital driven in  
part by good control of stock n et debt rose to £96bn at the yearend last year £62bn £19bn of this increase is attributable to the impact  
of acquiring tp f and homever and a further £10bn to the effect of unfavourable currency movements 
we are targeting a reduction in net debt in the current year driven by lower capital expenditure property divestments lower stock levels and other 
improvements in working capital
property in april 2006 we announced plans to release cash from property through a sequence of joint ventures and other sale and leaseback 
transactions in the uk and internationally and return significant value to shareholders both through enhanced dividends through the growth in 
underlying earnings per share which includes property profits and share buybacks we have managed the pace of this programme in light of the 
current financial and property market conditions and as a result we have divested the property at attractive yields 
t he transactions completed so far – with pension funds property companies and other investors – have delivered aggregate proceeds of £22bn 
whilst yields have increased modestly in recent months we expect to be able to complete further transactions on attractive terms in the months ahead 
and we are currently in discussion with potential counterparties proceeds for the remainder of this year will principally be used to pay down debt
t he net book value of our fixed tangible assets is £247bn most of it in our freehold store portfolio – even after recent property divestments linked 
to our £5bn programme we estimate the current market value of these assets to be £304bn representing a 23 premium to book value
pensions o ur awardwinning definedbenefit pension scheme is an important part of our competitive benefits package which helps t esco  
recruit and retain the best people t he trustees manage and fund our scheme on an actuarial valuation basis and at our triennial valuation dated 
31 march 2008 the scheme had a small deficit of £275m 
following the valuation member and company contributions have increased and to further improve the security of the scheme for members  
the trustees will be granted contingent property assets worth £500m
a s at february 2009 under the ias 19 methodology of pension liability valuation the scheme had a deficit on a posttax basis of £11bn last year 
£06bn t his change has been driven mainly by falls in capital markets and other asset classes although the deficit is similar to the level reported 
at our interim results
return on capital employed in january 2004 we said that we had an aspiration to increase our posttax return on capital employed roce   
of 102 in the 20023 financial year by 200 basis points over five years on then current plans in april 2006 we renewed our commitment to 
increasing our posttax return on capital employed roce  by a further 200 basis points having exceeded our 2004 aspiration early 
roce rose slightly to 130 in the year before the effect of the two major acquisitions – tp f and homever – which were completed in the  
second half t his represents a good performance and we remain on track to deliver our targeted roce improvement in the years ahead as these 
investments mature  tesco plc annual report and financial s tatements 2009
36 repo rt o f t he directo rs
key performance indicators

we operate a balanced scorecard approach to managing the business that is known internally within the g roup as our ‘s teering wheel’ t his unites 
the g roup’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 tradeoffs that need to be made all the time 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 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
        2009 2008
sales growth  
c hange in g roup sales over the year including value added tax      151 111
uk sales growth       95 67
international sales growth        306 253
international sales growth at constant exchange rates       136 225
retailing s ervices sales growth       11 –
profit before tax       £2954m £2803m
underlying profit before tax       £3128m £2846m
trading margin  
uk trading margin       62 59
international trading margin excluding the united s tates       53 56
†
 
t rading margin is calculated from the trading profit expressed as a percentage of g roup revenue sales excluding value 
added tax it is a measure of profit generation from sales and is a comparable performance measure with other companies 
t his 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 t rading 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 ‘ l eases’ 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 t esco personal finance tp f
net cash inflowoutflow       £1601m £801m
n et cash inflow is the cash received less cash spent during the financial period after financing activities   
capital expenditure       £47bn £39bn
t his is the amount invested in purchasing fixed assets       
uk       £26bn £23bn
international       £21bn £16bn
net borrowings and gearing  
n et borrowings       £96bn £62bn
gearing       74 52
return on capital employed roce       130
‡
  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 g roup 
underlying diluted earnings per share       2892p
§
  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 
c ompany decided to distribute all its profits as dividends instead of retaining some for future expansion
 all 2009 kpis are for 53 weeks to 28 february 2009 unless otherwise stated
† international trading margins rose by 15 basis points excluding the impact of consolidating the c hina business
‡ excluding acquisitions of tp f and homever india startup costs and after adjusting for assets held for sale
 using a ‘normalised’ tax rate before startup costs in the us and t esco 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 7 on a statutory basis tesco plc annual report and financial s tatements 2009
37 repo rt o f t he directo rs
to find out more go to 
wwwtescocomannualreport09
       2009 2008
total shareholder return       80 228
t otal shareholder return is the notional return from a share and is measured as the percentage change in the share price 
plus the dividend paid t his is measured over the last five years   
full year dividend per share       1196p 1090p
t he growth of the dividend per share from one period to the next is important to shareholders since this represents their  
actual cash return and is usually paid twice a year  
we monitor a wide range of kpis both financial and nonfinancial individual business units have their own versions of the s teering wheel which 
incorporate their own priorities and kpis s ome of the g roup kpis below are tracked through the s teering wheel and those above are tracked as  
a monitor of investor return
across the g roup kpis are set for local markets with oversight from the executive directors to ensure they are tailored to drive the priorities  
of each business  
t he following are some kpis for the uk and g roup operations
       2009 2008
uk market share  
g rocery market share

        222 218
n onfood market share       88 85
employee retention       87 84
t his 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 co2 emissions
† †
   
uk        133 38
the group       126 38
t his measure shows the overall reduction in emissions from energy use of existing stores and distribution centres related 
to a fixed 20067 floor area it excludes refrigerant gas emissions  
reduction in co2 emissions intensity of new stores
† †
  
the group       209 117
intensity is measured as co 2 emissionssq ft t he measure indicates the average reduction in emissions  
intensity of all new stores built since 20067 the base year c arbon footprint reporting has been assured  
by environmental resources management erm 
 t his is measured as the share of all spend by all shoppers through t aylor n elson s ofres s uperpanel t otal t ill roll data
†† figures adjusted for 52week comparison tesco plc annual report and financial s tatements 2009
repo rt o f t he directo rs 38
risks and uncertainties
introduction risk is an accepted part of doing business t he 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
t he board has overall responsibility for risk management and internal 
control within the context of achieving the g roup’s objectives our process 
for identifying and managing risks is set out in more detail from page 47  
of the c orporate g overnance section of this annual report and financial 
s tatements t he key risks faced by the g roup 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 long
term 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 
t o ensure the g roup 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 g roup’s strategy t he executive c ommittee  
also holds specific sessions to discuss 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 t he business operates a s teering 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 such as dotcom to help manage 
performance and deliver business strategy
financial strategy and group treasury risk t he main financial risks  
of the g roup 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 t he risks associated 
with operating t esco personal finance are covered under financial  
services risks below
t he t reasury function is mandated by the board to manage the financial 
risks that arise in relation to underlying business needs t he function has 
clear policies and operating parameters and its activities are routinely 
reviewed and audited t he 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 c ommittee and internal and 
external audit is set out in the c orporate g overnance section on page 48
financial services risks t hrough t esco personal finance plc formerly 
t esco personal finance g roup l imited tp f the g roup is subject to 
certain risks relating to the personal financial services industry in the uk
tp f is subject to significant legislative and regulatory oversight in 
particular tp f is subject to supervision by the financial s ervices authority 
fsa  which has substantial powers of intervention and is required to  
satisfy certain capital adequacy and liquidity ratios if tp f is unable or fails  
to satisfy these ratios in the future it could lose its licence and consequently 
its ability to transact business 
tp f is subject to various risks associated with the provision of financial 
services in relation to its insurance business tp f may experience a 
concentration of risks from natural or manmade disasters in addition 
market conditions may not allow tp f 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 tp f’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 by 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 tp f’s market share and profitability 
l egal developments changes in legal interpretation or precedent and 
changes in public policy may result in new risks emerging in addition to 
those anticipated
because tp f is an fsa regulated entity its treasury function is run 
independently from the rest of the g roup tp f’s treasury risks include in 
particular liquidity risk and interest rate risk in particular in the interest rate 
margin realised between lending and borrowing costs tp f 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
operational threats and performance risk in the business t here 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 t he continuing acquisition and 
development of property sites also forms an intrinsic part of our strategy 
and this carries inherent risks
we try to deliver what customers want better than our competitors by 
understanding and responding to their behaviour all of our business units 
have stretching targets based on the s teering 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 t he retail industry is highly competitive 
t he g roup 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 g roup’s 
financial results 
we aim to have a broad appeal in 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 our greatest asset is our employees i t 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 o ur ‘t alent planning’ process 
helps individuals achieve their full potential we also carry out succession 
planning to ensure that the needs of the business going forward are 
considered and provided for t here are clear processes for understanding 
and responding to employees’ needs through our people matters g roup 
staff surveys regular performance reviews involvement of trade unions in 
relevant markets and regular communication of business developments
reputational risk as the largest retailer in the uk expectations of the 
g roup are high failure to protect the g roup’s reputation and brand could 
lead to a loss of trust and confidence t his could result in a decline in the 
customer base and affect the ability to recruit and retain good people 
l ike other companies we must consider potential threats to our reputation 
and the consequences of reputational damage emotional loyalty to the 
t esco 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 t he ‘t esco 
values’ are embedded in the way we do business at every level and our 
c ode of ethics guides our behaviour in our dealings with customers 
employees and suppliers tesco plc annual report and financial s tatements 2009
39 repo rt o f t he directo rs
to find out more go to 
wwwtescocomannualreport09
we engage with stakeholders in every sphere to take into account their 
views and we try to ensure our strategy reflects them t he launch of the 
c ommunity plan in 2006 has demonstrated our commitment to tackling  
a wide range of societal and environmental issues we have high level 
committees including the executive c ommittee c orporate responsibility 
c ommittee and c ompliance c ommittee to help guide and monitor  
our policies
environmental risks o ur key environmental risks are related to 
minimising energy usage in stores and transportation waste management 
and our ability to respond to consumer concerns in this area we develop 
environmental policy through engaging with key stakeholders and experts 
in this field to achieve sustainable growth and minimise our environmental 
impacts t he g roup’s approach is brought together in a consistent manner 
by the c orporate responsibility c ommittee
policy is reviewed regularly by the c ompliance c ommittee and c orporate 
responsibility c ommittee we recognise the opportunities for competitive 
advantage through energy efficiency and look for continuous 
improvement through innovations and better ways to help customers act 
responsibly towards the environment
product safety t he safety and quality of our products is of paramount 
importance to t esco as well as being essential for maintaining customer 
trust and confidence a breach in 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 t here 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 while 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 preventing health and safety incidents form an 
intrinsic part of our s teering wheels across the business and performance 
against these kpis is reported quarterly our g roup c ompliance 
committee and the compliance committees in our international businesses 
monitor the level of compliance with 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 for direct suppliers to t esco 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 v alues 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 t rading initiative eti  we expect 
all our suppliers to follow the eti base code and guarantee their workers 
the rights set out within it t here is however a risk that any part of the 
supply chain might not adhere to these high standards 
t o minimise this risk we only work with suppliers who can demonstrate 
that they are committed to the eti code and share our values we use 
s upplier ethical data exchange se dex  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 a t rading fairly strategy 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 feedback on our approach 
we work with suppliers to identify any problems and where they exist 
support them in taking action to improve standards for their workers 
we have also 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 ngo s 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 g lobal s ocial c ompliance programme and other 
groups in specific industries or regions 
fraud and compliance as the business grows in size and geographical 
spread the risk of 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 
t he g roup 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 t he g roup gives 
clear guidance on behaviour to employees through the t esco values and 
the c ode of ethics internal audit undertakes detailed investigations into 
all areas of the business and highlights its findings to the audit c ommittee 
t he 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 the  
uk and overseas and may face challenges in finding suitable sites and 
obtaining planning or other consents to enable sites to be acquired and 
developed t he complexity of many of our property developments is 
increasing especially the growing number of mixeduse schemes  
we also have to comply with design and construction standards which  
vary significantly from country to country 
our p roperty acquisition c ommittees 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 o ur g roup 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 to 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 t he 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  
so that we can 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  tesco plc annual report and financial s tatements 2009
repo rt o f t he directo rs 40
risks and uncertainties continued
regulatory and political 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 t esco 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 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 g roup’s ability to 
trade in addition to contingency plans we have security systems and 
processes that reflect best practice
pension risks t he g roup’s pension arrangements are an important part  
of our employees’ overall benefits package especially in the uk we see 
them as a strong contributor to our ability to attract and retain good 
people our g roup’s greatest asset s ince the implementation of ias 19 
there is a risk that the accounting valuation deficit which is recorded as a 
liability on the g roup balance s heet could increase if returns on corporate 
bonds are higher than the investment return on the pension scheme’s 
assets t he g roup has considered its pension risks and has taken action 
by reducing risk in its investment strategy
joint venture governance and partnerships as we continue to enter 
into new partnerships and joint ventures as well as developing existing 
arrangements there remains an inherent risk in managing these partnerships 
and joint ventures it is more difficult to guarantee the achievement of joint 
goals that affect our partners and we rely on partners to help achieve such 
goals we may also be impacted by reputational issues which affect our 
partners we choose partners with good reputations and set out joint goals 
and clear contractual arrangements from the outset we monitor performance 
and governance of our joint ventures and partnerships
financial review
t he main financial risks faced by the g roup 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 t hese risks are managed as described below t he 
g roup balance sheet position at 28 february 2009 is representative of  
the position throughout the year
funding and liquidity t he g roup finances its operations by a 
combination of retained profits long and mediumterm debt capital 
market issues commercial paper bank borrowings and leases t he 
objective is to ensure continuity of funding t he 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
t esco g roup has a longterm rating of a 3 by moody’s and a by s tandard 
and poor’s with a stable outlook n ew funding of £56bn was arranged 
during the year including a net £07bn from property transactions and 
£49bn from mediumterm notes mtn s at the year end net debt was 
£96bn last year £62bn
interest rate risk management t he 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
t he policy is to fix or cap a minimum of 40 of actual and projected debt 
interest costs of the g roup excluding tp f at the year end £63bn of debt 
was in fixed rate form last year £25bn with a further £07bn of debt capped 
or collared therefore 72 2008 – 55 of net debt is fixed capped or 
collared t he remaining balance of our debt is in floating rate form t he 
average rate of interest paid on an historic cost basis excluding joint 
ventures and associates this year was 52 last year 45
foreign currency risk management our principal objective is to reduce 
the effect of exchange rate volatility on shortterm profits t ransactional 
currency exposures that could significantly impact the g roup income 
s tatement 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 
£2110m were outstanding 2008 – £1198m 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 g roup balance s heet value during the year currency movements 
increased the net value of the g roup’s overseas assets by £480m last year 
increase of £284m we translate overseas profits at average foreign 
exchange rates which we do not currently seek to hedge
credit risk t he objective is to reduce the risk of loss arising from  
default by parties to financial transactions across an approved list of 
counterparties of high credit quality t he g roup’s positions with these 
counterparties and their credit ratings are routinely monitored
tesco personal finance tpf tp f became a wholly owned subsidiary 
of t esco g roup on 19 december 2008 in preparation for this change the 
risk management and treasury capabilities of tp f have been materially 
strengthened all policies pertaining to risk within tp f are now subject  
to tp f governance procedures which are owned by the tp f board
tp f has a banking business predominantly in the uk with the three main 
products being credit cards unsecured personal loans and savings tp f 
has also developed a significant insurance business with motor home  
and pet insurance being the main products 
c redit risk arising from its unsecured lending is managed using all the 
normal reporting and collections and recoveries systems in terms of 
liquidity risk tp f has implemented a conservative approach to the 
minimum amount of liquid assets its holds and to its core funding ratio of 
customer assetscustomer liabilities tp f has at this stage in its development 
an increased element of operational risk as it currently outsources most of 
its operations to royal bank of s cotland g roup whilst at the same time it is 
in the process of building new banking and insurance systems tp f retains 
profit and loss risk to its insurance activities of which a large weather 
related event would generate the largest adverse variance
insurance we purchased assets earnings and c ombined l iability 
protection from the open insurance market at ‘catastrophe’ level only  
t he risk not transferred to the insurance market is retained within the 
business by using our captive insurance companies t esco insurance 
l imited in g uernsey and valiant insurance c ompany l imited in the 
republic of ireland t esco insurance l imited covers assets and earnings 
while valiant insurance c ompany l imited covers c ombined l iability 
statement of compliance
t his business review has been prepared in accordance with the 
requirements for a business review under the c ompanies acts 1985  
and 2006 
t he 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 t hese statements should be 
treated with caution due to the inherent risks and uncertainties underlying 
any such forwardlooking information
t he g roup 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 s uch 
factors include but are not limited to those discussed under ‘risks and 
uncertainties’ on pages 38 to 40 of this document to find out more go to 
wwwtescocomannualreport09 tesco plc annual report and financial s tatements 2009
41 repo rt o f t he directo rs
general information
principal activity business review and future developments t he 
principal activity of the g roup is retailing and associated activities in the uk 
the republic of ireland hungary poland the c zech republic s lovakia 
t urkey t hailand s outh korea malaysia japan c hina and the us t he 
g roup also provides retail banking and insurance services through its 
subsidiary t esco personal finance
group results g roup revenue rose by £7bn to £543bn representing an 
increase of 15 g roup profit before tax increased by £151m to £2954m 
profit for the year was £2166m of which £2161m was attributable to 
equity holders of the parent company
dividends t he directors recommend the payment of a final dividend  
of 839p per ordinary share to be paid on 10 july 2009 to members on the 
register at the close of business on 1 may 2009 t ogether with the interim 
dividend of 357p per ordinary share paid in december 2008 the total 
dividend for the year will be 1196p compared with 1090p for the previous 
year an increase of 97
fixed assets c apital expenditure excluding business combinations 
amounted to £47bn compared with £39bn the previous year in the 
directors’ opinion the properties of the g roup have a market value in 
excess of the carrying value of £7bn included in these financial statements 
share capital and control of the company details of the c ompany’s 
share capital including changes during the year in the issued share capital 
and details of the rights attaching to the c ompany’s ordinary shares are set 
out in note 29 on page 114 details of treasury shares held by the c ompany  
are shown in note 30 on page 115 during the year 25214811 ordinary shares 
were repurchased for cancellation n o shareholder holds securities carrying 
special rights with regards to control of the c ompany and there are no 
restrictions on voting rights t he board has power to purchase its own 
shares and is seeking renewal of that power at the forthcoming agm within 
the limits set out in the notice of that meeting
s hares held by the c ompany’s employee s hare incentive plan t rust 
international employee benefit t rust and t esco ireland s hare bonus 
s cheme t rust rank pari passu with the shares in issue and have no special 
rights but voting rights and rights of acceptance of any offer relating to the 
shares rests with the t rustees who may take account of any recommendation 
of the c ompany and are not exercisable by the employees
t he c ompany is not party to any significant agreements that would take 
effect alter or terminate following a change of control of the c ompany  
t he c ompany does not have agreements with any director or o fficer that 
would provide compensation for loss of office or employment resulting 
from a takeover except that provisions of the c ompany’s share plans may 
cause options and awards granted under such plans to vest on a takeover
company’s shareholders t he c ompany has been notified that as at the 
date of this report l egal  g eneral investment management l imited owns 
455 of the issued share capital of the c ompany t he c ompany is not 
aware of any other ordinary shareholders with interests of 3 or more in 
the issued share capital of the c ompany
articles of association t he c ompany’s articles of association may only 
be amended by special resolution at a g eneral meeting of the shareholders
directors and their interests t he directors who served during the  
year were
mr d e reid mr r f c hase c be s ir t erry l eahy mr r brasher mr p a c larke 
mr a t higginson mr t j r mason mr l mcilwee miss l n evillerolfe cmg 
mr d t potts mr c l allen c be ms j t ammenoms bakker mr p c escau 
mrs k c ook mr e m davies c be dr h einsmann mr k j hydon and  
ms c mcc all
ms c mcc all resigned from the board on 10 april 2008 and mr e m davies c be 
resigned from the board on 31 o ctober 2008 t he biographical details of the 
present directors are set out on page 43 of this report ms t ammenoms bakker 
mr c escau mr hanna and mr mcilwee were appointed to the board in the last 
12 months and as required by the articles of association offer themselves for 
election mr allen mr brasher mr c larke dr h einsmann and mr higginson 
retire from the board by rotation and being eligible offer themselves for 
reelection t he interests of directors and their immediate families in the 
shares of t esco plc  along with details of directors’ share options are 
contained in the directors’ remuneration report set out on pages 50 to 64
at no time during the year did any of the directors have a material interest 
in any significant contract with the c ompany or any of its subsidiaries  
a qualifying thirdparty indemnity provision as defined in s ection 234 of 
the c ompanies act 2006 is in force for the benefit of each of the directors 
and the c ompany s ecretary who is also a director of certain subsidiaries 
of the c ompany 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 c ompany maintained a directors’ 
and officers’ liability insurance policy throughout the financial year 
employment policies t he g roup depends on the skills and commitment 
of its employees in order to achieve its objectives o ngoing training 
programmes seek to ensure that employees understand the g roup’s 
customer service objectives and strive to achieve them t he g roup’s 
selection training development and promotion policies ensure equal 
opportunities for all employees regardless of factors such as gender marital 
status race age sexual preference and orientation colour creed ethnic 
origin religion or belief or disability all decisions are based on merit 
internal communications are designed to ensure that employees are well 
informed about the business of the g roup employees are encouraged  
to become involved in the financial performance of the g roup through a 
variety of schemes principally the t esco employee profitsharing scheme 
s hares in s uccess the savingsrelated share option scheme s ave as  
you earn and the partnership share plan buy as you earn
political and charitable donations c ash donations to charities amounted 
to £28278867 2008 – £22655173 c ontributions to community 
projects including causerelated marketing giftsinkind staff time and 
management costs amounted to £57094208 2008 – £54542913 
t here were no political donations 2008 – £nil during the year the g roup 
made contributions of £55468 2008 – £45023 in the form of sponsorship 
for political events l abour party £15500 l iberal democrat party £6150 
c onservative party £8595 s cottish n ational party £7343 plaid cymru 
£1880 trade unions £16000
supplier payment policy t esco plc is a signatory to the c bi c ode of 
prompt payment c opies of the c ode may be obtained from the c bi 
c entre point 103 n ew oxford s treet l ondon wc1a 1du payment terms 
and conditions are agreed with suppliers in advance t esco plc has no 
trade creditors on its balance s heet t he g roup 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 t he directors consider that the g roup and the c ompany 
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 
t here were no material events after the balance s heet date
auditors a resolution to reappoint pricewaterhousec oopers llp as 
auditors of the c ompany and the g roup will be proposed at the annual 
g eneral meeting
directors’ statement of dislosure of information to auditors
having made the requisite enquiries the directors in office at the date of 
this annual report and financial s tatements have each confirmed that so 
far as they are aware there is no relevant audit information as defined by 
s ection 418 of the c ompanies act 2006 of which the g roup’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 g roup’s auditors are aware of 
that information t his confirmation is given and should be interpreted in 
accordance with the provisions of s ection 418 of the c ompanies act 2006 tesco plc annual report and financial s tatements 2009
repo rt o f t he directo rs 42
our board of directors
david reid
charles allen
ken hanna
philip clarke
rodney chase
patrick cescau
ken hydon
laurie mcllwee
andrew higginson
sir terry leahy
karen cook
jacqueline tammenoms bakker
lucy nevillerolfe
tim mason
richard brasher
dr harald einsmann
jonathan lloyd
david potts tesco plc annual report and financial s tatements 2009
43 repo rt o f t he directo rs
to find out more go to 
wwwtescocomannualreport09
david reid – 62•
n onexecutive c hairman
david reid became n onexecutive c hairman on 2 april 2004 prior to his 
appointment he was deputy c hairman of t esco plc and has served on the 
t esco board since 1985 david is a n onexecutive director of reed elsevier 
g roup plc and c hairman of kwikfit g roup
rodney chase cbe – 65• u n
deputy c hairman and s enior n onexecutive director
rodney c hase was appointed a n onexecutive director on 1 july 2002 
he is n onexecutive c hairman of petrofac l imited and a n onexecutive 
director of c omputer sciences c orporation in l os angeles nalco 
c ompany in c hicago and t esoro c orporation in s an antonio
sir terry leahy – 53• 
c hief executive
t erry l eahy became c hief executive in 1997 joining t esco in 1979 he 
held a number of marketing and commercial positions prior to being 
appointed to the board of t esco plc on 5 o ctober 1992
richard brasher – 47
c ommercial and marketing director
richard brasher was appointed to the board on 15 march 2004 he joined 
t esco in 1986 he has held a number of marketing commercial and store 
operations positions most recently n onfood c ommercial director
philip clarke – 48
international and it director
philip c larke was appointed to the board on 16 n ovember 1998 prior to 
his appointment he held a number of roles in store operations commercial 
and marketing he is a n onexecutive director of whitbread plc 
andrew higginson – 51
c hief executive of retailing s ervices and g roup s trategy director
andrew higginson was appointed to the board on 17 n ovember 1997  
he has recently taken up a new board position as c hief executive of 
retailing s ervices retaining his responsibilities for t esco g roup strategy 
he is c hairman of t esco personal finance and a n onexecutive director  
of bs kyb plc
tim mason – 51
president and c hief executive o fficer fresh  easy
t im mason has been president and c hief executive o fficer fresh  easy 
n eighborhood market since january 2006 he was appointed to the board 
on 16 february 1995 he joined t esco in 1982 
laurie mcilwee – 46
g roup finance director
l aurie mcilwee was appointed to the board on 27 january 2009 he joined 
t esco in 2000 as uk finance director and distribution director in 2005  
he is currently a member of the 100 g roup of finance directors
lucy nevillerolfe cmg – 56
c orporate  l egal affairs director
l ucy n evillerolfe was appointed to the board on 14 december 2006  
s he joined t esco in 1997 from the c abinet o ffice s he is deputy c hair  
of the british retail c onsortium a n onexecutive director of t he c arbon  
t rust and a member of the c hina britain business c ouncil the uk india 
business c ouncil and the c orporate l eaders g roup on c limate c hange
david potts – 51
retail and l ogistics director
david potts was appointed to the board on 16 n ovember 1998 he joined 
t esco in 1973 from 1997 he directed the integration of our businesses  
in n orthern ireland and the republic of ireland before returning to the  
uk in 2000 as director responsible for uk retail o perations from 2004 
david’s responsibilities have included the uk s upply c hain and the 
republic of ireland
charles allen cbe – 52• n
n onexecutive director
c harles allen was appointed a nonexecutive director on 19 february 1999 
he was c hief executive of itv plc from 2004 to 2007 he is c hairman of 
g lobal radio and is a n onexecutive director of the l ondon o rganising 
c ommittee of the o lympics and paralympics
patrick cescau – 60• u n
n onexecutive director
patrick c escau was appointed a nonexecutive director on 1 february 2009 
he was g roup c hief executive of unilever from 2005 to 1 january 2009 
and prior to this he was c hairman of unilever plc and v ice c hairman of 
unilever nv  he has also been a nonexecutive director of pearson plc since 
2002 patrick was appointed a c hevalier de la l égion d’honneur in 2005
karen cook – 55• n
n onexecutive director
karen c ook was appointed a n onexecutive director on 1 o ctober 2004 
s he is a managing director of g oldman s achs international and president  
of g oldman s achs europe s he is also a member of the firm’s european 
management c ommittee and partnership c ommittee
dr harald einsmann – 75• n
n onexecutive director
dr harald einsmann was appointed a nonexecutive director on 1 april 1999 
he is on the board of c arlson g roup of c ompanies harman international 
industries inc and c heckpoint s ystems inc in the united s tates he is also 
on the board of rezidor ab in s weden
ken hanna – 55• u n
n onexecutive director
ken hanna was appointed a n onexecutive director on 1 april 2009 he  
is c hairman of inchcape plc  he was previously c hief financial o fficer of 
c adbury plc until january 2009 and prior to that an o perating partner  
of c ompass partners and c fo and then ceo of dalgety plc  he has also 
been c fo of united distillers and avis europe plc 
ken hydon – 64• u 
n onexecutive director
ken hydon was appointed a n onexecutive director on 23 february 2004 
he is also a n onexecutive director of reckitt benckiser plc t he royal 
berkshire n hs foundation t rust and pearson plc 
jacqueline tammenoms bakker – 55•
n onexecutive director
jacqueline t ammenoms bakker was appointed a n onexecutive director 
on 1 january 2009 s he was a director g eneral at the ministry of t ransport 
in the n etherlands from 2001 to 2007 and has held senior positions at 
quest international mckinsey  c o and shell jacqueline was appointed  
a c hevalier de la l égion d’honneur in 2006
jonathan lloyd – 42
c ompany s ecretary
jonathan l loyd was appointed c ompany s ecretary to the board in 
december 2006 he joined t esco as deputy c ompany s ecretary  
and c orporate s ecretariat director in april 2005 from freshfields  
bruckhaus deringer
•  member of the n ominations c ommittee
u  member of the audit c ommittee
n  member of the remuneration c ommittee 44 report of the directors
tesco plc annual r eport and f inancial s tatements 2009
corporate governance
directors’ report on corporate governance
t esco plc is committed to the highest standards of corporate governance 
as we recognise that good governance is crucial in helping the business to 
deliver its strategy generating shareholder value and safeguarding our 
shareholders’ longterm interests
compliance with the combined code
t he c ombined c ode on c orporate governance sets out guidance in the 
form of principles and provisions on how companies should be directed 
and controlled to follow good governance practice t he f inancial s ervices 
authority fs a requires companies listed in the uk to disclose in relation 
to s ection 1 of the c ombined c ode 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
t he board considers that t esco plc complied in full with the c ombined 
c ode principles of c orporate governance and c ode of best practice for the 
whole of the year ended 28 f ebruary 2009 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 the board excluding the 
c hairman should comprise nonexecutive d irectors determined by the 
board to be independent t he board recognises the importance of a 
balanced board with an appropriate level of independence t here were 
however two unexpected changes to the board in the year with the 
resignation of c arolyn mcc all and e mervyn d avies as nonexecutive 
d irectors due to conflicts of interest which resulted in the board not  
being in balance   
while the process of finding replacements for c arolyn mcc all and  
e mervyn d avies was started immediately the board places a priority  
on ensuring that the right candidates are selected and the process of 
recruiting individuals with the right experience availability and skills to 
complement those of the existing board can take a significant amount  
of time t he c ompany announced the appointment of two new non
executive d irectors on 17 d ecember 2008 as replacements for the two 
nonexecutive d irectors who had resigned and the appointment of  
a further nonexecutive d irector was announced on 12 january 2009  
in order to ensure that the board remained in balance once the new group 
f inance d irector laurie mcilwee was appointed on 27 january 2009 
jacqueline t ammenoms bakker and patrick c escau joined the board with 
effect from 1 january and 1 f ebruary respectively and ken h anna joined 
the board with effect from 1 april 2009 at which point the board became 
once again fully compliant with provision a32
f urther information on the c ombined c ode provision be found at  
wwwfrcorguk 
board composition and independence 
as at 28 f ebruary 2009 the board of t esco plc comprised eight  
executive d irectors seven independent nonexecutive d irectors and  
d avid r eid nonexecutive c hairman r odney c hase is d eputy c hairman 
and s enior independent nonexecutive d irector ken h anna joined the 
board on 1 april 2009
t he structure of the board and the integrity of the individual d irectors 
ensure that no single individual or group dominates the decision  
making process
biographies for the d irectors can be found on page 43 of this r eport 
c hanges to the board since 24 f ebruary 2008 are as follows
c arolyn mcc all nonexecutive d irector r esigned 10 april 2008
e mervyn d avies nonexecutive d irector r esigned 31 o ctober 2008
jacqueline  
t ammenoms bakker nonexecutive d irector appointed 1 january 2009
laurie mcilwee executive d irector appointed 27 january 2009
patrick c escau nonexecutive d irector appointed 1 f ebruary 2009
ken h anna nonexecutive d irector appointed 1 april 2009
election of directors
all d irectors 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 t he c ompany’s articles of association require all new d irectors 
to be submitted for election by shareholders in their first year following 
appointment 
the chairman
c lear divisions of accountability and responsibility exist and operate 
effectively for the positions of c hairman and c hief executive t he 
c hairman has primary responsibility for running the board while the  
c hief 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
t he board has appointed one nonexecutive d irector r odney c hase  
to act as s enior independent d irector t he s enior independent d irector  
is available to shareholders to assist in resolving concerns should the 
alternative channels be inappropriate t he senior independent d irector  
is also required to lead the discussion in relation to assessing the 
effectiveness of the c hairman’s performance
nonexecutive directors
t he nonexecutive d irectors bring a wide range of skills and experience  
as well as independent judgement on strategy risk and performance  
to the c ompany
both c harles allen and h arald einsmann have served on the board for ten 
years t he c hairman has conducted a thorough review with each d irector 
to assess his independence and contributions to the board and confirmed 
that they both continue to be effective independent nonexecutive 
d irectors c harles allen brings extensive corporate operational experience  
and knowledge of the media industry and provides leadership for the 
r emuneration committee t hrough his wealth of business experience  
h arald einsmann contributes a valued dimension to the board in terms of 
international marketing brand building and human resource development 
both c harles allen and h arald einsmann will retire and offer themselves 
for reelection at this year’s annual general meeting t hereafter they may 
submit themselves for reelection each year if the board considers them  
to be eligible 45 report of the directors
tesco plc annual r eport and f inancial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
board responsibilities
t he board has set out a clear s chedule of matters r eserved for board 
d ecision in order to ensure its overall control of the group’s affairs  
t hese include the approval of
the c ompany’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 •	
all d irectors have access to the services of the c ompany s ecretary and 
may take independent professional advice at the c ompany’s expense in 
conducting their duties t he c ompany provides insurance cover and 
indemnities for its d irectors and officers 
attendance at meetings
t he board scheduled nine meetings in the year ended 28 f ebruary  
2009 including a twoday offsite meeting which considered the group’s 
strategy ad hoc meetings were also convened to deal with matters 
between scheduled meetings as appropriate it is expected that all 
d irectors attend scheduled board and c ommittee meetings unless they 
are prevented from doing so by prior commitments and that all d irectors 
will attend the agm where d irectors 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 c hairman in advance of the meeting d irectors leave 
the meeting where matters relating to them or which may constitute a 
conflict of interest are being discussed 
t he table above shows the attendance of d irectors at scheduled board 
meetings and at meetings of the nominations r emuneration and audit 
c ommittees during the year 
board processes
t he board governs through a number of statutory board c ommittees – 
the audit r emuneration and nominations c ommittees – to which certain 
responsibilities and duties are delegated t hese c ommittees are properly 
authorised under the constitution of the c ompany to take decisions and 
act on behalf of the board within the parameters laid down by the board 
t he board is kept fully informed of the work of these c ommittees and any 
issues requiring resolution are referred to the full board as appropriate  
a summary of the operations of these c ommittees is set out below 
t he effectiveness of the audit r emuneration and nominations 
c ommittees is underpinned by their nonexecutive director membership 
which provides independent insight on governance matters a copy  
of each c ommittee’s t erms of r eference is available on our website  
wwwtescocomboardprocess t he board is serviced by the c ompany 
s ecretary who reports to the c hairman in respect of his core duties  
to the board 
  f ull board  audit  r emuneration  nominations
  meetings  c ommittee  c ommittee  c ommittee
number of meetings actual possible actual possible actual possible actual possible
nonexecutive directors        
d avid r eid c hairman 9 9 – – – – 4 4
c harles allen c be 9 9 – – 10 10 4 4
patrick c escau appointed 1209 1 1 1 1 1 1 0 0
r odney c hase c be s enior independent d irector 9 9 5 5 10 10 4 4
karen c ook 8 9 – – 9 10 4 4
e mervyn d avies resigned 311008 3 6 2 4 4 7 1 2
h arald einsmann 9 9 – – 9 10 4 4
ken h ydon 9 9 5 5 – – 4 4
c arolyn mcc all resigned 10408 1 1 1 2 – – 0 1
jacqueline t ammenoms bakker appointed 1109 2 2 – – – – 1 1
executive directors    
s ir t erry leahy 8 9 – – – – 4 4
r ichard brasher 9 9 – – – – – –
philip c larke 8 9 – – – – – –
andrew h igginson 9 9 – – – – – –
t im mason 8 9 – – – – – –
laurie mcilwee appointed 270109 1 1 – – – – – –
lucy neviller olfe c mg 9 9 – – – – – –
d avid potts 9 9 – – – – – – 46 report of the directors
tesco plc annual r eport and f inancial s tatements 2009
nominations committee 
members
d avid r eid c hairman •	
c harles allen •	
patrick c escau from 1 f ebruary 2009 •	
r odney c hase •	
karen c ook •	
e mervyn d avies until 31 o ctober 2008 •	
d r h arald einsmann •	
ken h ydon •	
c arolyn mcc all until 10 april 2008 •	
jacqueline t ammenoms bakker from 1 january 2009 •	
s ir t erry leahy •	
f rom 1 april 2009
ken h anna •	
 
t he nominations committee leads the process for board appointments 
and the reelection and succession of d irectors as well as making 
recommendations for the membership of statutory committees t he 
c ommittee is chaired by d avid r eid and the c ompany s ecretary also 
attends meetings in his capacity as s ecretary of the c ommittee where 
matters discussed relate to the c hairman the s enior independent non
executive d irector chairs the meeting t he nominations c ommittee met 
four times in the year to discuss the ongoing shape and capability of the 
board as well as reviewing the performance and development of the 
executive d irectors and the senior executive levels below the board the 
c ommittee also regularly reviews board structure size composition 
working arrangements and capability and considers succession plans  
for executive and nonexecutive d irectors 
d uring the year the c ommittee continued the effort of identifying  
suitable candidates for the position of nonexecutive d irector and a 
successor for the position of group f inance d irector external search 
consultants were engaged to identify candidates t he c hairman and  
ceo then met candidates before recommending a shortlist to the 
c ommittee t he c ommittee members interviewed the candidates  
before recommending three new appointments of nonexecutive  
d irectors to the board a similar process was followed for the selection  
of the new group f inance d irector except that in addition to identifying 
potential external candidates the external search consultants also  
carried out benchmarking of internal candidates
remuneration committee
members all independent nonexecutive d irectors
c harles allen c hairman •	
patrick c escau from 1 f ebruary 2009 •	
r odney c hase •	
karen c ook •	
e mervyn d avies until 31 o ctober 2008 •	
d r h arald einsmann •	
f rom 1 april 2009
ken h anna •	
t he r emuneration committee’s role is to determine and recommend  
to the board the remuneration of the executive d irectors 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 d irectors needed to run the 
c ompany successfully 
at the invitation of the c ommittee the c hairman of the board normally 
attends meetings and the c hief executive attends as appropriate 
r epresentatives of the group’s personnel and f inance functions attend  
as appropriate to provide support and the c ompany s ecretary also attends 
in his capacity as s ecretary of the c ommittee
t he c ommittee met ten times this year each year it conducts a review  
of the c ommittee’s own effectiveness and its t erms of r eference t he 
responsibilities of the r emuneration c ommittee and an explanation of 
how it applies the d irectors’ remuneration principles of the c ombined 
c ode are set out in the d irectors’ r emuneration r eport on pages  
50 to 64 
audit committee 
members all independent nonexecutive d irectors
ken h ydon c hairman •	
patrick c escau from 1 f ebruary 2009 •	
r odney c hase •	
e mervyn d avies until 31 o ctober 2008 •	
c arolyn mcc all until 10 april 2008 •	
f rom 1 april 2009
ken h anna •	
t he audit c ommittee’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 c ommittee and their independence which includes an 
assessment of their appropriateness to conduct any nonaudit work as 
well as to review the programme of internal audit 
at the invitation of the c ommittee the c hairman of the board the  
f inance d irector and his representatives the h ead of internal audit the 
c orporate and legal affairs d irector other relevant executive d irectors 
and representatives of the external auditors regularly attend meetings  
t he c ompany s ecretary also attends in his capacity as s ecretary of  
the c ommittee 
t he c ommittee met five times this year and took advantage of an 
overseas board meeting to meet with local management and review risks 
and controls t he c ommittee also had regular private meetings with the 
external auditors and h ead of internal audit d uring the year the 
c ommittee received presentations on whistleblowing it security fraud 
bribery and corruption business continuity and updates from business 
units each year the c ommittee conducts a review of its own effectiveness 
and its t erms of r eference
corporate governance continued
ken hydon audit committee  
c hairman
charles allen remuneration 
c ommittee c hairman
david reid nominations  
c ommittee c hairman 47 report of the directors
tesco plc annual r eport and f inancial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
t he 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 t his year training was provided on accounting and 
reporting developments under ifrs  ifric  ias  and other relevant guidance 
and standards t raining is also provided to meet specific individual needs of 
committee members
management of the group – executive committee
t he board delegates responsibility for formulating and implementing  
the group’s strategic plan and for management of the group to the 
executive c ommittee which comprises the eight executive d irectors and  
is chaired by the c hief executive t he c ommittee which is not a statutory 
committee has authority for decisionmaking in all areas except those  
set out in the s chedule of matters r eserved for board d ecision and  
meets formally every week a number of senior executives also attend  
the committee and their valuable operational experience helps broaden 
the debate t heir attendance facilitates the communication of the 
c ommittee’s decisions to the rest of the group t he c ompany s ecretary 
attends in his capacity as s ecretary of the c ommittee
t he executive c ommittee 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
t he executive c ommittee has set up further nonstatutory committees – 
including the f inance c ompliance and c orporate r esponsibility c ommittees 
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 
t hese committees and groups have as members an appropriate mixture  
of executive d irectors and senior management from relevant functions 
procedures to deal with director’s conflicts of interest
t he c ompany has procedures in place to deal with the situation where  
a d irector has a conflict of interest t he procedures have been revised  
in accordance with the new provisions set out in c ompanies act 2006  
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 c ompanies act 2006
keep records and board minutes as to authorisation granted by d irectors •	
and the scope of any approvals given and
regularly review conflict authorisation •	
training and development
all new d irectors 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 t he programme has evolved taking into account 
feedback from new d irectors and will usually include an overview of the 
business model and board processes meetings with the executive team 
and senior managers site visits across our international operations and 
briefings on key issues including social ethical and environmental see  
issues d irectors also receive an induction to those board c ommittees  
he or she will serve on 
t he need for d irector training is regularly assessed by the board and 
regular training sessions are arranged to provide an opportunity for 
upskilling of the d irectors on a variety of areas relevant to the group’s 
business including see issues in the coming year the board proposes  
to hold training sessions focusing inter alia on the regulation and 
governance issues associated with operating a financial services business 
following the acquisition of t esco personal f inance
t he board usually holds at least one meeting overseas each year to 
facilitate the d irectors’ understanding of the group’s international 
operations in march 2008 the board convened in the us a to enhance 
their understanding of the progress of the f resh  easy operation
board performance evaluation 
t he performance of the board is a fundamental component of the group’s 
success t he board regularly reviews its own performance d uring the year 
ended 28 f ebruary 2009 the board assessed its own performance t his 
assessment was coordinated and directed by the c hairman with the 
support of the c ompany s ecretary a questionnaire covering the main 
areas of evaluation was prepared by the c hairman and the c ompany 
s ecretary and formed the basis of indepth interviews with each d irector 
t he results of the evaluation were considered by the board and confirmed 
the strength of the strategic and entrepreneurial leadership of the 
c ompany a sound governance framework and practices compliant with 
the combined code
t he c hief executive reviews the performance of each executive d irector 
t he c hairman reviews the performance of the c hief executive and each 
nonexecutive d irector d uring the year the c hairman met with the  
nonexecutive d irectors without the executive d irectors present to 
discuss board issues and how to build the best possible team t he s enior 
independent nonexecutive d irector met with the nonexecutive d irectors 
in the absence of the c hairman to assess the c hairman’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 
t he 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 t he 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 c ommittee in order to 
facilitate its review of the systems 
background
t he 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 t his 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 t esco values t he values set out the standards  
that we wish to uphold in how we treat people t hese are supported by  
the group c ode of ethics which offers guidance on relationships between 
the group and its employees suppliers and contractors t he c ompany  
is a signatory to the dti c ode of c onduct and met its obligations for 
implementing the c ode for the financial year ended 28 f ebruary 2009 
we operate a balanced scorecard approach that is known within the  
group as our s teering wheel t his unites the group’s resources around  
our customers people operations community and finance t he scorecard 
operates at every level within the group from ground level business units 
through to country level operations it enables the business to be operated 
and monitored on a balanced basis with due regard for all stakeholders  48 report of the directors
tesco plc annual r eport and f inancial s tatements 2009
risk management  
t he group maintains a key r isk r egister t he r egister 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 t he 
content of the r egister is determined through regular discussions with 
senior management and review by the executive c ommittee 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  
the group’s control our risk management process recognises there are 
opportunities to improve the business to be built into our future plans  
our key risks are summarised on pages 38 to 40 of the business r eview 
t he risk management process is cascaded through the group with every 
international ceo and local boards maintaining their own risk registers 
and assessing their control systems t he same process also applies 
functionally in those parts of the group requiring greater overview f or 
example the audit c ommittee’s t erms of r eference require it to oversee 
the f inance r isk r egister we also have a c orporate r esponsibility r isk 
r egister which specifically considers s ocial ethical and environmental 
see  risks o versight of these risks is the responsibility of the c orporate 
r esponsibility c ommittee t he board assesses the significant see risks to 
the group’s shortterm and longterm value and incorporates see risks on 
the key r isk r egister where they are considered material or appropriate
we recognise the value of the abi guidelines on r esponsible investment 
d isclosure 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 wwwtescocomcrreport09 and in  
our annual c orporate r esponsibility r eview 2009 
internal controls  
t he board is responsible for the c ompany’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 
t he ceo s of subsidiary businesses are required to certify by way of annual 
statements of assurance that the board’s governance policies have been 
adopted both in practice and in spirit f or certain joint ventures the board 
places reliance upon the internal control systems operating within our 
partners’ infrastructure and the obligations upon partners’ boards relating 
to the effectiveness of their own systems  
s uch 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 
t he board has conducted a review of the effectiveness of internal controls 
and is satisfied that the controls in place remain appropriate
monitoring  
t he 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 nonstatutory committees including the 
f inance c ommittee c ompliance c ommittee and c orporate r esponsibility 
c ommittee t he minutes of the audit c ommittee and the various non
statutory committees f inance c ompliance and c orporate r esponsibility 
c ommittees are distributed to the board and each committee submits a 
report for formal discussion at least once a year t hese processes provide 
assurance that the group is operating legally ethically and in accordance 
with approved financial and operational policies 
audit committee  
t he audit c ommittee 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 
t hroughout the year the c ommittee receives regular reports from the 
external auditors covering topics such as quality of earnings and technical 
accounting developments t he c ommittee 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  
t he 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 t urnbull guidance it operates a risk based methodology ensuring 
that the group’s key risks receive appropriate regular examination its 
responsibilities include maintaining the key r isk r egister reviewing and 
reporting on the effectiveness of risk management systems and internal 
control with the executive c ommittee the audit c ommittee and ultimately 
to the board internal audit facilitates oversight of risk and control systems 
across the group through audit and compliance committees in each of our 
international businesses and our joint ventures t he h ead of internal audit 
also attends all audit c ommittee meetings 
external audit  
pricewaterhousec oopers llp the c ompany’s external auditor 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 c ommittee t he engagement and independence of 
external auditors is considered annually by the audit c ommittee before it 
recommends its selection to the board t he c ommittee has satisfied itself 
that pricewaterhousec oopers llp is independent and there are adequate 
controls in place to safeguard its objectivity o ne such measure is the non
audit services policy that sets out criteria for employing external auditors and 
identifies areas where it is inappropriate for pricewaterhousec oopers llp to 
work nonaudit services work carried out by pricewaterhousec oopers llp  
is predominantly the review of subsidiary undertakings’ statutory accounts 
transaction work and corporate tax services where pwc ’s services are 
considered to be the most appropriate pricewaterhousec oopers llp also 
follows its own ethical guidelines and continually reviews its audit team to 
ensure its independence is not compromised 
finance committee  
t he f inance c ommittee which is not a statutory committee is chaired  
by the ceo  s ir t erry leahy and membership includes nonexecutive 
d irectors with relevant financial expertise executive d irectors and 
members of senior management t he c ommittee usually meets twice  
a year and its role is to review and agree the f inance plan on an annual 
basis to review reports of the t reasury and t ax functions and to review 
and approve t reasury limits and delegations 
compliance committee  
t he c ompliance c ommittee which is not a statutory committee is chaired 
by the c orporate and legal affairs d irector lucy neviller olfe and 
includes three executive d irectors and members of senior management 
t he c ommittee normally meets six times a year and its remit is to ensure 
that the group complies with all necessary laws and regulations in all of  
its operations worldwide t he committee has established a schedule  
for the regular review of operational activities and legal exposure each 
international business in the group has a local compliance committee 
designed to ensure compliance with local laws and regulations as well  
as group compliance policies and each country compliance committee 
reports to the group c ompliance c ommittee on a regular basis 
corporate governance continued 49 report of the directors
tesco plc annual r eport and f inancial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
corporate responsibility committee  
t he c orporate r esponsibility c ommittee which is not a statutory 
committee is chaired by the c orporate and legal affairs d irector lucy 
neviller olfe 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 social ethical and environmental issues reviewing 
threats and opportunities for the group progress in developing 
c ommunity initiatives is monitored by the use of relevant kpis in the  
uk and our international businesses t he board formally discusses the 
work of the c ommittee on a regular basis including progress in 
implementing our c ommunity plan 
t he c orporate and legal affairs department and the t rading law and 
t echnical department provide assurance and advice on legal compliance 
health and safety and see matters t hese functions report on their work 
on a regular basis and escalate matters as appropriate 
whistleblowing  
t he 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 t hese issues include unethical behaviour such as fraud 
dishonesty and any practices that endanger our staff customers or  
the environment 
c omplaints made are treated as confidential and are investigated  
where appropriate matters will be escalated to the d irector of group 
s ecurity 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 s teering 
wheel is reviewed quarterly s teering wheels are operated in business 
units across the group and reports are prepared of performance against 
target kpis 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 we do the right 
thing by all our stakeholders 
o ur programme of engaging with stakeholders including customers staff 
suppliers investors nongovernmental organisations and others is set out 
in more detail in our c orporate r esponsibility r eview 2009 and on our 
website wwwtescocomcrreport09 
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 c ompany developments
d uring the year the c hairman c hief executive and f inance d irector 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 t he c hairman’s meetings with major shareholders 
took place independently from the executive team in addition to this  
the c ompany s ecretary’s office investor r elations and other teams within 
the business engage with shareholders on a regular basis and on a wide 
range of issues 
it is normal that institutional shareholders may be in more regular  
contact with the group than others but care is exercised to ensure that 
any pricesensitive information is released to all shareholders institutions 
and private at the same time in accordance with applicable legal and 
regulatory requirements
every shareholder may choose to receive a full annual r eport and  
f inancial s tatements or the annual r eview and s ummary f inancial 
s tatements either in paper or electronic form t hese reports together 
with publiclymade trading statements are available on the group’s 
website wwwtescocomcorporate
the tesco plc agm  
t he annual general meeting offers the opportunity for the board to 
communicate directly with shareholders our last annual general meeting 
in june 2008 was held near birmingham a departure from its traditional 
location in c entral london t his was in recognition of the diversity of our 
shareholder base
t he 2009 agm will be held in glasgow at 1030 am on f riday 3 july t he 
choice of location is based on our policy of widening the opportunity for 
our shareholders to attend the agm by moving to different locations in 
the uk each year
t he whole board attends the meeting and is available to answer questions 
from shareholders present t o 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 t his follows best practice 
guidelines and allows the c ompany to count all votes not just those of 
shareholders attending the meeting 
by o rder of the board 
jonathan lloyd
c ompany s ecretary
1 may 2009
tesco plc
r egistered number 445790
r egistered in england and wales
r egistered o ffice t esco h ouse d elamare r oad c heshunt
h ertfordshire en8 9s l
vat r egistration number gb 220 4302 3 50 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
base salary
shortterm 
performance
cash bonus
deferred 
share bonus
performance
share plan 
group  
international
share 
options
us l tip
group new
business
incentive
plan
longterm 
performance
c•••• depending on
individual incentive arrangements
and performance c•••• depending on individual incentive arrangements and performance
performancerelated elements fixed element
base salary
shortterm 
performance
cash bonus
deferred 
share bonus
performance
share plan 
group  
international
share 
options
us l tip
group new
business
incentive
plan
longterm 
performance
c1233 depending on
individual incentive arrangements
and performance c6788 depending on individual incentive arrangements and performance
performancerelated elements fixed element
t his report sets out the remuneration policy for the executive and  
n onexecutive d irectors of t esco plc and describes the individual 
remuneration of the d irectors for the year ended 28 february 2009
executive summary
t he primary goal of t esco is to deliver strong sustainable and profitable 
longterm growth d espite the global downturn t esco has delivered 
another strong performance against targets this year t his has continued 
to build on the track record of recent years
sales profit and roce performance over 5 years 
2005 2006 2007 2008 2009
10000
20000
30000
40000
50000
60000
0
sales £m
 
2005 2006 2007 2008 2009
500
1000
1500
2000
2500
3000
3500
0
underlying profit before tax £m
 
2005 2006 2007 2008 2009
130
100
103
r oce
106
109
112
115
118
127
121
124
 
t esco is already a large and profitable company a 10 increase in 
c ompany value equates to some £3bn in additional shareholder  
value equivalent to a ftse 50 organisation c ontinuing to grow and 
expand profitability from such a high base is challenging but forms  
the core of t esco’s strategy and its supporting processes including 
executive remuneration 
t he result for 20089 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 
executive d irector salaries were increased from 1 july 2008 by an •	
average of 54 after the normal review
annual bonus payouts ranged from 60 to 90 of maximum  •	
t he 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 d irectors
longterm incentive payout was 90 of a potential maximum of  •	
100 of salary
no material changes to policy remuneration mix or scale of incentives •	
deferred awards already earned from prior years representing  •	
46 million shares became available to d irectors
minor changes are being proposed to remuneration arrangements •	
relating to leaving conditions and
continuing high level of share ownership by executive d irectors •	
executive director remuneration strategy
t esco has a longstanding policy of rewarding talent and experience  
we seek to provide incentives for delivering high sustainable and 
profitable growth thus creating high additional value for shareholders 
we operate in a keenly competitive and rapidly changing retail 
environment business success depends on the talents of the key team 
but outstanding business performance comes from teamwork t esco has  
a stable and successful management team and motivating that team  
at senior levels to deliver yet higher levels of performance is vital to our 
ongoing success we believe our incentives should support the continued 
progress within the existing business the strengthening of our returns 
from the international business and new retail lines as well as the creation 
of significant new businesses 
t he r emuneration c ommittee believes that the majority of total 
remuneration should be performancerelated and delivered largely  
in shares to closely align the interests of shareholders and executive 
d irectors in determining the balance between the fixed and variable 
elements of the executive d irectors’ remuneration packages the 
c ommittee takes into account both policy and market practice 
t otal remuneration levels of executive d irectors are reviewed annually  
by the c ommittee taking into account their value to the c ompany and 
competitive market practice c onsideration is also given to pay levels across 
the group in order to sustain a common sense of purpose and sharing  
of success when setting the remuneration of executive d irectors the 
c ommittee considers the group’s performance on environmental social 
and governance esg matters specific esg performance targets are 
applied to certain elements of the remuneration structure in order to 
reinforce positive and responsible behaviour by senior management
directors’ remuneration report
year ended 28 february 2009
balance of fixed and performance related remuneration 51 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
performance related remuneration
t he remuneration structures for executive d irectors 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 performance  
longterm performance is rewarded through delivery of shares and short
term performance through a combination of cash and compulsory deferred 
shares t his ensures continued emphasis on strong annual performance 
combined with longterm executive share ownership providing a strong link 
between the incentives received and shareholder value 
performance measures
t he executive d irectors have a range of performance targets across the 
various incentive plans which reflect the objectives of the group and their 
own responsibilities t argets are generally set to reward performance 
improvement over prior periods
t he 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 profitability measured through return on capital  •	
whilst growing the business
achievement of durable improvements in the underlying drivers  •	
of performance such as cost reduction energy efficiency reduced 
environmental impact and sales growth captured through the  
corporate measures and
laying foundations for future performance through measures such  •	
as developing new sales footage developing people implementing 
community programmes also captured through the corporate measures
shortterm performance measures
measures participation incentivises maximum potential 
 of salary
performance period delivered via
earnings per share all executive d irectors year on year earnings 
growth
125 us ceo 625 o ne year annual cash and 
annual deferred  
share bonuses  
3year deferral
c orporate objectives all executive d irectors d elivery of strategic 
business priorities 
entrepreneurial  
spirit and building 
framework for  
future growth
55 us ceo 275 o ne year annual cash and 
annual deferred  
share bonuses  
3year deferral
t otal shareholder 
return
all executive d irectors s hare price and 
dividend growth
20 us ceo 10 o ne year annual deferred  
share bonuses  
3year deferral
s pecific us objectives us ceo d elivery against 
financial and strategic 
milestones for us 
business
200 o ne year annual cash and 
annual deferred  
share bonuses  
3year deferral
s pecific us objectives group ceo d elivery against 
financial and strategic 
milestones for us 
business
50 o ne year annual deferred  
share bonuses  
3year deferral
longterm performance measures
measures participation incentivises maximum potential 
 of salary unless 
otherwise stated
performance period delivered via
eps relative to rpi all executive d irectors longerterm earnings 
growth
200 t hree years executive share options
group roce all executive d irectors longterm business 
success and 
shareholder returns
100 t hree years performance share 
plan
international roce all executive d irectors 
except us ceo
longterm business 
success and 
shareholder returns
50 t hree years performance share 
plan
us ebit and roce us ceo establishment of 
successful us business
2 million shares 201011 – 201314 us long t erm 
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 n ew business 
incentive plan
  t his is the amount on which the number of shares under option is calculated t he actual realisable value of these options will depend on any growth in share price between the date of 
grant and the date of exercise 52 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
directors’ remuneration report continued
participation in the various elements is governed by the r emuneration 
c ommittee and individual executives 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 t he c ommittee 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 rising 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 
t he r emuneration c ommittee believes that executive d irectors holding 
shares aligns their interests with shareholders and demonstrates their 
ongoing commitment to the business executive d irectors are required to 
build and maintain a shareholding with a value at least equal to their basic 
salary n ew appointees will typically be allowed three years to establish this 
shareholding full participation in the longterm performance s hare plan is 
conditional upon this all executive d irectors currently satisfy this requirement
shares held by executive directors
as at 28 february 2009
0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000
ordinary shares sip l tip eip psp
richard brasher
philip clarke
andrew higginson
tim mason
laurie mcllwee
lucy nevillerolfe
david potts
sir terry leahy
 t im mason sold 631384 ordinary shares on 22 april 2009
includes ordinary shares and awards of shares and nil cost options made to d irectors  
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 c ompany complies with abi dilution guidelines on their issue t he 
current dilution usage of executive plans is 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 international competitors we also take into account 
pay conditions throughout the group in deciding executive annual salary 
increases t he average increase for senior management below board level 
last year was 5 whereas for other staff the average increase was typically 
around 4 basic salaries are typically increased with effect from 1 july 
each year and the r emuneration c ommittee will be taking into account the 
current economic climate in setting salaries for the coming year
  basic salary 1 july 2008 
director £000
r ichard brasher 792
philip c larke 792
andrew higginson 792
s ir t erry leahy 1375
t im mason 792
laurie mcilwee 550
lucy n eviller olfe 554
d avid potts 792
 s alary on appointment 27 january 2009
 
pensions 
pension provision is central to our ability to foster loyalty and retain experience 
which is why t esco wants to ensure that the t esco plc pension s cheme is a 
highly valued benefit all executive d irectors are members of the t esco plc 
pension s cheme which provides a pension of up to twothirds of base salary 
on retirement normally at age 60 dependent on service t he final salary 
s cheme is now closed to new entrants but has been replaced throughout 
the organisation by a different definedbenefit pension scheme based on 
career average earnings s ince april 2006 following implementation of the 
regulations contained within the finance act 2004 executive d irectors have 
been eligible to receive the maximum pension that can be provided from the 
registered pension scheme t he balance of any pension entitlement for all 
executive d irectors is delivered through an unapproved retirement benefits 
scheme sur bs  except for t im mason the sur bs is ‘secured’ by using a 
fixed charge over a cash deposit in a designated account 
o ver the last few years pension contributions by our executive d irectors 
have been increasing progressively in 20089 the level of contribution was 
7 of salary which is in line with senior management’s contribution levels 
c ontributions will rise over the next three years to 10 by 201112 further 
details of the pension benefits earned by the d irectors can be found on 
page 56
all employee share schemes
t he executive d irectors are eligible to participate in the c ompany’s all 
employee share schemes on the same terms as u k employees  
s hares in s uccess s hares in the c ompany are allocated to participants •	
in the scheme up to hmrc approved limits currently £3000 per annum 
t he amount of profit allocated to the scheme is determined by the 
board taking account of c ompany 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 the market value in t esco plc 
s ave 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 
t esco plc at the end of a threeyear or fiveyear period at a discount of 
up to 20 of the market value t here are no performance conditions 
attached to sa ye options
other benefits
t he executive d irectors are eligible for car benefits life assurance 
disability and health insurance and staff discount 
20089 performance measurement
shortterm performance 20089
earnings per share
t he reported underlying diluted group eps for 20089 was 2892p  
an increase of 7 on last year 
corporate objectives
t he corporate objectives are based on our balanced scorecard the 
s teering wheel c orporate objectives for the awards made in respect  
of the financial year 20089 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  53 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
management and capability embedding the new international c ommunity 
plans and reducing our environmental impact most targets were met at 
the stretch level 
total shareholder return
t he graph below highlights the group’s total shareholder return 
performance over the last five financial years relative to the ftse 100 
index of companies t his index has been selected to provide an established 
and broadbased comparator group of retail and nonretail companies of 
similar scale to t esco
total shareholder return tsr 1 march 2004 to 28 february 2009
tesco
ftse 100
feb 04 feb 05 feb 06 feb 07 feb 08 feb 09

95
120
145
170
195
ftse100
tesco
 
tsr is the notional return from a share or index based on share price 
movements and declared dividends 
t he c ommittee considers tsr performance against the ftse 100 and a 
comparator group of international retailers that includes ahold c arrefour 
j s ainsbury metro morrisons s afeway inc t arget and walmart 
following the r emuneration c ommittee’s consideration of the extent to 
which the various performance measures in respect of the 20089 award 
have been achieved the executive d irectors have been awarded 90  
of the potential maximum for the cash element and 90 of the potential 
maximum for the deferred shares element of that part of their annual 
bonus which is measured by reference to eps  corporate objectives and tsr  
us objectives
t he additional awards to t im mason and s ir t erry leahy were 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  
d uring 20089 advances were made on most measures including store 
development sales growth cost management and customer factors 
however the economic downturn did result in a constraint over the year 
on the pace of growth against the demanding development objectives 
t he r emuneration c ommittee has assessed the bonus outturn for 20089 
and t im mason has been awarded 45 of the potential maximums for the 
cash and deferred shares elements of that part of his annual bonus which 
is measured by reference to us specific targets and s ir t erry leahy has 
been awarded 45 of the potential maximum for the deferred shares 
element of that part of his annual bonus which is measured by reference  
to us specific targets
longterm performance 20089
earnings per share
t he threeyear performance period for the 20067 executive o ption grant 
over shares with a value of 200 of salary at the date of grant ended at 
the financial year end 20089 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 with the balance vesting for achieving 
growth of at least rpi plus 15 t here is no retesting of performance t he 
increase in underlying diluted eps relative to rpi over the three years from 
20067 to 20089 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 
20067 psp award the c ommittee considered the level of performance 
against the target for the first 75 of the psp award of achieving posttax 
group roce of 134 by the end of fy 20089 posttax roce calculated  
on a likeforlike basis with the target originally set at the end of fy 20089 
was 133 so 70 of the first 75 of the award will vest t he c ommittee 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 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 c ommittee concluded that 20 of the remaining 25 of 
the award should vest
future performance targets
t he c ommittee has determined that no change is required for the coming 
year in the form of incentive arrangements nor in the relative balance 
between them t he maximum opportunity under incentive arrangements 
will remain the same for the forthcoming year as set out on page 51 t he 
same principles as described earlier were also adopted in the determination 
of performance targets ie emphasis on continuous improvement and 
recognition of the need to deliver underlying improvements and continue 
to develop for the future whilst delivering current financial objectives
shortterm performance 
we are not able to 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 c orporate 
o bjective targets for the group ceo and us ceo a portion of the annual 
bonus will continue to relate to the performance of the us business
longterm performance 
earnings per share
o ptions were granted in 20089 to executive d irectors 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 201011 to determine the level  
of vesting
return on capital employed – group and international
t he rules of the performance s hare plan allow awards to be made over 
shares up to 150 of salary in the year ended 28 february 2009 awards 
were made to all the executive d irectors except t im mason over t esco plc 
shares equal to 150 of salary an award was made to t im mason over 
t esco plc shares equal to 100 of salary
for all the executive d irectors awards over up to 100 of salary will vest 
together with reinvested dividends subject to the achievement of group 
roce targets t he awards over the equivalent of a further 50 of salary 
made to the executive d irectors other than t im mason will vest together 
with reinvested dividends subject to the achievement of targets based  
on international roce to incentivise and reward delivery of higher returns 
from invested capital outside the u k but excluding the us  
t he 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 t he target in respect of the first 75 of the 20089 psp award is 
achievement of 142 group roce and 90 international roce at the 
end of the threeyear performance period in 201011 t he remaining  
25 of the award will vest for superior r eturn on c apital performance as 
judged by the r emuneration c ommittee taking into account the factors 
outlined above  54 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
directors’ remuneration report continued
if the r emuneration c ommittee exercises its judgement to allow some  
or all of the remaining 25 of the psp awards to vest we will describe  
in the d irectors’ r emuneration r eport in the relevant year those factors 
taken into account in determining the level of the award which would vest 
t here is no retesting of performance in respect of any targets
return on capital employed – us
t he 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 
t he t esco plc us long t erm incentive plan 2007 the us ltip has been 
designed to deliver reward only if the us business realises this potential 
t he 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 n o other executive d irectors 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 61 
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 t he group n ew 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 r emuneration c ommittee in the future where this is 
appropriate to do so in order to support the group’s new business ventures 
an award of 25 million shares was made to the group ceo in n ovember 
2007 t his award will vest based on the roce and ebit performance of the 
us business as set out on page 61 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
as the c ompany’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 r emuneration 
c ommittee has the flexibility to consider and include other new business 
development opportunities within the proposed award in addition the 
r emuneration c ommittee will consider the findings of the governance 
o versight c ommittee described below and opinions of the audit 
c ommittee as to whether the level of reported results achieved reflects  
the underlying financial performance of the c ompany when considering  
if and the extent to which the award made to the group ceo will vest 
service agreements
t he executive d irectors all have rolling service agreements with no fixed 
expiry date t hese contracts are terminated on notice of 12 months by  
the c ompany and six months’ notice by the executive if an executive 
d irector’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 c ompany will pay a sum 
calculated on the basis of basic salary and the average annual bonus paid 
for the last two years n o account will be taken of pension t ermination 
payments will be subject to mitigation t his 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 t o 
reflect his length of service with t esco and the early age of his appointment 
as ceo  s ir t erry leahy’s service agreement provides for his full pension 
entitlement to become available on retirement on or after his 57th birthday 
t he r emuneration c ommittee has agreed that new appointments of 
executive d irectors will normally be on a notice period of 12 months  
t he c ommittee 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 t he service agreements are available to shareholders to view 
on request from the c ompany s ecretary
outside appointments
t esco recognises that its executive d irectors may be invited to become 
n onexecutive d irectors of other companies s uch nonexecutive  
duties can broaden experience and knowledge which can benefit t esco 
s ubject to approval by the board executive d irectors 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 d irectors’ biographies can be found on page 43 of this r eport 
fees retained for any nonexecutive directorships are set out below
 c ompany in which fee retained  
 nonexecutive in 20089 
 directorship held £000
philip c larke whitbread plc 55
andrew higginson bskyb plc 60
lucy n eviller olfe t he c arbon t rust 19
nonexecutive directors
n onexecutive d irectors have letters of appointment setting out their 
duties and the time commitment expected t he letters are available  
to shareholders to view from the c ompany s ecretary upon request  
t he c hairman meets with each n onexecutive d irector separately to 
review individual performance all n onexecutive d irectors 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 c harles allen and harald einsmann each having served over ten 
years will submit themselves for reelection every year subject to the 
c hairman having reviewed their performance and concluded that they 
remain independent and continue to add value
t he remuneration of the n onexecutive d irectors is determined by the 
c hairman and the executive c ommittee after considering external market 
research and individual contribution n onexecutive d irectors’ fees were 
reviewed during the year and the basic fee was increased to £65000 per 
annum t he c hairs of the audit and r emuneration c ommittees receive 
£30000 in addition to their basic nonexecutive fee and n onexecutive 
d irectors who are members of these c ommittees receive an additional 
£12000 for each c ommittee t he s enior independent n onexecutive 
d irector r odney c hase who is also the d eputy c hairman receives a total 
fee of £135000 per annum t he r emuneration c ommittee determines  
the c hairman’s remuneration having regard to time commitment and 
packages awarded to c hairmen of other companies of a similar size and 
complexity d avid r eid n onexecutive c hairman receives an annual fee  
of £610000 this year and has the benefit of a company car and chauffeur
the remuneration committee
t he r emuneration c ommittee the c ommittee is governed by formal 
t erms of r eference t hey are reviewed annually and this year they were 
updated to reflect an increased level of oversight of senior management 
packages t he t erms of r eference are available from the c ompany 
s ecretary upon request or can be viewed at wwwtescocomboardprocess
composition of the committee
t he c ommittee consists entirely of independent n onexecutive d irectors 
t he members of the committee during the year were c harles allen 
c hairman of the c ommittee patrick c escau r odney c hase karen c ook  
e mervyn d avies and harald einsmann patrick c escau was appointed a 
member of the r emuneration c ommittee effective from 1 february 2009 
e mervyn d avies resigned from the c ompany during the year due to a 
conflict of interest ken hanna joined the c ommittee on 1 april 2009  
t he directors’ biographies can be found on page 43 of this r eport
n o member of the c ommittee has any personal financial interest in the 
matters being decided other than as a shareholder nor any daytoday 
involvement in running the business of t esco jonathan lloyd the 
c ompany s ecretary is s ecretary to the c ommittee d avid r eid n on
executive c hairman and s ir t erry leahy c hief executive of the group 
both attend meetings at the invitation of the c ommittee t hey are not 
present when their own remuneration is being discussed 
t he c ommittee is supported by the group personnel and finance 
functions and has continued to use the services of d eloitte llp whom it 
appointed as an external independent advisor d eloitte 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 c ommittee meetings is listed in the 
c orporate governance section on page 45 of this r eport 55 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
role of the committee
t he c ommittee’s purpose is to
determine and recommend to the board the remuneration policy for the •	
c hairman and executive d irectors
ensure the level and structure of remuneration is designed to attract •	
retain and motivate the executive d irectors needed to run the 
c ompany 
agree performance frameworks and targets and review performance •	
against these
monitor the level and structure of remuneration for senior management •	
and
ensure the remuneration relationship between the executive d irectors •	
and senior executives of the c ompany below this level is appropriate
t he c ommittee normally meets at least four times a year and has a  
rolling schedule of items within its remit in the financial year ended  
28 february 2009 the c ommittee met ten times d uring the year the 
c ommittee reviewed its own performance and agreed steps to enhance  
its effectiveness
governance oversight committee
t he governance o versight committee g oc  has been established  
to review and report at the end of each financial year on the allocation  
of capital and other group resources t he goc comprises the s enior 
independent d irector of the c ompany who chairs the goc  the 
c hairman of the audit c ommittee and the c hairman of the r emuneration 
c ommittee t he c hairman attends the goc and the c ompany s ecretary 
serves as its secretary t he goc reports its findings to the r emuneration 
c ommittee each year t he r emuneration c ommittee takes these into 
account along with the view of the audit c ommittee 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 
r emuneration c ommittee in respect of executive d irectors or the board in 
respect of all other employees who are participants in accordance with the 
c ombined c ode any such adjustments to vesting for executive d irectors will 
be reported to shareholders in the r emuneration r eport at the relevant time 
compliance
in carrying out its duties the r emuneration c ommittee gives full 
consideration to best practice t he c ommittee was constituted and operated 
throughout the period in accordance with the principles outlined in the 
listing r ules of the financial s ervices authority derived from the c ombined 
c ode on c orporate governance t he auditors’ report set out on page 67 
covers the disclosures referred to in this report that are specified for audit by 
the financial s ervices authority t his report also complies with disclosures 
required by the d irector r emuneration r eport r egulations 2002 d etails  
of d irectors’ emoluments and interests are set out on pages 55 to 64 of  
this r eport
charles allen 
c hairman of the r emuneration c ommittee
t ables 111 are audited information
table 1  directors’ emoluments
  fixed emoluments  performancerelated emoluments
      shortterm 
     shortterm deferred  total total
  s alary allowances benefits
3
 cash shares longterm
4
 20089 20078
  £000 £000 £000 £000 £000 £000 £000 £000
executive directors
r ichard brasher  778   –   65   712 712 –   2267   2116 
philip c larke  778   –   38  712  712  480  2720  2749 
andrew higginson  778   –   59  712  712   493  2754   2810 
s ir t erry leahy  1356   –   85  1238 1547  876  5102   5472 
 t im mason – base salary
1
  778   312   218  712 712   493  3225   3797 
 t im mason – supplement
1
  200   –   –   180 180  –  560  733 
t im mason – total  978   312   218  892  892  493  3785   4530 
laurie mcilwee
2
  38   –   5  24  24  –  91   – 
lucy n eviller olfe  538   –   70   499  499  –  1606   1451 
d avid potts  778   –   37  712  712  480  2719  2718 
non–executive directors        
c harles allen  91   –  – –  –  –  91   85 
patrick c escau
2
  5    –     5  – 
r odney c hase  129   –   –   –   –   –  129   118 
karen c ook  73   –   –   –   –   –  73   67 
e mervyn d avies  55   –   –   –   –   –  55   79 
harald einsmann  73   –   –   –   –   –  73   67 
ken hydon  91   –   –   –   –   –  91   85 
c arolyn mcc all  10   –   –   –   –   –  10   67 
d avid r eid c hairman  601   –   56   –   –   –  657  675 
jacqueline t ammenoms bakker
2
  9   –   –   –   –   –  9  – 
t otal  7159   312   633  5501 5810  2822  22237   23089 
1  t im 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  t im mason’s benefits are made up of car travel medical tax related costs and services and free shares awarded under the all employee 
s hare incentive plan
2 laurie mcilwee patrick c escau and jacqueline t ammenoms bakker were appointed during the year figures in table 1 are shown from their date of appointment  
3   with the exception of t im 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 s hare incentive plan         
4  t he longterm bonus figures shown in table 1 relate to the additional 125 enhancements allocated in may 2008 on shortterm and longterm awards under the old bonus scheme  
t he longterm bonuses awarded on 8 july 2008 under the performance s hare plan were awarded in the form of nil cost options with the exception of t im mason who received an unfunded 
promise to deliver shares d etails of these awards are shown in table 6  56 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
directors’ remuneration report continued
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 
definedbenefit pension scheme which is approved by hmrc
         
     a 
     increase in  transfer transfer  
     accrued t ransfer value of value of  transfer  
   t otal increase pension value of a at total accrued total accrued value of increase
   accrued in accrued during 28 february pension at pension at total accrued in transfer 
   pension at pension the year  2009 less 23 february 23 february pension at value less 
 age at years of 28 february  during net of d irector’s 2008 2008 28 february director’s
 28 february c ompany 2009
1 2
 the year inflation contributions old basis
3
 new basis
3
  2009 contributions
 2009 service £000 £000 £000 £000 £000 £000 £000 £000
 
r ichard brasher 47 22 332 39 24 218 2767 3075 3030 45
philip c larke 48 34 363 32 16 153 3343 3695 3530 165
andrew higginson 51 11 292 40 27 313 2882 3140 3354 214
s ir t erry leahy
4
 53 30 775 70 34 835 10141 10894 12130 1236
t im mason 51 27 395 34 17 188 4123 4490 4493 3
laurie mciiwee
5
 46 8 105 33 33 292 na 620 918 298
lucy n eviller olfe 56 11 205 39 30 468 2444 2597 3216 619
d avid potts 51 36 399 35 17 196 4285 4664 4705 41
1 t he accrued pension is that which would be paid annually on retirement at 60 based on service to 28 february 2009
2 s ome of the executive d irectors’ benefits are payable from an unapproved pension arrangement t his is secured by a fixed and floating charge on a cash deposit
3  t he 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 
2007 no longer produced reasonable values t ransfer values at 23 february 2008 have been restated using the new method of comparative purposes
4 s ir t erry leahy is entitled to retire at any age from 57 to 60 inclusive with an immediate pension of twothirds of base salary
5  laurie mciiwee was promoted to the board on 27 january 2009 t he increase in accrued pension shown is based on the increase since his date of promotion s imilarly the transfer value  
as at 23 february 2008 is based on the value of his pension as at date of promotion
table 3  gains made on executive share options
executive share option scheme and discretionary share option plan
       value realisable
1
     n umber of  o ption  market   
  d ate  d ate  d ate of  options  price  price at  20089 20078 
  of grant exercisable  exercise exercised pence exercise t otal £000 £000
 
r ichard brasher  –  – –   –  – –  –  – –
philip c larke  –  –   –   –   –  –  –  – 935
andrew higginson  –  –   –   –  –   –   –  – –
s ir t erry leahy 300998 300901 300908 126832 16400 36920 126832 260 –
t im mason  –   –   –   –  – –  –  –  –
laurie mcilwee 
2
  –  –  – –  –  –   –  –  –
lucy n eviller olfe   –   –  –  – –  –   –  – 274
d avid potts  –  –  –  –  –  –   – – 956 
total    126832   126832 260 2165
1  t he 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 laurie mcilwee was appointed on 27 january 2009 figures shown in this table are from the date of his appointment
3 gains made on s ave a s you earn share options are not included above t hese are detailed in table 5
4 gains made on nil cost options awarded under the performance s hare plan and executive incentive plan are not included above t hese are detailed in table 6 and table 9
table 4  share options held by directors and not exercised at 28 february 2009 
executive share option schemes 1994 and 1996 and discretionary share option plan 2004 
  o ptions as at  o ptions  o ptions  options as at  exercise d ate from  
  23 february  granted  exercised  28 february  price  which  expiry  
 d ate of grant 2008 in year
1
 in year
3
 2009 pence exercisable date
r ichard 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
t otal  1635947 353114 – 1989061    57 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
table 4  share options held by directors and not exercised at 28 february 2009 continued
executive share option schemes 1994 and 1996 and discretionary share option plan 2004 
  o ptions as at  o ptions  o ptions  options as at  exercise d ate from  
  23 february  granted  exercised  28 february  price  which  expiry  
 d ate of grant 2008 in year
1
 in year
3
 2009 pence exercisable date
philip c larke 22042005 379856 – – 379856 31275 22042008 22042015
 08052006 404896 – – 404896 31860 08052009 08052016
 08052007 298844 – – 298844 47375 08052010 08052017
 12052008 – 353114 – 353114 42700 12052011 12052018
t otal  1083596 353114 – 1436710   
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
t otal  1517949 353114 – 1871063   
s ir t erry leahy 30091998 126832 – 126832 – 16400 30092001 30092008
 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 08072010 08052017
 12052008 – 618548 – 618548 42700 12052011 12052018
t otal  6041507 618548 126832 6533223   
t im 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
t otal  1910725 353114 – 2263839   
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
t otal  382313 – – 382313   
lucy n eviller olfe  22042005 108050 – – 108050 31275 22042008 22042015
 08052006 116133 – – 116133 31860 08052009 08052016
 08052007 189973 – – 189973 47375 08052010 08052017
 12052008 – 231850 – 231850 42700 12052011 12052018
t otal  414156 231850 – 646006   
d avid 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
t otal  1083596 353114 – 1436710   
t otal  14069789 2615968 126832 16558925   
1  executive share options are subject to performance conditions measured over three years as set out on page 53 eps growth for the period 20056 to 20078 exceeded rpi growth by 42 
therefore share options awarded on 22 april 2005 vested in full on 22 april 2008 executives have until the tenth anniversary of the date of grant to exercise their options  
2  laurie mcilwee was appointed on 27 january 2009 figures shown in this table are from his date of appointment
3  t he market price at exercise is shown in table 3 t he share price at 28 february 2009 was 33320 pence t he share price during the 53 weeks to 28 february 2009 ranged from  
28590 pence to 43700 pence 58 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
directors’ remuneration report continued
table 5  share options held by directors and not exercised at 28 february 2009 
s avingsrelated share option scheme 1981
        value value  
  a s at  o ptions  o ptions  as at exercise realisable realisable  
  23 february granted exercised 28 february price 20089 20078 
 d ate of grant 2008 in year in year
1
 2009 pence £000 £000
r ichard brasher 06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5
philip c larke 06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5
andrew higginson 06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5
s ir t erry leahy 06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5
t im mason 06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5 59 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
table 5  share options held by directors and not exercised at 28 february 2009 continued
s avingsrelated share option scheme 1981
        value value  
  a s at  o ptions  o ptions  as at exercise realisable realisable  
  23 february granted exercised 28 february price 20089 20078 
 d ate of grant 2008 in year in year
1
 2009 pence £000 £000
laurie mcilwee
2
 06112003 1625 – 1625 – 19500 2 –
 02112005 754 – 754 – 24800 1 –
 08112006 615 – – 615 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 1077 – – 1077 31100 – –
  4890 – 2379 2511  3 –
lucy n eviller olfe  06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5
d avid potts 06112003 1625 – 1625 – 19500 2 5
 04112004 1424 – – 1424 23200 – –
 02112005 1298 – – 1298 24800 – –
 08112006 1066 – – 1066 30700 – –
 07112007 819 – – 819 41000 – –
 05112008 – 1077 – 1077 31100 – –
  6232 1077 1625 5684  2 5
t otal  48514 7539 13754 42299   
1  s ave a s you earn is an all employee share scheme o ptions are not subject to performance conditions all options are exercisable from 1 february in the year which is six 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 options granted on 6 n ovember 2003 on 2 february 2009 
when the market price was 34740 pence laurie mcilwee exercised his option granted on 2 n ovember 2005 on 18 february 2009 when the market price was 34230 pence n o options 
lapsed in the year
2 laurie mcilwee was appointed on 27 january 2009 figures shown in this table are from the date of his appointment 60 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
directors’ remuneration report continued
table 6  longterm performance share plan
     s hares released   d ate of  
   s hare price a s at  s hares awarded  options as at  releasedate  
  d ate of award on award date  23 february  options granted exercised  28 february from which  expiry 
 grant pence 2008 in year
3
 in year 2009 exercisable date
4
r ichard brasher 28072004 25345 118367 – – 118367 28072008 28072014
 12102005 30275 191565 6083 – 197648 12072009 12102015
 20072006 34625 196807 6249 – 203056 20072010 20072016
 14112007 47110 240045 7622 – 247667 14072010 14112017
 08072008 35376 – 339360 – 339360 08072011 08072018
t otal   746784 359314 – 1106098  
philip c larke 28072004 25345 175774 – – 175774 28072008 28072014
 12102005 30275 224654 7133 – 231787 12072009 12102015
 20072006 34625 211086 6703 – 217789 20072010 20072016
 14112007 47110 240045 7622 – 247667 14072010 14112017
 08072008 35376 – 339360 – 339360 08072011 08072018
t otal   851559 360818 – 1212377  
andrew higginson 28072004 25345 175774 – – 175774 28072008 28072014
 12102005 30275 224654 7133 – 231787 12072009 12102015
 20072006 34625 211086 6703 – 217789 20072010 20072016
 14112007 47110 240045 7622 – 247667 14072010 14112017
 08072008 35376 – 339360 – 339360 08072011 08072018
t otal   851559 360818 – 1212377  
s ir t erry leahy 28072004 25345 304794 – – 304794 28072008 28072014
 12102005 30275 393582 12498 – 406080 12072009 12102015
 20072006 34625 369810 11743 – 381553 20072010 20072016
 14112007 47110 420484 13352 – 433836 14072010 14112017
 08072008 35376 – 589465 – 589465 08072011 08072018
t otal   1488670 627058 – 2115728  
t im mason
1
 28072004 25345 90431 – – 90431 28072008 28072014
 12102005 30275 224654 5957 106385 124226 12072009 12102015
 25082006 34625 211086 6703 – 217789 20072010 –
 14112007 47110 160030 5081 – 165111 14072010  –
 08072008 35376 – 226240 – 226240 08072011  –
t otal   686201 243981 106385 823797  
laurie mcilwee
2
 20072006 34625 52808 – – 52808 20072009 –
 10102007 46550 41890 – – 41890 10072010  –
 08072008 35376 62141 – – 62141 08072011  –
t otal   156839 – – 156839  
lucy n eviller olfe
2
 18012006 31225 29820 639 30459 – 18072008 –
 20072006 34625 57417 1818 – 59235 20072009 –
 14112007 47110 157610 5003 – 162613 14072010 14112017
 08072008 35376 – 237552 – 237552 08072011 08072018
t otal   244847 245012 30459 459400  
d avid potts 28072004 25345 175774 – – 175774 28072008 28072014
 12102005 30275 224654 7133 – 231787 12072009 12102015
 20072006 34625 211086 6703 – 217789 20072010 20072016
 14112007 47110 240045 7622 – 247667 14072010 14112017
 08072008 35376 – 339360 – 339360 08072011 08072018
t otal   851559 360818 – 1212377  
t otal   5878018 2557819 136844 8298993  
1  t im mason’s awards since 2006 have been made in the form of unfunded promises following approval by the r emuneration c ommittee t im mason part exercised his 2005 award on  
12 july 2008 at a share price of 35525 pence in order to fund a us tax liability
2   laurie mcilwee was appointed on 27 january 2009 his awards shown above were made in the form of restricted shares under the senior management performance s hare plan figures 
shown in this table are from his date of appointment lucy n eviller olfe’s 2006 awards were also made in the form of restricted shares under the senior management performance s hare plan 
o n 18 july 2008 30459 shares were released to lucy n eviller olfe at a share price of 37575p
3   t he performance s hare plan replaced the longterm executive incentive s cheme t he first award under the new plan was made in 2004 all awards except those described in notes 1 and 2 
above have been made in the form of nil cost options t he awards are subject to performance conditions based on r eturn on c apital employed targets t he group roce for 20078 was 
129 therefore targets for psp awards granted on 12 o ctober 2005 were met in full and these awards vested executives are required to retain these vested awards for a further  
12 months with the exception of t im mason see note 1 s hareholder 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 t his 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
4 n o options lapsed in the year under this plan 61 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
table 7  group new business incentive plan
     options 
   s hare price on a s at  s hares awarded exercised as at date from 
 d ate of award date 23 february options granted shares released 28 february  which  expiry  
 awardgrant pence 2008 in year in year 2009 exercisable date
s ir t erry leahy 14112007 48200 2500000 79393 – 2579393 four  14112017 
       tranches  
       20112014 
t otal    79393 – 2579393  
1  t he group n ew business incentive plan 2007 was approved by shareholders on 29 june 2007 t he 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 t he 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  t he vesting of the award made to the group ceo under this plan will be conditional upon achievement against group and international performance conditions t he performance 
conditions under this award will be aligned with the targets set for awards made under the performance s hare 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  o nce 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 ventures as determined by the r emuneration c ommittee
summary of us business performance conditions
roce hurdle     201011 201112 201213 201314
maximum performance    6 roce 9 roce 11 roce 12 roce
t arget performance    4 roce 6 roce 8 roce 10 roce
vesting percentage  of maximum award
vesting levels at maximum performance    u p to 25 u p to 50 u p to 75 u p to 100
vesting levels at target performance     u p to 625 u p to 10 u p to 125 u p to 1875
table 8  us long term incentive plan
    s hare price on a s at  s hares s hares  as at  
  d ate of award date 23 february awarded released 28 february  date of 
  awardgrant pence 2008 in year in year 2009 release
t im mason  14112007 48200 2000000 63514 – 2063514 four  
        tranches  
        20112014
t otal     63514 – 2063514 
1  t he us long t erm incentive plan 2007 was approved by shareholders on 29 june 2007 t he 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 t he targets are set out under table 7
2  t he maximum number of shares which may be awarded under the us l tip 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 t im mason us ceo  in n ovember 2007 awards may be adjusted to take account of any dividends paid or that are payable in respect of the number of shares earned t he 
extent to which awards will vest under the us l tip is conditional on the financial performance of the c ompany’s us business based on the achievement of stretching earnings before 
interest and t ax ebit  and r eturn o n c apital 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’ t he 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 t he 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 t o 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 
t hat 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  t he targets for the us l tip have been based on the business plan in respect of the initial phase of the us business t he r emuneration c ommittee 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 r emuneration c ommittee will seek the input of 
the audit c ommittee and the governance o versight c ommittee 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 c ommittee and will be disclosed in the c ompany’s r emuneration r eport  62 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
table 9  executive incentive plan
1
       d ate of  
   s hare price a s at  s hares awarded s hares released as at  releasedate  
  d ate of on award  23 february  options options 28 february from which  expiry 
  awardgrant pence 2008 granted exercised 2009 exercisable date
3
r ichard brasher 20052005 31100 102636 3229 – 105865 20052008 20052015
 26052006 31850 172945 5491 – 178436 26052009 26052016
 24052007 45675 145594 4622 – 150216 24052010 24052017
 02052008 42405 – 149192 – 149192 02052011 02052018
t otal    421175 162534 – 583709  
philip c larke 20052005 31100 152415 4795 – 157210 20052008 20052015
 26052006 31850 202817 6440 – 209257 26052009 26052016
 24052007 45675 156159 4959 – 161118 24052010 24052017
 02052008 42405 – 149192 – 149192 02052011 02052018
t otal    511391 165386 – 676777  
andrew higginson 20052005 31100 152415 4795 – 157210 20052008 20052015
 26052006 31850 202817 6440 – 209257 26052009 26052016
 24052007 45675 156159 4959 – 161118 24052010 24052017
 02052008 42405 – 149192 – 149192 02052011 02052018
t otal    511391 165386 – 676777  
s ir t erry leahy 20052005 31100 264290 8316 – 272606 20052008 20052015
 26052006 31850 355326 11284 – 366610 26052009 26052016
 24052007 45675 273581 8687 – 282268 24052010 24052017
 02052008 42405 – 403030 – 403030 02052011 02052018
t otal    893197 431317 – 1324514  
t im mason
2
 20052005 31100 152415 4795 – 157210 20052008 20052015
 24052007 45675 177470 5635 – 183105 24052010  –
 02052008 42405 – 299078 – 299078 02052011  –
t otal    329885 309508 – 639393  
lucy n eviller olfe 24052007 45675 74452 2363 – 76815 24052010 24052017
 02052008 42405 – 97957 – 97957 02052011 02052018
t otal    74452 100320 – 174772  
d avid potts 20052005 31100 152415 4795 – 157210 20052008 20052015
 26052006 31850 202817 6440 – 209257 26052009 26052016
 24052007 45675 156159 4959 – 161118 24052010 24052017
 02052008 42405 – 149192 – 149192 02052011 02052018
t otal    511391 165386 – 676777  
t otal   3252882 1499837 – 4752719  
         
1  t he executive incentive plan replaced the shortterm executive incentive s cheme t he first award under the new plan was made in 2005 t he awards are subject to performance conditions 
based on tsr  earnings per share and corporate objectives t he awards are increased to reflect dividend equivalents as each dividend is paid 
2 s ince 2007 t im mason’s awards have been made in the form of an unfunded promise his 2005 award was made in the form of nil cost options
3 n o options lapsed in the year under the executive incentive plan
directors’ remuneration report continued 63 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
to find out more go to 
wwwtescocomannualreport09
table 10  directors’ interests in the longterm incentive plan 
   n umber of    number of  value of    
   shares as at    shares as at  shares   market price 
 year of  award 23 february  s hares  s hares  28 february  released r elease  on release 
 release date 2008 awarded
3
 released 2009 £000s date pence
philip c larke 2009 100402 164538 25983 190521 – 668 190209 35070
 2009 040504 340886 53831 394717 – 1384 190209 35070
 2010 090403 218410 34491 – 252901 – 090410 –
 2011 040504 179884 28407 – 208291 – 040511 –
t otal   903718 142712 585238 461192 2052  
andrew higginson 2009 100402 179639 28368 208007 – 729 190209 35070
 2009 040504 340886 53831 394717 – 1384 190209 35070
 2010 090403 228119 36024 – 264143 – 090410 –
 2011 040504 179884 28407 – 208291 – 040511 –
t otal   928528 146630 602724 472434 2113
s ir t erry leahy 2009 100402 322117 50869 372986 – 1308 190209 35070
 2009 040504 601210 94943 696153 – 2441 190209 35070
 2010 090403 409471 64664 – 474135 – 090410 –
 2011 040504 317250 50100 – 367350 – 040511 –
t otal   1650048 260576 1069139 841485 3749
t im mason 2009 100402 179639 28368 208007 – 729 190209 35070
 2009 040504 340886 53831 394717 – 1384 190209 35070
 2010 090403 228119 36024 – 264143 – 090410 –
 2011 040504 179884 28407 – 208291 – 040511 –
t otal   928528 146630 602724 472434 2113 
laurie mcilwee
1 2
 2009 240506 52804 – 52804 – 185 190209 35070
 2010 240507 58863 – – 58863 – 240510 –
 2011 210508 62383 – – 62383 – 210511 –
t otal   174050 – 52804 121246 185
lucy n eviller olfe
1
 2009 240506 57935 1834 59769 – 210 190209 35070
t otal  57935 1834 59769 – 210
d avid potts 2009 100402 164538 25983 190521 – 668 190209 35070
 2009 040504 340886 53831 394717 – 1384 190209 35070
 2010 090403 218410 34491 – 252901 – 090410 –
 2011 040504 179884 28407 – 208291 – 040511 –
t otal   903718 142712 585238 461192 2052
t otal   5546525 841094 3557636 2829983 12474 
1  bonus shares shown for laurie mcilwee and lucy n eviller olfe were awarded under the senior management bonus scheme before they joined the board t hese shares can not be retained 
for an additional threeyear period and enhanced  
2  laurie mcilwee was appointed on 27 january 2009 figures shown in this table are from the date of his appointment
3  t his plan has been replaced by the performance s hare plan and executive incentive plan
d ate of award  100402 090403 040504 240506 240507 210508
award price pence  24800 19725 24875 31688 45663 41545 64 directors’ remuneration report
tesco plc annual r eport and financial s tatements 2009
table 11  disclosable interests of the directors including family interests
        23 february 2008 
       28 february 2009 or on appointment if later
      options   o ptions 
      to acquire   to acquire 
     ordinary  ordinary o rdinary ordinary  
     shares
1
 shares
2
 shares
1
 shares
2
executive directors
r ichard brasher     189825 3684552 184221 2810138
philip c larke     1344598 3331548 1438835 2452778
andrew higginson     1287438 3765901 1384926 2887131
s ir t erry leahy     5992724 12558542 6067985 10929606
t im mason     4365664 2641390 3882995 2384457
laurie mcilwee
3
     320878 384824 340149 387203
lucy n eviller olfe      197903 1226627 227650 652450
d avid potts     1737555 3331548 1803574 2452778
nonexecutive directors      
c harles allen     – – – –
patrick c escau     – – – –
r odney c hase     – – – –
karen c ook     – – – –
e mervyn d avies
4
     2400 – 2400 –
d r harald einsmann     303209 – 246054 –
ken hydon     30093 – 30093 –
c arolyn mcc all
4
     6556 – 6556 –
d avid r eid c hairman     193825 – 193515 –
jacqueline t ammenoms bakker     – – – –
total     15972668 30924932 15808953 24956541
1  o rdinary shares shown in this table include restricted shares held by laurie mcilwee and lucy n eviller olfe under the performance s hare plan shown in table 6 which are subject to future 
performance conditions shares held under a promise by t im mason under the performance s hare plan shown in table 6 which are subject to future performance conditions the us long 
t erm incentive plan shown in table 8 which are subject to future performance conditions and the executive incentive plan shown in table 9 which are subject to a holding period shares held 
under the long t erm incentive plan shown in table 10 which are subject to a holding period and shares held under the all employee s hare incentive plan which are subject to a holding period 
between 28 february 2009 and 20 april 2009 483 shares were purchased by executive d irectors as part of the buy a s you earn scheme and t im mason sold 631384 ordinary shares
2  o ptions to acquire ordinary shares shown in this table comprise options held under the executive s hare o ption schemes and d iscretionary s hare o ption plan shown in table 4 s ave as you earn 
scheme shown in table 5 and nil cost options held under the performance s hare plan group n ew business incentive plan and executive incentive plan shown in tables 6 7 and 9 respectively 
3  laurie mcilwee was appointed on 27 january 2009 figures for 20078 shown in this table are from the date of his appointment
4  c arolyn mcc all and e mervyn d avies resigned from the board on 10 april 2008 and 31 o ctober 2008 respectively 
directors’ remuneration report continued 65 financial statements
financial statements  65
statement of directors’ responsibilities 66
independent auditors’ report to the members  
 of tesco plc 67
group income statement 68
group statement of recognised income and expense 69
group balance sheet 70
group cash flow statement 71
reconciliation of net cash flow to movement in  
 net debt note 71
notes to the group financial statements 72
five year record 124
tesco plc – parent company financial statements 126
independent auditors’ report to the members  
 of tesco plc 136
contents 
to find out more go to 
wwwtescocomannualreport09 tesco plc annual report and financial statements 2009 66 financial statements
tesco plc annual report and financial statements 2009
statement of directors’ responsibilities
the directors are required by the companies acts 1985 and 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 
ifrs 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 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 group and which enable them to ensure that the financial 
statements and the directors’ remuneration report comply with the 
companies acts 1985 and 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 67
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
financial statements
we have audited the group financial statements of tesco plc for the  
53 weeks ended 28 february 2009 which comprise the group income 
statement the group balance sheet the group cash flow statement  
the group statement of recognised income and expense and the related 
notes these group financial statements have been prepared under the 
accounting policies set out therein
we have reported separately on the parent company financial statements 
of tesco plc for the 53 weeks ended 28 february 2009 and on the 
information in the directors’ remuneration report that is described as 
having been audited 
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the 
group financial statements in accordance with applicable law and 
international financial reporting standards ifrss as endorsed by the 
european union are set out in the statement of directors’ responsibilities
our responsibility is to audit the group financial statements in accordance 
with relevant legal and regulatory requirements and international 
standards on auditing uk and ireland this report including the opinion 
has been prepared for and only for the company’s members as a body in 
accordance with section 235 of the companies act 1985 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 report is shown 
or into whose hands it may come save where expressly agreed by our prior 
consent in writing
we report to you our opinion as to whether the group financial statements 
give a true and fair view and whether the group financial statements have 
been properly prepared in accordance with the companies act 1985 and 
article 4 of the ias regulation we also report to you whether in our 
opinion the information given in the report of the directors is consistent 
with the group financial statements 
in addition we report to you if in our opinion we have not received all the 
information and explanations we require for our audit or if information 
specified by law regarding directors’ remuneration and other transactions 
is not disclosed
we review whether the corporate governance statement reflects the 
company’s compliance with the nine provisions of the combined code 
2006 specified for our review by the listing rules of the financial 
services authority and we report if it does not we are not required to 
consider whether the board’s statements on internal control cover all  
risks and controls or form an opinion on the effectiveness of the group’s 
corporate governance procedures or its risk and control procedures
independent auditors’ report to the  
members of t esco plc
we read other information contained in the annual report and consider 
whether it is consistent with the audited group financial statements  
the other information comprises only the introduction the financial 
highlights chairman’s statement tesco at a glance the chief executive’s 
qa the report of the directors the corporate governance statement 
the unaudited part of the directors’ remuneration report and the five year 
record we consider the implications for our report if we become aware  
of any apparent misstatements or material inconsistencies with the  
group financial statements our responsibilities do not extend to any  
other information
basis of audit opinion   
we conducted our audit in accordance with international standards on 
auditing uk and ireland issued by the auditing practices board an audit 
includes examination on a test basis of evidence relevant to the amounts 
and disclosures in the group financial statements it also includes an 
assessment of the significant estimates and judgements made by the 
directors in the preparation of the group financial statements and  
of whether the accounting policies are appropriate to the group’s 
circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information 
and explanations which we considered necessary in order to provide us 
with sufficient evidence to give reasonable assurance that the group 
financial statements are free from material misstatement whether caused 
by fraud or other irregularity or error in forming our opinion we also 
evaluated the overall adequacy of the presentation of information in the 
group financial statements
opinion
in our opinion
 the group financial statements give a true and fair view in accordance •	
with ifrss as endorsed by the european union of the state of the 
group’s affairs as at 28 february 2009 and of its profit and cash flows 
for the 53 weeks then ended
the group financial statements have been properly prepared in •	
accordance with the companies act 1985 and article 4 of the ias 
regulation and
the information given in the report of the directors is consistent with •	
the group financial statements
pricewaterhousecoopers llp
chartered accountants and registered auditors 
london 1 may 2009 68 financial statements
tesco plc annual report and financial statements 2009
group income statement 
    2009 2008 
53 weeks ended 28 february 2009   notes £m £m
continuing operations
revenue sales excluding vat           2 54327 47298
cost of sales             50109 43668
gross profit             4218 3630
administrative expenses             1248 1027
profit arising on propertyrelated items           23 236 188
operating profit            2 3206 2791
share of posttax profits of joint ventures and associates           13 110 75
finance income           5 116 187
finance costs           5 478 250
profit before tax           3 2954 2803
taxation           6 788 673
profit for the year        2166 2130
  
attributable to
equity holders of the parent           30 2161 2124
minority interests           30 5 6
          2166 2130
  
earnings per share
basic           9 2750p 2695p
diluted     9 2731p 2661p
nongaap measure underlying profit before tax
    2009 2008 
   notes £m £m
profit before tax              2954 2803
adjustments for
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements         15 88 49
ias 19 income statement charge for pensions           28 403 414
‘normal’ cash contributions for pensions           28 376 340
ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods     1 27 18
ifrs 3 amortisation charge from intangible assets arising on acquisition         1 32 –
underlying profit before tax     1 3128 2846
 results for the year ended 23 february 2008 include 52 weeks of operation
the notes on pages 72 to 123 form part of these financial statements 69 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
group statement of recognised income  
and expense
    2009 2008 
53 weeks ended 28 february 2009   notes £m £m
change in fair value of availableforsale investments            3 4
foreign currency translation             275 38
total lossgain on defined benefit pension schemes           28 629 187
gainslosses on cash flow hedges              
  net fair value gains             505 66
  reclassified and reported in the group income statement            334 29
tax on items taken directly to equity           6 435 123
net expenseincome recognised directly in equity             295 381
profit for the year             2166 2130
total recognised income and expense for the year      30 1871 2511
  
attributable to            
  equity holders of the parent             1872 2500
  minority interests             1 11
          1871 2511
 results for the year ended 23 february 2008 include 52 weeks of operation 70 financial statements
tesco plc annual report and financial statements 2009
group balance sheet 
    2009 2008 
28 february 2009   notes  £m £m
noncurrent assets
goodwill and other intangible assets           10 4027  2336 
property plant and equipment           11 23152 19787
investment property           12 1539 1112
investments in joint ventures and associates           13 62 305
other investments           14 259 4
loans and advances to customers      17 1470 –
derivative financial instruments           22 1478 216
deferred tax assets           6 21 104
                32008 23864
current assets
inventories      15 2669 2430
trade and other receivables      16 1798 1311
loans and advances to customers      17 1918 –
loans and advances to banks and other financial assets           18 2129 –
derivative financial instruments           22 382 97
current tax assets             9 6
shortterm investments             1233 360
cash and cash equivalents           19 3509 1788
                13647 5992
noncurrent assets classified as held for sale            7 398 308
                14045 6300
current liabilities
trade and other payables           20 8522 7277
financial liabilities
  borrowings           21 4059 2084
  derivative financial instruments and other liabilities           22 525 443
customer deposits      24 4538 –
deposits by banks      25 24  –
current tax liabilities             362 455
provisions           26 10 4
                18040 10263
net current liabilities              3995 3963
noncurrent liabilities
financial liabilities
  borrowings           21 12391  5972 
  derivative financial instruments and other liabilities           22 302  322
postemployment benefit obligations           28 1494 838
other noncurrent payables           20 68 42
deferred tax liabilities           6 696  802 
provisions           26 67 23
                15018 7999
net assets       12995 11902
  
equity
share capital           2930 395 393
share premium account           30 4638 4511
other reserves           30 40 40
retained earnings           30 7865  6871
equity attributable to equity holders of the parent             12938 11815
minority interests           30 57  87
total equity        12995 11902
sir terry leahy
laurie mcilwee
directors
the financial statements on pages 68 to 123 were authorised for issue by the directors on 1 may 2009 and are subject to the approval of the shareholders 
at the annual general meeting on 3 july 2009 71 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
group cash flow statement 
    2009 2008 
53 weeks ended 28 february 2009   notes £m £m
cash flows from operating activities
cash generated from operations            33 4978 4099
interest paid             562 410
corporation tax paid             456 346
net cash from operating activities              3960 3343
cash flows from investing activities               
acquisition of subsidiaries net of cash acquired              1275 169
purchase of property plant and equipment and investment property           4487 3442
proceeds from sale of property plant and equipment              994 1056
purchase of intangible assets             220 158
increase in loans to joint ventures             242 36
investments in joint ventures and associates             30 61
investments in shortterm investments             1233 360
proceeds from sale of shortterm investments             360 –
dividends received             69 88
interest received              90 128
net cash used in investing activities              5974 2954
cash flows from financing activities 
proceeds from issue of ordinary share capital              130 138
proceeds from sale of ordinary share capital to minority interests           – 16
increase in borrowings             7387 9333
repayment of borrowings             2733 7593
new finance leases             – 119
repayment of obligations under finance leases             18 32
dividends paid             883 792
dividends paid to minority interests             3 2
own shares purchased              265 775
net cash from financing activities              3615 412
net increase in cash and cash equivalents              1601 801
cash and cash equivalents at beginning of year             1788 1042
effect of foreign exchange rate changes             120 55
cash and cash equivalents at end of year      19 3509 1788
 results for the year ended 23 february 2008 include 52 weeks of operation
reconciliation of net cash flow to movement  
in net debt note
     2009 2008 
 53 weeks ended 28 february 2009   notes £m £m
net increase in cash and cash equivalents             1601 801
elimination of net increase in tpf cash and cash equivalents             37 –
net cash inflow from debt and lease financing             4636 1827
shortterm investments             873 360
movement in joint venture loan receivables
 
            242 36
debt acquired on acquisition of homever             611 –
transfer of joint venture loan receivable on acquisition of tpf             91 –
other noncash movements             759 691
increase in net debt in the year             3418 1321
opening net debt           34 6182 4861
closing net debt     34 9600 6182
 results for the year ended 23 february 2008 include 52 weeks of operation
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 72 financial statements
tesco plc annual report and financial statements 2009
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 1985 registration number 
445790 the address of the registered office is tesco house delamare 
road cheshunt hertfordshire en8 9sl uk
the financial year represents the 53 weeks to 28 february 2009 prior 
financial year 52 weeks to 23 february 2008 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 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 acts 
1985 and 2006 as applicable to companies reporting under ifrs
basis of preparation
the financial statements are presented in pounds sterling rounded to the 
nearest million they are prepared on the historical cost basis except for 
certain financial instruments sharebased payments 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 
dilapidations 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
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 
note 1 accounting policies 73 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 
insurance commission received by the group is accrued over the term  
of the policy
clubcard and loyalty initiatives
the cost of clubcard is treated as a cost of sale with an accrual equal to 
the estimated fair value of the points issued recognised when the original 
transaction occurs on redemption the cost of redemption is offset 
against the accrual
the fair value of the points awarded is determined with reference to the 
cost of redemption and considers factors such as redemption via clubcard 
deals versus moneyoff instore and redemption rate
computers for schools and sport for schools and clubs 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 as 
a deduction from sales
other income
finance income excluding income arising from financial services is 
recognised in the period to which it relates on an accruals basis dividends 
are recognised when a legal entitlement to 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 tangible fixed assets are reviewed for impairment in accordance with 
ias 36 ‘impairment of assets’ when there are indications that the carrying 
value may not be recoverable
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 personal finance group limited interest expense 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
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 at 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
note 1 accounting policies continued 74 financial statements
tesco plc annual report and financial statements 2009
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 have suffered an impairment loss if such indication 
exists the recoverable 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 
income immediately
other investments
other investments in the group balance sheet comprise equity 
investments and availableforsale financial assets refer to the financial 
instruments accounting policy for further detail
equity investments 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 
recognised income and expense
payments to defined contribution schemes are recognised as an expense 
as they fall due
notes to the group financial statements continued
note 1 accounting policies continued 75 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 directly in equity in which case  
it is recognised in equity 
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 in which case the deferred tax is also 
recognised in equity
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
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
note 1 accounting policies continued 76 financial statements
tesco plc annual report and financial statements 2009
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 
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 and interest rate 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
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 including 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 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 
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 and currency options
notes to the group financial statements continued
note 1 accounting policies continued 77 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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
securitisation transactions
during 20089 the group has entered into a securitisation transaction  
and issued debt securities the debt securities in issue and the loans and 
advances to customers are recorded on the group’s balance sheet within 
current borrowings and loans and advances to customers
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
recent accounting developments
standards amendments and interpretations effective for 20089  
or issued and early adopted
in preparing the group financial statements for the current year the group 
has adopted the following new ifrs amendments to ifrs and ifric 
interpretations which have not had a significant impact on the results or 
net assets of the group
 amendments to ias 39 ‘financial instruments recognition and •	
measurement’ and ifrs 7 ‘financial instruments disclosures’ effective 
from 1 july 2008 these amendments permit the reclassification of 
financial assets in particular circumstances the adoption of the 
amendments to ias 39 and ifrs 7 has had no impact on the results  
or net assets of the group
 ifric 11 ‘group and treasury share transactions’ effective for annual •	
periods beginning on or after 1 march 2007
 ifric 12 ‘service concession arrangements’ effective for annual periods •	
beginning on or after 1 january 2008 this interpretation applies to 
public sector service concession operators and explains how to account 
for the obligations undertaken and rights received in service concession 
arrangements no member of the group is an operator and hence the 
adoption of ifric 12 has had no impact on the results or net assets of 
the group
standards amendments and interpretations not yet effective  
but not expected to have a significant impact on the group
 ifrs 8 ‘operating segments’ effective for annual periods beginning on •	
or after 1 january 2009 this new standard replaces ias 14 ‘segment 
reporting’ and requires segmental information to be presented on the 
same basis that management uses to evaluate performance of its 
reporting segments in its management reporting we do not expect the 
adoption of ifrs 8 to have a significant impact upon the results or net 
assets of the group
 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 we do not expect the adoption of the amendment  
to ias 23 to have a significant impact upon the results or net assets of 
the group
 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 2009 as endorsed by the eu this 
interpretation provides guidance on how to assess the limit on the 
amount of surplus in a defined benefit scheme that can be recognised 
as an asset under ias 19 ‘employee benefits’ we do not expect the 
adoption of ifric 14 to have a significant impact upon the results  
or net assets of the group
standards amendments and interpretations not yet effective  
and under review as to their impact on the group
 amendment to ias 1 ‘presentation of financial statements’ effective •	
for annual periods beginning on or after 1 january 2009 
amendment to ias 27 ‘consolidated and separate financial •	
statements’ effective for annual periods beginning on or after  
1 july 2009
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 39 ‘financial instruments recognition and •	
measurement’– eligible hedged items effective for annual periods 
beginning on or after 1 july 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
amendment to ifrs 2 ‘sharebased payment’– vesting conditions  •	
and cancellations effective for annual periods beginning on or after  
1 january 2009
amendments to ifrs 3 ‘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
ifric 13 ‘customer loyalty programmes’ effective for annual periods •	
beginning on or after 1 july 2008 this interpretation requires customer 
loyalty award credits to be accounted for as a separate component of 
the sales transaction in which they are granted and therefore part of the 
fair value of the consideration received is allocated to the award credits 
and deferred over the period that the award credits are fulfilled 
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
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
note 1 accounting policies continued 78 financial statements
tesco plc annual report and financial statements 2009
notes to the group financial statements continued
note 1 accounting policies continued
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
 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 there are no exceptional items in 20089 and 20078 
segmental trading profit
segmental trading profit is an adjusted measure of operating profit which 
measures the performance of each geographical segment before profit
loss arising on propertyrelated items impact on leases of annual uplifts 
in rent and rentfree periods amortisation charge from intangible assets 
arising on acquisition and replaces the ias 19 pension charge with the 
‘normal’ cash contributions for pensions
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 20089 £10m 20078 – £nil of the  
ias 3239 charge arose in the share of posttax profit of joint ventures 
and associates with the remainder in finance incomecosts 
 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 makes 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 postemployment 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 20089 was  
an adverse charge of £27m 20078 – £18m 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 79 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
  note 2 segmental reporting
the board has determined that the primary segmental reporting format is geographical based on the group’s management and internal reporting 
structure secondary information is reported by business segments which comprises retailing and financial services
in 20078 the uk reporting segment included the startup operations in the united states of america us which were not material the results of the 
us business have been reported as a separate reporting segment within international in our results for 20089 the comparatives have been restated  
to reflect the us as a separate segment the impact of this is to transfer sales of £16m and a loss of £67m from the uk segment to the us segment  
in 20078 in addition the uk reporting segment includes the results for tesco personal finance group limited tpf from the date of acquisition  
see note 31
the rest of europe reporting segment includes the republic of ireland hungary poland the czech republic slovakia and turkey
the asia reporting segment includes thailand south korea malaysia china japan and india it also includes the results of homever for 20089 from 
the date of acquisition see note 31
segment results assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis 
unallocated items comprise mainly interestbearing borrowings and taxation related assetsliabilities
intersegment turnover between the geographical areas of business is not material
geographical segments
     rest of  
    uk europe asia  us total 
year ended 28 february 2009    £m £m £m  £m £m
continuing operations
revenue
sales excluding vat to external customers        38191 8862 7068 206 54327
result
segment operating profitloss        2540 479 343 156 3206
share of posttax profitloss of joint ventures and associates       111 2 1 – 110
net finance costs            362
profit before tax            2954
taxation            788
profi t for the year        2166
reconciliation of operating profit to trading profit
     rest of  
    uk europe asia  us total 
    £m £m £m  £m £m
operating profit        2540 479 343 156 3206
adjustments for  
  profitloss arising on propertyrelated items        263 14 8 5 236
  ias 19 income statement charge for pensions        410 6 12 – 428
  ‘normal’ cash contributions for pensions        358 3 15 – 376
  ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods     20 – 7 9 36
 ifrs 3 amortisation charge from intangible assets arising on acquisition  32 – – – 32
trading profitloss       2381 496 355 142 3090
trading margin     62 56 50 na 57 80 financial statements
tesco plc annual report and financial statements 2009
note 2 segmental reporting continued
    rest of    other  
   uk europe asia  us unallocated  total 
   £m £m £m  £m  £m £m
assets and liabilities
segment assets     29913 6953 6242 768 2115 45991
investments in joint ventures and associates     49 – 13 – – 62
total assets     29962 6953 6255 768 2115 46053
segment liabilities     13032 1270 1966 98 16692 33058
total net assets              12995
other segment information
capital expenditure including acquisitions through business combinations
 property plant and equipment      2417 852 1404 305 – 4978
 investment property      – 48 152 – – 200
 goodwill and other intangible assets      1242 15 385 – – 1642
depreciation
 property plant and equipment      566 249 176 20 – 1011
 investment property      – 9 16 – – 25
amortisation of intangible assets      131 16 6 – – 153
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
profitloss arising on propertyrelated items   263  14 8 5 – 236
  
     rest of  
    uk europe asia  us total 
year ended 23 february 2008    £m £m £m  £m £m
continuing operations
revenue
sales excluding vat to external customers        34858 6872 5552 16 47298
result
segment operating profitloss        2164 400 294 67 2791
share of posttax profit of joint ventures and associates       75 – – – 75
net finance costs            63
profit before tax            2803
taxation            673
profi t for the year        2130
reconciliation of operating profit to trading profit
     rest of  
    uk europe asia  us total 
    £m £m £m  £m £m
operating profit        2164 400 294 67 2791
adjustments for  
  profitloss arising on propertyrelated items        188 5 3 2 188
  ias 19 income statement charge for pensions        446 5 10 – 461
  ‘normal’ cash contributions for pensions        328 3 9 – 340
  ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods     18 – 6 3 27
trading profitloss       2112 397 304 62 2751
trading margin     61 58 55 na 58
notes to the group financial statements continued 81 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 2 segmental reporting continued
    rest of    other  
   uk europe asia  us unallocated  total 
   £m £m £m  £m  £m £m
assets and liabilities
segment assets     18949 6093 4247 296 274 29859
investments in joint ventures and associates     293 1 11 – – 305
total assets     19242 6094 4258 296 274 30164
segment liabilities     6442 1229 1314 72 9205 18262
total net assets              11902
other segment information
capital expenditure including acquisitions through business combinations
 property plant and equipment      2359 696 662 189 – 3906
 investment property      – 13 37 – – 50
 goodwill and other intangible assets      219 18 22 – – 259
depreciation
 property plant and equipment      532 188 136 4 – 860
 investment property      – 9 7 – – 16
amortisation of intangible assets      99 12 5 – – 116
impairment losses recognised in the group income statement     48  25 4 – – 77
reversal of prior period impairment losses through the  
 group income statement   48 36 3 – – 87
profitloss arising on propertyrelated items   188  5 3 2 – 188
business segments
the group has two business segments retailing and financial services
       financial  
      retailing services total 
year ended 28 february 2009       £m £m £m
revenue        54164 163 54327
segment assets      39788 6203 45991
segment liabilities        27557 5501 33058
capital expenditure including acquisitions through business combinations      6537 283 6820
       financial  
      retailing services total 
year ended 23 february 2008        £m £m £m
revenue        47298 – 47298
segment assets      29859 – 29859
segment liabilities        18262 – 18262
capital expenditure including acquisitions through business combinations      4215 – 4215
note 3 income and expenses
        2009 2008 
from continuing operations       £m £m
profit before tax is stated after chargingcrediting the following
profit arising on propertyrelated items             236 188
rental income of which £304m 2008 – £211m relates to investment properties         349 267
direct operating expenses arising on rental earning investment properties           91 54
costs of inventories recognised as an expense             40779 35279
stock losses             870 700
depreciation of property plant and equipment and investment property      1036 876
net reversal of impairment of property plant and equipment and impairment of investment property     22 10
amortisation of internallygenerated development intangible assets           88 87
amortisation of other intangibles             65 29
operating lease expenses
a 
            738 520
a operating lease expenses include £81m 2008 – £88m for hire of plant and machinery 82 financial statements
tesco plc annual report and financial statements 2009
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
        2009 2008 
       £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         31 25
 other services pursuant to such legislation             01 01
 other services relating to taxation             08 12
 other services relating to corporate finance transactions             13 03
 all other services             06 03
total auditor remuneration             65 50
in addition to the amounts shown above the auditors received fees of £01m 2008 – £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
        2009 2008 
       £m £m
wages and salaries             4707 4246
social security costs             410 349
postemployment benefits note 28             439 470
sharebased payments expense note 27             242 228
                5798 5293
the average number of employees by geographical segment during the  
year was
    average 
  average  number 
  number of   of fulltime 
  employees  equivalents 
  2009 2008 2009 2008
uk 286392 282199 194419 193187
rest of europe 86760 83705 78914 77267
asia 92773 77554 88099 74570
us 2583 669 2583 730
total 468508 444127 364015 345754
  the comparatives have been restated to reflect the us as a separate segment in 20078  
the us employees were included in the uk reporting segment 
notes to the group financial statements continued 83 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 5 finance income and costs
        2009 2008 
       £m £m
  
finance income
bank interest receivable and similar income on cash and cash equivalents          91 91
net pension finance income note 28             25 47
total finance income on historical cost basis             116 138
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements           – 49
total finance income             116 187
finance costs
interest payable on shortterm bank loans and overdrafts repayable within five years         152 47
finance charges payable under finance leases and hire purchase contracts           13 13
75 258m gbp mtn 2007             – 8
6 125m gbp mtn 2008             2 7
525 500m eur mtn 2008             4 18
5125 192m gbp mtn 2009             10 10
6625 150m gbp mtn 2010             10 10
475 750m eur mtn 2010             26 25
3875 500m eur mtn 2011             14 13
5625 1500m eur mtn 2012       35 –
5 600m gbp mtn 2014       1 –
5125 600m eur mtn 2015       1 –
4 rpi gbp mtn 2016
a 
            23 20
5875 1500m eur mtn 2016       33 –
55 850m usd bond 2017             23 12
55 350m gbp mtn 2019             20 19
6125 900m gbp mtn 2022       1 –
5 515m gbp mtn 2023             21 18
3322 lpi gbp mtn 2025
b 
            20 19
6 200m gbp mtn 2029             12 12
55 200m gbp mtn 2033             11 11
1982 rpi gbp mtn 2036
c 
            14 11
615 1150m usd bond 2037             35 18
5 300m gbp mtn 2042             15 15
5125 600m eur mtn 2047             21 21
52 500m gbp mtn 2057             26 13
other mtns             9 13
capitalised interest             152 103
total finance costs on historical cost basis             400 250
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements           78 –
total finance costs             478 250
a interest payable on the 4 rpi gbp mtn 2016 includes £13m 2008 – £10m of retail price index rpi related amortisation
b interest payable on the 3322 lpi gbp mtn 2025 includes £11m 2008 – £11m of rpi related amortisation
c interest payable on the 1982 rpi gbp mtn 2036 includes £10m 2008 – £7m of rpi related amortisation
finance costs of £30m 2008 – £nil resulted from hedge ineffectiveness 84 financial statements
tesco plc annual report and financial statements 2009
note 6 taxation
recognised in the group income statement
       2009 2008 
       £m £m
current tax expense
uk corporation tax             673 853
foreign tax             88 78
adjustments in respect of prior years             164 278
benefit of tax losses recognised – adjustments in respect of prior years           – 56
                597 597
deferred tax expense
origination and reversal of temporary differences             119 54
benefit of tax losses recognised – adjustments in respect of prior years           – 28
adjustments in respect of prior years             97 63
change in tax rate             25 69
                191 76
total income tax expense             788 673
uk corporation tax is calculated at 282 2008 – 300 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
       2009 2008 
       £m £m
profit before tax             2954  2803
effective tax charge at 282 2008 at 300             833  841 
effect of
  nondeductible expenses             189 180
  differences in overseas taxation rates             111  41 
  adjustments in respect of prior years             67  215 
  share of results of joint ventures and associates             31  23 
  change in tax rate             25  69 
total income tax charge for the year            788 673
 
effective tax rate             267 240
tax on items charged to equity
       2009 2008 
       £m £m
current tax credit on 
  foreign exchange movements             199 250
  sharebased payments             46 5
                245 255
deferred tax creditcharge on
  sharebased payments             14 57
  pensions             176 75
                190 132 
total tax on items credited to equity note 30             435 123
notes to the group financial statements continued 85 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 24 february 2007  1019 284 136 51 24 21 – 503
chargecredit to the group income statement   83 22 3 2 13 8 11 76
charge to equity  – 75 57 – – – – 132
acquisition of subsidiaries  18 – – – – – – 18
foreign exchange translation 52 2 – 24 1 – – 31
at 23 february 2008  1068 233 76 25 12 13 11 698
chargecredit to the group income statement 194 7 46 61 1 8 12 191
credit to equity  – 176 14  –  –  –  – 190
acquisition of subsidiaries 12  –  – 42  – 42  – 12
foreign exchange translation 3  1  – 2 3  – 7 12
at 28 february 2009 1247 417 44 42 16 47 6 675
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
       2009 2008 
        £m £m
deferred tax assets             21 104
deferred tax liabilities             696 802
                675 698
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 
£1726m 2008 – £1053m
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
       2009 2008 
        £m £m
deductible temporary differences             12 2
tax losses             192 38
                204 40
at the balance sheet date the group has unused trading tax losses of £744m 2008 – £146m available for offset against future profits a deferred tax 
asset has been recognised in respect of £58m 2008 – £9m of such losses no deferred tax asset has been recognised in respect of the remaining 
£686m 2008 – £137m due to the unpredictability of future profit streams included in unrecognised tax losses are losses of £32m 2008 – £39m in 
2012 that will expire in 2013 and £647m 2008 – £57m in 2028 that will expire between 2014 and 2029 other losses will be carried forward indefinitely
in addition the group has uk capital losses of £310m 2008 – £350m  86 financial statements
tesco plc annual report and financial statements 2009
note 7 noncurrent assets classified as held for sale
       2009 2008 
        £m £m
noncurrent assets classified as held for sale             398 308 
the noncurrent assets classified as held for sale consist mainly of properties held for sale
note 8 dividends
      2009 2008 2009 2008 
      penceshare penceshare £m £m
amounts recognised as distributions to equity holders in the year
final dividend for the prior financial year         770 683 603 541
interim dividend for the current financial year         357 320 280 251
            1127 1003 883 792
  
proposed final dividend for the current financial year         839  770 662 605
the proposed final dividend was approved by the board of directors on 20 april 2009 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 28 february 2009 in accordance with ias 10 ‘events after the balance 
sheet date’ it will be paid on 10 july 2009 to shareholders who are on the register of members on 1 may 2009
note 9 earnings per share and diluted earnings per share
basic earnings per share amounts are calculated by dividing the profit attributable to equity holders 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 equity holders 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 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
     2009   2008
    potentially    potentially 
     dilutive    dilutive 
    basic share options diluted basic share options diluted
profit £m   2161 – 2161 2124 – 2124
weighted average number of shares millions   7859 53 7912  7881 102 7983
earnings per share pence   2750 019 2731  2695 034 2661
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
        2009  2008
      £m penceshare £m penceshare
 
profit 
earnings from operations         2161 2731 2124 2661
adjustments for
 ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements       88 111 49 061
 total ias 19 income statement charge for pensions         403 509 414 519
 ‘normal’ cash contributions for pensions         376 475 340 426
 ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods       27 034 18 022
 ifrs 3 amortisation charge from intangible assets arising on acquisition   32 041 – –
 tax effect of adjustments at the effective rate of tax 2009 – 267 2008 – 240     47 059 10 013
underlying earnings from operations         2288 2892 2157 2702
  in 20078 agreement was reached with hmrc on settling prior year tax items removing the oneoff impact of settling prior year tax items with hmrc the normalised tax rate was 289
notes to the group financial statements continued 87 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 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       – – 270 1152 1422
reclassification across categories       2 – 2 – –
disposals       8 1 – 1 10
at 28 february 2009        879 310 318 3283 4790
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 – –
disposals        1 1 – – 2
at 28 february 2009       426 197 42 98 763
net carrying value
at 28 february 2009        453  113  276 3185  4027
at 23 february 2008       351 115 41 1829  2336  
cost
at 24 february 2007       583 233 39 1684 2539
foreign currency translation       2 18 – 151 171
additions       128 29 2 22 181
acquisitions through business combinations       – – 8 70 78
reclassification across categories       1 1 1 – 1
disposals       23 3 – – 26
at 23 february 2008        691 278 48 1927 2944
accumulated amortisation and impairment losses
at 24 february 2007       263 128 5 98 494
foreign currency translation       – 9 – – 9
amortisation for the year       87 27 2 – 116
reclassification across categories    1 – – – 1
disposals       11 1 – – 12
at 23 february 2008       340 163 7 98 608
 
net carrying value
at 23 february 2008       351 115 41 1829 2336
at 24 february 2007       320 105 34 1586 2045
there are no intangible assets other than goodwill with indefinite useful lives 88 financial statements
tesco plc annual report and financial statements 2009
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 20089 recoverable amounts 
are based on value in use value in use is 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 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 in the case of japan it is reasonably possible that a change in key assumptions would cause the goodwill to exceed its value in use at  
28 february 2009 there was headroom of £8m incorporating a longterm growth rate of 15 and a pretax discount rate of 73 as key assumptions  
a 02 reduction in the longterm growth rate or a 02 increase in the discount rate would cause goodwill to exceed its value in use ebitda margin  
is also assumed to increase in 200910 from 20089 where a 29 decrease in the forecast margin for 200910 would also cause goodwill to exceed its 
value in use for poland with headroom of £84m and assuming an 113 pretax discount rate a 04 increase in the discount rate would cause 
goodwill to exceed its value in use
the forecasts are extrapolated beyond five years based on estimated longterm average growth rates of generally 210 2008 34
the pretax discount rates used to calculate value in use range from 724 2008 824 on a posttax basis the discount rates ranged from 
519 2008 520 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 2009 and 2008 impairment reviews were performed by comparing the carrying value of goodwill with the recoverable amount of the  
cashgenerating units to which goodwill has been allocated management determined that there has been no impairment
the components of goodwill are as follows
       2009 2008 
       £m £m
uk             616 571
tesco personal finance group limited             767 –
thailand             153 124
south korea             378 48
japan             196 129
china             540 376
malaysia             76 65
poland             354 394
czech republic             47 44
turkey             53 54
other             5 24
                3185 1829
notes to the group financial statements continued 89 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 11 property plant and equipment
       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
a  other assets consist of plant equipment fixtures and fittings and motor vehicles
b  includes £152m 2008 – £103m 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 2008 – 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 28 february 2009 of £910m 2008 – £790m
  ii assets held under finance leases which are analysed below
  2009  2008
  land and  land and 
  buildings other
a
 buildings other
a
 
  £m £m £m £m
cost  121 578 96 723
accumulated depreciation 
 and impairment losses 22 390 20 441
net carrying value 99 188 76 282
these assets are pledged as security for the finance lease liabilities
d the net carrying value of land and buildings comprises
    2009 2008 
    £m £m
freehold     17332 15209
long leasehold – 50 years or more     1450 892
short leasehold – less than 50 years  1027 829
net carrying value     19809 16930
e  carrying value of land and buildings includes £4m 2008 – £6m relating to the  
prepayment of lease premiums
f capital work in progress does not include land 90 financial statements
tesco plc annual report and financial statements 2009
note 11 property plant and equipment continued
      land and 
       buildings other
a
 total 
       £m £m £m
cost
at 24 february 2007           16540 5389 21929
foreign currency translation           545 231 776
additions
b
           2802 925 3727
acquisitions through business combinations           153 26 179
reclassification across categories           50 95 145
classified as held for sale           295 5 300
disposals           485 131 616
at 23 february 2008           19210 6340 25550
accumulated depreciation and impairment losses
at 24 february 2007           1942 3011 4953
foreign currency translation           52 117 169
charge for the year           353 507 860
reclassification across categories           34 40 6
classified as held for sale           44 1 45
disposals           47 111 158
impairment losses           77 – 77
reversal of impairment losses           87 – 87 
at 23 february 2008           2280 3483 5763
net carrying value
cde
at 23 february 2008           16930 2857 19787
at 24 february 2007           14598 2378 16976
capital work in progress included above
f
at 23 february 2008           1058 112 1170
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 based on value in use which is 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 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 210 2008 34
the pretax discount rates used to calculate value in use range from 724 2008 824 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
notes to the group financial statements continued 91 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 11 property plant and equipment continued
the following amounts have been chargedcredited to operating costs in the group income statement during the current and prior year
        2009 2008 
        £m £m
impairment losses
uk            21 48
rest of europe            31 25
asia            4 4
               56 77
reversal of impairment losses
uk            21 48
rest of europe            50 36
asia            17 3 
               88 87
net reversal of impairment losses            32 10
the impairment losses relate to stores whose recoverable amounts either value in use or fair value less costs to sell 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 
        2009 2008 
        £m £m
 
cost
at beginning of year             1190 906
foreign currency translation             24 93
additions             114 50
acquisitions through business combinations             86 –
transfers             260 144
classified as held for sale             10 –
disposals             4 3
at end of year              1660 1190
accumulated depreciation and impairment losses
at beginning of year             78 50
foreign currency translation             3 7
charge for the period             25 16
transfers             5 5
impairment losses       10 –
at end of year             121 78
net carrying value             1539 1112
the net carrying value at 24 february 2007 was £856m
the following amounts have been charged to operating costs in the group income statement during the current and prior year
       2009 2008 
        £m £m
 
impairment losses
rest of europe            10 –
net impairment losses            10 –
the impairment losses relate to malls whose recoverable amounts either value in use or fair value less costs to sell do not exceed the asset carrying 
values in all cases impairment losses arose due to the malls performing below forecasted trading levels
the estimated fair value of the group’s investment property is £3196m 2008 – £2265m 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 92 financial statements
tesco plc annual report and financial statements 2009
  note 13 group entities 
significant subsidiaries
the group consolidates its subsidiary undertakings the principal subsidiaries are 
     share of issued ordinary share   country of  
   business activity  capital and voting rights  incorporation 
tesco stores limited   retail   100    england
one stop stores limited   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 ¸ 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
a
   thailand
tesco stores malaysia sdn bhd retail     70   malaysia
tesco japan co limited retail     100   japan
shanghai kancheng storage co limited retail     90   republic of china
dobbies garden centres plc retail     100   scotland
fresh  easy neighborhood market inc retail   100  usa
tesco personal finance group limited 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     84   england
tesco insurance limited selfinsurance     100   guernsey
valiant insurance company limited selfinsurance     100   republic of ireland
 held by an intermediate subsidiary
a the group has 86 of voting rights and 39 of issued ordinary share capital in ekchai distribution system co limited
all principal subsidiary undertakings operate in their country of incorporation
the accounting period ends of the subsidiary undertakings consolidated in these financial statements are on or around 28 february 2009
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 1985
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 2007           304 10 314
additions           8 – 8
share of profit of joint ventures and associates           74 1 75
income received from joint ventures and associates           87 1 88
transferred to investment in subsidiary undertakings
 
          4 – 4
at 23 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
 
notes to the group financial statements continued 93 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 13 group entities continued
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 
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 see note 31
during the year ended 23 february 2008 the group purchased additional share capital in nutri centres limited 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 property investment     50     england
blt properties limited 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
arena jersey management limited
† 
property investment     50     jersey
the tesco property no 2 limited partnership
† 
property investment     50     jersey
† held by an intermediate subsidiary
the accounting period ends of the joint ventures consolidated in these financial statements range from 31 december 2008 to 28 february 2009 
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 
the share of the assets liabilities revenue and profit of the joint ventures which are included in the consolidated financial statements are as follows
        2009 2008 
        £m £m
noncurrent assets             1637 1411
current assets             281 4277
current liabilities             426 3888
noncurrent liabilities             1458 1513
goodwill             1 1
cumulative unrecognised losses             14 7
                49 295
revenue             549 482
expenses             443 408
profit for the year             106 74
the unrecognised share of losses made by joint ventures in the year to 28 february 2009 was £7m 2008 – £nil  94 financial statements
tesco plc annual report and financial statements 2009
note 13 group entities continued
associates  
at the balance sheet date the group’s principal associate is
      share of issued 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 tesco 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
        2009 2008 
        £m £m
assets             163 115
liabilities             152 107
goodwill             2 2
                13 10
revenue             540 325
profit for the year             4 1
the accounting period ends of the associates consolidated in these financial statements range from 31 december 2008 to 31 january 2009  
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 1985
note 14 other investments 
        2009 2008 
        £m £m
equity investment         259 –
availableforsale financial assets         – 4
        259 4
the equity investment comprises an interest free subordinated loan made by tesco personal finance group limited to direct line group limited  
this loan has been classed as an equity investment as there is no interest receivable and no fixed repayment date 
no impairment charges were recognised on the loan since the date of acquisition
availableforsale financial assets consist of ordinary shares and therefore have no fixed maturity date or coupon rate
the fair value of the unlisted availableforsale investments has been estimated using a valuation technique based on assumptions that are not 
supported by observable market prices or rates the fair value of the listed availableforsale investments is based on quoted market prices at the 
balance sheet date
the following table shows the aggregate movement in the group’s other investments during the year
        2009 2008 
        £m £m
at beginning of year             4 8
acquisitions through business combinations             259 –
revaluation through equity             – 4
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements          4 –
at end of year             259 4
notes to the group financial statements continued 95 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 15 inventories
        2009 2008 
        £m £m
goods held for resale             2656 2420
development properties             13 10
                2669 2430
note 16 trade and other receivables
        2009 2008 
        £m £m
 
prepayments and accrued income             419 298
finance lease receivables note 37             – 5
other receivables             1103 796
amounts owed by joint ventures and associates note 32             276 212
                1798 1311
included within trade and other receivables are the following amounts receivable after more than one year
        2009 2008 
        £m £m
prepayments and accrued income             14 12
other receivables             275 160
amounts owed by joint ventures and associates note 32             262 173
                551 345
trade and other receivables are generally noninterest bearing credit terms vary by geography 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 24 february 2007               34
foreign currency translation               3
charge for the year               15
uncollectible amounts written off               14
recoveries of amounts previously written off               9
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
as at 28 february 2009 trade and other receivables of £45m 2008 – £31m were past due and impaired the amount of the provision was £44m  
2008 – £29m the ageing analysis of these receivables is as follows 
        2009 2008 
        £m £m
up to 3 months past due             3 3
3 to 6 months past due             3 3
over 6 months past due             39 25
                45 31 96 financial statements
tesco plc annual report and financial statements 2009
note 16 trade and other receivables continued
as at 28 february 2009 trade and other receivables of £97m 2008 – £103m were past due but not impaired the ageing analysis of these receivables  
is as follows
       2009 2008 
        £m £m
up to 3 months past due             71 79
3 to 6 months past due             15 13
over 6 months past due             11 11
                97 103
no receivables have been renegotiated in the current or prior year
note 17 loans and advances to customers 
tesco personal finance group limited has loans and advances to customers  
       2009 2008 
       £m £m
current           1918 –
noncurrent         1470 –
            3388 –
the maturity of these loans and advances is as follows
        2009 2008 
        £m £m
repayable on demand or at short notice          1 –
within three months          2021 –
greater than three months but less than one year          38 –
greater than one year but less than five years          1061 –
after five years           517 –
        3638 –
provision for impairment of loans and advances       250 –
           3388 –
the securitised amount against loans and advances is £1468m and the fair value of these are not materially different to the amortised cost value at 
which they are disclosed 
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
 tesco personal finance group limited was acquired on 19 december 2008
at 28 february 2009 tesco personal finance group limited’s noninterest bearing loans were £291m loan impairment provisions of £250m were held 
against these loans in the period between the date of acquisition and year end the gross income not recognised but which would have been recognised 
under the original terms of noninterest bearing loans was £25m
notes to the group financial statements continued 97 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 17 loans and advances to customers continued
at 28 february 2009 loans and advances to customers of £82m were past due but not impaired the ageing analysis of these loans and advances  
is as follows
        2009 2008 
        £m £m
up to one month past due       58 –
one to three months past due          15 –
over three months past due          9  –
        82 –
no loans have been renegotiated between the date of acquisition and the year end that would otherwise have been past due or impaired
note 18 loans and advances to banks and other financial assets        
tesco personal finance group limited has loans and advances to banks and other financial assets with the following maturity   
        2009 2008 
        £m £m
within three months          1509 –
greater than three months but less than one year 
a
          591 –
greater than one year but less than five years          29 –
            2129 –
a included within loans and advances to banks and other financial assets are treasury bills of £588m in respect of collateral held with the bank of england
there are no loans and advances which are past due and impaired 
note 19 cash and cash equivalents 
        2009 2008 
        £m £m
cash at bank and in hand             2112 1542
shortterm deposits             1397 246
                3509 1788
note 20 trade and other payables
current
        2009 2008 
        £m £m
trade payables             4748 3936
other taxation and social security             334 324
other payables              1984 1714
amounts payable to joint ventures and associates note 32             162 116
accruals and deferred income             1294 1187
                8522 7277
noncurrent 
        2009 2008 
        £m £m
other payables             68 42 98 financial statements
tesco plc annual report and financial statements 2009
note 21 borrowings
current
       maturity 2009 2008 
      par value year £m £m
bank loans and overdrafts           2009  3014 1458
loan from joint ventures note 32           2009  20 10
6 mtn         £125m 2008 – 130
525 mtn         €500m 2008 – 392
5125 mtn     £192m 2009 198 –
1434 mtn – tpf     £295m 2009 295 –
1684 mtn – tpf     £89m 2009 89 –
1418 mtn – tpf     £204m 2009 204 –
other mtns         –  – 192 43
finance leases note 37         –  –  47  51
                4059  2084 
the loan notes issued as part of the securitisation are secured on portfolios comprising variable rate personal credit cards the maturity date of the notes 
matches the maturity date of the underlying assets and are repayable within one year from the balance sheet date 
noncurrent
       maturity 2009 2008 
      par value year £m £m
finance leases note 37         – –  196  215
5125 mtn         £192m 2009 – 191
6625 mtn         £150m 2010 154 153
475 mtn         €750m 2010 689 592
3875 mtn         €500m 2011 476 387
5625 mtn     €1500m 2012 1362 –
libor  133 bond – tpf     £225m 2012 225 –
5 mtn     £600m 2014 592 –
5125 mtn     €600m 2015 522 –
4 rpi mtn
a 
        £263m 2016 268 254
5875 mtn     €1500m 2016 1488 –
55 usd bond         850m 2017 678 455
55 mtn         £350m 2019 351 350
6125 mtn     £900m 2022 901 –
5 mtn
b 
        £515m 2023 515 417
3322 lpi mtn
c 
        £265m 2025 267 255
6 mtn         £200m 2029 216 194
55 mtn         £200m 2033 216 192
1982 rpi mtn
d 
        £221m 2036 221 212
615 usd bond         1150m 2037 977 604
5 mtn         £300m 2042 306 305
5125 mtn         €600m 2047 628 451
52 mtn         £500m 2057 500 499
other mtns         – – 285 135
other loans         – – 358 111
            12391 5972
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 an additional bond issue increased the principal of this mtn from £415m to £515m in 20089 
c 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
d 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 28 february 2009 in respect of which all conditions precedent had been met as 
at that date
        2009 2008 
        £m £m
expiring between one and two years             100 –
expiring in more than two years             2600 1600
                2700 1600
all facilities incur commitment fees at market rates and would provide funding at floating rates 
notes to the group financial statements continued 99 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 22 financial instruments 
derivatives are used for hedging in the management of exposure to market risks this enables the optimisation of the overall cost of accessing debt 
capital markets and mitigates the market risk which would otherwise arise from the maturity and other profiles of assets and liabilities
hedging policies using derivative financial instruments are further explained below derivatives that are held as hedging instruments are formally 
designated as hedges as defined in ias 39 derivatives may qualify as hedges for accounting purposes as described below
finance costs of £30m 2008 – £nil 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 gain of £1197m on hedging instruments was recognised during the year offset by a loss of £1227m on hedged items in 2008 a gain of £261m on 
hedging instruments was offset by a loss of £261m 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 options 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
the group has a chinese yuan denominated liability relating to the future purchase of the minority shareholding of its subsidiary hymall this liability 
has been designated as a net investment hedge of a proportion of the assets of hymall
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 may not qualify for hedge accounting or are specifically  
not designated as a hedge where natural offset is appropriate
these instruments include caps collars 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
        2009  2008
      asset liability asset liability 
     £m £m £m £m
current         382 525 97 443
noncurrent       1478 302 216 322
          1860 827 313 765 100 financial statements
tesco plc annual report and financial statements 2009
note 22 financial instruments continued
the fair value and notional amounts of derivatives analysed by hedge type are as follows
     2009    2008
   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 6 307 67 2123 2 125 80 657
cross currency swaps 1445 4293 40 996 252 2795 – –
cash flow hedges
interest rate swaps and similar instruments – 100 66 400 – – – –
cross currency swaps 1 21 – – – – 1 17
forward foreign currency contracts 101 1762 24 348 19 811 9 387
net investment hedges
forward foreign currency contracts 92 2623 194 2767 2 289 218 2328
future purchases of minority interests – – 167 – – – 197 –
derivatives not in a formal hedge relationship
interest rate swaps and similar instruments 1 774 35 3740 6 3668 2 189
cross currency swaps 25 411 47 639 – – 16 347
forward foreign currency contracts 189 2784 154 2767 32 1641 207 2816
future purchases of minority interests – – 33 – – – 35 –
total  1860 13075 827 13780 313 9329 765 6741
carrying and fair value of financial assets and liabilities at financial year ending
        2009  2008
     carrying fair carrying fair 
     value value value value  
     £m £m £m £m
assets
finance leases group as lessor – note 37         – – 5 5
cash and cash equivalents       3509 3509 1788 1788
loans and advances to customers – tpf         3388 3388 – –
loans and advances to banks and other financial assets – tpf      2129 2129 – –
shortterm investments         1233 1233 360 360
other investments – tpf         259 259 – –
joint venture loan receivables note 32         262 262 173 173
derivative financial assets            
 interest rate swaps and similar instruments       7 7 8 8
 cross currency swaps          1471 1471 252 252
 forward foreign currency contracts         382 382 53 53
total financial assets       12640 12640 2639 2639
liabilities
shortterm borrowings
 amortised cost       3779 3778 1511 1516
 bonds in fair value hedge relationships         233 223 522 502
longterm borrowings        
 amortised cost         5248 5028 2269 2138
 bonds in fair value hedge relationships       6947 6147 3488 3261
finance leases group as lessee – note 37         243 243 266 266
customer deposits – tpf       4538 4538 – –
deposits by banks – tpf         24 24 – –
derivative and other financial liabilities        
 interest rate swaps and similar instruments         168 168 81 81
 cross currency swaps       87 87 18 18
 forward foreign currency contracts         372 372 434 434
 future purchases of minority interests         200 200 232 232
total financial liabilities         21839 20808 8821 8448
total        9199 8168 6182 5809
notes to the group financial statements continued 101 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 28 february 2009 and 23 february 2008 are as follows
         
      loans and    
      receivables fair value 
      other financial through 
      liabilities profit or loss total 
at 28 february 2009      £m £m £m
cash and cash equivalents      3509 – 3509
loans and advances to customers – tpf      3388 – 3388 
loans and advances to banks and other financial assets – tpf     1541 588 2129
shortterm investments       1233 – 1233 
other investments – tpf      259 – 259 
joint venture loan receivables note 32      262 – 262
customer deposits – tpf      4538 – 4538
deposits by banks – tpf      24 – 24 
shortterm borrowings      4012 – 4012 
longterm borrowings      12195 – 12195
finance leases group as lessee – note 37      243 – 243 
derivative fi nancial 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
        10820 1621 9199
           
      loans and    
      receivables fair value 
      other financial through 
      liabilities profit or loss total 
at 23 february 2008      £m £m £m
finance leases group as lessor – note 37      5 – 5
cash and cash equivalents      1788 – 1788
shortterm investments      360 – 360
joint venture loan receivables note 32      173 – 173
shortterm borrowings      2033 – 2033
longterm borrowings      5757 – 5757
finance leases group as lessee – note 37      266 – 266
derivative fi nancial instruments        
 interest rate swaps and similar instruments      – 73 73
 cross currency swaps      – 234 234
 forward foreign currency contracts      – 381 381
 future purchases of minority interests      – 232 232
        5730 452 6182 102 financial statements
tesco plc annual report and financial statements 2009
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  
28 february 2009 is representative of the position throughout the year including the impact of acquisitions during 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 38 to 40
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 40
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 personal finance group limited tpf please refer to the separate section on tpf financial risk factors
during 2009 and 2008 net debt including tpf was managed using derivative instruments to hedge interest rate risk as follows
     2009   2008
   fixed  floating total fixed  floating total 
    £m £m  £m £m £m £m
cash and cash equivalents    – 3509 3509 – 1788 1788
loans and advances to customers – tpf     3388 – 3388 – – – 
loans and advances to banks and other financial assets – tpf   – 2129 2129 – – –
shortterm investments     – 1233 1233 – 360 360 
other investments – tpf     259 – 259 – – – 
joint venture loan receivables     – 262 262 – 173 173
finance leases    84 159 243 73 188 261
bank and other borrowings    11540 4667 16207 5745 2045 7790
customer deposits – tpf     – 4538 4538 – – –
deposits by banks – tpf    – 24 24 – – –
future purchases of minority interests     200 – 200 232 – 232
derivative effect         
 interest rate swaps     415 415 – 752 752 –
 cross currency swaps     4524 4524 – 2778 2778 –
 caps and collars    774 774 – 876 876 –
total     3294  7138  10432  3396  2566  5962 
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 40
the counterparty exposure under derivative contracts is £1860m 2008 – £313m the group policy is to transact derivatives only with counterparties 
rated at least a1 by moody’s
for credit risk relating to tpf please refer to the separate section on tpf financial risk factors
liquidity risk  
liquidity risk is managed by shortterm and longterm cash flow forecasts in addition the group has committed facility agreements for £27bn  
2008 – £16bn which mature between 2010 and 2014
the group has a european medium term note programme of £15bn of which £11bn was in issue at 28 february 2009 2008 – £49bn plus a euro 
commercial paper programme of £2bn of which £16bn was in issue at 28 february 2009 2008 – £06bn and a us commercial paper programme  
of 4bn none of which was in issue at 28 february 2009 2008 – £nil 
for liquidity risk relating to tpf please refer to the separate section on tpf financial risk factors
the following is an analysis of the undiscounted contractual cash flows payable under financial liabilities and derivatives
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 index linked liabilities inflation is 
estimated at 3 for the life of the liability 
notes to the group financial statements continued 103 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 23 financial risk factors continued
      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     £m  £m  £m £m £m £m
non derivative financial liabilities
bank and other borrowings      3616 971 873 1931 225 7943
interest payments on borrowings      560 549 514 486 411 5045
customer deposits – tpf   4538 – – – – –
deposits by banks – tpf   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     17469  1389 1343 2398 621 12239
 
     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 23 february 2008    £m  £m  £m £m £m £m
non derivative financial liabilities
bank and other borrowings      2018 287 795 398 47 4714
interest payments on borrowings      298 272 229 211 198 4906
finance leases       62  54 50 46 30 130
trade and other payables      7277 14 13 2 6 7
derivative and other financial instruments          
net settled derivative contracts – receipts     7 – – – – –
net settled derivative contracts – payments     230 16 9 9 9 172
gross settled derivative contracts – receipts     2968 255 705 484 297 3207
gross settled derivative contracts – payments     2827 286 677 452 304 3280
future purchases of minority interests      –  70 – 166 34 –
total      9737  744  1068 800 331 10002
sensitivity analysis at 28 february 2009
financial instruments affected by market risk include borrowings deposits and derivative financial instruments the following analysis required by  
ifrs 7 ‘financial instruments disclosures’ is intended to illustrate the sensitivity to changes in market variables being uk interest rates and foreign 
exchange risk 104 financial statements
tesco plc annual report and financial statements 2009
notes to the group financial statements continued
note 23 financial risk factors continued
foreign exchange risk
the group is exposed to foreign exchange risk principally via
a  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
b  net investment exposure from the value of net investments outside the uk we hedge the majority of our investments in our international 
subsidiaries via foreign currency transactions and borrowings in matching currencies which are formally designated as net investment hedges
c  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
the impact on group financial instruments from foreign currency volatility is shown in the sensitivity analysis below
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 28 february 2009
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 the post hedge floating rate net debt exposure with no sensitivity •	
assumed for lpilinked 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
        2009  2008
     income equity income equity 
     gainloss gainloss gainloss gainloss 
     £m £m £m £m
assets
1 increase in gbp interest rates         59 – 42 –
 
25 appreciation of the euro 2008 – 5         22 22 5 32
20 appreciation of the south korean won 2008 – 5         1 222 – –
25 appreciation of the us dollar 2008 – 5         11 218 2 43
25 appreciation of the thai baht 2008 – 5         – 1 – 1
25 appreciation of the czech koruna 2008 – 10         – 204 – 27
15 appreciation of the polish zloty 2008 – 15         14 – 1  102
20 appreciation of the slovak koruna 2008 – 20         – – 2 87
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 usd as cash flow hedges 105 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 23 financial risk factors continued
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 company
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 we outlined our plan to release cash from our 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 we continued with the policy at the beginning of 20089 we have 
subsequently used the proceeds from property divestment to pay down debt following the two major acquisitions in the second half homever and 
tesco personal finance group limited early in 20089 we purchased and cancelled £100m ordinary shares in the financial year 200910 we expect  
to continue to use the proceeds from the sale of property to pay down debt 
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 £524m and new bonds issued totalling £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
tesco personal finance group limited tpf
interest rate risk
interest rate risk arises where assets and liabilities in tpf’s banking activities have different repricing dates tpf 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 15 parallel movement in interest rates risk is managed through arm’s length cash transactions
credit risk
credit risk is the probability of customers and counterparties failing to meet their obligations to tpf and arises principally from tpf’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 and board  
of tpf
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 tpf’s banking activities and adheres to the liquidity requirements set by the financial services 
authority fsa from time to time in the uk the fsa requires tpf to be able to meet its sterling obligations without recourse to the wholesale markets 
for a period of at least five business days 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 tpf 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
         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 28 february 2009 £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 2129  – – – – – –  – 2129
    2740   652 828 870 563 82 291 250 5776 
                    
commitment 3103   1451 744 305 129 – –  – 5732 
total off balance sheet 3103   1451 744 305 129 – – – 5732  106 financial statements
tesco plc annual report and financial statements 2009
note 23 financial risk factors continued
insurance risk  
tpf 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 tpf 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 sex and driving experience type and nature of vehicle 
use of vehicle and area there are many sources of uncertainty that will affect tpf’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
        2009 2008 
            £m £m
customer deposits          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 
        2009 2008 
            £m £m
within three months          24 –
            24 –
deposits by banks are recorded at amortised cost
note 26 provisions
        property 
        provisions 
        £m
at 23 february 2008             27
foreign currency translation             3
acquisitions through business combinations        59
amount utilised in the year             12
at 28 february 2009             77
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 balances are analysed as follows
       2009 2008 
       £m £m
current             10 4
noncurrent             67 23
                77 27
notes to the group financial statements continued 107 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 27 sharebased payments
the group has not taken advantage of the transitional provisions of ifrs 2 ‘sharebased payment’ in respect of equitysettled awards but instead 
applied ifrs 2 retrospectively to all awards granted but not vested as at 28 february 2004
the total group income statement charge for the year recognised in respect of sharebased payments is £242m 2008 – £228m which is made up of 
share option schemes and share bonus payments of this amount £204m 2008 – £199m will be equitysettled and £38m 2008 – £29m 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 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 
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 108 financial statements
tesco plc annual report and financial statements 2009
note 27 sharebased payments continued
the following tables reconcile the number of share options outstanding and the weighted average exercise price waep
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 – 
exercise price   15900 to   15900 to   19750 to   16400 to   17670 to 
  range pence   24800   24800   31350   31350   31275   –
weighted average  
  remaining 
  contractual 
  life years   018   015   399   463   476       583
for the year ended 23 february 2008
  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 
  24 february 
  2007 173103108 23612 4927409 25027 16855033 27619 82526915 26770 33128105 28068 5810007 000
granted 30284995 41000 1333621 41000 3675200 47375 14355638 47366 10127935 46657 5113574 000
forfeited 9470529 25396 401169 24175 926135 33621 3399364 35517 1999671 31013 –  – 
exercised 40555754 19056 776852 19883 3374252 24277 16439584 24518 4286110 25290 85343 000
outstanding at  
  23 february 
  2008 153361820 28140 5083009 30071 16229846 32445 77043605 30700 36970259 33322 10838238 000
 
exercisable as at 
  23 february
  2008 7761557 19299 245709 20121 4968637 23222 33091974 23057 9412295 22527 – – 
exercise price   15900 to   15900 to   19750 to   16400 to   17670 to 
  range pence   23200   23200   25900   25900   25900   –
weighted average  
  remaining
  contractual 
  life years   020   020   394   459   406   –
notes to the group financial statements continued 109 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 27 sharebased payments continued
share options were exercised on a regular basis throughout the year the average share price during the year to 28 february 2009 was 37206p  
2008 – 44359p
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
     2009   2008
    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      33 33 00 24 24 00
expected volatility      2530 25 25 2021 24 2427
riskfree interest rate      3238 3249 4649 48 5053 4749
expected life of option years     3 or 5 6 6 3 or 5 6 69
weighted average fair value of options granted pence     8928 9390 41809 11635 11996 46917
probability of forfeiture      2025 10 0 2025 10 0
share price pence     36100 42520 41809 47000 47112 46917
weighted average exercise price pence     31100 42520 000 41000 47112 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 tesco plc 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 consider 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
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 £33m 2008 – £26m
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
eligible roi employees are able to participate in a share bonus scheme an allemployee profit sharing scheme each year employees receive a 
percentage of their earnings as either cash or shares
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
        2009  2008
     shares wafv shares wafv 
     number pence number pence
shares in success         21295232 43105 18019768 47045
executive incentive scheme         10996677 41568 10012950 45611
performance share plan         2123237 35376 1292172 46621
us longterm incentive plan         673716 40380 4817720 47110 110 financial statements
tesco plc annual report and financial statements 2009
notes to the group financial statements continued
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 £11m 2008 – £8m 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 watson wyatt 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
the one stop senior executives pension scheme is a funded defined benefit scheme open to senior executives and certain other employees at the 
invitation of the company an independent actuary using the projected unit method carried out the latest actuarial assessment of the scheme as at  
5 april 2004 
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 watson wyatt limited to take account of the 
requirements of ias 19 in order to assess the liabilities of the schemes as at 28 february 2009 the schemes’ assets are stated at their market values  
as at 28 february 2009 watson wyatt 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 watson wyatt limited to take account of the requirements 
of ias 19 in order to assess the liabilities of the schemes as at 28 february 2009 the major assumptions on a weighted average basis used by the 
actuaries were as follows
      2009 2008 2007 
        
 
rate of increase in salaries           37 50 45
rate of increase in pensions in payment           31 35 30
rate of increase in deferred pensions           32 35 30
rate of increase in career average benefits           32 35 30
discount rate           65 64 52
price inflation           32 35 30
 in excess of any guaranteed minimum pension gmp element
the main financial assumption is the real discount rate ie 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 £110m and the annual uk current service cost would 
decreaseincrease by approximately £11m 
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
this assumption was used for the calculation of the pension liability as at 28 february 2009 for the main uk scheme
as at 28 february 2009 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 28 february 2009 in addition the allowance for future mortality improvements 
has been changed to incorporate medium cohort projections with a minimum improvement of 1 per annum 111 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 28 postemployment benefits continued
the mortality assumptions used for the calculation of the pension liabilities as at 24 february 2007 and 23 february 2008 were based on the previous 
triennial actuarial valuation as at 31 march 2005 which included the following assumptions for funding purposes
base tables
 pma92c00 for male members with cohort improvements to 2000 and members taken to be two years older than actual age  
 pfa92c00 for female members with cohort improvements to 2000 and members taken to be half a year older than actual age
additionally at the 31 march 2005 valuation an allowance was built in for future mortality improvements via a 02 reduction to the discount rate
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 
      2009 2008 2007 
      in years in years in years
retiring at reporting date at age 65 male         215 190 175
    female         233 233 219
retiring at reporting date 25 years at age 65 male         239 206 184
    female         258 247 230
rates of return on scheme assets 
the assets in the defined benefit pension schemes and the expected nominal rates of return were
      2009  2008  2007
   longterm market longterm market longterm market 
   rate of return value rate of return value rate of return value 
    £m  £m  £m
 
equities     89 1482 89 2205 81 2420
bonds     55 1080 57 901 52 812
property     73 342 73 351 67 343
other alternative assets     89 383 89 512 81 384
cash     37 133 45 120 40 48
total market value of assets       3420   4089   4007
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
      2009 2008 2007 
      £m £m £m
opening fair value of plan assets           4089 4007 3448
expected return           338 301 255
actuarial lossesgains           1270 465 82
contributions by employer           376 340 321
actual member contributions           8 7 7
foreign currency translation           11 9 2
benefits paid           132 112 104
acquisitions through business combinations           – 2 –
closing fair value of plan assets           3420 4089 4007 112 financial statements
tesco plc annual report and financial statements 2009
note 28 postemployment benefits continued
changes in the present value of defined benefit obligations are as follows
      2009 2008 2007 
      £m £m £m
opening defined benefit obligation           4927 4957 4659
current service cost           428 461 466
interest cost           313 254 221
gain on change of assumptions           760 672 71
experience losses           117 21 41
foreign currency translation           13 8 4
benefits paid           132 112 104
actual member contributions           8 7 7
past service gains           – – 258
acquisitions through business combinations           – 3 –
closing defined benefit obligation           4914 4927 4957
the amounts that have been charged to the group income statement and group statement of recognised income and expense for the year ended  
28 february 2009 are set out below
      2009 2008 2007 
      £m £m £m
analysis of the amount chargedcredited to operating profit        
current service cost           428 461 466
past service gains           – – 258
total charge to operating profit           428 461 208
analysis of the amount creditedcharged to finance income        
expected return on pension schemes’ assets           338 301 255
interest on pension schemes’ liabilities           313 254 221
net pension finance income note 5           25 47 34
total charge to the group income statement           403 414 174
in 2007 in line with changes to the finance act 2006 the scheme rules were amended from 6 april 2006 to allow employees to commute convert  
a larger proportion of their pension for a cash lump sum at retirement accordingly the assumptions made in calculating the group’s defined benefit 
pension liability have been revised resulting in a gain of £250m being recognised in group operating profit in 20067 revisions to this assumption will 
be reflected in the group statement of recognised income and expense changes to scheme rules in the republic of ireland affecting early retirement 
have reduced pension liabilities by a further £8m which was also shown as a past service gain in the group income statement in 20067
      2009 2008 2007 
      £m £m £m
analysis of the amount recognised in the group statement of recognised income and expense    
actual return less expected return on pension schemes’ assets         1270 465 82
experience losses arising on the schemes’ liabilities           117 21 41
foreign currency translation           2 1 2
changes in assumptions underlying the present value of the schemes’ liabilities       760 672 71
total lossgain recognised in the group statement of recognised income and expense     629 187 114
the cumulative losses recognised through the group statement of recognised income and expense since the date of transition to ifrs are £1001m  
2008 – £372m
notes to the group financial statements continued 113 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 28 postemployment benefits continued
summary of movements in deficit during the year
      2009 2008 2007 
      £m £m £m
deficit in schemes at beginning of the year           838 950 1211
current service cost           428 461 466
past service gains           – – 258
other finance income           25 47 34
contributions by employer           376 340 321
foreign currency translation           2 1 2
actuarial lossgain           627 186 112
acquisitions through business combinations           – 1 –
deficit in schemes at end of the year           1494 838 950
history of movements  
the historical movement in defined benefit pension schemes assets and liabilities and history of experience gains and losses are as follows
     2009 2008 2007 2006 
     £m £m £m £m
total market value of assets         3420 4089 4007 3448
present value of liabilities relating to unfunded schemes         39 34 27 17
present value of liabilities relating to partially funded schemes        4875 4893 4930 4642
pension deficit         1494 838 950 1211
 
experience lossesgains on scheme assets         1270 465 82 309
experience losses on plan liabilities          117  20 41 24
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 28 february 2009 of £10m 2008 – £11m was determined in accordance with the advice of independent actuaries in 20089  
£07m 20078 – £06m has been charged to the group income statement and £05m 20078 – £07m of benefits were paid 
a change of 10 in assumed healthcare cost trend rates would have the following effect
      2009 2008 2007 
      £m £m £m
effect of a 1 increase in assumed healthcare cost trend rate on            
  service and interest cost           01 01 01
  defined benefit obligation           16 16 13
effect of a 1 decrease in assumed healthcare cost trend rate on            
  service and interest cost           01 01 01
  defined benefit obligation           13 13 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 company contributions are increasing to 111 from 109 on this basis the group 
expects to make contributions of approximately £410m to defined benefit pension schemes in the year ending 27 february 2010 114 financial statements
tesco plc annual report and financial statements 2009
note 29 called up share capital
     2009   2008
    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      – –  – –
at end of year       10858000000 543 10858000000 543
allotted called up and fully paid
at beginning of year      7863498783 393 7947349558 397
share options       57060046 3 65432552 3
share buyback      25214811 1 149283327 7
at end of year      7895344018 395 7863498783 393
during the financial year 57 million 2008 – 65 million shares of 5p each were issued in relation to share options for aggregate consideration of  
£130m 2008 – £138m 
during the year the company purchased and subsequently cancelled 25214811 2008 – 149283327 shares of 5p each representing 0  
2008 – 2 of the called up share capital at an average price of £398 2008 – £438 per share the total consideration including expenses was 
£100m 2008 – £657m the excess of the consideration over the nominal value has been charged to retained earnings 
between 1 march 2009 and 17 april 2009 options over 3120922 ordinary shares have been exercised under the terms of the savingsrelated  
share option scheme 1981 and the irish savingsrelated share option scheme 2000 between 1 march 2009 and 17 april 2009 options over  
324991 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 28 february 2009 the directors were authorised to purchase up to a maximum in aggregate of 7848 million 2008 – 7934 million ordinary shares
the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings  
of the company
notes to the group financial statements continued 115 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 30 statement of changes in equity
         
total
 
        retained  
equity
 
        earnings 
attributable
    
 issued   capital     to equity 
 share share other redemption hedging translation treasury retained holders of minority 
 capital premium reserves reserve reserve reserve shares earnings the parent interests total 
 £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
foreign currency translation  
  differences – – – – – 269 – – 269 6 275
actuarial loss on defined  
  benefit schemes – – – – – 2 – 627 629 – 629 
tax on items taken directly to  
  or transferred from equity – – – – – 199 – 236 435 – 435
change in fair value of  
  availableforsale financial assets – – – – – – – 3 3 – 3
gains on cash flow hedges – – – – 171 – – – 171 – 171 
purchase of treasury shares – – – – – – 165 – 165 – 165
sharebased payments – – – – – – 137 67 204 – 204 
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 tpf – – – – – – – 35 35 – 35
profit for the year – – – – – – – 2161 2161 5 2166
equity dividends authorised    
  in the year – – – – – – – 883 883 – 883 
at 28 february 2009 395 4638 40 13 175 173 232 7736 12938 57 12995
         
total
 
        retained  
equity
 
        earnings 
attributable
    
 issued   capital     to equity 
 share share other redemption hedging translation treasury retained holders of minority 
 capital premium reserves reserve reserve reserve shares earnings the parent interests total 
 £m £m £m £m £m £m £m £m £m £m £m
at 24 february 2007 397 4376 40 5 33 39 154 5914 10506 65 10571
foreign currency translation  
  differences – – – – – 33 – – 33 5 38
actuarial gain on defined  
  benefit schemes – – – – – 1 – 186 187 – 187 
tax on items taken directly to  
  or transferred from equity – – – – – 250 – 127 123 – 123
decrease in fair value of  
  availableforsale financial assets – – – – – – – 4 4 – 4
gains on cash flow hedges – – – – 37 – – – 37 – 37 
purchase of treasury shares – – – – – – 118 – 118 – 118
sharebased payments – – – – – – 68 131 199 – 199 
issue of shares 3 135 – – – – – – 138 – 138 
share buybacks 7 – – 7 – – – 665 665 – 665 
purchase of minority interest – – – – – – – 47 47 27 20
minority interest on acquisitions 
 of subsidiaries – – – – – – – – – 38 38
profit for the year – – – – – – – 2124 2124 6 2130
equity dividends authorised  
  in the year – – – – – – – 792 792 – 792 
at 23 february 2008 393 4511 40 12 4 245 204 6814 11815 87 11902 116 financial statements
tesco plc annual report and financial statements 2009
note 30 statement of changes in equity continued
share premium account
the share premium account is used to record amounts received in excess of the nominal value of shares on issue of new shares
translation reserve
the translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries it is also  
used to record the movements in net investment hedges 
treasury shares
the employee benefit trusts hold shares in tesco plc for the purpose of the various executive share incentive and profit share schemes at 28 february 
2009 the trusts held 511 million shares 2008 – 474 million which cost £203m 2008 – £184m and had a market value of £170m 2008 – £190m
the voting rights in relation to the shares are exercisable by the trustee however in accordance with investor guidelines the trustee abstains from voting
at 28 february 2009 the group’s trustees also held 87 million 2008 – 78 million unallocated shares in tesco plc which cost £29m 2008 – £20m
other reserves
the merger reserve arose on the acquisition of hillards plc in 1987 
share buyback liability
insider trading rules prevent the group from buying back tesco plc shares in the market during specified close periods including the period between  
the year end and the annual results announcement however if an irrevocable agreement is signed between the company and a third party they can 
continue to buy back shares on behalf of the company in 2008 three such arrangements were in place at the year end and in accordance with ias 32 
the company recognised a financial liability equal to the estimated value of the shares purchasable under these agreements a liability of £100m was 
recognised within other payables for this amount there were no such agreements in place in 2009
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
other
the cumulative goodwill written off against the reserves of the group as at 28 february 2009 amounted to £718m 2008 – £718m 
fair value reserve arising on acquisition of tpf
the share of fair value reserve has arisen on the acquisition of tpf and is made up of the reversal of previous profits recognised due to equity accounting 
of the joint venture and increase in fair value of the underlying identifiable assets since initial acquisition
notes to the group financial statements continued 117 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 31 business combinations 
the group has made a number of acquisitions in the year of which the most significant acquisitions have been disclosed separately and the remainder 
shown in aggregate
the net assets and results of the acquired businesses are included in the consolidated accounts of the group from the date of acquisition acquisition 
accounting has been applied and the goodwill arising has been capitalised and is subject to annual impairment testing
the goodwill acquired in the business combinations listed below has been allocated to the single group of cashgenerating units represented by  
the acquired businesses as this is the lowest level within the group at which the goodwill is monitored internally goodwill arising on acquisitions  
in the year is attributable mainly to location the assembled workforce and the synergies expected to be achieved
the fair values currently established for acquisitions made in the year to 28 february 2009 are provisional fair values will be reviewed based on 
additional information up to one year from the date of acquisition the directors do not believe that any net adjustments resulting from such a review 
would have a material effect on the group
had all the combinations listed below taken place at the beginning of the financial year with the exception of dobbies garden centre plc which 
became a subsidiary in 20078 the operating profit of the group would have been £3391m and revenue would have been £55750m the proforma 
information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred nor is it necessarily 
indicative of future results of operations of the combined companies 
tesco personal finance group limited tpf 
on 19 december 2008 the group acquired the remaining 50 of the share capital of its joint venture tpf a provider of banking and other financial 
services in the united kingdom making it a whollyowned subsidiary undertaking
the fair value of the identifiable assets and liabilities of tpf as at the date of acquisition were
      preacquisition  recognised 
      carrying fair value values on 
      amounts adjustments acquisition 
      £m £m £m
property plant and equipment       24  3 21 
intangible assets       –  259  259 
loans and advances to banks and other financial assets       3  –  3 
loans and advances to customers       3715  347 3368 
other investments       259  –  259 
trade and other receivables       158  – 158 
deferred tax asset       12  40  52 
customer deposits        3175 – 3175
bank overdraft       92 – 92
borrowings       226 – 226
trade and other payables      177 18 195
net assetsliabilities       501 69 432
fair value of acquired net assets of existing interest        216
net assets acquired           216
goodwill arising on acquisition           767
         983
consideration 
cash consideration           955
costs associated with the acquisition           28
total consideration           983
from the date of acquisition the acquired business has contributed £163m to revenue and £34m of operating profit to the group  118 financial statements
tesco plc annual report and financial statements 2009
note 31 business combinations continued
homever
on 30 september 2008 the group acquired 100 of the share capital of homever a retailer in south korea
the fair value of the identifiable assets and liabilities of homever as at the date of acquisition were
      adjustments   
     preacquisition to align  recognised 
     carrying accounting fair value values on 
     amounts policies adjustments acquisition 
     £m £m £m £m
property plant and equipment      643  2 37  682 
intangible assets      96  2 83  11 
other noncurrent assets          63  – 3  60 
deferred tax asset     1 – 1 –
inventories      45  – 8  37 
trade and other receivables      32  – 5  27 
cash and cash equivalents      16  – –  16 
trade and other payables      204  – 16  220 
provision for liabilities and charges      5 2 52 59
bank and other borrowings      611 – – 611
deferred tax liability      5 35 – 40
net assetsliabilities acquired      71 37 131 97
goodwill arising on acquisition           362
         265
consideration 
cash consideration           259
costs associated with the acquisition           6
total consideration           265
from the date of acquisition the acquired business has contributed £326m to revenue and £18m of operating loss to the group
dobbies garden centres plc
on 31 july 2008 the group completed the acquisition of the remaining 345 20078 – 655 of the share capital of dobbies garden centres plc 
dobbies a retailer in the united kingdom for total consideration of £43m
this resulted in additional goodwill of £18m arising on acquisition during the year based on dobbies net assets of £77m
other acquisitions
the other acquisitions in the year include the trade and assets of sandyholm garden centre and some smaller businesses the companies acquired 
undertake retail activities
fair value adjustments of £2m were identified in addition to the £3m preacquisition carrying amounts of net assets resulting in the recognition of £5m 
as the fair value of net assets acquired with cash consideration of £10m this has resulted in the recognition of £5m of goodwill arising on acquisition
the postacquisition contribution of the other acquisitions to the group was £5m to revenue and £1m to operating profit
note 32 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
 2009 2008 2009 2008 2009 2008 2009 2008 
 £m £m £m £m £m £m £m £m
 
joint ventures 183 164 290 238 14 39 6 34
associates – – 1175 771 – – 156 82
sales to related parties consists of servicesmanagement fees and loan interest 
purchases from related parties include £174m 2008 – £157m of rentals payable to the group’s joint ventures including those joint ventures formed as 
part of the sale and leaseback programme
notes to the group financial statements continued 119 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 32 related party transactions continued
purchases from associates include £1171m 2008 – £766m 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
 2009 2008 2009 2008 2009 2008 2009 2008 
 £m £m £m £m £m £m £m £m
 
joint ventures 465 652 262 173 20 10 – 8
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 and unlimited companies 
accounts regulations 1993 ‘regulations’ apply the accounts for those partnerships have been consolidated into these accounts pursuant to 
regulation 7 of the regulations
on 19 december 2008 the group formed a property joint venture with tesco pension trustees the limited partnership contains three superstores 
which have been sold from and leased back to tesco the group sold assets for net proceeds of £199m to the joint venture which had a net book value 
of approximately £107m the group’s share of the profit realised from this transaction is included within profit arising on propertyrelated items in 20089
on 15 august 2008 the group formed a property joint venture with the universities superannuation scheme the limited partnership contains four 
superstores which have been sold from and leased back to tesco the group sold assets for net proceeds of £222m to the joint venture which had a net 
book value of £136m the group’s share of the profit realised from this transaction is included within profit arising on propertyrelated items in 20089 
another smaller transaction with bp pension trustees was completed in june 2008 where £44m of assets were transferred
on 20 march 2007 the group formed a property joint venture with the british land company plc the limited partnership contains 21 superstores 
which have been sold from and leased back to tesco the group sold assets for net proceeds of £652m to the joint venture which had a net book value  
of approximately £350m the group’s share of the profit realised from this transaction is included within profit arising on propertyrelated items in 20078 
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 part of the 
directors’ remuneration report
transactions on an arm’s length basis with tesco personal finance group limited which became a whollyowned subsidiary on 19 december 2008  
were as follows
      credit cards and   
      personal loan balances saving deposit accounts 
      number    number  
      of key   of key   
       management  management   
      personnel £k personnel £k
  
at 23 february 2008       2 39 2 19
at 19 december 2008       2 30 2 44
at 28 february 2009       2 30 2 77
during the year there were no other material transactions or balances between the group and its key management personnel or members of their  
close family 120 financial statements
tesco plc annual report and financial statements 2009
note 33 reconciliation of profit before tax to net cash generated from operations
       2009 2008 
       £m £m
profit before tax             2954 2803
net finance costs             362 63
share of posttax profits of joint ventures and associates             110 75
operating profit             3206 2791
depreciation and amortisation             1189 992
profit arising on propertyrelated items             236 188
profit arising on sale of non propertyrelated items       3 –
net reversal of impairment of property plant and equipment            22 10
adjustment for noncash element of pensions charge             52 121
sharebased payments             204 199
increase in inventories             95 376
decreaseincrease in trade and other receivables             79 71
increase in trade and other payables             691 641
increase in tpf loans and advances to customers             20 –
increase in tpf loans and advances to banks and other financial assets            2126 –
increase in tpf customer deposits and other financial liabilities            2053 –
increase in working capital             582 194
cash generated from operations             4978 4099
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 34 analysis of changes in net debt 
    at   other  at 
    23 february   noncash elimination 28 february  
    2008 cash flow acquisitions movements of tpf 2009 
    £m £m £m £m £m £m
cash and cash equivalents     1788 1601 – 120 37 3472
shortterm investments     360 873 – – – 1233
finance lease receivables     5 5 – – – –
joint venture loan receivables     173 242 91 62 – 262
derivative financial instruments     313 183 – 1730 2 1858
cash and receivables     2639 2528 91 1788 39 6825
bank and other borrowings     2033 1025 611 343 588 3424
finance lease payables     51 23 – 19 – 47
derivative financial instruments and other liabilities     443 941 – 1023 42 483
debt due within one year     2527 61 611 1385 630 3954
bank and other borrowings     5757 5290 – 1148 222 11973
finance lease payables     215 – – 19 – 196
derivative financial instruments and other liabilities     322 53 – 33 – 302
debt due after one year     6294 5237 – 1162 222 12471
        6182 2770 702 759 813 9600
notes to the group financial statements continued 121 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 35 commitments and contingencies
capital commitments
at 28 february 2009 there were commitments for capital expenditure contracted for but not provided of £1551m 2008 – £1309m principally relating 
to the store development programme
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 we continue to defend our case vigorously no provision has been recognised in the group’s results
tesco personal finance group limited
at 28 february 2009 tesco personal finance group limited tpf has commitments of formal standby facilities credit lines and other commitments  
to lend totalling £57bn the amount is intended to provide an indication of the volume of business transacted and not of the underlying credit or  
other risks
the financial services compensation scheme ‘fscs’ compensates customers of uk financial institutions when those institutions are unable to pay 
out firms are being levied only for interest costs and management expenses of the scheme and not for the capital repayments which will ultimately 
need to be made but the amounts have increased significantly compared to prior years 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 tpf was a market participant at 31 december 2007  
and 31 december 2008 and has accrued for its share of the 20089 and 200910 levy which was not material to the group going forward further 
provisions in respect of these costs are likely the ultimate cost of which remains uncertain
note 36 capital resources 
the following table shows the composition of regulatory capital resources of tesco personal finance group limited at the balance sheet date
       2009 2008 
           £m £m
tier 1 capital           
shareholders funds and minority interests        566 –
tier 2 capital         
qualifying subordinated debt        205 –
other interests in tier 2 capital       19 –
supervisory deductions        259 –
total regulatory capital        531 –
the movement of tier 1 capital from the date of acquisition to the balance sheet date is analysed as follows
        2009 2008 
            £m £m
at 19 december 2008        559 –
profi t attributable to shareholders       7 –
at 28 february 2009        566 –
 tesco personal finance group limited was acquired on 19 december 2008
it is tesco personal finance group limited’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 individual capital guidance ‘icg’ as a measure of capital adequacy in the uk banking sector comparing a bank’s capital resources with its risk
weighted assets the assets and offbalance sheet exposures are ‘weighted’ to reflect the inherent credit and other risks tpf has complied with the 
fsa’s capital requirements throughout the period between the date of acquisition and the balance sheet date 122 financial statements
tesco plc annual report and financial statements 2009
note 37 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
     2009 2008 2009 2008 
     £m £m £m £m
within one year         55 62 47 51
greater than one year but less than five years         140 181 114 156
after five years         172 130 82 59
total minimum lease payments         367 373 243 266
 
less future finance charges         124 107
present value of minimum lease payments         243 266
  
analysed as
current finance lease payables         47 51
noncurrent finance lease payables         196 215
            243 266
finance lease receivables – group as lessor
in 2006 the group entered into finance leasing arrangements with uk staff for certain of its electronic equipment as part of the computers for staff 
scheme the average term of finance leases entered into was three years and these all expired in 2008 the interest rate inherent in the leases was fixed 
at the contract date for all of the lease term the average effective interest rate contracted approximated to 26 per annum the fair value of the 
group’s finance lease receivables at 23 february 2008 was £5m 
future minimum lease receivables under finance leases together with the present value of the net minimum lease receivables are as follows
        present value of  
       minimum lease payments minimum lease payments
     2009 2008 2009 2008 
     £m £m £m £m
within one year         – 5 – 5
net finance lease receivables         – 5 – 5
  
notes to the group financial statements continued 123 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 37 leasing commitments continued
operating lease commitments – group as lessee
future minimum rentals payable under noncancellable operating leases are as follows
       2009 2008 
       £m £m
within one year            754 551
greater than one year but less than five years             3069 2190
after five years             9170 7127
total minimum lease payments             12993 9868
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 
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 at the end of the 
lease for the group to repurchase the properties at market value market rent reviews and 2025 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 investment 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 
       2009 2008 
       £m £m
within one year             201 141
greater than one year but less than five years             445 341
after five years             335 313
total minimum lease payments             981 795 124 financial statements
tesco plc annual report and financial statements 2009
five year record
        ifrs
     2005 2006
1
 2007 2008 2009 
         53 weeks
financial statistics
group sales including vat £m      36957 43137 46611 51773 59426
revenue excluding vat £m
uk      27146 29990 32665 34858
6
 38191
rest of europe      3818 5095 5559 6872  8862
asia      2902 4369 4417 5552 7068
us      – – – 16
6
 206
total group      33866 39454 42641 47298  54327
  
operating profit
2
 £m
uk      1556 1788 2083 2164
6
 2540
rest of europe      243 263 324 400 479
asia      153 229 241 294 343
us      – – – 67
6
 156
total group      1952 2280 2648 2791 3206
operating profit margin
2
uk      57 60 64 62
6
 67
rest of europe      64 52 58 58 54
asia      53 52 55 53 49
us      – – – na
6
 na
total group      58 58 62 59  59
share of results of joint ventures and associates
3
 £m      74 82 106 75 110
profit on sale of investment in associates      – – 25 – –
net finance costs
3
 £m      132 127 126 63 362
profit before tax £m      1894 2235 2653 2803 2954
taxation
3
 £m      541 649 772 673  788
minority interests £m      3 6 7 6 5
lossprofit for the period from discontinued operation
4
 £m    6 10 18 – –
profit for the financial year attributable to  equity holders of the parent £m    1344 1570 1892 2124 2161
underlying profit before tax
5
 £m      1925 2277 2545 2846 3128
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  share of results of joint ventures and associates is stated net of the interest and tax of the group’s joint ventures and associates the group’s charges for interest and tax have been reduced 
by these amounts
4 consists of the net result of the taiwanese business which was sold during 20067
5  ifrs underlying profit excludes ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements the ias 19 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 and ifrs 3 amortisation charge from intangible assets arising on acquisition for further 
details of this measure see page 78 
6 results have been restated to reflect the us as a separate segment 125 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
        ifrs
     2005 2006
1
 2007 2008 2009 
         53 weeks
 
enterprise value
7
 £m      27910 30841 40469  37656 35907
basic earnings per share
8 
     1752p 2020p 2361p 2695p 2750p
diluted earnings per share
8 
     1730p 1992p 2331p 2661p 2731p
dividend per share
9 
     756p 863p 964p  1090p 1196p
return on shareholders’ funds
10 
     232 249 267 251 239
return on capital employed
11 
     118 127 126
16
 129
17 
130
20
group statistics
number of stores      2334 2672 3263 3751 4332
total sales area – 000 sq ft
12 
     49135 55215 68189 76338  88451
average employees      335750 368213 413061 444127  468508
average fulltime equivalent employees      242980 273024 318283 345737  364015
uk retail statistics
number of stores      1780 1898 1988 2115
18 
2282
21
total sales area – 000 sq ft
12 
     24207 25919 27785 29549
18
  31285
21
average store size sales area – sq ft
13 
     31677 32816 34209 35055
18
 35215
21
average fulltime equivalent employees      163006 175459 184461 193917 194420
uk retail productivity £
revenue per employee
14 
     166534 170923 177084 179840  196436
profit per employee
14 
     9564 10190 11292 10814
19
  13065
weekly sales per sq ft
15 
     2389 2506 2548 2543  2621
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 53 us stores and 22 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 tpf and homever and india startup costs and after adjusting for assets held for sale calculated on a 52 week basis roce for 20089 is 128
21 excluding 24 dobbies stores 126 financial statements
tesco plc annual report and financial statements 2009
tesco plc – parent company balance sheet 
       2009 2008 
28 february 2009      notes £m £m
noncurrent assets
investments           5 10975 9551
derivative financial instruments           10  1473 216
               12448 9767
current assets
derivative financial instruments           10 291 76
debtors           6 8815 6046
current asset investments           7 2970 491
                12076 6613
creditors – amounts falling due within one year
borrowings           9 1981 1114
derivative financial instruments           10 373 413 
other creditors           8 2569 2037 
                4923 3564
net current assets             7153 3049
total assets less current liabilities             19601 12816
creditors – amounts falling due after more than one year
borrowings           9 11750 5645
derivative financial instruments           10 194 86
                11944 5731
net assets             7657 7085
capital and reserves
called up share capital           13 395 393
share premium account           14 4638 4511
profit and loss reserve           14 2624 2181
total equity             7657 7085
accounting policies and notes forming part of these financial statements are on pages 127 to 135
sir terry leahy 
laurie mcilwee
 
directors  
the parent company financial statements on pages 126 to 135 were authorised for issue by the directors on 1 may 2009 and are subject to the approval 
of the shareholders at the annual general meeting on 3 july 2009 127 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 acts 1985 and 2006 as applicable
the financial year represents the 53 weeks to 28 february 2009 prior 
financial year 52 weeks to 23 february 2008
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 230 of the companies act 1985 and not presented a profit and 
loss account for the company alone
the company has taken advantage of the frs 29 ‘financial instruments 
disclosures’ exemption and has not provided derivative financial 
instrument disclosures 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 
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
 amendment to frs 26 ‘financial instruments recognition and •	
measurement’ and frs 29 ‘financial instruments disclosures’ – 
effective from 1 july 2008 these amendments permit the 
reclassification of financial assets in particular circumstances  
the adoption of the amendments to frs 26 and frs 29 has had  
no impact on the results or net assets of the company
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’ – puttable •	
financial instruments and obligations arising on liquidation effective 
for annual periods beginning on or after 1 january 2010
amendment to frs 8 ‘related party transactions’ to reflect changes to •	
uk law effective for annual periods beginning on or after 6 april 2008
standards amendments and interpretations not yet effective but 
under review as to their effect on the company
amendment to frs 20 ‘share based payment’ – vesting conditions •	
and cancellations effective for annual periods beginning on or after  
1 january 2009 
amendment to frs 26 ‘financial instruments recognition and •	
measurement’ – eligible hedged items effective for annual periods 
beginning on or after 1 july 2009 
current asset investments
these relate to money market deposits which are stated at cost all income 
from these investments is included in the 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 financial year end exchange rates
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 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 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 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
notes to the parent company financial 
statements 
note 1 accounting policies  128 financial statements
tesco plc annual report and financial statements 2009
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 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 remains 
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 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 including 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 profit and loss account in the same period or  
periods during which the hedged transaction affects the profit and  
loss account the classification of the effective portion when recognised 
in the 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 profit and loss account
derivative instruments qualifying for cash flow hedging are principally 
forward foreign exchange transactions and 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 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 
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 profit 
and loss account gains and losses accumulated in equity are included 
in the 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 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
note 1 accounting policies continued 129 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 2 auditor remuneration 
       2009 2008 
       £m £m
fees payable to the company’s auditor for the audit of the parent company and group financial statements     0 6 06
note 3 employment costs including directors’ remuneration
       2009 2008 
       £m £m
wages and salaries             15 12
social security costs             1 6
pension costs             1 1
sharebased payment expense             18 20
                35 39
the average number of employees all directors of the company during the year was 14 2008 – 15 
the schedule vi requirements for directors’ remuneration are included within the directors’ remuneration report on pages 50 to 64
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            
as at 23 february 2008            9612 162 9774
additions           1434 – 1434
transferred to subsidiary undertaking      146 146 –
disposals      6 – 6
as at 28 february 2009           11186 16 11202
 
impairment
as at 23 february 2008           223 – 223
provision for impairment           4 – 4
as at 28 february 2009           227 – 227
 
net carrying value
as at 28 february 2009           10959 16 10975
as at 23 february 2008           9389 162 9551
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 primarily relates to the revaluation of the company’s listed fixed asset investments to fair value based on quoted 
market prices at the balance sheet date note 14 of the group financial statements 130 financial statements
tesco plc annual report and financial statements 2009
note 6 debtors
       2009 2008 
       £m £m
amounts owed by group undertakings             8587 5803
amounts owed by joint ventures and associates
a 
            106 171
other debtors             112 60
deferred tax asset
b 
            10 12
total             8815 6046
a the amounts due from joint ventures and associates of £106m 2008 – £171m 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 23 february 2008          13 1 12
charge to profit and loss account for the year            2  – 2
at 28 february 2009          11 1 10
note 7 current asset investments
       2009 2008 
       £m £m
bonds and deposits             2970 491
note 8 other creditors
       2009 2008 
       £m £m
 
amounts falling due within one year          
other tax and social security             – 1
amounts owed to group undertakings             2141 1725
other liabilities             421 304
accruals and deferred income             7 7 
                2569 2037
notes to the parent company financial 
statements continued 131 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 9 borrowings
      maturity 2009 2008 
     par value year £m £m
bank loans and overdrafts         – 2009 1494 538
loan from joint venture         – 2009 9 10
6 mtn         £125m 2008 – 130
525 mtn         €500m 2008 – 392
5125 mtn         £192m 2009 198 191
6625 mtn         £150m 2010 154 153
475 mtn         €750m 2010 689 592
3875 mtn         €500m 2011 476 387
5625 mtn     €1500m 2012 1362 –
5 mtn     £600m 2014 592 –
5125 mtn     €600m 2015 522 –
4 rpi mtn
a 
        £263m 2016 268 254
5875 mtn     €1500m 2016 1488 –
55 usd bond         850m 2017 678 455
55 mtn         £350m 2019 351 350
6125 mtn     £900m 2022 901 –
5 mtn
b 
        £515m 2023 515 417
3322 lpi mtn
c 
        £265m 2025 267 255
6 mtn         £200m 2029 216 194
55 mtn         £200m 2033 216 192
1982 rpi mtn
d 
        £221m 2036 221 212
615 usd bond         1150m 2037 977 604
5 mtn         £300m 2042 306 305
5125 mtn         €600m 2047 628 451
52 mtn         £500m 2057 500 499
other mtns         – – 477 178
other loans     – – 226 –
                13731 6759
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 an additional bond issue increased the principal of this mtn from £415m to £515m during 2009 
c  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
d the 1982 rpi mtn is redeemable at par indexed for increases in the rpi over the life of the mtn
       2009 2008 
       £m £m
repayment analysis
amounts falling due within one year             1981 1114
                1981 1114
amounts falling due after more than one year            
amounts falling due between one and two years             867 277
amounts falling due between two and five years             2784 1166
amounts falling due after more than five years             8099 4202
                11750 5645
                13731 6   759
  132 financial statements
tesco plc annual report and financial statements 2009
note 10 derivative financial instruments
the fair value of derivative financial instruments has been disclosed in the company’s balance sheet as
        2009  2008
      asset liability asset liability
     £m £m £m £m
current     291 373 76 413
noncurrent     1473 194 216 86
total      1764 567 292 499
     2009    2008
   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 6 257 31 1000 2 125 80 657
cross currency swaps 1444 4293 41 996 252 2788 – –
cash flow hedges
interest rate swaps and similar instruments – – 66 400 – – – –
forward foreign currency contracts 19 656 23 283 – – – –
net investment hedges
forward foreign currency contracts 92 2623 194 2767 2 289 218 2328
derivatives not in a formal hedge relationship
interest rate swaps and similar instruments 1 774 30 3280 5 3638 2 189
cross currency swaps 20 219 47 639  – – 2 204
forward foreign currency contracts 182 2632 135 2561 31 1589 197 2625
total  1764 11454 567 11926 292 8429 499 6003
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 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
notes to the parent company financial 
statements continued 133 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
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 23 february 2008 options waep options waep options waep options waep
outstanding at  
  24 february 2007 42249 22323 53381 28099 11300347 27090 5810007 000
granted  5733 41000 – – 1888688 47375 5113574 000
exercised  10330 15900 – – 997056 25325 85343 000
outstanding at
 23 february 2008 37652 26929 53381 28099 12191979 30375 10838238 000
exercisable as at
  23 february 2008 – – 15189 19750 5233393 23071 – –
exercise price range            16400 to
 pence – –  – 19750 – 25900 – –
weighted average remaining 
  contractual life years – – – 516 – 433 – –
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
        2009  2008
     shares wafv shares wafv 
     number pence number pence
shares in success         5568 43105 4464 47045
executive incentive scheme         304713 42465 176135 40190
performance share plan         238024 35605 160030 47110
us longterm incentive plan         63514 48200 2000000 47110
note 12 pensions
the total cost of the pension scheme to the group was £403m 2008 – £414m further disclosure relating to the tesco plc pension scheme can be 
found in note 28 of the group financial statements 134 financial statements
tesco plc annual report and financial statements 2009
note 13 called up share capital
     2009   2008
    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     – – – –
at end of year     10858000000 543 10858000000 543
  
allotted called up and fully paid
at beginning of year     7863498783 393 7947349558 397
share options     57060046 3 65432552 3
share buyback      25214811 1 149283327 7
at end of year     7895344018 395 7863498783 393
during the financial year 57 million 2008 – 65 million shares of 5p each were issued in relation to share options for aggregate consideration of £130m 
2008 – £138m
during the year the company purchased and subsequently cancelled 25214811 2008 – 149283327 shares of 5p each representing 0 2008 – 2  
of the called up share capital at an average price of £398 2008 – £438 per share the total consideration including expenses was £100m 2008 – 
£657m the excess of the consideration over the nominal value has been charged to retained earnings 
between 1 march 2009 and 17 april 2009 options over 3120922 ordinary shares have been exercised under the terms of the savingsrelated share 
option scheme 1981 and the irish savingsrelated option scheme 2000 between 1 march 2009 and 17 april 2009 options over 324991 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 28 february 2009 the directors were authorised to purchase up to a maximum in aggregate of 7848 million 2008 – 7934 million ordinary shares 
the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings  
of the company 
share buyback liability
insider trading rules prevent the group from buying back the company shares in the market during specified close periods including the period 
between the year end and the annual results announcement however if an irrevocable agreement is signed between the company and a third party 
they can continue to buy back shares on behalf of the company in 2008 three such arrangements were in place at the year end and in accordance  
with frs 25 the company recognised a financial liability equal to the estimated value of the shares purchasable under these agreements a liability  
of £100m was recognised within other payables for this amount there were no such agreements in place in 2009
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
notes to the parent company financial 
statements continued 135 financial statements
tesco plc annual report and financial statements 2009
to find out more go to 
wwwtescocomannualreport09
note 14 reserves
       2009 2008 
       £m £m
    
share premium account
at beginning of year             4511 4376
premium on issue of shares less costs             127 135
at end of year             4638 4511
  
profit and loss reserve
at beginning of year             2181 1380
sharebased payment             204 199
purchase of treasury shares             165 118
dividend             883 792
change in fair value of availableforsale financial assets             3 4
share buyback             – 665
share buyback – capital redemption             1 7
gains on cash flow hedges             105 24
profit after tax for the year             1178 2150
at end of year             2624 2181 136 financial statements
tesco plc annual report and financial statements 2009
independent auditors’ report to the members  
of t esco plc
we have audited the parent company financial statements of tesco plc 
for the 53 weeks ended 28 february 2009 which comprise the balance 
sheet and the related notes these parent company financial statements 
have been prepared under the accounting policies set out therein we have 
also audited the information in the directors’ remuneration report that is 
described as having been audited
we have reported separately on the group financial statements of  
tesco plc for the 53 weeks ended 28 february 2009 
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report the 
directors’ remuneration report and the parent company financial 
statements in accordance with applicable law and united kingdom 
accounting standards united kingdom generally accepted accounting 
practice are set out in the statement of directors’ responsibilities
our responsibility is to audit the parent company financial statements  
and the part of the directors’ remuneration report to be audited in 
accordance with relevant legal and regulatory requirements and 
international standards on auditing uk and ireland this report 
including the opinion has been prepared for and only for the parent 
company’s members as a body in accordance with section 235 of the 
companies act 1985 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 report is shown or into whose hands it may 
come save where expressly agreed by our prior consent in writing
we report to you our opinion as to whether the parent company financial 
statements give a true and fair view and whether the parent company 
financial statements and the part of the directors’ remuneration report  
to be audited have been properly prepared in accordance with the 
companies act 1985 we also report to you whether in our opinion the 
information given in the report of the directors is consistent with the 
parent company financial statements
in addition we report to you if in our opinion the parent company has not 
kept proper accounting records if we have not received all the information 
and explanations we require for our audit or if information specified by law 
regarding directors’ remuneration and other transactions is not disclosed
we read other information contained in the annual report and consider 
whether it is consistent with the audited parent company financial statements 
the other information comprises only the introduction the financial 
highlights chairman’s statement tesco at a glance the chief executive’s 
qa the report of the directors the corporate governance statement 
the unaudited part of the directors’ remuneration report and the five 
year record we consider the implications for our report if we become 
aware of any apparent misstatements or material inconsistencies with the 
parent company financial statements our responsibilities do not extend to 
any other information
basis of audit opinion
we conducted our audit in accordance with international standards on 
auditing uk and ireland issued by the auditing practices board an audit 
includes examination on a test basis of evidence relevant to the amounts 
and disclosures in the parent company financial statements and the part  
of the directors’ remuneration report to be audited it also includes an 
assessment of the significant estimates and judgments made by the 
directors in the preparation of the parent company financial statements 
and of whether the accounting policies are appropriate to the parent 
company’s circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information 
and explanations which we considered necessary in order to provide us 
with sufficient evidence to give reasonable assurance that the parent 
company financial statements and the part of the directors’ remuneration 
report to be audited are free from material misstatement whether caused 
by fraud or other irregularity or error in forming our opinion we also 
evaluated the overall adequacy of the presentation of information in  
the parent company financial statements and the part of the directors’ 
remuneration report to be audited
opinion
in our opinion
 the parent company financial statements give a true and fair  •	
view in accordance with united kingdom generally accepted 
accounting practice of the state of the parent company’s affairs  
as at 28 february 2009
 the parent company financial statements and the part of the directors’ •	
remuneration report to be audited have been properly prepared in 
accordance with the companies act 1985 and
 the information given in the report of the directors is consistent with •	
the parent company financial statements
pricewaterhousecoopers llp
chartered accountants and registered auditors 
london 1 may 2009 printed on revive a 100 recycled 
paper with fsc certification 
printed by ctd using an alcohol 
free process the printing inks  
are made with nonhazardous 
vegetable oil from renewable 
sources over 90 of solvents and 
developers are recycled for further 
use and recycling initiatives are in 
place for all other waste associated 
with this production ctd are fsc 
and iso 14001 certified with strict 
procedures in place to safeguard the 
environment through all processes 
designed and produced by  
35 communications
 go online
every year more and more
information is available for 
our shareholders staff and 
customers online
 go online
every year more and more
information is available for 
our shareholders staff and 
customers online
introduction 
financial highlights 2
chairman’s statement 3
tesco at a glance 4
chief executive’s qa 5
report of the directors  6
business review 6
longterm strategy 6
markets served and business model 7
international 8
core uk 12
nonfood 16
retailing services 20
community 24
people 28
resources and relationships 30
group performance 32
key performance indicators 36
risks and uncertainties 38
financial review 40
general information 41
our board of directors 42
corporate governance 44
directors’ remuneration report 50
financial statements  65
statement of directors’ responsibilities 66
independent auditors’ report to the
 members of tesco plc 67
group income statement 68
group statement of recognised income and expense 69
group balance sheet 70
group cash flow statement 71
reconciliation of net cash flow to movement in 
 net debt note 71
notes to the group financial statements 72
five year record 124
tesco plc – parent company financial statements 126
independent auditors’ report to the members 
 of tesco plc 136 annual report and financial statements 2009 tesco plc
wwwtescocomannualreport09
tesco plc
tesco house
delamare road
cheshunt
hertfordshire en8 9sl
value
travels
annual report and 
financial statements 2009 value
travels
annual review and summary
financial statement 2009 introduction 
financial highlights 2 
chairman’s statement 3 
tesco at a glance 4
chief executive’s qa 6
the year in review 
international 8
core uk 10
nonfood 12
retailing services 14
community 16
people 18
summary financial statement 
summary report of the directors 20
summary financial statement  
and business review  22
our board of directors ibc
go online
every year more and more
information is available for 
our shareholders staff and 
customers online
2009
annual review and summary 
financial statement 
contents 1
tesco plc annual review and summary financial statement 2009
welcome to tesco plc
value travels – tesco is about 
creating value for customers  
to earn their lifetime loyalty  
we understand that this is more 
important than ever as our 
customers around the world  
are looking to us to help them 
spend less  
so whether they are looking for 
lighter meal options clothing 
mobile phone tariffs or savings 
accounts they can trust tesco  
to deliver great value
a more detailed version can be found at
wwwtescocomannualreview09 2 financial highlights
tesco plc annual review and summary financial statement 2009
151
group sales 
including vat
100
underlying group profit 
before tax†
55
group profit before tax
110
underlying diluted earnings
per share
26
diluted earnings per share
 9 7
dividend per share
good financial management and leading market positions  
have served us well this year in the face of a challenging 
consumer environment we will continue to pursue our long
term strategy which will put us in an even stronger position 
once our markets emerge from the economic downturn
        2009 
      2009 52 weeks  
      53 weeks proforma 2008  
group sales £m including value added tax     59426  58588 51773
group revenue £m excluding value added tax     54327  53552 47298
underlying group profit before tax £m
†
      3128  3093 2846
group profit before tax £m      2954  2920 2803
underlying diluted earnings per share p

      2892 – 2702
dividend per share p      1196 – 1090
group enterprise value £m market capitalisation plus net debt     35907 –  37656
return on capital employed      130
‡
 – 129
§
 sales  profit growth reported on a consistent basis 12 months versus 12 months for china 
 growth in underlying diluted eps has been adjusted to reflect a constant tax rate year on year growth was 70 on a statutory basis
†  adjusted for ias 32 ias 39 the net difference between the ias 19 income statement charge and ‘normal’ cash contributions for pensions ias 17 ‘leases’ impact of 
annual uplifts in rent and rentfree periods and the ifrs 3 amortisation charge on intangible assets arising on the acquisition of tesco personal finance tpf
‡ excluding acquisitions of tpf and homever india startup costs and after adjusting for assets held for sale
§  using a ‘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
all growth figures reported on a 53week basis tesco plc annual review and summary financial statement 2009
3 chairman’s statement
we’ve made several new appointments to 
the tesco board in the year including laurie 
mcilwee who takes on the role of group 
finance director replacing andrew higginson 
who has been appointed chief executive  
of retailing services whilst retaining his 
responsibility for group strategy 
laurie has been with tesco for nine years 
and has a very strong trackrecord in both 
finance and operations in his most recent 
role as distribution director laurie was 
responsible for transforming our network – a 
tremendous achievement his appointment 
shows once again how careful management 
succession planning works in tesco and i have 
every confidence he will do an outstanding 
job as our group finance director 
we’ve also appointed three strong new 
nonexecutive directors in recent months – 
jacqueline tammenoms bakker a former 
director general at the ministry of transport 
in the netherlands who has also held senior 
positions at mckinsey  co and shell 
patrick cescau former ceo of unilever and 
ken hanna chairman of inchcape plc and 
former cfo of cadbury they bring with 
them a wealth of international commercial 
and financial experience which will further 
strengthen our board and support our plans 
for the longterm growth of the group
whilst the downturn has presented many 
challenges it has also opened up some 
opportunities we have made two very 
significant acquisitions this year
we have acquired the remaining 50 of 
tesco personal finance from royal bank  
of scotland a move which will enable us to 
develop an already very successful financial 
services offer towards our objective of 
becoming a fullservice retail bank
in south korea we purchased 36 
hypermarkets from eland mostly in  
seoul which has put us in a very strong 
position to challenge for market leadership 
in one of our most successful markets
most of our growth has again been organic – 
we’ve opened nine million square feet of new 
space this year excluding the acquisition in 
south korea and in august we announced 
that we are establishing a wholesale cash  
i am pleased to report that despite the 
extraordinary economic environment 
we find ourselves in tesco has once 
again delivered a good set of results 
this demonstrates that tesco is coping 
well with the downturn despite the 
challenging conditions around the 
globe we have remained resilient and 
are growing as fast as any major 
international retailer 
carry operation in india this complements 
our entries into china and the united states 
giving us access to another of the world’s 
most important economies
whilst many of our customers are focused 
on managing their shopping budgets it is 
still important to them that we behave 
responsibly in the communities we serve 
we now have a community plan for each 
country and earlier in the year we launched 
our community promises these are 
actively supporting local communities 
buying and selling our products responsibly 
caring for the environment giving 
customers healthy choices and good  
jobs for local people
we’ve made some great progress this year 
– we’ve opened our greenest ever store  
at cheetham hill in manchester with a 
carbon footprint that is 70 lower than  
a typical store – bringing our total number 
of green stores across the group to 37 
our work to encourage customers to make 
greener decisions is going well through 
green clubcard points we have reduced  
the number of singleuse carrier bags in the 
uk by 50 and we are finding innovative 
ways to use green clubcard elsewhere –  
for example by rewarding customers for 
cycling to our stores in south korea
i’m also pleased to announce that in the 
uk we have once again broken our ‘charity 
of the year’ record raising a remarkable  
£62 million for marie curie cancer care
although it was impossible to predict the 
scale of the global economic slowdown 
tesco has responded well by adjusting our 
business to this environment our 470000 
strong team have done a fantastic job – 
staying close to customers and reacting 
quickly to their changing needs around  
the world
i am confident that this hard work will 
continue as we press on with our longterm 
strategy which i believe will put us in an 
even stronger position once economies 
start to recover
david reid chairman tesco plc annual review and summary financial statement 2009
india
south korea
china
uk
poland
slovakia       
japan
malaysia
czech republic
hungary
us
t urkey
thailand
republic 
of ireland
4 tesco at a glance
tesco has coped well with the global economic downturn to 
deliver solid growth across the group we’ve faced into the 
challenges of subdued and competitive markets adjusting our 
offer to deliver an even better shopping trip for customers
market staff numbers store numbers
china 19452 70
czech republic 12677 113
hungary 21356 149
japan 4007 135
malaysia 9872 29
poland 23569 319
rep ireland 13764 116
market staff numbers store numbers
slovakia 8286 70
south korea 20626 242
thailand 38166 571
turkey 7025 96
uk 286394 2306
us 2583 115
in 20089 there were an additional 731 people working in other global locations such as international buying hubs
store numbers exclude one store in calais france
geographic locations
470000
people
4331
stores worldwide
14
countries 36
33
30
uk 
europe
asia 
us 
1
2005 2006 2007 2008 2009
370
431
466
518
59 4
£415bn
£10 1bn
£7 6bn
uk 
europe 
asia  
us 
£02bn
group sales £bn
tesco plc annual review and summary financial statement 2009
5 tesco at a glance
£594bn
group sales 
 n o  3
third largest grocery  
retailer in the world
 622 new stores
including 435 international
115m sq ft
of new space
group space by region group sales by region 6 chief ex ecutiv e’s qa
international
tesco is an international retailer and 
wherever we operate we focus on 
giving local customers what they 
want page 8
core uk
the uk is our biggest market and 
the core of our business we aim 
to provide all our customers with 
excellent value and choice page 10
nonfood
our aim is to be as strong in nonfood 
as in food this means offering the 
same great quality range price and 
service for our customers as we do in 
our food business page 12
retailing services
tesco has followed its customers 
into the growing world of retailing 
services aiming to bring simplicity 
and value to complex markets 
page 14
community
tesco is a responsible business  
we aim to take a leadership role in 
tackling climate change and believe 
in playing a positive role in all the 
communities we serve page 16
our long
term strategy
sir terry leahy chief executive tesco plc annual review and summary financial statement 2009
7 chief ex ecutiv e’s qa
at a time when customers everywhere are 
feeling the economic strain we are responding 
to their changing needs in all our markets by 
lowering prices introducing more affordable 
products and offering even sharper promotions 
q you’re very much in the front line 
when it comes to knowing what 
customers are thinking how they are 
behaving are there any signs that we 
have perhaps reached the bottom of  
the recession what lies in store for  
the economy do you think
a it is very fluid at the moment – changes 
are happening over weeks so i don’t think 
you can see any clear direction yet what  
i would say is that it looks as if things are 
stabilising on the consumer front in the  
uk the lower interest rates help as do the 
lower fuel prices and energy prices and 
coupled with the work that we have done  
in reducing food prices for customers –  
this helps rebuild confidence in central 
europe the economics had a big decline 
early in the summer and the autumn of 
2008 – that feels as if it has levelled out 
which is encouraging in asia it is too early 
to say their decline came later with the  
destocking of the supply chain and so for 
them it really hit around december these 
are strong economies and the destocking 
will end and we’ll start to get restocking in 
the pipeline which will help
q priorities change during a recession 
of course for business and customers 
alike is there a risk that the focus on 
green and corporate responsibility slips 
somewhat
a it is important that it doesn’t and it’s  
one of the reasons we lay such emphasis 
within tesco on our ‘steering wheel’ –  
our balanced scorecard – so that whatever 
is going on in the outside world we keep 
focused on the things that matter long 
term of course price and trading is 
important at the moment but there are  
big longterm objectives around community 
and the environment that we have got to 
stay committed to tesco has to help 
customers change from mass consumption 
to green consumption on climate change 
these actions combined with our core 
strengths – in selling food and everyday 
essentials owning our own property 
and having a broad business base – are 
helping us to cope well with the effects 
of the downturn we are also pleased 
with the early performance of tesco 
personal finance under our ownership 
and with the converted homever stores 
in south korea 
 
as a result we have delivered a solid 
sales and profit performance both in 
the uk and internationally whilst 
continuing to invest in our longterm 
strategy for growth we have made  
a good start to the new financial year 
and i am confident tesco will continue 
to make good progress even in the 
current global economic environment
q it has been a very tough time for the 
economy but the good news is it has 
been very sturdy growth for tesco  
how have you managed that
a it has been a very good year and mainly 
of course that is the dividend of having  
a longterm consistent strategy we’ve 
invested into this slowdown and that has 
given us good momentum through the 
recession we are growing fast in our 
overseas countries laying out networks of 
stores and we are still opening new space in 
the uk as well in addition to that of course 
people have to eat – we’re blessed in that 
sense so we don’t face the worst of the 
slowdown we’ve also adjusted our business 
both in the uk and around the world to 
make sure that we offer better value and 
better ranges which keeps customers in the 
stores and helps volume in the business
to see a full video interview go to 
wwwtescocomannualreview09presentations
we’ve got to learn how to run this business 
on 80 less carbon we have got great 
plans and we are making great progress 
of course it helps the business too – not 
wasting things is a very good habit at a 
time like this and one of the reasons our 
energy bills are down £100 million this year 
is because of all of the green initiatives 
we’ve been working on over several years
q bearing in mind what you have seen 
in the us so far are you pleased with 
the progress 
a i am yes because there’s lots to be 
pleased about clearly nobody would have 
chosen to open into the scale of recession 
that we’ve seen there which is particularly 
stiff in the western united states but the 
customers love the stores and they appeal 
right across the income range and the age 
range and that bodes very well for their 
longterm appeal fresh  easy is more 
than just a niche retailer – it’s a new and 
different form of retailing customers 
obviously like the fresh foods and they  
like the ownbrand products  but also are 
increasingly recognising the tremendous 
prices that are on offer and of course that  
is very important at the moment the 
operation is very good and it’s strong  
we really have created the business that  
we set out to create in terms of the highest 
freshest quality in the market at the best 
prices in the local neighbourhood we are 
expanding the business at a good rate and 
morale is high 
q what excites you most about the 
year ahead
a first of all we’re growing – and we’re 
serving more customers they have needs 
they are just different needs at a time like 
this it’s what tesco is for – to stay close  
to customers and change as their needs 
change that’s got to take a different form  
in different categories or in different parts  
of the world it’s important you have strong 
confident local leadership teams who take 
the responsibility to make those changes  
i believe that is happening if you look at our 
businesses – whether it’s nonfood financial 
services or in our international markets –  
we are growing strongly and we are growing 
market share there’s more that we have  
to do from place to place but confidence is 
high people know what they have to do and 
have the authority to do it  8
tesco plc annual review and summary financial statement 2009
the year in rev iew
loyalty card schemes 
we have national loyalty card schemes based on 
clubcard in ireland malaysia south korea and 
china and pilot schemes in slovakia poland 
thailand and turkey
each of our markets is different so it’s up to 
the individual businesses to adjust their offer 
locally using customer insight allows our 
experienced teams on the ground to make 
decisions based on real customer data 
we have spent many years developing our 
customer insight skills particularly through 
dunnhumby the consumer research 
company behind our loyalty scheme 
clubcard through careful analysis of  
sales and loyalty card data we can better 
understand what is important to our 
customers this year we have been using 
this unique insight across most parts of  
our business so we don’t have to guess 
what our customers want we know
in all our markets it’s helping us select the 
most important items for pricesensitive or 
costconscious shoppers so we can invest  
in lowering prices on the most important 
items to help customers through tough 
economic times for example in malaysia 
we have reviewed our range of staple  
foods and groceries and as a result we have 
introduced 27 new products to the basket 
which we know are among the most 
important for customers we now make 
sure that we are not beaten on price for 
these products
this insight is also helping us to make 
things simpler for customers to shop in  
our stores for example in asia we have 
worked with our leading supplier of baby 
milk by reviewing the sales data we 
discovered that displaying the products by 
brand rather than by age was important  
so we are changing the layout on the 
shelves to make it easier for customers  
to find the products they want 
across our markets customers are changing 
their shopping habits as they are affected 
to varying degrees by the global economic 
downturn in this kind of environment  
it is more important than ever to listen  
to customers and adapt quickly to their 
changing needs
for example in the us our customers tell 
us that they love the quality and freshness 
of our ranges as well as the prices and  
the convenient locations of the stores 
however the economic environment into 
which we originally launched the business 
has markedly changed and we’ve had to 
adapt to that we’ve made some changes 
to the product ranges introduced a limited 
number of promotions and special offers 
as well as made improvements to the 
ambience of the stores these changes 
have been wellreceived and consequently 
customer numbers per store are up by 
more than a third
international
it’s been another good year for our international business which  
now spans 13 countries across asia europe and the united states  
as customers around the world are feeling the effects of the global 
economic slowdown we are successfully adjusting our offer in all  
our markets to help customers who are feeling the pinch
whilst it is important to invest in the 
shopping trip we are also continuing to 
invest for future growth this is a strategy 
that has served us well in the past for 
example we entered thailand and south 
korea during the asian economic crisis in 
the 1990s and emerged stronger once the 
economies started to recover we are now 
market leader in thailand and following  
our acquisition of 36 hypermarkets in 
south korea we are now in a very strong 
position to challenge for market leadership 
there as well
we also announced our entry into the 
indian market last year we are establishing 
a cash  carry business that will offer a 
comprehensive range of great value fresh 
food grocery and nonfood products to 
small retailers restaurants kirana stores 
and other business owners we will also 
provide farmers and other suppliers with a 
highly efficient route to market in addition 
we have signed an exclusive franchise 
agreement with trent the retail arm of the 
tata group trent currently operates four 
star bazaar hypermarkets with plans to 
grow to 50 stores over the next five years 
we will supply these hypermarkets with 
products but also offer our retail expertise 
and technical capability to support the 
development of their business
to find out more go to 
wwwtescocomannualreview09 9 the year in rev iew
international 
sales up
31
philip clarke international and it director
we’ve long understood that retailing  
is local each team on the ground is  
able to adjust our offer to each market 
because customers in china for example 
aren’t the same as those in poland or  
south korea 
so we’ve never tried to run the 
international business from our office in 
the uk in fact we have very few expats 
working outside the uk – in south korea 
just six out of a team of 20000 people  
as we face into some strong economic 
headwinds it’s more important than ever 
to stay close to customers and be able to 
adapt quickly locally as their needs change 
we have people in each of our markets 
who have a wealth of experience and  
are able to make the decisions that  
really matter 
a big part of my job is about making sure 
we’ve got the right people in each country 
sharing experience around the business 
and empowering people to do the right 
things for their customers 
how do you run successful 
businesses in so many 
countries 10 the year in rev iew
making many small improvements in 
everything we do is what ‘every little 
helps’ is about because when we all  
work together on the little things it 
amounts to a great deal it’s more 
important today than it’s ever been –  
it keeps us focused on what matters  
most to customers 
they are shopping around more and  
price is clearly a priority for many –  
so we need to put the right effort and 
investment into price – but not sacrifice  
all the other things that are important  
to customers such as not having to  
queue and being able to get everything 
that they want 
so we’ve continued to make lots of  
small improvements and they’re making  
a big difference for example through  
a number of initiatives to achieve a  
better and more efficient service at our 
checkouts many more customers didn’t 
have to queue last year and customers 
continue to rank us best for speed of 
service at the checkouts
 
£540m
in productivity savings
david potts retail and logistics director
is ‘every little helps’  
still important 11
tesco plc annual review and summary financial statement 2009
the year in rev iew
30 
around 30 of our customers 
buy something from our 
‘discount brands at tesco’ 
every time they shop
70
of our products are delivered to stores in  
retailready packaging including all of our  
new ‘discount brands’ saving many hours  
of staff time refilling shelves
500 new products as part of our ‘discount 
brands at tesco’ initiative the new range 
means that every customer can have a 
product to match their budget without 
compromising on choice or quality it creates 
a completely new way to shop for customers 
who want to spend less
as well as introducing more affordable 
products we have been working hard to  
cut prices across the store to help us do 
this we have been keeping very good 
control of costs and have put more focus 
on our efficiency saving programme we  
call stepchange this programme has 
delivered £540 million of productivity and 
other savings in the year most of which 
have been reinvested in improving our 
shopping trip for customers
this programme involves many projects 
right across the business which change the 
way we do things to drive efficiency many 
of today’s savings were conceived and 
planned years ago and they are a result of 
productivity projects that span the whole 
business from stores and depots to the 
office they range from reducing the 
amount of energy we use in our stores  
it’s been a tough year for many of our 
customers consumer confidence has fallen 
as people worry about unemployment and 
are struggling to manage their household 
budgets not surprisingly there has been  
a shift in our customers’ priorities – our 
research has shown that price is ranked as 
the most important by a margin not seen in 
two decades therefore we believe our job 
is to be on the side of customers listening 
to them and doing what we can to help 
them spend less 
at the time of the last recession we launched 
value lines – the famous blue and white 
stripes – so we’ve long been able to provide 
the cheapest grocery shop in the country 
discounters included
this recession has provided a new 
challenge because although customers 
tend to shop around more for the best 
prices when times are hard – it doesn’t 
mean they want to compromise on quality 
of the shopping trip or on choice that is 
why this year we made the biggest change 
to our range in a decade launching around 
core uk
everyone in the business understands the way we work – to make 
things better for customers simpler for staff and cheaper for tesco  
at a time when customers are feeling the pinch and our competitors 
have improved this philosophy is more important than ever
to introducing better ways of working to 
improve our efficiency by making things 
better for customers simpler for staff and 
cheaper for tesco for example in the last 
year we have saved 52000 deliveries to  
our stores by using largerfill doubledecked 
vehicles which in turn have also saved  
12 million road miles 
we’ve also introduced innovative 
technology which allows us to electronically 
checkin bread and milk deliveries at our 
depots eliminating substantial paperwork 
and administration
we have picked up the pace on a number 
of these longterm crossfunctional step
change projects and plan to deliver similar 
savings in the current year of around £550 
million these savings will continue to go 
back into improving our offer for customers 
making things better simpler and cheaper 
is part of our culture at tesco and all our 
people are encouraged to suggest new 
ideas on how we can achieve this 
to find out more go to 
wwwtescocomannualreview09 tesco plc annual review and summary financial statement 2009
12
 no 5
technika is the fifth largest tv brand in the uk
the year in rev iew
also been promoting our slow cooking 
appliances as customers have been buying 
cheaper cuts of meat and cooking from 
scratch – half of all slow cookers bought in 
the runup to christmas were sold in tesco
our online nonfood business tesco direct 
continues to grow rapidly increasing sales 
by more than 50 in the year the latest 
springsummer catalogue and website 
includes over 1500 products that are  
cheaper than they were last year in the 
current year we also plan to introduce  
an online clothing offer – making our 
fashionable affordable clothes easier to 
buy for many more customers 
to ensure that we offer the best possible 
prices for customers we buy many products 
globally so that we benefit from our scale 
we have an international sourcing office 
based in hong kong which is responsible 
for buying 100000 nonfood products  
for the group the international sourcing 
operation has seen rapid growth in the last 
few years and now sources 60 of our 
clothing in the uk and 40 of hardlines 
including electricals homewares 
entertainment toys and books in europe  
it provides over 25 of our hardlines and 
85 of our clothing and we have recently 
nonfood remains an important part of our 
strategy and we continue to grow both 
sales and market share 
in our experience customers will buy where 
they see value to help customers we have 
been making changes to our ranges and 
cutting prices for example in the uk sales 
of our technika ownbrand televisions have 
been very strong as customers trade away 
from big brands and we now have a 10 
share of the television market we’ve  
nonfood
it has been a challenging year for nonfood as consumers around the 
globe have been hit by the economic downturn and are cutting back  
on nonessential purchases – but by keeping our prices low improving 
our offer in key categories like electricals and clothing and giving 
customers more choice about how they shop such as through tesco 
direct – we have outperformed the market 
gaming sales up 
30
53m
last year our international buying office sourced 
over 53 million pairs of socks for the group
started to source products for asia in the 
last year our international sourcing team 
shipped 72000 containers from 54 ports
we also have sourcing hubs in china india 
sri lanka bangladesh and turkey with 
smaller offices in thailand czech republic 
and italy we have invested in buying hubs 
where we have a critical mass of suppliers 
and shipment volumes it helps to be close 
to our suppliers so that we can ensure great 
quality products delivered from ethical 
sources on time and at the best price
where possible we try to source products 
direct from factories rather than through 
agents or middlemen this way we can 
ensure the lowest possible cost price as  
well as making sure that our products are 
sourced safely and fairly we also manage 
to strip out more costs by consolidating 
freight volumes this gives us the best 
shipping and transportation rates which 
can be passed on to the customer in the 
form of lower prices
to find out more go to 
wwwtescocomannualreview09 13 the year in rev iew
across the nonfood market customers 
have been cutting back on nonessential 
purchases but they have been buying 
when they see real value and as  
a consequence we have increased our 
market share as customers appreciate  
the convenience of buying nonfood from 
tesco and the value that we offer 
we’ve been adding new ranges with lower 
pricepoints and extending ranges that 
consumers see as essentials and we’ve 
seen real success on ownbrand products 
such as technika in electricals and 
cherokee and ff in our clothing offer
our online catalogue nonfood offer 
tesco direct has been very popular and we 
have seen strong growth with our latest 
springsummer range which included 
1500 price cuts compared to our autumn
winter catalogue with the benefit of high 
footfall great value ranges and the option 
to shop in store or online we are well 
placed to continue to grow both sales and 
market share in a difficult market
 
£125bn
group nonfood sales
richard brasher commercial and marketing director
lots of high street retailers 
have been cutting prices  
can i still get the best deals 
at tesco andrew higginson chief executive of retailing 
services and group strategy director
14 the year in rev iew
we believe in creating value for all our 
customers because that is how we earn 
their loyalty over time customers have 
come to trust tesco to deliver value 
whether they are buying their weekly 
shop or opening a savings account their 
trust is very important to us so we take 
the same approach to financial services  
as we do to all other parts of our business 
and that means offering competitive 
straightforward products with no 
confusing small print and hidden charges 
unlike many of the high street banks tpf 
is well funded – we never got involved in 
any of the complicated financial products 
and toxic debt that has caused so many 
problems for the banking sector so while 
many banks now have to grow their 
margins and rebuild their balance sheets 
we can concentrate on offering competitive 
rates across our savings loans credit 
cards and insurance products 
looking further ahead it’s clear that 
customers want us to provide a real 
alternative to other banks and that means  
a broader product range including a 
current account
6m
tesco personal finance 
customer accounts
can tesco really offer  
the same value as my bank tesco plc annual review and summary financial statement 2009
15 the year in rev iew
tescocom
is the world’s most successful  
online grocery retailer
developing retailing services has been  
part of our strategy for over a decade –  
with the aim of bringing value and simplicity 
to customers through services such as 
telecoms and financial products after ten 
years of success we have given it a renewed 
focus and in july we announced that andrew 
higginson would relinquish his role as group 
finance director to take on the role of  
chief executive of retailing services he  
has assembled an experienced team to  
really drive forward this part of the strategy 
which we believe has the potential to deliver  
£1 billion of annual profit in the next few years
the aim is to develop our services business 
to offer customers the same convenience 
we have brought to food shopping to all 
the other products and services we offer 
our dotcom grocery business and now our 
online nonfood offer tesco direct have 
already added more convenient options for 
customers to shop – particularly those with  
very busy lives or limited access to transport 
the growing power of the internet means 
increasingly that people look to this channel 
to buy everyday services and goods
retailing services 
it’s been a big year for our retailing services which includes our 
online shopping channels tescocom and tesco direct telecoms 
tesco personal finance tpf and dunnhumby – our consumer 
research business
however many people still like the 
reassurance of being able to talk to someone 
knowledgeable about the products and 
services they buy we believe in offering 
customers the choice – to shop in the way 
which most suits their needs whether that is 
online in store or by phone that is why we 
now have 40 phone shops in our stores and 
we plan to have around 100 open by the  
end of this year this means more customers 
than ever can access our popular telecoms 
offer we remain one of the fastest growing 
providers for prepay mobiles and we are 
now attracting more customers through our 
new contract mobile deals
in december we completed the acquisition 
of the remaining 50 of tpf from royal 
bank of scotland group plc rbsg this 
was an important move for tesco allowing 
us to build on the success of tpf and 
eventually offer customers the products 
you would expect from a fullservice retail 
bank this will mean growing our existing 
customer base across the 28 simple 
products we offer from home insurance  
to credit cards but also attracting new 
customers at a time when many have lost 
trust in their high street bank
all our current financial products are 
available to buy online and at present  
over 50 of our customers choose to buy 
this way however in the same way as 
customers value the service offered by  
our telecoms centres we understand that 
many would like to discuss their financial 
needs with someone knowledgeable we 
plan to increase our presence for tpf by 
extending the trial of our instore branches 
which offer customers the opportunity to 
talk to our specially trained finance advisors  
in a convenient location
18m
tesco mobile customers
to find out more go to 
wwwtescocomannualreview09 tesco plc annual review and summary financial statement 2009
16 the year in rev iew
truly local level and so over the past year  
we have appointed over 250 community 
champions in stores and depots across  
six countries these members of staff are 
dedicated to working with local schools 
charities and services to support the causes 
that matter most to our customers 
we have made a stepchange in our work 
on climate change and environmental 
responsibility by taking clear leadership in 
these vital areas in 2007 we set ambitious 
targets to reduce emissions in our own 
buildings and distribution networks and we 
continue to make good progress over the 
past year we have continued to rollout 
initiatives to save energy and lower our 
carbon footprint in all our operations and 
we now have environmental stores in every 
country in which we operate since 20067 
we have reduced our carbon intensity of 
new stores by 21 
our aim is to give customers choice by 
providing them with the information they 
need to make informed decisions when they 
shop through initiatives such as carbon and 
guideline daily amounts gda labelling 
in addition we have continued to work  
hard to help our customers to lead healthy 
lifestyles by providing information and 
services such as tesco diets our online 
dieting weight loss and healthy eating 
service and improving nutritional content 
in all our foods we also continue to find 
innovative ways to help customers get 
active in thailand for example our getting 
we understand the importance of 
behaving responsibly in all our operations 
over the past year we have worked even 
harder to be a good neighbour and have 
strengthened our contribution to the wider 
communities we serve
all communities have their own individual 
concerns and priorities and so each of our 
countries has its own community plan 
whilst the goals and targets are tailored 
specifically to each country each plan is 
underpinned by five core promises actively 
supporting local communities buying and 
selling our products responsibly caring for 
the environment giving customers healthy 
choices and creating good jobs and careers 
our success depends on listening to our 
customers and responding to their 
feedback by giving them what they want 
often the most significant contributions  
we can make to communities are at the 
community
we recognise that running our business responsibly is important to  
our customers and increasingly crucial to our growth we are working 
within communities to develop our own plans as well as involve 
customers in the journey
500
we will measure the carbon footprint 
of 500 more products this year
200
our greener living brand helps our customers to 
make greener choices the range comprises 200 
products as diverse as energy saving light bulbs 
paper goods and kitchenware
active with tesco lotus programme has 
inspired 24 million people to get involved 
in activities such as aerobics
to provide the best quality choice and 
value for money for our customers we need 
strong and constructive relationships with 
our suppliers we continue to make good 
progress in building these longterm 
relationships as we recognise that our success 
is linked to theirs trading fairly is essential in 
all our operations and last year we met with 
the uksif the sustainable investment and 
finance association to discuss our ethical 
trading approach they benchmarked us 
against a number of peers and concluded 
that we were in a leadership position in 
terms of good factory labour standards
to find out more go to 
wwwtescocomcrreport09 17 the year in rev iew
we understand that many of our 
customers are facing real financial 
pressures at the moment and they’re 
looking to us to help them spend less 
however when customers shop with  
us they don’t leave their ethics at the 
door and they’re telling us it is still  
really important to them that we behave 
responsibly and honestly they want  
to see tesco doing the right things on 
community and the environment at  
the same time as providing them with  
the value they expect from us
we’ve made some great progress this 
year and one of the things i’m most proud 
of is the work we have done in getting 
unemployed people back to work which  
is especially important in light of rising 
unemployment in the uk and elsewhere 
last year we recruited over 3000 long
term unemployed people and other 
disadvantaged job seekers up on nearly 
500 the previous year
250
community champions
lucy nevillerolfe corporate  legal affairs director
how much do customers  
really care about community 
when they are struggling 
with the recession tim mason president and ceo of fresh  easy
18 the year in rev iew
having started a business from scratch  
in the us – one of the world’s largest 
markets – i know how important it  
is to have a strong team around you 
developing talent is crucial to any  
growing business particularly retail  
which is a peopleintensive industry 
 as a group we’re still investing hard 
and growing through the downturn with 
sales growing by 15 last year to handle 
that growth well we need to bring skilled 
experienced people through all the time  
to fill the thousands of jobs it creates  
take fresh  easy where our team has 
grown from 65 to over 2500 in less than 
two years hundreds more will join us this 
year so we can’t rely on bringing people  
in from other parts of the business we 
need to develop our own talent locally 
and equip our people with the skills  
they need to be able to do the job and  
lead others that’s why we’re absolutely 
committed to putting the best training 
plans in place making sure that all of 
our people have the opportunity to get  
on in the business
470000
people
is training and developing 
staff still a priority tesco plc annual review and summary financial statement 2009
19 the year in rev iew
as the business continues to grow it is 
important that we build capability through 
training and development over 3500  
new management appointments were 
made in the uk last year through options 
a tailored programme for our people  
who have been identified as having the 
potential to move to a bigger job and  
our training academies we also have  
our highest ever number of people on 
options – 7680 – which includes over  
500 in our depots our graduate options 
programme was externally recognised 
winning a times graduate recruitment 
award in 2008 for graduate employer of 
choice in general management
we’re also doing more to recruit graduates 
across our international business we have 
plans to recruit 1000 graduates in asia and 
300 in central europe to ensure that we 
have a great pool of talent to support our 
future growth
this year we brought together over 2000 
managers from across the whole business 
at our triennial conference it was an 
opportunity to look back at the tremendous 
growth in the business in the last three 
years but also to look ahead it has been  
a challenging year for our people but with 
a clear strategy underpinned by our values 
they have never been clearer on what we 
need to do
the theme of the conference was ‘living 
the values’ we first launched our values  
a decade ago and they have been the  
glue that has held us together as we have 
rapidly grown the business they ensure 
that every person understands our culture 
and goals in the last year we have spent  
a lot of time talking to our people across 
the business to make sure that they are still 
as relevant today as they were 10 years ago 
and that they are universally understood  
it was clear that not only do our values 
remain relevant but that they have 
travelled because things like trust and 
respect for example are universal – they 
are as important to our people in tokyo  
as to those in torquay 
our values
noone tries harder for customers
• 	 u nd er st and 	 c u st o mer s
• 	 b e 	 f ir st 	 t o 	 m e e t 	 t he ir 	 ne e d s
•	 a c t 	 r es pons ibl y 	 f or 	 o ur 	 c ommunit ies
we treat people how we like to  
be treated
•	 w or k 	 as 	 a 	 team
• 	 t r u st 	 an d 	 r e s p e c t 	 eac h 	 o t he r
•	 l isten  	 suppor t 	 and 	 s ay 	 t hank 	 yo u
• 	 s h ar e 	 k no w le d g e 	 an d 	 e x p e r i e nc e
so we can enjoy our work
people 
over 470000 people now work for tesco across 14 countries  
it’s been a challenging year for our people and they have worked  
harder than ever to deliver an ‘every little helps’ shopping trip
170000
over 170000 of our uk staff have a personal stake  
in tesco through our share ownership and share 
incentive schemes
137
in china we have developed a leadership 
development programme to help us meet 
the needs of our rapid expansion this  
year 137 people completed the programme 
which is tailored to meet the development 
needs of each person and prepare them  
for leadership roles
to find out more go to 
wwwtescocomannualreview09 20
was not in compliance for part of the year 
the board recognises the importance of  
a balanced board with an appropriate level 
of independence there were however 
unexpected resignations of two non
executive directors due to conflicts of 
interest which resulted in the board not 
being in balance while the process of 
finding replacements was started 
immediately the board places a priority on 
ensuring the right candidates are selected 
and the process of recruiting individuals with 
the right experience availability and skills  
to complement those of the existing board 
can take a significant amount of time the 
company has appointed three new non
executive directors two as replacements  
for the two directors that resigned and one 
in order to ensure that the board remained 
in balance once the new group finance 
director was appointed from 1 april 2009 
the board became once again fully compliant 
with provisions of the combined code  
a full corporate governance statement is 
contained in the annual report and 
financial statements 2009
summary report of the directors 
on remuneration
directors’ 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 policy of rewarding talent and 
experience and seeks to provide incentives 
for delivering high growth and high returns 
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 21 the  
full remuneration report is provided in  
the annual report and financial 
statements 2009
principal activity and business review
the principal activity of the group is 
retailing and associated activities in the uk 
the czech republic hungary poland the 
republic of ireland slovakia turkey china 
japan malaysia south korea thailand and 
the united states the group also provides 
retail banking and insurance services through 
its subsidiary tesco personal finance the 
summary financial statement and business 
review is on pages 22 to 24
dividends
the directors recommend the payment  
of a final dividend of 839 pence per 
ordinary share to be paid on 10 july 2009 
to members on the register at the close of 
business on 1 may 2009 together with the 
interim dividend of 357 pence per ordinary 
share paid in december 2008 the total 
dividend for the year will be 1196 pence 
compared with 1090 pence for the 
previous year an increase of 97
directors
details of the current members of the 
board are shown on the inside back cover 
mr r brasher mr p clarke mr a higginson 
mr c allen and dr h einsmann retire  
from the board and being eligible offer 
themselves for reelection at the annual 
general meeting agm ms c mccall and 
mr e mervyn davies resigned from the 
board on 10 april 2008 and 31 october 
2008 respectively mr l mcilwee was 
appointed to the board on 27 january 2009 
ms j tammenoms bakker and mr p cescau 
joined the board with effect from  
1 january 2009 and 1 february 2009 
respectively and mr k hanna joined the 
board with effect from 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 
principles of good governance and code of 
best practice for the year ended 28 february 
2009 with the exception of provision a32 
which requires that at least half the board 
should comprise independent nonexecutive 
directors in respect of which the company 
independent auditors’ statement to the members  
of tesco plc
we have examined the summary financial statement 
which comprises the summary group income 
statement summary group balance sheet summary 
group cash flow statement and the summary report  
of the directors on remuneration set out on pages  
20 to 24
respective responsibilities of directors  
and auditors
the directors are responsible for preparing the 
summarised annual review and summary financial 
statement in accordance with united kingdom law 
our responsibility is to report to you our opinion on the 
consistency of the summary financial statement within 
the annual review and summary financial statement 
with the full annual financial statements the directors’ 
report and the directors’ remuneration report and  
its compliance with the relevant requirements of section 
251 of the companies act 1985 and the regulations  
made thereunder 
we also read the other information contained in the 
annual review and summary financial statement  
and consider the implications for our statement  
if we become aware of any apparent misstatements  
or material inconsistencies with the summary  
financial statement
this statement including the opinion has been prepared 
for and only for the company’s members as a body in 
accordance with section 251 of the companies act 1985 
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
basis of opinion
we conducted our work in accordance with bulletin 
19996 ‘the auditors’ statement on the summary 
financial statement’ issued by the auditing practices 
board our reports on the company’s full annual  
financial statements describe the basis of our audit 
opinions on those financial statements 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 53 weeks ended  
28 february 2009 and complies with the applicable 
requirements of section 251 of the companies  
act 1985 and the regulations made thereunder 
pricewaterhousecoopers llp 
chartered accountants and registered auditors 
london 29 april 2009 
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
summary financial statement
summary 
report of the
directors tesco plc annual review and summary financial statement 2009
21 summary financial statement
directors’ emoluments
  fixed emoluments performancerelated emoluments
      shortterm shortterm  total total 
   salary allowances benefits
3
 cash deferred shares longterm
4
 20089 20078 
   £000 £000 £000 £000 £000 £000 £000 £000 
 
executive directors     
richard brasher  778   –   65  712 712 –  2267   2116 
philip clarke  778   –   38   712  712  480   2720   2749 
andrew higginson  778   –   59   712  712   493   2754   2810 
sir terry leahy  1356   –  85 1238 1547  876   5102   5472 
 tim mason – base salary
1
  778   312   218  712 712   493   3225  3797 
 tim mason – supplement
1
  200   –   –  180 180  –   560   733 
tim mason – total  978   312   218   892  892   493   3785   4530 
laurie mcilwee
2
  38   –   5  24  24   –   91   – 
lucy nevillerolfe  538   –   70   499   499  –   1606  1451 
david potts  778   –   37  712   712   480   2719   2718 
nonexecutive directors       
charles allen  91   –  – –  –  –   91   85 
patrick cescau
2
  5    –     5  – 
rodney chase  129   –   –   –   –   –  129   118 
karen cook  73   –   –   –   –   –  73   67 
e mervyn davies  55   –   –   –   –   –   55  79 
harald einsmann  73   –   –   –   –   –   73   67 
ken hydon 91   –   –   –   –   –   91   85 
carolyn mccall 10   –   –   –   –   –   10  67 
david reid chairman  601   –   56   –   –   –   657  675 
jacqueline tammenoms bakker
2
  9   –   –   –   –   –   9   – 
total 7159 312 633 5501 5810 2822 22237 23089 
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 his benefits are made up of car travel medical tax related costs and services and free shares awarded under the share incentive plan
2 laurie mcilwee patrick cescau and jacqueline tammenoms bakker were appointed during the year figures in this table are shown from their date of appointment
3   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
4  the longterm bonus figures include the 125 enhancements on awards under the old bonus scheme
disclosable interests of the directors including family interests
      options held exercise price  value realisable ordinary shares 
  options held at 23 february 2008
1
    28 february of outstanding during 20089 at 28 february
  or on appointment if later granted exercised at 2009
1
 options pence £000 2009
2
executive directors
mr r brasher 2810138 876039 1625 3684552 00047375 2 189825
mr p a clarke 2452778 880395 1625 3331548 00047375 2 1344598
mr a t higginson 2887131 880395 1625 3765901 00047375 2 1287438
sir t leahy 10929606 1757393 128457 12558542 00047375 262 5992724
mr t j r mason 2384457 364943 108010 2641390 00047375 380 4365664
mr l mcilwee
3
 387203 – 2379 384824 00047375 3 320878
ms l nevillerolfe 652450 575802 1625 1226627 00047375 2 197903
mr d t potts 2452778 880395 1625 3331548 00047375 2 1737555
nonexecutive directors       
mr c l allen – – – – – – –
mr p j cescau – – – – – – –
mr r f chase – – – – – – –
mrs k cook – – – – – – –
mr e m davies
4
 – – – – – – 2400
dr h einsmann – – – – – – 303209
mr k j hydon – – – – – – 30093
ms c mccall
4
 – – – – – – 6556
mr d e reid chairman – – – – – – 193825
ms j tammenoms bakker – – – – – – –
total 24956541 6215362 246971 30924932   655 15972668
1  options to acquire ordinary shares shown in this table comprise options held under the executive share option schemes and discretionary share option plan save as you earn and nil cost 
options held under the performance share plan group new business incentive plan and executive incentive plan
2  ordinary shares shown in this table include restricted shares held by laurie mcilwee and lucy nevillerolfe under the psp subject to future performance conditions shares held by tim mason 
under the psp us long term incentive plan and eip subject to peformance or holding conditions shares held under the long term incentive plan subject to a holding period and shares 
held under the all employee share incentive plan 
3 laurie mcilwee was appointed on 27 january 2009 figures for 200708 shown in this table are from his date of appointment
4 carolyn mccall and e mervyn davies resigned from the board on 10 april 2008 and 31 october 2008 respectively laurie mcllwee group finance director
22
group sales including vat increased by 
151 to £594bn last year £516bn  
at constant exchange rates sales increased 
by 106 on a 52week comparable basis 
sales growth was 135
underlying profit before tax excluding  
the impact of the volatile noncash 
elements of ias 19 ias 32 ias 39 ias 17 
ifrs 3 – principally pension costs the 
marking to market of financial instruments 
the impact of annual uplifts in rents and 
rentfree periods and the amortisation 
charge on intangible assets arising on  
the acquisition this year relating to tesco 
personal finance increased to £3128 
million up by 100 on a 52week 
comparable basis underlying profit  
before tax rose by 88
underlying diluted earnings per share  
increased by 70 to 2892p despite the 
significantly lower than normal effective 
tax rate in the prior year using a constant 
tax rate underlying diluted earnings per 
share rose by 110 or by 97 on a  
52week comparable basis 
a final dividend of 839p per ordinary share 
2008 – 770p is proposed together with 
the interim dividend of 357p 2008 – 
320p already paid this brings the fullyear 
dividend to 1196p 2008 – 1090p an 
increase of 97 on last year
uk sales increased by 95 to £415bn last 
year £379bn including likeforlike growth 
of 43 27 from net new stores and  
a contribution of 21 from the 53rd week 
and a firsttime contribution from the 
consolidation of tpf excluding petrol like
forlike sales grew by 30 with increases 
of 20 and 27 in the third and fourth 
quarters respectively adjusting for the 
reduction in vat rates which came into 
effect in early december likeforlike 
growth excluding petrol was 37 in the 
fourth quarter
inflation reduced during the second half and 
our rate of growth was also impacted by a 
sharp increase during the year in the level of 
downtrading by customers seeking to spend 
less on their weekly shop tesco supported 
both of these trends by cutting prices and 
introducing more affordable products – 
including our successful new ‘discounter’ 
ranges a combination of recovering 
competitors and more subdued customer 
demand in some nonfood product 
categories continued to hold back sales 
progress in the second half although non
food sales growth remained positive overall 
and broadly stable in likeforlike terms
increased productivity and good expense 
control enabled us to maintain solid 
margins and deliver good profit growth 
despite these challenges whilst also 
absorbing initial trading losses totalling 
around £22m on tesco direct after these 
costs uk trading profit rose 127 to 
£2381m last year £2112m with trading 
margins at 62 including tpf slightly up 
on last year on a 52week comparable 
basis uk trading profit rose 107
in december we completed as planned the 
acquisition of the royal bank of scotland 
group plc’s 50 shareholding in tesco 
personal finance tpf and on becoming a 
subsidiary its results were consolidated into 
our uk business for the final ten weeks of 
the financial year during this period it 
contributed £163m to uk sales and made  
a small contribution to trading profit 
total international sales grew strongly – by 
306 at actual exchange rates to £179bn 
last year £137bn and by 136 at 
constant exchange rates on a 52week 
comparable basis actual and constant 
exchange rate growth was 303 and 
133 respectively sales growth slowed in 
europe during the second half which 
reflected deteriorating economic conditions 
in a number of markets in contrast sales 
growth in asia accelerated driven by the 
acquisition of the 36 homever stores in 
south korea at the start of the second half 
international contributed £709m to trading 
profit in the year last year £636m up 
115 after charging £33m of homever 
integration costs and preconversion 
losses before these costs trading profit 
grew by 167 excluding initial us trading 
losses international trading profits grew  
by 219 or by 215 on a 52week 
comparable basis at constant exchange 
rates and excluding initial us losses 
international trading profits grew by 83
total profit net of tax and interest from joint 
ventures and associates for the year was 
£110 million an increase of £35m compared 
with last year tesco personal finance profit 
was reported within joint ventures and 
associates for 50 weeks 50 share
net finance costs for the year were £362 
million 2008 – £63 million the rise 
summary financial statement and business rev iew
income
statement
my main challenge is to maintain the 
balance between staying on strategy 
while living within our means for a 
growth company like tesco it is vital  
of course that we meet the challenges 
posed by the economic downturn – and 
the priorities there are the same as for 
any finance director in the current 
environment – in helping the business  
to find the resources to invest for 
customers by keeping a good grip  
on costs and cash
at the same time though i need to  
do what i can to help sustain tesco’s 
investment in future growth by investing 
in the right opportunities protecting 
ourselves from unpredictable capital 
markets and trading in a sustainable  
way we should exit this recession as an 
even stronger company that’s how  
tesco emerged as a winner from the last 
recession exciting opportunities are 
there to be grasped – for example land 
and property are already significantly 
cheaper our online businesses are not 
capital intensive and given the loss of 
confidence in the banking sector our very 
conservative straightforward approach 
in tesco personal finance may be exactly 
what customers are looking for
as group finance director 
what are your priorities at 
the moment tesco plc annual review and summary financial statement 2009
23
summary group income statement
53 weeks ended 28 february 2009
                  2009 2008 
                  £m £m
continuing operations
revenue sales excluding vat                54327  47298
cost of sales                50109  43668
gross profit                4218  3630
administrative expenses                1248  1027
profit arising on propertyrelated items               236  188
operating profit                3206  2791
share of posttax profits of joint ventures and associates             110 75 
finance income                116  187
finance costs                478  250
profit before tax                2954  2803
taxation                788  673
profit for the year                2166  2130
attributable to
equity holders of the parent                2161  2124
minority interests                5  6
                  2166  2130
earnings per share
basic                2750p  2695p
diluted                2731p  2661p
 
                  2009 2008 
nongaap measure underlying profit before tax              £m £m
profit before tax                2954  2803
adjustments for
ias 32 and ias 39 ‘financial instruments’ – fair value remeasurements          88   49
ias 19 income statement charge for pensions              403  414
‘normal’ cash contributions for pensions              376  340
ias 17 ‘leases’ – impact of annual uplifts in rent and rentfree periods          27  18
ifrs 3 amortisation charge from intangibles arising on acquisition           32 –
underlying profit before tax                3128  2846
underlying diluted earnings per share               2892p  2702p
 results for the year ended 23 february 2008 include 52 weeks of operation
summary financial statement and business rev iew
principally reflecting increased average net 
debt levels linked to acquisitions and foreign 
exchange movements higher coupon rates 
on commercial paper and unfavourable 
changes in the noncash ifrs elements  
of the interest charge the interest charge 
excluding ifrs adjustments rose by £150m
tax has been charged at an effective rate of 
267 2008 – 240 this increase in tax 
rate is primarily due to last year’s oneoff 
tax reimbursement reflecting settlement 
of prior year tax items with hmrc
the summary financial statement on 
pages 22 to 24 and the summary report  
of the directors on pages 20 and 21 are  
a summary of information in the annual 
report and financial statements 2009 
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 2009
the report of the directors 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 2009 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 1 may 2009
sir terry leahy 
laurie mcilwee 
directors tesco plc annual review and summary financial statement 2009
24 summary financial statement and business rev iew
summary group balance sheet
28 february 2009
                  2009 2008 
                  £m £m
noncurrent assets                32008  23864
current assets including assets held for sale             14045   6300
current liabilities                18040  10263
net current liabilities               3995   3963
total assets less current liabilities               28013   19901
noncurrent liabilities               15018   7999
net assets               12995   11902
equity attributable to equity holders of the parent            12938   11815
minority interests                57  87
total equity                12995  11902
balance sheet net assets have increased by £1093 million to £12995 million noncurrent assets increased by £8144 million after charging 
depreciation and amortisation of £1189 million
group capital expenditure was £47 billion uk capital expenditure was £26 billion total international capital expenditure rose to £21 billion 
£09 billion in asia £09 billion in europe and £03 billion in the us in the year ahead we forecast group capital expenditure to be around  
£35 billion
summary group cash flow statement
53 weeks ended 28 february 2009
                  2009 2008 
                 £m £m
cash generated from operations                4978  4099
interest paid                562  410
corporation tax paid                456  346
net cash from operating activities                3960  3343
net cash used in investing activities               5974  2954
cash flows from financing activities
dividends paid                883  792
other net cash flows from financing activities               4498  1204
net cash from financing activities               3615  412
reconciliation of net cash flow to movement in net debt
53 weeks ended 28 february 2009
                  2009 2008 
                 £m £m
net increase in cash and cash equivalents              1601 801
elimination of net increase in tpf cash and cash equivalents       37 –
net cash inflow from debt and lease financing              4636 1827
shortterm investments               873 360
movement in joint venture loan receivables             242 36
debt acquired on acquisition of homever             611 –
transfer of joint venture loan receivable on acquisition of tpf          91 –
other noncash movements               759 691
increase in net debt in the year              3418 1321
opening net debt              6182 4861
closing net debt           9600 6182
 results for the year ended 23 february 2008 include 52 weeks of operation 
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 summary group cash flow statement
cash flow statement overall the group generated a net cash inflow of £1601 million leaving net debt of £96 billion at the year end  
£34 billion higher than last year gearing was 74 2008 – 52 our board of directors
1 2 3 4 5
6 7 8 9 10 11 12
13 14 16 15 17 18
1 david reid – 62 
nonexecutive chairman
2 rodney chase cbe– 65 
deputy chairman and  
senior nonexecutive director
3 sir terry leahy – 53 
chief executive
4 richard brasher – 47 
commercial and marketing director
5 philip clarke – 48 
international and it director
6 andrew higginson – 51 
chief executive of retailing services 
and group strategy director
7 tim mason – 51 
president and chief executive officer  
fresh  easy 
8 laurie mcilwee – 46  
group finance director
9 lucy nevillerolfe cmg – 56  
corporate  legal affairs director
10 david potts – 51  
retail and logistics director
11 charles allen cbe – 52 
nonexecutive director
12 patrick cescau – 60  
nonexecutive director
our board  
of directors
13 karen cook – 55 
nonexecutive director
14 dr harald einsmann – 75  
nonexecutive director
15 ken hanna – 55 
nonexecutive director
16 ken hydon – 64 
nonexecutive director
17 jacqueline tammenoms bakker – 55 
nonexecutive director
18 jonathan lloyd – 42 
company secretary
please go to our website to view  
the complete biographies 
wwwtescocomboardofdirectors
printed on revive a 100 recycled paper  
with fsc certification printed by ctd 
designed and produced by 35 communications wwwtescocomannualreview09
tesco plc
tesco house
delamare road
cheshunt
hertfordshire en8 9sl


Summary:
 2
tesco plc annual report and financial statements 2009
financial hig hlig hts
151
group sales 
including vat
         2009 
      2009 52 weeks  
      53 weeks proforma 2008
group sales £m including value added tax      59426  58588 51773
group revenue £m excluding value added tax      54327  53552 47298
underlying group profit before tax £m
†
      3128  3093 2846
group profit before tax £m      2954  2920 2803
underlying diluted earnings per share p

      2892 – 2702
dividend per share p      1196 – 1090
group enterprise value £m market capitalisation plus net debt      35907 –  37656
return on capital employed      130
‡
 –  129
§
 sales  profit growth reported on a consistent basis 12 months versus 12 months for china 
 growth in underlying diluted eps has been adjusted to reflect a constant tax rate year on year growth was 70 on a statutory basis
†  adjusted for ias 32 ias 39 the net difference between the ias 19 income statement charge and ‘normal’ cash contributions for pensions ias 17 ‘leases’ impact of annual uplifts  
in rent and rentfree periods and the ifrs 3 amortisation charge on intangible assets arising on the acquisition of tesco personal finance tpf
‡ excluding acquisitions of tpf and homever india startup costs and after adjusting for assets held for sale
§  using a ‘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
100
underlying group profit 
before tax†
55
group profit before tax
110
underlying diluted earnings
per share
26
diluted earnings per share
97
dividend per share
good financial management and leading market 
positions have served us well this year in the 
face of a challenging consumer environment 
we will continue to pursue our longterm 
strategy which will put us in an even stronger 
position once our markets emerge from the 
economic downturn
all growth figures reported on a 53week basis