Annual Report and Financial Statements 2007 - Tesco PLC

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8 Tesco PLC Annual report and financial statements 2007 Find out more at www.tesco.com/corporate Operating and financial review continued Key Performance Indicators (KPIs) We operate a balanced scorecard approach to managing the business that is known internally within the Group as our Steering Wheel. This unites the Group’s resources around our customers, people, operations, finance and the community. This enables the business to be operated and monitored on a balanced basis with due regard for all stakeholders. Some of the KPIs below are tracked through our Steering Wheel and others are tracked as a monitor of investor return. Sales growth 2007* 2006* Change in Group sales over the year (including value added tax) 10.9% 13.2% UK sales growth 9.0% 10.7% International sales growth 17.9% 23.0% International sales growth (at constant exchange rates) 17.4% 15.5% Profit before tax £2,653m £2,206m Underlying profit before tax £2,545m £2,248m Trading margin UK trading margin 5.9% 5.8% International trading margin 5.7% 5.7% Trading margin is calculated from the operating profit expressed as a percentage of Group revenue (sales excluding value added tax). It is a measure of profit generation from sales and is a comparable performance measure with other companies. This is how much we made from trade in our stores, taking account of the cost of the products sold, wages and salaries, expenses associated with running the stores, depots and head office, and the cost of depreciation of the assets used to generate the profits. Net cash (outflow)/inflow £(265)m £165m Net cash inflow is the cash received less cash spent during the financial period, after financing activities. Capital expenditure £3.0bn £2.8bn This is the cash invested in purchasing fixed assets. UK £1.9bn £1.8bn International £1.1bn £1.0bn Net borrowings and gearing Net borrowings £5.0bn £4.5bn Gearing 48% 48% Return on Capital Employed (ROCE) 12.6% ‡ 12.5% ROCE is calculated as profit before interest less tax divided by the average of net assets plus net debt plus dividend creditor less net assets held for sale. ROCE is a relative profit measurement that not only incorporates the funds shareholders have invested, but also funds invested by banks and other lenders, and therefore shows the productivity of the assets of the Group. Underlying diluted earnings per share 22.36p 20.04p Underlying diluted earnings per share is the calculation of profit after tax and minority interest divided by the diluted weighted average number of shares in issue during the year. It is the amount which could be paid out on each share if the Company decided to distribute all its profits as dividends instead of retaining some for future expansion. * On a 52-week comparable basis. ‡ Including the one-off gain from Pensions A-Day, ROCE was 13.6%.
2007 2006 Total shareholder return 36.0% 45.8% Total shareholder return is the notional return from a share and is measured as the percentage change in the share price, plus the dividend paid. This is measured over the last five years. Full year dividend per share 9.64p 8.63p The 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 non-financial. Across the Group, KPIs are set locally, with oversight from the Executive Directors, to ensure they are tailored to drive the priorities of each business. Each business operates a Steering Wheel, our balanced scorecard. During the last year we have made good progress with rolling-out our Corporate Responsibility management system to our International operations. We report quarterly on social, ethical and environmental matters alongside their Customer, Operations, Finance and People KPIs. More detail on each country follows in the ‘Operations, resources and relationships’ section. The following are some KPIs for the UK and Group operations. UK market share 2007 2006 Grocery market share* 21.0% 20.2% Non-food market share 8.0% 7.0% *This is measured as the share of all spend by all shoppers through Taylor Nelson Sofres Superpanel (Total Till Roll) data. Supplier viewpoint measure 94% 94% We aim to monitor supplier relations through the Supplier Viewpoint Survey. The target is for over 90% of suppliers to view Tesco as being trustworthy, reliable, consistent, clear, helpful and fair. Employee retention 84% 83% This measure shows the percentage of employees who have stayed with the business for longer than one year. It is one measure that we use to monitor employee loyalty and satisfaction and we aim to exceed 80% retention of experienced staff. Energy consumption 12.5% 5.5% For 2006/07 our target was to reduce energy consumption by 12% (2005/06 – 5%). 9 OPERATING AND FINANCIAL REVIEW
Page 1 and 2: Annual Report and Financial Stateme
Page 3 and 4: inside... 02 Financial highlights 0
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Page 43 and 44: FINANCIAL STATEMENTS CONTENTS State
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Note 13 Group entities Significant
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UK GAAP IFRS 2003 2004 2005 2005 20
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Notes to the Parent company financi
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Independent auditors’ report to t
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Annual Report and Financial Statements 2007 - Tesco PLC

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