Tesco plc Annual Report and Financial Statements 2012

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Notes to the Parent Company financial statements Note 1 Accounting policies continued 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 Company Profit and Loss Account, together with any changes in the fair value of the hedged item that is attributable to the hedged risk. 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 Company Profit and Loss Account in the same period during which the hedged transaction affects the Company Profit and Loss Account. The classification of the effective portion when recognised in the Company Profit and Loss Account is the same as the classification of the hedged transaction. Any element of the remeasurement criteria of the derivative instrument which does not meet the criteria for an effective hedge is recognised immediately in the Company Profit and Loss Account. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge accounting or is de-designated. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs or the original hedged item affects the Parent Company Profit and Loss Account. If a forecasted hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the Company Profit and Loss Account. 144 Tesco PLC Annual Report and Financial Statements 2012 Pensions The Company participates in the Tesco PLC Pension Scheme which is a multi-employer 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 the 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 tax 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 non-discontinued 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.
OVERVIEW Note 2 Auditor remuneration STRATEGIC REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS Fees payable to the Company’s auditor for the audit of the Company and Group financial statements 0.7 0.6 Note 3 Employment costs, including Directors’ remuneration Wages and salaries 16 14 Social security costs 2 2 Pension costs 1 1 Share-based payment expense 7 26 26 43 The average number of employees (all Directors of the Company) during the financial year was 15 (2011: 16). The Schedule VI requirements for Directors’ remuneration are included within the Directors’ remuneration report on pages 64 to 86. Note 4 Dividends For details of dividends see Note 8 in the Group financial statements. Note 5 Investments Shares in Group undertakings £m 2012 £m 2012 £m Shares in joint ventures £m Cost At 26 February 2011 13,229 16 13,245 Additions 969 – 969 Disposals (4) – (4) At 25 February 2012 14,194 16 14,210 Impairment At 26 February 2011 535 – 535 At 25 February 2012 535 – 535 Net carrying value At 25 February 2012 13,659 16 13,675 At 26 February 2011 12,694 16 12,710 For a list of the Company’s principal operating subsidiary undertakings and joint ventures see Note 13 in the Group financial statements. 2011 £m 2011 £m Total £m Tesco PLC Annual Report and Financial Statements 2012 145
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Annual Report and Financial Stateme
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Trading profit £529m 14% of Group
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OVERVIEW Chairman’s statement Cha
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OVERVIEW Chief Executive’s review
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OVERVIEW STRATEGIC REVIEW PERFORMAN
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OVERVIEW Strategy in action IN THIS
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OVERVIEW Quality and innovation STR
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OVERVIEW Clothing The UK clothing m
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OVERVIEW Click & Collect Click & Co
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OVERVIEW Smaller format stores Smal
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OVERVIEW Fresh & Easy: progress in
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OVERVIEW Savings and loans New prod
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OVERVIEW Business model -- Core act
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OVERVIEW Our KPIs measure how we ar
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OVERVIEW Group strategy: To be an o
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OVERVIEW Financial review Laurie Mc
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OVERVIEW US trading loss £(142)m
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OVERVIEW Board of Directors Governa
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OVERVIEW Board of Directors STRATEG
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OVERVIEW Principal risks Reputation
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OVERVIEW Principal risks Product sa
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OVERVIEW Principal risks Credit ris
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OVERVIEW Governance structures STRA
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OVERVIEW Length of service of each
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OVERVIEW A Board visit is organised
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OVERVIEW The areas covered by the C
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OVERVIEW Remuneration policy for Ex
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OVERVIEW Share ownership guidelines
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OVERVIEW As announced in January 20
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OVERVIEW Performance measures and p
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OVERVIEW Aligning pay with performa
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OVERVIEW Chairman The Remuneration
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Page 97 and 98: OVERVIEW STRATEGIC REVIEW PERFORMAN
Page 99 and 100: OVERVIEW Note 1 Accounting policies
Page 107 and 108: OVERVIEW Note 2 Segmental reporting
Page 109 and 110: OVERVIEW Note 3 Income and expenses
Page 111 and 112: OVERVIEW Note 6 Taxation continued
Page 115 and 116: OVERVIEW Note 10 Goodwill and other
Page 117 and 118: OVERVIEW Note 11 Property, plant an
Page 119 and 120: OVERVIEW Note 12 Investment propert
Page 121 and 122: OVERVIEW Note 13 Group entities con
Page 123 and 124: OVERVIEW Note 17 Loans and advances
Page 125 and 126: OVERVIEW Note 20 Borrowings Current
Page 127 and 128: OVERVIEW Note 21 Financial instrume
Page 129 and 130: OVERVIEW Note 21 Financial instrume
Page 131 and 132: OVERVIEW Note 22 Financial risk fac
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Page 135 and 136: OVERVIEW Note 24 Provisions continu
Page 137 and 138: OVERVIEW Note 25 Share-based paymen
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Page 141 and 142: OVERVIEW Note 27 Called up share ca
Page 145 and 146: OVERVIEW Note 34 Leasing commitment
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Page 151 and 152: OVERVIEW Note 9 Borrowings STRATEGI
Page 153 and 154: OVERVIEW Note 11 Share-based paymen
Page 157 and 158: Financial calendar Financial year e
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Tesco plc Annual Report and Financial Statements 2012

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