Tesco 2006 Annual Report Download - page 15

13Tesco plc
air from chilled areas is re-used for air conditioning. Our second
model energy efficient store has now opened in Swansea.
Our investments will also include further recycling initiatives to
make recycling easy and attractive for customers. In 2005, we
recycled 71% of all store waste, saving nearly 27,000 tonnes
from landfill. We invested over £600,000 in new automated
recycling machines for customers at our stores in Winchester,
Havant, Portsmouth, Southampton, Andover and Royston and
we plan to install these at many more stores. We believe this
will enable us to double the amount our customers bring for
recycling and this additional material would account for around
10% of the total additional tonnage needed to meet the UK’s
EU packaging recycling targets by 2008.
We have set up a £100m fund within our business to be used
for innovation in sustainable environmental technology. We
will be installing wind turbines at some of our new stores,
alongside solar energy technology, geothermal power,
combined heat and power and trigeneration. We will also be
trialling gasification, a revolutionary technology to turn waste
into clean, sustainable power.
Community Wecontinue to play an active role in regeneration,
encouraging inward investment and creating rewarding jobs
and careers in our most deprived areas. Over the last seven
years wehave completed 14 Regeneration Partnership
Schemes creating 3,500 jobs and helping 2,200 long-term
unemployed people back into work. In 2005/06 we completed
two such schemes in Manchester and Leicester. To attract and
retain the best workforce we offer training and development to
help people achievetheir full potential. In 2004, we launched
our Apprenticeship in Retail scheme with just 16 staff taking
part from three stores, this year 445 general assistants from 92
stores will attain their apprenticeships and GCSE equivalent
qualifications in English and Maths.
People tell us they want us to use our size and reach to be
a force for good in society. To help us meet this challenge
we have decided that from 2006 we will operate a new
Community Plan. This will be part of our Steering Wheel,
setting out objectives that the business will deliver. It will
ensure we provide the right resources, energy and focus to
meet the expectations of our customers and other stakeholders
in this area. The key objectives are:
• to be a good neighbour; and
• to be responsible, fair and honest
in the way we do business.
Risks and uncertainties
Risk is an accepted part of doing business. The real challenge
for any business is to identify the principal risks and to develop
and monitor appropriate controls. A successful risk
management process balances risks and rewards and relies
on a sound judgement of their likelihood and consequence.
The Tesco Board has overall responsibility for risk management
and internal control within the context of achieving the Group’s
objectives. Our process for identifying and managing risks is set
out in more detail on page 22 of the Corporate Governance
Statement in this Annual Report. The key risks and mitigating
factorsare set out below.
Business strategy If our strategy follows the wrong direction
or is notefficiently communicated then the business may suffer.
We need to understand and properly manage strategic risk in
order todeliver long-term growth for the benefit of all our
stakeholders. Our strategy is based on a four-part strategy:
to grow the core UK business, to become a successful
international retailer, to be as strong in non-food as in food
and todevelop retailing services. Pursuit of this four-part
strategy has allowed the business to diversify. At a strategic
level diversification and pursuit of growth in emerging markets
has the effectof reducing overall risk by avoiding reliance on
asmall number of business areas. However, by its very nature,
diversification also introduces new risks to be managed in
areas of the businessthat arelessmature and fully understood.
Toensurethe Group continues to pursue the right strategy,
theseaspects are reviewed on a continuous basis. We also
have structured programmes for engaging with all our
stakeholders including customers, employees, investors,
suppliers, government, the mediaand non-governmental
organisations. We also invest significant resources in ensuring
our strategy is communicated well and understood by the
parties who are key todelivering it. The business utilises a
Steering Wheel approach in all our countries and significant
businessunits, such as tesco.com, to help manage performance
and deliver business strategy.
Financial strategy and Group treasury risk The main
financial risks of the Group relateto the availability of funds to
meet business needs, the risk of default by counter-parties to
financial transactions, and fluctuations in interest and foreign
exchange rates.
The Treasury function is mandated by the Board to manage
the financial risks that arisein relation to underlying business
3
Huge on quality and
low on price, our new
Naturally Good Food
range marks the new
age of the ready meal.
3
We aim to offer
our customers
the convenience
of either large
or small stores.
4
One in ten women
in the UK buy
Tesco makeup.