Tesco 2014 Annual Report Download - page 15

Group results 2013/14 (on a continuing operations basis)
52 weeks ended 22
February 2014 2013/14
Growth (actual
exchange rates)
Growth (constant
exchange rates)
Group sales (inc. VAT)*£70,894m 0.3% (0.2)%
Sales growth excluding
petrol 0.9% 0.4%
Group trading profit £3, 315m (6.0)% (6.7)%
– UK £2,191m (3.6)% (3.6)%
– Asia £692m (5.6)% (6.8)%
– Europe £238m ( 27.7)% (32.8)%
– Tesco Bank £194m 1.6% 1.6%
Underlying profit
before tax £3,054m (6.9)% ( 7.7)%
Underlying diluted
earnings per share 32.05p ( 7.3)%** n/a
ROCE
(pro-forma inc. China)*** 12.1% (64)bp n/a
Capex £2.7bn 0.9% 0.6%
Statutory profit before tax includes:
– One-off items
(inc. Europe asset
impairment of £(734)m)
£(801)m
Statutory profit
before tax £2,259m 9.8% n/a
China treated as discontinued, including a charge of £(540)m relating to the
write-down of goodwill
* Group sales (inc. VAT) exclude the accounting impact of IFRIC 13.
**
Underlying diluted EPS growth calculated on a constant tax rate basis;
(5.0)% at actual tax rates.
***
From an accounting point of view, our existing business in China has to be treated
as a discontinued operation, prior to the planned completion of our partnership
with CRE. The pro-forma Group ROCE of 12.1% includes our Chinese business
to provide a comparable figure to the previously disclosed 2012/13 figure.
It is otherwise calculated on a continuing operations basis, excluding one-off
charges. Excluding our Chinese business, Group ROCE for 2013/14 was 13.6%.
Group results and strategic update
Group sales for the year were £70.9 billion, an increase of 0.3%
at actual exchange rates. Full-year trading profit for our continuing
operations declined (6.0)% to £3.3 billion. This was driven
by a decline in UK profits and challenges overseas; specifically,
the regulatory impact in South Korea, political disruption in
Thailand and continuing challenging conditions in Central Europe.
Underlying profit before tax1, which excludes the contribution
from property-related items, declined (6.9)% to £3.1 billion.
Underlying diluted earnings per share was 32.05 pence.
During the year, we concluded our strategic review in the United
States with the sale of the substantive part of Fresh & Easy’s operating
business to Yucaipa. We also announced our partnership with China
Resources Enterprise Ltd. (CRE), which when completed will give
Tesco a 20% ownership stake in the largest food retail business in
China. Both of those operations are therefore shown as discontinued.
Reflecting the challenging trading conditions and rapidly changing
environments, we have also announced a number of one-off
charges. £(801) million2 of these are in continuing operations.
These include:
•A non-cash impairment of £(734) million to the carrying values
of some stores in the Europe segment.
•An additional £(63) million provision for payment protection
insurance and other customer redress at the Bank.
Our statutory profit before tax for the year was £2.3 billion. Despite
these charges and a lower contribution from profits and losses on
property-related items, Group profit before tax increased by 9.8%,
primarily reflecting higher one-off charges last year.
Laurie Mcllwee
Chief Financial Officer†
Group sales
£70.9bn
Underlying diluted earnings
per share
32.05p
Group trading profit
£3,315m
Full-year dividend per share
maintained
14.76p
† After 14 years’ service at Tesco, Laurie resigned as Chief Financial Officer
on 4 April 2014. He will continue to work with us until October 2014 while
a successor is appointed.
1 See Note 1 on page 79 in the Annual Report and Financial Statements 2014
for the definition of underlying profit before tax.
2 See Note 2 on page 81 in the Annual Report and Financial Statements 2014
for the analysis of restructuring and other one-off items.
12 Tesco PLC Annual Report and Financial Statements 2014
Financial review