Tesco 2014 Annual Report Download - page 5

through levels of transparency and
disclosure which are undoubtedly now
world-leading.
We were pleased to welcome Mark Armour
to the Board in September last year and the
expertise, rooted in a long business career,
that he brings to our discussions.
We announced on 4 April that Laurie
McIlwee had resigned from his position
as Chief Financial Officer. I would like to
thank Laurie for his contribution to Tesco
over the last 14 years. Together with Philip
and the wider team, Laurie has played an
important role in our process to transform
Tesco and position it to be a winner in the
new era of retailing. I and the Board wish
him every success for the future.
Financial results
Our task is to deliver value to our shareholders
and we hold this goal in mind in all our
deliberations. The trade-offs at the present
time are not straightforward and we
continually track the balance between future
value and current return, seeking to ensure
an optimum balance between the two in the
context of the rapid changes which the retail
sector is experiencing. This is reflected in a
number of one-off write-offs associated with
significant business or market developments
and in our results generally which have
again been held back by the factors I have
described. Revenues from continuing
operations were broadly flat and underlying
profit fell by (6.9)%. We understand the
importance of the dividend to our
shareholders and our confidence in the
strategic choices we are making is reflected
in an unchanged dividend.
Conclusion
In pursuing our goals, the most important
resource we have is our colleagues who are
the ones who work unfailingly to anticipate
and meet the needs of customers, and I
and the whole Board are grateful to each
and every one of them for all that they do.
The future is a retail world where retailers
will need to operate across multiple
channels while meeting wholly different
customer expectations for service levels,
choice, convenience and overall experience.
You may be assured that we will compete
hard in the current market but the bigger
prize we seek on your behalf is to utilise
the unique assets and resources of Tesco
to ensure we emerge as leaders in the
future world of retailing.
Sir Richard Broadbent
Chairman
The Tesco brand
Re-building the Tesco brand to become
synonymous again with value, choice and
quality, to be seen again as unerringly on
the customers’ side, is central to our future.
In the multichannel world we are moving
into, what you are known for will be
as important as the channels through
which you sell. We have and will continue
therefore the patient work to strengthen
trust in our brand. This is not without its
cost but we believe it is as important an
investment as any other part of our strategy.
Values are central to any brand and last
year we took the major step of introducing
a new Value: we use our scale for good.
This is evidently a long-term project but
the year has seen the first steps taken to
embed this sentiment as a touchstone
of the business. These are reported in
more detail in our separate update of
“Tesco and Society” which is being
published alongside this report.
International
Our priority is to deliver value to our
shareholders. The last two years or so have
seen us address tough decisions in relation
to the international business. That said, we
continue to see opportunity to create value
internationally by leveraging our skills and
scale in relatively rapidly growing economies
with less developed modern retail sectors
where the rate of economic growth coupled
with switching to modern retail outlets can
generate attractive returns.
Such opportunities need to be taken with
focus, flexibility and care. The completion
in the past year of our exit from the US
underpins the importance of piloting new
ventures; of being open to partnership
especially in new markets; to selecting
rigorously those markets that meet
tightly-drawn criteria for investment; and
to ensure close management and control
of the investments. Many of our choices
this year, to enter partnerships in China and
India or to invest modestly in an internet
start-up in South East Asia, reflect this
philosophy of establishing a position of
opportunity and testing returns against our
criteria as a basis for building long-term,
value-enhancing positions.
Governance
In common with other public companies,
we are meeting this year new standards
of disclosure. Our Remuneration Policy
is set out on pages 41 to 61 for
shareholders to consider. Our accounts
as a whole have been considered by the
Board in the light of the new test to be
“fair, balanced and understandable.”
We have taken seriously the spirit as
well as the letter of the new Regulations,
which are seeking to build trust between
the corporate sector and society generally
“ The future is a retail world
where retailers will need
to operate across multiple
channels while meeting
wholly different customer
expectations for service
levels, choice, convenience
and overall experience.”
02 Tesco PLC Annual Report and Financial Statements 2014
Chairman’s statement continued