13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q...
Transcript of 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q...
![Page 1: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/1.jpg)
13 April 2016
Serving Britain's shoppers a little better every day Dave Lewis – CEO, Alan Stewart – CFO
![Page 2: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/2.jpg)
• Significant progress
• Detailed results
• The next step
Agenda
![Page 3: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/3.jpg)
Broad-based improvement
4Q
(4.4)%
(2.9)%
(1.2)%
1.0%
1Q 2Q 3Q
1Q 2Q 3Q
ROI Asia Europe
(3.4)%
0.1%
2.4%
3.5%
1Q 2Q 3Q 4Q
1Q 2.2%
4.0%
3.3%
4.1%
1Q 2Q 3Q 4Q
(1.3)%
(1.0)%
(1.5)%
0.9%
4Q
1Q 2Q 3Q
UK
Improving like-for-like sales
4Q
![Page 4: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/4.jpg)
Broad-based improvement
Retail operating
cash generation
£2.6bn
Improving
profitability
Sales momentum
(1.2)%
(0.3)% (0.5)%
1.6%
4Q
1Q 2Q 3Q
Group operating
profit1
Group LFL
£161m
£354m
£590m
2H 14/15 1H 15/16 2H 15/16
1. Group operating profit before exceptional items.
![Page 5: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/5.jpg)
Broad-based improvement
Customer
satisfaction1
Colleague
engagement2
Supplier
viewpoint3
51% 60%
68%
40%
75%
Oct-14 Feb-16
71 71
76
80
85
2014 2016FY 14/15 1H 15/16 2H 15/16
1. Reflects % of customers rating overall service and colleague helpfulness as excellent as part of the weekly Customer Viewpoint survey.
2. Reflects % of colleagues recommending Tesco as a great place to work as part of What Matters To You Survey undertaken every January and August.
3. Reflects % of UK suppliers responding positively when asked “overall how satisfied are you with your experience of working with Tesco” as part of the
Supplier Viewpoint survey.
![Page 6: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/6.jpg)
Three priorities
Regaining competitiveness in core UK business
Protecting and strengthening the balance sheet
Rebuilding trust and transparency
1
2
3
![Page 7: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/7.jpg)
3.3%
(7.0)%
4.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q1
UK volume-based recovery
UK like-for-like volume
2014/15 2013/14 2012/13 2011/12 2010/11 2015/16
1. 3Q 15/16 adjusted for the impact of non-repeated coupons in the prior year.
![Page 8: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/8.jpg)
UK transaction growth
2.8%
(4.0)%
4.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2013/14 2014/15 2015/16
Year-on-year change in UK transactions by quarter %
![Page 9: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/9.jpg)
35%
65%
55%
80%
40%
75%
Improved customer offer
Service1 Availability2 Price3
Oct-14 Feb-16 Oct-14 Feb-16 Oct-14 Feb-16
Range4
Oct-14 Feb-16
55%
80%
1. Reflects % of customers rating overall service and colleague helpfulness as excellent as part of the weekly Customer Viewpoint survey.
2. Reflects % of customers who were strongly satisfied with overall availability as part of the weekly Customer Viewpoint survey.
3. Reflects % of customers very satisfied with prices paid as part of the weekly Customer Viewpoint survey.
4. Reflects % of customers rating overall range of food as part of the weekly Customer Viewpoint survey.
![Page 10: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/10.jpg)
Better service
More hours Customer
feedback3
52%
70%
Oct '14 Feb '16
114 104
PI
Colleague
engagement2
71 71
76
80
85
2014 2016
1
1. Productivity Index.
2. Reflects % of colleagues recommending Tesco as a great place to work as part of What Matters To You Survey undertaken every January and August.
3. Reflects % of customers rating overall service and colleague helpfulness as excellent as part of the weekly Customer Viewpoint survey.
![Page 11: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/11.jpg)
Record availability
96%
Sales-based
availability
Clearer backrooms Optimum shelf
capacity
82% 94% Stock down
10%
![Page 12: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/12.jpg)
Lower, more stable prices
Multibuy
promotions2
Price investment1
£44.73
£46.98
£45.48
Fewer coupons
down 37%
7%
(15)%
(26)%
(32)%
4Q
1Q
2Q 3Q
1. Price data shows the price paid for a typical basket of products as at August 2014, August 2015 and February 2016.
2. Reflects the year-on-year movement in products on multibuy promotion.
![Page 13: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/13.jpg)
Brand Guarantee
![Page 14: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/14.jpg)
Right range for customers
All food categories
reviewed
Innovation Average range
reduction
18% 33
+ 2,011 new lines
Seeded Folded Flatbreads
New
![Page 15: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/15.jpg)
Smooth operational performance
![Page 16: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/16.jpg)
Protecting and strengthening the balance sheet
Pension transition
complete
Sale of Homeplus Capital discipline
13/14 14/15 15/16
£1bn
£2bn
£3bn
![Page 17: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/17.jpg)
Acquired
freehold:
21 superstores
Agreed sale
of 14 sites
for £250m
Protecting and strengthening the balance sheet
October 2015
Acquired
freehold:
36 superstores
13 Extras
February 2016 March 2015
![Page 18: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/18.jpg)
Rebuilding trust and transparency
New commercial
approach
24 3
On-time payment
98.0%
Standardised
payment terms
<£100k = 14 days
![Page 19: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/19.jpg)
Rebuilding trust and transparency
Encouraging
progress
Supplier network
5,000 suppliers
50 countries
51% 60%
68%
Supplier training
Supplier
viewpoint1
FY 14/15 1H 15/16 2H 15/16
1. Reflects % of UK suppliers responding positively when asked “overall how satisfied are you with your experience of working with Tesco” as part of the
Supplier Viewpoint survey.
![Page 20: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/20.jpg)
Rebuilding trust and transparency
Community Food
Connection
Charity
partnership
Local community
grant scheme
No surplus food waste
by 2017
![Page 21: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/21.jpg)
Rebuilding trust and transparency
BrandIndex Index Score – an overall measure of brand health
Source: YouGov Brand Index.
0.0
18.0
Jan 2014 Feb 2016
![Page 22: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/22.jpg)
Three priorities
Regaining competitiveness in core UK business
UK transactions up 2.8% in 4Q
Protecting and strengthening the balance sheet
Total indebtedness £6.2bn lower
Rebuilding trust and transparency
Customer, colleague, supplier measures all improved
1
2
3
![Page 23: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/23.jpg)
Full year results
![Page 24: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/24.jpg)
Group performance
Continuing operations FY 15/16 Change
constant rates
Change actual rates
Group sales (exc. VAT, exc. Fuel) £48.4bn 0.1% (1.6)%
Group operating profit before exceptional items £944m 1.1% 0.0%
Exceptional items £102m n/m n/m
Group statutory operating profit £1,046m n/m n/m
Group PBT before exceptional items and net pension finance costs £435m - (11.9)%
Diluted EPS before exceptional items and net pension finance costs 4.97p - -
Note: Change shown on a comparable 52 week basis.
![Page 25: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/25.jpg)
Segmental performance
Sales Operating profit before exceptional items
FY 15/16 FY 14/15 Change
constant rates
Change actual rates
FY 15/16 FY 14/15 Change
constantrates
Change actual rates
UK & ROI £37.2bn £38.2bn (0.5)% (0.9)% £505m £498m 1.4% 0.6%
International £10.2bn £10.7bn 1.8% (4.3)% £277m £254m 11.4% 9.1%
Bank £1.0bn £0.9bn 0.8% 0.8% £162m £188m (13.8)% (13.8)%
Group £48.4bn £49.9bn 0.1% (1.6)% £944m £940m 1.1% 0.0%
Note: Change shown on a comparable 52 week basis.
![Page 26: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/26.jpg)
(5.1)%
(1.7)% (1.3)%
(1.0)% (1.5)%
0.9%
(8.0)%
(6.0)%
(4.0)%
(2.0)%
0.0%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
UK
UK and ROI like-for-like sales performance1
(6.9)% (6.7)%
(4.4)%
(2.9)%
(1.2)%
1.0%
(8.0)%
(6.0)%
(4.0)%
(2.0)%
0.0%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
ROI
1. Exc. VAT, exc. Fuel.
![Page 27: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/27.jpg)
UK like-for-like sales performance
Online FY 15/16: Grocery 8.8% General Merchandise (2.1)% Clothing 6.7%
(6.3)%
(2.2)% (2.4)%
(1.1)%
(3.2)%
(0.3)%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Extra
(6.1)%
(2.5)%
(3.4)%
(2.3)%
(3.2)%
(0.7)%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Superstore
(5.1)%
(1.8)%
(0.2)% (0.2)%
(1.7)% (1.4)%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Metro
2.1%
4.5% 4.4% 4.1%
3.3% 3.0%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Express
1. UK like-for-like sales inc. VAT, exc. Fuel and statutory adjustments.
![Page 28: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/28.jpg)
498
(409)
226
(345)
613
(78)
505
UK & ROI
FY 14/15
Lower
prices
Volume and
mix benefit
Investment in
customer offer
Net cost
savings
Other UK & ROI
FY 15/16
Rebuilding operating profit
£m
UK & ROI
FY 14/15
UK & ROI
FY 15/16
![Page 29: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/29.jpg)
(45)
(226)
268
307
35 339
UK & ROI
H2 14/15
Lower
prices
Volume and
mix benefit
Net cost
savings
Other UK & ROI
H2 15/16
Rebuilding operating profit - 2H
UK & ROI
2H 14/15
UK & ROI
2H 15/16
£m
![Page 30: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/30.jpg)
• Market share gains in 5 of 7 markets
• Strong volume growth
• Strong cash generation
– Operating cash up 87%
– Stock days reduced by 6 days
International performance
![Page 31: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/31.jpg)
International like-for-like sales performance1
(6.2)%
(5.0)%
(3.4)%
0.1%
2.4%
3.5%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Asia
0.3%
3.1%
2.2%
4.0%
3.3%
4.1%
14/15
3Q
14/15
4Q
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Europe
1. Exc. VAT, exc. Fuel.
![Page 32: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/32.jpg)
International like-for-like sales performance
Online FY 15/16: 23.7%
(1.1)%
2.0% 2.0%
2.9%
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Hypermarket
(1.9)% (1.9)%
1.0%
1.7%
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Superstore
2.2%
4.3% 5.1%
6.3%
15/16
1Q
15/16
2Q
15/16
3Q
15/16
4Q
Convenience
![Page 33: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/33.jpg)
254
(95)
126
(37)
76
(47)
277
14/15 FY
Operating Profit
Lower
prices
Volume
and mix
Other customer
investment
Net cost
savings
Other 15/16 FY
Operating Profit
International profit performance
£m
International
FY 14/15
International
FY 15/16
![Page 34: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/34.jpg)
• More value delivered to Tesco customers
• Outstanding customer service recognised
• Strong growth in customer metrics
• Capital and liquidity position remains strong
Tesco Bank
6.9
7.7
8.5
6.1
6.9
7.4
13/14 14/15 15/16
Customer Lending/Deposits
Customer Lending Customer Deposits
£bn
14.0%
15.2%
16.6%
13/14 14/15 15/16
Core Tier 1 ratio
![Page 35: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/35.jpg)
• Valuable asset
• JV with O2
• UK’s largest MVNO and 5th largest
mobile operator
• National footprint in 400+ stores
• Attractive sector fundamentals
• Industry change creates options
Tesco Mobile
2.9m
3.5m
4.0m
4.4m 4.6m
11/12 12/13 13/14 14/15 15/16
Customer Numbers
![Page 36: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/36.jpg)
1. Statutory net finance costs include a £(220)m impact from FX losses on translation of sterling balances received from Korea disposal being held in a Euro subsidiary.
Finance income and costs
FY 15/16 FY 14/15
Interest payable £(504)m £(535)m
Capitalised interest £6m £44m
IAS 32 and 39 ‘Financial instruments’
– fair value measurements £(19)m £(26)m
IAS 19 net pension finance costs £(155)m £(134)m
Finance income £29m £80m
Net finance costs1 £(643)m £(571)m
![Page 37: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/37.jpg)
• Effective tax rate affected by:
– Lower book value than tax value of properties disposed of in year
– Change in tax rate on deferred tax balances
– Unrecognised tax losses
Tax
Before
exceptional items Statutory
Profit before tax £280m £162m
Tax (charge) / credit £(8)m £54m
Effective tax rate 2.7% (33.2)%
![Page 38: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/38.jpg)
FY 15/16 FY 14/15
Net impairment1 £(408)m £(5,389)m
Net restructuring and redundancy £(126)m £(406)m
Property transactions £156m -
Past service credit and associated costs arising
on UK defined benefit pension scheme £480m -
Stock-related - £(500)m
Reversal of commercial income - £(208)m
Other - £(187)m
Total exceptional items in operating profit £102m £(6,690)m
Exceptional items
1. Net impairment of property, plant and equipment, onerous lease provisions, intangible assets and investments in joint ventures and associates.
![Page 39: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/39.jpg)
Total indebtedness £m
18,532 (1,721) (232)
(1,234)
(4,117)
1,121
21,719
15,536
Opening total
indebtedness
FY 14/15
Change in
net debt
Change in
discounted
operating
leases
Change in
pension deficit
Total
indebtedness
before
Korea and
property
transactions
Korea Property
Transactions
Closing total
indebtedness
FY 15/16
![Page 40: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/40.jpg)
Total indebtedness £m
21,719
15,536
Opening total
indebtedness
FY 14/15
Change in
net debt
Change in
discounted
operating
leases
Change in
pension deficit
Total
indebtedness
before
Korea and
property
transactions
Korea Property
Transactions
Closing total
indebtedness
FY 15/16
Pension deficit £2,612m
Discounted operating
leases £7,814m
Net debt £5,110m
![Page 41: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/41.jpg)
2,231
(91) (231)
280
2,581 392
(297)
(1,004)
1,280
3,334
(1,684)
441 3,371
Cash flow from
retail
operations
Impact from
exceptionals
New approach
with supplier
payments
Korea working
capital
Underlying
working
capital
Retail cash
generated
from
operations
Interest and
Tax (inc. tax
receipt)
Cash capex Free cash flow Net impact of
Korea disposal
Net impact of
property
transactions
Other Reduction in
net debt
Movement in net debt1
£m
£350m IMPROVEMENT IN WORKING CAPITAL
1. Includes both continuing and discontinued operations.
![Page 42: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/42.jpg)
Property1
FY 15/16 FY 14/15
% selling space owned
UK & ROI 52% 43%
International 71% 70%
Group 61% 58%
% total property owned - by value2
UK & ROI 47% 41%
International 75% 73%
Group 54% 49%
1. Based on continuing operations.
2. Excluding fixtures and fittings.
![Page 43: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/43.jpg)
• Significant progress made with pension scheme de-risking
– Defined benefit scheme replaced with defined contribution scheme
• £1.3bn reduction in deficit
– £480m exceptional actuarial credit resulting from RPI to CPI index change
– Part-year payment under £270m per annum funding plan
• Greater certainty on future cash contributions
Pensions
![Page 44: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/44.jpg)
• £4.4bn available cash
• £5.0bn committed facilities in place
– £2.6bn RCF
– £2.4bn bilaterals
• Strong funding and liquidity profile
Strong liquidity
£bn
0.0
1.0
2.0 Debt Maturity Profile
![Page 45: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/45.jpg)
Improving debt metrics
FY 15/16 FY 14/15
Total indebtedness ratio1 5.1x 6.0x
Fixed Charge Cover2 1.9x 1.9x
1. Net Debt + pension deficit + NPV of lease obligations)/ EBITDAR.
2. EBITDAR/(Interest + Rent).
![Page 46: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/46.jpg)
• Positive sales momentum across the Group
• Rebuilding profitability
• Improved cash generation
• Significant reduction in total indebtedness
• Strong liquidity
• Strengthening balance sheet
Financial summary
![Page 47: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/47.jpg)
Big 6 Full Year Performance
Grow sales
Customers recommend us and come
back time and again
Colleagues recommend us as a great
place to work and shop
We build trusted
partnerships
Improve operating cash flow
Deliver profit
The Big 6 across
the Group
![Page 48: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/48.jpg)
Serving Britain’s shoppers a little better every day
![Page 49: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/49.jpg)
The next step
• The customer remains our number one priority
• Removing reasons to shop elsewhere
• Doing more of what makes Tesco unique
• All of this whilst rebuilding longer-term profitability
• Challenging, deflationary and uncertain market
![Page 50: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/50.jpg)
Unique
Tesco
offering
Customer proposition
Value Equation
![Page 51: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/51.jpg)
Source: Kantar Worldpanel data for the 52 weeks ending 28 February 2016.
Over/under trade by category vs competitor A + B
Toiletries
Household
Beers, wines & spirits
Healthcare
Impulse
Counters
Dairy
Grocery
Convenience
Bakery
Frozen
Meat, fish, poultry, eggs
Produce
Meeting customer needs
![Page 52: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/52.jpg)
![Page 53: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/53.jpg)
![Page 54: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/54.jpg)
![Page 55: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/55.jpg)
![Page 56: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/56.jpg)
![Page 57: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/57.jpg)
![Page 58: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/58.jpg)
£103.11 £89.06
Discounter Tesco before
£86.35
Tesco after
Why shop anywhere else?
![Page 59: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/59.jpg)
Serving Britain’s shoppers a little better every day
![Page 60: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/60.jpg)
• Broad-based improvement across the Group
• Significant progress on all three key priorities
• Delivered or exceeded everything we said we would
• More customers, buying more things, more often
• Reinvigorated team putting customers at the heart
of everything we do
• Challenging, deflationary and uncertain market
• Investing to create long-term value for shareholders
Summary
![Page 61: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/61.jpg)
Q & A
![Page 62: 13 April 2016 Serving Britain's shoppers a little better every day - Home - Tesco PLC · 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013/14 2014/15 2015/16 Year-on-year change in UK transactions](https://reader033.fdocuments.us/reader033/viewer/2022051823/5fedf332aa12db24ca650301/html5/thumbnails/62.jpg)
This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and operating margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Tesco as of the date of the statement. All written or oral forward-looking statements attributable to Tesco are qualified by this caution. Tesco does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in Tesco’s expectations.
Disclaimer