2 25.
Value. Quality. Service.
Tesco PLC Annual Report and Financial Statements
Value creation at Tesco
At Tesco, we pride ourselves
on our commitment to deliver
for our customers.
We focus on doing the
basics brilliantly and
leading on the things
that truly matter to
customers, including...
Sa e.
…Value.
We want to make sure that our customers are getting the best products at the best
prices every day at Tesco, whether they’re shopping for potatoes, shirts or phone deals.
We continued to invest in lowering prices this year through our combination of Aldi Price
Match, Low Everyday Prices and Clubcard Prices.
Up to
£392
*
annual savings per customer
with Clubcard Prices
Added an average of
c.650
products per market to our Low
Price Guarantee in Central Europe
More than
800
prices locked for Booker catering customers
between October 2024 and January 2025
* Clubcard Prices saving of up to £392 is based on the top 25% of Tesco Clubcard members and large store sales between 6 January 2024 and 4 January 2025. Tesco Clubcard Price saving versus regular Tesco price.
F esh.
…Quality.
We take care of the quality of our products from the very start of the supply chain, with our
farmers and growers, through manufacturing and packaging, to the presentation in our stores.
Thanks to a strong focus on product quality across our range, our quality perception has
improved 153 bps this year.
1, 000
new products launched
15%
increase in Tesco Finest
sales in the UK
600
products improved
£2.5bn
annual sales of Finest
24 7.
…Service.
It is our mission to be easily the most convenient retailer. That means making sure
that products are available when customers want them, that our stores are easy
to shop and that our app offers everything they need in one place.
Grocer 33
Award for availability 2024
1,500
stores offering Whoosh, for
delivery in as little as 20 minutes
18m
Tesco app users
Hello.
Strategic report
Value creation at Tesco 1
Contents 4
Highlights of the year 5
Tesco at a glance 6
Chair’s statement 8
Our purpose framework 10
Group Chief Executive’s review 11
UK market context 14
Our strategic priorities 16
Our business model 18
Key performance indicators 19
Stakeholder engagement 20
Everyone’s welcome 23
Financial review 24
Planet 31
TCFD (including content finder index) 36
Principal risks and uncertainties 40
(including TCFD risks and opportunities)
Longer term viability statement 50
Governance
Governance overview 52
Governance introduction 54
Board of Directors 56
Governance framework 61
Nominations and Governance Committee 72
Sustainability Committee 76
Audit Committee 80
Directors’ remuneration report 90
Statement of Directors’ responsibilities 123
Financial statements
Independent auditor’s report 124
Group income statement 135
Group statement of comprehensive 136
income/(loss)
Group balance sheet 137
Group statement of changes in equity 138
Group cash flow statement 140
Notes to the Group financial statements 141
Tesco PLC – Parent Company balance sheet 212
Tesco PLC – Parent Company statement 213
of changes in equity
Notes to the Parent Company 214
financial statements
Related undertakings of the Tesco Group 220
Additional information
Supplementary information (unaudited) 226
Glossary – Alternative 228
performance measures
Five-year record 236
Directors’ report 237
NFSIS 241
Additional information for shareholders 242
Welcome to our
Annual Report 2025.
Tesco was built to be a champion for customers, serving
them every day with affordable, healthy and sustainable food.
Our commitment to our customers extends beyond our
stores, and into every community we serve – in the UK,
Republic of Ireland (ROI), Slovakia, the Czech Republic and
Hungary. We invest in communities to help them thrive,
through supporting schools and children’s groups, food
banks and other good causes.
Our purpose guides every part of the Group. Serving our
customers, communities and planet a little better every day
is what we do.
Further reading
Please visit our website: tescoplc.com/investors
Our people
People content has been integrated across the Annual Report.
A responsible business
Download our Sustainability report: tescoplc.com/sustainability-reports
Task Force on Climate-related Financial Disclosures (TCFD)
TCFD content has been integrated across the Annual Report and can
be found using the index on page 36 and wherever you see this icon:
T
Tesco PLC Annual Report and Financial Statements 2025
4.
For integrated content in this report and further reading:
The Independent auditor’s reasonable assurance report
in relation to the Electronic Format Annual Financial Report
is appended to the end of the Annual Report
2 24/25...
Highlights of the year
The performance of the Banking operations has been presented as a discontinued operation to the date of disposal. The Insurance and Money Services business has been presented on a continuing basis
and therefore within headline performance measures. Further details on discontinued operations can be found in Note 8.
Δ Alternative performance measures (APMs) – the Group has defined and outlined the purpose of its APMs in the Glossary starting on page 228.
(a) Group sales exclude VAT and fuel.
(b) Adjusted operating profit and Adjusted diluted EPS exclude the impact of adjusting items. Refer to Note 5 on page 151.
(c) Net debt now includes Insurance and Money Service, with the prior year reported on a consistent basis. The impact of the prior year is to reduce Net debt by £80m. Further information on Net debt can be found in Note 32 on page 209.
(d) Free cash flow is an APM defined and outlined in the Glossary starting on page 228. See the Glossary starting on page 228 for details of changes to APMs.
(e) UK market share based on Kantar Grocers Total Till Roll on a 12-week basis ending 23 February 2025.
(f) Basis – Tesco Global Brand tracker on a three-month rolling basis.
Performance highlights
Group sales
Δ(a)
£63.6bn
3.5%
(2024: £61.5bn)
Adjusted operating profit
Δ(b)
£3,128m
10.6%
(2024: £2,829m)
Dividend per share
13.70p
13.2%
(2024: 12.10p)
UK market share (sales value)
(e)
28.3%
+67bps
(2024: 27.6%)
Adjusted diluted EPS
Δ(b)
27.38p
17.0%
(2024: 23.41p)
Free cash flow
Δ(d)
£1,750m
(15.2)%
(2024: £2,063m)
Net debt
Δ(c)
£(9,454)m
2.4%
(2024: £(9,684)m)
Group net promoter score
(f)
28pts
9pts
(2024: 19pts)
Statutory measures (on a continuing operations basis)
Revenue
£69.9bn
2.5%
(2024: £68.2bn)
Profit before tax
£2,215m
(3.2)%
(2024: £2,289m)
Operating profit
£2,711m
(3.9)%
(2024: £2,821m)
Statutory diluted EPS
23.13p
(5.7)%
(2024: 24.53p)
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
5.
Governance
Who we are.
Tesco at a glance
We are
Tesco.
We are Tesco, a
multinational grocery
retailer, with its
headquarters in the
United Kingdom.
We serve millions of
customers every week,
in stores and online, and
provide additional services
across the Tesco family.
Serving our
customers,
communities
and planet
a little better
every day.
O
u
r
p
u
r
p
o
s
e
O
u
r
p
u
r
p
o
s
e
Our
customers
are always
at the core
Tesco Mobile
has grown into an
award-winning
network serving
more than 5.5m
customers
One Stop
is a retail
convenience
business with
more than
1,000 shops
Tesco Insurance
and Money
Services provides
insurance, travel
money, ATMs
and gift cards
Booker is
the UK’s leading
food and drink
wholesaler, serving
thousands of retail
and catering
customers
dunnhumby is
a global leader
in customer
data science
Tesco is a leading
multinational grocery
retailer, available in
five markets
Our
businesses
Tesco PLC Annual Report and Financial Statements 2025
6.
The value our businesses bring to customers and the Group
Tesco is a leading multinational grocery retailer, which aims to serve
customers affordable, healthy and sustainable food. We have a relentless
focus on value and quality across large stores, convenience and online.
www.tesco.com
One Stop is a retail convenience business with more than 1,000
shops across the UK. The focus this year has been to provide
customers in local communities with quality products and
services at great prices.
www.onestop.co.uk
Booker is the UK’s leading food and drink wholesaler, delivering great
choice, price and service to a wide range of customers – including
caterers, independent retailers and other businesses. Booker also
owns symbol brands including Budgens, Londis and Premier.
www.booker.co.uk
Tesco Mobile is the UK’s largest mobile virtual network operator,
serving more than 5.5 million UK customers. Established in 2003
as a joint venture between Tesco and O2, it has grown into
an award-winning network with more than 500 phone shops.
This year, the focus has been on unlocking the power of Clubcard
to deliver unique value and service for customers.
www.tescomobile.com
dunnhumby is a global leader in customer data science. It works with
brands, grocery retail, retail pharmacy and retail financial services
to provide technology, software and consultancy services. Its insights
help retailers and brands to truly put the customer first, through
engaging experiences which enhance loyalty and growth.
www.dunnhumby.com
Tesco Insurance and Money Services helps more than 2 million
customers protect what matters to them across home, travel,
pet and car insurance. It is the second largest provider of travel
money and has the third largest ATM network in the UK, with more
than 3,400 ATMs in over 3,000 Tesco and One Stop stores. Its gift
card offering is the largest in the UK retail market.
www.tescoinsurance.com and www.tescotravelmoney.com
Where we operate
4,572
Stores globally
3,829
Stores in the United Kingdom
182
Stores in the Republic
of Ireland
184
Stores in the Czech Republic
179
Stores in Slovakia
198
Stores in Hungary
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
7.
Governance
Chair’s statement
Deli er.
As we build for the future, Tesco continues
to deliver for all stakeholders.
I reflect on another strong year for Tesco and
I would like to start by thanking all colleagues
across the Group.
Every time I go around Tesco, in our stores,
distribution centres, offices and across all of
our markets, I see consistent and enthusiastic
dedication to our simple and shared purpose
of serving our customers, communities and the
planet a little better every day.
There is never a straightforward year in retail.
As ever, we have had to navigate external events,
geopolitical influences and changing consumer
trends, but we have always tried to stay
connected to our stakeholders and do
what is right for them.
In focusing on all of our stakeholders, the Tesco
team has delivered higher customer satisfaction,
increased market share in the UK and Ireland and
a strong trading and financial performance from
the Group.
It’s thanks to those efforts that today Tesco is
a stronger business than ever, fit for the future
and with gathering strategic momentum.
Every Little Helps
While inflation eased over the year, value
remains the biggest influence when it comes
to customers’ shopping choices, and it is
essential that we retain our relentless
commitment to price and quality.
In the UK, Tesco was the cheapest full-line
grocer throughout the year, while in Ireland we
saw volume growth in every quarter this year
and in Central Europe we have continued to
cut prices in each of our markets.
We have continued to invest in our colleagues,
with further significant increases in hourly pay
and other benefits, recognising the essential
role that our colleagues play in supporting our
customers and communities, and in helping
Tesco succeed. I’m proud that Tesco continues
to be a fantastic place to get on and build an
exciting and rewarding career.
Supporting our communities remains central to
our business, and to our purpose. This year, our
Stronger Starts programme made a real impact
for children across the UK with its Fruit & Veg for
Schools initiative, which has so far supported
400 schools with more than 5 million portions
of fruit. For further detail, see pages 11 and
12. We’ve also supported hundreds of young
people from some of the UK’s most deprived
areas to start their careers thanks to our
Stronger Starts apprenticeships.
Gerry Murphy,
Chair
The team has achieved higher customer satisfaction,
increased market share and a strong financial
performance. When we prioritise our customer
offer, we deliver for all our stakeholders.
8.
I’m also proud that we have doubled down on
our drive towards net zero, for example with
progress in harnessing solar energy for the
future and moving freight from road to more
sustainable rail in the UK. We have also worked
hard to support our farmers and suppliers. In
January, we relaunched the Tesco sustainable
farming group to support British pig farmers.
Strong financial performance
Our investments over the last four years have
resulted in the most competitive position and
highest market share we have had for many
years, with strong finances and positive trading
momentum. Business growth and efficient use
of our resources have resulted in another strong
financial performance during 2024/25. Group
adjusted operating profit rose 10.9%, driven
by further progress in our core retail markets
and a further contribution from our save to
invest programme.
We have delivered well against the multi-year
performance framework we set out in 2021,
leading to strong cash generation and
shareholder returns.
Tesco Bank update
In November 2024, we completed the sale of our
Banking operations to Barclays, while retaining
our insurance business, ATMs, travel money
and gift cards which will trade under the Tesco
Insurance and Money Services brand. We also
launched a new long-term strategic partnership
with Barclays to provide our customers access
to a range of Tesco-branded financial products
Tesco is a vibrant business, full of energy, ideas
and creativity. Innovation has always been in
Tesco’s DNA – including the launch of Clubcard
as a globally groundbreaking loyalty programme
30 years ago. On a daily basis, I see that restless
spirit as strong as ever with our growing retail
media business and our ever more personalised
Clubcard offer as great examples of commercial
and strategic innovation.
Tesco never stands still and will always look
for new ways to do the best we can for our
customers, communities and planet. It’s why
we come to work.
Gerry Murphy
Chair
9 April 2025
and services. This partnership combines Tesco’s
market-leading retail proposition, physical and
digital reach with Barclays’ deep financial
services capabilities.
Board changes
In February, we welcomed Chris Kennedy to the
Board as a Non-executive Director. As the Chief
Financial Officer and Chief Operating Officer at
ITV, Chris brings a wealth of knowledge in financial
management, strategic planning and corporate
governance, and will be a real asset to the Board.
He is a member of the Audit Committee and the
Nominations and Governance Committee.
Looking ahead
In addition to inflationary cost pressures from
government decisions affecting employment
costs and environmental regulations, we are
seeing even stronger competitive activity in our
key UK grocery market. We are committed, as
always, to ensuring that Tesco customers get the
best value in the market without compromising
on quality and we will always act to protect and
strengthen our competitive position.
Tesco has weathered a number of turbulent
periods in recent years. Through all of that, it
has emerged a stronger, more robust business.
I am confident, thanks to the dedication of our
colleagues and expertise of our leaders, that
it will do so again in the year ahead.
Did you know:
The UK and ROI,
saw like-for-like
volume growth in
every quarter of
the year.
Strategic report Financial statements Additional information
9.
Governance
Our purpose framework
What we
stand for.
Our core purpose is:
Serving our customers,
communities and planet
a little better every day.
Serving our customers, communities and planet a little better every day
means we always keep customers at the heart of what we do, while also
reflecting our responsibilities to the communities we serve and to society
more broadly.
Customers
Everything we do begins and ends with our customers. By understanding
our customers, we can anticipate and respond to their needs
and expectations.
As a Group we serve a wide range of different customers, in different
settings, from retail customers to customers of our insurance, mobile and
wholesale businesses, as well as dunnhumby’s retailer and supplier clients.
Communities
The role we play in the thousands of communities we serve is vital –
whether it’s creating good jobs, supporting local suppliers and
producers, or helping local causes through our community programmes.
Planet
Our commitment to sustainability is core to our business. It drives
our work across our own operations and our supply chain to reduce
our environmental impact and support a healthier way of living.
Our values put our purpose into practice:
Our three values underpin our purpose, setting out how we work together
as a team and guiding the decisions and choices we make across the Group.
1.
No one tries
harder for
customers
2.
We treat people
how they want
to be treated
3.
Every little help
makes a big
difference
Understanding people –
customers, colleagues,
communities – and what
matters to them, and then
trying to make those things
better, is at the heart of Tesco.
It’s about listening to people and
talking to them using all the tools
at our disposal – from Clubcard
data to social media – and
then acting by changing and
innovating to meet their needs.
Here, there is an opportunity
for all; everyone is heard,
valued, supported, and
empowered to be their best.
By respecting each other and
working together, we can make
Tesco great for our colleagues
and customers.
Every little help makes a big
difference – it’s the value we
live by to ensure we serve our
customers, colleagues and
their communities a little
better every day.
It really captures how, when we
add up all the small things we do,
Tesco can make a big difference
to the issues customers,
colleagues, communities and
wider society care about.
Since we first introduced our Tesco Values more than a decade ago, they have become a vital part of our
culture – and an essential underpinning of our growth and success. They ensure that every person at
Tesco understands what is important – how we work together as a team and how customers are at the
centre of what we do. They are universal values, which have helped guide our people as Tesco has grown.
Tesco PLC Annual Report and Financial Statements 2025
10.
F cus.
For more information
about our results use
the QR code above
Strong performance allows us to invest
for all of our stakeholders.
Today, Tesco is a business delivering strong
financial performance, with a robust balance
sheet and positive momentum. We’ve continued
to invest in value, quality and service – and our
customers have responded. Market share has
reached its highest level since 2016 and we’re
winning share across the market. By investing in
the fundamental building blocks that underpin
a successful retailer, we’re a stronger business
than ever.
I would like to thank all of my Tesco colleagues
for their efforts in delivering another strong
performance. The success of our business is
down to the dedication of our colleagues, who
work to deliver for our customers, communities
and planet a little better every day.
A continued focus on value…
Value continues to be a central focus over the
past year. Our compelling value offer of Aldi Price
Match, Low Everyday Prices and Clubcard Prices
continues to resonate strongly with customers
in the UK.
Right across the Group, we’re focusing on
supporting our customers. At Booker we have
locked the price of more than 700 catering
products until June 2025.
At Tesco Mobile, until 2026, customers can
tap into their UK allowance at no extra cost
in 48 destinations across the EU and beyond.
…and on quality
We’ve also invested heavily in the quality of
our products. Finest goes from strength to
strength, recording a 15% increase in UK
sales over the last year and was recognised
as the Own-Brand Range of the Year at the
Grocer Gold Awards 2024. In addition, we have
introduced Own Brand innovation across all
tiers, including launches of the Taste Discoveries
dinner-for-tonight range, inspired by Japanese
and Korean cuisine, and High Protein and Gut
Sense ranges.
At Christmas, Finest played a pivotal role, with
more than 300 Finest festive products brought
into stores in the UK, including our expanded
Finest Chef’s Collection range.
In Central Europe, we saw customers respond
to our investment in quality as we introduced
further Finest products to the market.
Overall, quality perception is up 153bps
year-on-year, growing ahead of the market.
We’ve invested across all of our ranges, but
Finest in particular has had a remarkable year
– you can see why on page 13.
Investing in our colleagues
Our colleagues are our greatest asset and our
performance would not be possible without
their relentless focus on brilliant service for our
customers every day. Over the past year, we
invested in our largest-ever increase in store
colleague pay and improved parental and
wellbeing offerings. We’ve also invested
additional hours in store, helping us deliver
market-leading availability. All of this culminated
in standout colleague satisfaction results and
Tesco being named the Employer of the Year
(Retailer) at the Grocer Gold Awards 2024.
We are investing another £180m in colleague pay
this year and have invested more than £900m
in pay increases since April 2022.
Supporting our local communities
We take great pride in serving our local
communities and making a real difference to
those who need it most. Stronger Starts, our
grant programme to help children have a
stronger start in life through healthy food and
physical activities, has supported more than
12,200 projects to date. As part our Fruit & Veg
for Schools scheme, launched in October, we
have supported 400 schools with more than
5 million portions of fruit and veg.
Group Chief Executive’s review
Ken Murphy,
Group Chief Executive
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
11.
Governance
Group Chief Executive’s review continued
We’ve also continued to focus on food donations
– with 300 million meals donated to charities
and local communities in the UK since 2016/17.
Our Stronger Starts apprenticeship scheme
continues to offer hundreds of young people from
some of the UK’s most deprived communities the
chance to develop life skills and take their first
steps on the path to a fulfilling career in retail.
Looking after the planet
We continue to make great strides towards our
commitment to be carbon neutral in our own
operations by 2035. Our tenth rail service,
serving the north west of England, means we
now move more than 300 million cases on the
Tesco rail network each year. The signing of a
new power purchase agreement ensures we’ll
receive enough solar energy from the Cleve Hill
solar park to power the equivalent of 144 large
stores every year – a tenth of our total electricity
demand. A further deal for a windfarm at
Stranoch will add clean energy for the
equivalent of 80 average-sized supermarkets.
We’ve continued our drive to reduce plastic use
in our operations, removing millions of pieces of
plastic from our stores and supply chain. We’ve
moved our Finest pasta from plastic to paper
packaging and trialled the use of laser etching
on our avocados.
I’m happy with our work on health, where
we have made strong progress towards our
commitment of 65% healthy sales by 2025
in the UK and ROI.
And we have continued to look after our
suppliers, who’ve ranked us number one in
the Advantage supplier survey for the ninth
consecutive year.
Tesco Bank
In November, we completed the sale of our
Banking operations and began an associated
strategic partnership with Barclays. This
partnership allows us to unlock even greater
value for Tesco Bank customers, giving them
access to new and innovative propositions while
continuing to enjoy the unique benefits of Tesco
Clubcard. I want to thank all our colleagues at
Tesco Bank for their hard work, helping millions
of loyal customers to manage their money for
more than 25 years.
Following the sale, we will return £700m to
shareholders via an incremental share buyback.
Progress on our strategic priorities
Our strategic priorities continue to play a
vital role in keeping us laser-focused on our
customers in a competitive and fast-paced
market. We dig into the details of our strategic
priorities on pages 16 and 17, but I would like to
say a few words here.
Magnetic value – our colleagues work day-in,
day-out to make sure we’re giving our customers
the best possible value, quality and a great
shopping experience, no matter how they
choose to shop with Tesco.
I love my Tesco Clubcard – more than 23 million
UK households now hold a Clubcard, with
Group-wide app users now up to 18 million.
We have delivered an increase in Clubcard
sales penetration across all markets with the
UK at 84%, ROI 87% and Central Europe 88%.
The launch of our AI-powered Clubcard
Challenges campaign amplified our efforts to
give customers ever-greater personalisation,
with more than 10 million given the chance
to earn up to £50 worth of Clubcard vouchers
over Christmas.
Easily the most convenient – Tesco continues
to help customers shop with us wherever,
whenever and however they want. We have
opened 90 new stores across the Group,
Whoosh goes from strength to strength, and
now offers delivery from a number of large
stores. And while Booker has faced some
challenging market conditions, we welcomed
a further 566 net new retail partners, taking
the total to just under 8,000.
Save to invest – we are always looking for ways
we can be a simpler and more efficient business,
allowing us to reinvest in the things that matter
most to our customers and colleagues. We
delivered £510m efficiency savings for the
2024/25 financial year and have seen continued
progress across all areas, including goods &
services not for resale, operations, property
and central overheads.
Customer:
Up to
£392
annual savings per customer
with Clubard Prices
Community:
300m
total number of meals
donated to charities
and local communities
in the UK since 2016/17
Our Stronger Starts apprenticeship scheme
continues to offer hundreds of young people
from some of the UK’s most deprived
communities the chance to develop life skills
and take their first steps on the path to
a fulfilling career in retail.
12.
Spotlight on:
Executive team
In July, our Group General Counsel, Adrian
Morris, left Tesco after a career of 11 years
leading our Legal team and as a member of the
Executive Committee. Adrian had an immense
impact on our business, providing invaluable
guidance through the turnaround efforts and
beyond – ensuring Tesco is stronger and more
resilient than ever.
I was delighted to confirm the permanent
appointment of Kay Majid as our Group
General Counsel and member of the Executive
Committee in September. Kay has had a
significant impact on Tesco in her 15 years with
the business, leading our UK legal agenda and
acting as an inspirational champion in her
support for the Parents and Carers network.
Looking ahead
Building on our strong financial performance,
robust balance sheet and positive momentum,
we are setting ourselves up for the year ahead
with the flexibility to continue to win in a highly
competitive market. Despite further headwinds
from cost inflation, we are committed to
ensuring customers get the best possible
value by shopping at Tesco and see further
opportunities to strengthen our competitiveness.
By putting customers first, we will continue
to create sustainable value for every stakeholder
in Tesco.
Ken Murphy
Group Chief Executive
9 April 2025
Finest.
Celebrating 25 years of making the everyday
that little bit more special.
It was a remarkable year for Finest, which recently celebrated
its 25th anniversary and continued to win share from
premium retailers.
Thanks to our continued investment in quality, we saw a
15% year-on-year increase in UK sales of Finest products as
customers turned to Tesco to help them elevate any occasion.
At Christmas, we launched more than 300 Finest festive
products into store to build on a spike in sales last Christmas,
including our expanded Chef’s Collection range, which offers
customers restaurant-quality food from the comfort of their
own home.
Our Finest Champagne, Premier Cru, won best Champagne
in a Which? taste test, seeing off competition from a number
of branded competitors.
And to top it all off, Finest was recognised as the Own-Label
Range of the Year at the 2024 Grocer Gold Awards.
400
new Finest products
launched in 2024/25.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Governance Financial statements Additional information
13.
Spotlight on:
Sustainability
focus.
Market drivers
Sustainability remains at the forefront of consumers’ minds,
having become less of a priority during COVID-19 and the peak of
the cost-of-living crisis. Consumers want organisations and
institutions to take personal action, with 59% stating that tackling
climate change should be a top priority.
59%
believe climate change should be a top priority.
Sources: IGD, Mintel, Kokoro
How we are responding
– We published our Greenprint report for UK farming, alongside
our partners at Harper Adams University’s School of Sustainable
Food and Farming. The report sets out recommendations across
key subjects for the sector, including financial certainty,
innovation and attracting talent.
– Renewable energy projects including Cleve Hill solar farm, the
largest solar corporate power purchase agreement contract,
operational in the first half of 2025.
– Introduced our tenth ‘Tesco train’ rail service to reduce freight
road miles.
– Moved our Finest range of dried pasta into paper packaging to
reduce plastic consumption.
Spotlight on:
Refocus
on health.
Market drivers
With many customers now more financially confident, health is
back on the agenda. 57% of consumers say that health is a priority
for them, increasing from 53% last year, meaning it is the highest
life priority amongst all consumers right now. There are a variety
of ways that consumers intend on being healthy, depending on
their personal circumstances and life stage.
57%
prioritising health.
Sources: Mintel, Kokoro
How we are responding
– Introduced health-led Own Brand High Protein and
Gut Sense ranges.
– Health charity partnerships with the British Heart Foundation,
Cancer Research UK and Diabetes UK to promote advice on health.
– Tesco Pharmacies in more than 360 stores serving half a million
customers a week with a range of services from flu jabs to blood
pressure checks.
– On track to hit our UK and ROI target of 65% of sales volume of
healthy food by the end of December 2025, now at 64%.
UK market context
UK market
context.
Spotlight on:
Consumer
spending.
Market drivers
Following a period of cautious optimism, consumers are now much
more intentional with their spending. This means that they now
want to apply more focus on deciding what things they really want
to spend on.
This attitude has been driven by a decrease in personal finance
concern, while inflation concern has dipped year-on-year. It has
been fuelled further by a desire amongst many to bring joy back
into their lives, caused by disruptive and negative news about the
world around us.
44%
concerned about inflation.
Sources: Foresight Factory, Basis, Nielsen IQ, Kokoro
How we are responding
– 400 new Finest products launched this year.
– Sales of our Finest range products increased by 15% in the UK
year-on-year.
– We have been the cheapest full-line grocer for more than
two years.
– We price-match Aldi on more than 600 products, we have more
than 1,000 products in our Low Everyday Prices offer and have
around 8,000 exclusive offers per week through Clubcard Prices.
Tesco PLC Annual Report and Financial Statements 2025
14.
Spotlight on:
Local
community.
Market drivers
The pandemic and cost-of-living crisis has meant that in recent
years many customers have been spending more time in their local
community and paying attention to how things have changed.
45%
value community and local causes.
Source: Kokoro
How we are responding
– We have launched Tesco Fruit & Veg for Schools to support
400 schools with 5 million portions of fruit.
– Tesco’s Stronger Starts has provided financial support to over
12,200 projects from community groups and schools, to help
provide a healthier start to kids’ lives.
– Our annual Winter Food Collection donated 1.9 million meals
to foodbanks.
– Launched free career clinics for 765 people in economically
challenged areas to support them back into work.
Spotlight on:
Future of
technology.
Market drivers
While tech continues to accelerate forward, and to become a
more integrated, dynamic and accessible part of our lives, there
are some for whom the human touch remains important. Indeed,
71% agree that modern tech is necessary to solve future problems.
71%
think modern tech can solve future problems.
Sources: Google Trends, WGSN, Ipsos, Kokoro
How we are responding
– All our stores offer a choice between colleague-operated and
self-service checkouts and there are always colleagues on hand.
– We use an automation tool to make sure we are discounting the
right products at the right time, helping customers to get the
best value and enabling us to reduce food waste.
– We utilise AI to optimise the routes our drivers take, finding the
most efficient combination of products, baskets and journeys for
every lorry and delivery van, so that we reduce our overall mileage.
Following a period of cautious
optimism, consumers are
now much more intentional
with their spending.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
15.
Governance
Our strategic priorities enable us to continue
to deliver great value, reward customers for
their loyalty and stay competitive while
ensuring we remain an agile and efficient
business. Our focus on doing the basics
brilliantly helps us to drive top-line growth,
grow profit and generate cash, and in doing
so, deliver for all of our stakeholders.
Redefining value to become the
customer’s favourite
Why is it important?
– Demonstrating the importance of value underpinned by price,
quality and sustainability.
– Removing price as a reason to shop elsewhere.
– Making healthy, sustainable food affordable for everyone.
– Working with suppliers to develop sustainably sourced products
of the highest quality.
– Continuing to make a positive contribution to the communities
in which we operate.
Progress during the year
– Winning value combination of Aldi Price Match on more than
600 lines, Low Everyday Prices on more than 1,000 lines and
c.8,000 Clubcard Prices deals each week; Clubcard Prices save
customers up to £392 off their annual grocery bill.
– Further own-brand innovation across all tiers, including launches
of the Taste Discoveries dinner-for-tonight range inspired by
Japanese and Korean cuisine, and health-led High Protein and
Gut Sense ranges.
– Further progress in customer satisfaction scores at Booker,
with 700 prices locked until June 2025.
– Expanded our Low Price Guarantee in Central Europe, adding
an average of c.650 mostly branded products in each market.
– Exclusive Clubcard deals on everyday services such as fixed
prices for the length of a contract with Tesco Mobile.
Our strategic priorities
How we
do it.
Magnetic value for customers
Creating a competitive advantage through
our powerful digital capability
Why is it important?
– Continuing to develop a personalised shopping experience for
customers by using unique insights offered by one of the UK’s
leading digital retail platforms.
– Growing incremental revenue opportunities with suppliers to
help them offer customers tailored and relevant products.
Progress during the year
– Clubcard celebrates 30 years with unrivalled customer reach;
over 23 million Clubcard households in the UK with new
campaigns including 10,000 bonus points for customers who
use Clubcard vouchers when booking with easyJet Holidays.
– Expanding the largest and most generous supermarket Reward
Partner scheme, with Virgin Red and five new visitor attractions
becoming Reward Partners; customers can now earn Clubcard
Points with the purchase of a new Vauxhall car.
– Tesco Media and Insight Platform saw growth in active
advertisers and spend per campaign, with the team ranked joint
#1 in Flywheel’s European retail media rankings and shortlisted
for Media Brand of the Year at the Media Week Awards.
– Over 9,000 retail media campaigns delivered; creativity
enhancements included fully integrated Coca-Cola campaign
over Christmas, comprising onsite and offsite media, exclusive
competitions and products, and wrapping home delivery vans.
I love my Tesco Clubcard
16.
Our strategic priorities continue to play
a vital role in keeping us laser-focused
on our customers in a competitive and
fast-paced market.
Performance framework
We set out the framework in 2021 and will continue to
use it to guide our actions and track our progress.
Drive top-line growth, underpinned by
– Increasing customer satisfaction relative to the market
– Growing or at least maintaining our core UK market share
Grow absolute profits while maintaining margins
– Use assets efficiently across all channels
– Access new revenue streams across our digital platform
– Target productivity initiatives that at least offset inflation
in the medium term
Generate between £1.4bn and £1.8bn free cash flow
each year – with £1,750m achieved in 2024/25.
Serving customers wherever, whenever and
however they want to be served
Why is it important?
– Supporting growth of our core business.
– Continuing evolution of large stores as the backbone of
online grocery business as we maximise our existing assets.
– Continuing to test and learn with on-demand services to
develop the right offer for our customers.
Progress during the year
– Opened 90 stores across the Group: 64 in the UK, 12 in ROI and
14 in Central Europe; and refreshed a further 463.
– UK online sales up 10.2%, driven by growth in orders per week,
with market share up 173bps year-on-year to 35.5%.
– UK online customer satisfaction up 8pts year-on-year and 150
new delivery vans launched to increase capacity; Delivery Saver
subscribers at 770,000, up 9% year-on-year.
– Integrated a further 566 net new Booker retail partners, taking
the total outlets to just under 8,000; integration of Venus
acquisition progressing well, with new distribution centre
opened within Makro branch in Manchester.
Easily the most convenient
A cost-efficient retailer
Why is it important?
– Aiming to simplify, be more productive and reduce costs.
– Focus on offsetting inflation in the medium term and creating
headroom to fund investments.
– Committed to spending money only where it adds value for
customers and makes a real difference.
Progress during the year
– Save to invest progress, delivering £510m of savings for FY 24/25.
– Continued progress across all areas, including goods & services
not for resale, operations, property and central overheads.
– New robotic automation implemented at our Peterborough
distribution centre, with Aylesford semi-automated distribution
centre on track to open in summer 2025.
– End-to-end review of stock flow from suppliers to store,
optimising waste performance and improving availability.
– Simplifying in-store routines, supported by the rollout of new
fresh food fixtures which enable faster replenishment.
– Taking action to reduce stock loss, including security system
enhancements at checkouts and investments in new
technology at our Daventry security hub.
Save to invest
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
17.
Governance
Customer
Product
Channel
Serving our
customers,
communities and
planet a little
better every day
I
n
s
i
g
h
t
s
I
n
s
i
g
h
t
s
Our business model
Our business
model.
With our winning combination of reach, innovation, insight
and expertise, we can provide customers with the products they
want – whenever, wherever and however they want to be served.
Customers
Listening to our
customers and acting
on what is most
important to them
when they shop with us.
Products
Working closely with
our suppliers to source
the right products
at the right price for
our customers.
Channels
Serving customers
whenever, wherever
and however they want
to be served – from
large and convenience
stores to grocery home
shopping and Whoosh.
Our reach
With 4,572 stores and a thriving online
business, we have unparalleled scale to
reach customers, wherever they are
Knowing our customers
Through our retail expertise and insight,
we have a unique understanding of what
our customers want
A best-in-class supply chain
Flexibility and resilience in our supply chain
help us respond better to external events
Strong supplier relationships
Excellent links with suppliers help drive
greater quality, value and availability
Breadth of offer
Leading range development driven by insight
and sourcing expertise helps us react to
evolving customer demand
Investing in our business
Strong free cash flow enables investment
in growth and innovation
Our unique strengths
Helping to execute our strategy
Magnetic value for customers I love my Tesco Clubcard
Easily the most convenient Save to invest
Creating value for all
Customers Colleagues Communities
Planet Suppliers Shareholders
Tesco PLC Annual Report and Financial Statements 2025
18.
Key performance indicators
Our
Big 6 KPIs.
The performance of our Banking operations has been presented as a discontinued operation to the date of disposal and has been excluded from our headline performance measures.
Δ Alternative performance measures (APMs). Measures with the Δ symbol are defined in the Glossary section on pages 228 to 234.
(a) Group sales exclude VAT and fuel.
(b) Growth is at constant exchange rates.
(c) Operating cash flow is the same as the statutory measure Cash generated from/(used in) operations presented on a continuing operations basis, excluding Insurance and Money Services.
Growth is at actual exchange rates. See Glossary, reconciliation of cash flow measures, for a reconciliation to the Group equivalent.
(d) Basis Tesco Global Brand tracker on a three-month rolling basis.
(e) Carbon emissions are based on total Scope 1 and 2 (market-based) footprint and stated as tonnes of CO
2
equivalent (tCO
2
e), see pages 39 and 240.
Grow sales Deliver profit Colleagues recommend us as a great place to work and shop
Why it is important: Sustainable growth in sales
is important to our business model.
What we measure: Group sales is a measure
of revenue excluding fuel sales made at petrol
filling stations. It demonstrates the Group’s
performance in the retail and financial services
businesses by removing volatilities associated
with the movement in fuel prices that are
outside the control of management.
How we performed: Group sales rose by
4.0% at constant exchange rates, driven by
strong growth across all segments.
Why it is important: Delivering profitable
growth is essential as we aim to create
long-term value for all stakeholders.
What we measure: Group adjusted operating
profit is the headline measure of the Group’s
performance.
How we performed: Group adjusted operating
profit rose by 10.9% at constant exchange
rates to £3.1bn, reflecting our strong trading
performance across the Group and continued
cost savings.
Why it is important: When we get things right for our more than 340,000 colleagues, we make it even
easier for them to do what they do best – serving our customers, communities and planet a little better
every day.
What we measure: Our Great Place to Work measure is the percentage of colleagues who agree or
strongly agree with the statement ‘I would recommend Tesco as a great place to work’. Great Place
to Shop is an NPS measure, answering the question ‘I would recommend Tesco as a place to shop’.
How we performed: Our Great Place to Work score increased again this year to 85%.
Group Sales
Δ
Group Adjusted operating profit
Δ
Recommend as a place to shop Great Place to Work
£63.6bn
(2024: £61.5bn)
4.0%
(a)(b)
£3.1bn
(2024: £2.8bn)
10.9%
(b)
49pts
(2024: 46pts)
3pts
85%
(2024: 84%)
1%
Improve operating cash flow Customers recommend us and
come back time and again
Climate – reduce Scope 1 and 2 emissions by 60% by 2025
Why it is important: Strong cash generation
is important to our underlying philosophy with
which we manage our business.
What we measure: Operating cash flow is the
cash generated from continuing operations,
excluding Insurance and Money Services. It is a
measure of cash generation and working capital
efficiency of the Group’s trading operations.
How we performed: We delivered another
strong year of operating cash flow of £4.6bn. The
decline year-on-year is primarily due to the prior
year benefiting from a working capital inflow
driven by elevated levels of input cost inflation.
Why it is important: Customers are at the heart
of everything we do, and customer satisfaction
is an important driver of loyalty.
What we measure: Our score reflects the
percentage of Fans minus Critics answering
the question ‘How likely is it that you would
recommend Tesco to a friend or colleague?’
How we performed: Our Group NPS score
has increased as customers have recognised
our commitment to delivering great value.
Why it is important: This measure reflects the importance we place on minimising our impact
on the planet.
What we measure: Based on our commitment to reduce Scope 1 and 2 carbon emissions by 60% by
2025, we measure the reduction in tonnes of CO
2
equivalent (tCO
2
e) vs our 2015/16 baseline.
How we performed: Our carbon emissions have reduced by a further 10% vs last year. This has been
achieved through identifying and implementing efficiencies, alongside targeted capital investment
to decarbonise our hot spots.
Operating cash flow
(c)
Group NPS
(d)
Carbon emissions (tCO
2
e)
(e)
£4.6bn
(2024: £4.7bn)
(3.0)%
28pts
(2024: 19pts)
9pts
0.8m
(2024: 0.9m)
10%
vs last year
65%
cumulative reduction vs baseline
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
19.
Governance
Board oversight
The Board recognises the need to create
conditions that foster talent and encourage
all colleagues to achieve their full potential.
Through Every Voice Matters colleague
engagement surveys, feedback through our
news & views communications platform,
twice-yearly CCPs and regular updates on
people initiatives surrounding our culture,
purpose and values, the Board has the
oversight to understand what is important
to our colleagues and what is required to
create the workforce of the future.
As our business evolves, we want to make sure
colleagues have the skills they need to succeed
now and in the future. Safety is also central to
how we do business, with the aim of protecting
our colleagues and customers from injury.
More information on our CCPs can be found
on page 69.
Customers
28
NPS
No.1
voted Britain’s favourite supermarket
by customers
More detail on how we support
our customers can be found on
pages 8 to 9 and pages 11 to 13.
Why they are important
Tesco was built to be a champion for customers,
serving them every day with affordable, healthy
and sustainable food. Our commitment to our
customers extends beyond our stores, and into
every community we serve.
Our customer net promoter score (NPS) is
measured based on customers recommending
us as a place to shop and is a key metric in
measuring our progress.
We make it a priority to listen to our customers,
so that we can keep serving them better every
day, either in stores or online.
Stakeholder engagement
Stakeholder
engagement.
Each decision taken by the Board
aligns to our culture and values,
and considers the benefits, risks,
financial implications and impact
on relevant stakeholders.
The Board believes that understanding its
stakeholders and what matters to them is key
to its success. The Directors place significant
importance on looking after the safety of
colleagues, customers and anyone else
impacted by our business. The following table
identifies our key stakeholders and
summarises the engagement undertaken
during the year. It includes some of the
actions taken as a result of this engagement.
Colleagues
85%
of colleagues recommend Tesco as a great
place to work (up 1% on 2023/24)
More detail on our colleague policies,
reward and benefits can be found on
pages 8 and 11. More detail on Everyone’s
welcome can be found on page 23. More
detail on our Colleague Contribution
Panels (CCPs) can be found on page 69.
Why they are important
We cannot deliver our purpose without our
dedicated workforce. They are at the heart
of everything we do. As our business evolves,
we want to make sure colleagues have the skills
they need to succeed now and in the future.
Our colleagues want to be treated fairly and
feel supported with their health, safety and
wellbeing, while being recognised and rewarded
for their contribution. Safety is central to how
we do business, with a heavy focus on protecting
our colleagues.
Priorities and engagement
We aim to create a positive culture at Tesco
which aligns our purpose, values and behaviours
and to create an inclusive workplace, where
colleagues feel welcome and able to be
themselves. We are upskilling and reskilling our
workforce to meet both current job demands
and emerging jobs in the future.
The launch of an internal news & views
communications platform continues to enhance
colleague engagement. Through our CCPs
and the results of the Every Voice Matters
engagement survey we receive valuable
feedback and insight on colleague views.
We have continued to collaborate with the
USDAW trade union on safety measures. Our
support of their campaign to protect retail
workers from physical and verbal abuse has
brought about increased protection for our
colleagues, to bring it in line with the protection
of emergency service workers. The government
is in the process of introducing a new standalone
offence of assaulting a retail worker, following
an industry-wide campaign.
Outcomes and highlights in 2024/25
Tesco announced a £180m investment in
colleague pay, bringing the hourly rate for
our UK store colleagues up to at least £12.64
from the end of August 2025.
Our colleagues have gained from an enhanced
benefits package in recent times, including a
number of family-friendly policies, such as
enhancements to paid maternity, neonatal,
fertility, adoption and kinship leave. We have
also introduced flexible and guaranteed working
arrangements, health and financial wellbeing
benefits including advice and guidance, unlimited
appointments with a virtual GP and Pay Advance
enabling colleagues to receive up to 25% of their
contractual pay early.
The safety of our colleagues is our number one
priority. We continue to roll out a number of
measures to protect colleagues, including body
cameras for colleagues working across our
stores and delivery drivers, as well as installing
new protective screens at hundreds of Express
stores and petrol station kiosks.
85%
of colleagues recommend
Tesco as a great place to work.
20.
Priorities and engagement
We serve millions of customers in store and online
every day. We actively seek customer feedback
on a regular basis which, combined with the
information we gather from Tesco Clubcard as
well as independent consumer research, helps
us to really get to know our customers.
Despite falling inflation, our customers have
continued to feel the pressure of the cost of
living this year and value has been extremely
important to them. Whether that is the value
they get from our Aldi Price Match, Low Everyday
Prices and Clubcard Prices proposition or the
value they get from treating themselves to a
Tesco Finest night in, rather than a meal out.
In addition to value, it is important to our
customers that we are helping them to eat more
healthily and to get whatever they need in the
most convenient way.
Outcomes and highlights in 2024/25
We are committed to offering our customers
great value and have been the cheapest full-line
grocer for more than two years.
In the UK our unique customer offer combines
Aldi Price Match on more than 600 lines, we have
more than 1,000 products in our Low Everyday
Prices offer and have around 8,000 exclusive
offers per week through Clubcard Prices.
We have also reduced the price of more than
200 essential lines in our Express stores by an
average of 10% this year.
We have also introduced in-store Better Baskets
zones that signpost foods high in fibre, plant-
based options and food under 100 calories.
Board oversight
The Board uses customer engagement surveys
and data analysis to listen to customer views and
act on what is most important to deliver the best
possible quality products and services, at great
value and in the most convenient way. Innovation
in customer research is a pivotal part of
understanding customer behaviour, development
of our Own Brand products and creating
competitive advantage. The Board receives
regular updates on customer insights
to understand customer behaviours and our
customers’ needs. It is important to the Board
to make healthy and sustainable products
accessible and affordable for all and it is
essential that we keep innovating for the future.
Innovative projects help deliver the strategy
to drive the business forward to meet the
changing needs of our customers, the
environment we operate in and the delivery
of our net zero commitments.
Suppliers
In the 2024 Advantage survey, our suppliers
have ranked us the #1 retailer to work with in
the UK for the ninth year running.
We surpassed our highest Group supplier
satisfaction to date and achieved an overall
Group supplier satisfaction of 88.2% in our
H2 2024/25 Supplier Viewpoint survey.
More detail can be found
on page 238.
Why they are important
Our partnerships with suppliers are vitally
important in delivering great value and great
quality products for our customers. When we
get it right together, our customers benefit and
the business grows. Tesco and its suppliers are
committed to responsibly-sourced products,
helping to deliver our net zero commitments
under Scope 3 by 2050.
Priorities and engagement
We continue to build trusted relationships with our
suppliers and work with them to deliver healthier
and more sustainable products for our customers,
which are affordable. Our work on human rights is
fully integrated within our operations, forming a
key part of our broader commitment to being a
responsible and sustainable business. We will
always look to work with suppliers to meet our
responsible sourcing and ethical requirements.
We engage our suppliers through regular contact
with our Product teams, as well as through
supplier surveys. Suppliers are also supported by
our Business Code of Conduct, and any material
matters raised by suppliers are reported to the
Audit Committee. We ensure delivery against
our commitments under the Groceries Supply
Code of Practice (GSCOP) through a number
of mechanisms, including reporting to the
Audit Committee.
Outcomes and highlights in 2024/25
We are delighted to have achieved the number
one position in the Advantage supplier survey for
the ninth year in a row. We are encouraged by the
progress we have made so far to deliver healthy,
affordable and more sustainable products and will
continue greater collaboration with our suppliers
and partners as we work towards our objectives
and support them to achieve their net zero
commitments. We are also supporting suppliers
to improve diversity within their businesses.
Through our sustainable farming groups we
continue to: bring together industry
representatives; share knowledge between
farmers, suppliers and Tesco colleagues; and trial
innovations that can help reduce on-farm
emissions and protect biodiversity.
This year, we have launched The Future Dairy
Partnership with our suppliers Arla and Muller
UK & Ireland, which is a farmer-led partnership
aiming to put sustainability at the heart of
the dairy industry. We have also bolstered
support for British farmers by relaunching
our Tesco Sustainable Pig Group, in partnership
with Cranswick.
We have also welcomed the second intake
of young farmers to our Tesco Future Farmer
programme in the UK.
Board oversight
Our suppliers provide feedback through our
product management teams and through our
annual Supplier Viewpoint survey. Suppliers
are also supported by our Business Code of
Conduct, and any material matters raised by
suppliers are reported to the Audit Committee.
The Board recognises the importance of
suppliers being treated fairly to align with our
values. The Board receives regular updates
on our product and supplier strategy and have
oversight of our sourcing priorities through
our sustainability strategy and objectives.
Understanding the challenges we face and the
support we can provide, supports the Board
delivering its strategy and objectives.
Shareholders
£1,750m
Free cash flow
13.70p
per ordinary share full year dividend
More detail can be found in the Financial
review on pages 24 to 30.
Why they are important
Our shareholders want us to create value and
deliver long-term, sustainable growth and
returns. Understanding the views of our
shareholders supports the decisions we
take and the opportunities we create.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
21.
Governance
Stakeholder engagement continued
Priorities and engagement
Regular dialogue with our institutional investors,
potential investors and analysts provides insight
to their views and policies, which is reflected in
our decision making. It is the Board’s intention to
continue to pay a progressive dividend by aiming
to grow the dividend per share each year,
broadly targeting a payout of around 50% of
earnings. Our long-term plan sets out our growth
ambitions over the next three years, including
continued delivery for all stakeholders and
ongoing cash returns to our shareholders.
Outcomes and highlights in 2024/25
The investments we have made to date have
strengthened our offer to customers, made
us more efficient, and more digitally capable,
establishing a strong foundation for future
growth. We continue to see the buyback
programme as an ongoing and critical driver
of shareholder returns. We have had regular
dialogue with shareholders during the year,
including through calls, individual and group
meetings, with a particular focus on themes
such as ongoing performance, competitive
advantages in our core UK market and
sustainability. This engagement helps us to
understand shareholder priorities and their
views on how we are progressing. We welcome
engagement with private shareholders at
our Annual General Meeting.
Board oversight
Members of the Board, senior management and
Investor Relations hold regular meetings with
existing and potential institutional investors and
analysts to understand their views and policies.
The Board receives regular updates to ensure
it understands the market we operate in,
considers the views of shareholders to provide
expected returns and grow the business in line
with strategy, which is reflected in our decision
making. The Group Company Secretary’s team
engages with private shareholders with the
support of our registrar, Equiniti, who provide
services to private shareholders on our behalf.
Communities
More than 99 million
meals donated across the Group in 2024/25
More than £13.4m
awarded by Stronger Starts to over 12,200
projects
More information on the Sustainability
Committee’s visit to Groundwork can be
found on page 80.
Why they are important
We place great importance on helping the
communities we serve. We play a vital role in
local communities, through the people we
employ, businesses we work with, and the
causes we support. Cost-of-living pressures
have put significant strain on many of
our communities.
Priorities and engagement
Tesco redistributes surplus food from its
distribution network and stores through its
charity and community partners, FareShare and
Olio. Colleagues and customers join our regular
food collections to support FareShare and
Trussell. Tesco also provides financial support
to help the charities in their work. Our
Community Champions in stores across the
UK help us build relationships with communities
and support local events and initiatives.
Outcomes and highlights in 2024/25
Our Community Food Connection scheme has
grown into the biggest food redistribution
initiative of its kind in the UK. To date it has
provided more than 300 million equivalent meals
to charities and local communities who depend
on the food they receive to be able to support
people facing hunger. We launched Stronger
Starts, a programme to help give children a
healthier, stronger start in life and help them
thrive. The scheme, supported by UK community
charity Groundwork, replaced the Tesco
Community Grants programme and is boosted
with an additional £1m funding each year,
through our share forfeiture fund until 2026/27.
Board oversight
The Board places great importance in helping
the communities we serve, recognising the vital
role we play, through the people we employ,
businesses we work with, and the causes we
support. Understanding the initiatives and
positive impact we have on local communities
is a key part of the Board’s oversight.
Planet
65%
reduction in emissions of own operations
since 2015
More information on the planet initiatives
can be found on pages 31 to 39.
Why it is important
We have built sustainability into our purpose,
strategy and business plans. We know that our
business depends on the world around us. As the
UK’s largest retailer, we know we can make a big
difference. We aim to be carbon neutral across
our own operations by 2035. We are working with
suppliers and partners to deliver our goal to be
net zero from farm to fork by 2050.
Priorities and engagement
Tesco has a longstanding commitment to tackling
climate change. Our commitment to operating in
a responsible and sustainable way reflects our
values. We will continue to deliver action on
climate through our planet plan, which has been
successfully rolled out across our business.
Priorities include reducing emissions across our
own operations and supply chain and building on
our work to provide customers with affordable,
healthy, sustainable food, through initiatives
such as our Better Baskets scheme, which helps
customers make better choices in the food
they buy.
Outcomes and highlights in 2024/25
In January this year, we published our Greenprint
for UK farming report alongside our partners at
Harper Adams University’s School of Sustainable
Food and Farming. The report sets out
recommendations across several key areas,
including: a long-term vision for the sector;
the need for government to better support UK
farmers through a long-term land use and food
security strategy; improved funding for all stages
of innovation that aids sustainability; and setting
common environmental standards which
farmers can regularly measure against to help
prioritise investment in the most effective and
sustainable farming techniques.
We signed the UK’s largest solar corporate
power purchase agreement in October 2024
with Cleve Hill solar park in Kent, which will
provide the equivalent of 10% of Tesco’s UK
electricity demand.
We continued to reduce the environmental
impact of deliveries to our stores by introducing
our tenth ‘Tesco train’ rail service to reduce
freight road miles.
Board oversight
Our commitment to operating in a responsible
and sustainable way reflects our values. The
delivery of our sustainability commitments
through the planet plan has brought together all
of the work we are doing to reduce Scope 1 and 2
emissions. Regular updates to the Board and
Sustainability Committee on the progress against
each of the pillars of the plan, support the Board
in reviewing progress against each of our key
milestones and enhance its understanding of
how activities at an operational level ladder up
to meet our sustainability commitments.
Tesco PLC Annual Report and Financial Statements 2025
22.
Everyone’s welcome
Everyone’s
welcome.
Over the last year, we made continued progress
on ensuring Tesco is a great place to work,
including supporting our managers through
improved training to help them to better support
their teams.
To accelerate our progress further, and ensure
we are driving forward the things that matter
most to our workforce, we focused on colleague
listening: hosting listening groups and launching
a Group-wide survey, giving every colleague the
chance to tell us more about their experiences
at Tesco.
We have more than 25 colleague networks across
the Group, which amplify, consult and celebrate
inclusion across every part of our business. They
create spaces for colleagues to share challenges,
explore career paths and connect with like-
minded individuals.
At Tesco, we’re committed to continuing to represent the customers
and communities we serve and the colleagues who work here. We’re a
place where Everyone’s welcome and we treat people how they want
to be treated.
Our five colleague commitments guide us in
creating meaningful action plans to better
support our workforce:
Inclusion for all
Colleagues work in an environment where they
feel they can be themselves, are valued, and see
themselves represented at every level. We …
– continued making progress against our
representation targets;
– ranked in the Times Top 50 for Gender Equality
in the UK for the fourth year running, as well as
being a Stonewall Top 50 LGBTQ+ employer;
– strengthened and refreshed our anti-bullying,
harassment & discrimination policy and training;
– continued delivering our women’s development
programme, supporting more than 200 high-
potential women at Tesco to realise their potential,
with tools and development opportunities; and
– continued progress on our Black action plan,
addressing Black inclusion at every point in
the colleague lifecycle.
Flexibility for all
Enabling colleagues to thrive at Tesco, with a
culture that embraces and supports flexible
working. We …
– began advertising all full-time vacancies with the
option of part-time hours ahead of legislation;
– updated our tools and resources to support
colleagues and their managers to have
conversations about working flexibly; and
– launched our free Care Concierge service in the
UK to support those caring for elderly relatives.
Accessible first
Our colleagues with different accessibility needs
should feel supported at Tesco, whether that’s in
a physical environment, our technology systems
or the communications we share. We …
– worked to a minimum standard framework
across the Group to support colleagues with a
disability. Doing so has seen us achieve Disability
Confident status across our UK business; and
– supported colleagues with workplace adjustments.
Transform recruitment
Colleagues and candidates experience a positive
and inclusive recruitment experience so that
we can attract and retain the best talent. We …
– launched a new global careers site, making
jobs across the Tesco Group more visible
and accessible;
– began rolling out refreshed training for
hiring managers, to support an inclusive
hiring process.
Developing careers
Supporting underrepresented and disadvantaged
people to gain experiences, skills and behaviours
to enhance their career choices. We ...
– welcomed 86 Stronger Starts retail apprentices in
the UK, supporting underrepresented young
people from high-deprivation areas into work at
our stores, helping them to build their confidence
and skills. We are expanding the programme in
2025, hiring an additional 450 school leavers;
– gave 347 young people who would struggle to
access the job market the opportunity to work in
our stores for 2–3 weeks, through our movement
to work festive work placements; and
– supported our 79 graduates with hands-on
retail assignments to build an understanding
of our customers and frontline operations.
This deepens their business perspectives
and informs their decision making, so they
are equipped with practical insights and
leadership skills.
For more information on progress against
our Board DE&I policy see page 75.
Below is the schedule in accordance with UK Listing Rule 6.6.6(10). Gender and ethnicity data is collected through the Group’s payroll system using the
legally registered gender for each colleague. Ethnicity data for the Board and Executive Committee is obtained through the Group’s Directors’ disclosures
questionnaire and the voluntary diversity questionnaire – This is Me.
Data as at
22 February 2025
No. of Board
members
% of the
Board
No. of senior members
on the Board
No. of Executive
Committee
% of Executive
Committee
No. of top
global leaders
1
% of top
global leaders
1
No. of
employees
% of
employees
Men 7 58 3 7 64 178 68 164,393 49
Women 5 42 1 4 36 83 32 172,034 51
Not specified/prefer not to say 0 0 0 0 0 0 0 13 0
Data as at
22 February 2025
No. of
Board members
% of
the Board
No. of senior members
on the Board
No. of Executive
Committee
% of Executive
Committee
White British or other White (including minority-white groups) 10 83 3 7 64
Mixed/multiple ethnic groups 0 0 0 0 0
Asian/Asian British 2 17 1 2 18
Black/African/Caribbean/Black British 0 0 0 0 0
Other ethnic group, including Arab 0 0 0 0 0
Not specified/prefer not to say 0 0 0 2 18
1. Definition of top global leaders: work levels 4 to 6.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
23.
Governance
Imran Nawaz,
Chief Financial Officer
Gr wth.
Financial review
Group review of performance.
On a continuing operations basis
1
52 weeks ended 22 February 2025
2,8
FY 24/25 FY 23/24
Change at
actual rates
Change at
constant rates
Sales (exc. VAT, exc. fuel)
3
£63,636m £61,477m 3.5% 4.0%
Fuel £6,280m £6,710m (6.4)% (6.3)%
Revenue (exc. VAT, inc. fuel) £69,916m £68,187m 2.5% 3.0%
Group adjusted operating profit
4
£3,128m £2,829m 10.6% 10.9%
Adjusting items £(417)m £(8)m
Statutory operating profit £2,711m £2,821m (3.9)%
Net finance costs £(492)m £(538)m
Joint ventures and associates £(4)m £6m
Statutory profit before tax £2,215m £2,289m (3.2)%
Taxation £(611)m £(525)m
Statutory profit after tax £1,604m £1,764m (9.1)%
Adjusted diluted EPS
4
27.38p 23.41p 17.0%
Statutory diluted EPS 23.13p 24.53p (5.7)%
Dividend per share 13.70p 12.10p 13.2%
Net debt
6
£(9,454)m £(9,684)m 2.4%
Free cash flow
5
£1,750m £2,063m (15.2)%
Capex
9
£1,457m £1,314m 10.9%
Sales
3
increased by 4.0% at constant rates, including a strong contribution from higher volumes
and improved category mix, supported by our continued investments in value, quality and service.
Revenue increased by 3.0% at constant rates, including a (6.3)% decline in fuel sales, mainly driven
by lower retail prices year-on-year.
Group adjusted operating profit
4
increased by 10.9% at constant rates, driven by further progress in
our core retail markets as higher sales volumes and a further c.£510m contribution from Save to invest
more than offset net operating cost inflation. Group adjusted operating profit includes Insurance and
Money Services where adjusted operating profit increased by £86m to £155m, including £46m of
non-recurring items mainly due to a new five-year pet insurance contract.
Statutory operating profit decreased by (3.9)% year-on-year, as the Group adjusted operating profit
growth described above was more than offset by a non-cash net impairment charge on non-current
assets of £(286)m, mainly due to an increase in discount rates driven by higher government bond rates
compared to the prior year.
Net finance costs (including adjusting items) were £46m lower year-on-year, mainly due to lower net
interest costs on medium-term notes as a result of net refinancing activities, and favourable non-cash
mark-to-market movements on certain derivative financial instruments. The higher tax charge this
year was driven by higher operating profit and the full year effect of the increase in UK corporation
tax rates, effective from 1 April 2023.
We have delivered a strong financial
performance in the year, with higher volumes
driving profit growth and strong cash delivery.
24.
Adjusted diluted EPS
4
grew by 17.0%, driven by the strong growth in Group adjusted operating profit
described above as well as a benefit from our ongoing share buyback programme, with a further
£1bn of share buybacks completed in the year. Statutory diluted EPS declined by (5.7)%, driven
by the non-cash net impairment charge as described above. We propose to pay a final dividend of
9.45 pence per ordinary share, taking the full year dividend to 13.70 pence, up 13.2% year-on-year.
We generated strong free cash flow
5
of £1,750m compared to £2,063m last year, with the prior year
benefiting from higher trade working capital balances, driven by elevated levels of input cost inflation.
Net debt
6
reduced by £230m to £(9,454)m, driven by strong free cash flow generation and the receipt
of the £614m Banking operations gross disposal proceeds, partially offset by cash returned to
shareholders via dividends and our ongoing share buyback programme. The Net debt/EBITDA
ratio was 2.0 times, down from 2.2 times in the prior year.
Further commentary on these metrics can be found below and a full income statement can be
found on page 135.
1. The performance of the Banking operations has been presented as a discontinued operation to the date of disposal. The
Insurance and Money Services business has been presented on a continuing operations basis and therefore within headline
performance measures. Further details on discontinued operations can be found in Note 8, starting on page 155.
2. The Group has defined and outlined the purpose of its alternative performance measures, including its performance highlights,
in the Glossary starting on page 228.
3. Group sales exclude VAT and fuel.
4. Adjusted operating profit and Adjusted diluted EPS exclude adjusting items.
5. Free cash flow and return on capital employed (ROCE) are alternative performance measures defined and outlined in the Glossary
starting on page 228.
6. Net debt now includes Insurance and Money Services, with the prior year reported on a consistent basis. The impact on the prior
year is to reduce Net debt by £80m. Further information on Net debt can be found in Note 32, starting on page 209.
7. Like-for-like (LFL) sales growth is a measure of growth in Group sales from stores that have been open for at least a year and
online sales (at constant exchange rates, excluding VAT and fuel). LFL excludes revenue from dunnhumby, Insurance and Money
Services as this revenue is not directly linked to the sale of goods.
8. All measures are shown on a continuing operations basis unless otherwise stated.
9. Capex excludes additions arising from business combinations, property buybacks (typically stores) and other store purchases
and their associated refit costs. Refer to page 232 for further details.
Segmental review of performance:
Sales performance:
(exc. VAT, exc. fuel)
3,8
On a continuing operations basis
1
Sales
(£m)
LFL sales
change
7
Total sales change
at actual rates
Total sales change
at constant rates
– UK 47,486 4.0% 5.1% 5.1%
– ROI 2,974 4.6% 2.9% 5.6%
– Booker 8,990 (1.8)% (1.0)% (1.0)%
UK & ROI 59,450 3.1% 4.0% 4.2%
Central Europe 4,186 2.2% (3.0)% 2.5%
Sales 63,636 3.1% 3.5% 4.0%
Further information on sales performance is included in the appendices starting on page 226.
Adjusted operating profit
4,8
performance:
On a continuing operations basis
1
Profit
(£m)
Change at
actual rates
Change at
constant rates
Margin % at
actual rates
Margin %
change at
actual rates
UK & ROI 3,016 10.1% 10.3% 4.6% 30 bps
Central Europe 112 24.4% 28.9% 2.6% 58 bps
Group 3,128 10.6% 10.9% 4.5% 33 bps
Further information on operating profit performance is included in Note 2 starting on page 148.
UK & ROI overview:
Like-for-like sales for the UK & ROI segment increased by 3.1%. Volume growth was particularly strong
in the UK and ROI, with growth in every quarter of the year, and continued market share gains across
the year. While Booker delivered a strong performance in core retail and catering, overall like-for-like
sales reduced by (1.8)% due to the continued decline in the tobacco market and weakness in some
areas of the fast-food market serviced by Best Food Logistics.
UK & ROI adjusted operating profit was £3,016m, up 10.3% at constant rates, driven by volume growth
and the ongoing delivery of our Save to invest programme, which offset net operating cost inflation,
including colleague pay awards. Insurance and Money Services adjusted operating profit, now included
within the UK & ROI segment, increased by £86m to £155m, including £46m of non-recurring items,
mainly reflecting the accounting for upfront commission income on the signing of a new five-year pet
insurance contract. The year-on-year growth excluding these items was driven by strong underlying
performance in the insurance business.
UK – Growing volumes and market share:
Like-for-like sales grew by 4.0%, with growth both in stores and online. Volume growth was ahead
of our expectations, and we consistently grew ahead of the market.
Market share grew by +67bps year-on-year to 28.3%, delivering 21 consecutive four-week periods of
market share growth by the end of the year and our highest market share since 2016 over the
Christmas period. We continue to deliver improvements in our overall brand perception year-on-year,
up +185bps and stepping forward across all drivers, including reputation (+282bps), value (+242bps) and
quality (+153bps).
Food like-for-like sales grew by 4.9%, with full-year volume growth supported by our ongoing
investments in product quality and innovation. We launched over 1,000 new products and improved
over 600, including Taste Discoveries dinner-for-tonight range and health-led High Protein and Gut
Sense ranges. Our Finest range continued to perform well, with sales up 15% year-on-year, including
record sales over the festive period.
We are committed to ensuring that customers get the best value for money by shopping at Tesco.
Over 2,300 products were cheaper at the end of the year than at the start, with an average reduction
of around 9%.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
25.
Governance
Financial review continued
Clothing like-for-like sales grew by 3.0% due to a strong performance in womenswear, with further
development of our F&F Active and F&F Edit ranges. Home like-for-like sales declined by (2.2)%,
which includes a (5.5)ppts drag from the transition to our new partnership with The Entertainer.
The partnership, which offers customers an even better range of toys in our stores, means we no
longer recognise toy sales, and instead earn commission income. The transition completed in the
second half of the year and is now in around 750 stores. Excluding this impact, Home like-for-like
sales grew by 3.3%, primarily driven by the launch of our F&F Home range.
Large store like-for-like sales grew by 4.1%, driven by further investment into our promotional
offer over key seasonal events in addition to investments in service and delivering market-leading
availability. These investments resulted in our highest customer net promoter score in five years.
Convenience like-for-like sales, which includes our One Stop stores, declined by (0.2)%. Tesco Express
like-for-like sales were broadly flat, with a particularly strong performance in fresh food offset by the
impact of the ongoing decline in the tobacco market. Tesco Express gained +138bps of market share,
supported by a 1.7ppts contribution to sales growth from net new store openings.
Online sales grew by 10.2%, including a c.3ppts contribution from Tesco Whoosh. Sales growth was
primarily driven by an increase in average online orders per week which were up 10.8% year-on-year
to 1.3 million, with customer satisfaction also increasing year-on-year. Tesco Whoosh, our rapid
delivery service, saw sales almost double in the year, with a further improvement in customer
satisfaction and growth in average basket size. Tesco Whoosh is now available in over 1,500 stores,
including 42 large stores.
Online performance FY 24/25 YoY change
Sales inc. VAT £6.8bn 10.2%
Orders per week 1.33m 10.8%
Basket size (excluding Whoosh) £109 3.6%
Online % of UK total sales 13.5% 0.6ppts
In June, we launched Tesco Marketplace, offering customers an even broader range of products online
through third-party sellers. We are now offering over 400,000 products and have built a pipeline of
further sellers to join the platform, with new category launches planned for later in FY 25/26. We are
encouraged with customer satisfaction scores, and trading through Black Friday was particularly
successful. Our priority has been laying the foundations for growth, adding for instance the capability
to offer customers Clubcard Prices when they shop on Tesco Marketplace.
In November, we completed the disposal of our Banking operations and started our associated strategic
partnership with Barclays. The exclusive 10-year partnership provides customers access to Tesco-
branded banking products and services, combining Tesco’s market-leading brand, physical and digital
reach and relentless customer focus with Barclays’ deep financial services capabilities and expertise in
commercial partnerships. We retained all the existing insurance and money services activities, including
ATMs, travel money and gift cards. In the year, sales from Insurance and Money Services grew by c.30%,
primarily driven by strong growth in the insurance business.
ROI – Ongoing volume growth driving strong market share gains:
Like-for-like sales grew by 4.6% for the full year, driven by volume growth supported by our continued
roll out of our ‘fresh first’ store refresh programme and our ongoing investments in product quality
and innovation, which has been recognised with 21 gold medals at the Blas na hÉireann (‘Taste of
Ireland’) awards. Total sales grew by 5.6% at constant rates, including a 1.0ppts contribution from
new stores, driven by the opening of 12 new stores in the year.
Food like-for-like sales grew by 5.0%, driven by strong volume growth in fresh food. Our Finest
range performed well with year-on-year volume growth of over 29%.
Non-food like-for-like sales grew by 0.9%, which includes a (3.1)ppts impact from the transition to our
new partnership with The Entertainer, as in the UK. Excluding toys, non-food like-for-like sales grew by
4.0%, with a strong contribution from Home driven by a refreshed proposition which has now been
rolled out across 30 stores.
We have now gained market share in ROI for 37 consecutive four-week periods, taking our share to
23.9% at the end of the year, up +29bps year-on-year. Clubcard sales penetration stepped up by a
further 2ppts year-on-year to 87%.
BOOKER – Growth across core catering and retail following strong
performance last year:
Sales
£m LFL
Core retail 3,234 0.9%
Core catering* 2,621 2.1%
Tobacco 1,694 (8.8)%
Best Food Logistics 1,441 (5.1)%
Total Booker 8,990 (1.8)%
* Includes sales to small businesses and sales from Venus Wine and Spirit Merchants PLC, which was acquired in June 2024.
Venus is excluded from LFL growth.
Overall like-for-like sales declined by (1.8)%, reflecting the continuing decline in the tobacco market
and weakness in parts of the fast-food market serviced by Best Food Logistics, while the core retail
and catering businesses grew despite a challenging market backdrop.
Core retail like-for-like sales increased by 0.9% year-on-year, growing ahead of the market, supported
by a further 566 net new retail partners in the year. While the independent convenience sector is
seeing some trading softness, Booker’s symbol brands performed strongly, supported by our targeted
promotional plans and improvements in availability. Booker retail customer satisfaction continued to
improve, with gains year-on-year.
Core catering like-for-like sales increased by 2.1%, driven by stronger volumes, as customers
responded well to our value campaigns throughout the year, with prices now locked on over 700
products until June 2025. Customer satisfaction levels remained high, growing year-on-year, and
availability improved even further to c.98% by the end of the year.
In June 2024, we acquired Venus Wine and Spirit Merchants PLC, a specialist wine and spirits
merchant, offering our on-trade catering customers an even larger selection of spirits, wines, lagers,
ciders and ales. The integration of Venus is progressing well, and we are continuing to expand the
customer base, with strong progress towards increasing its geographic presence.
Tesco PLC Annual Report and Financial Statements 2025
26.
CENTRAL EUROPE – Improved category mix and volume growth driving sales
momentum and profit growth:
Like-for-like sales grew by 2.2%, as improved category mix and volumes contributed to positive growth,
with market share trajectory improving. Food like-for-like sales grew by 2.4% year-on-year, including
c.4% growth in Fresh volumes. Customer satisfaction scores improved in Central Europe, as customers
responded well to our product innovation and targeted value investments, with on average c.650
products added to our Low Price Guarantee per market. Our Finest range performed well, with
year-on-year volume growth of over 23%.
Non-food like-for-like sales grew by 0.6%, with particularly strong performance over the seasonal
Christmas period.
Central Europe adjusted operating profit was £112m, an increase of 28.9% year-on-year at constant
rates, primarily driven by volume growth and further progress in our Save to invest programme.
Discontinued operations:
In February 2024, we agreed to sell our Banking operations, comprising personal loans, credit cards
and customer deposits and associated operational capabilities. In November 2024, we completed the
disposal to Barclays for gross cash proceeds of £614m. In combination with further net cash released
after the settlement of certain regulatory capital amounts and net of transaction costs, this provides
£700m of cash realised from the disposal which will be returned to shareholders through share
buybacks in FY 25/26.
The performance of our Banking operations has been presented as a discontinued operation and has
been excluded from our headline performance measures. Profit after tax from discontinued operations
was £26m which includes adjusting items of £(65)m primarily relating to the fair value remeasurement of
assets of the disposal group, associated with the sale of our Banking operations to Barclays.
Adjusting items:
FY 24/25
£m
FY 23/24
£m
Net impairment (charge)/release on non-current assets (286) 28
Amortisation of acquired intangible assets (76) (74)
Save to invest restructuring provisions (43) (50)
Property transactions 2 75
Other* (14) 13
Total adjusting items included within operating profit (417) (8)
Net finance income 44 20
Taxation 79 68
Total adjusting items included within profit after tax from continuing
operations (294) 80
Adjusting items included within discontinued operations (65) (628)
Total adjusting items (including discontinued operations) (359) (548)
* Other comprises Banking operations disposal costs. In the prior year, other includes a £12m profit on disposal of Booker’s
Ritter-Courivaud Limited subsidiary.
Adjusting items are excluded from our adjusted operating profit performance by virtue of their size
and nature, to provide a helpful perspective of the year-on-year performance of the Group’s ongoing
business. Total adjusting items in operating profit (from continuing operations) resulted in a net charge
of £(417)m, compared to £(8)m in the prior year.
In the current year, there was a non-cash net impairment charge on non-current assets of £(286)m,
primarily reflecting an increase in discount rates, as a result of higher government bond rates. This
compares to a £28m non-cash net impairment release in the prior year.
We continue to present amortisation of acquired intangible assets, principally relating to the merger
with Booker, as an adjusting item. In the current year, amortisation of acquired intangible assets was
£(76)m, compared to £(74)m in the prior year.
We recognised a £(43)m restructuring charge in the current year, compared to a £(50)m charge in the
prior year relating to our Save to invest programme.
Adjusting items in discontinued operations of £(65)m primarily relates to the fair value remeasurement
of assets of the disposal group, associated with the sale of our Banking operations to Barclays. In the
prior year, we recognised a post-tax loss of £(628)m, related to the disposal of our Banking operations.
Further detail on discontinued operations can be found in Note 8 starting on page 155.
Adjusting items in net finance costs and tax are set out below. Further detail on adjusting items
can be found in Note 5, starting on page 151.
Net finance costs:
On a continuing operations basis
FY 24/25
£m
FY 23/24
£m
Net interest costs (157) (179)
Net finance expenses from insurance contracts (9) (6)
Interest expense on lease liabilities (370) (373)
Adjusted net finance costs (536) (558)
Fair value remeasurements of financial instruments 76 38
Net pension finance costs (32) (18)
Adjusting items in net finance costs 44 20
Net finance costs (492) (538)
Adjusted net finance costs were £(536)m, £22m lower year-on-year mainly due to lower net interest
costs on medium term notes as a result of refinancing activities.
Within adjusting items, fair value remeasurements of financial instruments led to a credit of £76m,
compared to a £38m credit in the prior year, driven by non-cash mark-to-market movements on
certain derivative financial instruments that are not hedge accounted and a non-cash gain from a
liability management transaction.
Net pension finance costs increased by £(14)m, reflecting a higher opening pension deficit in FY 24/25
and a higher discount rate at the start of FY 24/25 than the start of FY 23/24.
We expect a similar level of adjusted net finance costs for FY 25/26. Further detail on finance income
and costs can be found in Note 6 on page 152, as well as further detail on the adjusting items in
Note 5, starting on page 151.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
27.
Governance
Financial review continued
Group tax:
On a continuing operations basis
FY 24/25
£m
FY 23/24
£m
Tax on adjusted profit (690) (593)
Tax on adjusting items 79 68
Tax on profit (611) (525)
Tax on adjusted Group profit was £(690)m, £(97)m higher than last year, primarily due to higher profit
and the full year impact of the increase in the UK corporation tax rate from 19% to 25%, effective from
1 April 2023. The effective tax rate on adjusted Group profit was 26.7% (FY 23/24: 26.0%), higher than
the current UK statutory rate of 25%, primarily due to the depreciation of assets which do not qualify
for tax relief. We expect our FY 25/26 effective tax rate to remain around 27%.
The current year £79m adjusting credit in tax primarily relates to deferred tax on impairment charges
on qualifying assets. The prior year £68m adjusting tax credit primarily relates to impairment charges
on qualifying assets, as well as a final settlement related to our exit from the Gain Land Associate in
China, in February 2020.
Earnings per share:
On a continuing operations basis FY 24/25 FY 23/24 YoY change
Adjusted diluted EPS 27.38p 23.41p 17.0%
Statutory diluted EPS 23.13p 24.53p (5.7)%
Statutory basic EPS 23.41p 24.80p (5.6)%
On a total basis, including discontinued operations
Statutory diluted EPS 23.51p 16.56p 42.0%
Statutory basic EPS 23.79p 16.74p 42.1%
Adjusted diluted EPS was 27.38p, 17.0% higher year-on-year, due to an increase in Group adjusted
operating profit, the benefit of our ongoing share buyback programme and a reduction in net finance
costs, partially offset by an increase in tax.
Statutory diluted EPS was 23.13p, (5.7)% lower year-on-year, primarily driven by the £(286)m non-cash
net impairment charge on non-current assets in the year, compared to a £28m impairment release in
the prior year.
On a total basis, including discontinued operations, statutory diluted EPS was 23.51p, 42.0% higher
year-on-year due to the effect of the remeasurement loss recognised last year related to the sale
of our Banking operations.
Dividend:
We propose to pay a final dividend of 9.45 pence per ordinary share, which combined with the interim
dividend of 4.25 pence per ordinary share made in November 2024, takes the full year dividend to
13.70 pence per ordinary share. The full year dividend is based on our dividend policy to pay a
progressive dividend, broadly targeting a 50% payout of adjusted earnings per share.
The proposed final dividend was approved by the Board of Directors on 9 April 2025 and is subject to
the approval of shareholders at this year’s Annual General Meeting. The final dividend will be paid on
27 June 2025 to shareholders who are on the register of members at close of business on 16 May 2025
(the Record Date). Shareholders may elect to reinvest their dividend in the dividend reinvestment plan
(DRIP). The last date for receipt of DRIP elections and revocations will be 6 June 2025.
Summary of Net debt:
Feb-25
£m
Feb-24*
£m
Movement
£m
Net debt before lease liabilities (1,738) (2,062) 324
Lease liabilities (7,716) (7,622) (94)
Net debt (9,454) (9,684) 230
Net debt/EBITDA 2.0x 2.2x
* The Net debt APM has been amended to include Insurance and Money Services, with the prior year presented on a consistent
basis. The impact on the prior year is to reduce Net debt by £80m.
Net debt was £(9,454)m, a decrease of £230m year-on-year, predominantly driven by strong free cash
flow generation of £1,750m and gross proceeds from Barclays of £614m related to the disposal of our
Banking operations. This exceeded the cash outflows relating to our ongoing share buyback
programme of £(1,016)m and dividend payments of £(864)m.
Lease liabilities of £(7,716)m were £(94)m higher year-on-year, mainly driven by the opening of a new
distribution centre and the leasing back of stores following the sale of mall properties in Central
Europe.
Our Net debt/EBITDA ratio was 2.0 times at the end of the year, down from 2.2 times in the prior year,
partially driven by the receipt of cash proceeds from the sale of our Banking operations which we will
return to shareholders in the coming year.
We had strong levels of liquidity at year-end, totalling £3.6bn, including cash, highly liquid short-term
deposits and money market investments. In addition, our £2.5bn committed revolving credit facility
remained undrawn and is in place until at least October 2027.
Fixed charge cover was 4.2 times at the end of the year (FY 23/24: 3.8 times), an improvement
year-on-year, primarily due to an increase in EBITDA.
Defined benefit pension schemes:
Feb-25
£m
Feb-24
£m
Movement
£m
Defined benefit schemes in surplus 56 22 34
Defined benefit schemes in deficit (307) (657) 350
Deferred tax asset/(liability) 71 162 (91)
Deficit in schemes at the end of the year (net of
deferred tax) (180) (473) 293
Net of tax, the net IAS 19 pension deficit has improved from £(473)m to £(180)m, principally reflecting
the impact of higher discount rates. The largest scheme is the main UK Tesco Pension Scheme. The
trustees of each pension scheme are also required to calculate the net surplus/deficit using Technical
Provisions and in accordance with relevant regulations and guidance issued by the appropriate
regulator. On this basis, which is different to IAS 19, the main UK Tesco Pension Scheme continues to
be in a funding surplus at the year end. The most recent completed triennial funding valuation of the
UK Tesco Pension Scheme was at 31 March 2022 and the next valuation, relating to the funding position
of the scheme as at 31 March 2025, will be completed during FY 25/26.
Further detail on post-employment benefits can be found in Note 29, starting on page 200.
Tesco PLC Annual Report and Financial Statements 2025
28.
Summary free cash flow:
The following table reconciles Group adjusted operating profit to free cash flow. Further details are
included in the reconciliation of cash flow measures, starting on page 233.
On a continuing operations basis
FY 24/25
£m
FY 23/24
£m
Group adjusted operating profit 3,128 2,829
Less: Insurance and Money Services adjusted operating (profit)/loss (155) (69)
Retail adjusted operating profit 2,973 2,760
Add back: Depreciation and amortisation 1,680 1,602
Other reconciling items 69 82
Pensions (30) (29)
(Increase)/decrease in working capital (45) 418
Cash generated from operations before adjusting items 4,647 4,833
Cash capex (1,392) (1,289)
Net interest (500) (560)
– Interest related to Net debt before lease liabilities (123) (188)
– Interest related to lease liabilities (377) (372)
Tax paid (355) (214)
Dividends received 2 9
Repayment of capital element of obligations under leases (598) (623)
Own shares purchased for share schemes (54) (93)
Free cash flow 1,750 2,063
Memo (not included in free cash flow definition):
– Special dividend received from Tesco Bank - 250
– Net acquisitions and disposals* (61) (2)
– Property buybacks, store purchases and associated refits, and
disposal proceeds (93) (66)
– Cash impact of adjusting items (55) (98)
* Excluding proceeds from the disposal of the Group’s Banking operations. Refer to Note 8, starting on page 155, for further details.
We delivered another strong year of cash generation, with free cash flow of £1,750m. This is £(313)m
lower year-on-year, primarily due to higher trade working capital balances in the prior year due to
elevated levels of input cost inflation.
There was a working capital outflow of £(45)m this year. We continue to tightly manage our working
capital balances, with the outflow this year reflecting lower trade balances in fuel, driven by fuel
price deflation.
Cash capital expenditure was £(1,392)m, £(103)m higher than last year driven by incremental
investments in expanding our digital platforms, automating our distribution network and refreshing
our UK store estate.
Net interest paid was £60m lower year-on-year, principally driven by the impact of the timing of
refinancing activities in the prior year.
Tax paid was £(141)m higher year-on-year, mainly due to no longer benefiting from tax relief related to
the one-off pension contribution made in 2021, with the balance fully utilised by the end of the prior
year, and the impact of higher adjusted operating profit year-on-year. These increases in cash tax paid
were partially offset by a tax deduction arising on the disposal of our Banking operations.
Within the memo lines shown, the net £(61)m acquisitions and disposals outflow primarily relates
to Booker’s acquisition of Venus Wine and Spirit Merchants PLC. The £(93)m net outflow relating
to property transactions includes the buyback of four supermarkets in the UK, partially offset by
proceeds generated from the sale of mall properties in Central Europe. The cash impact of adjusting
items of £(55)m relates to operational restructuring changes as part of our Save to invest programme,
which were provided for at the end of the prior financial year.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
29.
Governance
Financial review continued
Capital expenditure and space:
UK & ROI Central Europe Group
FY 24/25 FY 23/24
2
FY 24/25 FY 23/24 FY 24/25 FY 23/24
Capex £1,347m £1,201m £110m £113m £1,457m £1,314m
Openings (k sq ft) 311 366 84 87 395 453
Closures (k sq ft) (98) (204) (45) (22) (143) (226)
Repurposed (k sq ft)
1
(235) - (145) (342) (380) (342)
Net space change (k sq ft) (22) 162 (106) (277) (128) (115)
Space in the above table is defined as net space in store adjusted to exclude checkouts, space behind checkouts, customer service desks and customer toilets. The data above excludes space relating to franchise stores. A full breakdown of space by segment is included
in the supplementary information on pages 226 to 227.
1. Repurposed space relates to optimising selling space, such as through the addition of retail partners.
2. Includes £13m relating to the Banking operations disposal group, incurred prior to being classified as held for sale.
Capital expenditure shown in the table above reflects expenditure on ongoing business activities across the Group, excluding property buybacks and other store purchases and their associated refit costs.
We have been pleased with the results of our continued investment in our store estate, including refreshing a total of 463 stores and opening two superstores, 55 Tesco Express stores and seven One Stop
stores in the UK. In ROI, we opened six new large stores and six Tesco Express stores. In Central Europe, we opened 14 new stores.
Our total capital expenditure for the year was £1,457m, £143m higher year-on-year. Our capital expenditure for the year includes investing in our core assets, as well as investing in growth, such as our online
customer proposition, and delivering efficiencies across our operations, including further automation within our distribution and fulfilment centres. We continue to see attractive opportunities to commit
capital to high-returning investments, and expect a similar level of capital investment in FY 25/26.
Statutory capital expenditure for the year was £1.6bn.
Further details of current space can be found in the supplementary information on pages 226 to 227.
Property:
UK & ROI Central Europe Group
Feb-25 Feb-24 Feb-25 Feb-24 Feb-25 Feb-24
Property
1
– fully owned
– Estimated market value £15.4bn £15.1bn £1.6bn £1.8bn £17.0bn £16.9bn
– Net book value £15.3bn £15.2bn £1.3bn £1.5bn £16.6bn £16.7bn
% store selling space owned 58% 58% 64% 68% 59% 60%
% property owned by value
2
60% 59% 55% 65% 60% 60%
1. Stores, malls, investment property, offices, distribution centres, fixtures and fittings and work-in-progress. Excludes joint ventures.
2. Excludes fixtures and fittings.
The estimated market value of our fully owned property as at the year-end increased by £0.1bn to £17.0bn. In the UK & ROI, we saw an increase of £0.3bn due to a combination of our refit and remodelling
programmes. In Central Europe, we saw a decrease of £0.2bn, predominantly reflecting the sale of malls. The market value represents a surplus of £0.4bn over the net book value.
Our Group store selling space ownership percentage was 59%, marginally down year-on-year driven by the sale of malls in Central Europe, which more than offset property buybacks in UK & ROI.
Tesco PLC Annual Report and Financial Statements 2025
30.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Governance Financial statements Additional information
31.
We’ve built sustainability into our purpose, strategy and business
plans. We know that our business depends on the world around us.
As the UK’s leading food retailer, we know we can make a big difference.
Our commitment to operating in a responsible and sustainable way
reflects our beliefs and values.
Sustainability
Making a positive…
Since 2015 we’ve reduced Group
Scope 1 and 2 emissions by
65%
We aim to be carbon neutral across
our own operations by
2035
Impa t.
Planet.
We recognise we have a
responsibility to play our part
to address the impact the food
system has on climate and nature,
as part of our core purpose to
serve our customers, communities
and planet a little better every day.
Our planet plan brings together our key areas
of activity under six pillars and reflects
the interdependencies of the food system
and the natural environment.
This includes work to improve the sourcing
of our products, how we run our stores and
transport, helping our customers eat more
healthily, how we’re tackling waste across
the food value chain, and addressing some
of the nature and biodiversity impacts the
food system has at a landscape level.
Sustainability
The pillars of our planet plan
Improve our products
Reduce the environmental
impact of the things we sell
Decarbonising transport
Reduce emissions created
when we move our products
Reduce store emissions
Minimise emissions from
our stores and centres
Support sustainable
consumption
Help customers switch to
healthier, more sustainable food
Eliminate waste
Reduce food waste and packaging
from production through to our
customers’ homes
Protect nature
Work with nature to restore
habitats, protect water and
increase biodiversity
Our plan is centred on our commitment to
reaching net zero across our full value chain by
2050, validated in line with the Science-Based
Targets Initiative’s (SBTi) pathway for limiting
global warming to no more than 1.5°C average
above pre-industrial levels, and the economic
longevity of our business relies on the health,
resilience, and adaptation of our supply chains.
Our stakeholders continue to expect our
business to demonstrate urgent, credible
leadership and collaboration across the food
industry to achieve net zero. We’ve made
good progress in a number of areas this year
but continue to call for the right regulatory
frameworks from governments across our
markets in order to help us drive the
transformational change needed.
Improve our products
Covering the production of all our products,
from raw material extraction and agriculture to
logistics and manufacturing, this pillar comprises
the largest emissions hotspots across our value
chain, at around 50%.
Our British farmers play a pivotal stewardship
role when it comes to our natural environment
and will play a key part in helping us reach our
climate and nature goals. We continued to
strengthen our relationships with our farmers
and suppliers, through the launch of a new
Tesco Sustainable Farming Group for pigs.
The group benefit from a combination of cost
of production and market price+ incentives,
giving producers greater stability in pricing,
and help to support longer term investment.
We also launched a groundbreaking sustainability
partnership with our milk suppliers, Arla and
Müller UK and Ireland, with the aim of uniting
the dairy industry to accelerate reduction
of emissions, protecting and restoring nature
and commit to higher animal welfare standards.
Informed by feedback from over 300 farmers,
our Greenprint for UK Farming report set out
a number of recommendations to government
and the wider industry to secure a sustainable
future for the sector. We committed to
supporting the industry to implement clearer
sustainability requirements and standards, and
to work with farmers to simplify and standardise
data collection. We’ve also launched two low
carbon concept farms in our UK supply chain
to trial new technologies and share learnings to
scale the adoption of sustainability innovations.
We continue to work with our global supply base
to ensure all our global produce suppliers that
supply into the UK are LEAF Marque Certified
by the end of 2025.
Tackling deforestation in animal feed supply
chains remains a key priority in this pillar, and
we continue to work on the implementation
of the delayed EU Regulation on Deforestation-
free Products (EUDR), starting with our
EU-based businesses.
Decarbonising transport
Transport comprises around 47% of our
operational (Scope 1 and 2) emissions. We’re
working to switch all our fleets to low-carbon
alternatives by 2035, where possible, based
on available market solutions.
As we continue to decarbonise our transport
network, we’ve introduced a further 150 electric
home delivery vans to our Tesco fleet in the UK
this year. We also launched our 10th rail service,
serving the North West of England. We’re now
moving a total of 300 million cases of goods
a year across the country by the Tesco rail
network rather than by lorry.
Read more in our Sustainability Report.
Reduce store emissions
We continue to work towards reaching our goal
of carbon neutral operations by 2035. We’re
now using the latest AI technology to identify
and repurpose heat from refrigeration systems
to lower our energy use and saving energy
by installing doors on fridges in more than
100 of our large stores.
We’ve also continued our programme of securing
more directly sourced renewable electricity.
In October 2024, we signed a new power
purchase agreement with Cleve Hill Solar Park
in Kent. The site will produce enough solar energy
to power the equivalent of 144 large stores every
year – up to a tenth of our total electricity
demand in the UK.
A further deal with Stranoch windfarm in Scotland
will add green electricity for the equivalent of 80
average-sized supermarkets when it is scheduled
to become operational in 2026.
Support sustainable consumption
It’s essential we integrate health and sustainability
on this journey. Our goal is to make Tesco the
easiest place for customers to find healthy,
affordable, and sustainable food. This involves
encouraging customers to consume more
seasonal fruits, vegetables, and alternative
plant-based proteins such as legumes and cereals.
32.
In 2021, we set a target to increase the
proportion of healthy products sold to 65%
of total UK and ROI sales by the end of 2025.
We’ve made good progress, with 64% of
products now meeting the UK Government’s
Nutrient Profile Model (NPM).
Eliminate waste
This pillar addresses both food waste and
packaging, emphasising the need to minimise
both for a sustainable future. We aim to reduce
food loss across the entire supply chain by 50%
by 2030. Our food waste hierarchy guides our
plans, covering end-to-end food waste reduction,
including increasing food redistribution both
through our charity partners and also colleagues.
We’ve partnered with FareShare since 2012 to
redistribute surplus food from our stores and
distribution centres, preventing food waste.
This year, we hit a milestone by redistributing
the equivalent of over 250 million meals to
charities nationwide.
Following challenges in our food waste
operations in 2023/24, we worked with
engineering company RenEco to establish a new
facility to turn surplus food into animal feed.
The site in Northamptonshire will un-pack food
and transform it into a pulp or crumb to feed
to animals. The focus of the operation will be
on bakery and fresh produce. Through an
additional, separate process, meat and fish
surplus will also be used in household pet food.
We’re keeping up momentum on our drive to
reduce plastic use, removing more than two
billion pieces of plastic from our stores and supply
chain, including moving our Own Brand oats and
pasta ranges from plastic to paper packaging.
Protect nature
The food system relies on healthy soils, clean
freshwater, and thriving pollinator populations.
We are collaborating with our suppliers to adopt
a landscape-based approach, transforming our
supply chains holistically to achieve lasting
environmental benefits for both climate
and nature.
We’ve expanded our Nature Programme with the
launch of two new partnerships to help protect
and restore nature in key UK sourcing regions.
Our partnership with Forestry England will
contribute to restoring nature in Neroche,
Somerset, a key sourcing region for Tesco, by
increasing the diversity and abundance of wildlife
across the area and provide valuable insight into
how large-scale nature restoration can aid
sustainable food production.
Our partnership with the Royal Society for the
Protection of Birds (RSPB) will provide dedicated
conservation and habitat advisory support
to farmers in Tesco’s supply chain. Nature-
friendly farming will help boost farmland
resilience to climate change, provide improved
protection against extreme weather, and
enhance biodiversity.
Spotlight on:
72%
of farmers we surveyed want to
do more to make their farms
environmentally friendly.
Planet.
UK Agriculture
As the biggest customer of UK agriculture, bringing our customers healthy,
affordable and sustainable food wouldn’t be possible without our farmers
and producers.
In the last year alone, we’ve seen unprecedented flooding and unpredictable
weather patterns disrupt the typical farming calendar, while inflation has put
pressure on the price of inputs, including energy, fertiliser and animal feed.
If we’re to deliver on our climate and nature goals, we need to support the
sector, so we asked our farmers where they need support. More than 300
farmers shared their experiences and views at agricultural shows across the
country, as well as at an in-depth roundtable discussion with farmers across
our arable, livestock and fresh produce supply chains.
A Greenprint for UK Farming report
Informed by these discussions, in January 2025, we
published our Greenprint report for UK farming, alongside
our partners at Harper Adams University’s School of
Sustainable Food and Farming.
Our report sets out recommendations across several key
areas, including a long-term vision for the sector, the need
for government to better support UK farmers through a
long-term land use and food security strategy; improved
funding for all stages of innovation that aids sustainability;
and setting common environmental standards which
farmers can regularly measure against to help prioritise
investment in the most effective and sustainable
farming techniques.
At the same time, we committed to continue to support the
industry to implement clearer sustainability requirements
and standards; working with farmers to simplify and
standardise data collection; and exploring new models and
incentives that could help farmers manage investment risk.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Governance Financial statements Additional information
33.
Governance
Nature.
As a food retailer, we rely on
healthy soils, clean, fresh water
and thriving pollinator populations
to help produce our food.
However, the global food system
is one of the leading contributors
to nature and biodiversity loss.
It’s vital we play our part in
protecting nature in at-risk
landscapes including forests,
freshwater catchments and
marine environments.
Our work includes action in our supply
chains to reduce the impact key products
and commodities have on our natural world,
as well as landscape-level efforts to increase
biodiversity, manage water resources
responsibly and avoid polluting waterways,
protect natural habitats including peatland
and improve soil health.
Given the interconnectedness between the
climate and nature crises, we continue to strive
for a nature-led transition to net zero. Our
planet plan reflects this, with a pillar of work
focused on protecting and restoring nature.
Taskforce on Nature-related
Financial Disclosures (TNFD)
The TNFD framework aims to provide a framework
for organisations to report on risks from
biodiversity loss and ecosystem degradation.
The information below is designed to show our
progress towards alignment with the framework,
setting out our work so far on nature-related
governance, strategy, risk and impact
management, and metrics and targets. It also
outlines the steps we have taken this year to
complete the LEAP (locate, evaluate, assess
and prepare) process, pioneered by TNFD.
Governance
We have a comprehensive climate governance
framework encompassing the Board, its
associated Committees, and the Executive
Committee. This governance framework includes
all pillars of our planet plan, including the Protect
Nature pillar, and reflects our holistic approach
to achieving a nature-led net zero.
See our Annual Report governance
section starting on page 52.
Strategy
The food system has a central role to play in
protecting and restoring nature. Building on our
initial work to understand our nature-related
risks, impacts and dependencies, and to
further refine our strategy in this area, we have
continued our work on mapping our direct
operations and our most at risk supply chains
through the TNFD’s LEAP assessment. Learning
from the two TNFD pilot projects in our soy and
palm oil supply chains from last year, the scope
of our LEAP assessment has evolved to include
more of our high-risk commodities material to
the Science Based Targets Network’s (SBTN)
High Impact Commodity List, and most
meaningful to our business.
Using the initial outputs of the LEAP process and
the TNFD pilot projects, we are continuing to
map our supply chains across key sourcing
regions to gain a more comprehensive view
of the nature-related impacts, risks and
opportunities in our supply chain beyond our
key high-risk commodities. The ongoing analysis
will be used to inform our sourcing strategies and
direct our focus in nature restoration projects.
We have continued to make progress on
protecting and restoring nature through the
development of our Nature Programme which
focuses efforts on five key areas of action:
protecting nature in key sourcing landscapes,
both in the UK and abroad; scaling industry
leading innovations to support biodiversity;
implementing a nature plan across our own
estate and operations; continuing to lead the
industry on research into key challenges facing
nature and the food system; and playing a
leading role in cross sector engagement.
Risks and impacts
We will continue to act on recommendations
from the TNFD LEAP process including integrating
nature-related risks and opportunities into
existing risk management processes.
This will include leveraging enhanced due
diligence programmes to manage nature loss
and impacts on communities; and implementing
targeted training and audit programmes for
environmental targets for commodities and
locations where biodiversity impact is high.
Building on our initial work
to understand our nature-
related risks, impacts and
dependencies, and to further
refine our strategy in this area,
we have continued our work
on mapping our direct
operations and our most
at-risk supply chains through
the TNFD’s LEAP assessment.
Sustainability continued
Zero
We continue to strive for
a nature-led transition to net
zero. Our planet plan reflects
this, with a pillar of work
focused on protecting
and restoring nature.
34.
Restore.
Nature programme
We launched our nature programme in November 2023,
with the ambition to protect and restore nature across our
supply chains and key sourcing landscapes, alongside our
suppliers and partners. This year, we launched a
partnership with Forestry England which will contribute to
restoring nature in Neroche, Somerset, by increasing the
diversity and abundance of wildlife across the area, while
providing valuable insight into how large-scale nature
restoration can aid sustainable food production.
We also launched a partnership with the RSPB which will
provide dedicated conservation and habitat advisory
support to farmers in our supply chain in East Anglia, a key
sourcing region for us. Habitat transformation can improve
biodiversity, boost productivity, and provide improved
protection against extreme weather caused by climate
change, such as drought and flooding. The project will
enable the scaling-up of existing RSPB programmes to
support biodiversity and address the impact of agriculture
on nature.
Metrics and targets
For our key forest risk commodities such as soy
and palm, we are committed to sourcing only
from verified zero deforestation and conversion
free areas by the end of 2025.
We continue to provide significant multi-year
funding for vital water stewardship work across
the UK, alongside organisations like the Wye and
Usk Foundation and Norfolk Rivers Trust. We
have encouraged key suppliers to match our
ambition on achieving Waste and Resources
Action Programme’s (WRAP) Courtauld 2030
Water Roadmap, which aims to source 50%
of the UK’s fresh food and drink from areas of
sustainable water management by 2030. This
funding also supports nature-related outcomes
in catchments across Spain, Kenya, South Africa,
and Ica in Peru.
We continue to provide significant
multi-year funding for vital water
stewardship work across the UK,
alongside organisations like the
Wye and Usk Foundation and
Norfolk Rivers Trust.
Spotlight on:
In 2023
we launched our nature
programme with the ambition
to protect and restore nature
across our supply chains and
key sourcing landscapes.
Strategic report Governance Financial statements Additional information
35.
Task Force on Climate-related Financial Disclosures
TCFD.
Climate-related financial disclosures
We have disclosed a TCFD statement since
2019 and have now met the full disclosure
requirement for four years consecutively. This
year, we have integrated the TCFD content
across the Annual Report (see the TCFD content
finder on the left of this page), providing further
detail on the actions underpinning our planet
plan and work to build a resilient supply chain.
Our sustainability efforts continue to focus on
our ability to create and preserve long-term
value for our customers, colleagues,
shareholders, the planet and the communities
we serve.
Governance
We have a comprehensive climate governance
framework encompassing the Board, its
associated Committees and the Executive
Committee. This governance framework
includes all pillars of our planet plan, reflecting
our holistic approach to becoming a net zero
business. In addition to climate-related issues,
the governance framework also encompasses
food waste, sustainable agriculture, nature,
healthy sustainable diets and packaging.
Further information on climate governance
can be found on pages 43, 61 to 63 and 77.
Strategy
We understand that our best strategy to mitigate
our main climate risks is to become a net zero
business across the whole Group, entailing fast,
large-scale, and effective decarbonisation of our
operations and our supply chain. In 2023 we
became one of the first companies globally to
gain SBTi validation for our net zero targets on
all greenhouse gas emissions, including those
originating from forests, land and agriculture
(FLAG) emissions, aligned with a 1.5°C pathway.
Our targets include stretching interim
commitments to reduce absolute Scope 1 and 2
emissions from our own operations by 85% by
2030 from a 2015/16 baseline year, and a
voluntary target to achieve net zero on Scopes 1
and 2 by 2035, 15 years ahead of our SBTi
validated target. To date, we have reduced our
Scope 1 and 2 emissions by 65% vs our 2015/16
baseline. On Scope 3, our target includes a 55%
reduction by 2032 from a 2019/20 baseline on
emissions from energy and industrial sources,
and absolute Scope 3 emissions from FLAG
emissions by 39% by 2032 from a 2019/20
baseline year. Ultimately, we will reach net zero
across all scopes by 2050 via a reduction of
72% of FLAG emissions, and 90% on Scope 3
non-FLAG emissions. Residual emissions will be
neutralised in line with the SBTi guidance.
According to the strategic and rounded
approach proposed in the Transition Plan
Taskforce framework, businesses should not only
focus on their own net zero targets, they should
also work on building adaptation and resilience
to the effects of climate change, and drive
industry system change.
Governance
Board-level
strategic oversight
Executive Committee
Audit
Committee
Sustainability
Committee
Planet committee
Group operational
decarbonisation
steering group
(Scope 1 & 2)
Planet steering
group (Scope 3)
ESG reporting and
disclosure group
Management-level
implementation
and compliance
TCFD content finder
Governance
Board oversight of climate risks and
opportunities pages 61 to 63 and 77
Management’s role in assessing and
managing climate-related risks and
opportunities page 43
Strategy
Climate-related risks and opportunities
identified over the short, medium and
long-term and their impact on Tesco’s
businesses, strategy and
financial planning pages 48 and 49
Strategic resilience taking into account
different climate-related scenarios
pages 48 and 49
Risk management
Processes for identifying, assessing and
managing climate-related risks page 64
How they are integrated into the
organisation’s overall risk management
pages 41 and 81
Metrics and targets
Climate-related metrics and targets
page 38
Greenhouse gas emissions and
related risks page 39
T
Content elsewhere in the Annual Report
that relates to TCFD is indicated with
this icon
Tesco PLC Annual Report and Financial Statements 2025
36.
Our performance
against our targets
this year is:
65%
emissions reduction in Scope 1
and 2 versus 2015/16 baseline
100%
of electricity procured from
renewable sources
13%
of dotcom delivery van fleet
is now electric
Our planet agenda categorises work across
six different areas and includes a number of
initiatives as we work towards the targets
validated by the SBTi. Pages 32 and 33 describe
the planet plan in detail. Below is an overview of
the main decarbonisation initiatives within the
six pillars of our planet plan, and progress to date.
While our Scope 1 and 2 emissions may represent
a small proportion of our footprint, it is the
area over which we have full control and are
therefore, with the right planning and capital
allocation, able to deliver at pace.
Decarbonise transport
Transport comprises around 47% of our
operational (Scope 1 and 2) emissions. That
is why we are working to switch all our fleets to
low-carbon alternatives by 2035 where possible
based on available market solutions. As part of
our EV100 pledge, we have now deployed
720 electric home delivery vans and are on track
to be 100% electric by 2030. We’re also trialling
alternative fuels, such as Hydrogenated Vegetable
Oil (HVO), which has up to 90% less emissions
compared to diesel. In March 2025, we started
introducing HVO to all trucks based at our
Thurrock distribution centre. Our Best Food
Logistics team have also partnered with clients
to trial HVO.
Reduce store emissions
In 2020, we reached our RE100 commitment
to source 100% renewable electricity 10 years
ahead of our 2030 target. We designed our
strategy to ensure we increasingly source our
electricity directly via on-site generation and
onsite/offsite power purchase agreements
(PPAs), going beyond renewable energy
certificates to help boost domestic renewable
capacity in the markets we serve. We are
committed to onsite and offsite renewable
generation supplying 60% of our electricity
demand by 2030. We have announced multiple
energy projects, helping us source green
electricity directly from windfarms and solar
parks across the UK. With the addition of Cleve
Hill and Stranoch to our existing portfolio, the
contracted output from our PPAs could cover
41% of Tesco UK or 32% of Group expected FY 26
electricity demand. Addressing remaining store
emissions, we are switching away from our
depreciated HFC refrigerant systems to
recovered CO
2
systems. In the UK, 137 stores
were transitioned to CO
2
systems in 2024/25.
To replace gas boilers, we are trialling air source
heat pumps and heat reclaim systems across
the UK, ROI and Central Europe. In the UK, gas
boilers were transitioned to heat pumps in
16 stores in 2024/25.
Scope 3 represents over 98% of our Group
emissions and we are therefore focused on how
we can drive and advocate for change to deliver
net zero and build resilience along our value chain.
Improve our products
Agriculture makes up around 39% (FLAG
emissions as defined by the SBTi) of our whole
footprint, making it the single biggest contributor
to our end-to-end value chain emissions.
We are taking a whole landscape, systems-based
approach to supporting the sector’s transition,
using common standards to drive better
land management practices and improve
the overall resilience and productivity of our
agri-food systems.
For example, the following projects have
launched or continued to develop in the
past 12 months:
– We continue to collaborate and facilitate
shared learnings through our Sustainable
Farming Groups. We relaunched our
Sustainable Pig Group which supports our
British farmers and suppliers by providing
stable pricing and helping support longer-term
investment. Financial incentives and long-term
contract options are an important element
of our sustainable farming groups, giving our
farmers the confidence to plan and invest
in their businesses to become low carbon.
– We launched the Future Dairy Partnership with
suppliers Arla and Müller UK & Ireland, and all
400 Tesco Sustainable Dairy Group farmers,
to accelerate sustainability measures in our
dairy supply chain and beyond.
– We continue to require all produce supplied to
our UK stores to be LEAF Marque certified by
2025, and have 457 more overseas farms that
supply us certified compared to last year.
– We supported with Soil Association Exchange
and other businesses in the arable supply
chain, to launch the Exchange Market. This
initiative will reward British farmers for
reducing emissions in arable agriculture.
– We also announced the launch of two
low-carbon farms to trial solutions and
bridge the gap between the net zero
research and farms.
Deforestation and conversion in animal feed
supply chains is a significant source of emissions
associated with sourcing our products. We will
apply the upcoming EU due diligence legislation
across the Group to obtain the transparency
we need to verify our supply chains as
deforestation-free. Simultaneously, we are
working towards our voluntary target as a
signatory to the UK Soy Manifesto which goes
beyond legislation to exclude conversion from
our Own Brand supply chains by December 2025.
Reaching net zero will require industry-wide
efforts and shared accountability right through
the supply chain, so we are working with our
suppliers to help and encourage them to set
their own climate targets. To support our
strategic ambition, we have asked all UK
suppliers to set an SBTi-aligned net zero target
and to begin measuring and reporting their
carbon footprint. By the end of 2024, 194 of our
key suppliers committed to net zero ambitions.
Eliminate waste
Based on a 2022 survey on-farm food loss
represents over 25% of the UK’s total food
loss and waste. Tackling food waste can deliver
benefits across the supply chain, through more
efficient operations. We manage bumper crops
at certain times of the year through great value
offers for our customers. For example, in 2024,
the sudden arrival of warmer weather after a
cold and wet spring and early summer start
quickly brought on a crop flush of British
strawberries. As a result of the surplus,
we bought an extra few hundred tonnes of
British-grown strawberries and put one kilo
punnets on sale for £4.50, and 400g punnets
for the Clubcard price of £1.90. The regular
price for a 400g punnet at the time was £2.50.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Governance Financial statements Additional information
37.
Risks and opportunities modelling
We continue to use scenario modelling to help
inform our understanding of the most material
climate-related risks and opportunities. Our
approach is to combine the latest scientific
research with a wide range of internal
information including financial forecasts, climate
footprint, locations of Tesco operated facilities
and supply chain information.
Five warming scenarios were modelled, covering
>4°C, 3°C, 2.5°C, 2°C and 1.5°C pathways. These
pathways are based on the Intergovernmental
Panel on Climate Change (IPCC) Shared
Socioeconomic Pathways and allow us to assess a
wide range of climate possibilities. Our disclosure
incorporates the 1.5°C pathway, aligned to the
Paris Agreement and our stated targets, and a 3°C
pathway aligned to the current warming pathway
as reported by the IPCC, to ensure we cover the
range of possible evolutions. We continue to
quote the costs or financial value at risk as a
range, reflecting the uncertainties of climate-
related modelling and our resulting reliance on
assumptions. Unless stated, our modelling
assumes just the downside risk, using our current
product range, sourcing and asset base with no
mitigation or strategic response to minimise the
risk. The risk values disclosed are based on our
scenario modelling completed in 2024 and
therefore remain consistent with the prior year.
This reflects that there have been no material
changes in our business operations nor
to the underlying climate modelling assumptions.
Future scenario modelling will be carried out in
line with regulatory requirements.
Further information about our principal
risks and uncertainties, including our TCFD
risks and opportunities, can be found on
pages 40 to 49.
Metrics and targets
Metrics are used to identify opportunities for decarbonisation initiatives, including assessing progress
in decarbonising owned assets to understand where and when plans could be accelerated.
In recognition of how critical sustainability is to our business success, our 2025 Performance Share
Plan (PSP) continues to incorporate sustainability metrics including those for Scope 1 and 2 emission
reduction. For more information on the sustainability metrics included within our PSP, see page 95.
Metric 2024/25 2023/24 Target
Emissions reduction in Scope 1 and 2 vs
2015/16 baseline
65% 61% (85)% FY 2030, (90)% FY 2035
EV100 – % of delivery van fleet that is
electric
13% 11% 100% by 2030
% of electricity from renewable sources 100% 100% 100%
Proportion of generated volume from onsite
and offsite PPAs, as a percentage of energy
consumption at a Group level
19% 11% 45% by December 2025 and
60% by December 2030
To support the delivery of our decarbonisation plans, we continue to apply our internal carbon price
(ICP). This will ensure that any strategic decisions such as potential new stores, business acquisitions
and divestments, or other decisions which would give rise to changes in the level or classification of
our emissions are identified at the earliest opportunity and mitigated accordingly. The price will be
reviewed annually and governed by the Group operational decarbonisation steering group.
Metrics supporting our Scope 3 target include:
Metric 2024/25 2023/24 Target
Percentage volume of palm oil physically
certified to RSPO standard
100% 100% 100% RSPO segregated by
December 2025
Percentage of soy used in animal feed
that meets our UK Zero Deforestation Soy
Transition Plan requirements
100% 100% 100% verified deforestation
and conversion-free by
December 2025
Percentage of paper/wood products
certified to FSC, PEFC or from a recycled
scheme
100% 100% 100%
Percentage weight of all Own Brand
packaging that is recyclable:
(i) at kerbside
87% 86% Our packaging will be fully
recyclable by 2025
(ii) additionally at UK collection points
including large supermarkets
99% N/A
Details of the methodologies for the above metrics and further information on our progress against
these targets can be found at www.tescoplc.com/sustainabilityreport2025. We continue to review
our targets and metrics and focus on disclosing recognised cross-industry metrics where these align
to the risks and opportunities we identify.
TCFD continued
Support sustainable consumption
One of the most impactful ways to reach a net
zero food system is to shift demand towards
more sustainable choices, including diverse
proteins, fruit and vegetables. Our approach
to healthy sustainable diets is well established,
seeking to make a better balanced diet easy,
affordable and enjoyable through actions
including product reformulation, promotions,
pricing and strengthening of our plant-based and
healthier ranges. We are committed to leading
the plant-based market with a competitive and
compelling range of meat and dairy alternatives.
We have an innovation programme across the
Group which looks to identify and scale future
healthy and sustainable ingredients and
processes. This work includes global innovation
and technology scanning, working with our
established supplier partners, business-to-
business ingredient suppliers and new suppliers.
We offer great value fruit and veg across all our
core value propositions, including Aldi Price
Match, Fresh 5 and Clubcard Prices. Our ‘better
baskets’ campaign is designed to help and
inspire customers to make healthier and more
sustainable choices. We have learnt that
customers respond to helpful nudges at point
of purchase, so we have created better basket
zones in our larger stores and online which
signpost better choices.
Protect nature
It is important to consider the risks that climate
change and nature loss simultaneously pose
to our supply chain resilience, as we recognise
the interconnectedness between nature and
climate. Our work involves six focus areas
identified through Taskforce on Nature-related
Financial Disclosures (TNFD) and the Science
Based Targets for Nature (SBTN) frameworks:
protecting and restoring habitats, protecting
species, supporting sustainable freshwater use,
preventing freshwater pollution, improving soil
health and improving air quality.
Find out more about the work we are
doing to protect nature on page 34.
Tesco PLC Annual Report and Financial Statements 2025
38.
Next steps
On Scope 1 and 2 we plan to continue rolling out efficiency measures like installing doors on fridges; low
carbon asset replacement for refrigeration; and heat pump installations in FY 25/26. We will introduce
HVO and explore bio-CNG in our largest trucks as interim solutions to reduce emissions as quickly as
possible on the way to net zero. We also continue to expand our Dotcom fleet electrification. On Scope 3,
we are working to improve our emissions reporting. We have identified our top suppliers by emissions and
will continue to support and accelerate their decarbonisation transition. We are focusing on establishing
joint plans, collective sharing of insights, innovation and best practice, and regularly reviewing progress
against key measures.
Our total emissions footprint
73.1m
tCO
2
e/year
Scope 1
Refrigerants, HVAC, transport (logistics) 1.1%
Scope 2
Purchased electricity 0.01%
Scope 3
Purchased goods and services
(including deforestation) (Cat 1) 48.3%
Fuel- and energy-related activities (Cat 3) 5.2%
Upstream transportation and distribution (Cat 4) 2.3%
Downstream transportation and distribution (Cat 9) 6.4%
Use of sold products (Cat 11) 34.8%
End-of-life treatment of sold products (Cat 12) 0.7%
Investments (Cat 15) 0.4%
Capital goods, waste generated in operations,
business travel and employee commuting, and
processing use of sold products (Cat 2, 5, 6, 7, 10) 0.7%
Our total footprint has been calculated using Scope 1 and 2 emissions from 2024/25 and Scope 3 based on 2022/23. Our net zero
validated targets are based on the SBTi scope which excludes certain emissions like emissions from cooking the food purchased
in our stores or consumers driving to our stores. Our total 2022/23 emissions within SBTi scope were estimated at 58.9 million
tCO
2
e per year. We report on the categories that are material to Tesco based on their contribution to our end-to-end footprint.
Upstream leased assets (category 8) are not singled out as a separate category as any emissions coming from leased buildings are
already incorporated into our operational footprint. All other categories not included, such as: downstream leased assets
(category 13); and franchises (category 14), are irrelevant for our sector and the scope of our business.
Greenhouse gas emissions and energy consumption*
2024/25 2023/24 2022/23
Base year
2015/16
Scope 1 (tonnes of CO
2
e) 802,425
◊
902,830 1,039,346 1,240,871
Scope 2
(a)
Market-based method (tonnes of CO
2
e) 5,497
◊
6,259 7,796 1,095,671
Location-based method (tonnes of CO
2
e) 582,298
◊
587,899 575,462 1,657,316
Total Scope 1 and 2 market-based (tonnes of CO
2
e) 807,921
◊
909,089 1,047,142 2,336,542
Scope 1 and 2 carbon intensity (kg CO
2
e/sq.ft. of
stores and DCs) 9.25
◊
10.33 11.91 26.29
CO
2
e saved from exporting renewable energy to the
National Grid (tonnes of CO
2
e) 398 194 281 –
Total annual energy consumption (GWh) 5,420 5,511 6,000 6,823
UK only total Scope 1 and 2 market-based (tonnes
of CO
2
e) 699,447 772,944 888,676 1,751,572
UK only Scope 1 and 2 carbon intensity (kg CO
2
e/per
sq.ft. of stores and DCs) 10.65 11.47 13.88 26.29
UK only annual energy consumption (GWh) 4,549 4,368 5,037 5,502
* For both energy and emissions data, we have included all major subsidiaries within Group measures and have included all
UK-based subsidiaries in our consolidated UK disclosures.
◊ We engaged Deloitte LLP to provide independent limited assurance over the GHG emissions data highlighted in the above table
with a ◊ using the assurance standards ISAE (UK) 3000 and 3410. In addition, Deloitte have also assured selected categories of our
Scope 3 footprint to the value of 531,254 tonnes of CO
2
e. Deloitte has issued an unqualified opinion over the selected data.
Deloitte’s full assurance statement is available at: www.tescoplc.com/sustainabilityreport2025.
Our method statement can be accessed at: www.tescoplc.com/sustainabilityreport2025. We use the market-based method for
calculating Scope 2 emissions for our total emissions to account for our efforts in generating and purchasing low-carbon energy.
The location-based method is provided for disclosure only and all intensity, net and gross emissions shown are calculated using the
Scope 2 market-based method.
Compliance statement
Tesco PLC has complied with all of
the requirements of UKLR 6.6.6R
by including climate-related
financial disclosures in this
section (and in the information
available at the locations
referenced therein) consistent
with the TCFD recommendations.
Tesco PLC has also complied with
all reporting requirements under
sections 414CA and 414CB of the
Companies Act 2006 consistent
with the CFD requirements.
Deloitte’s assurance
Deloitte has provided independent third-party limited
assurance in accordance with the International Standard
for Assurance Engagements 3000 (ISAE 3000 revised) and
Assurance Engagements on Greenhouse Gas Statements
(ISAE 3410) issued by the International Auditing and
Assurance Standards Board (IAASB) over the TCFD on
pages 36 to 39 and selected metrics highlighted in
this report with a ◊. Items marked with a
T
throughout
the Strategic Report and Corporate Governance sections
of the Annual Report are also included within the
scope of Deloitte’s limited assurance. Deloitte’s full
unqualified assurance opinion, which includes details
of the selected metrics assured, can be found at
www.tescoplc.com/sustainabilityreport2025.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Governance Financial statements Additional information
39.
Risk identification
& assessment
Risk appetite
Clear
governance
Policies, procedures
& controls
Culture &
Leadership
Communications
& training
Investigations
& follow up
Data
Monitoring
& auditing
C
o
n
t
r
o
l
s
A
s
s
u
r
a
n
c
e
R
i
s
k
2
3
4
5
6
7
8
1
Principal risks and uncertainties
Managing
our risks.
Effective risk management is core
to our management practices
which help deliver our strategy
and our commitments to our
customers, community, and
the planet.
We are focused on conducting our business
responsibly, safely, and legally, while making
risk-informed decisions when responding
to opportunities or threats that present
themselves. The Board and Executive
Committee are responsible for the effective
management of risk across the Group, and we
manage our risks in line with the risk appetite
set by the Board.
Risk management framework (RMF)
The diagram to the right, provides an overview of
our framework defining Tesco’s risk management
process and governance. Our RMF continues to
be embedded throughout the organisation
enabling us to clearly identify, prioritise, respond,
and monitor our most significant risks and
emerging risk themes. Our RMF supports
decision making, with culture and leadership
being at the heart of our framework, including
a clear tone from the top on the importance of
risk management. Our colleagues play a vital role
in carrying our culture forward through their
commitment to our shared values on risk
management. We provide regular learning
opportunities to strengthen our colleague
awareness on various risks and controls, for
example providing appropriate training to help
prevent cyber-security incidents, as well as
communicating the opportunities and
safeguards while using artificial intelligence tools.
Top down
Bottom up
Board
Audit Committee
Group Chief Executive
and Executive Committee
Group risk and
compliance committee
*
Business and functional
leadership team
Governance Risk control assurance methodology
Risk management framework
Principal risks are significant risks that could affect our strategic ambitions, future performance, viability, and/or reputation.
Full disclosures of these risks is included on pages 42 to 47.
* In addition to the Group risk and compliance committee, there are other internal stakeholder risk committees (e.g. cyber and privacy risk committee, planet committee).
Tesco PLC Annual Report and Financial Statements 2025
40.
Risk
A complete view of our risk universe starts
with the analysis of our business, the external
environment within which we operate,
the regulatory landscape and our internal
operations. This includes the impacts on our
strategy, initiatives, governance and processes.
We use a consistent assessment criterion to
identify and prioritise risks at the Group,
business unit and functional level, along
with horizon-scanning for emerging risk
themes. The identified risks are categorised
into one or more of the following risk types:
strategic; change; operational; finance; or
compliance. This enables effective
governance and monitoring of the risks.
T
Management assesses the risks on a continuous
basis, taking into account the risk to Tesco’s
strategy, our colleagues and our operations,
as well as our impact on society and the
environment. There is regular formal oversight
through clearly defined governance structures,
e.g. the cyber and privacy risk committee
oversees the various elements of cyber security
and data privacy risks. During the year, we
have further strengthened and formalised our
approach to risk appetite. The objective of this
initiative is to strengthen the overall risk culture,
embedding behaviours that drive informed
decision-making across all business operations.
Controls
A strong risk and controls culture forms the
foundation of our RMF, with responsibilities
shared across all management levels and
oversight by the Board, which actively engages in
risk discussions. The Audit Committee annually
assesses RMF effectiveness, focusing on
emerging and principal risks, while the Group risk
and compliance committee oversees key risks on
behalf of the Executive Committee. For further
details refer to the Corporate governance
section on pages 61 to 64.
For risks where our risk appetite is low,
we take a robust approach to determine
appropriate controls and responses.
For these risks (typically regulatory and
compliance risks) we have established
policies and blueprints to guide the
business in managing the risks. These risks
are monitored formally by one or more of
our various governance bodies, such as
our Group risk and compliance committee,
as well as by the Audit Committee. For
other risks, which are typically strategic,
pervasive, or dynamic in nature, the
controls and responses are determined
on a case-to-case basis in line with the
strategic goals of the organisation. Our
approach to risk appetite provides the
framework to consistently respond to
risk and establish boundaries for coherent
risk decision making. This element of the
risk management framework has been
enhanced during the current year, to
align our risk appetite approach and
adopt this consistently.
T
We provide continuous training programmes
to equip our colleagues with updated skills and
knowledge, driving innovation and adaptability.
Investigations and follow-up ensure that control
deficiencies or irregularities are promptly
identified, analysed, and addressed to prevent
recurrence. This process strengthens our overall
control environment by promoting accountability
and mitigating risks.
Assurance
Group Audit undertakes assurance activities
including regular risk based internal audits
driven by the annual internal audit plan which is
reviewed and approved by the Audit Committee.
The internal audit plan is aligned to principal risks
and remains under review and subject to change,
to reflect any updates to the risk profile through
the year. The Audit Committee reviews and
approves all changes to the audit plan and
receives regular updates on the outcome of the
work performed. Further, second-line functions
such as finance controls, ethics and compliance
and safety systematically test key processes and
controls established by management to mitigate
risks. The work of second-line functions is
subject to review by internal audit on a cyclical
basis. Data-driven assurance activities support
the decision-making process, thereby improving
the accuracy and reliability of our audit
conclusions. Data informed insights and clear
visibility of risks help our leaders in making
strategic decisions.
Principal risks and uncertainties
The most significant risks – those that
could affect our strategic ambitions, future
performance, viability, and/or reputation –
form our principal risks.
Our principal risks are detailed in the following
pages. This includes a summary of key
information including the type of risk, links to our
strategic drivers, risk movement, key responses
and controls, and the oversight committees at
the Executive Committee and Board level. This
list does not include all our risks. Additional risks,
not presently known, or those we currently
consider to be less material, may also have
adverse effects. We also highlight principal risks
that are included in our long-term viability
scenarios, on pages 50 and 51.
As of year-end FY 24/25, there are 13 Group
principal risks, reflecting a reduction of two
risks from year-end FY 23/24. This reduction is
attributed to the retirement of the Tesco Bank
principal risk, following the completion of the
sale of Banking operations to Barclays, and the
consolidation of the Customer and Competition
and Markets principal risks, given their strong
interdependency and consequence on one
another. Further, given the heightened level of
geopolitical uncertainty due to wars and civic
unrest, terrorism, elections, tariffs and
government restrictions, we have elevated the
Geopolitics and other global events risk. Our
approach to these events is to continue to scan
the external environment for threats, assess
the risk to our business and build resilience to
minimise business disruption and prioritise the
safety of our colleagues and customers in the
event of such incidents. We understand the
short-term risks and impacts, and we have the
right teams, governance mechanisms, customer
offerings and strategies in place. However, the
long-term impacts remain uncertain, and we
will continue to monitor the external landscape
closely and respond accordingly.
Our principal risks are interdependent
and interconnected with each other, with
comprehensive and cogent strategies designed
to mitigate the cascading effects on our overall
risk exposure. Further, the emerging themes that
have a potential impact and require a response,
have been considered as part of our risk
assessment process described on pages 42 to
47. We are also aware of the requirements under
the updated Provision 29 of the UK Corporate
Governance Code effective FY 26/27 and have
an ongoing dedicated programme to respond to
the requirements with regular updates to the
Audit Committee.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
41.
Governance
Strategic drivers
Magnetic value for customers
Easily the most convenient
I love my Tesco Clubcard
Save to invest
Risk type
Strategic Change Operational Finance Compliance
Residual risk movement (after taking current responses and controls into consideration)
Risk increasing No risk movement Risk decreasing
† Indicates that the principal risk has been included as part of the longer term viability scenarios detailed on pages 50 and 51.
Principal risk Risk movement Key responses and controls
Cyber security
†
A cyber security incident can result in unauthorised access
to, or misuse of, our information systems, technology, or data.
This could lead to leakage of sensitive information, loss of our
critical assets, impact on trade, and reputational damage.
Oversight: Cyber and privacy risk committee, Group risk
and compliance committee, Executive Committee, Audit
Committee, Board.
As in previous years, the importance of
cyber security remains paramount. We
continue to invest in building the right
capabilities and skills across our teams,
which combined with colleague training
and Executive level oversight, supports
us in managing the risk effectively on
an ongoing basis.
– Our layered cyber security defence model (LDM) consists of preventative, detective, and responsive
technical controls and foundational capabilities. The security model continues to be strengthened
in line with our strategy and detailed roadmap, with our progress tracked against milestones and
defined outcomes.
– We regularly test our cyber security defences using independent third-party agencies to provide insight
into the maturity of our cyber security position, and ensure our security operations centres ability to
detect, report, and respond to security incidents stays aligned with the changing threat environment.
– Governance and oversight committees at both senior management and Board levels monitor and
oversee the results of the cyber security programme and its progress against the strategy.
– Significant progress has been made in enhancing our ability to recover from catastrophic attacks on core
infrastructure and systems, along with addressing vulnerabilities associated with outdated technology.
– We recognise the importance of training and communication to help prevent cyber security incidents.
We hold regular induction, awareness, and refresher courses for all our colleagues.
– Our third-party supplier assurance programme assesses and manages cyber security risks associated
with service providers and suppliers as well as the use of third-party software.
Data privacy
†
Failure to comply with legal or regulatory requirements
relating to data privacy in the course of our business activities
results in reputational damage, fines, or other adverse
consequences. These can include criminal penalties and
consequential litigation, which may result in an adverse
impact on our ability to do business.
Oversight: Cyber and privacy risk committee, Group risk
and compliance committee, Executive Committee, Audit
Committee, Board.
We hold customer and colleague personal
data. Although the threat landscape has
been ever changing, the risk remains
unchanged, and we continue to monitor
and manage the risk closely through
structured implementation of our Group
privacy compliance programme, robust
governance, and oversight mechanisms.
– Our data privacy policies and processes (including via privacy impact assessments and data governance)
establish how we protect and appropriately use personal data.
– There is regular reporting on progress and performance of the privacy compliance programme to
governance and oversight committees. Our multi-year technology security programme is driving
enhanced data security capabilities.
– Our Group privacy compliance programme includes ongoing assessment and monitoring of privacy risks
and controls across our businesses. A privacy assurance programme has been developed alongside the
implementation of controls.
– We have an established team in our security operations centre to detect, report and respond to
security incidents (including personal data incidents).
– We have a third-party supplier assurance programme focusing on third-party data security and
privacy risks.
– We recognise the importance of ongoing training and communication to raise awareness of good
data-handling practices, and to help prevent personal data incidents. We carry out regular induction,
awareness, risk-based tailored training (including refresher training) for our colleagues.
Principal risks and uncertainties continued
Tesco PLC Annual Report and Financial Statements 2025
42.
Principal risk Risk movement Key responses and controls
Climate change
†
Our climate change risks stem from both physical and
transition risks. Our physical risks include tangible and direct
impacts of climate change on our environment, infrastructure,
and human well-being. Our transition risks pertain to the
economic, financial, and societal impacts associated with
our transition to a low-carbon economy. Delivery against our
1.5°C -aligned ambition to reach net zero by 2050 along the
value chain, meeting our ESG targets and regulatory obligations
to mitigate climate change is vital. This is because the longevity
and prosperity of our business depends intrinsically on the
health of the natural environment.
Oversight: planet committee, Executive Committee,
Sustainability Committee, Audit Committee, Board.
Climate change is a widely acknowledged
global emergency, with the need to act
faster becoming evident. Managing the
greenhouse gas emissions associated with
our supply chain is critical to reducing
our impact on climate change. This risk
remains in line with the previous year.
Our sustainability efforts focus on our
ability to create and preserve long-term
value for people, planet, and the key
communities we serve.
– The planet committee oversees and governs the delivery of Tesco’s sustainability commitments, including
those related to climate change. The committee is chaired by the Chief Commercial Officer, and brings
together the different parts of the business, further enabling coordination during key decision-making.
– We have several metrics with appropriate management oversight and governance mechanisms to
enable us to monitor progress. We are working internally and with third-party organisations to continue
developing this suite of metrics. There is a level of external assurance over the metrics, and we are
working to further enhance and extend this.
–
– We have stated a commitment to be net zero by 2050. This pledge is in the process of being
supported by road maps and targeted decarbonisation plans. These combine supplier engagement
with innovative farming methods to support the reduction of our carbon footprint e.g. technology
investments in pursuit of low-carbon energy and transport. Our targets are validated by the
Science-Based Targets initiative (SBTi).
– We have aligned our climate-related ambitions with our reward policies and have two sustainability-
linked bonds. We also continue to report our climate-related financial disclosures, see TCFD section
on pages 36 to 39.
T
Geopolitics and other global events
†
Failure to address geopolitical uncertainties, such as wars,
civil unrest, terrorism, elections, government restrictions,
rising geopolitical competition, fractured international
relations, including the potential impact of increased tariffs,
and potential future pandemics, could significantly disrupt
our business. This may result in restricted access to our
products, threats to our employees, operational challenges,
and broader global economic impacts.
Oversight: Group risk and compliance committee,
Executive Committee, Audit Committee, Board.
Uncertain global events and disruptions
are leading to greater volatility in the
business environment, which requires
us to be responsive and resilient. Our
approach is to foresee events where
possible, assess the risk to our business,
and build resilience to minimise business
disruption and prioritise the safety
of our colleagues and customers in the
event of such incidents. This risk
has slightly increased compared to
previous year given the heightened
geopolitical uncertainty.
– We continuously monitor the external environment for emerging risks that could disrupt our business,
creating comprehensive plans with specific milestones and dedicated oversight to ensure resilience.
Our long-term plans are adjusted to account for sensitivities, the interconnectivity of our principal risks,
and scenario planning related to the broader macroeconomic environment.
– We closely track global developments and government guidelines. This includes engagement with trade,
government, industry and labour bodies and ongoing monitoring of potential changes to the future
political landscape.
– Our disaster recovery, crisis management and business continuity plans are continually tested and
enhanced to minimise disruption due to geopolitical and other global events.
– The safety and wellbeing of our colleagues and customers remain our highest priority. Our management,
with regular Board oversight, diligently monitors events, including the spread of highly infectious diseases,
evaluates their impacts, and formulates appropriate response strategies.
– Learnings from events are integrated into our operations, such as securing supply chain capacity,
implementing hygiene protocols, enhancing store security, and supporting at-risk colleagues, customers,
and suppliers.
– The engagement of leadership and senior management is critical to the successful management
of this risk area. We have established structured communication plans to provide a clear tone from
the top and our leadership actively contributes to planning and scenario testing activities.
Technology
Failure to design, build, operate and maintain resilient key IT
systems and infrastructure, may result in loss of operating
capabilities, financial impacts, and damage to our reputation.
Oversight: Executive Committee, Audit Committee, Board.
As Tesco increasingly relies on technology
to drive transformational change and
achieve its strategic goals, the need for
enhanced technology capability and
robust technology resilience grows. We
consider this risk stable compared to the
previous year, as we continue to invest in
the resilience and power of our underlying
technology platforms and infrastructure,
upskilling our team and attracting
new talent. Enhanced governance is
provided through technology and AI
focused committees.
– The enhancement of our technology infrastructure and platforms to improve resilience continues at pace.
Significant investment and activity continues to ensure maximum stability of our internal infrastructure and
to increase our capability to respond and recover from unplanned outages of critical systems.
– Continued testing and auditing of our disaster recovery and business continuity plans provides assurance
of our resilience and identifies opportunities for further improvement.
– Our continued investment in data centres, cloud hosting facilities and connectivity is providing greater
resilience and control for our key systems. Consolidating to a single public cloud hosting supplier has
both simplified its management and enhanced security and resilience.
– We have robust and proven IT development, change management and lifecycle procedures in place
and skilled colleagues to build, operate and maintain our systems.
– Tesco’s technology risk and compliance committee provides oversight and governance of Tesco’s
technology risk and compliance management plans.
– The AI governance group has been created to ensure Tesco has a well-balanced approach to exploit
AI opportunities, in alignment with good practice and accepted principles for responsible use of AI.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
43.
Governance
Principal risk Risk movement Key responses and controls
Responsible sourcing
†
Failure to ensure that products are sourced responsibly
across our supply chains (adhering to respect for
fundamental human rights, including ensuring clean and
safe working conditions and fair pay to all employees) may
result in supply chain disruption, regulatory breaches, and
reputational impact.
Oversight: Group risk and compliance committee, corporate
responsibility committee, Executive Committee, Audit
Committee, Board.
Exploitation of workers and human
rights breaches remain the key drivers
of this risk.
Continued pressures on global
economies, have resulted in an increased
risk of worker exploitation, particularly in
some of our key sourcing countries. We
continue to implement targeted response
strategies, including the implementation
of innovative monitoring methods to
ensure our standards are met. Our plan
to enhance the governance, scope and
standards alignment have been identified
and implemented. This risk remains stable
compared to the previous year.
– We have policies and guidance to help ensure human rights are respected across our supply chain.
These include a focus on appropriately monitoring conditions and progress, tackling endemic sector
risks, and addressing wider community needs.
– Our contractual agreements with suppliers clearly articulate the expected standards related to human
rights and modern slavery. Suppliers’ obligations are monitored and discussed as part of regular
governance meetings. We are increasing transparency of our supply chains to drive up standards, such
as by publishing our Tier 1 supplier list.
– We also provide targeted training for colleagues and suppliers dealing with specific regulations related
to human rights and modern slavery.
– We operate supplier audit programmes to monitor supplier compliance with our standards related to
human rights. These include unannounced audits of supplier sites and facilities and the review of any
prior approvals for sub-contracting.
– We qualify and review supplier factories through due diligence before use to ensure they can meet
our standards.
– We use certification schemes and participation in voluntary industry schemes to drive up our standards.
Health and safety
Failure to meet health, safety, and security standards in
relation to our workplace may unfortunately result in death
or injury to our customers, colleagues, or third parties, or
damage to our operations and lead to adverse financial, legal,
and reputational consequences.
Oversight: Group risk and compliance committee,
Executive Committee, Audit Committee, Board.
The continued rise in theft and violence
has led to a greater threat to the safety
of our colleagues. However, the risk
remains stable, as we monitor and
progress on implementing specific
response strategies, to ensure we
continue to provide safe workspaces for
all our colleagues, and that we manage
increased regulatory enforcement of
health and wellbeing.
– Our business-wide, risk-based safety framework defines how we implement and report on safety
controls to ensure that colleagues, contractors and customers have a safe place to work and shop.
– We regularly review and update our health and safety framework to address operational changes. This
includes implementing enhanced controls and physical security measures to protect colleagues from
increased threats of violence and abuse.
– We require each business to maintain a comprehensive health and safety risk assessment and risk
improvement plan to document and track enhancements.
– Our store colleagues are provided with equipment and training to deter, de-escalate, manage and
evidence violent and abusive behaviour.
– Governance and oversight are established in the form of our Group risk and compliance committee
and business unit-specific health and safety committees. These committees review critical metrics and
monitor the effectiveness of related controls.
– Our safety audits, Protector Line arrangements and the results of our annual colleague surveys inform
management on the delivery of targeted safety initiatives, including communication plans.
– Our assurance activities, such as store and distribution compliance reviews, safety health checks and
audits, help us assess our compliance with established policies and processes. They also enable us
to continuously seek and identify areas for potential improvement.
– Our information exchange platform provides leading indicators of safety, enabling early identification
of threats and design of action plans which support injury prevention.
Principal risks and uncertainties continued
Tesco PLC Annual Report and Financial Statements 2025
44.
Principal risk Risk movement Key responses and controls
Product safety and food integrity
Failure to meet regulatory standards and customer
expectations related to product safety, traceability and
integrity could result in illness, injury or death damaging our
relationships with customers, with negative effects on our
performance and corporate reputation.
Oversight: Group risk and compliance committee,
Executive Committee, Audit Committee, Board.
Given the evolving regulatory landscape,
continued economic pressures being
faced by our suppliers and evolution in
consumer preferences, the external risk
has remained challenging. In response,
we continue to mature our already
well-established and comprehensive
food safety and quality management
systems to manage this risk, resulting in
the risk showing no significant movement
compared to the previous year.
– Our product standards, policies and guidance, help ensure that products are safe, legal and of
the required quality. They cover food and non-food, as well as goods and services not for resale.
– We closely monitor any updates to product safety regulations, to ensure our standards and products
continue to conform with all relevant regulations.
– We conduct detailed due diligence of our suppliers prior to onboarding, to ensure that adequate
infrastructure, capabilities, and capacities are in place to meet Tesco’s standards.
– We run colleague training programmes on food and product safety, hygiene controls, and also provide
support for stores for product safety.
– Our crisis management procedures are embedded within our operations to quickly resolve issues if
non-compliant products are produced or sold. Clear escalation protocols include the product recall
processes. We operate unannounced supplier audit and product analysis programmes to monitor
product safety, traceability, and integrity. We use data analytics to identify which supplier sites may have
increased risk exposure, adjusting our audit frequency accordingly. This approach allows us to use our
resources effectively, while ensuring appropriate assurance over supplier’s sites is maintained.
– We operate a risk-based quality assurance programme, which is focused on sample-based testing of
our products to ensure compliance with our standards and regulations.
People
Failure to attract, retain and develop the required talent
and capabilities, and to embed our values in our culture
could impact on the delivery of our purpose and business
performance.
Oversight: Nominations and Governance Committee,
Remuneration Committee, Executive Committee, Audit
Committee, Board.
Market competition for key leadership and
specialist talent remains strong, within
the retail sector and wider economy.
Furthermore, wage inflation and other
macro-economic conditions also have
an impact on the risk. In response, we
continue to have mitigation plans in
place to attract and retain colleagues,
ensure competitive compensation and
fulfil any gaps in specialised skillsets. On
this basis, therefore, this risk has
remained unchanged.
– Our talent planning and people development processes, including succession planning for key roles,
are established across the Group to identify, monitor, understand, and grow the skills required to fulfil
strategic objectives of the business. The talent planning process includes succession planning for key
roles, and identification of any new skillsets and plans to secure these via internal development or
external recruitment.
– Increased focus on strategic workforce planning will provide visibility of areas of future demand and
identification of new skillsets required. This will enable us to take informed, targeted actions to meet
future demand.
– There are formal talent development programmes in place with regular discussions on talent and
succession planning by management and the Executive Committee, with oversight by the Nomination
and Governance Committee and the Board.
– We continue to invest in our ability to attract and develop talent, including through the introduction of a
new global careers website and recruitment platform. This will bolster our ability to build global, inclusive
talent pipelines and further enhance the experience of candidates.
– Our Remuneration Committee agrees the objectives and remuneration arrangements for senior
management. Additionally, we perform a regular review of our ‘total reward’ offers to ensure
remuneration offered for colleagues is competitive and appropriate. We also continue to engage
closely with trade unions to inform and adapt our future plans and strategy.
– We conduct an independent assessment of all leadership level promotions and external hires to ensure
capability, potential, leadership, and values remain central to our decision making related to hiring.
– Our speak up programmes and dedicated training across the Group include our continuous engagement
with colleagues on Protector Line and complaints process. These allow colleagues to raise in confidence
any workplace concerns such as dishonest activity, bullying, harassment, bias or anything that endangers
colleagues, the public or the environment.
– Led by colleague voice, we continue to roll out propositions to ensure the overall wellbeing of our
colleagues, including mental, physical, and financial wellbeing.
– Our Group diversity, equality and inclusion strategy helps to ensure that everyone is welcome and that
we provide all our colleagues with equal opportunities for growth and development. This is embedded
in our values, and we are committed to building an inclusive workplace where we treat people how they
want to be treated.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
45.
Governance
Principal risk Risk movement Key responses and controls
Macroeconomic exposures
†
Our financial performance may be impacted by the broader
macroeconomic environment, including uncertainties with
respect to, inter alia, inflationary pressures, commodity and
other input costs, government policies, monetary policies,
and labour market conditions. If not managed appropriately,
such costs may negatively impact our financial performance
through higher operating and financing costs.
Oversight: Executive Committee, Audit Committee, Board.
The risk is stable year-on-year, principally
because of our established processes
and policies for the management
of such costs relating to inflationary
pressures, commodity costs,
government and monetary policies
and labour market conditions.
– We maintain and monitor appropriate systems, policies, and reports to ensure discipline and oversight on
all financial risk. Such policies are reviewed and approved by the Executive Committee, Audit Committee,
and the Board.
– The Chief Financial Officer leads a team of in-house professionals, who monitor our adherence to such
policies through regular oversight and governance meetings.
– We continually monitor macroeconomic risk and impact on costs, to enable prompt and
data-driven mitigations.
– We review the impact of proposed and actual changes in government policies and regulations.
– Long-term plans are flexed to consider sensitivities and scenario planning that relate to the wider
macroeconomic environment.
– We regularly review liquidity levels, sources of cash, and access to committed credit facilities and debt
capital markets is maintained.
– The Audit Committee maintains regular oversight and governance of key areas, including; liquidity
and funding strategy, tax obligations, our viability and going concern statements, and Group key
financial controls.
Customer, competition and markets
†
Inability to clearly understand changing customer behaviours
and respond to a complex and fast evolving competitive
landscape pose significant risks to our business. In this
challenging environment, our ability to deliver an effective,
coherent, and consistent strategy is crucial. Failure
to do so may result in a loss of market share, adversely
affecting customer trust in our brand and overall
business performance.
Oversight: Executive Committee, Audit Committee, Board.
Customer behaviour and market
competition are often closely linked,
wherein changes in market dynamics can
directly impact our customer preferences
and vice versa. By combining these
risks, we can better understand and
manage the interplay between them.
The combined risk remains stable as
we continue to have focused response
strategies in place.
– Our key strategic drivers underpin decision-making and are central to the design of our customer
offerings, propositions and experience being provided through our different channels. The Board
develops and regularly challenges the strategic direction of our business to enhance our ability to remain
competitive on price, range, and service.
– Our product ranges, propositions and Clubcard benefits are designed to provide our customers with the
flexibility to achieve balance between value and quality.
– We have a consistent approach to building impactful customer propositions by offering high-quality and
competitive value while improving the customer experience.
– The Executive Committee and operational management regularly review markets, trading opportunities,
competitor strategy, and activity. We carry out market scanning and competitor analysis to refine our
customer proposition.
– Our Group-wide customer insight analysis enables us to dynamically improve our propositions. It does
this by monitoring customer behaviour and buying sentiments (including any changes due to external
factors such as inflation). This approach includes enriching customer engagement through tailored
campaigns, which also helps to improve customer retention as well as loyalty.
– Our well-established product development and quality management processes, ensure the needs of our
customer are central to our decision making. We continuously improve our digital platform, adding more
flexibility, delivery options, and an increased range of merchandise on offer to compete against new
players in the market.
– We monitor the effectiveness of our processes by regularly tracking our business and competitors
against measures that customers tell us are important to their shopping experience. We continue to
improve our Clubcard offerings and have introduced promotions and targeted campaigns to compete
with other retailers on price and product quality.
Principal risks and uncertainties continued
Tesco PLC Annual Report and Financial Statements 2025
46.
Principal risk Risk movement Key responses and controls
Regulatory and compliance
†
Failure to comply with legal and other requirements (such
as anti-bribery, competition law, grocery regulations, and
supplier code) in an increasingly litigious environment, may
result in fines, criminal penalties for Tesco or colleagues,
litigation (including class actions e.g. the ongoing equal
pay claim), that may lead to adverse financial, legal, and
reputational consequences.
Oversight: Group risk and compliance committee,
Executive Committee, Audit Committee, Board.
We continue to monitor controls
implemented across the Group, which
support the business to demonstrate
compliance with regulations. We have
assessed the risk to be in line with the
previous year given our current response
strategies, monitoring, and control
environment. The political component of
this risk is now embedded in the wider risk
definition of geopolitics and other global
events.
– Wherever we operate, we aim to ensure that we incorporate the impacts of regulatory changes in our
strategic planning and policies. This includes engagement with trade, government and industry bodies
and ongoing monitoring of potential changes to the future regulatory landscape.
– We have compliance programmes and committees to manage our most important risks (e.g. grocery
regulations, supplier code, anti-bribery, and competition law). We conduct assurance activities for
each key risk area.
– We support our code of business conduct and various policies by new starter and annual compliance
training and other tools such as our Protector Line.
– The engagement of leadership and senior management is critical to the successful management of this
risk area. We have established structured communication plans to provide a clear tone from the top.
Security of supply
†
Disruption in our supply chain due to adverse macroeconomic
conditions, geopolitical events, and/or loss of resilience in
our key supplier network, may result in Tesco being unable to
secure the products required to fulfil customer demand on
time and at acceptable prices. This could result in customer
dissatisfaction, reputational impact, loss of market share, loss
of sales, and erosion of expected profit margins.
Oversight: Group risk and compliance committee,
Executive Committee, Audit Committee, Board.
Uncertain macro-events and disruptions,
such as inclement weather patterns,
crop failures, logistical disruptions, and
conflict between countries, continues
to affect the availability of raw material
and food supply. However, we have seen
no significant disruptions in our product
availability across our stores, therefore,
this risk has remained unchanged.
– We have a diversified portfolio of suppliers to reduce reliance on single suppliers or multiple key suppliers
from the same region. This is further supplemented by a wide product range which enables us to offer
alternate products to our customers, in case of supply chain disruptions.
– We have introduced a proactive and reactive approach to managing security of supply risks. This also
includes developing a technology solution for identifying high risk raw materials and regions, with
associated governance to support.
– We have an established mechanism to identify products which are key in our customer baskets and
have identified alternate or contingent suppliers to fulfil any slack in supply. Additionally, we maintain
appropriate stock levels within our warehouses for fast moving goods.
– We have a detailed supplier onboarding and due diligence process, which allows us to review resilience
of suppliers, in terms of appropriate infrastructure as well as financial stability. Furthermore, the due
diligence process includes assessment of any third parties or raw materials which the supplier may
be reliant upon.
– We have established regular governance forums through which our dedicated teams engage
with suppliers to proactively identify and resolve any issues (or upcoming threats) being faced
by our suppliers.
– We have committed significant investment with some of our key suppliers to enhance the underlying
infrastructure to ensure they are able to meet any increases or spike in demand volumes. Furthermore,
we monitor the financial stability of our key suppliers, and where possible, provide support to those
suppliers which may be facing financial duress.
– We have business continuity plans in place, which can be executed in case of any logistical disruptions
or inclement weather events which may affect our ability to transport goods.
Emerging risk themes
Emerging risk themes are reported to the Audit Committee alongside our principal risks. We conduct horizon scanning to enable a medium and longer-term view of potential disruptors to our business. As part
of our risk assessment process, we analyse internal and external sources of emerging risk themes through reviewing leading external publications, attending industry seminars and forums, gathering insights via
top-down and bottom-up risk discussions with internal stakeholders, and seeking professional consultation where required. We are currently tracking several emerging risk themes such as political, economic,
technological, environment and talent.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
47.
Governance
TCFD risks and
opportunities.
The tables below summarise the financial value at risk associated with three material transition risk
categories (policy, consumer and technology) and one physical risk (raw materials supply) over the
short term (five years) and medium term (10 years) and a qualitative assessment of how these risks
could evolve over the longer term (20 years). These time periods have been selected so that the
five-year, short-term view can inform our internal financial planning process, 10-year enables a view of
how transitional risks and opportunities develop and 20 years captures the evolution of physical risk.
Risk management
Following the establishment of climate change as a standalone principal risk in 2020/21, reviews
have been conducted at various levels including the Executive Committee and the Board.
These include the identification and documentation of climate related risks and the review and
consideration of appropriate risk responses. This consolidated view provides an input to our
review of the Group risk profile.
The most recent principal risk review was presented to the Board and Executive Committee in
February 2025. Climate is assessed to be one of our most material risks determined by a
combination of likelihood and potential financial impact.
Management assesses the risks on a continuous basis, taking into account the risk to Tesco’s
strategy, our colleagues and our operations, as well as our impact on society and the environment.
There is regular formal oversight through clearly defined governance structures. Our risk
management framework continues to be embedded throughout the organisation, enabling us to
clearly identify, prioritise, respond to, and monitor our most significant risks and emerging risk
themes. We continue to track emerging climate regulations including any requirements for the
reporting and disclosure of climate risks.
Policy risk
Pathway Mitigated annual
profit impact
five-year outlook
Mitigated annual
profit impact
10-year outlook
20-year outlook
3°C Not material Not material Carbon prices remain at current levels or rise
marginally, with an inconsistent global approach,
which leads to minimal financial impact to
our business
1.5°C £50–100m £100–150m Carbon prices begin to plateau and are
sustained at this level, with further adoption
across the developed and developing economies
The policy risk models an increase in future carbon pricing which would largely impact the prices
we pay our suppliers for the products we sell to customers. Under a 3°C pathway, we assume no
change to the current carbon taxation system which has generated a non-material output, while
the 1.5°C pathway models widespread adoption of increasing rates of carbon taxation. The model
assumes a reduction in our emissions footprint, aligned to our net zero plan, and we have assumed
that the majority of the financial risk would be mitigated by means of shifts in consumer behaviour
and general market pricing.
Our assumption for the 1.5°C pathway over the longer term would be for carbon pricing to eventually
plateau, while for the 3°C pathway we would expect the currently low levels of global carbon prices
to remain stable, with inconsistent global adoption and therefore immaterial financial impact.
Consumer market risk
Pathway Unmitigated
annual profit
impact five-year
outlook
Unmitigated
annual profit
impact 10-year
outlook
20-year outlook
3°C Not material Not material Conventional shopping preferences continue,
with existing levels of uptake for sustainable
options continuing, resulting in only a minor
impact to our current business
1.5°C £50–100m £50–100m Demand for sustainable products and services
becomes mainstream in the market, the
purchasing behaviours and associated financial
risk seen in the five and 10-year horizon stabilise
over a longer time period rather than increasing
in a linear fashion
This risk models the impact of customers’ sustainable purchasing decisions, for example placing
a greater importance on the environmental impact when purchasing new clothes. The modelling
assumes no benefit from switching to more sustainable products and is based on our current
product category sales participation.
The modelling found the levels of financial risk in our core food business to be negligible, due to our
proven ability to adapt our product offer to meet changing consumer demands and the existing
high levels of substitutability available to customers by means of our broad plant-based and
dairy-alternative product ranges. Our modelling of consumer preference changes allows our
product development and buying teams to work with our supplier partners to evolve our product
ranges to remain at the forefront of emerging customer behaviours and demands.
Technology risk
Pathway Unmitigated
annual profit
impact five-year
outlook
Unmitigated
annual profit
impact 10-year
outlook
20-year outlook
3°C £0–50m £0–50m The pace of green technology uptake is steady
and we continue to see impairment of fossil fuel
assets, but this remains at a low level
Principal risks and uncertainties continued
T
Tesco PLC Annual Report and Financial Statements 2025
48.
Technology risk continued
Pathway Unmitigated
annual profit
impact five-year
outlook
Unmitigated
annual profit
impact 10-year
outlook
20-year outlook
1.5°C £25–75m £25–75m Green technology is established and dominates
the energy mix, as the remaining carbon-intensive
assets get phased out the initial incremental cost
of write-offs fall away longer term
This risk relates to the write-off of existing internal assets due to increasing levels of investment in
low carbon-based assets. The 1.5°C pathway assumes a faster-paced transition to green technology
whereas our 3°C pathway assumes a much slower transition. The modelling uses the current net
book value of our asset base, with no mitigation or planned transition of our current asset base.
Risk levels for both pathways remain low even with no mitigation activity considered. Our mitigation
plan for this risk is to continue to maintain both short and long-term investment plans with a clear
connection between these plans and our sustainability targets and commitments.
Over the medium term in our 1.5°C pathway, we would expect green technology uptake to continue
to grow and in the long term most non-green technology to be phased out. In our 3°C scenario green
technology uptake will continue to grow, but carbon based technologies remain in use.
The Group’s three-year strategic plan integrates the delivery of our sustainability ambitions, of which
the decarbonisation of our own operations is the most material in terms of direct capital requirement.
The strategic plan is reviewed and approved by the Board annually, including a review of the key
decarbonisation initiatives and associated costs and capital investments. Our review process for
proposed capital investments ensures we understand how different projects will impact our emissions
levels. This enables us to balance the best carbon return for our investment, considering the maturity of
emerging technologies and supply capacity. Beyond our three-year strategic plan, we have also created
a capital investment profile and associated decarbonisation impact to 2035, to align to our own
operations decarbonisation target. More detail on our progress towards our 2035 target can be
found in the TCFD section on pages 36 to 39.
Raw materials risk
Pathway Unmitigated
annual profit
impact five-year
outlook
Unmitigated
annual profit
impact 10-year
outlook
20-year outlook
3°C £0–50m £0–50m Chronic risks challenge the viability of suppliers
in certain regions, leading to a high likelihood
of material disruption
1.5°C £0–50m £0–50m Physical risks remain, impacting security of
supply, but more significant impacts are avoided
This physical risk models the impact of chronic changes in temperature and precipitation on yields
of our key commodities. The model output assesses only the downside risk and assumes no
mitigation such as identifying alternative sourcing locations.
Risk levels remain relatively low for both pathways, with or without mitigation activity considered.
This reflects that our grower base is already geographically diverse, offering a natural hedge to
changing climate conditions in specific locations.
We recognise the impacts of climate change that we are already experiencing, and to an extent are
locked into from the delayed effect of historic emissions, compels us to develop adaptive plans in
our sourcing strategy to protect availability and quality. This includes ensuring a diverse supplier
base both locally and internationally.
In addition to the risks above, a further three transition risks and two physical risks were modelled
which we have not disclosed.
The transition risks assessed but not disclosed include: the risk of climate-related litigation; the risk
of a negative shift in consumer sentiment; and negative investor sentiment due to a perceived lack
of action to address climate change. We have chosen not to provide further detailed disclosure of
these risks because we believe that our sustainability commitments and progress made to date
are both well understood, and our ongoing engagement across our different stakeholder groups
enables us to stay aligned with changing expectations in this fast-developing space. This includes
our significant investment in the decarbonisation of our property estate and transport fleet, our
market-leading sustainable product ranges, and the provision of the largest electric vehicle (EV)
charging network of any UK supermarket.
The two physical risks we have modelled but chosen not to disclose are the resilience of our
business facilities to climate impacts and market demand disruption driven by changing weather.
The geographically diverse nature of our store and distribution network provides a degree of
structural resilience. Furthermore, our enhanced modelling capabilities allow us to anticipate and
manage the potential physical climate risks at a site level, for example devising flood plans at sites
with high risk of flooding. As a result, while some individual locations will be more exposed to
adverse climate impacts than others, the financial value at risk is not material either individually
or aggregated and is therefore not included here.
Opportunities
As the impacts of climate change escalate, we witness increasing negative impacts on communities.
Therefore, our efforts focus on understanding and mitigating the risks to our business and
stakeholders. However, we recognise risk mitigation can unlock some positive outcomes, for example:
– Lower impact ranges: shifting consumers’ diets is unlocking growth in new product ranges,
including alternative proteins, legumes, pulses, fruits and vegetables. As a retailer, Tesco can
expand its plant-based ranges to cater to consumer demand, and mitigate some of the risks due
to consumption habits changing. Opportunities are explored through our accelerator programme
which supports developing brands to deliver innovation for customers. The brands are carefully
selected to feed into emerging product trends, including health and sustainability.
– Resource efficiency: lowering emissions intensity within our operations and supply chain via
efficient energy solutions such as refrigeration and heating systems in our stores, can unlock
energy savings and thus financial savings.
– EV charging offering for customers: we are uniquely placed to be a convenient place for
customers to charge at while they shop.
– Access to less volatile energy prices by increasingly procuring energy for stores via our onsite
and offsite long-term PPAs and also self-generating on-site.
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
49.
Governance
Longer term viability statement
Longer term
viability statement.
Assessing the Group’s longer-term
prospects and viability
The Directors have based their assessment of
viability on the Group’s current long-term plan,
which is updated and approved annually by the
Board. The plan delivers the Group’s purpose of
‘serving our customers, communities and planet
a little better every day’ and is underpinned by
a clear strategic focus on creating sustainable,
long-term value for every Tesco stakeholder.
The Group conducts an annual strategic planning
process, comprising a comprehensive
reassessment of progress against the Group’s
strategic objectives, alongside an evaluation
of the longer-term opportunities and risks in
each market in which the Group operates.
The process for identifying the principal and
emerging risks in each market is an important
input to this process.
The Group’s strategic plan and viability
statement are both considered over a three-
year period, as this time horizon most
appropriately reflects the dynamic and changing
retail environment in which the Group operates.
Long-term planning process
The long-term planning process builds from
the Group’s current position and considers
the evolution of the strategic objectives over
the next three years. Three years is selected
as the Group’s planning horizon and viability
period based on the pace of change in both
the competitive landscape and customer
shopping behaviours within the retail sector.
Current position
Our multi-year performance framework,
strategic drivers and capital allocation
framework, which were introduced in 2021,
continue to guide management’s actions.
The multi-year performance framework sets out
the objectives of the business: to drive top-line
growth; to grow absolute profits while
maintaining sector leading margins; and to
generate stable free cash flow each year.
The delivery of these objectives will enable
the Group to maintain a strong balance sheet,
invest for growth and deliver improved returns
for shareholders.
The Group continues to invest in delivering
great value, quality and customer service, while
delivering sustainable growth, supported by:
– a strategic focus on driving growth and
continued focus on cost reduction from
simplification of the operating model;
– a clear set of financial priorities to deliver cash
profit, free cash flow and earnings per share
growth, underpinned by a robust capital
allocation framework; and
– a diversified business portfolio covering retail,
wholesale, financial services and data science.
Refer to the Chief Executive’s review on page 11
and the Financial review on pages 24 to 30 for
further detail regarding the Group’s strategic
and financial progress.
Longer-term prospects
The following factors are considered both
in the formulation of the Group’s strategic
plan and in the longer-term assessment of
the Group’s prospects:
– The principal risks and uncertainties faced by
the Group, as well as emerging risks as they are
identified, and the Group’s response to these;
– The prevailing economic climate and global
economy, competitor activity, market
dynamics and changing customer behaviours;
– Any structural changes in how customers shop,
additional costs incurred by the Group and
potential macroeconomic consequences
of inflation due to geopolitical events and
global supply challenges;
– Opportunities for further cost reduction
through operational simplification and
leveraging technology; and
– The resilience afforded by the Group’s
operational scale.
Assessing the Group’s viability
The viability of the Group has been assessed,
considering the Group’s current financial
position, including external funding in place over
the assessment period, and after modelling the
impact of certain scenarios arising from the
Group’s principal risks outlined on pages 40
to 49.
Three ‘severe but plausible’ scenarios have been
modelled which address the principal risks that
the Group has assessed would have the most
direct and material impact on the Group. None
of the modelled scenarios, either individually or
in aggregate threaten the viability of the Group.
The hypothetical scenarios described are also
used as the basis for the risk-weighted cash
flows which are included in our impairment
of non-current asset sensitivity analysis.
For more information, please refer to Note 15
on pages 164 to 167.
Did you know:
In assessing the
Group’s viability,
the Directors have
conducted a robust
assessment of the
principal risks and
uncertainties facing
the Company,
including those that
would threaten its
business model, future
performance,
solvency or liquidity.
Tesco PLC Annual Report and Financial Statements 2025
50.
Scenario Associated principal risk Description
Ongoing geopolitical events
trigger global supply chain
challenges and resurgent
inflation, leading to weak
consumer confidence,
further intensifying
competition in the sector
– Geopolitics and other global events
– Security of supply
– Responsible sourcing
– Macroeconomic exposures
– Customer, competition and markets
Geopolitical events, including a more widespread use of tariffs, trigger supply chain
volatility and commodity price inflation, resulting in resurgent cost inflation in the
markets in which we operate for a sustained period. The Group incurs elevated
levels of cost inflation across goods purchased for sale to customers and the
operating cost base, particularly in costs related to colleague payroll. The ability
of the Group to manage these cost tensions through cost savings is constrained.
Options to offset cost increases through retail prices are constrained, with
competition in the grocery sector intensifying further in a bid for price leadership.
UK interest rates remain elevated beyond current forecasts as central banks seek to
maintain target inflation levels. Management has applied a downside scenario which
reduces projected like-for-like sales growth across the three years of the Group’s
strategic plan by c.(2)%.
Data breach
– Cyber security
– Regulatory and compliance
– Customer, competition and markets
– Data privacy
The volume and nature of the customer and supplier data we hold as a business
could result in a serious data or security breach, which sees a significant financial
penalty levied against the Group, aligned to the UK GDPR penalty framework, which
could see a maximum fine levied of 4% of Group revenue. For the purposes of this
stress test, management has included a fine quantified as 2% of Group revenue,
being the mid-point of the potential maximum fine. A significant data breach poses
a reputational risk, resulting in a decline in customer sentiment and an adverse
trading impact. The extent of this trading impact is very uncertain, both in terms of
the financial impact and the period it may take to regain customer trust. As such,
the potential brand reputation element of this scenario has been modelled via a
‘reverse stress test’. This assesses the risk in the context of the residual headroom
after all other scenarios have been applied. The resultant like-for-like sales decline
which would have to occur to eliminate the residual cash headroom, including all
other scenarios happening in aggregate, is significantly higher than any decline the
Group has faced in recent history.
Climate change
– Climate change
– Geopolitics and other global events
– Security of supply
– Responsible sourcing
– Regulatory and compliance
– Customer, competition and markets
Rising global temperatures result in an increasing incidence and severity of extreme
weather events, leading to a higher incidence of store closures due to flooding and
disruption to our global supply chain. The quantification of the potential financial
impacts of physical and transitional risks and opportunities linked to climate change
on the Group have been taken from our ongoing climate-related risk modelling work
based on 1.5°C warming pathway.
We expect to be able to refinance external debt
and renew committed facilities as they become
due, which is the assumption made in the
viability scenario modelling. Our committed
facilities remain undrawn as at the end of the
financial year. Please refer to Note 22 on
page 171 for further details on our debt profile,
including maturity dates. The scenarios on the
left are hypothetical and purposefully severe
with the aim of creating outcomes that could
threaten the viability of the Group. In the case
of these scenarios arising, additional mitigation
options are available to the Group to maintain
liquidity to continue in operation, such as:
(i) accessing new external funding early;
(ii) short-term cost reduction actions; and
(iii) reducing capital expenditure.
None of these mitigating actions are assumed
in our current scenario modelling.
Viability statement
Based on these severe but plausible scenarios,
the Directors have a reasonable expectation
that the Company will continue in operation
and meet its liabilities as they fall due over the
three-year period considered.
This Strategic report (on pages 5 to 51
and incorporating by reference pages 70
and 71 and pages 237 to 240) has been
prepared in accordance with the
requirements of the Companies Act
2006, and has been approved and
signed on behalf of the Board.
Ken Murphy
Group Chief Executive
9 April 2025
Tesco PLC Annual Report and Financial Statements 2025
Strategic report Financial statements Additional information
51.
Governance
The purpose of this report is to demonstrate the Board’s approach to corporate governance,
which is underpinned by reporting against the UK Corporate Governance Code 2018.
It provides an overview of the work of the Board and Committees across the year.
Corporate governance report
Governance
overview.
Independence (number of
independent Directors)
Gender %
Independent
Non-executive Directors 9
Executive Directors 2
Chair (independent
upon appointment) 1
Male 58%
Female 42%
Ethnicity % Geographic experience
(number of Directors with
international experience)
White 83%
Ethnically diverse 17%
UK 12
Europe 8
Rest of World 6
Board expertise Board skills
Financial
International
Marketing
Property
Remuneration
Retail
Risk
Strategy
Sustainability
Supply chain/Logistics
Technology/Digital
Non-executive Director tenure
Average tenure: 3 years and 10 months
1
2
3
4
5
6
7
8
9
Gerry Murphy
Carolyn Fairbairn
Melissa Bethell
Bertrand Bodson
Thierry Garnier
Stewart Gilliland
Alison Platt
Caroline Silver
Karen Whitworth
Chris Kennedy
Contents
Governance overview 52
Governance introduction 54
Board of Directors 56
Governance framework 61
Executive Committee 63
Purpose and culture 65
Performance review 66
Board activity 67
Nominations and Governance Committee 72
Sustainability Committee 76
Audit Committee 80
Directors’ remuneration report 90
Directors’ report 237
All data on this page is as at 22 February 2025
Tesco PLC Annual Report and Financial Statements 2025
52.
Compliance with the UK
Corporate Governance Code 2018
During the year the Company has applied
the principles set out in the UK Corporate
Governance Code 2018 (the Code), and
complied with all provisions of the Code
with the exception of provision 15.
The Board is familiar with the changes following
the publication of the UK Corporate Governance
Code 2024 (2024 Code) and intends to be
compliant with all new relevant provisions
in the timeframes dictated in the 2024 Code.
Monitoring compliance with the Code is the
responsibility of the Nominations and Governance
Committee, which receives regular updates and
reports its findings to the Board. Details of how
the principles of the Code have been applied can
be found throughout this Corporate governance
report, the Strategic report and adjacent
committee reports as signposted below.
Fair, balanced and understandable
The Group has a strong commitment to balanced
reporting. As part of the fair, balanced and
understandable review, the Annual Report and
Financial Statements 2025 has been reviewed by
management, as well as independent functions,
who performed verification and assessment
under prescribed guidance. On behalf of the
Board, the Audit Committee undertook a review
of the Annual Report and Financial Statements
2025, as well as the effectiveness of processes
and controls which underpin its production,
and recommended to the Board that the Annual
Report and Financial Statements 2025 provided
the necessary information to assess the
Company’s position and performance,
business model and strategy.
In accordance with the Code, confirmation
by the Board is set out in the Statement
of Directors’ responsibilities on page 123
and is supported by the independent auditor’s
report on pages 124 to 134 outlining their
reporting responsibilities.
Chris Kennedy, an Executive Director at ITV plc,
was appointed to the Board on 20 February 2025.
He will step down from his role as a
non-executive director at Whitbread plc
at the conclusion of the Whitbread plc AGM in
compliance with the Code, to ensure he has
sufficient time to meet the requirements of
his role as a Non-executive Director at Tesco.
Code principles Pages
Board leadership and company purpose
Promoting the long-term, sustainable success of the company 50, 51, 61 to 64 and 67 to 71
Purpose and culture 19 to 23, 54, 55, 65, 67 to 69,
101, 102, 104 and 114
Resources and controls 41, 84
Stakeholder engagement 20 to 22, 60, 69, 70, 104 and 114
Workforce engagement 20, 69, 104 and 114
Division of responsibilities
Role of Chair, Non-executive Directors and
Group Company Secretary
56 to 60
Board composition
Composition, succession and evaluation 52, 54, 56 to 58, 66, 72 to 74,
79, 89 and 238
Appointments to the Board and succession planning 56 to 58, 72 to 74, 238
Balanced board 23, 52 and 56 to 58
Board performance 54, 55, 66, 72 to 74, 79 and 89
Audit, risk and internal control
Audit Committee report 80 to 89
Principal risks and uncertainties 40 to 49
Remuneration
Directors’ remuneration report 90 to 122
The Financial Reporting Council (FRC) is responsible for the publication and periodic review of the
UK Corporate Governance Code, which can be found on the FRC website at www.frc.org.uk.
Did you know:
Having an effective
corporate governance
framework supports
the Board in the
delivery of the
Group’s strategy and
supports long-term
sustainable growth.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
53.
GovernanceStrategic report
Delivering on our longer-term
ambitions
The Board plays an active role in developing and
overseeing the implementation of strategy,
ensuring alignment with our purpose of serving
all of our stakeholders a little better every day.
Over the past year, the Board has provided
guidance as Tesco continues to focus on its
core retail business, expand digital capabilities
and deliver on its ambitious sustainability
commitments, including the target to be carbon
neutral across our own operations by 2035.
We remain focused on driving efficiency and
innovation to support long-term competitiveness,
including improving our online offering and
leveraging data through Clubcard and Tesco’s
digital platforms. The Board’s oversight ensures
that management remains accountable for
delivering results that are both commercially
strong and socially responsible.
Board effectiveness and governance
An effective and high-performing Board is
critical to achieving Tesco’s long-term objectives.
This year, we conducted an externally-facilitated
Board performance review to assess our
performance, identify areas for improvement
and ensure that we continue to operate
effectively as a collective leadership body.
The review concluded that the Board operates
with a strong culture of openness, constructive
challenge and collaboration. The Board has an
appropriate balance of skills, experience and
diversity to support Tesco’s strategic ambitions.
However, we remain committed to continuous
improvement and have implemented several
enhancements to our Board processes, including
a deeper focus on digital transformation, ESG
oversight and succession planning.
We also continue to strengthen the capabilities
of our Board committees, each of which plays
a key role in overseeing specific aspects of
governance, risk management and sustainability.
Board evolution
The composition of the Board has evolved
further this year with two changes. In June 2024,
Byron Grote stepped down at the AGM having
served nine years as a Non-executive Director
on the Board. I am grateful to Byron for his
outstanding contribution and commitment to
the Board. In February 2025, we welcomed
Chris Kennedy to the Board. Chris is a seasoned
business leader with extensive experience
across the media and hospitality sectors.
He brings a wealth of knowledge in financial
management, strategic planning, and corporate
governance and he will be a real asset to the
Board. We will say goodbye to Alison Platt who,
having served nine years on the Board, will be
stepping down from the Board at the conclusion
of this year’s AGM. I would like to thank Alison for
her invaluable contributions and expert guidance
to Tesco over the years, including in her role as
Remuneration Committee Chair. I am pleased
that Melissa Bethell will be taking on the role
of Remuneration Committee Chair from the
conclusion of the AGM having been a member
of the Committee since September 2018. We
will also welcome Chris Taylor as our new Group
Company Secretary in April 2025.
Overview of remuneration
policy changes
In line with the three-year renewal cycle, we
will be presenting our remuneration policy
for shareholder approval. As the policy has
functioned well, no material changes are
proposed. A key element of the review is to
ensure that the policy takes account of Tesco’s
evolving strategy. Further details are discussed
within the Director’s remuneration report on
pages 90 to 122.
Governance
introduction.
Gerry Murphy
Chair
The Board believes that
its continued focus on the
implementation of our strategy
has delivered a balanced
outcome for our customers,
colleagues, suppliers
and shareholders.
Dear Shareholder
I am pleased to present this Governance report
for the year ended 22 February 2025. The report
that follows, in conjunction with the Nominations
and Governance, Sustainability, Audit, and
Remuneration Committee reports, seeks to
demonstrate our high standards of governance
and key developments throughout the year.
Having a strong and effective corporate
governance framework supports the Board’s
focus on the ethical leadership and effective
decision making needed to deliver long-term
sustainable growth and ensures that the Board
has the right level of oversight of the material
issues facing the Group.
The Board remains focused on ensuring that our
governance framework aligns with the evolving
expectations of our stakeholders and the
principles of the UK Corporate Governance
Code. Its role is to provide strategic oversight,
ensure accountability and maintain a culture
of integrity throughout the organisation.
Corporate governance report continued
Tesco PLC Annual Report and Financial Statements 2025
54.
Stakeholder engagement
Our Board and management work hard to
embed the right behaviours, conduct and
decision making so that we always do the right
thing for our stakeholders. The Board recognises
the importance of understanding and
considering their views in our decision making.
Through active engagement, particularly with
our Colleague Contribution Panels (CCP), we
look for insights, feedback and understanding of
what is important to our stakeholders. We also
maintain strong relationships with our suppliers,
supporting fair partnerships and shared
sustainability goals. Further information on the
2024/25 CCPs can be found on page 69, as well
as seeing the Board in action on pages 67 to 68.
Sustainability and ESG leadership
The Board is firmly committed to delivering our
climate and sustainability goals. We continue
to make good progress on our climate action
road map, with clear accountability for reducing
emissions, promoting healthier and more
sustainable products, and supporting
responsible sourcing practices. ESG
considerations are fully integrated into the
Board’s discussions and decision-making
processes and community engagement
remains a priority, with continued investment
in programmes such as Stronger Starts and
our ongoing support for local food banks.
Looking ahead
Tesco delivered a strong financial and strategic
performance in 2024/25. We continued to lay
the foundations to support meeting our
long-term ambitions. As I look to the future,
I am excited about the opportunities that lie
ahead for the Group and confident that we
can continue to realise Tesco’s full potential.
On behalf of the Board, I would like to thank our
colleagues, in particular, for their unwavering
commitment and resilience. I also extend my
thanks to all our stakeholders for their trust
and continuing support.
Gerry Murphy
Chair
9 April 2025
Key highlights from the Board in 2024/25
Development of the
longer-term strategy
The Board spent more time on developing the longer-term
strategy with a focus on customer strategy, digitisation
and personalisation.
Sale of the Group’s
Banking operations
Completion of the sale of the Group’s Banking operations
and focus on the separation of the Insurance and Money
Services business.
Scrutiny of operational and
financial performance
Management reporting scrutinised at each Board meeting
with deep dives into financial and risk matters by the
Audit Committee.
Oversight of
sustainability strategy
Review of key milestones and operational capital expenditure
required to achieve our carbon neutral targets.
Return of capital Continued to review our share buyback programme,
building on the ongoing capital return programme launched
in October 2021.
Key focus during 2024/25
Purpose and strategy 23%
Operational performance 18%
Financial performance, risk management
and internal control 20%
Stakeholder engagement 20%
Governance and culture 19%
2025/26 Board priorities
Strategy Further develop and implement the longer-term strategy
and growth ambitions.
Succession planning and
talent management
Continue to identify the capabilities required to support the
longer-term strategy and ensure the talent pipeline is aligned
to the needs of the business.
Sustainability Integration of sustainability into the longer-term strategy and
continue to embed sustainability initiatives through our planet
plan across our business.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
55.
GovernanceStrategic report
Chair
Dr Gerry
Murphy.
Appointed
September 2023
N
Skills, experience and competences
Gerry has extensive global leadership
experience through both executive and
non-executive roles. His executive career was
spent in retail and other customer-focused
businesses in senior leadership and
commercial roles. His significant business and
board level experience and deep understanding
of corporate governance, enable him to
provide the Board with valuable leadership in
the delivery of the Group’s strategic objectives.
External appointments
Current:
– Chair: Burberry Group plc
– Senior advisor: Perella Weinberg Partners
Past:
– Chair: The Blackstone Group International
Partners LLP and Tate & Lyle PLC
– Non-executive director: Intertrust N.V.,
British American Tobacco plc, Merlin
Entertainment plc, Reckitt Benckiser plc,
Abbey National plc and Novar plc
– Chief executive officer: Greencore Group
plc, Exel plc, Carlton Communications plc
(now ITV plc) and Kingfisher plc
Group
Chief Executive
Ken
Murphy.
Appointed
October 2020
Skills, experience and competences
Ken is a growth-orientated business leader
with strong commercial, marketing and brand
experience within retail and wholesale
businesses. He has experience in global
product brand management, product
development, sales and marketing, sourcing,
manufacturing and distribution.
External appointments
Current:
– None
Past:
– Executive vice president, chief commercial
officer and president of global brands:
Walgreens Boots Alliance
– Various roles: Procter & Gamble and
Coopers & Lybrand (now PwC)
Chief
Financial Officer
Imran
Nawaz.
Appointed
May 2021
Skills, experience and competences
Imran has over 20 years’ experience in the
global food industry and broad financial,
strategic and international experience gained
across a number of large multinational
organisations. His financial, strategic,
leadership and international strengths are
a valuable asset to Tesco as we deliver on
our strategic priorities.
External appointments
Current:
– None
Past:
– Chief financial officer: Tate & Lyle PLC
– Various roles: Mondelēz International, Inc,
Kraft Foods, Philip Morris and Deloitte
Senior Independent
Director
Dame Carolyn
Fairbairn DBE.
Appointed
September 2023
A
N
R
S
Skills, experience and competences
Carolyn brings a wealth of experience to the
Board with her deep understanding of the
macroeconomic, regulatory and political
environment and significant experience across
media, government and finance sectors.
External appointments
Current:
– Non-executive director: HSBC Holdings plc
– Chair of the board of trustees: Royal
Mencap Society
Past:
– Director-general: Confederation of
British Industry
– Non-executive director: Lloyds Banking
Group plc, The Vitec Group plc, Capita plc,
BAE Systems plc, UK Competition and
Markets Authority and Financial
Services Authority
– Senior positions: McKinsey & Company,
BBC and ITV plc
– Member: Number 10 Policy Unit
The Board is currently composed of the Chair, who was independent
upon appointment, two Executive Directors and nine Independent
Non-executive Directors.
Corporate governance report continued
Board of
Directors.
Key:
A
Audit Committee
N
Nomination and Governance Committee
R
Remuneration Committee
S
Sustainability Committee
Committee Chair
Tesco PLC Annual Report and Financial Statements 2025
56.
Independent
Non-executive Director
Melissa
Bethell.
Appointed
September 2018
A
N
R
Skills, experience and competences
Melissa’s wealth of international corporate,
strategy and financial experience across a
range of industries, with a focus on private
equity, advisory services, strategic consultancy
and the financial, media and technology
sectors, is invaluable in delivering our strategy.
Melissa will be appointed chair of the
Remuneration Committee from the conclusion
of the 2025 AGM.
External appointments
Current:
– Chair: Ocean Outdoor Limited
– Non-executive director: Diageo PLC,
Exor N.V. and Brillio LLC
– Senior advisor: Atairos
Past:
– Non-executive director: Samsonite
International S.A., Worldpay Group PLC and
Atento S.A.
– Senior positions: Atairos Europe, Bain Capital
and Goldman Sachs & Co
Independent
Non-executive Director
Bertrand
Bodson.
Appointed
June 2021
N
S
Skills, experience and competences
Bertrand is an accomplished business
executive, with significant experience of digital
transformation, technology and the
application of AI. He brings exceptional
leadership and business expertise to the
Board, as well as experience in delivering
corporate transformation programmes while
maintaining a focus on performance. His
significant knowledge of digital and technology
matters gained across a number of sectors,
including retail, enhances the Board’s
oversight of these areas and the delivery
of the strategy.
External appointments
Current:
– Chief executive officer: Keywords Studios Ltd
Past:
– Supervisory board: Wolters Kluwer N.V.
– Senior positions: Novartis AG, Sainsbury’s
Argos and EMI Music
– Co-founder and CEO: Bragster.com
Independent
Non-executive Director
Thierry
Garnier.
Appointed
April 2021
N
S
Skills, experience and competences
Thierry brings extensive experience in the
retail sector, both in the UK and internationally,
with a successful track record of implementing
business transformation and driving leading-
edge digital innovation in competitive and
rapidly-changing retail environments.
External appointments
Current:
– Chief executive officer: Kingfisher PLC
Past:
– Executive committee member: Carrefour SA
– Senior positions: CEO, Carrefour Asia and
Carrefour International and managing
director of Carrefour in France
Independent
Non-executive Director
Stewart
Gilliland.
Appointed
March 2018
S
N
R
Skills, experience and competences
Stewart brings over 40 years’ experience and
knowledge in international marketing, logistics
and business management, having held a
number of senior roles, predominantly in
customer-centric businesses. His experiences
as an executive and non-executive director,
and understanding and advocacy of supplier
relationships, customers, colleagues and
sustainability, which directly support Tesco’s
strategy, provide him with the skills and
capabilities as Chair of the Sustainability
Committee. The breadth and diversity of
Stewart’s experience is a benefit to the Board.
External appointments
Current:
– Chair: IG Design Group PLC
– Non-executive director: Nature’s Way
Foods Ltd
Past:
– Chair: Booker Group plc and C&C Group plc
– Chief executive: Müller Dairies UK and Ireland
– Non-executive director: Chapel Down
Group plc
– Senior positions: Whitbread plc, Mitchells &
Butlers plc and Interbrew
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
57.
GovernanceStrategic report
Independent
Non-executive Director
Chris
Kennedy.
Appointed
February 2025
A
N
Skills, experience and competences
Chris is a seasoned business leader with
extensive experience across the media and
hospitality sectors. He brings a wealth of
knowledge in financial management, strategic
planning, and corporate governance,
stemming from his contribution to the
financial transformation of several UK listed
companies across his breadth of senior
executive roles.
External appointments
Current:
– Chief financial officer and chief operating
officer: ITV plc
– Non-executive director: Whitbread plc
(retiring at the conclusion of the Whitbread
plc AGM in June 2025)
– Trustee: EMI Archive Trust
Past:
– Group finance director: Micro Focus
International plc, ARM Holdings plc
and easyJet plc
– Non-executive director: Great Ormond St
Hospital Foundation Trust
– Senior positions: EMI Group
Independent
Non-executive Director
Alison Platt
CMG.
Appointed
April 2016
N
R
Skills, experience and competences
Alison has extensive experience of leadership
in customer-driven organisations across the
healthcare, insurance and property sectors.
Alison has gained significant business-to-
business and international commercial
experience from working for high-profile
consumer-facing companies. Her former
membership of the steering group of the
Hampton-Alexander Review provides strategic
insights on diversity and inclusion. Alison will
not seek re-election and will step down from
the Board at the conclusion of the 2025 AGM.
External appointments
Current:
– Chair: Ageas (UK) Limited
– Non-executive director: Spectrum Wellness
Holdings Limited and Inchcape plc
– Member: The Takeover Panel Hearings
Committee (with effect from 1 May 2025)
Past:
– Chair: Dechra Pharmaceuticals PLC and
Opportunity Now
– Non-executive director: Foreign and
Commonwealth Office and Cable & Wireless
Communications PLC
– Senior positions: Countrywide Limited and
Bupa Limited
Independent
Non-executive Director
Caroline
Silver.
Appointed
October 2022
A
N
Skills, experience and competences
Caroline brings to the Board over 20 years of
non-executive experience, together with a
wealth of knowledge gained across senior
commercial, financial and governance roles.
Her strategic insight and significant experience,
both in the financial sector and as a serving UK
listed company chair, provides guidance and
constructive challenge to senior management
in delivering our strategy.
External appointments
Current:
– Chair: Barratt Redrow PLC and ICE Clear Europe
– Non-executive director: Intercontinental
Exchange, Inc
– Member: International advisory board of
Adobe Inc and V&A Foundation
– Senior advisor: Moelis & Company
– Chair of audit committee: National Film and
Television School
Past:
– Chair: PZ Cussons PLC
– Non-executive director: Meggitt PLC, M&G
PLC and Bupa Limited
– Senior positions: Moelis & Company,
Morgan Stanley and Merrill Lynch
– Trustee: Victoria and Albert Museum
– Board member: London Ambulance Service
NHS Trust
Independent
Non-executive Director
Karen
Whitworth.
Appointed
June 2021
A
N
R
S
Skills, experience and competences
Karen has significant strategic, financial and
risk experience gained through a number of
commercial, operational and governance
roles. In addition, she brings to the Board
extensive knowledge of the retail sector,
logistics and supply chain gained across
a number of senior retail roles.
External appointments
Current:
– Senior independent director: The Rank
Group plc and Tritax Big Box REIT plc
– Non-executive director: Nuffield Health
Past:
– Supervisory board member: GS1 UK Limited
– Non-executive director: Pets at Home Group
plc
– Member: Commercial board and director
of non-food grocery and new business at
J Sainsbury plc
– Senior positions: BGS Holdings Limited,
InterContinental Hotels Group PLC and
Coopers & Lybrand (now PwC)
– Independent advisor and board member:
GrowUp Farms Limited
Corporate governance report continued
Board of Directors continued
Detailed biographies for each member
of the Board can be found at
www.tescoplc.com.
Key:
A
Audit Committee
N
Nomination and Governance Committee
R
Remuneration Committee
S
Sustainability Committee
Committee Chair
Tesco PLC Annual Report and Financial Statements 2025
58.
Group Company Secretary
Chris Taylor.
Appointed April 2025
*
Skills, experience and competences
Chris is an experienced chartered Company Secretary having held positions at a number of listed
companies. Chris provides governance, legal and regulatory advice and support to the Board and the
boards of all other legal entities in the Group.
* Chris Taylor will be appointed as Group Company Secretary of Tesco PLC as at 14 April 2025.
Director changes during the year
Byron Grote Tenure: May 2015 – June 2024 Stepped down after nine years’
service as a Non-executive
Director on the Board.
Chris Kennedy Joined the Board on
20 February 2025
Appointed as an independent
Non-executive Director and
member of the Audit
and Nominations and
Governance Committees.
Additional external commitments
During the year, the Board approved the additional external commitment taken on by Alison Platt.
An assessment of time-commitment, effectiveness, independence and the impact of any
cross-directorships was considered. It was agreed that these additional external commitments
would not impact her role and commitment to Tesco PLC.
More information on the review of Directors’ time commitments can be found in the
Nominations and Governance Committee report on page 73.
Board attendance table as at 22 February 2025
(a)
Gerry Murphy
6/6
Ken Murphy
6/6
Imran Nawaz
6/6
Melissa Bethell
6/6
Bertrand Bodson
6/6
Carolyn Fairbairn
6/6
Thierry Garnier
6/6
Stewart Gilliland
6/6
Chris Kennedy
(b)
1/1
Alison Platt
(c)
5/6
Caroline Silver
(c)
5/6
Karen Whitworth
6/6
(a) This table shows details of attendance at scheduled Board meetings during the year. Attendance at the Audit, Nominations and
Governance, Remuneration and Sustainability Committee can be found on the relevant committee pages. Byron Grote stood
down from the Board and relevant committees on 14 June 2024.
(b) Chris Kennedy joined the Board as a Director and a member of the Audit Committee and Nominations and Governance
Committee on 20 February 2025.
(c) Tesco PLC Board and committee meetings are scheduled two years in advance of the meeting. Due to unavoidable circumstances,
it was necessary to change meeting dates during 2024/25. This resulted in Alison Platt and Caroline Silver each being unable to
attend one Board meeting during the year due to prior commitments. Alison and Caroline’s prior commitments affected different
Board meetings, but both contributed to meeting discussions in advance. Details of their committee attendance can be found on
pages 72, 80 and 90.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
59.
GovernanceStrategic report
Corporate governance report continued
Board of Directors continued
Division of responsibilities
The Board has agreed a clear division of responsibilities, with the responsibilities of the Chair, Group Chief Executive, Senior Independent Director and other Directors clearly defined so that no individual has
unrestricted powers of decision, and no small group of Directors can dominate the Board’s decision making. While there is no formal role profile, the Group Chief Financial Officer is responsible for the financial
affairs of the Group while supporting the Group Chief Executive in the development and execution of the Group’s strategy.
In addition, Non-executive Directors take on the role of workforce engagement and host the twice-yearly Colleague Contribution Panels (CCP). These additional responsibilities are set out in the table below.
More details on the CCP can be found on page 69.
Chair Group Chief Executive Senior Independent Director Non-executive Directors Workforce engagement
Board host
Group Company Secretary
The Chair leads the Board,
ensuring its effectiveness while
taking account of the interests of
the Group’s various stakeholders,
and promoting high standards
of corporate governance.
Key responsibilities include:
– Providing effective leadership
of the Board and promoting the
highest standards of corporate
governance practices.
– Leading the Board in providing
strong strategic oversight and
setting the Board’s agenda,
culture and values.
– Leading the Board in challenging
management’s thinking and
proposals, and fostering open
and constructive debate
among Directors.
– Maintaining internal and external
relationships with key
stakeholders, and
communicating investors’
views to the Board.
– Organising periodic monitoring
and evaluation, including
externally facilitated evaluation,
of the performance of the
Board, its committees and
individual Directors.
– Leading on succession planning
for the Board and its
committees, ensuring
appointments reflect diverse
cultures, skills and experiences.
The Group Chief Executive is
responsible for:
– Developing Tesco’s strategic
direction for consideration
by the Board.
– Implementing the strategy
and reporting on progress.
– Day-to-day management
of the Company,
communicating expectations
in relation to Company
culture and ensuring
responsible business
conduct across the business.
– Providing effective
leadership, coordination and
performance management
of the Executive team.
Further details on how the
Executive Committee support
the Group Chief Executive can
be found on page 63.
The Senior Independent
Director’s responsibilities
include:
– Acting as a sounding board
for the Chair and a trusted
intermediary for other
Directors.
– Leading the annual review of
the Chair’s performance,
together with the Non-
executive Directors, taking
into account the views of the
Executive Directors.
– Discussing the results of the
Chair’s effectiveness review
with the Chair.
– Leading the search and
appointment process and
makes the recommendation
to the Board for a new Chair.
– Acting as an additional point
of contact for shareholders.
– Maintaining an understanding
of shareholder issues and
concerns through meetings
with shareholders and
briefings from the Group
Company Secretary.
Bring independent insight and
experience to the Board.
The Non-executive Directors
have responsibility for:
– Constructive challenge of
the strategies proposed by
the Executive Directors.
– Scrutinise the performance
of management in achieving
agreed goals and objectives.
– Play leading roles in the
function of the Board
committees and bring
an independent view to
the discussion.
Engage and listen to the CCP
representatives and develop
a greater understanding
of colleagues’ views on the
operations of the business.
Monitor actions to address
issues raised by the CCP
representatives.
With the support of the Chief
People Officer, report back to
the Board to ensure all
directors have an awareness
of colleague views and these
are reflected in decisions.
Provide CCP representatives
with an awareness of Board
and business priorities and the
impact on business practices.
– Supports the Board and
Committee Chairs to plan
future agendas and annual
programmes.
– Ensures information is made
available to Board members
in a timely fashion.
– Supports the Chair to design
and deliver Board inductions.
– Coordinates continuing
business awareness and
training for the Non-
executive Directors.
– Undertakes internal Board
and committee evaluations
at the Chair’s request.
– Advises the Directors on
Board practice and
procedures and corporate
governance matters.
– All directors and senior
executives have access
to the advice of the Group
Company Secretary and is
a point of contact for
shareholders on all corporate
governance matters.
Tesco PLC Annual Report and Financial Statements 2025
60.
Board
The Board has collective responsibility to promote the long-term, sustainable
success of the Group, ensuring due regard is paid to the interests of its stakeholders
Board Committees
The Board is supported by the activities of its
Committees, which ensure that specific matters
receive the right level of attention and
consideration. In addition, each Committee works
in collaboration with other Board Committees to
oversee, support and determine specific matters.
Matters considered by each of the Committees are
set out in the Committees’ terms of reference
which can be found at www.tescoplc.com.
Audit
Committee
Nominations and
Governance Committee
Remuneration
Committee
Sustainability
Committee
Chair Karen Whitworth
Oversees the integrity of the financial
reporting and audit process, and
the maintenance of sound internal
controls and risk management
systems. The Committee monitors
the effectiveness of internal
and external audit and reviews
concerns about financial fraud and
whistleblowing.
In addition, it reviews external
sustainability-related disclosures
and sustainability KPIs and reviews
management’s process for
identifying sustainability risks
and internal controls.
Chair Gerry Murphy
Reviews the size, composition, tenure
and skills of the Board. Leads the
process for appointments to the
Board and makes recommendations
to ensure plans are in place for
orderly succession to both the Board
and senior management positions,
and oversees a diverse succession
pipeline. The Committee also has
a role to ensure that the Company
is managed to high standards of
corporate governance.
Chair Alison Platt
*
Determines remuneration policy and
packages for Executive Directors
and senior managers, having regard
to pay across the Group and the
views of stakeholders. Sets the
broad structure for the Company’s
Remuneration Policy and determines
the remuneration of the Chair, the
Executive team and the Company
Secretary. The Committee is also
responsible for reviewing workforce
remuneration and the alignment
of incentives and rewards with the
Company’s culture.
* Melissa Bethell will become Chair of the
Remuneration Committee at the
conclusion of the 2025 AGM.
Chair Stewart Gilliland
Provides oversight and effective
governance on the Group’s planet
plan pillars, community and human
rights initiatives to support the
delivery of the Group’s purpose,
strategic priorities and sustainability
objectives. The Committee oversees
the Group’s social and environmental
obligations, including climate-related
matters, and is responsible for
monitoring progress towards our
commitments. It works in conjunction
with the Remuneration Committee
on sustainability-related performance
objectives for executive leaders
and with the Audit Committee on
sustainability reporting.
Each of the Board Committees meet at least four times per year. Following each Committee meeting, the Committee Chair provides the Board with
a written and verbal update on recent Committee activities.
Disclosure Committee
The Board delegates responsibility to the Disclosure Committee to consider timely and accurate disclosure of sensitive information.
Details of Board Committee membership and Committee activity during the year is set out in the Committee reports on pages 72 to 122.
T T
The Board is committed to maintaining the highest standards of corporate governance in the management
of its affairs. A detailed governance framework ensures that the Board has the right level of oversight for
matters that are material to the Group.
The Board sets the Company’s purpose, values, strategy and long-term objectives. It is also responsible for the Group’s corporate governance activities,
risk management and financial performance and the framework is designed to improve the Board’s effectiveness and to support its oversight
of the senior leadership team as it delivers the Company’s strategy. To ensure the framework’s optimal effectiveness, it has a clear division of
responsibilities, appropriate distribution of workload to the Board Committee and highly committed directors who are motivated to carry out
their roles and responsibilities for the success of the Company.
Governance
framework.
Cross-Committee memberships
The table provides details of the number of
Non-executive Directors representing multiple
Committees. Cross-Committee membership
provides visibility and awareness of matters
relevant across the Committees.
Audit Committee Remuneration Committee Sustainability Committee
Audit Committee (total no. of members: 5) 3 2
Remuneration Committee (total no. of members: 5) 3 3
Sustainability Committee (total no. of members: 5) 2 3
Note: all Non-executive Directors are members of the Nominations and Governance Committee.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
61.
GovernanceStrategic report
Corporate governance report continued
Governance framework continued
Role and operations of the Board
Summary of schedule of matters
reserved for the Board
The Board:
– Sets and monitors the Group’s purpose,
strategy, values and culture.
– Sets the long-term plan and budget.
– Monitors net zero commitments for Scope 1, 2
and 3.
– Oversees risk management and internal controls.
– Determines the nature and extent of emerging
and principal risks.
– Oversees implementation of the governance
framework.
– Monitors financial reporting, controls
and disclosures.
– Approves changes to corporate and capital
structure.
– Sets the dividend policy and approves any
declarations.
– Approves significant capital expenditure,
borrowing and material contracts.
– Approves major acquisitions, mergers, joint
ventures and disposals.
– Approves changes to the pension scheme
arrangements.
– Reviews and approves remuneration policies
and share schemes.
The full schedule of matters reserved for
the Board can be found on our website at
www.tescoplc.com.
T
Board purpose and
responsibilities
The Board is responsible for setting the
overall strategy of the Group and remains
focused on delivering on our four strategic
priorities: magnetic value for customers;
easily the most convenient; I love my Tesco
Clubcard; and save to invest. Sustainability is
built into our purpose, strategy and business
plans, ensuring the risks and opportunities
associated with climate change are
embedded in all we do. The Group is
committed to operating in a responsible and
sustainable way which reflects our values. To
ensure climate considerations are integrated
within our governance framework, roles and
responsibilities are set out in a schedule of
matters reserved for the Board and in the
Committees’ terms of reference.
The Board has collective responsibility for
promoting the long-term sustainable success
of the Group, taking into consideration the
views of, and impact to its stakeholders, and
ensuring that it operates within a framework
of effective controls. It has ultimate
responsibility for ensuring adequate resource
is available to meet agreed objectives and
strategy, ensuring that resources are
responsibly and effectively deployed.
The Board has adopted a formal schedule of
matters reserved, detailing matters that are
considered of significance to the Group owing
to their strategic, financial or reputational
importance or consequences.
More information on the purpose and
culture, strategic priorities, risk
management and internal controls
framework can be found on pages 10,
16 to 17, 40 to 47 and 64 to 65.
How the Board operates
The Board and its Committees have a
forward-looking programme of agenda items
scheduled for discussion throughout the
year to ensure operational and financial
performance, strategy which includes
our sustainability targets, risk, culture
and stakeholders are discussed at the
appropriate time. A regular review of the
forward planners is undertaken and the Chair
of the Board, or relevant Committee, ensures
that sufficient time is allowed for discussion
and debate on the topics scheduled. They
encourage constructive discussion and
challenge during meetings.
Standard paper templates are reviewed on
a regular basis to ensure Directors receive
high-quality, clear and timely information
to support their oversight, challenge and
decision making in a standard format.
If Directors have concerns about the
Company or a proposed action which cannot
be resolved, it is recorded in the Board
minutes. In addition, upon resignation,
Non-executive Directors are encouraged to
provide a written statement of any concerns
for circulation to the Board. No such
concerns were raised in FY 24/25.
The Board held six scheduled meetings during
the year and additional strategy meetings at
which senior managers presented on each of
our business areas. In the rare event of a
Director being unable to attend all or part of
a Board or Committee meeting, the Chair of
the respective meeting discusses the matters
proposed with the Director concerned,
wherever possible, seeking their support and
feedback accordingly. The Chair subsequently
represents those views at the meeting. In
addition, the Group Chief Executive provides
updates to the Board at regular intervals
between Board meetings to report on
business performance and provide relevant
market insights.
During the year, Board meetings have
commenced with a meeting of the Chair
and Non-executive Directors only.
In the event of an urgent, business critical
matter requiring Board approval in
accordance with the schedule of reserved
matters for the Board, or under the Group
delegation of authority, which arises between
scheduled Board meetings, a sub-Committee
of the Board is formed, the quorum for which
is any two of the Chair, Group Chief Executive
or Senior Independent Director. Any approvals
granted through the Board sub-Committee
are noted by the Board at its following meeting.
The Group provides access, at its expense,
to the services of independent professional
advisors in order to assist Directors in their
role. A Directors’ and Officers’ liability
insurance policy is maintained for all
Directors and each Director has the benefit
of a deed of indemnity.
The table on page 59 shows the
attendance at the scheduled Board
meetings. Attendance at Committee
meetings can be found in the relevant
Committee reports on pages 72 to 122.
T
Tesco PLC Annual Report and Financial Statements 2025
62.
Executive Committee
The Board delegates responsibility to the Group Chief Executive for overseeing the day-to-day
operations of the Group, formulating, implementing and overseeing the Group’s strategic objectives
as approved by the Board. The Group’s delegation of authority, matters reserved for the Board and
Committees’ terms of reference provide a clear direction on oversight and decision making. The
Group Chief Executive is supported by the Executive Committee in carrying out this role. The
Executive Committee comprises Ken Murphy and Imran Nawaz, Executive Directors of the Board,
CEOs of our regional businesses and senior management in key functional roles detailed below.
Ken Murphy
Group Chief Executive
Member since October 2020
Imran Nawaz
Chief Financial Officer
Member since May 2021
Natasha Adams
CEO, Ireland and Northern Ireland
Member since June 2018
Matthew Barnes
CEO, UK
Member since March 2024
Guus Dekkers
Chief Technology Officer
Member since May 2021
Christine Heffernan
Group Communications Director
Member since March 2019
Kay Majid¹
Group General Counsel
Member since July 2024
Ashwin Prasad
Chief Commercial Officer
Member since September 2020
Matt Simister
CEO, Central Europe
Member since April 2017
Emma Taylor
Chief People Officer
Member since March 2022
Andrew Yaxley
CEO, Booker
Member since July 2018
1. In July 2024, Adrian Morris left the business and was succeeded by Kay Majid.
The Executive Committee has 11 scheduled meetings per year which are minuted, together with
more informal weekly check-in meetings.
During the year, the Executive Committee played a key role in driving the Group’s strategy and
objectives forward.
The Executive Committee’s key responsibilities include:
– Making recommendations to the Board and implementing the objectives and strategy set
by the Board.
– Developing the Group’s budget and long term plan for consideration by the Board.
– Supporting the delivery of the Group’s strategic priorities.
– Developing the sustainability agenda to balance short, medium and long-term objectives.
– Review of capital investments required to achieve the net zero objectives, ensuring that
the investments are included in the long term plan and annual budget.
– Ensuring identification, management and monitoring of risk and effective internal controls.
– Approving material contracts and transactions in accordance with the delegation of
authority framework.
– Monitoring the people agenda across the Group including: culture; succession planning;
talent management; and diversity, equity and inclusion.
The Executive Committee terms of reference are reviewed on an annual basis.
These can be found on our website at www.tescoplc.com.
T
Biographies for each of the Executive Committee members can be found on our website
at www.tescoplc.com which sets out their roles, responsibilities and experience.
There are a number of executive level committees established to support the Executive Committee
in the delivery of their role. Some of the key executive level committees are detailed below.
Executive level committees
These executive level committees provide updates to the Board, Audit, Sustainability and Executive
Committee on matters of significance.
Group risk and
compliance
Responsible for: the
oversight of key risks on
behalf of the Executive
Committee; evaluating
and proposing policies;
monitoring processes to
control business,
operational and compliance
risks faced by the Group;
and assessing emerging
risks. It reports twice-yearly
to the Executive Committee
and Audit Committee.
Planet
Responsible for reviewing
and monitoring the climate
strategy against agreed
performance measures and
recommending the actions
needed to achieve the
Group’s net zero objectives.
Three steering groups
underpin the
implementation and
compliance component
of our planet governance
structure and feed into
the planet committee.
Cyber and privacy
Responsible for ensuring
a comprehensive
understanding of the
potential cyber exposure of
the Group and the effective
oversight and governance of
cyber risk management
plans. A dedicated cyber
security programme has
been developed with clearly
defined governance,
oversight and structured
training processes. Matters
of significance are raised at
the Board, Audit Committee
and Executive Committee
as appropriate.
More information on the Group’s sustainability governance can be found in the Sustainability report
on our website at www.tescoplc.com.
T
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
63.
GovernanceStrategic report
Governance of
risk management
and internal control
framework
Board
Sets the risk culture and
risk appetite, ensuring
it is aligned to strategy.
Defines the nature and extent
of emerging and principal risks.
Is responsible for establishing
an effective internal
control framework.
Audit Committee
Supports the Board to assess
and monitor significant risks,
ensuring the appropriate
mitigations and approach to
identification is in place.
Monitors the effectiveness of
the internal control framework
and assurance.
Reviews and approves of audit
and assurance policies.
Remuneration
Committee
Ensures performance-related
elements of remuneration have
appropriate metrics and targets,
ensuring that incentive arrangements
do not take inappropriate risks.
The remuneration policy has
malus and clawback
provisions in the event
of behavioural risk.
Sustainability Committee
Monitors KPIs relating to
sustainability and climate
objectives, highlighting any
potential risks to the Audit
Committee and Board.
Executive Committee
Ensures that risks and
opportunities are effectively
managed across the Group
with the support of the
Group risk and
compliance committee.
Corporate governance report continued
Governance framework continued
Did you know:
The risk management
framework provides
clear processes for
risk identification,
assessment and
management.
The approach is
supplemented by red
team testing, the
development of
resilience plans and
assurance outputs
from second and
third lines.
Spotlight on:
Risk.
T
Risk management and internal
control framework
The Board has overall responsibility for internal
controls and risk management processes. It has
established a risk management framework
to manage and report the risks faced by the
business. A strong risk culture is at the heart
of our risk management framework with clear
risk ownership and proactive leadership.
The responsibility for identifying, assessing,
escalating and managing risks resides with
management at a functional, business unit
and executive level. The Audit Committee,
on behalf of the Board, undertakes an
annual effectiveness assessment of the risk
management framework, with regular focus
on specific emerging risk themes and a review
across all principal risks, twice a year, which
also supports the external reporting process,
see page 86. The Group risk and compliance
committee is responsible for the oversight of
key risks on behalf of the Executive Committee.
Our approach to risk allows us to adapt to
changing internal and external factors through
the three lines of defence model and combines
the top-down with bottom-up risk management
approach to ensure the Group can respond to a
continuously changing environment.
The Board, Audit Committee and Executive
Committee undertake deep dives into our
principal risks periodically during the year.
Tesco PLC Annual Report and Financial Statements 2025
64.
Purpose
and culture.
Our
purpose
Serving our customers, communities and planet a little better every day
means we always keep customers at the heart of what we do, while also reflecting
our responsibilities to the communities we serve and to society more broadly.
Our
values
No one tries harder
for our customers
We treat people
how they want
to be treated
Every little help
makes a big
difference
Our three values underpin our purpose, setting out how we work together as a team
and guiding the decisions and choices we make across the Group.
Win
together
behaviours
Believe in
each other:
Building trust
in teams and
enabling end-to-
end collaboration
across Tesco.
Stay curious:
Seeking new and
different ideas
and listening to
every voice in
the room.
Be brave:
Doing the
right thing and
creating safe
spaces where
colleagues can
test, learn and
speak up.
Live 20/80:
Prioritising the
few things that
will make
the biggest
difference.
Our win together behaviours underpin our values.
How does the Board monitor culture?
The Board receives detailed reports on a wide variety of topics to allow it to assess culture within
the Group, to ensure it is aligned with our purpose and supports the delivery of the strategy:
People updates
People updates include metrics and KPIs on senior management succession planning, talent
management and monitoring progress against our diversity, equity and inclusion (DE&I) strategy.
More information on the Group’s diversity, equity and inclusion strategy can be found on
page 23 and page 75.
Assessment of executive performance
Assessment of executive performance to ensure it is aligned to the strategic drivers, KPIs and
win together behaviours. The Board and Remuneration Committee monitor the outturns of Your
Contribution for Executive Committee members and senior management. Your Contribution is the way
performance is measured for all colleagues around the Group to drive the culture we want to see, and
a newly introduced Line Manager Standard ensures anyone with management responsibilities is
measured against a clear set of expectations.
Supported by the Executive Committee
Supported by the Executive Committee, the results of the colleague survey are analysed and an action
plan is developed to address any issues. Additionally, the results of supplier engagement surveys
are analysed and reviewed by the Board and Executive Committee. An action plan is developed for
improvements required.
Colleague Contribution Panels
CCPs, which represent the workforce across all business areas of the Group, are hosted by an
Independent Non-executive Director (the Workforce Engagement Host). Each forum meets twice during
the year and the Workforce Engagement Host provides feedback to the Board following each meeting.
More information on our CCPs can be found on page 69.
Our Code of Business Conduct
Our Code of Business Conduct defines the standards and behaviours expected of colleagues and is
supported by Group policies and mandatory training which is completed by all colleagues in the first
five business days after joining, and on an annual basis, to reinforce the importance of these standards.
The results of the annual compliance programme are reported to the Audit Committee for review.
Visit www.tescoplc.com to view Tesco’s Code of Business Conduct.
Protector Line
Protector Line provides colleagues and suppliers with a completely independent support service where
they have the ability to raise concerns regarding possible misconduct and breaches of the Tesco’s Code of
Business Conduct. The whistleblowing policy sets out how matters of concern can be reported and explains
the protection and support that will be given. The Audit Committee provides oversight of the effectiveness
of the Group’s internal whistleblowing policy and the independent Protector Line arrangements.
All of this allows the Board to assess progress against strategy and provides oversight of the culture
we operate in.
Culture
The Board has overall responsibility for establishing and monitoring the Company’s purpose, values
and behaviours, ensuring that the Group is appropriately managed and achieves its objectives in a way
that is supported by the right culture. We aim to create a positive culture at Tesco which aligns our
purpose, values and win together behaviours. Our clear diversity, equity and inclusion strategy
strives to create an inclusive workplace, where colleagues feel welcome and able to be themselves.
Operating within this culture supports the delivery of our strategy and our long-term sustainable
success, while generating value for shareholders. Our purpose and values are fundamental to the
way we act and drive the Group’s culture. Our values and win together behaviours ensure that the
Tesco culture is embedded throughout the organisation.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
65.
GovernanceStrategic report
Corporate governance report continued
Performance review.
The Chair and the Board continually work to strengthen and enhance the performance, skills and
experience of the Board to align with Group strategy. To ensure the Board remains effective, a
performance review is carried out each year to review the effectiveness of the Board, its Committees
and Directors. These reviews operate on a three-yearly cycle as shown below.
Year 1
Internal effectiveness
review via questionnaire
led by the Chair
Year 2
Internal effectiveness
review via questionnaire
led by the Chair
Year 3
Externally facilitated
effectiveness review
The Chair’s review is undertaken on an annual basis and is always led by the Senior Independent Director.
The external effectiveness review offers an independent review of the Board’s performance. This year,
Calibro Consult Limited was appointed to facilitate the external review. Calibro Consult Limited has no
other connection to Tesco or any of its Directors. During 2025/26 an internal effectiveness review will
be undertaken.
Progress against actions identified through the FY 23/24 internal performance review are detailed below:
Action identified Progress against action
Continue to review Board composition,
with a focus on strengthening the
expertise and skills required to deliver
the Group’s long-term objectives
and opportunities to further
enhance diversity.
The Nominations and Governance Committee reviewed
Non-executive Director skills and expertise through
succession plans, executive and senior management roles.
Lygon Group were instructed to perform a search for an
experienced CFO to join the Board and Audit Committee
and we announced the appointment of Chris Kennedy in
December 2024. All Independent Non-executive Directors
were appointed to Nominations and Governance Committee
providing oversight and input to succession plans.
Continue to shape the Board agenda
to concentrate on the longer-term
strategy with a focus on growth, net
zero commitments, the customer
experience and technology.
Forward planners for the Board and Committees reviewed
to enhance stakeholder reporting to the Board. Additional
strategy sessions scheduled.
Continue to review Group performance
in a changing market and the changing
needs of our customers.
Board views sought on 1:1 basis on longer-term trends
and opportunities and discussed at strategy meeting.
Continue to develop and test
risk appetite.
Risk Appetite Framework reviewed and developed.
Additional risk deep dives scheduled at the Audit Committee
at which all Board members were invited to attend.
Spotlight on:
Effectiveness.
FY 24/25 External Board effectiveness review
Stage 1
Scope of
effectiveness
review
Stage 2
Attendance
at meetings
Stage 3
Discuss findings
Stage 4
Development
of action plan
An overview of the process is set out below:
June–August – selection of external effectiveness review provider. Discussions with Chair,
Group Chief Executive, Senior Independent Director and Group Company Secretary on
scope and deliverables.
September – attendance and observation of Board and Committee meetings.
October–December – individual interviews with Independent Non-executive Directors
and Executive Committee members.
November – attendance and observation at the strategy Board session and Committee meetings.
January – draft report on findings.
February – discussions with Chair on findings and presentation to the Board.
April – development of action plan to measure progress against key objectives.
Focus of effectiveness review
– Purpose, culture, values and behaviours
– Strategy and future growth ambitions
– Approach to sustainability and inclusion
– Key challenges for the Board and
management team linked to the strategy
– Board composition, dynamics, operations
and structures
– Internal culture
– External factors and the changing
business environment
The Nominations and Governance
Committee will review the action plan to
track progress against the actions identified.
Actions identified
Continue to:
– develop and implement the longer-term
strategy and growth ambitions;
– shape the agenda and Board focus with
a balance of operational oversight and
strategic development;
– enhance our strategic enablers through
technology and our people with a focus
on succession and talent planning,
capability, diversity and expertise; and
– evolve the appetite for risk in alignment
with the longer-term strategy.
Tesco PLC Annual Report and Financial Statements 2025
66.
Board
activity.
During discussions at Board meetings, the views of our stakeholders form an integral part of the Board’s
decision making. Key topics are reviewed, discussed and debated during the year by the Board to
support Directors in their oversight and provide the opportunity to challenge executive management.
Spotlight on:
Planning.
Crisis management simulation
As a large business, we make sure that we
are well prepared to respond to incidents
at all levels of the organisation. Every year,
leaders from across the business are invited
to take part in a series of crisis simulations.
In February 2025, the Board took part in
one of these exercises alongside the
Executive Committee and the UK leadership
team. The aim of the exercise was to
rehearse the Group’s response and ensure
that all participants understand their roles
in a crisis. All the exercises are based on
fictitious but plausible scenarios that
could impact Tesco such as cyber attacks,
disruptive geopolitical events, natural
disasters or civil unrest and are kept secret
from the exercise participants until a few
days before the exercise, to make it as
realistic as possible.
Our response to a crisis is guided by our
purpose and values, and by our legal
and regulatory obligations. Our guiding
principles in a crisis are: prioritising the
safety and security of our customers and
colleagues; maintaining the supply of food
and essential products and services across
our footprint; and safeguarding our
financial viability.
The February exercise saw our Board,
Executive Committee and UK leadership
team demonstrating a high level of maturity
in crisis preparedness, and has led to
further initiatives on scenario planning
aligned to our principal risks.
Strategy and purpose Strategic drivers
Each year the Board spends a few focused days immersing itself in
the Group strategy. This involves meeting colleagues and suppliers,
discussing the operational alignment with strategy, and horizon
scanning impact, risks and opportunities for the business. During the
year, the Board hosted two strategy workshops to further develop
the longer-term strategy with a focus on customer strategy,
digitisation and personalisation.
Additionally, the Board receives strategic updates throughout the
year with the aim of gaining a better understanding of market trends,
technology developments, innovation and people strategies to
support the long-term planning and strategic direction of the Group.
The Board regularly reviews the progress of the Group’s strategic
drivers and long-term plan, which represents a strong three-year
plan delivering growth and sustainable value for stakeholders.
Having a clear strategic direction for the short, medium and longer
term, and understanding our stakeholder expectations, is vital for
the delivery of our strategic priorities.
Updates are provided by the Group Chief Executive, the Chief
Financial Officer and other members of senior management in
respect of all material matters, to ensure the delivery of strategic
drivers and KPIs in line with our culture, purpose and values.
Technology updates provide an overview of operational stability,
technical capability, transformation, cyber security and the use of AI
in our business. Our dedicated cyber security programme has clearly
defined governance, oversight and structured training processes.
Updates provide the Board with oversight of the risks and
opportunities available. Improvements in technology continue to
support the delivery of the Group’s strategic priorities. We continue
to embed AI into our business to optimise operations to better serve
our customers, communities and planet. As new techniques and
uses emerge, we are exploring how they could be adopted to deliver
on our purpose. Through our AI governance framework, we ensure
that any AI technologies utilised by the business are fair, safe,
transparent, explainable, accountable and sustainable, and that
they comply with existing legislation and any emerging legislation.
Magnetic value for
customers: Re-defining
value to become the
customer’s favourite
I love my Tesco
Clubcard: Creating a
competitive advantage
through our powerful
digital capability
Easily the most
convenient: Serving
customers wherever,
whenever and however
they want to be served
Save to invest:
Significant opportunities
to simplify, become more
productive and reduce
costs
Our response to a crisis is guided by our purpose and values,
and by our legal and regulatory obligations.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
67.
GovernanceStrategic reportStrategic report
Corporate governance report continued
Board activity continued
Did you know:
The Board’s forward
planner ensures that
there is sufficient time
for discussion and
debate on topics
scheduled and
provides an
opportunity to deep
dive into matters
relating to each of our
stakeholder groups
during the year.
Operational performance
Business updates from UK, ROI, Central Europe,
Booker, dunnhumby and Tesco Mobile provide
essential oversight of the operational
performance of the Group, highlighting
opportunities, challenges and risks faced by the
different business areas, insight into how our
different markets operate and the differing
needs of our stakeholders. Trading updates to
the Board provide insight into managing capacity
through peak trading, stock management and
resourcing. This supports the Board in identifying
growth opportunities and the delivery of the
Group’s strategic drivers.
The Board places significant importance on
looking after the safety of colleagues, customers
and anyone else impacted by our business.
Health and safety updates focus on people
safety, the safety framework and strategy,
progress against safety priorities, opportunities
for improvement, the volume and severity of
injuries and cost of injury claims across all
business areas.
Throughout the year, Directors, individually
and collectively, explored specific operational
activities through presentations, meetings and
site visits, giving them the opportunity to meet
with senior management to gain insight into the
business operations and the challenges they
face. This enables the Non-executive Directors
to engage with colleagues from across the
Group, giving them a greater understanding
of colleague views and provides a true
understanding of the operations. Directors
have visited a number of our business functions,
including Tesco Business Services in India,
distribution centres and supplier operations.
Financial performance, risk
management and internal controls
Through the Chief Financial Officer’s report, the
Board regularly reviews the financial position,
going concern and viability of the Group, with
updates on progress against the Group budget
and the long term plan, plus a detailed overview
of each of the business areas including
performance against each business unit budget,
sales, profit, cash flow and capital expenditure.
Updates provide the Board with oversight of
the progress against the Big 6 and the key
performance indicators across the Group.
More information on the Big 6 and key
performance indicators can be found
on page 19.
The Board reviews the most significant or
principal risks facing the Group. Having the right
systems and controls in place across the Group
facilitates effective management and sound
decision making. Efficient internal reporting,
effective internal controls, and oversight of
current and emerging risk themes are embedded
into our business processes and are
fundamental to Tesco’s governance framework.
The Board has visibility of the strategic, financial,
operational, change and compliance risks facing
the business. The Board is kept abreast of
developments through the work of the Audit
Committee, to ensure it has dedicated oversight
and the relevant mitigations are put in place.
More information on the principal risks and
uncertainties and the risk management
and internal control framework can be
found on pages 40 to 47 and page 64.
The Board reviews and approves the capital
allocation framework, dividend policy and
shareholder returns and the management of the
Group’s debt capital markets activities, including
any new issuance of bonds under the euro
medium term note programme. Oversight of
these activities ensures that future liabilities
can be met.
The Board, supported by the Executive
Committee, has visibility of the property strategy
and approves any significant capital expenditure
under that strategy. The annual fair value
property valuations provide oversight of the
property portfolio, ensuring the portfolio is
properly managed and accounted for.
Governance and culture
Reports from the Group Company Secretary
at each Board meeting update the Board on
governance-related matters, which have
included over the year: regulatory changes; the
share buyback programme; Non-executive
Director fees; share forfeiture programme;
modern slavery; material litigation; review and
approval of statutory reporting and shareholder
documentation; the annual renewal of directors’
and officers’ insurance and the review and
approval of material contracts taking into
consideration the associated operational and
financial benefits, risks and opportunities, and
consideration of the impact on all stakeholders.
More information on how the Board
monitors culture can be found on page 65.
Tesco PLC Annual Report and Financial Statements 2025
68.
Stakeholder engagement
Engagement with all our stakeholders is led by
our Executive team. The Board’s forward planner
schedules matters for discussion by the Board
and ensures that the Board has the opportunity
to have a deep dive into each of our stakeholder
groups during the year, providing the opportunity
for directors to discuss, challenge and create
opportunities in line with strategy. This facilitates
the Board’s understanding of stakeholder views,
market trends and challenges in light of the
Group’s strategic priorities and sustainability
objectives. Each decision taken by the Board
aligns to our culture and values, and considers
the benefits, risks, financial implications and
impact on relevant stakeholders. The Board
reviews the results, management action plans
and areas for improvement based on customer,
colleague and supplier surveys.
Our commitment to our customers extends
beyond our stores, and into every community
we serve. Our partnerships with suppliers are
vitally important in delivering great value and
great quality products for our customers.
Our work on human rights is fully integrated
within our operations, forming a key part of our
broader commitment to being a responsible
and sustainable business. We will always look
to work with suppliers to meet our responsible
sourcing and ethical requirements. The
Sustainability Committee provides oversight
on human rights matters.
During the year, the Board met with a number
of suppliers, which included a Board visit to
one of our suppliers, to deepen the Board’s
understanding of the challenges faced and
support that can be provided.
More information on the Sustainability
Committee supplier visit can be found
on page 78.
Throughout the year, regular dialogue between
our Group Chief Executive, Chief Financial
Officer and senior management, and our
institutional investors, potential investors and
analysts has taken place, including through
calls, and individual and group meetings, with
a particular focus on themes such as the
consumer and market environment, strategic
priorities and capital allocation.
It is the Board’s intention to continue to pay
a progressive dividend, broadly targeting
a payout of around 50% of earnings. Our
long-term plan sets out our growth ambitions
over the next three years, including continued
delivery for all stakeholders and ongoing cash
returns to our shareholders.
We continue to see the buyback programme
as an ongoing and critical driver of shareholder
returns. By April 2026, we plan to buy back
£1.45bn worth of shares.
Our commitment to operating in a responsible
and sustainable way reflects our values; we know
we can make a big difference. We aim to be
carbon neutral across our own operations
by 2035 and are working with suppliers and
partners to deliver our goal to be net zero from
farm to fork by 2050. We will continue to deliver
action on climate through our planet plan across
all our businesses.
More information on our stakeholder
engagement and climate commitments
can be found on pages 20 to 22 and pages
31 to 35.
Spotlight on:
Colleagues.
Colleague Contribution Panels
The CCPs provide a platform for colleagues
to bring new ideas to the table, including
improvements for communications and
colleague benefits. The forum facilitates open
discussions and ensures that the Board is
aware of the views of the workforce. Having a
designated Non-executive Director (the Host)
for each CCP provides continuity, allows a
deeper understanding of specific workforce-
related matters by the Board and supports
colleagues develop a better awareness of
Board matters and business priorities.
During FY 24/25, five CCPs were held to
discuss topical issues and matters of
importance, with a focus on: health and
wellbeing; executive remuneration policy;
and would you recommend Tesco as a place
to shop. Each Host provided highlights of the
Board’s activities, which included: our growth
strategy; progress against the six pillars of
the planet plan; sale of the Group’s Banking
operations; an overview of our Chair and
Senior Independent Director induction
programme; details of Board visits
undertaken during the year; everyone’s
welcome strategy; and an overview of Board
governance and the Board’s future focus.
In addition, management went through some
of the key elements of the Every Voice Matters
colleague engagement survey and actions
captured at the previous CCP.
Themes raised by representatives included
pay and reward, increased availability of
healthier food, flexible working and the need
for more product variety and better regional
product placement. Positive feedback was
received on the introduction of virtual GP
services and mental health support services,
the free fruit initiative and improved
discounts in Central Europe.
The Board receives updates directly from each
Host, allowing for more informed decisions
to be made in the long term in the interests
of the Company and its stakeholders.
In addition to the CCPs, we have engaged with
contractors through the Contingent Workers
Survey to obtain their views as part of
capturing wider workforce engagement.
Contractors highly value Tesco’s collaborative
environment, flexibility and strong
management support. They seek better
communication, aligned benefits
and streamlined administrative processes.
1. Melissa Bethell will take on the role of Central Europe CCP Host in June 2025.
Board
UK, ROI and subsidiaries CCP
(Host: Carolyn Fairbairn)
Central Europe CCP
(Host: Alison Platt¹)
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
69.
GovernanceStrategic report
Tesco PLC Annual Report and Financial Statements 2025
Strategic report
Corporate governance report continued
Section 172 statement.
The Board recognises that stakeholder
engagement and understanding the
consequences of any decision in the long term
are vital to the sustainable success of the
Company. The differing interests of stakeholders
are considered in the business decisions
we make across Tesco at all levels and are
reinforced by the Board. However, it is not always
possible to provide positive outcomes for all
stakeholders, and sometimes the Board has
to make decisions based on balancing competing
stakeholder priorities, while ensuring it is in
the best interests of the Group. Through
engagement with our key stakeholders, the
Board understands these competing priorities.
In addition, the interests and views of Tesco
pensioners and our relationship with regulators
and NGOs are taken into consideration.
Details of our key stakeholders are set out
on pages 20 to 22.
In performing their duties during the year, the
Directors have had regard for the matters set
out in section 172 of the Companies Act 2006.
Examples of how the Directors have oversight
of stakeholder matters and had regard for these
matters when making decisions is included
throughout this Annual Report.
Directors have acted in a way they consider to
be in good faith and to be most likely to promote
the long-term success of the Company.
This statement is incorporated by reference
into the Strategic report.
Section 172 (a)–(f) additional information Pages
D.
Impact of our
operations on the
community and
environment
Our market context 14 and 15
Planet, Nature and TCFD 31 to 39,
48 and 49
Stakeholder engagement 22
Board activity and Section 172
statement
67 to 69 and
70
Sustainability Committee report 76 to 79
E.
Maintain a
reputation
for high
standards of
business conduct
Our purpose framework and
Our business model
10 and 18
Governance framework 61 to 63
Purpose and culture 65
Board activity and Section 172
statement
67 to 69 and
70
F.
Acting fairly
between
members of
the Company
Our strategic priorities and Key
performance indicators
16, 17 and 19
Board activity and Section 172
statement
67 to 69 and
70
Stakeholder engagement 21, 22
and 69
More information on the Board’s activities and how we engage with our
stakeholders can be found on pages 20 to 22 and pages 67 to 69.
Section 172 (a)–(f) additional information Pages
A.
Consequences of
any decisions in
the long term
Chair’s statement and
Group Chief Executive’s review
8, 9 and
11 to 13
Our market context and Our
strategic priorities
14 to 17
Key performance indicators and
Our business model
18 and 19
Longer term viability statement 50 and 51
Board activity and Section 172
statement
67 to 69 and
70
B.
Interests of the
employees
Key performance indicators 19
Everyone’s welcome 23
Stakeholder engagement 20 and 69
Corporate governance report 65 and 69
Nominations and Governance
Committee
72 to 75
Directors’ remuneration report 91 to 95, 101
to 106 and 117
Directors’ report 239
C.
Foster business
relationships
with suppliers,
customers
and others
Chair’s statement and Group
Chief Executive’s review
8, 9 and
11 to 13
Our market context and Our
strategic priorities
14 to 17
Key performance indicators and
Our business model
18 and 19
Principal risks and uncertainties 40 to 49
Stakeholder engagement 20 to 22
and 69
Tesco PLC Annual Report and Financial Statements 2025
70.
Key strategic decisions
Completion of the sale of the Banking operations to Barclays
As reported over the year, the Board approved the sale of its Banking operations to Barclays and entered into an exclusive 10-year partnership providing customers with access to Tesco-branded banking
products and services, combining Tesco’s market-leading brand, physical and digital reach, and relentless customer focus with Barclays’ deep financial services capabilities and expertise in commercial
partnerships. The partnership also creates the opportunity to develop new and innovative products with Barclays under the Tesco Bank brand. Through the partnership it allows us to offer customers
Tesco-branded banking products and services, while continuing to benefit from the Tesco Clubcard, and exploring other opportunities that offer value to Tesco customers. We have retained all the existing
insurance and money services activities, including ATMs, travel money and gift cards. The remaining activities have lower capital requirements than the Banking operations, and are profitable businesses with a
strong connection to the core retail offer. Following the completion in November 2024, the Board announced its intention to return £700m to shareholders via an incremental share buyback. When considering
the strategic partnership and sale, the Board discussed a number of factors including those affecting our stakeholders.
Strategic priorities
Our strategic priorities ensure that we focus on offering great value, quality and convenience for our customers, while rewarding loyalty. Through our colleagues, our reach and our supplier relationships, we are
well placed to serve our customers wherever, whenever and however they need us. Our strategy guides us to deliver top-line growth, grow profit and generate cash and in doing so, deliver for all our stakeholders.
Over the past 18 months, the Board has spent significant time working alongside the Executive Committee to shape the longer-term strategy and growth opportunities. This is being achieved through: expanding
our thinking; gaining insight into how others utilise technology; reviewing key trends; performing strategic diagnostics; challenging our ways of thinking; and considering the future needs of customers.
The Board has focused on key trends, the future consumer, AI, geopolitics, climate change and technological advances to support efficiency. We have made good progress on key initiatives to support our
strategic priorities. We continue to build our capabilities to support delivery of our longer-term objectives through investments in our people and technology, including robotic automation to streamline
operations, improve efficiency and support our commitment to deliver a seamless shopping experience for our customers. We have partnered with some of the UK’s leading healthcare companies as part
of a new store concept that gives customers easy and convenient access to even more high-quality health services. With our network of stores and pharmacies in communities all over the UK, we are uniquely
placed to help make food and healthcare accessible to our customers. Sustainability initiatives are now well integrated across our strategic priorities. Investment in Booker has supported the growing demand
for delivery with the opening of new catering hubs, improved availability and greater customer satisfaction.
Through this process, the Board has considered the views and impacts on all stakeholders, in particular the needs of our customers, how we support our suppliers through long-term strategic partnerships,
the impact of a rapidly evolving retail environment and supporting colleagues across our workforce. Through regular updates and feedback on management engagement with stakeholders, the Board has
oversight of stakeholder views. More information can be found in Stakeholder engagement on pages 20 to 22, Board activity on pages 67 to 69 and the Board’s visit to Cranswick on page 78.
Throughout 25/26, the Board will continue to develop initiatives to deliver the longer-term strategy through greater focus of key areas in scheduled Board meetings, additional strategy workshops, advice
from external experts and Board visits to strengthen our capability and strategic partnerships.
Personalisation Retail media
Our ambition is to deliver the most helpful personalised shopping experience for customers through
healthy swaps, nudges and suggestions with the help of Clubcard pricing. This will also support our
customers through health and wellness initiatives. We continue to enhance our data analytics insight
and the use of AI to better understand our customers and deliver them more personalised offers, to
improve outputs from customer feedback and assist with demand forecasting and waste reduction.
Personalised Clubcard Challenges were offered to 10 million customers and launched a trial of Your
Clubcard Prices, which contributed to record levels of digital engagement.
We are expanding our retail media channel via the Tesco Media and Insight Platform which will result
in a growth in active advertisers, number of campaigns per advertiser and an increase in spend per
campaign. This will support our supplier strategy, build strategic partnerships and form part of our
enhanced brand strategy.
We have mobilised a dedicated Tesco Media and Insight Platform team. Through new partnerships with
WPP and Publicis we have been able to leverage our combined expertise and reach across a broader
pool of advertisers. We now have more than 5,000 in-store screens and more than 9,000 retail
media campaigns.
Marketplace Integration of sustainability across our longer-term strategy
In June 2024 we introduced our own marketplace proposition, offering customers an even broader range
of products from our specially selected partners. While we are still in the early stages of this, we are
now offering more than 400,000 third-party products across a range of categories. We have ambitious
growth plans aimed at expanding our product range and enhancing the overall customer experience.
We aim to deliver a more integrated consumer offering through expansion of our range and building
more strategic brand partnerships.
Our commitments to reduce carbon emissions, tackle food waste and promote healthier diets
demonstrates the importance of our role as a responsible business. Our key climate priorities through
our planet plan continue to be a focus for the Board and senior management, ensuring our current
approach to sustainability delivers competitive advantage for the business, as well as delivering on
our commitments.
More information on our sustainability initiatives can be
found on pages 31 to 35.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
71.
GovernanceStrategic report
Corporate governance report continued
Nominations and
Governance Committee.
Key responsibilities
Board and senior management succession
planning
– Board and Board-level committee composition.
– Board and senior management succession
plans.
– Directors’ skills and experience matrix.
– Recommendation of annual election and
re-election of Directors.
– In-depth three-year and six-year review
of Non-executive Directors’ performance.
Talent management
– Talent management priorities and progress
made against the priorities.
– Review and implementation of Board diversity,
equity and inclusion policy.
– Monitor the progress of the Group’s diversity,
equity and inclusion strategy.
Group governance
– Review of corporate governance framework,
including matters reserved for the Board and
Committee terms of reference.
– Monitoring compliance against the UK
Corporate Governance Code.
– Board and Committee effectiveness review
process and progress against actions identified.
– Effectiveness review of Non-executive Directors
including review of time commitments,
independence and conflicts of interest.
– Governance-related legal and regulatory
developments including impact of the
UK Corporate Governance Code 2024.
The terms of reference for the
Committee are reviewed on an annual
basis and are published on our website
at www.tescoplc.com
Further details on compliance with the
UK Corporate Governance Code 2018 is
set out on page 53.
Committee membership
and meetings
The Committee is composed of the
Non-executive Chair and nine independent
Non-executive Directors. The Committee held
four scheduled meetings during the year with a
focus on talent management, succession
planning, diversity, equity and inclusion, Board
composition and Board effectiveness.
Board composition, expertise and
succession planning
To ensure the composition of the Board remains
aligned to the Group strategy, the Committee
monitors the size and composition of the Board
and its committees. Memberships are reviewed
to ensure an appropriate balance of skills,
knowledge, experience and diversity. The
Committee recognises the need to attract Board
members with a diverse range of backgrounds
who can contribute a wealth of knowledge,
understanding and experience of
the communities where Tesco operates.
The Committee is responsible for identifying and
reviewing suitable candidates through a formal
and transparent process, ensuring that plans
are in place for orderly succession to the Board.
There have been a number of changes to the
Board during the year.
Appointment of Senior Independent Director
In anticipation of the retirement of Byron Grote
at the conclusion of the AGM in June 2024,
following 1:1 interviews by the Chair of the Board,
the Committee recommended Carolyn Fairbairn
be appointed as Senior Independent Director
to replace Byron upon his retirement.
Board evolution
Alison Platt will retire as a director of the Board
following nine years’ service at the conclusion of
the 2025 AGM. Following the retirement of Byron
Grote, a detailed role profile was developed, and
an in-depth selection process was initiated,
assisted by Lygon Group, to identify a new
Non-executive Director. The Committee
considered a shortlist of candidates and
reviewed each against the current Board and
Committee composition, the existing diversity
Nominations and
Governance Committee.
Chair of the Board and Committee Chair
Gerry Murphy.
Committee membership
2
and tenure
Director Member since
Meeting
attendance
Gerry Murphy, Committee Chair September 2023 4/4
Melissa Bethell¹ June 2024 3/3
Bertrand Bodson¹ June 2024 3/3
Carolyn Fairbairn
1
June 2024 3/3
Thierry Garnier¹ June 2024 3/3
Stewart Gilliland April 2019 4/4
Chris Kennedy
3
February 2025 1/1
Alison Platt
4
April 2019 3/4
Caroline Silver¹ June 2024 3/3
Karen Whitworth¹ June 2024 3/3
1. In June 2024, the Committee membership was expanded to include all Non-executive Directors.
2. Byron Grote was a member of the Committee until he stood down from the Board in
June 2024. He attended one meeting during the year.
3. Chris Kennedy joined the Committee in February 2025.
4. Tesco PLC Board and Committee meetings are scheduled two years in advance of the meeting.
Due to unavoidable circumstances, it was necessary to change a couple of meeting dates
during 2024/25. This resulted in Alison Platt being unable to attend one committee meeting
during the year.
Focus during 2024/25
– Board and committee composition: succession planning, skills and
experience matrix.
– Senior management talent and succession planning.
– Diversity, equity and inclusion strategy and progress.
– Board governance: Board performance review and progress against
2023/24 actions, time commitments and independence.
Committee activity
Board and senior management
succession planning 35%
Talent management 33%
Group governance 32%
Tesco PLC Annual Report and Financial Statements 2025
72.
of skills, knowledge and experience on the
Board, the diversity of gender and ethnicity,
together with the skills, experience and time
commitments required in the delivery of the role.
The Committee recommended to the Board
the appointment of Chris Kennedy who joined
the Board as a Non-executive Director in
February 2025.
Appointments are always based on merit and
relevant experience. The Committee continues
to challenge the external search consultants
where necessary, to ensure that diversity is
always considered when drawing up candidate
shortlists. Open advertising was not used.
Lygon Group has no connection to Tesco or
any of its Directors.
NED succession planning and skills matrix
As part of the succession planning process,
the Board reviews Committee composition
to ensure the size of each Committee is
appropriate with the relevant skills and expertise
required, ensuring governance requirements are
met when replacing certain roles, for example
Chair of Audit and Remuneration Committees.
The Chair leads the Committee in annually
evaluating the balance of skills, experience,
independence, and knowledge on the Board,
preparing a description of the role and
capabilities required for a particular appointment.
To support the succession planning process,
a skills matrix detailing skills and competencies
of the Board is regularly reviewed to ensure that
there is broad experience on the Board, and that
the skills required to deliver the strategy and
objectives in the longer term are maintained, as
well as to ensure the cultural fit of every member
of the Board. Having a skills matrix also identifies
the skills and experience that may potentially
be lost when a Non-executive Director retires
from the Board. Collectively, our Non-executive
Directors have a wide range of industry and
sector backgrounds, with a wealth of
international experience in complex
organisations. For more details on the
experience of the Board, see pages 56 to 58.
Senior management talent planning
The Board recognises the need to create
conditions that foster talent and encourage all
colleagues to achieve their full career potential.
During the year, the Board has placed greater
emphasis on talent management and diversity,
and ensuring the required future capabilities and
skills are in place. The aim is to have a diverse
set of leaders with the right skills to deliver our
business strategy, ready when we need them.
It has focused on critically evaluating internal
talent pipelines against these ambitions. The
Committee strongly believes that an inclusive
culture is a key driver of business success and
the Committee is committed to having a
leadership team which provides a range of
perspectives, insights and critical challenge
needed to support good decision-making,
helping with risk management, strategic planning
and delivery.
Succession planning at executive and senior
management level continues to be a priority
for the Committee and throughout the year, the
Committee monitored the future leadership
pipeline and the available pool of talent in the
Group. The Committee and management both
align to take a more strategic and future-focused
view of succession, using refreshed success
profiles, leading to more robust career and
development conversations with successors.
This is essential to ensuring a continuous level
of quality in management, avoiding instability
by helping mitigate the risks which may be
associated with unforeseen events, such as the
departure of a key individual. The Committee’s
review included a review of talent management,
key role profiles and succession planning, all
through a lens of inclusion.
Board effectiveness and performance
Effectiveness of the Board encompasses many
aspects of Board governance including: matters
reserved for the Board and delegation of
authority; review of the Board and Committee
performance; Board and Committee
composition and succession planning; review
of skills and expertise; independence; time
commitments; conflicts of interest; and Director
election and re-election. The Committee
undertakes detailed reviews of each of these
aspects at least annually.
The Committee oversees the Board
performance effectiveness review process.
The Committee discussed the proposed
approach to the 2024/25 external effectiveness
review of the Board, Committees and Directors,
considering the key themes and focus of the
review. The Committee reviewed the progress
against the actions identified through the
2023/24 effectiveness review and discussed
whether any further actions were required.
Details of the 2024/25 Board performance
review together with progress against
actions from 2023/24, can be found
on page 66.
A review of the Committee’s terms of reference
and the Board’s Matters Reserved for the
Board were undertaken during the year and
are published on the Corporate website at
www.tescoplc.com.
The Committee reviewed the Governance
sections of the Annual Report and reviewed
compliance with the UK Corporate Governance
Code. The relevant sections of the Annual Report
were recommended for adoption by the Board.
NED time commitments
The Board recognises the importance of all
Non-executive Directors having the necessary
time to commit to the business. Prior to
appointment, the Committee assesses the
commitments of a proposed candidate,
including other directorships, to ensure they
have sufficient time to devote to the role.
Upon appointment, Non-executive Directors’
letters of appointment stipulate the expected
time commitment while acknowledging that this
may vary depending upon the demands of the
business and other events. The Committee
regularly assesses the time commitments of
Directors to ensure that they each continue to
have sufficient time for their role. Each Director
completes a self-assessment of the time spent on
their external commitments which supports the
Committee in their assessment. The assessment
takes into account the number and nature of the
external commitments each Director has and
considers whether each Director has
demonstrated they have sufficient time to devote
to their present role within Tesco, including under
potential periods of corporate stress.
The Board is currently satisfied that the number
of appointments held by each Director in addition
to their position with Tesco is appropriate to
allow them to fulfil their obligations to Tesco. All
Directors make themselves freely available as
required, even at short notice, in order to meet
the needs of the business.
External appointments, which may affect existing
time commitments relevant to the Board, must
be agreed with the Chair in advance.
During the year, the Board approved the
additional external commitments taken on
by Alison Platt. An assessment of time-
commitment, effectiveness, independence
and the impact of any cross-directorships was
considered. It was determined that these
additional external commitments would not
impact her role and commitment to Tesco PLC
as a Non-executive Director.
Further details on Non-executive Directors’
external appointments are set out on
pages 56 to 58.
NED independence
The Non-executive Directors provide a strong
independent element to the Board and a solid
foundation for good corporate governance,
fulfilling the vital role of corporate accountability.
The Committee formally reviews the
independence of each of the Non-executive
Directors at least annually. In assessing each
Director’s independence, the Committee
concluded that each provides objective
challenge, strategic guidance, holds
management to account and is willing to stand
up and defend their own beliefs and that each
Non-executive Director continues to be
independent in character and judgement in
line with the definition set out in the 2018 UK
Corporate Governance Code.
Conflicts of interest
In accordance with the Companies Act 2006 and
the Company’s Articles of Association, Directors
are required to report actual or potential
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
73.
GovernanceStrategic reportStrategic report
Did you know:
The directors’
induction programme
constantly evolves,
changing as
appropriate to reflect
the business priorities,
the experience and
expertise of the
inductee and the role
they will perform.
Corporate governance report continued
Nominations and Governance Committee continued
conflicts of interest to the Board for
consideration and, if appropriate, authorisation.
If such conflicts exist, Directors excuse
themselves from consideration of the relevant
matter. On behalf of the Board, the Committee
reviews the register of authorised conflicts of
interests at least annually to confirm its ongoing
authorisation of any potential or actual conflicts
arising from a Director’s interest. During the
period, in reviewing the cumulative conflicts
of interests of each of the Directors, the
Committee concluded that no Director had
a conflict that would have a detrimental impact
on their independence and judgement or their
time commitment to Tesco.
Annual re-election of Directors
Annually, the Committee considers and
recommends to the Board the re-election
of Directors by shareholders at the AGM.
This is supported by each Director’s individual
assessment undertaken as part of the annual
Board effectiveness review. Following a review
of each of the Independent Non-executive
Directors’ time commitment, contribution and
effectiveness, the Committee considered and
recommended to the Board that each of the
Directors be proposed for election or re-
election by shareholders at the 2025 AGM,
with the exception of Alison Platt who, as
announced in June 2024, will retire at the
conclusion of the 2025 AGM.
Director induction
All new Directors receive a comprehensive
induction programme over a six-month period
which is designed to facilitate their understanding
of the business and is tailored to their individual
needs. The Chair and the Group Company
Secretary are responsible for delivering the
programme which covers the Company’s core
purpose and values, strategy, key areas of the
business and corporate governance.
The new director programme is delivered
through introductory meetings held with each
member of the Board and Executive Committee,
the Group Company Secretary, the Company’s
advisors and key senior managers across the
Group including Tesco Mobile, dunnhumby,
Booker, F&F, Insurance and Money Services.
In addition, they undertake site visits to stores
across different store formats and locations,
urban fulfilment and distribution centres,
providing an opportunity to meet colleagues
and see at first hand the business operations.
Directors joining Nominations and Governance,
Audit, Remuneration and Sustainability
Committees also spend additional time with
the Committee Chairs and the relevant senior
management covering key issues relating to
the Committee’s focus.
The Committee reviews the induction
programme ahead of a new Director joining.
Feedback from Directors has been that the
programme provides great insight into the
business operations, governance and controls,
with an opportunity to meet colleagues within
the business. Following appointment, Directors
agree their individual training and development
needs with the Chair.
Directors’ induction pack
Directors receive access
to a detailed library of
information, which in
addition to key policies,
includes information
relating to:
Information
received as
part of Director
induction
Risk
management,
internal control
and key policies
Strategy and
progress against
key objectives
Operational
and financial
performance
updates
Recent
developments,
challenges and
opportunities
Board and
Committee papers
and minutes
2024/25 Committee effectiveness review
The 2024/25 Committee effectiveness review
formed part of the external Board performance
review. The review found that the Committee
was performing effectively, with a well-balanced
composition. The expansion of the Committee to
include all Non-executive Directors has meant
that the whole Board feels properly informed,
and able to contribute to discussions relating to
key people matters. Meetings were well chaired,
with good quality papers. It was felt there was a
good mix of skills and members were well
informed, prepared and able to challenge.
Committee priorities for 2025/26
The Committee will continue to consider future
Non-executive Director succession planning
requirements, strategic ambitions and longer-
term strategy, as well as the need for diversity
across the Board.
Tesco PLC Annual Report and Financial Statements 2025
74.
Diversity, equity and inclusion
We place great importance on having an
inclusive and diverse Board and workforce.
We aim to build a culture where people see
themselves represented, feel they can be
themselves at work, meet their career
aspirations and thrive. The Board supports and
monitors Tesco’s diversity, equity and inclusion
strategy and management’s efforts to ensure
that the diversity of Tesco’s senior management
is continuously enhanced. The Committee
reviews progress against the strategy at least
twice a year, including our five commitments
to our colleagues:
1. Inclusion for all
2. Flexibility for all
3. Accessible first
4. Transform recruitment
5. Developing careers
Board diversity, equity and inclusion policy
The Board diversity, equity and inclusion policy
(the Policy) was first adopted in July 2019 and is
subject to an annual review by the Committee to
monitor the progress against the Policy and make
any updates as required. The Policy sits alongside
the Group’s values, business code of conduct and
the Company’s wider strategy, which aims to
create an inclusive workplace where colleagues
see themselves represented, feel they can be
themselves at work and develop. The Committee
reviews the Policy in detail each year and
monitors progress against it. Through its
succession plans, the Board considers the wider
diversity of the Tesco PLC Board, its Committees
and the Executive Committee, while ensuring
the right skills and experience are in place for
oversight, challenge and to promote the success
of the Group.
Gerry Murphy
Committee Chair
9 April 2025
Board diversity
Policy objectives Implementation Progress against objectives
A gender balance between 40% and 60%
on the Board.
Regular succession planning sessions are undertaken to review Board
and Committee composition throughout the year to ensure that the
appropriate balance of skills and experiences required to deliver on the
strategic objectives are in place over the short, medium and long term.
Appointments are always based on merit and relevant experience,
while taking into account the broadest definition of diversity. The
Committee continues to challenge the external search consultants
where necessary, to ensure that diversity is always considered when
drawing up candidate shortlists.
We currently have 42% female
representation on the Board.
At least one Director from a non-white
ethnic minority background on the Board
(as defined in categories recommended
by the Office of National Statistics).
Consideration is given to this as part of the succession planning process. We currently meet the Parker
Review recommendations with
both Melissa Bethell and Imran
Nawaz being from Asian
backgrounds. 17% of the Board
is ethnically diverse.
At least one woman in the role of Chair,
CEO, CFO or Senior Independent
Director.
Consideration is given to this as part of the succession planning process. Carolyn Fairbairn was
appointed as the Senior
Independent Director
in June 2024.
Diversity in senior roles
Policy objectives Implementation Progress against objectives
To achieve 39% female representation
of our top global leaders by 2027.
Scheduled updates to the Board, Nominations and Governance
Committee and Executive Committee to discuss talent management,
succession planning and diversity, equity and inclusion to assist the
development of a pipeline of high-potential and high-performing
candidates with diverse backgrounds in senior management roles. KPIs
have been established to measure progress. During the year, members
of the Committee have taken on mentoring roles to some of our senior
leaders within the business. Representation at Board and senior
management level is considered as part of the talent management and
succession planning processes.
Achieved 32% female
representation of our top
global leaders (director and
above), and our targets will
extend to senior managers
from 2027 onwards.
To achieve 18% ethnically diverse
representation of our top global leaders
by 2027.
14% ethnically diverse
representation of our top
global leaders (director
and above).
Further details on the Group’s diversity, equity and inclusion strategy and the schedule in
accordance with Listing Rule 6.6.6(10), can be found on page 23.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
75.
GovernanceStrategic reportStrategic report
Corporate governance report continued
Sustainability
Committee.
Committee Chair
Stewart Gilliland.
Committee membership and tenure
Director Member since
Meeting
attendance
Stewart Gilliland, Committee Chair June 2021 4/4
Bertrand Bodson June 2021 4/4
Carolyn Fairbairn September 2023 4/4
Karen Whitworth June 2021 4/4
Thierry Garnier¹ June 2024 3/3
1. Thierry Garnier joined the Committee in June 2024.
Key activities in 2024/25
– Review of initiatives required to support the delivery of our
Scope 1, 2 and 3 net zero commitments.
– Deep dive into the pillars of the planet plan with a focus during
2024/25 on decarbonisation, healthy sustainable diets, sustainable
agriculture, nature and waste.
– Oversight of the Group’s human rights and community initiatives.
– Sustainability-related site visits and events.
Committee activity
Sustainability strategy 27%
Planet plan pillars 27%
Current issues 21%
Stakeholders and governance 25%
Key responsibilities
Integrated sustainability strategy
– Support and advise the Board on matters
relating to the integrated sustainability
strategy, planet plan, human rights and our
communities.
– Review progress towards the Group’s climate
commitments.
– Provide constructive challenge of sustainability
initiatives to support delivery of the Group’s
purpose and strategic priorities.
– Support the development of the sustainability
agenda to balance short, medium and
long-term objectives.
– Monitor KPIs relating to sustainability and
climate metrics.
– Monitor external developments on sustainability.
Planet plan
– Progress updates and deep dives on initiatives
supporting each of the planet plan pillars.
Community
– Receive updates on our community
programmes.
– Approve the use of share forfeiture funds
for good causes.
Governance and stakeholder engagement
– Annual review of sustainability communication
and customer plan.
– Review of human rights strategy; oversight of
human rights risk and assurance; review of the
governance; and monitoring of human rights
matters.
– Review and approve current and forthcoming
sustainability-related corporate reporting
requirements.
– Regular updates on stakeholder engagement
on sustainability matters.
– Review of the effectiveness of the Committee
and annual review of Committee terms
of reference.
The Committee’s terms of reference
are reviewed on an annual basis and
are published on our website at
www.tescoplc.com.
As the Chair of the Committee, I am pleased to
present the Committee’s 2024/25 report into
the key activities undertaken during 2024/25
alongside its anticipated activities for 2025/26.
This report provides an overview of the
Committee’s role, responsibilities and activities
throughout the year and demonstrates how in
2024/25, we continued to place an increased
focus on our core purpose serving customers,
communities, the planet and sustainability, to
monitor sustainability performance to achieve
our goals and objectives, as we strive to meet
expectations from our stakeholders and while
we ensure we manage our risks and take
advantage of opportunities to serve our
customers with affordable, healthy and
sustainable food.
We have built sustainability into our purpose,
strategy and business plans as we know our
business depends on the world around us.
Having a sustainable business is a strategic
priority for the Board and reference to our work
in this area can be found throughout this Annual
Report. It is central to what we do, and the
Committee helps to ensure that it is given as
much of the Board’s time and attention as our
business priorities. This report explains how in
2024/25 the Committee has assisted the Board
in fulfilling its responsibilities by reviewing the
progress of Tesco with respect to sustainability
and overseeing the effective integration of
sustainability matters into the Company’s
strategy and operations, including the Group’s
sustainability initiatives to support the delivery
of the Group’s purpose, strategic priorities and
pillars of the planet plan, further details of which
can be found on pages 31 to 35.
At Tesco, we continue our journey with respect
to sustainability, an area of critical strategic
importance in which the Company aims to
implement change through the Committee’s
various activities, which provide a clear path
on the oversight of initiatives to deliver climate
goals, with activities grouped into the pillars
of our planet plan. As the UK’s largest retailer,
we know we can make a difference and the
Committee provides strategic oversight and
advice to the Board on our objectives and
Tesco PLC Annual Report and Financial Statements 2025
76.
targets as well as key priorities of the Group’s
integrated sustainability strategy, and to allow for
more detailed consideration of sustainability
related risks and opportunities. This reflects the
importance of sustainability matters globally as
well as the Company’s recognition of the
increasing importance of sustainability. Tesco
has developed a detailed plan which sets out
the pathway to achieve our Group targets for
each of the pillars of the planet plan as outlined
on page 32.
The Committee meets regularly to provide
strategic oversight and advice to the Board by
continuing to develop the Group’s sustainability
agenda to balance its short, medium and
long-term objectives. It also considers the
Group’s net zero commitments for Scope 1 and 2
by 2035 and Scope 3 by 2050; its impact on the
natural environment and the environment’s
impact on the Group; community programmes
and charity partnerships; and our objectives and
targets, as well as key priorities, and allows for
more detailed consideration of sustainability
related risks and opportunities. The Committee
also reviews and considers external stakeholder
perspectives on sustainability issues of relevance
to the Group’s businesses, as well as overseeing
the communication of the Group’s sustainability
matters with external stakeholders. I would like
to thank the members of the Committee and
the management team for their continued
commitment throughout the year, and we look
forward to continuing our work in 2025.
Committee activities
Throughout the year, the Committee focused
on the areas of greatest strategic importance,
allowing it to more effectively oversee Tesco’s
progress with respect to its sustainability
objectives. Meeting agendas focus the discussion
on a couple of key issues, allowing time for
debate and deeper analysis if required.
In the year, the Committee held a joint meeting
with the Remuneration Committee to determine
the appropriate sustainability-related
performance objectives and incentives for
executive leaders and to ensure that sustainability
matters are appropriately considered when
setting the overall remuneration policy. The
Committee also works in conjunction with the
Audit Committee, as necessary, to consider
requirements for internal and/or external
assurance of sustainability-related matters,
as well any sustainability-related disclosures,
targets, key performance indicators and
future plans.
Preparations are underway for compliance with
EUDR deforestation legislation across relevant
categories and products. The Committee has
recognised efforts where the Group are in
dialogue with our supply chain on the best way
to do this and have held five webinars with
suppliers to outline its approach and ensure
they are fully supported. It has noted that a
developed and detailed risk assessment
framework, in line with the EUDR due diligence
requirements is underway. The Committee is
also closely monitoring preparations for
forthcoming Corporate Responsibility reporting
directives, including EU Taxonomy regulation,
Corporate Sustainability Due Diligence
Directive and EU Corporate Sustainability
Reporting Directive.
The Committee regularly discusses how the
evolving approach to sustainability delivers
competitive advantage for the business, as
well as delivering on the Group’s sustainability
commitments. The Committee leveraged the
results of brand review work to understand
what resonates with our customers and wider
stakeholders. We evaluated how supplier
relationships could support our journey and
considered what Tesco would want to be most
well known for.
Our planet plan provides a clear structure for
the Committee’s oversight of the initiatives to
deliver Tesco’s climate goals, with activities
grouped into the six pillars of the plan. Details
of the pillars can be found on page 32. The
Committee reviews and challenges initiatives
supporting the Group’s net zero commitments
with regular deep dives into each of the planet
plan pillars, providing an opportunity to monitor
progress against targets, consider key areas
of focus and to address and mitigate any risks.
The Committee held four scheduled meetings during the year and each meeting followed an agenda
to focus the discussion on key issues, allowing time for debate and deeper analysis if required. The
timeline below provides details of the key issues discussed at each meeting over the past 18 months.
October – June
– Sustainability strategy to include food waste, nature, transition plan and planet
leadership areas
– Planet plan: decarbonising transport and reduce store emissions, improve our products,
eliminate waste (food waste and packaging)
– External trends, risks and opportunities and sustainability coverage
– Human rights: simplification and aligning ways of working, effectiveness and enhancing
the performance quality of audits and the efficient and enhanced management of audit
providers, independence and intelligence sharing
– Annual Report disclosures, ESG reporting assurance and regulations
– Current issues: net zero targets, River Wye and water pollution (support the WRAP Courtauld
2030 Water Roadmap and several water catchment projects), deforestation, ultra processed
foods (UPFs)
– Sustainability communication plan 2024/25: serving the planet a little better every day,
better baskets/pharmacy/health and the UK agriculture transition to net zero
– Investor update
– Tesco community programmes: Stronger Starts, Fareshare and Trussell Trust
– Approval of use of share forfeiture funds (for use in Stronger Starts, Trussell Trust and
community programmes across Central Europe and Ireland)
– ESG considerations in remuneration
– TCFD Disclosures
July – October
– Sustainability strategy: competitive advantage, (including the dashboard, EUDR update,
supplier update and trials update)
– Planet plan: decarbonising transport and reduce store emissions, protect nature
– Current issues: River Wye, deforestation, human rights
– Human rights: enhanced first-line due diligence, community impact, information on supply
chains, agency labour and additional training programmes
– Investor update
– External trends, risks and opportunities and sustainability coverage
– Cranswick farm visit
– ESG reporting and disclosure update
– ESG considerations in remuneration
November – February
– Sustainability strategy: competitive advantage, deforestation free soy, EUDR compliance
and adoption and current commitments
– Planet plan: support sustainable consumption: healthy sustainable diets including UPFs,
improve our products
– Current issues: recycling and soft plastics, farm animal welfare and food certification
scheme, River Wye/water catchments and deforestation
– Investor update
– ESG trends, risks and opportunities and sustainability coverage
– Annual Report disclosures and ESG reporting assurance and regulations
T
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
77.
GovernanceStrategic reportStrategic report
The Committee feeds back to the wider Board on
matters discussed at meetings and helps to
ensure that delivery of the integrated
sustainability strategy is embedded into the
Group’s overall strategy. The cross-committee
membership, combined with defined and focused
responsibilities across each Board Committee,
supports collaboration and consistency across
the governance framework. At each meeting, the
Committee monitors external developments on
sustainability-linked issues, especially where they
relate to planet plan pillars. It reviews a planet
plan dashboard and glide path setting out the key
initiatives and this enables it to monitor progress,
KPIs and key milestones, and to challenge and
request deep dives into specific topics and issues.
Specific deep dives
– Decarbonisation: the Committee reviewed
progress on operational change and transport
innovation within our own operations which will
support the delivery of Scope 1 and 2 targets.
Further information can be found in the
Sustainability report 2024/25 available on our
website at www.tescoplc.com.
– Healthier and sustainable diets/UPFs: the
Committee reviewed the development of
Tesco’s position on UPFs, a complex scientific
area where we want to support customers
make healthier choices. The Committee also
reviewed the proposed modernisation of
health laws, which calls for progressive age
restriction increases aimed at eventually
phasing out smoking, and the introduction of
age restrictions for the sale of energy drinks.
– Improve our products: while these initiatives
are on track overall, the Committee has
recognised the challenging environment
concerning UK agricultural policy following the
decision to not progress the industry Greener
Farms Commitment standard. Tesco has
continued to drive progress through its
Sustainable Farming Groups, and aimed to
accelerate innovative solutions through Agri
T-Jam which identified promising innovations
and matched them with suppliers who could
lend their scale.
– Nature: the launch of the nature programme
was considered by the Committee. Alongside
our suppliers and through industry collaboration,
Tesco plays a part in protecting nature in at-risk
landscapes, including forests, freshwater
catchments and marine environments.
– Waste: the Committee recognised that
progress has been made on rebuilding the food
waste programme, with a focus on diverting
surplus bakery and produce items and food
that is unsuitable for human consumption
to animal feed and pet food. Work is also
underway on the evolution of our packaging
targets to ensure they are stretching but
pragmatic, and take into account changing
regulations.
– Water pollution: the Committee has
continued to oversee the WRAP Courtauld
2030 Water Roadmap, a multi-year funding
programme for a number of water catchment
projects and was advised that the majority of
suppliers with operations within the River Wye
and Usk catchment areas had responded
positively to a request that they match the
Group’s ambition on achieving the WRAP
Courtauld 2030 commitment. The Group
remains committed to ensuring all its suppliers
sign up to a relevant environmental standard.
– Deforestation: the Committee discussed
supplier readiness to respond to new EU
regulations on deforestation concerning
products entering the EU market. There has
been a need for further strengthening of
corporate due diligence and end-to-end
traceability along the supply chain and EUDR
preparations have been phased according to
the complexity, resource requirements and
timelines involved. The Group has continued
to prioritise legal compliance in line with risk
management protocols and is currently
working towards compliance in this area.
The Group engaged with and worked with the
European Commission on scenario planning
and to work with the wider industry to seek
further guidance on the scope of EUDR.
Corporate governance report continued
Sustainability Committee continued
Spotlight on:
Impact.
Committee sees true strategic
partnership in action
In October 2024, the Committee spent some
time with Norfolk-based supplier Cranswick.
Cranswick produce, slaughter, butcher and
retail pack Tesco own brand fresh pork.
Visiting four different open-air sites,
Cranswick demonstrated various livestock
farming sustainability initiatives, as well as
how pork production processes supported
improvements in future land use and crop
rotation programmes.
The Committee discussed the various
environmental factors such as the benefits
of organic manure fertilisation produced by
grazing livestock to support the cycle of
regenerative agriculture. Its high value was
recognised by cereal farmers as it replaces the
need for synthetic fertilisers and reduces the
carbon footprint involved in crop production.
Cranswick highlighted the benefits derived
from the circularity back into animal feed and
improved product quality. The Committee
discussed the longer-term benefits of
improved soil health and the contribution
to topsoil regeneration and biodiversity
improvements due to the pig production
process. Cranswick explained how the farms
manage ground irrigation and mitigate run off
into local rivers. The Committee explored the
value gained from working with farmers to
reduce carbon emissions.
The Committee considered future projects
and innovation initiatives. Demonstrating
alignment with the Group’s planet plan,
purpose and strategy, as well as how the
Group could support the industry in achieving
some of these goals. Directors discussed the
strategic alignment and how Cranswick
worked in partnership with Tesco to unlock
value, manage risks, improve security of
supply and maximise growth opportunities to
further support the Group’s sustainability
and welfare agenda. Cranswick explained how
they were collaborating with other suppliers
in order to share successes and simplify the
product to market process. Both Cranswick
and the Committee recognised the value of
true strategic partnership and how
collectively, working with suppliers like
Cranswick, Tesco could better support British
producers, minimise further consolidation
and maintain competitiveness and innovation.
During the visit, the Cranswick team
showcased the innovative technology
solutions deployed within the operations.
These included:
– the use of solar-powered sensors to
monitor local insect and pollinator
populations and measure the corresponding
carbon uplift from the soil;
– measuring biodiversity in the local
ecosystems; and
– optimisation techniques in the pig-rearing
process.
More information on Board activity
can be found on pages 67 to 69.
Tesco PLC Annual Report and Financial Statements 2025
78.
– Human rights: the Committee has considered
and discussed progress made concerning our
human rights agenda covering risks, assurance
and future plans. During the year, the
Committee considered key human rights risks,
the progress to implement and embed our
human rights blueprint, and enhancements
to the due diligence programme, including
identifying the root causes of breaches and
issues. For further details on human rights
see page 21.
Sustainability communication plan
Tesco’s approach to the disclosure of its
sustainability impacts is to bring about
continuous improvement in the quality of
information disclosed. Tesco’s sustainability
reporting aims to demonstrate the way it
creates value for shareholders and society
in a sustainable way and provides detailed
information on the policies, practices,
performance and governance of a range of
economic, social and environmental matters.
The Group’s first stand alone sustainability
report for 2024/25 and other information can
be found on our website at www.tescoplc.com.
During the year, the Committee reviewed the
Group’s sustainability communication plan
(the Plan), which focuses on delivering on our
purpose and raising awareness of the planet
plan with our internal and external stakeholders,
showcasing initiatives and demonstrating the
actions we are taking to deliver on our
commitments.
During the year, the Committee reviewed the
Plan which is built around three initiatives
(serving the planet a little better everyday, better
baskets/pharmacy/health and supporting UK
agriculture transition to net zero), and designed
to be delivered by the Group Communications
team, the Group Customer team, the Group
Quality, Technical and Sustainability team and
the Group Finance team. The Plan focuses on
delivering on our purpose and raising awareness
of the planet plan with our internal and external
stakeholders, showcasing initiatives and
demonstrating the actions we are taking to
deliver on our commitments.
Community
The Committee regularly reviews community
initiatives and received a number of updates
during the year. We want to use our place at the
heart of communities across the UK to support
customers to live healthier lives. Our Community
Food Connection scheme has grown into the
biggest food redistribution initiative of its kind
in the UK. To date it has provided more than
300 million meals to charities and local
communities who depend on the food they
receive to be able to support people facing
hunger. We also continue to support our health
charity partners, the British Red Cross in the UK
and internationally and support our community
champions at a hyperlocal level to fulfil requests
for support.
Governance and stakeholder engagement
We recognise the importance of collaboration
with suppliers, governments and customers
as we look toward a more sustainable future.
Further details on our community initiatives
and stakeholder engagement can be found on
pages 20 to 22.
2024/25 Committee effectiveness
review
The 2024/25 Committee effectiveness review
formed part of the external Board performance
review. The review found that the Committee
was performing effectively, with positive
contribution by members and meetings well
chaired. The quality of the support and input
from the executive team was highlighted as
particularly important in the absence of
dedicated external advisors.
Looking ahead: Committee priorities
2025/26
Over the next year, the Committee will continue
to monitor the delivery of the integrated
sustainability strategy and some of its planned
activities will include:
– Continued focus on the planet pillars by
rotation of our planet plan.
– Monitoring of material issues which are also
overseen by our Nominations and Governance
Committee (such as diversity, equity and
inclusion and human rights).
Spotlight on:
Community.
The launch of our Fruit & Veg for schools
initiative has supported more than 140,000
pupils over 400 schools across the UK. The
Stronger Starts and Fruit & Veg initiatives
provide fruit and vegetables for children for
a full academic school year. Working closely
with the British Nutrition Foundation,
Stronger Starts aims to give children the
healthy start they deserve by pledging a
further £4m under the programme by giving
disadvantaged pupils regular access to
five-a-day, further details of which can be
found on pages 11, 12 and 15.
During our 2024 Winter Food Collection, our
customers also donated 1.9 million meals to
support our food charity partners, FareShare
and Trussell Trust. In addition to the donations
of food, the collection saw more than
£440,000 donated to the charities by
customers rounding up their shop at the
self-service till and donating through a link
from Tesco’s online groceries website. We
also provided an additional £500,000 of
funding to both FareShare and Trussell Trust
to address heightened levels of food poverty
during the summer holiday period and in the
run-up to Christmas. The Company used
share forfeiture funds from 2023/24 to
support community programmes with a focus
on food and nutrition, such as Stronger Starts.
– Governance including updates on TCFD and
TNFD reporting as well as FY 24 ESG reporting
and disclosure (and climate risk overseen by
the Audit Committee). Further details on TCFD
and TNFD can be found on pages 34 to 39.
– Increasing the focus on competitive
advancement and the integration and
implementation of sustainability initiatives
in the business, including deep dives into
the pillars and carbon emission reductions
in our own operations and value chain.
– Continue to oversee the delivery of key
milestones that support our sustainability
initiatives across the Group and hold
the business to account on delivering on
its commitments.
– Ensure the Group’s conduct as a
responsible business.
The sustainability agenda and supporting
regulation continue to grow at speed and it is vital
that we continue to be clear on how we can make
an impact as a Company and continue to deliver
strong performance for all our stakeholders. The
Committee will continue to focus on overseeing
the delivery of key milestones that support our
sustainability initiatives across the Group, ensure
the Group’s conduct as a responsible business,
and hold the business to account on delivering on
its commitments in all aspects of Tesco’s
operations. We recognise the importance of
collaboration with suppliers, government, and
customers as we look toward a more sustainable
future. The Committee will continue to oversee
the evolution of sustainability-linked reporting
disclosures in compliance with EU regulations.
Stewart Gilliland
Committee Chair
9 April 2025
Financial statements Additional information
79.
GovernanceStrategic reportStrategic report
Corporate governance report continued
Audit
Committee.
Audit Committee Chair
Karen Whitworth.
Committee membership
1
and tenure
Director Member since
Meeting
attendance
Karen Whitworth
2
, Committee Chair June 2021 5/5
Melissa Bethell September 2018 5/5
Carolyn Fairbairn
3
June 2024 4/4
Chris Kennedy
4
February 2025 0/0
Caroline Silver October 2022 5/5
1. Byron Grote was a member of the Committee until he stood down from the Board in June 2024.
He attended one meeting during the year.
2. Karen Whitworth became Chair of the Committee in June 2024.
3. Carolyn Fairbairn became a member of the Committee in June 2024.
4. Chris Kennedy became a member of the Committee in February 2025.
Focus during 2024/25
– Completion of the disposal of the Banking operations and separation
of the Insurance and Money Services business
– Other relevant key accounting judgements and estimates
– Internal controls and assurance
– Risk management and risk appetite
– Readiness for the requirements of the 2024 UK Corporate
Governance Code
The Committee considered the Annual Report and Financial Statements
2025 and concluded that the disclosures, as well as the processes and
controls underlying its production, were appropriate.
For more details on our fair, balanced and understandable
consideration see page 53.
Key responsibilities
The Audit Committee continues to focus on
issues relevant to the Group’s financial reporting,
considering key accounting judgements and
ensuring the ongoing quality of related
disclosures, and supporting the Board in the
oversight of the effectiveness of risk management
and internal controls processes and systems.
Key responsibilities are set out below.
Financial statements and reporting
– Monitor the Group’s financial reporting
processes, reviewing and submitting
recommendations to the Board.
– Where necessary, challenge the integrity of
financial statements and disclosures, including
any impacts from the external environment on
key accounting judgements.
– Review the Group’s assessments of going
concern, longer term prospects and viability
and the distributable reserves position prior
to any declaration of dividends.
– Review externally reported sustainability-
related disclosures and sustainability KPIs,
including any definitions, data sources and
levels of assurance for each.
External auditor
– Consider and make recommendations
to the Board on the appointment of the
external auditor.
– Approve the external auditor’s remuneration.
– Review the external auditor’s terms of
engagement, audit representation letter and
management’s response to recommendations.
– Assess the quality of the external auditor’s
contribution and effectiveness.
– Monitor the provision of non-audit services
and associated fees in line with policy on
non-audit services.
Risk management and internal controls
– Identify, prioritise, respond to and monitor the
Group’s principal risks and material internal
controls and the effectiveness of the Group’s
internal control and risk management
framework, including key financial, operational
and compliance risk and controls.
– Review the approach to identify and assess
emerging and principal risks, including the
management and mitigation of those risks.
– Review the effectiveness of the risk appetite
framework and mitigating controls.
Group Audit
– Review the effectiveness of the internal
audit processes.
– Review the annual audit plan.
– Review reports from the internal audit function
and consider management’s response to any
major external or internal audit actions.
– Approve the appointment of the Chief Audit
and Risk Officer.
The terms of reference for the
Committee are reviewed on an annual
basis and are published on our website
at www.tescoplc.com.
Committee membership
and meetings
The Committee is composed of five independent
Non-executive Directors and since the 2024
AGM, has been chaired by Karen Whitworth.
The Board is satisfied that all members of the
Committee have significant, relevant and recent
financial experience. Each of Karen Whitworth,
Caroline Silver and Chris Kennedy are chartered
accountants and are considered suitably
qualified. In addition, Chris Kennedy is currently
a serving chief financial officer at another FTSE
listed company. The Board considers that the
Committee members collectively have
competence relevant to the Company’s sector,
in addition to their general management and
commercial experience. The Committee
members’ expertise and experience is set out
in each of their biographies on pages 56 to 58.
The Committee held five scheduled meetings
during the year. Each meeting followed an
agenda to reflect the financial reporting cycle
Tesco PLC Annual Report and Financial Statements 2025
80.
and particular matters for the Committee’s
consideration. Regular attendees to meetings
include the Non-executive Chair, Group Chief
Executive, Chief Financial Officer, Group General
Counsel, Chief Audit and Risk Officer, senior
management from Group Finance and
representatives of the external auditor.
Members of the Committee meet regularly with
management to understand more about the
business operations, which provides greater
oversight and enables them to scrutinise
processes and controls in a more effective
way. Members hold private sessions with both
the external auditor and Internal Audit team
following each meeting which provides an
additional opportunity for open dialogue and
feedback without management being present.
The Committee Chair also meets with the Chief
Audit and Risk Officer and external auditor on
an ad hoc basis and prior to each Committee
meeting to discuss matters relating to its remit
and any issues arising from the audits. The
Committee Chair provides a written report to
the Board following each meeting for discussion.
The Committee has a forward-looking planner
which is regularly reviewed by management and
with input from the external auditor, to ensure
the responsibilities of the Committee are
discharged in full and that regulatory
developments and other business-critical
matters are brought to the Committee’s
attention. During the year, the forward planner
was refreshed to schedule additional risk deep
dives on particular topics which align to our
principal risks such as Cyber Security and Health
and Safety. An invitation is extended to other
members of the Board to attend these
scheduled risk deep dives. These deep dives will
support the Board’s Assurance Statement to be
made under provision 29 of the UK Corporate
Governance Code 2024 when that comes into
effect in 2027.
Environmental disclosures
and assurance
Work continued to support the
development of the Group’s risk
management framework and an external
reporting assurance policy to govern
assurance over key published non-financial
information. The Committee was updated
on our climate and nature disclosure plans,
including key areas of strategic progress and
KPI performance. The external auditor has
provided limited assurance over six material
KPIs including sustainability metrics in
the Performance Share Plan targets and
sustainability-linked financing. KPIs which
are not assured by the external auditor
are internally validated and the Committee
reviewed the assurance status prior to
external disclosure.
The Committee received updates on the
Group’s preparations for corporate
sustainability reporting, including a review
of the gap analysis undertaken to compare
future disclosure requirements with that of
our current disclosures and an assessment
of the double materiality process and the
disclosure metrics. For further information
on the Group’s environmental commitments
and details of the sustainability-linked
targets, visit www.tescoplc.com.
T
Financial statements and
regulatory reporting
During the year, the Committee considered
and recommended the approval of the interim
financial results, preliminary results and this
Annual Report, taking into consideration key
accounting judgements, adjusting items and
quality of earnings, as well as monitoring the
external audit. During the year, the Committee
specifically reviewed the accounting for the
disposal of the Group’s Banking operations and
the associated separation activities. The
Committee also reviewed climate risk-related
disclosures, capital allocation strategy, the
Company’s distributable reserves position in
advance of the declaration of dividends and
corporate governance disclosures. The
Committee received updates on the store
impairment review and property fair values.
The impairment methodology and details
of the impairment of non-current assets
can be found in Note 15.
Going concern and viability
The Committee considered the viability and
going concern statements, their underlying
assumptions and longer-term prospects of the
Group. The Committee considered the base
case liquidity headroom and the net impact
of the following agreed stress-test scenarios
applied and the mitigating actions available:
ongoing geopolitical and global supply issues
triggering further inflation, leading to weak
consumer confidence and intensified
competition, data breach and climate change.
More information on the viability statement
scenarios can be found on pages 50 and 51.
The Committee evaluated going concern over
an 18 month period, which included a review of
available cash in the base case and in the severe
but plausible case applying three stress-test
scenarios and considering the mitigating actions
which could be drawn upon. The Committee
considered it appropriate to prepare the Group’s
Financial Statements on a going concern basis.
Frequency of reporting
April
2024
July
2024
September
2024
November
2024
February
2025
Financial statements and reporting
Key accounting judgements
Going concern and viability
Full and half-year reporting
and disclosures
Sustainability reporting and assurance
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
81.
GovernanceStrategic report
Matter considered How the matter was addressed by the Committee Sources of further information
Going concern basis for the
financial statements and
viability statement
Disposal of Tesco Banking
operations
Impairment
Pensions
Corporate governance report continued
Audit Committee continued
The Committee reviewed and challenged management’s assessment of forecast cash flows including sensitivity to trading and
expenditure plans, intensifying competitor activity, and for the potential impact of certain scenarios, including resurgent
inflation, higher input costs alongside weakening consumer confidence, a data breach and climate change impacts.
The Committee also considered the Group’s financing facilities and future funding plans. Based on this, the Committee
confirmed that the application of the going concern basis for the preparation of the Group financial statements continued
to be appropriate, with no material uncertainties noted, and also recommended the approval of the viability statement.
The sale of the Group’s Banking operations completed on 1 November 2024. The Committee reviewed the final disposal
accounting, including the remeasurement loss of £64m recognised within discontinued operations during the year. Following
the disposal, the Committee reviewed the change to the Group’s segmental reporting, the remaining Insurance and Money
Services business is included in the UK & ROI segment following changes in management structure and how performance is
monitored and resources allocated by the Chief Operating Decision Maker.
The Committee also reviewed the approach to revenue recognition under the Barclays partnership agreement.
As set out below, the Committee also considered the consequential impact on the Group’s Alternative Performance Measures,
and found each to be appropriate.
The Committee reviewed and challenged management’s impairment testing of the Group’s portfolio of store cash-generating
units and goodwill, giving rise to a net charge for the year. The Committee considered the key assumptions and methodologies
used in both the value in use and fair value less costs of disposal models, in order to conclude on the appropriateness of the
impairment charges.
The Committee challenged key inputs into the impairment calculations including the projected cash flows, the discount rates
and the use of independent third-party valuations. The Committee reviewed management’s weighting assessment of risk and
uncertainties within the cash flows arising from macroeconomic events, higher input costs and inflationary pressures and
climate change. The Committee confirmed its agreement with management’s judgements.
The Committee also reviewed the impairment disclosures including the sensitivity to key assumptions and considered them
to be appropriate.
Accounting for defined benefit pension schemes remains an area of significant focus for the Group given the sensitivity of
the liabilities to changes in assumptions. The Committee reviewed and challenged the key actuarial assumptions used by
management in estimating the defined benefit pension obligations, including the discount rate, inflation rate and mortality
assumptions, which drove a reduction in the overall net defined benefit obligation (net of deferred tax) of £293m and
concluded they were reasonable. They also reviewed the sensitivity disclosures provided on the key assumptions.
The Committee was also provided with updates on the transition of investment management for the Tesco PLC Pension
Scheme to Schroders, which completed in July 2024, noting that the transition had been successful, and there was no
material impact on the valuation of the scheme assets arising.
For further information see
pages 50 and 51.
For further information see
Note 8 to the financial
statements.
For further information see
Note 15 to the financial
statements.
For further information see
Notes 1 and 29 to the
financial statements.
Significant financial statement reporting matters
The Committee considered the following significant issues during the year. As part of these considerations, the Committee received updates from management and sought assurance from the internal auditors
and external auditors. The Committee was satisfied with how each of the significant issues discussed were addressed.
Tesco PLC Annual Report and Financial Statements 2025
82.
Matter considered How the matter was addressed by the Committee Sources of further information
Recognition and disclosure of
commercial income
Adjusting items
Reassessment of alternative
performance measures (APMs)
The Committee continued to monitor commercial income controls across the Group and discussed the outcome of internal
audits on commercial income. The Committee reviewed a detailed summary of the different types of promotional activity that
the Group enters into as well as key drivers for movements in the income statement and balance sheet. The Committee
concluded that they were comfortable with the accounting and presentation of commercial income.
The Committee considered the presentation of the Group’s financial statements and the appropriateness of the presentation
of adjusting items, and the nature of the adjusting items identified. The total charge from adjusting items this year was primarily
driven by impairment charges and the final remeasurement loss on the sale of the Banking operations.
The Committee concurred with management that the treatment was clear, balanced and consistently applied.
The Committee reviewed the Group’s APMs presentation and disclosure, including their level of prominence, and considered
any changes in APMs and the clarity of APM reconciliation. Following the disposal of the Banking operations, the Audit
Committee assessed the changes in APMs to consider the treatment of the retained Insurance and Money Services business,
and where appropriate the restatement of the prior year comparatives. The Committee was comfortable that the new
definitions were appropriate and the changes appropriately disclosed.
For further information
see Notes 1 and 21 to the
financial statements.
For further information
see Note 1 to the financial
statements for a definition
of adjusting items and
Note 5 for an analysis of
adjusting items.
For further information on
the Group’s APMs, see
pages 230 to 236.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
83.
GovernanceStrategic report
Corporate governance report continued
Audit Committee continued
Internal controls
Through its ICFR programme, management is
responsible for maintaining an effective internal
financial controls framework, that identifies
risks, maps these to controls and gives
assurance over the effective operation of its
control activities. Management undertakes this
through a three lines of defence model, including
financial controls testing by a team independent
of the relevant control operators and use of the
Group’s internal audit function as a third line of
defence. Such testing includes validation of IT
general automated controls as well as manual
business process control activities, and entity
level controls.
Management is also responsible for identifying
and managing risks, and for maintaining the
Group’s system of internal controls, which is
designed to manage and mitigate relevant risks.
During the year, on behalf of the Board, the
Committee conducted a review of the
effectiveness of management’s internal controls
processes. The Committee did this principally
through updates provided to it by management,
Group Controls and Compliance, Group Audit,
and the external auditor.
During the year, the Committee reviewed the
effectiveness of the ICFR framework, including
considering the output of the work undertaken
by the Group Control and Compliance team, the
Group internal audit team and the external
auditor. In addition, the Committee has reviewed
the work performed by management to embed
ICFR as a business-as-usual activity ahead of the
requirements of the new Corporate Governance
Code in FY 27, including the process by which
the Board will be required to make its declaration
under Provision 29 of the Code. As part of this,
the Committee reviewed the progress made at
TBS to further improve its level of control
effectiveness.
The Committee also received regular updates
about the progress made by management to
remediate and improve IT general controls and IT
automated controls and challenged the external
auditor to continue seeking to increase the level
of reliance on such controls during the audit.
As a result, the external auditor has been able
to increase its level of reliance on IT general
controls over our main financial reporting
system as well as certain other key business
process areas.
Work continued during the year to embed the ICFR programme as
a business-as-usual activity, in good time for the changes that will
be required under the new Corporate Governance Code in FY 27.
Controls.
Strengthening and centralising the internal financial control
environment
During the year, the Committee has reviewed on an ongoing basis the processes undertaken
by management to continue to enhance its control environment, including its roadmap
to increase the level of automation and its expanded centralisation of control activities,
including at Tesco Business Services (TBS) and Central Europe.
The Group’s internal controls over financial reporting (ICFR) programme is now well
advanced, and during the year, work continued to embed the processes as business as
usual, in good time for the changes that will be required under the new Corporate
Governance Code in FY 27.
During the year, the Committee reviewed the Group’s progress to remediate IT general
controls and noted significant progress. Members of the Committee, including the Chair,
spent time with the TBS team in India, reviewing the progress the team has made in
continuing to strengthen and deliver a more efficient control environment.
During FY 24/25, management undertook the following approach to ICFR, and reported
progress to each meeting of the Audit Committee:
March–May
– Annual risk assessment and scoping process for the ICFR programme
– Determination of business units in scope
– Development of delivery of plan
June–August
– Detailed walkthrough of processes
– Testing of design and operating effectiveness of high frequency controls
– Validation of remediated controls from FY 24/25
September–November
– Ongoing testing of design and operating effectiveness, focused on monthly and
quarterly controls, first cycle of IT general control testing
– Validation of any remediation activity
December–February
– Continuation of operating effectiveness testing, including second cycle of IT general
control testing
– Review of entity level controls and year end control processes
– Completion of update training
Spotlight on:
Tesco PLC Annual Report and Financial Statements 2025
84.
Frequency of reporting
April
2024
July
2024
September
2024
November
2024
February
2025
Financial strategy and planning
Capital allocation, funding proposals,
liquidity management and dividend
Business updates
Business transformation (including the
transition of the Banking operations
and separation of Insurance and Money
Services)
Capital allocation and
liquidity funding
As appropriate during the year, the Committee
discussed with management its plans for
refinancing as well as optimising its net
debt position.
In addition, the Committee reviewed the Group’s
capital allocation framework and its plans for
shareholder returns, including ordinary
dividends, the share buyback programme,
and the incremental buybacks funded with
the disposal proceeds from its sale of its
Banking operations.
Business updates
The Committee considered the Group’s FY 25/26
energy hedging strategy. The Committee will
continue to consider the impact of changes in
the macroeconomic environment on the
underlying wholesale energy cost assumptions.
Annually, the Committee reviews the Group
Treasury Policy, which contains a framework
and approach to managing treasury risks.
Throughout the year, the Committee received
presentations from different areas of the
business providing an update on the financial
performance, key achievements, key audit
updates, risk overview, key priorities,
developments and how the Finance function
has supported its business units. These include
updates from TBS, UK & ROI, Central Europe,
Group Pensions, Tesco Bank and more recently,
Insurance and Money Services. During the year,
the Committee Chair has attended Tesco Bank
and latterly Insurance and Money Services Audit
Committee meetings to ensure that knowledge
is shared.
Given the importance of the Group’s TBS team in
India to the overall effectiveness of the Group’s
control environment, several members of the
Committee travelled to, and met with the team
in India. This included the Chair of the Committee
spending two days with the TBS team to review
the work of the TBS team, including with respect
to internal controls over financial reporting. In
March 2025, the Shared Services & Outsourcing
Network awarded TBS the World’s Best Global
Business Services Award. The award recognised
the strength of TBS’s service delivery model and
strategic alignment, the function’s evolution in
maturity and scope, the continued adoption
and impact of automation and the expertise
and capabilities of our TBS talent. The TBS
team continue to contribute core value to the
business in terms of cash, impact on working
capital, margin and market growth. Additionally,
the TBS team was recognised by the British
Quality Foundation for its continuous
improvement culture reflecting ongoing efforts
to optimise processes, embrace technological
advancement and promote a collaborative work
environment.
The Committee received regular updates in
relation to the disposal of the Group’s Banking
operations and the separation of the Insurance
and Money Services business. The Committee
also reviewed the accounting treatment of
partnership funding during the year which
included a review of the arrangements through
the Barclays partnership agreement.
In addition, the Committee receives periodic
updates on other key areas of the business,
including the Group’s pension schemes, its
property portfolio and finance systems and
change projects.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
85.
GovernanceStrategic report
Risk management
The Audit Committee, on behalf of the Board,
undertakes an annual effectiveness assessment
to manage the most significant risks or principal
risks facing the Group and actions taken to
mitigate them, validating the key risk movements
and approving any required outcomes arising
from the risk assessments. Maintaining a strong
risk and internal control environment is
fundamental to Tesco’s governance framework.
The Committee received regular updates on
the strengthening of the risk management
framework, Group risk register and principal
and emerging risks, reviewing detailed appetite
statements, risk appetite levels and mitigations
for critical risk events for each principal risk. The
Committee reviewed the prioritisation of risks
and risk movements and the changes proposed.
Following discussion, there were changes to the
principal risks, namely a reduction in the number
of risks from the previous year. This reduction
was attributed to the retirement of the Tesco
Bank principal risk, following the completion
of the sale of Banking operations to Barclays,
and the consolidation of the Customer and
Competition and Markets principal risks. The
‘Geopolitics and other global events’ risk impact
score has slightly increased given the heightened
level of geopolitical uncertainty due to wars and
civil unrest, terrorism, elections and government
restrictions. In addition, the previously named
‘Financial Performance’ risk has been renamed
‘Macroeconomic Exposures’ to better reflect
its focus.
During the year management has embedded
the framework and optimised mitigation plans to
enhance and strengthen the Group’s risk culture,
to support risk-informed decision making across
all business units. The enhancements to the Risk
Appetite framework support the internal control
requirements under the UK Corporate
Governance Code.
Additional risk deep dives are scheduled
throughout the year to align with our principal
risks. The Board are invited to attend these
sessions. This provides the Board with greater
insight to the risks and challenges faced, the
mitigations in place and the actions to be
undertaken to reduce the risk.
During the year, deep dives relating to two of our
principal risks – ‘Cyber Security’ and ‘Health and
Safety’ were undertaken to explore risk appetite,
key focus areas, risk governance controls and
assurance activities in place.
The Audit Committee is supported by the cyber
and privacy risk committee, which continues
to oversee prioritisation and progress towards
reducing risk exposure in this area.
A robust assessment of the Group’s principal
risks and detailed scenario analysis work to
stress test liquidity was performed as part of
the viability scenario modelling. Additionally, an
assessment of emerging risks was undertaken.
Frequency of reporting
April
2024
July
2024
September
2024
November
2024
February
2025
Risk management and internal controls
Review of principal and emerging risks
Risk management business updates
Internal controls: ICFR, IT general
controls
Risk deep dive
Further details on our Principal risks and uncertainties and the Group’s
risk management framework are set out on pages 40 to 49 and 64.
Corporate governance report continued
Audit Committee continued
Tesco PLC Annual Report and Financial Statements 2025
86.
Spotlight on:
Data.
Increased use of data metrics
The Group’s internal audit team is
continuously improving the effectiveness
and efficiency of its assurance processes by
leveraging data and advanced technologies.
This involves a collaborative approach
across the three lines of defence. By
integrating data analytics, continuous
monitoring and artificial intelligence (AI) into
the audit process, internal audit can
provide greater insights and assurance
to the business.
The Group’s internal audit team has
expanded its use of data analytics, to allow
it to analyse large volumes of data quickly
and accurately, identifying trends,
anomalies, and potential risks that might
not be visible through traditional audit
methods. Continuous monitoring involves
the ongoing review of business processes
and transactions in real-time or near-real-
time. This helps in the early detection of
issues, enabling timely corrective actions
and reducing the risk of significant
problems going unnoticed.
In addition, the Group’s external auditor
also uses various analytics and AI tools,
a number of which have been presented
to the Audit Committee. They have outlined
a five-year plan for the Tesco audit, focusing
on enhancing efficiency, quality and insights
through data analytics and AI. The plan is
based on three pillars: analytics and AI
technology; targeted controls reliance; and
centralisation. It also emphasises the
continuous assessment and deployment
of new tools to keep the audit approach
dynamic and aligned with Tesco’s evolving
finance transformation strategy.
During 2025, members have a workshop
with the external auditor to showcase
Deloitte’s technology and AI data-led
metrics.
AI technologies, such as machine learning and
natural language processing, can automate routine
audit tasks, enhance risk assessment and provide
predictive insights.
Internal audit plan
Internal audit is part of the Group Risk and Audit
function. It reports directly to the Committee
and administratively to the Chief Financial
Officer, with a remit to provide independent and
objective assurance over the Group’s prioritised
risks and management structures. Its purpose,
authority and responsibilities are defined in the
Group Audit charter, which is reviewed and
approved annually by the Committee.
During the year, the Chief Audit and Risk Officer
left the business and a new Chief Audit and Risk
Officer joined in April 2025. In the interim period,
the Committee appointed a senior partner from
PwC to oversee the internal audit function and
safeguard its independence effectively. This
ensured that the internal audit plan was
delivered in line with the initial plan submitted
to and approved by the Committee, and the
Chair of the Committee met with the PwC
partner regularly.
The Committee monitors the activity, role and
effectiveness of the Group Risk and Audit
function. At each meeting, the Committee
received updates covering a range of
management issues. Internal audit’s activity is
primarily driven by the annual internal audit
plan which is discussed and approved by the
Committee. The plan is aligned to the Group’s
principal risks and focuses on the biggest risk
areas and strategic drivers. The internal audit
plan is reviewed throughout the year to ensure it
remains appropriate and if required is updated
as necessary to reflect any changes in risk
profile, business objectives and the external
environment. Any changes proposed to the plan
are approved by the Committee. This year, audits
have covered a wide spectrum of business
activities with a focus on Group frameworks
and policies, monitoring controls, third-party
management, accountability structures and
significant change programmes. The Committee
receives regular updates on the outcome of
the work performed and the follow up actions
required. The audit process has been
strengthened through the use of data analytics
and this will remain a focus through FY 25/26.
The Committee has reviewed the 25/26 audit
plan which aligns to the Group’s principal risks,
has a focus on resilience, risk management to
support the identification of potential issues,
and the readiness for new regulatory reporting.
Internal audit undertakes several assurance
activities including continuous programme
controls reviews, pre-and/or post-
implementation audits, advisory reviews, and
other management requested assurance. The
results of these reviews are also presented
and reviewed by the Committee.
Audit and assurance policies
The Committee periodically receives internal
policies for review and adoption including the
employment of former auditor employees,
external reporting assurance (non-financial
information), and non-audit services policies.
The external reporting assurance (non-financial
information) policy sets out Tesco’s approach to
assuring the quality of non-financial information
externally reported to stakeholders ensuring
accuracy, reliability and integrity of externally
reported non-financial information. Through
a risk-based approach, this policy enables
information owners to determine appropriate
levels of assurance for different categories of
information, supporting the work undertaken
as part of the internal controls framework.
Frequency of reporting
April
2024
July
2024
September
2024
November
2024
February
2025
Internal audit
Audit outcomes
Internal audit plan
Internal audit effectiveness review
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
87.
GovernanceStrategic report
Corporate governance report continued
Audit Committee continued
Total auditor fees
Audit fees Non-audit fees Average non-audit fees
2022/23 2023/24
£13.3m
£1.4m
12%
£14.7m
Total fee
2024/25
£14. 9m
£1.7m
12%
£16.6m
Total fee
£14.7m
£1.2m
9%
£15.9m
Total fee
External audit
Following the tender process undertaken in
2023, Deloitte was reappointed as external
auditor, which was approved by shareholders
at the 2024 Annual General Meeting. Following
a review of the external auditor’s effectiveness
the Committee recommended to the Board the
reappointment of Deloitte as External Auditor,
for the 2025/26 financial year. The
reappointment is subject to approval at the
forthcoming Annual General Meeting.
At each Committee meeting, members consider
reports from the external auditor which provides
their views on the half and full year financial
statements including management’s key
accounting judgements, updates on its audit plan
and fees, any actions undertaken to address the
FRC’s annual report on the external auditor and
the inspection results of the external auditor’s
quality control processes, as well as the auditor’s
independence and an overview of non-audit
services. Through these updates, the Committee
receives an early warning of any concerns,
management letter observations, updates on
ongoing progress and scope of the external
auditor’s work and provides additional comfort
to the Committee on the quality and
effectiveness of the external auditor.
The Committee regularly reviews the
independence and role of the external auditor
and the scope of its audit. The Committee also
considers the effectiveness of the external
auditor including its independence, objectivity,
appropriate mindset and professional
scepticism. The Committee’s conclusions are
based on its own observations and interactions
with the external auditor and having regard to
the Minimum Standard for Audit Committees.
Frequency of reporting
April
2024
July
2024
September
2024
November
2024
February
2025
External auditor
External auditor report
Engagement letter and fees
External audit plan
External audit effectiveness review
Later in April 2025, Richard Muschamp will
replace John Adam as the new lead audit
partner following the completion of John’s
five-year tenure in that role. Richard has
been shadowing John Adam and observed all
Audit Committee meetings during the year.
The Committee will consider future audit
needs as part of the External Reporting
Assurance Policy.
Non-audit services
The Committee oversees the process for
approving all non-audit work provided by the
external auditor to safeguard the objectivity and
independence of the auditor and comply with
regulatory and ethical guidance. Where Deloitte
has been chosen, it has demonstrated the
relevant skills and experience making them an
appropriate supplier to undertake the work in
a cost-effective and time-efficient manner,
with appropriate safeguards in place.
Our policy for non-audit services is compliant
with the FRC’s Revised Ethical Standard 2019. In
line with regulation, the Group is required to cap
the level of non-audit fees paid to its external
auditor at 70% of the average audit fees paid in
the previous three consecutive financial years.
Fees paid to the external auditor are set out in
Note 4 to the financial statements.
Ethics and compliance
The Committee supports the Board in discharging
its responsibilities in relation to serious reportable
incidents, privacy, fraud, anti-bribery, people
safety, whistleblowing, annual and Group
compliance statements and received and
reviewed biannual ethics and compliance data
covering the aforementioned items.
External audit fees: non-audit and audit-related services
Nature of service
Level of
fees in
2024/25
(£m)
Level of
fees in
2023/24
(£m) Change
Safeguards to preserve independence
and objectivity
Interim review: performed
under International
Standards of Review
Engagements (UK and
Ireland) 2410
0.6 0.6
Considered a non-audit service
under the FRC Revised Ethical
Standard 2019 although the
objectives of the review are aligned
with those of the audit.
Other non-audit services:
various audit, assurance
and compliance-related
services
0.5 0.3
Scope of work sets out Deloitte’s and
management’s responsibilities ensuring
management takes all management
roles. Application of engagement
quality control review process.
ESG Limited Assurance
services including
services performed under
International Standards of
Assurance Engagements
3000 (Revised) and 3410
0.6 0.3
Scope of work sets out Deloitte’s
and management’s responsibilities
ensuring management take all
management roles. Application
of engagement quality control
review process.
Total 1.7
(a)
1.2
(b)
(a) £269,650 of the 2024/25 fees are not subject to the cap (all within other non-audit services). The remaining fees are all subject
to the cap.
(b) £212,000 of the 2023/24 fees are not subject to the cap (all within other non-audit services). The remaining fees are all subject
to the cap.
Increase No change Decrease
Tesco PLC Annual Report and Financial Statements 2025
88.
Frequency of reporting
April
2024
July
2024
September
2024
November
2024
February
2025
Governance
Ethics and compliance (including fraud)
Terms of reference and committee
effectiveness review
Annual Report, half-year and full-
year results: fair, balanced and
understandable, Corporate Governance
Code compliance
Policy review: including non-audit fees,
Internal Audit charter
Key outputs from Internal Audit effectiveness review
Action identified Progress against action
Continue integrating data analytics and
continuous monitoring into audit processes
to facilitate valuable, timely insights and
provide greater assurance to the business.
Early adoption of Artificial Intelligence and
analytics has helped streamline audit and risk
activities. First and second line have adopted
continuous monitoring tools initially developed
during audits.
Continue to assess the audit composition,
expertise and skills required to deliver in line
with business needs and evolution.
Adapting skill requirements with focus on
developing internal capability as well as
leveraging external specialist skills in fast paced
areas where they are most needed.
Continue providing end-to-end
assurance coverage across the three
lines of defence to enhance risk management,
collaboration, efficiency, and timely insights.
Assurance mapping across all Principal Risks
to achieve appropriate and efficient coverage
across all three lines of defence.
Continue horizon scanning to identify and
provide assurance over emerging and
developing risks.
Agile audit plan that proactively addresses
emerging risks and aligns with Tesco’s growth
strategy. The approach focuses on the
most significant risks, enhancing overall risk
management, internal controls, and resilience.
2024/25 Effectiveness review of the Audit Committee
The 2024/25 Committee effectiveness review formed part of the external Board performance review.
The review found that the Committee was performing effectively, with a well-developed and effective
audit process. Meetings were well chaired, with appropriate challenge and good quality papers. It was
felt that there was a good mix of skills and members were well informed, prepared and able to challenge.
Looking ahead: Committee priorities for 2025/26
– Oversee and monitor the developments of financial and non-financial controls to support
the attestations that the Board will make in 2027 in accordance with the 2024 UK Corporate
Governance Code;
– Enhance the audit process through data-led metrics;
– Review the transition, controls and system separation of the Insurance and Money Services
business; and
– Further enhance the risk management framework, including greater clarity on risk appetite.
Karen Whitworth
Committee Chair
9 April 2025
The Committee discussed the controls and
mitigating actions deployed in support of the
Group’s overall compliance strategy and culture
to reduce instances of fraud and compliance
breaches. We received updates on the
effectiveness of the Group’s internal and
independent external whistleblowing
arrangements and reviewed compliance with
GSCOP. The Committee Chair met with the
Groceries Code Adjudicator during the year.
The Committee monitors the relationship with
the Groceries Code Adjudicator and receives
reports on supplier engagement and the internal
auditing of ethical business processes.
The Group has complied with the provisions
of the Statutory Audit Services Order 2014.
Audit effectiveness review
In accordance with the Audit Committee Terms
of Reference and the Internal Audit Code of
Practice, Tesco is required to assess annually the
effectiveness of the Internal Audit and External
Audit functions.
In January 2025, the Internal Audit and External
Audit effectiveness reviews were undertaken. This
review was facilitated by an independent third
party, Lintstock Limited, through questionnaires
completed by the Board and senior management
and business representatives. The effectiveness
results were presented to the Audit Committee,
which concluded that, through this assessment
and ongoing review and oversight of assurance
activities, the Committee was satisfied with
the effectiveness of the Internal and External
Audit functions.
External Audit effectiveness review
The external auditor’s independence,
effectiveness and quality was evaluated and
the external auditor was rated as effective.
The assessment highlighted high levels of
independence, objectivity, and value provided
through audit insights which would feed into
the audit priorities over the coming year.
The Committee discussed areas for
improvement to best meet the future needs
of the Group, which included the use of
innovative tools, technology and data analytics
to drive efficiency through the audit process.
Internal Audit effectiveness review
Throughout the year, the Audit Committee
monitored performance and the progress
of innovation through technology, ensuring
a greater focus on controls. Regular meetings
were held without management present to
foster open communication. Through a tailored
survey, comprehensive feedback was provided.
This feedback was thoroughly reviewed to inform
our ongoing improvements and audit strategy.
The review assessed the effectiveness of
Internal Audit across key areas such as
composition and expertise, audit plan, quality
of work and relationships. The Committee
discussed areas for improvement concluding
that continued enhancement to the
effectiveness of assurance would be achieved
by leveraging data analytics and advanced
technologies across the three lines of defence.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
89.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report
Remuneration
Committee.
Committee Chair
Alison Platt.
Committee membership3 and tenure
Director Member since
Meeting
attendance
Alison Platt, Committee Chair April 2016 4/4
Melissa Bethell
1
June 2024 3/3
Carolyn Fairbairn² September 2023
3/4
Stewart Gilliland June 2023 4/4
Byron Grote⁴ July 2015 to June 2024 1/1
Karen Whitworth¹ June 2024 3/3
1. Melissa Bethell and Karen Whitworth became members of the Remuneration Committee
in June 2024.
2. Carolyn Fairbairn was unable to attend one meeting due to a known conflict at the time
of joining the Board. Carolyn contributed to discussions in advance of the meeting.
3. Thierry Garnier stepped down from the Remuneration Committee in June 2024. He attended
one meeting during the year.
4. Byron Grote was a member of the Committee until he stood down from the Board in
June 2024. He attended one meeting during the year.
Committee activity
Senior management remuneration 6%
Remuneration Policy and
stakeholder experience 23%
Governance and reporting (including
wider-workforce remuneration) 26%
Performance monitoring 45%
Key activities in 2024/25
– in-depth review of remuneration policy, incorporating views from major
shareholders and other stakeholders;
– extension of all employee share plan to colleagues in dunnhumby and
Central Europe as part of improvements for wider workforce reward; and
– review of non-financial measures for variable reward, including joint
meeting with Sustainability Committee.
Chair’s
Letter.
Dear Shareholder,
On behalf of the Remuneration Committee,
I am pleased to present the Directors’
remuneration report for the financial year
ended 22 February 2025.
This report outlines the key decisions made
by the Committee in the year, including our
proposed remuneration policy that is due to be
put to a shareholder vote at the 2025 AGM, and
is in line with our previous policy. We set out how
we have implemented our remuneration policy,
and how we intend to implement our proposed
policy in the coming year, in alignment with our
purpose, values and strategic priorities. It also
provides an overview of both Executive Director
and wider workforce remuneration for the year.
The Committee appreciates the strong
shareholder support for the remuneration
report, which was approved by 93.5% of
shareholders at the 2024 AGM. We value ongoing
dialogue with stakeholders on remuneration
matters, especially this year during our
remuneration policy review.
Delivering our strategic priorities and
living our purpose
Throughout 2024/25, Ken Murphy and his team
have continued to drive our strategy forward,
with the strength of our customer offer
delivering both volume growth and market
share gains. We have seen significant
improvements in customer perception, with
our YouGov BrandIndex scores increasing
across all measures.
Our continued success is a testament to our
dedicated colleagues who have played a crucial
role in achieving our strategic priorities. This
year, we have continued to make significant
investments in our colleagues, with a particular
focus on improving pay competitiveness for our
hourly-paid colleagues and investing in their
wellbeing through our colleague discount and
virtual GP service.
Our core purpose – serving our customers,
communities and planet a little better every day
– remains central to our decision-making
process. In this challenging economic climate,
it is more important than ever that we remain
conscious of that when assessing our
remuneration decisions.
Alongside consideration of our overall business
performance, the table overleaf sets out some
of the key factors that have been considered
throughout the year to ensure that our
remuneration decisions and implementation
of the policy take into account the broader
perspective of our key stakeholders.
Directors’ remuneration report index
Chair’s letter 90
2025 Remuneration policy consultation 93
Strategic alignment of remuneration 94
Remuneration for the year 96
Implementation of remuneration
policy for 2025/26 98
Wider remuneration at Tesco 101
Remuneration report 107
Committee governance 114
Remuneration policy 117
Tesco PLC Annual Report and Financial Statements 2025
90.
Area Factors considered by the Committee
Key stakeholders
Customers – Improved customer satisfaction driving market share to 28.3% in the UK
and 23.9% in ROI.
– Launched over 1,000 new products and improved over 600, underscoring
our commitment to quality and innovation.
– Continued to offer over 1,000 products at Low Everyday Prices and more
than 8,000 Clubcard Prices deals each week.
– Launched Tesco Marketplace.
– Tesco Whoosh is now in 1,500 stores.
Colleagues – Record investment of more than £300m in hourly store colleague pay.
– 85% of colleagues recommend Tesco as a Great Place to Work (+10% vs
market benchmark).
– Improvements to colleague benefits with wellbeing index up to 74%.
Suppliers – Ranked 1st in Advantage supplier survey for 9th year running.
– Further 16 brands included in 2024 Accelerator Programme.
– Re-launched the Sustainable Farming Group for pigs and sustainability
partnership with Arla and Müller UK.
Communities –Stronger Starts provided financial support to over 12,200 projects from
community groups and schools.
– Continued ‘Kids Eat Free’ campaign in over 300 Tesco Cafés.
– Donated more than 300 million meals to charities and local communities
to date.
Shareholders – Group sales grew by 4% at constant exchange rates, driven by strong growth
across all operating segments. Adjusted operating profit increased by 10.9%
at constant exchange rates, driven by further progress in our core retail
markets as higher sales volumes and a further £510m contribution from
Save to invest more than offset our investments in the customer offer and
colleague pay. Additionally we saw growth in our insurance and money
services business.
– Bought back £1bn worth of shares in the year. Since October 2021, we have
bought back £2.8bn worth of shares.
– Final recommended dividend of 9.45 pence in line with our progressive
dividend policy, taking the full year dividend to 13.70 pence, up 13.2%
year-on-year.
– Tesco’s total shareholder return of 39.0% outperformed the FTSE 100 index
by 22.5% (Tesco TSR: 39.0% vs FTSE 100 TSR: 16.5%).
– The sale of our Banking operations during the year realised £700m of cash,
which will be returned to shareholders through an incremental buyback.
Wider factors considered
Sustainability
commitments
– Signed the UK’s largest solar corporate power purchase agreement.
– Trialling methane-reducing feed supplement for dairy cows.
– Launched tenth ‘Tesco train’ to help cut freight road miles.
– Made positive progress on carbon reduction and diversity targets.
– Supplier challenges with food waste processing, leading to the withdrawing
of previously reported food waste data.
2024/25 business performance and incentive outcomes
The remuneration for our Executive Directors is closely tied to the strong performance of the business.
Our policy reflects the complexities of managing a large-scale operation like Tesco and is comparable to
other FTSE 50 companies. A significant portion of the total package has been achieved due to Ken Murphy
and Imran Nawaz meeting challenging targets in a competitive sector, creating value for all stakeholders.
Tesco’s strong performance is reflected in the outcomes of the 2024/25 annual bonus and 2022
Performance share plan (PSP), as demonstrated below. Full details of performance against the
2024/25 individual objectives in relation to the annual bonus plan are set out on page 108.
2024/25 bonus achievement
Group sales
(max 30%)
Individual
performance
(max 20%)
Adjusted operating
profit (max 50%)
44.9%
15.9%
18%
20%
Ken Murphy
Imran Nawaz
2022 PSP achievement
Cumulative free
cash flow
(max 37.5%)
Adjusted
diluted EPS
(max 37.5%)
26.1%
37.5%
ESG measures
(max 25%)
12.0%
Within this Directors’ remuneration report we have used colour coding to define different
elements of remuneration:
Salary Benefits Annual bonus PSP Pension Shareholding
Details of the definitions of the financial performance measures used throughout the Directors’
remuneration report are set out on pages 117 to 119.
The overall formulaic vesting level for the annual bonus is 78.8% of maximum for Ken Murphy and
80.8% for Imran Nawaz. Based on the strong performance outcomes over the three-year period, the
formulaic level of vesting for the 2022 PSP awards is 75.6% of maximum for both Executive Directors.
The PSP awards are delivered entirely in Tesco PLC shares and are subject to a further two-year
holding period.
No discretion was applied to adjust the formulaic outcomes, and the remuneration policy operated
as intended.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
91.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
As part of this process, we engaged with a large
proportion of our shareholders, as well as
listening to the views of our executives and the
wider workforce. Key areas of focus included
the alignment of executive pay with business
performance and competitiveness of our
remuneration packages. We also reviewed
market trends, regulatory developments and the
broader economic environment, ensuring that
our policy remains competitive and aligned with
the expectations of our key stakeholders.
Having undertaken this review, we have
determined that the current policy is working
effectively and supports our goals of attracting,
retaining and motivating high-calibre executives
to deliver our strategic priorities. More details on
the policy review and consultation are set out on
the next page. The full policy can be found on
pages 117 to 122.
Looking ahead to 2025/26
When considering base salary increases for our
senior executives, the Committee remains
mindful of the wider colleague experience and
our fairness principles. Ken Murphy and Imran
Nawaz will receive base salary increases of 2.0%
and 4.0% respectively, effective 25 May 2025.
These are below the increase for UK hourly-paid
colleagues in 2025 of 5.2%.
For the 2025/26 annual bonus and 2025 PSP,
there will be no changes to opportunity levels,
performance measures or their weightings, as
the Committee believes these continue to
incentivise the Executive Directors towards
delivering the strategy.
Breakdown of single figure remuneration
Fixed pay Annual bonus payout PSP payout
a
2024/25 2023/24
£4.69m
£1.65m
£2.88m
£9.23m
£5.23m
£1.64m
£3.38m
£10.24m
Ken Murphy
2024/25 2023/24
£2.25m
£0.94m
£1.62m
£4.81m
£2.49m
£0.91m
£1.71m
£5.10m
Imran Nawaz
Board and Committee changes
As previously announced, I will be stepping down
from the Board and as Chair of the Committee
at the conclusion of the 2025 AGM. I will be
succeeded as Committee Chair by Melissa
Bethell and I would like to wish her every success
in this role. It has been a privilege to serve as
Committee Chair and I extend my sincere thanks
to the Committee members, both past and
present, for their support and guidance over
the past three years.
On behalf of the Committee, I would like to thank
shareholders for their input and engagement
throughout the year. We welcome any comments
you may have on this report and hope to receive
your support at the 2025 AGM on our
remuneration resolutions.
Alison Platt
Committee Chair
9 April 2025
Further details of the performance outcomes
versus targets and the vesting of these awards
can be found in the Remuneration for the year
section on page 96. The Committee is satisfied
that the measures and targets set were robust
and challenging, reflecting the business
performance and wider stakeholder experience.
Despite the economic challenges, Tesco has
continued to lead the way on value, being
recognised as Employer of the Year (Retail)
at the Grocer Gold Awards, and delivered its
commitments to shareholders.
The chart below shows a breakdown of fixed
and performance-based remuneration paid
to Ken Murphy and Imran Nawaz for 2024/25
and 2023/24. The small decrease in total
remuneration reflects slightly lower bonus levels
and PSP vesting levels, although outcomes
continue to reflect strong performance against
stretching targets over a challenging period.
Remuneration policy review
The current remuneration policy was approved
by 91.98% of shareholders at the 2022 AGM,
and is required to be put to shareholder vote at
the 2025 AGM. The Committee conducted a
comprehensive review of the remuneration
policy during the year to ensure that it remains
fit for purpose and continues to support us to
deliver our strategic priorities.
(a) 2023/24 PSP estimated values have been restated based on the share price of 307.60p at the time of the PSP vesting.
Tesco PLC Annual Report and Financial Statements 2025
92.
Timeline
Internal review of current
policy, including interviews
with management and
Committee members to
develop initial proposals.
Committee review and
determination of potential
policy amendments.
Letter sent to major
shareholders and proxy
agencies setting out policy
amendments under
consideration.
Consultation with major
shareholders and
colleagues on the policy.
Committee discuss
and agree final policy
proposals.
Letter sent to major
shareholders to explain
how feedback was
considered and set out
final policy proposals.
Proposed policy published
in this Annual Report, and
voting resolution being
put to shareholder vote
at the 2025 AGM.
Key areas of shareholder engagement
The consultation focused on two potential remuneration changes:
Potential consideration Feedback received Response to feedback in our proposals
Flexibility of bonus deferral
period (when shareholding
requirement met).
In line with emerging market practice,
we considered a potential reduction
of bonus deferral for annual bonus
awards when an individual has met their
shareholding requirement.
New Investment Association (IA)
guidance supported this change. While
many shareholders were comfortable
with a change, other shareholders
noted that shareholdings of Executive
Directors would be reduced.
Although many shareholders signalled support for a reduction in bonus
deferral, we noted the feedback and concluded that a change is not required
at this time. We will, however, continue to monitor market practice.
Weighting of non-financial
measures in the PSP (within the
flexibility of the current policy).
While there are no immediate plans to increase
weighting, the Committee sought views on
implementing a higher weighting on non-
financial measures in the future, in the event
that this aligns with our future strategy.
Consistent feedback from major
shareholders that the current
weighting of non-financial PSP
measures (25%) is appropriate.
The Committee welcomed the clear and consistent feedback from
shareholders and does not intend to increase the weighting of non-
financial PSP measures. If new measures emerge to drive our strategy,
we may look to adjust or replace existing measures.
Feb–May
2024
Jun–Jul
2024
Aug
2024
Sep–Feb
2025
Mar
2025
May–Jun
2025
2025 Remuneration
policy consultation.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
93.
GovernanceStrategic report
Strategic alignment
of remuneration.
The Committee believes it is vital that a significant proportion of
the remuneration package for the Executive Directors and senior
management is performance-related and that performance measures
are aligned to our purpose and strategic priorities. Delivering against
our purpose and strategic priorities is critical to the creation of
long-term, sustainable value for our key stakeholders: customers,
colleagues, suppliers, communities and shareholders.
Our purpose
Serving our customers communities and
planet
a little better every day.
Multi-year
performance
framework
Drive top-line growth, underpinned by:
– Increasing customer satisfaction relative to the market.
– Growing our core UK market share.
Grow our absolute profits while maintaining sector-leading
margins through:
– Using our assets efficiently across all channels.
– Accessing new revenue streams across our digital platform.
– Targeting productivity initiatives to at least offset inflation in the
medium term.
Generate between £1.4bn and £1.8bn free cash flow each year
Strategic
priorities
Magnetic
value for
customers
Easily the
most
convenient
I love my
Tesco
Clubcard
Save to invest
Corporate governance report continued
Directors’ remuneration report continued
Our remuneration approach supports our
purpose and strategic priorities and reflects
the views of our stakeholders.
There are four key principles which guide our
approach to reward for all our colleagues,
including Executive Directors:
1. Simple
Helping all colleagues to understand how
they are rewarded
2. Fair
Achieving consistent outcomes through
flexible and transparent policies
3. Competitive
Setting pay with reference to internal
relativity and external market practices
4. Sustainable
A responsible and flexible approach,
aligning reward to business strategy
and performance
Tesco PLC Annual Report and Financial Statements 2025
94.
The tables below set out the performance measures we use within our incentive plans and how these align to our purpose
and strategic priorities to deliver the Group’s financial, operational and sustainability plans.
2025/26 bonus
Measures Alignment to strategic priorities Alignment to purpose
Group sales
(30%)
Our ambition is to drive top-line growth by increasing customer
satisfaction relative to the market and growing our core UK market
share.
We aim to provide customers with brilliant, helpful service in
every corner of our business, with products and services that
are sustainable and accessible to all.
Group adjusted
operating profit
(50%)
Our ambition is to grow absolute profits while maintaining sector-
leading margins through leveraging our assets efficiently across all
channels, accessing new revenue streams across our digital platform
and targeting productivity initiatives.
Individual
performance
(20%)
Individual objectives are aligned to our strategic priorities. Further
details are set out on page 16.
Individual objectives are aligned to each part of our purpose:
customers, communities and planet.
2025 PSP
Measures Alignment to strategic priorities Alignment to purpose
Cumulative free
cash flow (37.5%)
Profitable growth and free cash flow are key elements of our multi-
year performance framework. They are aligned to the delivery and
success of our strategic priorities over the medium and long-term.
We aim to continue to be a champion for customers, providing
great value, high-quality products wherever, whenever and
however customers want them.
Adjusted diluted
EPS (37.5%)
Sustainability measures (25%)
Carbon reduction
(8.3%)
Aligns to our commitment to be carbon neutral across our own
operations by 2035 against a 2015/16 baseline.
This is a critical time for our planet. As a responsible company
we are therefore finding new ways to reduce our impact on the
environment and collaborate with our supplier partners and
customers to help them do the same.
These measures bring to life our purpose to serve our planet a
little better every day.
Food waste
reduction (8.3%)
Aligns to our commitment to deliver a 50% reduction in tonnage
of food wasted (as a percentage of food handled), compared
with a baseline of 2016/17. For further details, please refer to the
Sustainability Report.
Diversity, equity
and inclusion
(8.3%)
Aligns to our commitment to be an inclusive and equitable business,
with diverse representation at all levels and a gender equal
workforce, with the PSP measure based on percentage of women
and ethnically diverse colleagues in senior roles.
Embedding diversity and building inclusion into everything
we do is key to our business success and helps us connect to
our colleagues, customers and communities. In doing so, the
measure brings to life our purpose to serve our customers and
communities a little better every day.
We continue to apply a high degree of rigour with regard to our sustainability goals and progress. For our most material issues, we publicly report progress with clear KPIs and provide full transparency
on our historical performance. Our reporting on these issues is assured by an independent third party. Wherever applicable, we align our reporting methodologies to recognised disclosure standards.
Our Sustainability Accounting Standards Board disclosure, along with all our KPI performance data can be found in our Sustainability Report, which is available on the Company’s website at
www.tescoplc.com/sustainabilityreport2025.
Our sustainability strategy will evolve over time and, as such, we anticipate that our sustainability performance measures will evolve to ensure they remain material to the business.
Further details of our approach to sustainability are detailed on pages 31 to 35.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
95.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Remuneration
for the year.
Fixed pay
Salary Benefits Pension
Ken
Murphy
£1.45m
Imran
Nawaz
£0.79m
Salary
increase
of 3.0% for
Ken Murphy
and 5.4% for
Imran Nawaz
from 26 May
2024
Benefits
packages
remained
unchanged
Pension
allowance of
7.5% of salary
remained
unchanged
Annual bonus outcomes (audited)
Outcome
Weighting
Threshold
(25% payout)
Target
(50% payout)
Stretch
(100% payout)
Actual
(at constant rates) Ken Murphy Imran Nawaz
Group sales 30% £61.9bn £63.8bn £65.8bn £64.0bn 15.9% 15.9%
Value of annual bonus
Group adjusted operating profit 50% £2.74bn £2.96bn £3.18bn £3.14bn 44.9% 44.9%
Ken Murphy
£2.88m
Imran Nawaz
£1.62m
Individual objectives 20% Details of performance are set out on page 108. 18.0% 20.0%
Total (% of maximum) 78.8% 80.8%
2022 PSP vesting (audited)
Weighting
Threshold
(25% payout)
Stretch
(100% payout) Actual Outcome
Cumulative free cash flow 37.5% £3.9bn £5.8bn £5.9bn 37.5%
Value of PSP
Adjusted diluted EPS 37.5% 20.9p 31.8p 27.4p 26.1%
Ken Murphy
£4.69m
Imran Nawaz
£2.25m
Sustainability measures:
– Carbon reduction 8.3% 56% 60% 65% 8.3%
– Food waste 8.3% 48% 55% (14)% 0.0%
– Diversity, equity and inclusion (gender/ethnicity) 8.3% 32%/13% 40%/15% 32%/14% 3.7%
Total (% of maximum) 75.6%
Single figure remuneration (excluding buy-out awards)
Salary Benefits Pension Annual bonus PSP
(a)
2023/24
2024/25
Imran Nawaz
0 £1m £2m £3m £4m £5m £6m £7m £8m £9m £10m £11m
2023/24
2024/25
Ken Murphy
£4.81m
£5.10m
£9.23m
£10.24m
(a) The PSP figures for 2024/25 relate to the 2022 PSP award and are estimates based on the average share price over the three months to 22 February 2025
of 370.34p. These will be restated in next year’s Directors’ remuneration report to show the actual value upon vesting.
Tesco PLC Annual Report and Financial Statements 2025
96.
Fixed versus performance-linked remuneration
A significant proportion of Executive Directors’ remuneration is performance-linked, long-term and at risk for a period during which the Committee can withhold vesting or recover sums paid. The charts below
show the fixed and performance-linked and short-term and long-term elements of pay for the Group Chief Executive and Chief Financial Officer based on maximum payouts in 2024/25. As half of the annual
bonus payout is deferred into Tesco shares for three years, it is deemed long-term for the purpose of the chart.
Executive Director shareholdings counting towards shareholding requirement (audited)
Further details of Executive Directors’ shareholdings and share interests are given in the table below and on page 111.
Shareholding
requirement
(% of salary)
Current
shareholding
(% of salary)
(a)
Number of shares owned outright Deferred share awards
(b)
Vested PSP shares
subject to holding period
Total shares counting
towards shareholding
requirement
24/02/24 22/02/25
24/02/24 22/02/25 24/02/24 22/02/25
24/02/24 22/02/25
Ken Murphy 400% 490% 78,396 80,982 605,607 932,425 – 925,184 683,983 1,938,591
Imran Nawaz 300% 798% 841,811 854,974 264,672 428,383 – 439,746 1,106,483 1,723,103
(a) Share price used is the average share price over the three months to 22 February 2025 of 370.34p.
(b) Net number of shares after deemed statutory deductions of 47% count towards the shareholding requirement.
Shareholding requirement (audited)
Share ownership is a key means by which the interests of Executive Directors are aligned with those
of shareholders. Ken Murphy and Imran Nawaz have both reached their shareholding requirements
of 400% and 300% of base salary respectively.
Executive Director shareholdings (% of base salary) (audited)
Shares owned outright Deferred share awards Vested PSP shares subject to two-year holding period
400%
Total
490%
234%
236%
Ken Murphy
Target
20%
300%
204%
198%
Imran Nawaz
Target
396%
Total
798%
Pay at risk
Annual bonus: Performance period Deferred period – half of actual bonus deferred into shares
PSP:
Performance period Holding period
2024/25 2025/26 2026/27 2027/28 2028/29
Annual bonus
PSP
Fixed 18% Performance-linked 82%
Short-term 37% Long-term 63%
Ken Murphy
Fixed 18% Performance-linked 82%
Short-term 38% Long-term 62%
Imran Nawaz
Salary Benefits Pension Annual bonus cash Annual bonus shares PSP
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
97.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Implementation of remuneration policy for 2025/26.
The purpose of the remuneration
policy remains to attract, retain
and motivate the talent capable of
delivering our purpose and strategy
and provide clear leadership. In
this way, it aims to create long-
term sustainable performance
and increased shareholder value.
The table and details below set out a summary of
the proposed remuneration policy for Executive
Directors and implementation in 2025/26. The
diagram to the right illustrates the time period
of each element of pay. Full details of the
remuneration policy that shareholders are asked
to approve at the 2025 AGM are on pages 117 to
122. This will also be made available on the Tesco
website at www.tescoplc.com.
Total pay over five years
Fixed pay
(base salary,
benefits and
pension)
Year 1 Year 2 Year 3 Year 4 Year 5
Annual
bonus
50% in cash
One-year
performance
period
50% in shares
Three-year deferral period
No further performance conditions
PSP
Two-year holding periodThree-year performance period
Pay element, purpose
and link to strategy Operation Implementation in 2025/26
Base salary
Supports the attraction and
retention of the best talent with
the capability to develop and
deliver Tesco’s strategy.
Salaries are normally reviewed annually by the Committee, with changes being effective on or around 1 June.
Salaries take account of:
– individual performance;
– role, skills and experience;
– pay and conditions elsewhere across the Group, including the wider workforce; and
– salary levels at leading FTSE companies and other large consumer businesses in the UK and internationally.
Any increases will normally be no higher than the typical level of increase awarded to other colleagues. Higher increases
may be awarded in certain circumstances such as where there is a change in responsibility, experience or a significant
increase in the scale of the role.
Increases of 2.0% and 4.0% will be applied to the
salaries of Ken Murphy and Imran Nawaz, respectively.
Salaries from 25 May 2025 are:
Ken Murphy: £1,493,729
Imran Nawaz: £832,000
These increases are below those awarded to UK
hourly-paid colleagues of 5.2%.
Benefits
Provides market-competitive and
cost-effective benefits to support
the attraction and retention of
Executive Directors.
Core benefits include a car or cash allowance and a driver, incapacity benefits, private medical insurance and life
assurance. Other benefits (including relocation and commuting support) may be offered as required. There is no
pre-determined maximum limit.
Normal Company benefit provision.
See page 101 for further details of benefits
provided in 2024/25.
Tesco PLC Annual Report and Financial Statements 2025
98.
Pay element, purpose
and link to strategy Operation Implementation in 2025/26
Pension
Provides a competitive level
of retirement income to support
the attraction and retention
of Executive Directors.
A defined contribution scheme or a cash allowance in lieu of pension. The maximum company contribution for Executive
Directors of 7.5% of base salary is aligned to the wider workforce.
Cash allowance of 7.5% of base salary.
Annual bonus
Encourages improved operational
and financial performance and
aligns the interests of Executive
Directors with shareholders
through the partial deferral of
bonus outturn into Tesco shares.
Maximum opportunity
The maximum award is 250% of base salary.
Performance measures
Bonuses are based on financial, operational and individual performance. Performance metrics and targets are set by the
Committee at the beginning of the performance period and at least 70% of bonus is based on financial performance. Up
to 25% is paid for threshold performance and 100% paid for achieving stretch targets, with straight-line vesting between
threshold and target, and target and stretch.
Compulsory deferral of bonus
Half of the bonus payout is deferred into Tesco shares for three years, subject to continued employment. This provides
assurance that the Group is being run in the long-term interests of shareholders and other stakeholders beyond the
annual bonus performance period. It also provides assurance to stakeholders that some or all of the deferred bonus could
be withheld, if during the deferred period this is deemed necessary. Dividend equivalents in the form of additional shares
are payable on deferred annual bonus awards that vest. Malus and clawback provisions apply.
The maximum bonus opportunity for Ken Murphy
and Imran Nawaz is 250% of base salary.
Performance measures (as a percentage of maximum)
are in line with previous years:
– 50% Group adjusted operating profit
– 30% Group sales
– 20% individual performance
The Board considers bonus targets to be commercially
sensitive as they could inform Tesco’s competitors
about our budgeting. However, full and transparent
disclosure of targets and performance outcomes will
be set out in next year’s annual report.
See page 107 for further details of annual
bonus outturns for 2024/25 and page 115 for
details of malus and clawback provisions.
PSP
Encourages the achievement
of Tesco’s strategic, financial
and sustainability targets and
provides a focus on long-term
value creation and alignment
with the interests of shareholders
and other stakeholders.
Maximum opportunity
The maximum award is 350% of base salary.
Performance measures
Awards are subject to the achievement of financial and non-financial performance conditions over three years.
Performance metrics and targets are set by the Committee at the beginning of the performance period. Up to 25% of an
award vests for threshold performance and 100% vests for achieving stretch targets, with straight-line vesting between
them unless stated otherwise. Dividend equivalents in the form of additional Tesco shares are paid on PSP awards that
vest. Malus and clawback provisions apply.
Additional holding period
Following the vesting of the PSP award, Executive Directors are required to hold the shares for an additional two-year period,
so the overall vesting and holding period is at least five years. The holding period continues to operate post-cessation of
employment, with shares held in a corporate sponsored nominee account. This ensures continued longer-term alignment
with the interests of shareholders and other stakeholders. It also provides assurance to stakeholders that some or all of
the PSP payout could be withheld, if during the holding period this is deemed necessary.
The maximum award opportunity for Ken Murphy
and Imran Nawaz is 275% of base salary.
Performance measures (as a percentage of maximum)
are in line with previous years being:
– 37.5% adjusted diluted EPS
– 37.5% cumulative free cash flow
– 25% sustainability measures
See pages 109 and 110 for further details
of 2022 PSP outturn and the PSP awards to be
granted in 2025. Details of malus and clawback
provisions can be found on page 115.
All-colleague share plans
Encourages widespread colleague
share ownership to enable
colleagues to share in the
success of Tesco.
Executive Directors are eligible to participate in applicable all-colleague share plans on the same basis as other eligible
colleagues in the UK. These currently comprise the Company’s Save As You Earn (SAYE) and Buy As You Earn (BAYE) plans.
SAYE and BAYE plans will continue to be operated in
2025/26.
Shareholding requirement
Ensures alignment between
the interests of the Executive
Directors and shareholders both
during and after employment.
In-post shareholding requirement
The Group Chief Executive is required to build and maintain a holding of shares to the value of 400% of base salary, and the
Chief Financial Officer to 300% of base salary. Executive Directors are required to retain all shares that vest to them, net of
any tax liability, whether from the annual bonus, PSP or buyout awards, until the relevant shareholding requirement is satisfied.
Post-cessation shareholding requirement
Following their departure from the Company, Executive Directors are required to hold the lower of their shareholding
requirement or their actual shareholding for two years. They must hold their shares covered by the post-cessation
shareholding requirement in a corporate sponsored nominee account.
Shareholding requirement will continue to be
operated in 2025/26.
See pages 97 and 111 for further details of
Executive Directors shareholdings and
interests in share awards.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
99.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Approach to remuneration
In developing its approach to remuneration, the Committee considers that the executive remuneration framework addresses the following factors:
Clarity
– Our remuneration policy is designed to be sustainable, simple and support the delivery of Tesco’s strategy and purpose of serving our customers, communities and planet a little better
every day.
– The Directors’ remuneration report sets out the remuneration arrangements for the Executive Directors in a clear and transparent manner.
– The Board has designated Non-executive Directors to host Colleague Contribution Panels to engage on various topics to ensure internal clarity on remuneration. You can find further
details on how the Board engages with stakeholders on pages 20 to 22.
Simplicity
– The Company operates an approach to remuneration that is simple to understand and familiar to stakeholders. Executive Directors receive a fixed element (base salary, benefits and
pension) and participation in a short-term incentive (an annual performance-related bonus) and single long-term incentive (the PSP).
Predictability
– Payouts under the annual bonus and PSP schemes are dependent on the performance of the Company over the short and long term, and a significant proportion of Executive Director
remuneration is performance-related.
– These schemes have a maximum opportunity, with details set out in the Directors’ remuneration report clearly showing potential performance and reward outcomes.
Proportionality
– Our annual bonus and PSP plans provide clear alignment between incentive outcomes and the achievement of Tesco’s purpose and strategy, with stretching performance conditions set
to achieve commensurate reward for commensurate performance.
– Performance measures have been selected to support the Group’s purpose and strategic priorities and consist of both financial and non-financial measures.
– Use of annual bonus deferral, PSP post-vesting holding periods and shareholding requirements (including after leaving Tesco) ensures that Executive Directors have a strong drive to
ensure that performance is sustainable over the long term.
– Stretching performance conditions, along with the discretion available to the Committee to adjust formulaic outcomes, ensure that outcomes do not reward poor performance.
Risk
– The Committee has designed incentive arrangements that do not encourage inappropriate risk-taking.
– The Committee retains overall discretion in both the annual bonus and PSP schemes to adjust payouts where formulaic outturns are not considered reflective of underlying performance
and individual contributions.
– Malus and clawback provisions apply to variable incentives, including in the event of any behavioural risks. You can find further details on malus and clawback provisions on page 115.
Alignment to culture
– Performance measures used for the annual bonus and PSP schemes are selected to align with Tesco’s purpose, values and strategic priorities, with a strong focus on delivering for our
customers and other stakeholders.
– The use of annual bonus deferral, PSP holding periods and shareholding requirements promotes integrity and provide a clear link to the ongoing performance of the Group to ensure
alignment with shareholders, which continues after employment.
Tesco PLC Annual Report and Financial Statements 2025
100.
Wider remuneration
at Tesco.
Our pay and reward framework
The shape of the reward package depends on the role of colleagues. Remuneration for most
colleagues is principally fixed pay to support a good standard of living. For more senior colleagues,
who have greater influence on overall Tesco performance, remuneration is weighted more towards
variable pay, which can increase or decrease based on business and individual performance
against our challenging goals. While the balance of the elements of remuneration may differ, our
consistent overall principle is that all colleagues should be paid competitively against the relevant
pay benchmark.
We regularly ask colleagues across the Group how they feel about pay and benefits at Tesco. In our
2025 Every Voice Matters colleague survey, 68% of colleagues agreed that the total reward package
at Tesco is competitive, which is well ahead of relevant external benchmarks. In addition, 83% of
colleagues said they are able to work flexibly and 86% feel they can be themselves at Tesco, without
fear of judgement. 74% of colleagues feel Tesco supports them with their wellbeing. Our colleagues
are the heart of our business and Tesco remains committed to building an inclusive workplace where
everyone can get on. The survey showed that 85% of colleagues regard Tesco as a Great Place to Work
(10% above the market benchmark).
Element of pay Policy Comparison with Executive Directors’ remuneration
Colleagues at all levels
Base salary
We want to attract and retain colleagues of the calibre, capability and experience needed to deliver the strategy. Salaries are
reviewed annually.
The approach is the same for Executive Directors, with any
increase normally no higher than the level awarded to other
colleagues.
Wellbeing benefits
We want to help colleagues live a healthier and more sustainable lifestyle and ensure they have access to early and effective
treatment, advice and information so they can be their best at work and home.
Colleagues at all levels have access to an Employee Assistance Programme which provides access to a wide range of experts
and resources to support colleagues’ mental and physical wellbeing. In addition, a 24/7 virtual GP service is available as well
as a hub providing access to mental, physical and financial resources.
Executive Directors have access to the same level of
wellbeing support and resources.
Other benefits
A market-competitive level of benefits is available for all colleagues, enhancing the reward package and providing other
reasons to work at Tesco, such as our Colleague Clubcard discount and colleagues deals and offers. In 2024, we launched a
flexible benefits platform for our salaried colleagues in the UK. Further details are set out on page 104.
Executive Directors also receive market-competitive
benefits, including the same discount in store as other
colleagues. Further details are set out on page 118.
Pension
A defined contribution pension scheme is available to all colleagues, with colleague contributions being matched by Tesco.
When colleagues get closer to retirement, Tesco provides education and support to plan for the next stage in their lives.
The maximum contribution into the defined contribution
scheme of 7.5% for Executive Directors is aligned to the UK
wider workforce.
Executive Directors can elect to receive a cash allowance
of 7.5% of base salary in lieu of pension contribution.
Cascade of remuneration
Consistent with best practice, the Committee spends considerable time on matters relating to
remuneration arrangements across the Group. Details of pay trends for the wider workforce provide
context when making decisions regarding remuneration for the Executive Directors as well as ensuring
consistent approaches and competitive reward packages are being adopted throughout Tesco.
The table below summarises the reward and benefits package of UK colleagues and how it compares
to Executive Directors’ remuneration.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
101.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Element of pay Policy Comparison with Executive Directors’ remuneration
Share plans
Buy As You Earn (BAYE) and Save As You Earn (SAYE) plans are available to all colleagues and provide an opportunity to become
a shareholder in Tesco and share in its success.
Executive Directors participate on the same terms as
other UK colleagues in the BAYE and SAYE plans.
All salaried colleagues
Annual bonus
The annual bonus incentivises eligible colleagues to deliver Tesco’s short-term financial and strategic objectives and share
in our success. A consistent design is operated throughout Tesco for delivering against business and individual goals.
Specific weightings and award levels vary by work level. For senior leaders, a proportion of any bonus is deferred into shares.
Bonuses are normally paid to eligible colleagues in May or June.
The annual bonus plan for Executive Directors is directly
linked to the same financial performance measures as
all colleagues.
Half of the bonus payout for Executive Directors is deferred
into Tesco shares for three years.
Executive Directors, Executive Committee and senior leaders
Performance
Share Plan (PSP)
The PSP incentivises the delivery of long-term value creation and aligns with our purpose and strategic objectives. Award
levels vary by work level.
Measures and targets for long-term incentive plans are consistent for all participants and measured over a three-year period.
The same measures and targets are applied to Executive
Directors awards as other participants.
Executive Directors’ PSP awards are subject to an additional
two-year holding period post vesting.
Tesco PLC Annual Report and Financial Statements 2025
102.
Performance and change in Group Chief Executive remuneration
The graph below illustrates the Company’s total shareholder return (TSR) performance against the FTSE 100 index over the past 10 years. We have chosen the FTSE 100 index because it is a broad-based index
of which the Company has been a constituent member throughout the period. The table below the TSR graph shows the Group Chief Executive’s annual remuneration over the same period.
Historical total shareholder return performance
Value of hypothetical
£100 invested
FTSE 100 Tesco
Source: Workspace
by LSEG
0
50
100
150
250
200
75
77
84
93
98
101
133
121
142
197
100
100
113
91
117
121
117
118
141
154
157
183
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24
(b)
2024/25
Group Chief Executive
single total figure of
remuneration (£’000)
Ken Murphy – – – – – 992 4,745 4,443 10,243 9,226
Sir Dave Lewis
(a)
4,632 4,147 5,113 4,600 6,328 1,650 – – – -
Annual bonus outturn
(% of maximum award) 96.0% 76.0% 73.0% 52.5% 75.9% 0% 95.0% 79.1% 95.0% 78.8%
PSP vest
(% of maximum award) – – 30.0% 28.8% 48.8% 23.1% – – 85.0% 75.6%
(a) Sir Dave Lewis stepped down as Group Chief Executive on 30 September 2020 and was succeeded by Ken Murphy on 1 October 2020.
(b) 2023/24 PSP estimated values have been restated based on share price of 307.60p at the time of the PSP vesting.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
103.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Spotlight on:
Colleagues.
At Tesco, our people are at the heart
of everything we do.
We believe that our people are what set us apart,
and we are dedicated to creating an environment
where everyone can succeed, regardless of their
background. As our business evolves, we want to
ensure colleagues have the skills they need to
succeed now and in the future.
Our colleagues want to be treated fairly and
feel supported with their health, safety and
wellbeing, while being recognised and rewarded
for their contribution. To ensure our colleagues
feel secure and valued, we offer a reward
package that is competitive, fair, simple and
sustainable. Inclusivity and fairness are at the
core of our approach, and we continuously
strive to enhance the wellbeing of our team.
Safety is central to how we do business, with
a heavy focus on protecting our colleagues.
We are positioned very competitively for both
basic pay and total reward, which is supported
by positive feedback from our colleagues on
their reward package. Through our Every Voice
Matters survey – the largest colleague
engagement programme in the UK – colleague
scores on both working at Tesco and their
reward package are significantly ahead of our
external partner’s global benchmark. In 2025,
85% of colleagues said that they would
recommend Tesco as a Great Place to Work,
an increase from our 2024 score of 84%.
Over the last year, we have balanced wider cost
pressures with our commitment to improving
rewards and introducing new initiatives. We are
proud to have been recognised for our efforts,
winning ‘Employer of the Year (Retailer)’ at the
Grocer Gold Awards 2024. Additional details on
how our reward and benefits have evolved over
2024 are outlined as follows:
Continued investment in colleagues’
reward and skills
We have a strong track record of making
substantial investments in colleague pay. In
March 2025, we announced pay increases of
5.2% for store colleagues, bringing the hourly
rate to £12.64 from the end of August 2025. This
represents a total increase of 32% since April
2022, amounting to an investment of more than
£900m. These changes reflect our commitment
to providing competitive pay and recognising
the contribution of our colleagues.
We are also investing in our colleagues’ skills
to equip them for the present and future. Our
store colleagues have become more skilled
and flexible, while managers have undertaken
training to improve their abilities.
Balanced benefits package
At Tesco, we feel a duty of care to provide our
colleagues with a competitive benefits package
that supports their different needs in addition
to base pay, across all our markets.
Our most valued benefit is the Colleague
Clubcard discount which was previously capped
at £2,000 in the UK and €2,000 in ROI. From
April 2025, we are removing the cap so
colleagues benefit from the discount on all
their shopping.
We know that colleagues want flexibility and
we continue to look for ways to provide choice.
The option to buy extra holiday has proved
to be popular and we have introduced
improvements to family leave and sickness
policies.
A new flexible benefits platform enables
colleagues to make selections that suit their
lifestyle, whether that’s investing in their
pension or Tesco shares, or taking advantage of
salary sacrifice, such as our Green Car and
Cycle to Work schemes. In 2025, we introduced
opportunities for colleagues to reinvest their
bonus directly into their pension and take
critical illness insurance cover.
Colleague wellbeing remains a major area of
focus. We provide free, confidential support
through our Employee Assistance Programme
and free 24/7 access to a virtual GP. We have
also introduced resources to support mental
health and financial wellbeing. In recognition of
ongoing cost-of-living challenges, we have also
increased the range of free products that we
offer in Colleague Rooms for everyone working
in stores.
These benefits reflect our commitment to
ensuring our colleagues feel valued and
supported, both in and out of the workplace.
Opportunities to share in
Tesco’s success
We want colleagues to feel recognised and
respected wherever they work, as well as
experience the reward of our collective
success. Under our SAYE scheme, in 2024 more
than 20,000 colleagues, mainly shopfloor
colleagues working in stores and distribution
centres, shared in a profit of more than £30m
as a result of strong growth in the Tesco share
price over the duration of the scheme,
representing a profit of ~ £2,900 for a store
colleague who invested the average £75 a
month for the last five years. Participation
in the SAYE continues to grow in the UK,
and we have extended the plan to
colleagues in India and Central Europe.
£900m
investment in store
colleague pay, an
increase of 32%
since April 2022.
Tesco PLC Annual Report and Financial Statements 2025
104.
Relationship between the pay of the Group Chief Executive and UK colleagues
Tesco is a retail business with one of the UK’s largest workforces. We employ around 260,000
UK-based colleagues in our major subsidiary, Tesco Stores Limited. These are mostly in customer-
facing roles in-store or in our distribution network. Given the workforce profile, all three of the Group
Chief Executive pay ratio reference points compare our Group Chief Executive’s remuneration with
that of colleagues in mainly customer-facing roles. There is relatively little difference in the outcomes,
as we show below. Regardless of the Group Chief Executive pay ratio, Tesco will continue to invest in
competitive pay for all colleagues.
The following table shows the ratio between the consolidated single total figure of remuneration
(STFR) of the Group Chief Executive for 2024/25 and the lower, median and upper quartile pay of
our UK colleagues. We also show for comparison the pay ratios for the five preceding years.
Total pay ratio
2019/20 2020/21 2021/22 2022/23 2023/24 2024/25
Ratio of CEO’s STFR
25th percentile 355:1 136:1 251:1 231:1 447:1 411:1
50th percentile 305:1 118:1 224:1 197:1 431:1 373:1
75th percentile 279:1 116:1 216:1 182:1 388:1 325:1
The table below sets out the base salary, total pay and benefit details of the Group Chief Executive
and UK colleagues who are at the 25th, 50th and 75th percentile.
2024/25
Group Chief Executive’s base salary £1,453,777
Group Chief Executive’s total pay and benefits £9,225,993
UK colleagues’ salary
Colleague at 25th percentile £21,975
Colleague at 50th percentile £23,960
Colleague at 75th percentile £27,430
UK colleagues’ total pay and benefits
Colleague at 25th percentile £22,452
Colleague at 50th percentile £24,731
Colleague at 75th percentile £28,358
The total full-time equivalent (FTE) pay and benefits for the relevant colleagues are based on the
period from Sunday, 4 February 2024 to Saturday, 1 February 2025. The reporting regulations offer
three calculation approaches for determining the pay ratio – Options A, B and C. We have chosen
Option C for all years, which we deem the most appropriate methodology for Tesco.
As more than half of Tesco’s colleagues work part-time, the exercise required to determine FTE is
extensive and complex. Tesco decided to use Option C as we had completed comprehensive data
collation and analysis of all relevant colleagues for the purpose of gender pay gap (GPG) reporting.
This enabled us to use additional pay data (including overtime, salary sacrifice values and employer
pension contributions) to ensure the STFR reflects total pay made throughout the financial year. This
approach minimised the differing definitions of pay for STFR and GPG to enable us to select the ‘best
equivalents’ of P25, P50 and P75. The only adjustments made to determine the pay and benefits of the
colleagues identified as P25, P50 and P75 related to working hours, basing amounts on a 36.5-hour
working week. We believe the ‘best equivalent’ colleagues identified are reasonably representative
of the 25th, 50th and 75th percentiles as Tesco has compiled pay on an FTE basis. We reviewed pay
across a sample of colleagues at each percentile before selecting the colleague who was most
representative.
In the case of the Group Chief Executive, his total remuneration includes a significant proportion of
variable pay. The STFR therefore varies considerably depending on the level of performance against
the measures driving the annual bonus and PSP. The Group Chief Executive’s PSP award will vest at
75.6% of maximum in 2025 and the annual bonus paid out at 78.8% of maximum, which have resulted
in a small decrease in the Group Chief Executive’s pay ratio numbers this year. Since 2014, the median
pay ratio has varied, increasing and decreasing in alternate years in line with variable pay outcomes.
As we set out on page 101, we base our reward framework across the Group on a consistent set of
principles for all: that overall remuneration should be competitive when compared to similar roles
in other organisations with which we compete for talent. We therefore determine colleague pay using
the same principles as the pay for our Executive Directors. On this basis, we believe the median ratio
is consistent with the Company’s wider policies on employee reward, pay and progression.
Gender and ethnicity pay
Our business model is underpinned by understanding customers and creating a great place to work
for our colleagues. It therefore follows that we need a diverse and inclusive workplace that represents
the communities we serve.
Our 2024 Gender Pay report shows the median gender pay gap for Tesco UK colleagues is broadly flat at
5.1% (versus 5.0% in 2023), significantly below the UK national average of 13.1%. The key factor behind the
gap is that a greater proportion of male colleagues work in roles which carry a premium and increase
pay. If we remove premium payments from our calculation, our median pay gap reduces to 2.3%.
The mean gender bonus gap for Tesco Stores Limited has reduced from 58.3% to 36.7%. The main factor
behind the gap is a greater proportion of male colleagues in senior roles which attract higher bonus
levels. We have introduced a number of initiatives to improve the proportion of women at leadership
levels. These include support for flexible working, making it easier for everyone to work at Tesco.
We are also making progress in ethnic representation. For the second year, we have chosen to publish
our ethnicity pay gap which shows that the median gap for Tesco Stores Limited is (5.0)% (i.e. the
median pay for ethnically diverse colleagues is higher than for white colleagues). The primary factor is
a greater tendency for ethnically diverse colleagues to work unsociable hours which carry a premium,
plus a lower likelihood of selecting salary sacrifice benefits. The ethnicity bonus gap mean is 5.4%
reflecting a lower proportion of ethnically diverse colleagues in senior roles. As with gender, we have
introduced initiatives to improve representation at senior levels, including the inclusion of diversity
measures in our PSP.
See our Everyone’s Welcome Report for more information at:
www.tescoplc.com/media/fkklxpqd/tesco-everyones-welcome-report-2024.pdf
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
105.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Change in remuneration of colleagues and Directors
The table below shows the percentage change in the annual remuneration of Directors and the average UK colleague over the past five years.
The reporting regulations require disclosure of the change in remuneration of employees of the parent company. As the only employees of this company are the Executive Directors, the Committee decided
to use the average UK colleague as the appropriate comparator group. This is because they represent the majority of Tesco colleagues and the Executive Directors are predominantly based in the UK.
Salary/fees (% change) Benefits
(e)
(% change) Bonus (% change)
(e)
2024/25 2023/24 2022/23 2021/22 2020/21 2024/25 2023 /24 2022/23 2021/22 2020/21 2024/25 2023/24 2022/23 2021/22 2020/21
Executive Directors
Ken Murphy 3.0% 2.8% 1.7% 0% – (26.1)% (50.0)% 170.5% 18.9% – (14.6)% 23.7% (14.8)% 100% –
Imran Nawaz 5.4% 4.0% 3.7% – – (6.1)% (24.8)% 162.2% – – (5.4)% 25.1% (8.3)% – –
Chair
Gerry Murphy 4.4% – – – – (32.8)% – – – – – – – – –
Colleagues
Average UK colleague
(a)
9.1% 9.1% 8.6% 3.3% 6.8% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A
Non-executive
Directors
Melissa Bethell
(b)
27.0% 3.1% 3.2% 2.2% 2.2% – – – – – – – – – –
Bertrand Bodson
(b)
15.0% 3.1% 2.5% – – – – – – – – – – – –
Carolyn Fairbairn
(b)
50.0% – – – – – – – – – – – – – –
Thierry Garnier
(b)
15.0% 3.1% 2.3% – – – – – – – – – – – –
Stewart Gilliland 10.7% 25.0% 2.8% 2.8% 5.0% – – – – – – – – – –
Chris Kennedy
(c)
– – – – – – – – – – – – – – –
Alison Platt 4.5% 8.1% 13.8% 2.8% 5.0% – – – – – – – – – –
Caroline Silver
(b)
15.0% 4.2% – – – – – – – – – – – – –
Karen Whitworth
(b)
40.2% 3.6% 3.0% – – – – – – – – – – – –
Former Directors
(d)
Byron Grote 2.7% 5.2% 12.3% 12.3% 3.0% – – – – – – – – – –
(a) We agreed jointly with our unions in 2019 that hourly-paid colleagues in stores would no longer receive an annual bonus, replacing it with a higher rate of base pay.
(b) On 14 June 2024 Carolyn Fairbairn was appointed as Senior Independent Director and a member of the Audit Committee, Karen Whitworth was appointed as Chair of the Audit Committee and member of the Remuneration Committee, Melissa Bethell was appointed as
a member of the Remuneration Committee, Melissa Bethell, Bertrand Bodson, Carolyn Fairbairn, Thierry Garnier, Caroline Silver and Karen Whitworth became members of the Nominations and Governance Committee, reflecting the fee increase changes in 2024/25.
(c) Chris Kennedy joined the Board on 20 February 2025 so no year-on-year comparison is possible.
(d) Byron Grote stepped down from the Board on 14 June 2024. To enable a meaningful year-on-year comparison his fees have been pro-rated for the purposes of comparison.
(e) Other than the Chair, Non-executive Directors receive fees only and do not receive any additional benefits or annual bonus payments. Gerry Murphy has the benefit of healthcare and a wellness programme for himself and his partner.
Please see page 105 of last year’s Directors’ remuneration report for historic details of events that impact the changes in remuneration, such as role changes, joiners and leavers.
Relative importance of spend on pay
The table below indicates how the pay of Executive Directors compares with other financial dispersals. You can find further information in the Notes to the Group financial statements starting on page 141.
2024/25
£m
2023/24
£m
%
change
Executive Directors’ remuneration 14.0 15.7 (10.9)%
Dividends and share buybacks 1,881 1,529 23.0%
Total income tax charge from continuing operations 611 525 16.4%
Colleague costs 8,726 8,161 6.9%
For every £1 we spent on Executive Directors’ remuneration in 2024/25, £44 was payable in tax and £622 was spent on colleague costs. In addition, £62 was made in dividend payments to shareholders for every
£1 spent on Executive Directors’ remuneration.
Tesco PLC Annual Report and Financial Statements 2025
106.
Remuneration
report.
Single total figure of remuneration – Executive Directors (audited)
The following table provides a summary Single total figure of remuneration (STFR) for 2024/25 and
2023/24 for the Executive Directors.
Ken Murphy Imran Nawaz
2024/25
(£’000)
2023/24
(£’000)
2024/25
(£’000)
2023/24
(£’000)
Fixed pay
Salary 1,454 1,411 790 752
Benefits 88 119 92 98
Pension 109 106 59 56
Total fixed pay 1,651 1,636 941 906
Variable pay
Annual bonus (cash and deferred shares) 2,885 3,377 1,616 1,708
PSP
(a)
4,690 5,230 2,255 2,485
Total variable pay 7,575 8,607 3,871 4,193
Total fixed and variable pay 9,226 10,243 4,812 5,099
Compensation for forfeited income – – - 405
(b)
Total remuneration 9,226 10,243 4,812 5,504
(a) The PSP figures for 2024/25 relating to the 2022 PSP award are an estimated value based on the average share price over the
three months to 22 February 2025 of 370.34p. These will be restated in next year’s Directors’ remuneration report to show the
actual value upon vesting. The estimated PSP figures for Ken Murphy and Imran Nawaz for 2023/24 have been restated, using the
actual share price at the date of vesting of 307.6p and includes dividend equivalents in respect of vested shares.
(b) Details of compensation of forfeited income were set out in the 2023/24 Directors’ remuneration report.
The total aggregate remuneration paid to all Directors in 2024/25 was £15.9m (2023/24: £17.1m).
The Committee is satisfied that the STFR for each Executive Director is appropriate.
Base salary (audited)
Executive Directors’ salaries were increased on 26 May 2024 by 3.0% from £1,421,786 to £1,464,440
for Ken Murphy and by 5.4% from £759,200 to £800,000 for Imran Nawaz. Details of increases to be
applied in 2025 are set out on page 92.
Benefits (audited)
Car and driver
(£’000)
Medical
insurance
and wellness
programme
(£’000)
Life assurance
(£’000)
Other benefits
(£’000)
Total
(£’000)
Ken Murphy 73 2 10 3 88
Imran Nawaz 83 2 5 2 92
Annual bonus outcomes (audited)
The annual bonus is determined by financial measures and individual performance, including objectives
which are designed to support the achievement of certain strategic outcomes. The 2024/25 annual
bonus outcome is 78.8% of maximum for Ken Murphy and 80.8% for Imran Nawaz. The annual bonus
is paid 50% in cash and 50% in shares deferred for three years subject to continued employment.
As set out in the Chair’s letter on page 90, the Committee is satisfied that the formulaic annual bonus
outcomes are appropriate and reflect Tesco’s performance over the performance period. We provide a
breakdown of the outturn of the financial measures on page 99. You can see details of the payouts and
the achievement against individual objectives below and overleaf.
2024/25
base salary
(£’000)
Bonus
opportunity
(% base salary)
Bonus
outcome
(% maximum)
Actual bonus
(% base salary)
Actual total
bonus (cash and
deferred shares)
(£’000)
Actual bonus
deferred into
shares
(£’000)
Ken Murphy 1,464 250 78.8 197 2,885 1,442
Imran Nawaz 800 250 80.8 202 1,616 808
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
107.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Achievement of individual objectives (20% of annual bonus)
Ken Murphy
Objective Key performance
indicators
Summary of
performance
Assessment
Delivery of medium-term
and long-term strategy
development
– Development of
long-term strategy
– Operating profit
contribution from
long-term growth
plans
– Delivered successful
strategy review and
future growth plans
incorporated into
Long Term Plan (LTP)
– Combined Group
operating profit
contribution from
long-term growth
plans in line with
plan
Overachieved
Establish plans for future
shape of the organisation,
aligned with strategy
development
– Plans developed and
agreed with Board
– Plans agreed with
Board, internal and
external talent plans
in place and on
track
Achieved
Lead the delivery of
Group-wide sustainability
commitments:
– Climate: carbon neutral
across own operations by
2035
– Health: increase sales of
healthy products as a
proportion of total sales
– Food waste: reduce food
waste across own
operations
– Climate: continue to
develop investment
analysis for Group
estate to 2035
– Health: improve
measure to 64%
– Food waste:
roadmap to take
Food waste to 50%
– Climate: clear
capital plans in
place to deliver our
carbon
commitments
– Health: delivered
64% sales of healthy
products
– Food waste:
progressed from
trials to scaled
operations for
bakery and produce
waste; new
purpose-built
processing facility
due for completion
ahead of schedule
in 2025
Overachieved
Imran Nawaz
Objective Key performance
indicators
Summary of
performance
Assessment
Long-term strategy
development including
future growth plan
– Develop plan for
long-term strategy
– Delivered successful
strategy review
– Future growth plans
incorporated into
LTP
Overachieved
Deliver Group-wide Save to
invest target
– Deliver £500m
savings target
– Develop plan to
deliver longer-term
savings
– Deliver year 3 of the
Finance change plan
– Deliver cash budget
– Delivered savings of
c.£510m
– Longer-term savings
plan agreed and
ready to be
deployed
– Year 3 Finance
change plans
delivered in line with
expectations
– Delivered free cash
flow at upper end of
guidance range
Overachieved
Ensure Corporate
Sustainability Reporting
Directive readiness
– Complete double
materiality
assessment and
reporting gap
analysis
– Double materiality
analysis completed
and assessed for
assurance
readiness; gap
analysis complete
– Reporting strategy
defined and agreed
for the Group in
readiness for
revised timelines
Overachieved
The percentage awarded for individual performance is based on an overall assessment of the
achievement of objectives and demonstration of leadership behaviours. On that basis, Ken Murphy
achieved a rating of 18% and Imran Nawaz 20%, both out of a maximum of 20%.
Tesco PLC Annual Report and Financial Statements 2025
108.
2022 PSP vesting in 2025 (audited)
The outcomes of the 2022 PSP award are shown on page 96. As set out in the Chair’s letter, the Committee is satisfied that the formulaic PSP outcomes are appropriate, that they reflect performance over the
performance period and that there were no windfall gains. You can see details of the payouts to the Executive Directors below.
Shares
granted
Outcome
achieved
Value of shares due to vest
PSP total
(£’000)
Vesting
date
Holding
period
Face value
at time of
grant
(a)
(£’000)
Value due to
share price
appreciation
(b)
(£’000)
Dividend
equivalents
accrued over
performance
period
(£’000)
Ken Murphy 1,521,455 75.6% 2,870 1,251 569 4,690 24/06/2025 24/06/2027
Imran Nawaz 731,462 75.6% 1,380 602 273 2,255 24/06/2025 24/06/2027
(a) Calculated using the grant price of 249.5p.
(b) Calculated using the difference between the grant price of 249.5p and the average closing share price over the three months to 22 February 2025 of 370.34p.
2024 deferred bonus award grant (audited)
The following table summarises the deferred bonus awards made to Executive Directors on 12 May 2024 in respect of 50% of the 2023/24 bonus outcome. Awards were made in the form of conditional awards
which will vest and be released on 12 May 2027, subject to continuous employment.
Executive Director
Number of
shares granted
Value at
award date
Vesting
date
Market price
on grant
(a)
Ken Murphy 550,926 £1,688,368 12/05/2027 306.5p
Imran Nawaz 278,698 £854,098 12/05/2027 306.5p
(a) Based on five-day average share price.
2024 PSP grant (audited)
The following table summarises the PSP awards made to Executive Directors on 24 June 2024.
Executive Director Type of award
% of base salary
awarded
Number of
shares granted
Value of
award
at grant
End of
performance
period
Vesting
date
Market price
on grant
(a)
Ken Murphy Conditional award 275% 1,305,247 £4,027,209 27/02/2027 24/06/2027 308.5p
Imran Nawaz Conditional award 275% 713,035 £2,199,998 27/02/2027 24/06/2027 308.5p
The performance measures
(b)
and targets for the 2024 PSP are:
Weighting Threshold
(c)
Stretch
Adjusted diluted EPS 37.5% 25.5p 38.2p
Cumulative free cash flow
(d)
37.5% £3,968m £5,952m
Sustainability measures
(e)
:
– Carbon reduction 8.3% 64% 70%
– Food waste reduction 8.3% 45% 52%
– Diversity, equity and inclusion (gender/ethnicity) 8.3% 37%/17% 43%/19%
(a) Based on five-day average share price.
(b) All measures have linear vesting between threshold and stretch, except food waste reduction for which the target is 50% with linear vesting between threshold and target, and target and stretch.
(c) Achievement of threshold will result in the vesting of 25% of the award granted.
(d) Adjustments have been made to the Cumulative free cash flow targets to reflect events not anticipated at the time targets were set, as set out on page 111. The original targets set were £4,000m and £6,000m at threshold and stretch respectively.
(e) The basis for sustainability measures is set out on page 95, in line with our strategic priorities.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
109.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
2025 PSP grant
The table below sets out the performance measures
(a)
and targets for the PSP award grant to be made in June 2025:
Weighting Threshold Stretch
Adjusted diluted EPS 37.5% 26.5p 39.7p
Cumulative free cash flow 37.5% £3,600m £5,400m
Sustainability measures
(b)
:
– Carbon reduction 8.3% 68% 74%
– Food waste reduction
8.3% 47% 54%
– Diversity, equity and inclusion (gender/ethnicity) 8.3% 40%/18% 44%/20%
(a) All measures have linear vesting between threshold and stretch, except food waste reduction for which the target is 52% with linear vesting between threshold and target, and target and stretch.
(b) The basis for sustainability measures is set out on page 95, in line with our strategic priorities.
The award will incorporate the right to receive the value of dividends between grant and vesting in respect of the number of shares that vest. The calculation of dividend equivalents will assume the
reinvestment of those dividends in Tesco shares on a cumulative basis.
Comparator groups for remuneration
When setting the remuneration of Executive
Directors, one of the factors the Committee
considers is the relevant markets for the
Executive Directors; it believes this is the
FTSE 50. When reviewing the Group Chief
Executive’s remuneration, the Committee also
references remuneration of a group of leading
international companies whose selection is
based on their size and complexity.
The chart to the right sets out the market
positioning of the Group Chief Executive’s and
Chief Financial Officer’s on-target and maximum
remuneration compared to the FTSE 50. This
information is one of the inputs used by the
Committee when setting executives’
remuneration, which enables it to ensure
remuneration levels are consistent with the
approved remuneration policy.
Positioning of remuneration versus the FTSE 50
Lower quartile to median Median to upper quartile Tesco
12,000
10,000
8,000
6,000
4,000
2,000
0
Total remuneration (£’000)
Target Maximum Target Maximum
Imran NawazKen Murphy
Tesco PLC Annual Report and Financial Statements 2025
110.
Executive Directors’ interests in share awards (audited)
The table below sets out the Executive Directors’ interests in share awards. Details of Executive Director shareholding requirements and achievement against these are set out on page 97.
Unvested
PSP awards
(a)
Deferred annual
bonus awards
(b)
Buyout
awards
Vested but
unexercised share
options
SAYE
options Total
Ken Murphy At 24/02/2024 5,191,827 1,142,654 – – 9,890 6,344,371
Granted 1,305,247 550,926 – – – 1,856,173
Dividend equivalents 184,568 65,712 – – – 250,280
Vested/released (1,745,632) – – – – (1,745,632)
Lapsed (300,077) – – – – (300,077)
Exercised – – – – – –
At 22/02/2025 4,635,933 1,759,292 – – 9,890 6,405,115
Imran Nawaz At 24/02/2024 2,492,500 499,382 – – – 2,991,882
Granted 713,035 278,698 – – – 991,733
Dividend equivalents 89,789 30,189 – – – 119,978
Vested/released (829,711) – – – – (829,711)
Lapsed (142,629) – – – – (142,629)
Exercised – – – – – –
At 22/02/2025 2,322,984 808,269 – – – 3,131,253
(a) Awards will only vest to the extent that relevant performance conditions are met.
(b) No performance conditions apply to these awards but are subject to service.
Between 22 February and 9 April 2025 Ken Murphy acquired 37 partnership shares under the BAYE plan. No other changes in Executive Director share interests occurred in the period.
Payments for loss of office (audited)
There were no payments made for loss of office during the year.
Payments to former Directors (audited)
There were no payments made to former directors during the year.
Adjustments to targets
The Committee considered adjustments to targets resulting from material events that were not
anticipated at the time the targets were set. Adjustments were made to ensure PSP targets and
outcomes are assessed on a like-for-like basis and events do not make the targets any easier or
harder to achieve. The table below summarises the adjustments made, rationale, affected awards
and the impact on the measure:
Performance measure Difference Rationale Awards Impact
Adjusted diluted EPS Neutralise impact of sale of
Banking operations
Targets were set including
discontinued Banking
operations
2022 PSP
2023 PSP
(1.0)p
(0.5)p
Performance measure Difference Rationale Awards Impact
Cumulative free cash
flow
Neutralise impact of tax
relief for Tesco Bank
Impact relates to an event not
anticipated at the time the
targets were set
2022 PSP
2023 PSP
2024 PSP
£72.0m
£72.0m
£72.0m
Neutralise impact of sale of
Banking operations
Targets were set including
discontinued Banking
operations
2023 PSP
2024 PSP
(87.0)m
(112.0)m
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
111.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Executive Directors’ service agreements
The Committee carefully considers Executive Directors’ service agreements, including arrangements
for early termination, which are designed to recruit, retain and motivate Executive Directors of the
calibre required to lead the Company. The details of existing Executive Directors’ service contracts
are summarised in the table below:
Executive Director
Date of service
agreement
Date joined the
Board
Notice period from
Company
Notice period from
Executive Director
Ken Murphy 1 October 2019 1 October 2020 12 months 12 months
Imran Nawaz 6 October 2020 1 May 2021 12 months 12 months
Neither Ken Murphy nor Imran Nawaz held an external directorship during the year. Both Ken Murphy
and Imran Nawaz will stand for re-election at the 2025 AGM.
Funding of equity awards
While current practice is to use market-purchased shares to satisfy incentive awards, the Company
has in the past 10 years used newly-issued shares. As such, the Company complies with the
Investment Association dilution guidelines on newly-issued shares. These provide that overall dilution
under all plans should not exceed 10% of the Company’s issued share capital over a 10-year period.
Tesco also implement a further limitation of 5% in any 10-year period for executive plans. Where
shares purchased in the market are held by Tesco Employees’ Share Scheme Trustees Limited
or Tesco International Employee Benefit Trust (together, the Trusts), the voting rights relating to the
shares are exercisable by the Trustees in accordance with their fiduciary duties. At 22 February 2025,
the Trusts held 37,142,726 shares.
Dilution from existing awards made over the past 10 years up to 22 February 2025 was as follows:
All colleague share plans
Actual Limit
2.5% 10%
Executive share plans
Actual Limit
0.5% 5%
Board Chair and Non-executive Director fees
The fees for the Board Chair and the Non-executive Directors are reviewed each year. The Board
Chair’s fee is reviewed by the Committee (without the Board Chair being present) and the Non-
executive Director fees by a committee comprising the Board Chair, Group Chief Executive and Chief
Financial Officer. In July 2024, following a review of independently sourced data, increases awarded to
the wider workforce and the time commitments of the Board Chair and Non-executive Directors, it
was agreed to increase the Board Chair’s fee to £727,000 and increase the average total fees paid to
Non-executive Directors from 18 August 2024 by 2.8%, lower than for the wider workforce. This year
we introduced a new fee of £3,500 to recognise the additional time commitment of those designated
Non-executive Directors who support our Tesco Colleague Contribution Panels. At the time of the
increase and of those FTSE 100 companies disclosing wider workforce engagement programmes, 65%
paid an additional fee, setting a fee value typically comparable to an equivalent day rate. Details of the
remuneration arrangements for the Board Chair and Non-executive Directors are set out below:
20/08/2023 to
17/08/2024
From
18/08/2024 Increase
Board Chair fee £705,000 £727,000 3.12%
Non-executive Director fee £85,000 £87,500 2.94%
Additional fees:
Senior Independent Director £35,000 £36,000 2.86%
Chairs of the Audit, Remuneration and Sustainability
Committees £35,000 £36,000 2.86%
Membership of Audit, Nominations and Governance,
Remuneration and Sustainability Committees
Colleague Contribution Panel
£16,500
–
£17,000
£3,500
3.03%
new
Tesco PLC Annual Report and Financial Statements 2025
112.
Single total figure of remuneration – Non-executive Directors (audited)
The table below sets out the fees paid to the Non-executive Directors during the year. Non-executive Directors are not paid a pension and do not participate in any of the Company’s variable incentive
schemes. Under the Company’s articles of association, the total fees paid to Non-executive Directors are capped at £3m per annum. Byron Grote stood down from the Board on 14 June 2024.
Taxable expenses include expense reimbursements relating to travel, accommodation and subsistence in connection with attendance at Board and Committee meetings during the year. Each Non-executive
Director had the £2,000 colleague discount allowance. Gerry Murphy also has the benefit of healthcare and a wellness programme for himself and his partner. The amounts in the table below include the
grossed-up cost of UK tax paid by the Company on behalf of the Non-executive Directors.
2024/25 2023/24
Committee
memberships
Date of
appointment
Fees
(£’000)
Taxable
expenses and
benefits
(£’000)
Total
(£’000)
Fees
(£’000)
Taxable
expenses and
benefits
(£’000)
Total
(£’000)
Melissa Bethell A N R 24 September 2018 127 1 128 100 1 101
Bertrand Bodson N S 1 June 2021 115 – 115 100 1 101
Carolyn Fairbairn A N R S 1 September 2023 171 1 172 57 1 58
Thierry Garnier S N 30 April 2021 115 4 119 100 3 103
Stewart Gilliland N R S 5 March 2018 155 1 156 140 1 141
Chris Kennedy A N 20 February 2025 1 – – – – –
Gerry Murphy N 1 September 2023 716 4 720 343 3 346
Alison Platt N R 1 April 2016 140 1 141 134 1 135
Caroline Silver A N 1 October 2022 115 2 117 100 1 101
Karen Whitworth A N R S 18 June 2021 157 1 158 116 – 116
Former Directors
Byron Grote A N R 1 May 2015 57 – 57 183 1 184
Non-executive Directors do not have service contracts. Instead, they are engaged by letters of appointment that are terminable by either party with no notice period. There is no compensation in the event of such
termination, other than accrued fees and expenses. All Non-executive Directors will stand for re-election at the 2025 AGM, except Alison Platt who will step down from the Board at the conclusion of the 2025 AGM.
Beneficial share ownership – Non-executive Directors (audited)
The table below outlines interests in the Company’s securities of the Non-executive Directors. There were no changes to Non-executive Director share interests between 22 February and 9 April 2025.
Non-executive Directors are expected to build up and maintain a personal holding in the securities of the Company equal to the value of their base fee over a period of five years following appointment.
Non-executive Director
Shares held at
24/02/2024
Shares held at
22/02/2025
Value of
shareholding
(% of base fee)
(a)
Melissa Bethell 37,447 37,447 158%
Bertrand Bodson 61,238 63,581 269%
Carolyn Fairbairn 35,000 35,000 148%
Thierry Garnier 15,000 15,000 63%
Stewart Gilliland 53,212 55,248 234%
Chris Kennedy – – 0%
Gerry Murphy 50,000 90,000 46%
Alison Platt 38,046 39,527 167%
Caroline Silver 15,000 15,000 63%
Karen Whitworth 52,300 52,300 221%
(a) The value of Non-executive Directors’ shareholdings is based on the average share price over the three months to 22 February 2025 of 370.34p. The range of the Company’s share price for the year was 279.5 to 397p. The year-end share price was 374.1p (2023/24: 280p).
(b) Byron Grote held 377,703 shares from 24 February 2024 until he retired from the Board on 14 June 2024.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
113.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Committee
governance.
Role of the Remuneration Committee
The role of the Committee is to determine the remuneration policy and packages for Executive
Directors and senior executives. When setting and operating the policy, the Committee aligns reward
to performance to promote the long-term success of the Group and has regard to policies and
practices relating to workforce remuneration, the experiences of other stakeholders and alignment
with purpose, strategy and culture. This means we can recruit, retain and motivate our executives as
part of an integrated overall approach to remuneration.
Committee’s priorities in 2025/26
As well as considering its standard business, the Committee will focus during 2025/26 on the following:
– maintaining an ongoing dialogue with our major shareholders and other stakeholders and to
continue to engage with them individually and collectively on the remuneration policy which will
be put to shareholders at the 2025 AGM;
– ensuring the smooth transition of chair to Melissa Bethell;
– continuing to monitor and assess the external market when considering remuneration arrangements
for Executive Directors and senior executives;
– monitoring developments on our purpose and strategy to ensure remuneration practices and
policies continue to be consistent with the Group’s long-term goals and aligned to the interests
of all our stakeholders;
– ensuring all aspects of remuneration are viewed through a sustainability lens. This will include
monitoring our current sustainability measures and considering whether new measures should
be used for future PSP awards to reflect our integrated sustainability strategy;
– ensuring colleagues’ views on pay, policies and practices are attained through the Colleague
Contribution Panels, Every Voice Matters surveys and meetings and that these are reflected in the
decisions the Committee takes; and
– continuing to monitor and oversee wider workforce remuneration, policies and practices. This aims
to ensure pay fairness and transparency across the workforce, that there is a consistent cascade
throughout the Group and that the rewards, incentives and conditions available to colleagues are
taken into account when considering the remuneration of Executive Directors and senior executives.
Colleague engagement and understanding colleague pay
Engaging with colleagues and understanding their views is vital to the Committee and its decision
making. This year, two Colleague Contribution Panels (CCPs) for UK & ROI, Central Europe and
subsidiary businesses took place in November 2024, where colleague representatives met with
Alison Platt, Melissa Bethell and Carolyn Fairbairn to share their views which provide the Committee
with useful insight. Further details on this year’s CCPs can be found on page 69.
In addition, Directors regularly visit stores, distribution centres, customer engagement centres and offices
to meet with colleagues to gauge their overall opinions and assess our culture. We use the information
provided by colleagues to guide our approach to Executive Director and senior executive remuneration.
The Committee believes it is important to understand how colleague pay and other key colleague
metrics operate throughout the Group. The Committee therefore reviews the findings from the
Every Voice Matters colleague survey and receives regular updates throughout the year on colleague
metrics and outcomes via the wider workforce dashboard, which sets out a broad range of
information, including:
– a summary of colleague demographics, colleague pay positioning split by location, a summary
of colleague pay versus comparators;
– gender & ethnicity data and pay gap reporting, real living wage reporting;
– Every Voice Matters survey results, UK Labour Turnover; and
– salary budgets by business, incentive outcomes by business, CEO pay ratio.
The Committee is therefore well-positioned to take into account colleagues’ views and pay when
setting the pay of Executive Directors and senior executives.
Approach to target setting
In determining the range of targets for each measure for the annual bonus and 2025 PSP grant, the
Committee considered the Board-approved budget and Long Term Plan, external consensus where it
exists, prior-year achievement and the wider economic environment. As part of its work to ensure
targets are appropriately stretching, the Committee also considered the Board’s assessment of how
achievable the budget is. The performance target range is set on a realistic basis but requires true
outperformance to achieve the maximum. The Committee has a history of setting stretching targets.
The annual bonus measures are selected to provide direct alignment with the Group’s short-term
operational targets. The Committee takes care to ensure that the short-term performance measures
are supportive of the strategic priorities and long-term objectives. The PSP performance measures
are selected to ensure that executives are encouraged in, and appropriately rewarded for, delivering
against the Group’s purpose and strategic priorities. This ensures a clear line of sight and alignment of
interests between executives and stakeholders and the generation of long-term sustainable returns.
Annual bonus and PSP performance is monitored every six months by the Committee. At the end of
the performance period, one year for the annual bonus and three years for the PSP, we assess the
formulaic outcome of each performance measure on a standalone basis. The Committee considers
whether the formulaic outcomes are fair in the context of the Group’s performance and the wider
stakeholder experience. The Committee may seek independent advice to assess the outcomes
of specific measures as well as the overall outcome. Where appropriate, the Committee also has
the ability to use its discretion to adjust the formulaic outcomes.
Tesco PLC Annual Report and Financial Statements 2025
114.
Discretion in relation to incentive plans
The Committee operates the annual bonus and PSP in accordance with their respective scheme rules
and the relevant UK Listing Rules, consistent with market practice. The Committee retains discretion,
within the confines and opportunity detailed above, regarding the operation and administration of
these plans. The discretion covers:
– the timing, size and type of awards, holding periods and the annual setting of targets;
– when performance against our qualitative performance measures is not in line with the Group’s
overall financial or strategic performance over the performance period;
– ensuring compliance with the rules, including in relation to whether or not malus or clawback
provisions should apply, in connection with recruitment, or terminations of employment, or
corporate events affecting the Company;
– adjustments required in certain circumstances, including rights issues, corporate-restructuring
events, special dividends and other corporate actions; and
– adjustments to targets and/or measures if events occur that cause the Committee to determine
it is appropriate to do so.
The Committee also retains the right to change performance measures and the weighting of
measures in certain circumstances including:
– following feedback from regulators, shareholders and/or other stakeholders; and
– amending the scheme rules in accordance with their terms and/or amending the basis of operation
(including but not limited to the approach in respect of dividend equivalents).
The Committee will disclose any exercise of discretion in accordance with regulatory requirements.
Malus and clawback provisions
The Committee has the discretion to scale back deferred share awards and PSP awards prior to the
satisfaction of such awards if:
– results are materially misstated;
– the participant has contributed to serious reputational damage to the Company or one of its
business units;
– the participant’s conduct has amounted to serious misconduct, fraud, dishonesty, a breach of the
Code of Business Conduct or material wrongdoing;
– the determination of the vesting or value of an award has been affected by an underlying incorrect
figure in the financial statements; or
– an error or miscalculation in determining the vesting or value of an award is identified.
Under malus, deferred share awards and unvested PSP awards can be reduced (including down to
zero) or be made subject to additional conditions. Clawback allows for the repayment of previously
paid-up cash bonuses for a period of three years and PSP awards for a period of two years after the
vesting date. The clawback periods align with the bonus deferral period and PSP holding period. No
such provisions were used during 2024/25.
2024/25
Early Feb
2024
Late Feb
2024
April
2024
October
2024
The Committee considered the wider context and how the annual bonus and PSP
targets were tracking against forecast performance.
The Committee considered the proposed structures of the annual bonus and PSP
awards and the possible targets and ranges. In doing so, it had regard to:
– wider workforce remuneration;
– the budget and Long Term Plan;
– the strategic priorities;
– analysts’ consensus forecasts; and
– the wider economic environment.
The Board approved the budget for the year.
The Committee determined the measures, weightings and targets for the annual
bonus and PSP for the forthcoming year and the outcomes of the prior year’s annual
bonus and 2021 PSP.
The Committee considered how the annual bonus and PSP targets were tracking
against forecast performance.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
115.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Committee advisor
To ensure that the Committee continues to operate in line with best practice, it has appointed PwC as
an independent external advisor. It is a member of the Remuneration Consultants Group and, as such,
voluntarily operates under the code of conduct in relation to executive remuneration consulting in the
UK. PwC was initially appointed in 2015 and then reappointed in 2020 following a competitive tendering
exercise.
Total fees for advice provided to the Committee were £73,750 (2023/24: £65,000) on a time and
materials basis. The wider PwC firm also provided Tesco with several other services during the year
relating to corporate and other tax compliance, governance, assurance, risk management and
consulting projects. However, the Committee is satisfied that the PwC engagement partner and
advisory team which provide remuneration advice to the Committee have no connection with the
Company or individual Directors that might compromise their independence or objectivity.
The Group Chief Executive, Chief Financial Officer, Chief People Officer and remuneration experts
from the Reward team attend meetings at the invitation of the Committee to provide advice and
respond to questions. The Group Company Secretary is Secretary to the Committee. No Directors
or executives are present when their own remuneration is discussed and they are not involved in
determining their own remuneration.
Voting at AGM
The table below sets out the voting outcome on the remuneration report at the 2024 AGM:
Votes for
(millions)
Votes against
(millions)
Votes withheld
(millions)
Remuneration report 4,584 319 1
(93.49%) (6.51%)
The current remuneration policy received strong shareholder support at the 2022 AGM:
Votes for
(millions)
Votes against
(millions)
Votes withheld
(millions)
Remuneration policy 5,148 449 8
(91.98%) (8.02%)
The Committee engages in regular dialogue with shareholders and annually invites major investors
to discuss its remuneration practices and governance matters. During the year, the Committee
consulted shareholders in relation to the remuneration policy, as outlined on page 93, and met with
shareholders to hear their views directly.
The Committee finds such meetings with major investors a valuable opportunity to receive feedback
on its work and the key issues it is considering. It also finds the feedback received extremely helpful in
informing its decisions. In addition, the Committee monitors the views of other stakeholders and
broader developments in executive remuneration generally.
2024/25 Effectiveness Review of the Remuneration Committee
The effectiveness of the Committee was assessed as part of the external Board performance review.
The review found that the Committee was performing effectively, noting discussions were of high
quality and that members were encouraged to contribute and engage in respectful debate. Meetings
were well chaired, with high-quality papers provided for consideration. The Committee is well
supported by both an exceptional internal team and PwC as external advisers. The Board is assured by
the quality of the work performed by the Committee. The evaluation highlighted the need to support
Melissa Bethell as the successor to the chair from June 2025 to ensure a positive transition and
suggested that the balance of incentives be reviewed, with a focus on greater incentivisation of
initiatives linked to the strategy and our commitments to customers, communities, and the planet.
Statutory requirements
The Committee’s composition, responsibilities and operation comply with the principles of good
governance, as set out in the UK Corporate Governance Code, the UK Listing Rules of the Financial
Conduct Authority and the Companies Act 2006. The Directors’ remuneration report has been
prepared on the basis prescribed in the Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013.
Approved by the Board on 9 April 2025.
Alison Platt
Committee Chair
Tesco PLC Annual Report and Financial Statements 2025
116.
Remuneration policy
Our current remuneration policy was approved by shareholders at the 2022 AGM, with a vote of
91.98% in favour. During the year, the policy operated as intended in terms of Company performance
and quantum. It is intended that the new policy for Tesco’s Executive and Non-executive Directors will
operate for a period of three years from the date of approval at the AGM on 12 June 2025.
During the year, the Committee conducted a comprehensive review of the remuneration policy to
ensure that it remains fit for purpose and continues to support us to deliver our strategic priorities.
The decision-making process that the Committee followed for the determination, review and
implementation of the proposed new remuneration policy is set out in the Chair’s letter on pages 90
to 92. As part of this process, we engaged with a large proportion of our shareholders, as well as
listening to the views of our executives and the wider workforce. Having undertaken this review, we
have determined that the current policy remains effective and fit for purpose, and as such we are not
proposing any changes to the policy set out below.
In order to manage conflicts of interest, no Director or employee participates in discussions or
decisions relating to their own remuneration. However, Executive Directors were kept well-informed
to ensure alignment between executive and wider colleague remuneration structures. A summary of
how the policy differs for Executive Directors and other colleagues in the Group is set out on
pages 101 to 106.
The Committee’s review of the remuneration policy sought to ensure that it continues to:
– apply pay principles which are applicable to all colleagues across the Group and, in particular, the
principle that the reward package should support the delivery of the Group’s purpose of serving
customers, communities and the planet a little better every day;
– be aligned with, and incentivise the delivery of, the Group’s strategy;
– foster performance in line with the Group’s culture, values and behaviours;
– be aligned with wider workforce pay policies (as set out on pages 101 and 102);
– take into consideration external benchmarking, based on other FTSE 100 companies;
– motivate executive talent; and
– drive the success of the Company for the benefit of key stakeholders.
You can find a summary of the new remuneration policy on pages 98 to 100. The full remuneration
policy for the 2025 AGM is set out here and is available on the Tesco website at www.tescoplc.com.
Remuneration policy table
The following table sets out the remuneration policy:
Base salary
Purpose and link
to strategy
The role of base salary is to support the recruitment and retention of
Executive Directors of the calibre required to develop and deliver the
strategy. Base salary provides fixed remuneration for the role, which
reflects the size and scope of the Executive Directors’ responsibilities
and their experience.
Operation The Committee sets base salary taking into account:
– the individual’s skills, experience and their performance;
– salary levels at leading FTSE companies and other large consumer
business companies in the UK and internationally; and
– pay and conditions elsewhere in the Group.
Base salary is normally reviewed annually with changes effective on or
around 1 June. It may be reviewed more frequently if the Committee
determines this is appropriate.
Maximum Executive Directors’ salary increases will normally be in line with the
typical level of increase awarded to other colleagues in the Group.
Increases may be above this level in certain circumstances such as:
– where a new Executive Director has been appointed to the Board at a
lower than typical market salary to allow for growth in the role. (In such
a case, larger increases may be awarded to move salary positioning
closer to the typical market level as the Executive Director gains
experience); or
– where an Executive Director has been promoted or has had a change
in responsibilities, then salary increases in excess of the above limit
may be awarded.
Measure n/a
Change No change from current policy.
Remuneration
policy.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
117.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Benefits
Purpose and link
to strategy
To provide a market-competitive level of benefits for Executive
Directors and to assist them in the performance of their roles.
Operation The Committee sets benefit provisions at an appropriate market-
competitive level, taking into account the individual’s home jurisdiction,
the jurisdiction in which the individual is based, typical practice and the
level of benefits provided for other employees in the Group.
Core benefits – currently include car benefits, security costs, health
insurance and life assurance. Other appropriate benefits may be
provided from time to time but will not be significant. Executive
Directors shall be reimbursed for all reasonable expenses. The Company
may settle any tax incurred in relation to these. Directors shall have the
benefit of Directors’ and Officers’ liability insurance and the provision of
an indemnity.
All-employee share plans – Executive Directors are eligible to participate
in the Company’s all-employee share schemes on the same terms as
other colleagues.
Mobility policy – when an Executive Director is required to relocate to
perform their role, they may be offered appropriate relocation
allowances and any required international transfer related benefits.
Maximum The overall level of benefits will depend on the cost of providing
individual items and the individual’s circumstances. There is therefore
no maximum level of benefit.
Measure n/a
Change No change from current policy.
Pension
Purpose and link
to strategy
To provide an appropriate level of retirement benefits as a part of a
holistic benefit package.
Operation Executive Directors receive a cash allowance in lieu of pension or a
contribution into a defined contribution scheme.
Maximum Maximum cash in lieu of pension or contribution will be aligned to the
wider workforce (currently 7.5% of base salary).
Measure n/a
Change No change from current policy.
Annual bonus
Purpose and link
to strategy
To reward Executive Directors for the delivery of Tesco’s annual
financial, operational and strategic goals. Deferral into Tesco shares
provides alignment with shareholders.
Operation The annual bonus is normally delivered:
– 50% in cash; and
– 50% in Tesco shares which are deferred for three years. Performance
is assessed over a financial year. The Committee determines the level
of bonus, taking performance against targets and the underlying
performance of the business into account. The Committee may apply
judgement in making appropriate adjustments to bonus outcomes to
ensure they reflect underlying business performance. Malus and
clawback provisions apply as described on page 115.
Maximum Maximum annual bonus opportunity of 250% of base salary. For details
of award levels for 2025/26, see page 99.
Measures The annual bonus may be based on a mix of financial, operational,
strategic and individual performance measures. At least 70% of the
bonus will be based on financial performance. The Committee
determines the exact metrics each year depending on the key goals for
the forthcoming year. Up to 25% of the bonus is paid for achieving a
threshold level of performance and the full bonus is paid for delivering
stretching levels of performance. These vesting levels may vary each
year depending on the stretch of targets set. Below threshold
performance, no payment is made.
The Committee sets bonus targets each year to ensure they are
appropriately stretching in the context of the business plan.
Change No change from current policy.
Performance Share Plan
Purpose and link
to strategy
To reward Executive Directors for achieving Tesco’s long-term strategy
and creating sustainable shareholder value that aligns the economic
interests of Executive Directors and shareholders.
Operation Awards normally vest based on performance over a period of not less
than three years (unless the Committee determines otherwise).
The Committee has the discretion to amend the formulaic vesting level
if it does not consider that it reflects the underlying performance of the
Company. All vested shares, net of any tax liabilities, will be subject to a
further two-year holding period after the vesting date. Malus and
clawback provisions apply as described on page 115.
Maximum The maximum annual award that can be granted under the PSP is 350%
of base salary. For details of award levels for 2025/26, see page 99.
Tesco PLC Annual Report and Financial Statements 2025
118.
Performance Share Plan
Measures Awards vest based on financial, non-financial and/or strategic
performance conditions which are aligned to the Company’s strategic
plan (the satisfaction of which is determined by the Committee). At least
50% of the PSP will be based on financial metrics. The current measures
are Adjusted diluted EPS (37.5%), Cumulative free cash flow (37.5%) and
ESG performance measures (25%). Any substantial or significant change
to measures will be subject to shareholder consultation. Up to 25% of
the award vests for threshold levels of performance, increasing to 100%
of the award for stretching performance.
The Committee sets targets each year so that they are stretching and
represent value creation for shareholders, while remaining motivational
for management.
Change No change from current policy.
Shareholding requirements
Guidelines
Tesco operates shareholding guidelines of 400% of base salary for the
Group Chief Executive and 300% for the Chief Financial Officer. Executive
Directors are required to retain all shares that vest to them, net of any
tax liability, whether from the annual bonus, PSP or buyout, until the
relevant shareholding guideline is satisfied. The Committee may waive this
requirement under certain exceptional personal circumstances.
Executive Directors are required to hold 100% of the lower of their
shareholding requirement or their actual shareholding at the date of their
departure from the Company for two years. They must hold shares covered
by the post-cessation shareholding requirement in a corporate sponsored
nominee account.
Change
No change from current policy.
Remuneration policy for new hires
When hiring a new Executive Director, the Committee would generally seek to align their remuneration
package with the remuneration policy outlined in this section. The Committee will set base salary
taking into account all relevant factors including:
– the experience and calibre of the candidate;
– the candidate’s current reward opportunity; and
– the jurisdiction from which the candidate was recruited.
Incentive opportunity will be in line with the policy maximums (i.e. a total maximum incentive
opportunity of 600% of base salary).
The Committee may make additional awards when appointing an Executive Director to buy out any
remuneration terms forfeited on leaving a previous employer. The Committee will look to do so on
a like-for-like basis with the awards forfeited, taking account of relevant factors including any
performance conditions attached to these awards, the form in which they were granted (e.g. cash
or shares) and the time over which they would have vested.
To facilitate buyout awards in the event of recruitment, the Committee may grant awards to a new
Executive Director under Listing Rule 9.4.2. This allows awards to be granted to facilitate the
recruitment of an Executive Director in unusual circumstances, or under other relevant company
incentive plans.
The Company will pay legal fees incurred by any new Executive Directors in respect of their
appointment.
If an internal candidate is promoted to the Board, legacy terms and conditions would normally be
honoured, including pension entitlements and any outstanding incentive awards.
In the event of the appointment of a new Chair or Non-executive Director, remuneration
arrangements will reflect the policy outlined on page 121.
Executive Director service agreements and policy on Executive Directors
leaving Tesco
When determining leaving arrangements for an Executive Director, the Committee takes any
contractual agreements into account, including the provisions of any incentive arrangements, typical
market practice and the performance and conduct of the individual.
The following table summarises Tesco’s policy in relation to Executive Director service agreements
and payments in the event of loss of office:
Provision Current service agreements
Notice period Up to 12 months’ notice by the Company and by the Executive Director. For
new appointments, the Committee reserves the right to vary this period to
24 months for the initial period of appointment, and for the notice period to
then revert to up to 12 months after the initial 12 months of employment.
Expiry date Ken Murphy and Imran Nawaz entered into service agreements with
Tesco PLC on 1 October 2019 and 6 October 2020, respectively. These are
rolling service agreements with no fixed expiry date. The notice period on
termination by the Company or the Executive Director is 12 months.
Termination payments
(do not apply if notice
is provided, as per the
service agreement,
or for termination by
reason of resignation
or unacceptable
performance or
conduct)
If the Company terminates an Executive Director’s agreement without full
notice or it is terminated by an Executive Director in response to a serious
contractual breach by the Company, then the Executive Director has the
right to a termination payment that reflects the unexpired term of the
notice.
Any termination payment in lieu of notice will be based on base salary and
benefits only, plus any statutory rights. Termination payments will normally
be subject to mitigation and paid in instalments. The Company’s obligation
to continue making phased termination payments will cease when the
Executive Director commences alternative employment.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
119.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Provision Current service agreements
Other information The Committee may require an Executive Director to work during their
notice period, or may choose to place them on garden leave. The Committee
may determine that an Executive Director may remain eligible to receive a
pro-rata bonus for the financial year in respect of the period they worked,
taking into account performance achieved, if they leave as a good leaver
(as defined in the leaver provisions for share plans, below).
The Committee will take into account time in active employment and
performance to determine the level of bonus.
The Committee may make payments in connection with an existing or
threatened legal obligation or in respect of any claim related to the cessation
of employment. This includes fees for outplacement assistance, legal and/or
professional advice.
The Company may reimburse the Executive Director for reasonable
legal expenses if they leave by mutual consent. Directors’ and Officers’
liability insurance for a specified period following the Executive Director’s
termination date may be provided. Where an Executive Director has been
recruited from overseas, the Company may pay for repatriation.
Shareholders can view service agreements of the Executive Directors at the Company’s
registered office.
Share plan rules – leaver provisions
The relevant share plan rules govern the treatment of outstanding share awards when an Executive
Director leaves. The following table summarises leaver provisions under the executive share plans
for good leavers. All awards will normally lapse except for good leavers. In specific circumstances,
however, the Committee may exercise its discretion to modify the policy outlined to the extent that
the rules of the share plan allow this. The Committee will not exercise discretion to allow awards to
vest where the participant is dismissed for gross misconduct. Where an Executive Director leaves
as a result of summary dismissal, they will forfeit outstanding share incentive awards.
Good leavers are those who have left the Company due to injury, ill-health or disability, death,
redundancy, retirement, the entity which employs them ceasing to be part of the Group, taking into
account the circumstances of the departure and performance, or any other reason determined by
the Committee.
Deferred bonus plan
awards
Unvested awards vest at cessation. The Committee has discretion to defer
vesting to the normal vesting date.
Long term incentive
plan awards
Unvested awards normally vest on the normal date, pro-rated for time and
take into account performance achieved. In the event of retirement, the
Committee has the right to lapse awards granted since February 2019 if
the former Executive Director is employed in a substantive role prior to the
vesting of the award. On vesting, shares will be subject to a two-year holding
period. Shares in the holding period will continue to be held until the end of
the two-year holding period. In the event of death, however, shares will be
released to the estate.
All–employee
share plans
Leaver provisions under all-employee share plans are determined in
accordance with HMRC-approved provisions.
Other vesting circumstances
Awards may also vest early to the extent determined by the Committee if:
– a participant is transferred to another country, making them suffer a tax disadvantage or become
subject to restrictions on their award; or
– in the event of a takeover, winding-up or other corporate event affecting the Company, which may
affect the value of share awards (such as a demerger or dividend in specie).
The Committee will determine the number of shares under an award that vest in these circumstances.
In the case of PSP awards, the Committee will consider performance and the time elapsed since grant
when determining the level of vesting. Awards will vest in full in the case of deferred annual bonus
share awards.
Information supporting the policy table
Dividend equivalents
Dividend equivalents are payable on deferred annual bonus and PSP awards that vest, usually in the
form of additional shares.
Discretion in relation to incentive plans
The Committee retains discretion regarding the annual bonus and PSP plans. This relates to:
– the timing, size and type of awards and holding periods, subject to policy maximums, and the annual
setting of targets;
– circumstances where qualitative performance measures are used, when performance against those
measures is not in line with the Group’s overall financial or strategic performance over the
performance period;
– the adjustment of targets and measures if events occur which cause the Committee to determine it
is appropriate to do so. The Committee also retains the right to change performance measures and
the weighting of measures, in circumstances including:
– following feedback from regulators, shareholders and/or other stakeholders; and
– amending the plan rules in accordance with their terms and/or amending the basis of operation
(including but not limited to the approach in respect of dividend equivalents);
– the exercise of discretion in accordance with the rules, including in relation to whether or not malus
or clawback provisions would apply, in connection with recruitment, or terminations of employment,
or corporate events affecting the Company; and
– adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events,
special dividends and other corporate actions).
The Committee will disclose any exercise of discretion in accordance with regulatory requirements.
Malus and clawback provisions
The Committee has the discretion to scale back deferred share awards and PSP awards prior to
the satisfaction of such awards if:
– results are materially misstated;
– the participant has contributed to serious reputational damage to the Company or one of its
business units;
– the participant’s conduct has amounted to serious misconduct, fraud, dishonesty, a breach of the
Code of Business Conduct or material wrongdoing;
– the determination of the vesting or value of an award has been affected by an underlying incorrect
figure in the financial statements; or
– an error or miscalculation in determining the vesting or value of an award is identified.
Tesco PLC Annual Report and Financial Statements 2025
120.
Under malus, deferred share awards and unvested PSP awards can be reduced (including down to
zero) or be made subject to additional conditions. Clawback allows for the repayment of cash bonuses
previously paid up for a period of three years and PSP awards for a period of two years after the
vesting date. The malus and clawback periods are purposefully designed to align with respective
deferral, vesting and holding periods. These are considered appropriate timeframes to review
whether any trigger events have occurred under the malus and clawback provisions.
There are robust mechanisms in place to ensure that these malus and clawback provisions are
enforceable.
Timing of target disclosure
Targets for the PSP are disclosed on or before the grant date of the award. Targets and performance
against these for the annual bonus are disclosed in the year following the start of the performance
period.
Terms of share awards
The Committee may amend the terms of awards or the rules of share plans within the scope defined
in the rules of the plans.
For share awards, the number of shares subject to an award may be adjusted in the event of a
variation of the Company’s share capital or a demerger, delisting, special dividend, rights issue or
other event, which may, in the Committee’s opinion affect the current or future value of awards.
Remuneration policy for Non-executive Directors
Approach to setting fees Basis of fees Other items
– Fees for the Non-executive Chair and Non-executive Directors are set
at an appropriate level to recruit and retain Directors of a sufficient
calibre to guide and influence Board-level decision making without
paying more than is necessary.
– Fees are set taking into account the following factors:
– the time commitment required to fulfil the role; and
– typical practice at other companies of a similar size and complexity
to Tesco.
– Non-executive Directors’ fees are set by the Board and the Chair’s fee
is set by the Committee (the Chair does not take part in any discussion
about their fees).
– Fees are reviewed by the Board and the Committee at appropriate
intervals.
– Fees paid to the Non-executive Chair and Non-executive Directors
may not exceed the aggregate limit set out in the Company’s Articles
of Association.
– Our Non-executive Director fees policy is to pay:
– a basic fee for membership of the Board;
– an additional fee for the Chair of a Committee and the Senior
Independent Director to take into account the additional
responsibilities and time commitment of the role;
– an additional fee for membership of a Committee to take into
account the additional responsibilities and time commitment
of the role; and
– additional fees to reflect additional Board or Committee
responsibilities as appropriate.
– The Non-executive Chair receives an all-inclusive fee for the role.
– Where significant travel is required to attend Board meetings,
additional fees may be paid to reflect this additional time
commitment.
– The Non-executive Directors are not entitled to participate in the
annual bonus, PSP or Long Term Incentive Plan.
– The Non-executive Directors have the benefit of Directors’ and
Officers’ liability insurance, provision of an indemnity and colleague
discount on the same basis as colleagues. The Board may introduce
additional benefits for Non-executive Directors if it is considered
appropriate to do so.
– The Non-executive Chair may have the benefit of a company car and
driver, home security, colleague discount and family healthcare. The
Committee may introduce additional benefits for the Non-executive
Chair if it is considered appropriate to do so.
– The Company may reimburse the Non-executive Chair and Non-
executive Directors for reasonable expenses in connection with the
performance of their duties and may settle any tax incurred in relation
to these.
– The Company will pay reasonable legal fees for advice in relation to
terms of engagement.
– If a Non-executive Director is based overseas, then the Company
would meet travel and accommodation expenditure as required to
fulfil non-executive duties and may settle any tax incurred in relation
to these.
The Committee may amend performance targets in accordance with the terms of an award or if a
transaction or event occurs which causes the Committee to decide (taking into account the interests
of shareholders) that an amended performance condition would be more appropriate, would
continue to achieve the original purpose and would be no less challenging to achieve.
Payments outside of the policy
The Committee reserves the right to make any remuneration payments and payments for loss of
office (including exercising any discretions available to it in connection with such payments)
notwithstanding that they are not in line with the proposed remuneration policy set out in this report,
where the terms of the payment were agreed (i) before the policy came into effect, or (ii) at a time
when the relevant individual was not a Director of the Company and, in the opinion of the Committee,
the payment was not in consideration for the individual becoming a Director of the Company. For
these purposes, ‘payments’ includes the Committee satisfying awards of variable remuneration, and
an award in shares is ‘agreed’ at the time the award is granted.
External appointments
Executive Directors are permitted to hold one approved non-executive directorship of another
company and to retain the fees earned from such an appointment.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
121.
GovernanceStrategic report
Corporate governance report continued
Directors’ remuneration report continued
Non-executive Director letters of appointment
Non-executive Directors have letters of appointment setting out their duties and the time
commitment expected. Appointments are for an initial period of three years after which they are
reviewed. Details of Non-executive Directors’ dates of appointments and length of service can be
found on page 113. In line with the UK Corporate Governance Code, all Non-executive Directors
submit themselves for re-election by shareholders every year at the annual general meeting. All
Non-executive Directors’ appointments can be terminated by either party without notice. Non-
executive Directors have no entitlement to compensation on termination. Shareholders can view
Non-executive Directors’ letters of appointment at the Company’s registered office.
Scenarios for future total remuneration
The charts to the right provide an illustration of what could be received by each Executive Director
under the new remuneration policy in 2025/26. These charts are illustrative as the actual value will
depend on business performance and share price performance. The maximum performance also
includes an additional bar which shows the impact of a 50% share price growth on the PSP outcome
over the relevant performance period, to show how the package value is aligned to shareholders.
Remuneration assumptions
Minimum
Fixed pay only – base salary, benefits and pension.
On target
Includes fixed pay, 50% of the maximum annual bonus (equal to 125% of
salary for the CEO and CFO) and 62.5% vesting of the PSP (equal to 172% of
salary for the CEO and CFO).
Maximum
Includes fixed pay, maximum annual bonus payout (equal to 250% of salary
for the CEO and CFO) and 100% vesting of the PSP (equal to 275% of salary
for the CEO and CFO).
Maximum with share
price increase
All elements the same as the maximum but assumes a 50% increase in
share price.
Illustrative total remuneration scenarios
Fixed pay Annual bonus Long term incentive Share price increase
Minimum On target Maximum Maximum
(with 50%
share price
growth)
Minimum On target Maximum Maximum
(with 50%
share price
growth)
100% 28% 18% 15% 100% 29% 18% 15%
30%
39%
32%
42%
43% 35%
18%
30%
39%
32%
41%
43% 35%
18%
Ken Murphy
Group Chief Executive
Imran Nawaz
Chief Financial Officer
£1.69m
£6.13m
£9.53m
£11.59m
£0.98m
£3.45m
£5.35m
£6.50m
Tesco PLC Annual Report and Financial Statements 2025
122.
Statement of Directors’
responsibilities.
The Directors are responsible for preparing the
annual report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law, the Directors are required to
prepare the Group financial statements in
accordance with UK-adopted international
accounting standards and applicable UK law.
The financial statements also comply with
International Financial Reporting Standards
(IFRSs) as issued by the IASB. The Directors have
also chosen to prepare the Parent Company
financial statements in accordance with United
Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards
and applicable law), including Financial Reporting
Standard (FRS) 101 Reduced Disclosure
Framework. Under company law, the Directors
must not approve the financial statements
unless they are satisfied that they give a true and
fair view of the state of affairs of the Company
and of the profit or loss of the Company for
that period.
In preparing the Parent Company financial
statements, the Directors are required to:
– Select suitable accounting policies and then
apply them consistently;
– Make judgements and accounting estimates
that are reasonable and prudent;
– State whether applicable UK Accounting
Standards have been followed, subject to any
material departures disclosed and explained
in the financial statements; and
– Prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Company will continue in
business.
In preparing the Group financial statements,
International Accounting Standard 1 requires
that Directors:
– Properly select and apply accounting policies;
– Present information, including accounting
policies, in a manner that provides relevant,
reliable, comparable and understandable
information;
– Provide additional disclosures when
compliance with the specific requirements
in IFRSs are insufficient to enable users to
understand the impact of particular
transactions, other events and conditions on
the entity’s financial position and financial
performance; and
– Make an assessment of the Company’s ability
to continue as a going concern.
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the Company,
and enable them to ensure that the financial
statements comply with the Companies Act
2006. They are also responsible for safeguarding
the assets of the Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities. The
Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions. Each
of the serving Directors, whose names and
functions are set out on pages 56 to 58,
confirms that, to the best of their knowledge:
– The financial statements, prepared in
accordance with the relevant financial
reporting framework, give a true and fair view
of the assets, liabilities, financial position and
profit or loss of the Company and the
undertakings included in the consolidation
taken as a whole;
– The Strategic report includes a fair review of the
development and performance of the business
and the position of the Company and the
undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face; and
– The Annual Report and Financial Statements
2025, taken as a whole, are fair, balanced and
understandable and provide the information
necessary for shareholders to assess the
Company’s position and performance,
business model and strategy.
By order of the Board,
Ken Murphy
Group Chief Executive
9 April 2025
Did you know:
The Directors are
responsible for
preparing the annual
report and the
financial statements
in accordance with
applicable law and
regulations.
Tesco PLC Annual Report and Financial Statements 2025
Financial statements Additional information
123.
GovernanceStrategic report
Report on the audit of
the financial statements.
1. Opinion
In our opinion:
– the financial statements of Tesco PLC (the Parent Company) and its subsidiaries (the Group) give
a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
22 February 2025 and of the Group’s profit for the 52 week period then ended;
– the Group financial statements have been properly prepared in accordance with United Kingdom
adopted international accounting standards;
– the Parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard
101 ‘Reduced Disclosure Framework’; and
– the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements which comprise:
– the Group income statement;
– the Group statement of comprehensive income/(loss);
– the Group and Parent Company balance sheets;
– the Group and Parent Company statements of changes in equity;
– the Group cash flow statement; and
– the related Notes 1 to 34 of the Group financial statements and Notes 1 to 16 of the Parent
Company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial
statements is applicable law and United Kingdom adopted international accounting standards. The
financial reporting framework that has been applied in the preparation of the Parent Company
financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101
‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. The
non-audit services provided to the Group and Parent Company for the year are disclosed in Note 4
(Operating expenses) to the financial statements. We confirm that we have not provided any non-audit
services prohibited by the FRC’s Ethical Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
– store impairment review;
– recognition of commercial income;
– pension valuation; and
– retail technology environment.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level
of risk
Similar level
of risk
Decreased level
of risk
Materiality
The materiality that we used for the Group financial statements was £125m (2023/24: £115m) which
was determined on the basis of 4.67% (2023/24: 4.92%) of total adjusted profit before tax, from both
continuing and discontinued operations, (including net pension finance income/(cost)) as described
further on page 129.
Scoping
Our scoping provides audit coverage of 97% (2023/24: 97%) of revenue from continuing operations, 94%
(2023/24: 92%) of profit before tax from continuing operations and 94% (2023/24: 92%) of total assets.
In relation to discontinued operations we performed an audit of the entire financial information
covering 100% of revenue and operating profit.
Significant changes in our approach
Due to the completion of the disposal of the Group’s Banking operations during the year, our 2024/25
report no longer includes the following key audit matters:
– Tesco Bank loan impairment; and
– Disposal of Banking operations.
Following the completion of the disposal of the Banking operations, the inherent risks and significant
judgements related to both Tesco Bank loan impairment and the disposal itself are no longer present
and there were no additional significant judgements or considerations on the completion of the
disposal.
There are no other significant changes in our approach in comparison to the prior year.
Financial statements
Independent auditor’s report to the members of Tesco PLC
Tesco PLC Annual Report and Financial Statements 2025
124.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue
to adopt the going concern basis of accounting included:
– obtaining confirmation for the financing facilities including nature of facilities, repayment terms and
any covenants to assess that these facilities remain available at year end;
– assessing the reasonableness of the assumptions used in the Group’s funding plan approved by
the Board;
– testing the mechanical accuracy used to prepare the forecasts including obtaining an understanding
of relevant controls over the Group’s model;
– reviewing the liquidity forecast and undertaking sensitivities to assess whether there is sufficient
headroom;
– challenging the assumptions used within the Group’s going concern model by obtaining third-party
and market data and evaluating any differences between this data and the judgement and
assumptions used;
– evaluating the historical accuracy of forecasts prepared by the Group;
– considering the mitigating factors identified by the Group in relation to their going concern analysis;
– assessing the compliance with capital and liquidity requirements for the insurance and money
services (IMS) business; and
– assessing the appropriateness of the Group’s disclosure concerning the going concern basis.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Group’s and
Parent Company’s ability to continue as a going concern for a period of at least 12 months from when
the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5.1. Store impairment review
Key audit matter description
As described in Note 1 (Accounting policies, judgements and estimates), Note 12 (Property, plant and
equipment) and Note 13 (Leases) of the financial statements, the Group held £17,262m (2023/24:
£17,221m) of property, plant and equipment and £5,569m of right of use assets (2023/24: £5,478m) at
22 February 2025.
Under IAS 36 ‘Impairment of Assets’, the Group is required to complete an impairment review of its store
portfolio where there are indicators of impairment or impairment reversal. Judgement is required in
identifying indicators of impairment charges or reversals and estimation is required in determining the
recoverable amount of the Group’s store portfolio.
Where a review for impairment, or reversal of impairment, is conducted, the recoverable amount is
determined based on the higher of ‘value in use’ or ‘fair value less costs of disposal’.
Value in use has been calculated using probability-weighted cash flows reflecting the Group’s best
estimate of the impact of the economic environment and climate change on the future trading
performance of the Group. Further details of the probability-weighted cash flows are set out in Note 15
(Impairment of non-current assets) of the financial statements.
The Group estimates the fair value less costs of disposal of the stores with the assistance of independent
professional valuers. External valuations are obtained for a sample of stores, the results of which are
then used by the Group’s in-house experts to determine the fair value of the other properties. Further
details of the basis for the valuation are set out in Note 15.
The key audit matter relates specifically to the UK trading store portfolio which represents 90% of the
Group’s property, plant and equipment and 85% of the Group’s right of use asset balances.
In making their assessment of value in use and fair value less costs of disposal, the Group has considered
the impact of the macroeconomic trading environment (including the impact of Government policies,
changes to prices of goods for resale and fluctuations in interest rates and inflation) on forecast cash
flows and property fair values where conditions existed at the balance sheet date.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
125.
Financial statementsStrategic report
Financial statements continued
Independent auditor’s report to the members of Tesco PLC continued
5.1. Store impairment review continued
The Group’s impairment review is sensitive to changes in the key assumptions as set out in Note 15.
Significant judgement is required to forecast store cash flows which are derived from the Board-
approved Long Term Plan (LTP) and also in relation to capital and restructuring adjustments made to the
LTP cash flows so that the impairment model cash flows comply with IAS 36. In particular, the impairment
model is sensitive to changes to the Year 3 cash flow as this cash flow is discounted into the long term in
the value in use calculation.
Key areas of judgement in the cash flow forecasts include the ability of the Group to achieve their
forecasts in light of changing consumer patterns, the ongoing competitive retail environment and the
Group’s ability to realise forecast cost savings.
Other areas of key estimation in the store impairment review are as follows:
– the probability applied to each cash flow scenario in calculating the probability-weighted cash flows;
– the discount rate and long-term growth rate used to determine value in use from the probability-
weighted cash flows; and
– the fair value of properties supporting the carrying value of store assets, in particular in response to
the changing retail and broader property landscape.
The LTP is prepared on a top-down basis and not at an individual store level. The Group perform an
exercise to allocate forecast performance across individual stores within the portfolio ensuring cash
flows derived from the LTP are in accordance with IAS 36. This increases the complexity and level of
judgement within the impairment model.
As a result of the Group’s store impairment review completed during the year, a net impairment loss
of £298m (2023/24: impairment reversal of £28m) was recognised. This includes an impairment charge
of £671m (2023/24: £572m) and an impairment reversal of £373m (2023/24: £600m). The sensitivities
associated with the Group’s impairment review are presented within Note 15 to the financial statements.
The Audit Committee’s discussion of this key audit matter is set out on page 82.
How the scope of our audit responded to the key audit matter
Our audit procedures included obtaining an understanding of the relevant controls around the
impairment review process, including the budget and forecast setting processes which support the
cash flows used in the impairment model.
Our procedures in relation to the Group’s value in use assessment included:
– challenging the key assumptions utilised in the cash flow forecasts with reference to historical trading
performance, changes to prices of goods for resale, the wider economic environment (including
possible macroeconomic impacts of Government policies, fluctuations in interest rates and inflation),
anticipated changes in consumer behaviour, competitor actions, our understanding of the Group’s
strategic initiatives, climate change considerations and our wider industry knowledge;
– reviewing the accuracy of past forecasts of growth rates and future cash flows to assess the level of
accuracy of the forecasting process;
– with the involvement of valuation specialists evaluating the Group’s inputs to, and the appropriateness
of, its discount rate and the validity of its long-term growth rate;
– assessing and challenging the adequacy of the Group’s sensitivity analysis in relation to key assumptions
that may lead to a significant further impairment charge or reversal. This includes consideration of
forecast cash flows (including probability weighted cashflows), discount rates and property fair values,
in light of ongoing market volatility due to cost pressures, changing consumer behaviours, fluctuations
in inflation and competitor activities;
5.1. Store impairment review continued
– performing testing on all the data inputs and model outputs, along with stand-back assessments
to identify unusual trends and understand the factors driving the movement or any indicators of
management bias;
– assessing the methodology applied in determining the value in use compared with the requirements of
IAS 36, including challenging the appropriateness of excluding certain cash flows contained within the
LTP which were determined as not permissible under IAS 36;
– assessing and challenging the reasonableness and weighting of probability scenarios applied to adjust
the Group’s cash flows; and
– assessing the mechanical accuracy and integrity of the value in use model prepared by the Group,
with the assistance of our specialist modelling team.
In relation to the Group’s stores where their value is supported by fair value less costs of disposal
(rather than value in use), our procedures included challenging the assumptions used by the Group in
determining the fair market value, including those completed by external valuers and assessing whether
appropriate valuation methodologies have been applied. Where stores are supported by their fair values
less costs of disposal but the Group plan to continue to trade in the store, we have challenged the Group
as to why the fair value is appropriate in these circumstances. With the involvement of property valuation
specialists we have evaluated the fair value less cost of disposal and, as part of our work performed, we
have evaluated the competence, capability and objectivity of the Group’s valuers.
We also evaluated whether there was appropriate disclosure regarding sensitivities associated with the
Group’s impairment review.
Key observations
Based on our audit procedures we are satisfied that the assumptions in the impairment models are
within an acceptable range, and that the estimate of the Group’s net impairment loss is reasonable.
We also consider the disclosures, including the sensitivity disclosure, in Note 15 to be appropriate.
Tesco PLC Annual Report and Financial Statements 2025
126.
5.2. Recognition of commercial income
Key audit matter description
As described in Note 1 (Accounting policies, judgements and estimates) and Note 21 (Commercial
income) of the financial statements, the Group has agreements with suppliers whereby volume-related
allowances, promotional and marketing allowances and various other fees and discounts are received in
connection with the purchase of goods for resale from those suppliers.
As such, the Group recognises a reduction in cost of sales as a result of amounts received from those
suppliers. Commercial income should only be recognised as income within the income statement when
the performance conditions associated with it have been met, for example where the underlying product
promotions have gone live in stores.
The variety and number of the buying arrangements with suppliers means there is complexity in
determining if the performance obligations associated with the income have been satisfied, giving rise
to a requirement for management judgement. As such we have identified this as a key audit matter and
considered that there was a potential for fraud pinpointed to the possible manipulation of the income
for promotional space deal types within the Tesco UK retail business.
The Audit Committee’s discussion of this key audit matter is set out on page 83.
How the scope of our audit responded to the key audit matter
Our audit procedures included obtaining an understanding of relevant controls that the Group has
established in relation to commercial income recognition.
In addition, our procedures included performing the following:
– using data analytics to identify commercial income deals with particular characteristics, such as those
related to promotional space, and carried out further procedures on these, including arranging one on
one meetings with individual Tesco buyers and third party supplier representatives;
– considering whether amounts recognised were accurate and recorded in the correct period by
circularising a sample of suppliers to determine whether the arrangements recorded were in accordance
with the terms agreed in advance with the suppliers with regard to the nature, timing and amount
of the promotions and deals. We evaluated all supplier confirmation responses and investigated all
exceptions reported to us, if any, to determine the effect on reported commercial income or on our
confirmation sampling plan. We obtained a 100% response rate from the suppliers in our sample, and
therefore we did not need to consider alternative procedures;
– evaluating the year-end accrual for promotional deals to assess whether performance obligations have
been fulfilled where they have been invoiced subsequent to year end;
– holding discussions with certain suppliers and members of the Group’s buying personnel in order to:
further understand relevant arrangements; gain further insights on the impact of economic trends
on specific product categories and associated cost prices; discussing the IT applications used to
administer and process commercial income deals; and identifying if there are any disputes or other
issues that we should be aware of for further investigation;
– testing the completeness of commercial income by evaluating the Group’s review and conclusions
related to any commercial income deals that were unrecorded and performing analytical procedures
to identify deals where performance obligations have been fulfilled but invoicing could not occur due to
pending final administrative procedures;
5.2. Recognition of commercial income continued
– testing commercial income balances included within inventories and trade and other receivables,
or netted against trade and other payables (as set out in Note 21) via balance sheet reconciliation
procedures; and
– assessing the appropriateness of the disclosures made in relation to commercial income in the Group’s
financial statements.
Key observations
Based on our audit procedures we are satisfied that the recognition of commercial income is reasonable.
We consider the disclosure given in the financial statements around commercial income provides an
appropriate understanding of the types of rebate income received and the impact on the Group’s
balance sheet.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
127.
Financial statementsStrategic report
Financial statements continued
Independent auditor’s report to the members of Tesco PLC continued
5.3. Pension valuation
Key audit matter description
As described in Note 1 (Accounting policies, judgements and estimates) and Note 29 (Post-employment
benefits) of the financial statements, the Group has a defined benefit pension plan in the UK retail
business. At 22 February 2025, the Group recorded a net retirement benefit deficit before deferred
tax of £251m (2023/24: £635m), comprising plan assets of £11,715m (2023/24: £12,156m) and plan
liabilities of £11,963m (2023/24: £12,787m). The net retirement deficit of £251m (2023/24: £635m) before
deferred tax comprises schemes in surplus of £56m (2023/24: £22m) and schemes in deficit of £307m
(2023/24: £657m).
The valuation of the Group’s pension obligations is sensitive to changes in key assumptions and is
dependent on market conditions. The key audit matter specifically relates to the key financial and
demographic assumptions linked to the valuation of the UK retail pension plan obligations: discount rate,
inflation expectations, and mortality assumptions. The setting of these assumptions is complex and
requires the exercise of significant management judgement with the support of the Group’s actuaries.
The Audit Committee’s discussion of this key audit matter is set out on page 82.
How the scope of our audit responded to the key audit matter
Our audit procedures included obtaining an understanding of relevant controls in relation to the pension
obligation valuation process.
In addition, we involved our actuarial specialists to assess the key actuarial assumptions used, both
financial and demographic, and considered the methodology utilised to derive these assumptions.
In order to assess and challenge the reasonableness of the Group’s discount rate, we independently
calculated an appropriate range from available market data and compared this to the Group’s rate.
Working with our actuarial specialists, we benchmarked and challenged assumptions used by the Group in
determining the value of pension liabilities, particularly focusing on the discount rate, inflation and mortality
assumptions. This included comparing the inputs and assumptions used in determining the valuation of
the UK retail pension plan to those used in comparable pension plans and our independently assessed
benchmarks. As part of our procedures, we considered the incorporation of, and weighting factors applied
to, the Continuous Mortality Investigation (CMI) 2023 mortality tables which include the updated 2023
actual mortality experience, with reference to advice the Group has received from its actuaries.
Additionally, we have considered the competence, capability and objectivity of the actuaries engaged
by the Group to perform valuations of the relevant plans.
Key observations
Based on our audit procedures we are satisfied that the overall methodology is appropriate, and the key
assumptions applied in relation to determining the pension valuation are reasonable.
5.4. Retail technology environment
Key audit matter description
The Group’s retail technology environment is complex and a significant element of its financial processes
and business operations are dependent on automated processes and controls.
In the current and previous years, we have reported certain IT control deficiencies within the retail IT
systems which could have an adverse impact on the Group’s controls and financial reporting systems.
The Group has continued to implement its multi-year remediation plan on control deficiencies related
to Application User Access Management and Privileged Access Management. IT controls remediation
is a complex project which includes the remediation of IT deficiencies across a range of internally and
externally hosted systems.
Areas of the Group’s remediation programme to which the key audit matter has been pinpointed include:
– appropriateness of remediated access controls across in-scope applications and their supporting
infrastructure; and
– whether the remediated controls address previously identified deficiencies.
The Audit Committee’s discussion of this key audit matter is set out on page 84.
How the scope of our audit responded to the key audit matter
Consistent with previous years, we did not plan to take a control-reliant audit approach in the retail
business for the majority of systems due to the previously identified deficiencies in the IT environment
and the level of integration and inter-dependencies across the systems.
During the year, we obtained an understanding of relevant controls over the information systems that
are important to financial reporting, including the changes made as part of the Group’s IT remediation
programme. We evaluated the design and implementation of controls which the Group has remediated
and tested operating effectiveness on certain systems.
Certain systems are further progressed along the remediation path, with IT controls reliance achieved over
a subset of systems this year, allowing us to rely on a number of automated controls within these systems.
Consistent with the prior year, we also extended the scope of our substantive audit procedures in response
to the deficiencies which affected the applications and databases within the scope of our audit.
Key observations
The additional substantive audit procedures performed in order to mitigate the risk of material
misstatement due to deficiencies in the IT systems within the scope of our audit were completed
satisfactorily.
Based on the current work programme, the Group intend to have the majority of IT remediation
completed within 2025/26. Our audit plan includes an ongoing programme to test the Group’s
remediated IT controls relevant to the audit once this has been completed by the Group. As such,
we consider the level of risk associated with this key audit matter to have remained consistent with
the prior year until these actions are further progressed.
Tesco PLC Annual Report and Financial Statements 2025
128.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole
as follows:
Group financial statements Parent Company financial statements
Materiality
£125m (2023/24: £115m) £96m (2023/24: £86.25m)
Basis for
determining
materiality
4.67% (2023/24: 4.92%) of total adjusted profit
before tax, from both continuing and discontinued
operations, (including net pension finance income/
(cost)) of £2,678m (2023/24: £2,337m).
Materiality represents
less than 1% of net assets
(2023/24: less than 1%).
Rationale
for the
benchmark
applied
We have determined materiality based on 4.67%
of total adjusted profit before tax, from both
continuing and discontinued operations, (including
net pension finance income/(cost)). Adjusting
items are defined in Note 1 and include net
pension finance income/(cost). For the purpose
of our materiality determination we have excluded
net pension finance income/(cost) from adjusting
items and therefore increased/(reduced) adjusted
profit before tax accordingly. Our determined
materiality represents 0.18% (2023/24: 0.17%) of
the Group’s revenue from continuing operations
and 1.1% (2023/24: 1.0%) of net assets.
Refer to Note 5 (Adjusting items) for further details
of adjusting items and the Group’s reconciliation
of this alternative performance measure to the
Group’s statutory measure.
As this is the Parent Company
of the Group, it does not
generate significant revenues
other than investment returns,
but incurs costs.
Net assets are of most
relevance to users of the
financial statements.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
statements as a whole.
Group financial statements Parent Company financial statements
Performance
materiality
65% (2023/24: 65%) of Group materiality 65% (2023/24: 65%) of Parent
Company materiality
Basis and
rationale for
determining
performance
materiality
As we continue to be unable to rely on the majority of internal controls in the
retail business due to the previously identified deficiencies in the IT environment,
consistent with previous years, we have used a lower percentage of materiality to
determine our performance materiality for 2024/25. In determining our performance
materiality, we have also considered the nature, quantum and volume of corrected
and uncorrected misstatements in prior periods, including prior period errors, and
our expectation that misstatements from prior periods would not likely recur in the
current period.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in
excess of £6.25m (2023/24: £5.75m), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material misstatement at the Group level.
The Group operates through over 600 legal entities and has subsidiary grocery retail operations in five
countries, together with interests in a number of other businesses both in the UK and internationally.
The Group’s accounting process is structured around business units managed by local finance
functions and further supported by business service centres in Bengaluru, India and Budapest,
Hungary which provide accounting and administrative support for the Group’s core retail operations.
Each local finance function reports through to the central Group finance function based at the
Group’s head office.
We performed a detailed scoping exercise of each individual account balance, class of transaction
and disclosure at a Group level to determine the individual legal entities’ contribution to each
significant account in the Group financial statements. This has resulted in certain individual legal
entities being subject to audit procedures through either an audit of the entire financial information,
audit procedures on specified account balances or being subject to specified procedures (“the
components subject to audit procedures”).
The work performed on the components subject to audit procedures (excluding the Parent Company)
was completed to component performance materiality levels between £23.4m and £62.4m (2023/24:
£11m and £56m).
Group materiality £125m
Component performance
materiality range
£23.4m to £62.4m
Audit Committee reporting
threshold £6.25m
Adjusted profit
before tax from
continuing and
discontinued
operations
(including net
pension finance
income/(cost))
£2,678m
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Financial statementsStrategic report
Financial statements continued
Independent auditor’s report to the members of Tesco PLC continued
Based on our assessment, our audit scope focuses on component entities within five retail locations
(UK, Republic of Ireland, Czech Republic, Hungary and Slovakia), Booker and certain material balances
within Tesco Personal Finance and Tesco Underwriting. For entities and account balances not subject
to audit procedures we performed analytical review procedures to confirm our conclusion that there
was no significant risk of material misstatement in the residual population. The components which
were subject to audit procedures in the current year represent 97% (2023/24: 97%) of revenue from
continuing operations, 94% (2023/24: 92%) of profit before tax from continuing operations and 94%
(2023/24: 92%) of total assets. In relation to discontinued operations we performed an audit of the
entire financial information covering 100% of revenue and operating profit.
As each of the local finance functions maintains separate financial records, we engaged component
auditors from the Deloitte member firms in the UK, Republic of Ireland and Central Europe to perform
procedures at all the wholly-owned components under our direction and supervision. This approach
also allowed us to engage local auditors who have appropriate knowledge of local regulations to
perform the audit work, under a common Deloitte audit approach.
The components subject to audit procedures contribute the proportions of Group totals shown below.
Revenue from continuing operations
Audit of the entire financial information 96%
Specified audit procedures 1%
Review at group level 3%
Profit before tax from continuing operations
Audit of the entire financial information 94%
Specified audit procedures 0%
Review at group level 6%
Total assets
Audit of the entire financial information 78%
Specified audit procedures 16%
Review at group level 6%
At the Group level we also tested the consolidation process and carried out analytical procedures to
confirm our conclusion that there were no significant risks of material misstatement of the aggregated
financial information of the remaining components not subject to audit procedures. At the Group level
we also performed audit procedures on centrally held balances including treasury, post-employment
benefit obligations, head office costs and litigation and claims.
The components that contribute the largest proportion of the significant accounts of the Group are
within its retail business in the UK. As such, there is extensive interaction between the Group and the
UK audit team to allow appropriate level of direction, supervision and review in this audit work. During
the course of our audit, the UK audit team visited 25 (2023/24: 27) retail stores in the UK to attend
inventory counts and to complete store control testing procedures, and 9 (2023/24: 7) distribution
centre inventory counts.
7.2. Our consideration of the control environment
In the current year our controls approach was principally designed to inform our risk assessment, to
allow us to test the operating effectiveness of certain relevant controls, to test controls that address
risks of material misstatement for which substantive procedures alone would not provide sufficient
appropriate audit evidence and to test the operating effectiveness of controls within processes
where a controls reliance approach was taken. The Group’s operations utilise a range of information
systems which underpin the financial reporting process. These are largely consistent across the retail
business. As noted on page 128, in most cases, it is not possible to take a controls reliant audit
approach in the retail businesses due to the IT deficiencies. For the now disposed Banking operations,
and the retained IMS business, there are separate information systems where the same IT deficiencies
do not exist and therefore a controls reliant audit approach was taken across certain account
balances.
For all of the components that were subject to audit procedures, we obtained an understanding of
the relevant IT systems for the purpose of our audit work.
In previous years we reported deficiencies in certain IT controls. As described in the Audit Committee
Report on page 84, the Group has implemented a remediation plan, progress against which is
monitored. Accordingly, consistent with the prior year, we extended the scope of our substantive
audit procedures in response to the identified deficiencies.
Further details are set out in the ‘Retail technology environment’ key audit matter in section 5.4 above.
Tesco PLC Annual Report and Financial Statements 2025
130.
7.3. Our consideration of climate-related risks
The Group is exposed to the impacts of climate change on its business and operations as highlighted
in the Task Force on Climate-Related Financial Disclosures (TCFD) report on page 36, the viability
statement on page 50, the principal risks on page 40, and in Note 15 of the financial statements. The
Group has set out their key commitments to reduce Scope 1 and 2 market based emissions by 2025,
be carbon neutral across their own operations by 2035 and achieve net zero across their value chain
(Scope 3) by 2050.
We engaged with both the central finance and sustainability functions to gain an understanding of the
assessment of, and the process undertaken to both identify and quantify, the Group’s climate-related
risks. We engaged our climate specialists in our assessment to consider broader industry and
market-wide practice.
We completed an independent climate-based risk assessment in order to consider the potential
impact of climate change on the Group’s financial statements, incorporating both business specific
knowledge and wider industry awareness, including the extent to which the impact has been included
in the Group’s forecast financial information. We used this to assess the completeness of the Group’s
identified risks and to develop audit procedures to respond to these risks, in particular as part of our
work in relation to store impairment and long-term viability, as well as considering climate-related
risks throughout our risk assessments on each financial statement account balance. Further details of
our work in relation to store impairment are set out in the ‘Store impairment review’ key audit matter
in section 5.1 above.
In considering the disclosures presented as part of the Strategic Report, we engaged our climate
specialists to assess compliance with the TCFD requirements and the recommendations made by
both the Task Force and FRC as set out in their thematic reviews. We also assessed whether these
disclosures reflect our understanding of the Group’s approach to climate and did not identify any
material inconsistencies as a result of these procedures.
7.4. Working with other auditors
The Group audit team issued detailed instructions to the component auditors and visited the
component auditors set out above, in addition to the Group’s business service centre in Bengaluru
where the work performed was overseen by the UK audit team. We had a dedicated audit partner
focused on overseeing the role of the component audit teams, so that we applied a consistent audit
approach to the operations in the Group’s UK and international businesses. We undertook group level
account balance risk assessments to determine the identification of significant risks and directed and
supervised the components as required.
The audit visits by the Group audit team were timed to enable us to be involved during the planning
and risk assessment process in addition to the execution of detailed audit procedures. During our
visits we attended key meetings with component management and auditors, directed and supervised
the underlying component risk assessments, which we then took ownership of at a group level, and
reviewed and challenged detailed component auditor working papers in the underlying audit files and
component reporting. In addition, we attended component audit closing calls and held regular remote
communication to interact on any related audit and accounting matters which arose.
Additionally, the component audit teams attended two all-day planning meetings in July 2024 led by
the Group audit team and held prior to commencement of our detailed audit work. The purpose of
these planning meetings was to establish a good level of understanding of the Group’s businesses,
its core strategy and hold a discussion of the significant risks and workshops on our planned audit
approach. Group management also attended part of the meeting to support these planning activities.
8. Other information
The other information comprises the information included in the Annual Report, other than the
financial statements and our auditor’s report thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going concern, disclosing as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
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Governance Additional information
131.
Financial statementsStrategic report
Financial statements continued
Independent auditor’s report to the members of Tesco PLC continued
11. Extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud
and non-compliance with laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the
design of the Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels
and performance targets;
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or
error;
– the results of our enquiries of management, the internal audit function, the Directors, the Group’s
Security function and the Group’s Compliance Officer, the Group’s General Counsel and the Audit
Committee about their own identification and assessment of the risks of irregularities, including
those that are specific to the sector;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies
and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of
any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations including the Group’s controls relating to the Group’s ongoing compliance with the
Groceries Supply Code of Practice (GSCOP) requirements and the requirements of the United
Kingdom’s Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) in relation
to the now disposed Banking operations and the retained IMS business; and
– the matters discussed among the audit engagement team including component audit teams and
relevant internal specialists, including IT, tax, valuations, pensions actuarial specialists, and industry
specialists regarding how and where fraud might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist
within the organisation for fraud and identified the greatest potential for fraud in the following area:
recognition of commercial income. In common with all audits under ISAs (UK), we are also required
to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in,
focusing on provisions of those laws and regulations that had a direct effect on the determination of
material amounts and disclosures in the financial statements. The key laws and regulations we
considered in this context included the Group’s ongoing compliance with the GSCOP, UK Companies
Act, Listing Rules, pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on
the financial statements but compliance with which may be fundamental to the Group’s ability to
operate or to avoid a material penalty. These included the Group’s requirements of the United
Kingdom’s PRA FCA and Solvency II regulations in relation to the now disposed Banking operations and
the retained IMS business, employment law, health and safety and food safety laws and regulations.
11.2. Audit response to risks identified
As a result of performing the above, we identified recognition of commercial income as a key audit
matter related to the potential risk of fraud. The key audit matters section of our report explains the
matter in more detail and also describes the specific procedures we performed in response to the
key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on
the financial statements;
– enquiring of management, the Audit Committee and in-house and external legal counsel concerning
actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and
reviewing correspondence, if any, with HMRC and other relevant regulatory bodies; and
– in addressing the risk of fraud through management override of controls, testing the
appropriateness of journal entries and other adjustments; assessing whether the judgements made
in making accounting estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members including internal specialists and component audit teams, and remained
alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Tesco PLC Annual Report and Financial Statements 2025
132.
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
– the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their
environment obtained in the course of the audit, we have not identified any material
misstatements in the Strategic report or the Directors’ report.
13. Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-
term viability and that part of the Corporate Governance Statement relating to the Group’s
compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
– the Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 123;
– the Directors’ explanation as to its assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 50;
– the Directors’ statement on fair, balanced and understandable set out on page 53;
– the Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 40;
– the section of the Annual Report that describes the review of effectiveness of risk management
and internal control systems set out on page 40; and
– the section describing the work of the Audit Committee set out on page 80.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
– the Parent Company financial statements are not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
Directors’ remuneration have not been made or the part of the Directors’ remuneration report to be
audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Group’s
shareholders on 25 June 2015 to audit the financial statements for the year ending 27 February 2016
and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments of
the firm is ten years, covering the years ending 27 February 2016 to 22 February 2025.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to
provide in accordance with ISAs (UK).
Report on other legal and
regulatory requirements.
Tesco PLC Annual Report and Financial Statements 2025
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133.
Financial statementsStrategic report
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
As required by the FCA Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these
financial statements will form part of the Electronic Format Annual Financial Report filed on the
National Storage Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s
report provides no assurance over whether the Electronic Format Annual Financial Report has been
prepared in compliance with DTR 4.1.15R – DTR 4.1.18R. We have been engaged to provide assurance on
whether the Electronic Format Annual Financial Report has been prepared in compliance with DTR
4.1.15R – DTR 4.1.18R and will publicly report separately to the members on this.
John Adam (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
9 April 2025
Financial statements continued
Independent auditor’s report to the members of Tesco PLC continued
Tesco PLC Annual Report and Financial Statements 2025
134.
Group income statement
The notes on pages 141 to 211 form part of these financial statements.
52 weeks ended | 52 weeks ended | ||||||
22 February 2025 | 24 February 2024 | ||||||
| Before adjusting | Adjusting items | Before adjusting | Adjusting items | ||||
| items | (Note 5) | Total | items | (Note 5) | Total | ||
Notes | £m | £m | £m | £m | £m | £m | |
| Continuing operations | |||||||
Revenue from sale of goods and services | |||||||
Insurance revenue | 24 | ||||||
Revenue | 2, 3 | ||||||
Cost of sales | ( | ( | ( | ( | ( | ( | |
Insurance service expenses | 24 | ( | ( | ( | ( | ||
Net expenses from reinsurance contracts held | 24 | ( | ( | ( | ( | ||
Gross profit/(loss) | ( | ( | |||||
Administrative expenses | ( | ( | ( | ( | ( | ( | |
Operating profit/(loss) | 2 | ( | ( | ||||
Share of post-tax profit/(loss) of joint ventures and associates | 14 | ( | ( | ||||
Finance income | 6 | ||||||
Finance costs | 6 | ( | ( | ( | ( | ||
Profit/(loss) before tax from continuing operations | ( | ||||||
Taxation | 7 | ( | ( | ( | ( | ||
Profit/(loss) for the year from continuing operations | ( | ||||||
| Discontinued operations | |||||||
Profit/(loss) for the year from discontinued operations | 8 | ( | ( | ( | |||
Profit/(loss) for the year | ( | ( | |||||
| Attributable to: | |||||||
Owners of the parent | ( | ( | |||||
Non-controlling interests | |||||||
( | ( | ||||||
| Earnings per share from continuing and discontinued operations | |||||||
Basic | 10 | ||||||
Diluted | 10 | ||||||
| Earnings per share from continuing operations | |||||||
Basic | 10 | ||||||
Diluted | 10 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
135.
Financial statementsStrategic report
Group statement of comprehensive income/(loss)
52 weeks ended | 52 weeks ended | ||
22 February 2025 | 24 February 2024 | ||
Notes | £m | £m | |
| Items that will not be reclassified to the Group income statement | |||
Change in fair value of financial assets at fair value through other comprehensive income | |||
Remeasurements of defined benefit pension schemes | 29 | ( | |
Net fair value gains/(losses) on inventory cash flow hedges | ( | ||
Tax on items that will not be reclassified | 7 | ( | |
( | |||
| Items that may subsequently be reclassified to the Group income statement | |||
Change in fair value of financial assets at fair value through other comprehensive income | |||
| Currency translation differences: | |||
Retranslation of net assets of overseas subsidiaries, joint ventures and associates | ( | ( | |
Impact of net investment hedges | |||
| Gains/(losses) on cash flow hedges: | |||
Net fair value gains/(losses) | |||
Reclassified and reported in the Group income statement | ( | ( | |
Finance income/(expenses) from insurance contracts issued | 24 | ( | |
Finance income/(expenses) from reinsurance contracts held | 24 | ||
Tax on items that may be reclassified | 7 | ( | |
( | ( | ||
Total other comprehensive income/(loss) for the year | ( | ||
Profit/(loss) for the year | |||
Total comprehensive income/(loss) for the year | |||
| Attributable to: | |||
Owners of the parent | |||
Non-controlling interests | |||
Total comprehensive income/(loss) for the year | |||
| Total comprehensive income/(loss) attributable to owners of the parent arising from: | |||
Continuing operations | |||
Discontinued operations | 8 | ( | |
The notes on pages 141 to 211 form part of these financial statements.
Tesco PLC Annual Report and Financial Statements 2025
136.
Group balance sheet
22 February 2025 | 24 February 2024 | ||
Notes | £m | £m | |
| Non-current assets | |||
Goodwill and other intangible assets | 11 | ||
Property, plant and equipment | 12 | ||
Right of use assets | 13 | ||
Investment property | |||
Investments in joint ventures and associates | 14 | ||
Other investments | 16 | ||
Trade and other receivables | 18 | ||
Reinsurance contract assets | 24 | ||
Derivative financial instruments | 26 | ||
Post-employment benefit surplus | 29 | ||
Deferred tax assets | 7 | ||
| Current assets | |||
Other investments | 16 | ||
Inventories | 17 | ||
Trade and other receivables | 18 | ||
Derivative financial instruments | 26 | ||
Current tax assets | |||
Short-term investments | 19 | ||
Cash and cash equivalents | 19 | ||
| Assets of the disposal group and non-current assets | 8 | ||
| classified as held for sale | |||
| Current liabilities | |||
Trade and other payables | 20 | ( | ( |
Borrowings | 22 | ( | ( |
Lease liabilities | 13 | ( | ( |
Provisions | 23 | ( | ( |
Insurance contract liabilities | 24 | ( | ( |
Deposits from central bank | 25 | ( | |
Derivative financial instruments | 26 | ( | ( |
Current tax liabilities | ( | ( | |
( | ( | ||
Liabilities of the disposal group classified as held for sale | 8 | ( | |
Net current liabilities | ( | ( |
22 February 2025 | 24 February 2024 | ||
Notes | £m | £m | |
| Non-current liabilities | |||
Trade and other payables | 20 | ( | ( |
Borrowings | 22 | ( | ( |
Lease liabilities | 13 | ( | ( |
Provisions | 23 | ( | ( |
Deposits from central bank | 25 | ( | |
Derivative financial instruments | 26 | ( | ( |
Post-employment benefit deficit | 29 | ( | ( |
Deferred tax liabilities | 7 | ( | ( |
( | ( | ||
Net assets | |||
| Equity | |||
Share capital | 30 | ||
Share premium | |||
Other reserves | 30 | ||
Retained earnings | |||
Equity attributable to owners of the parent | |||
Non-controlling interests | ( | ( | |
Total equity |
Tesco PLC Annual Report and Financial Statements 2025
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137.
Financial statementsStrategic report
Group statement of changes in equity
| Other reserves | Non-controlling | |||||||
Share capital | Share premium | (Note 30) | Retained earnings | Total | interests | Total equity | ||
Notes | £m | £m | £m | £m | £m | £m | £m | |
At 24 February 2024 | ( | |||||||
| Profit/(loss) for the year | ||||||||
| Other comprehensive income/(loss) | ||||||||
| Retranslation of net assets of overseas subsidiaries, joint ventures and associates | ( | ( | ( | |||||
| Impact of net investment hedges | ||||||||
Change in fair value of financial assets at fair value through other comprehensive income | ||||||||
Remeasurements of defined benefit pension schemes | 29 | |||||||
| Gains/(losses) on cash flow hedges | ||||||||
| Cash flow hedges reclassified and reported in the Group income statement | ( | ( | ( | ( | ||||
| Finance income/(expenses) from reinsurance contracts held | ||||||||
Tax relating to components of other comprehensive income | 7 | ( | ( | ( | ||||
| Total other comprehensive income/(loss) | ( | ( | ||||||
| Total comprehensive income/(loss) | ( | |||||||
| Transfer from translation reserve to retained earnings | ( | |||||||
| Inventory cash flow hedge movements | ||||||||
| (Gains)/losses transferred to the cost of inventory | ( | ( | ( | |||||
| Total inventory cash flow hedge movements | ( | ( | ( | |||||
| Transactions with owners | ||||||||
Own shares purchased for cancellation | 30 | ( | ( | ( | ||||
Own shares cancelled | 30 | ( | ( | |||||
Own shares purchased for share schemes | 30 | ( | ( | ( | ||||
Share-based payments | 28 | ( | ||||||
Dividends | 9 | ( | ( | ( | ||||
Tax on items charged/(credited) to equity | 7 | |||||||
Total transactions with owners | ( | ( | ( | ( | ||||
At 22 February 2025 | ( |
Tesco PLC Annual Report and Financial Statements 2025
138.
| Other reserves | Non-controlling | |||||||
Share capital | Share premium | (Note 30) | Retained earnings | Total | interests | Total equity | ||
Notes | £m | £m | £m | £m | £m | £m | £m | |
At 25 February 2023 | ( | |||||||
| Profit/(loss) for the year | ||||||||
| Other comprehensive income/(loss) | ||||||||
| Retranslation of net assets of overseas subsidiaries, joint ventures and associates | ( | ( | ( | |||||
| Impact of net investment hedges | | | | |||||
| Change in fair value of financial assets at fair value through other comprehensive income | | |||||||
Remeasurements of defined benefit pension schemes | 29 | ( | ( | ( | ||||
| Gains/(losses) on cash flow hedges | ( | ( | ( | |||||
| Cash flow hedges reclassified and reported in the Group income statement | ( | ( | ( | |||||
| Finance income/(expenses) from insurance contracts issued | ( | ( | ( | |||||
| Finance income/(expenses) from reinsurance contracts held | | | | |||||
Tax relating to components of other comprehensive income | 7 | ( | | |||||
| Total other comprehensive income/(loss) | ( | ( | ( | ( | ||||
| Total comprehensive income/(loss) | ( | |||||||
| Transfer from hedging reserve to retained earnings | ( | |||||||
| Inventory cash flow hedge movements | ||||||||
| (Gains)/losses transferred to the cost of inventory | | | ||||||
| Total inventory cash flow hedge movements | ||||||||
| Transactions with owners | ||||||||
Own shares purchased for cancellation | 30 | ( | ( | ( | ||||
Own shares cancelled | 30 | ( | ( | |||||
Own shares purchased for share schemes | 30 | ( | ( | ( | ||||
Share-based payments | 28 | | ||||||
Dividends | 9 | ( | ( | ( | ||||
Tax on items charged/(credited) to equity | 7 | | ||||||
Total transactions with owners | ( | ( | ( | ( | ||||
At 24 February 2024 | ( |
The notes on pages 141 to 211 form part of these financial statements.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
139.
Financial statementsStrategic report
| 52 weeks | 52 weeks | ||
| ended | ended | ||
| 22 February | 24 February | ||
| 2025 | 2024 | ||
Notes | £m | £m | |
| Cash flows generated from/(used in) operating activities | |||
Operating profit/(loss) of continuing operations | |||
Operating profit/(loss) of discontinued operations | 8 | ( | |
Depreciation and amortisation | |||
| (Profit)/loss arising on sale of property, plant and equipment, investment | ( | ||
| property, intangible assets, assets classified as held for sale and early | |||
| termination of leases | |||
| (Profit)/loss arising on sale of joint ventures and associates | ( | ||
| (Profit)/loss arising on sale of subsidiaries and businesses | ( | ||
| Net impairment loss/(reversal) on property, plant and equipment, right of use | 15 | ( | |
| assets, intangible assets and investment property | |||
Impairment loss on other investments | |||
Net remeasurement loss of non-current assets held for sale | 8 | ||
Defined benefit pension scheme payments | 29 | ( | ( |
Share-based payments | 28 | ||
Fair value movements included in operating profit/(loss) | |||
(Increase)/decrease in inventories | ( | ( | |
(Increase)/decrease in trade and other receivables and reinsurance assets | ( | ( | |
Increase/(decrease) in trade and other payables and insurance liabilities | |||
Increase/(decrease) in provisions | ( | ( | |
Increase/(decrease) in deposits from central bank | 25 | ( | ( |
Increase/(decrease) in working capital of the Banking operations disposal group | ( | ||
(Increase)/decrease in working capital (a) | ( | ||
Cash generated from/(used in) operations | |||
Interest paid | ( | ( | |
Corporation tax paid | ( | ( | |
Net cash generated from/(used in) operating activities | |||
| Cash flows generated from/(used in) investing activities | |||
Proceeds from sale of property, plant and equipment, investment property, intangible assets and assets classified as held for sale | |||
Purchase of property, plant and equipment and investment property | ( | ( | |
Purchase of intangible assets | ( | ( | |
| Disposal of subsidiaries, net of cash disposed | |||
Disposal of Banking operations, net of cash disposed | 8 | ||
Acquisition of subsidiaries, net of cash acquired | ( | ( | |
| Proceeds from sale of joint ventures and associates | |||
Increase in loans to joint ventures and associates | ( | ( | |
Investments in joint ventures and associates | ( | ( | |
Dividends received from joint ventures and associates |
Group cash flow statement
(a) Comparative (increase)/decrease in working capital has been re-presented to present increase/(decrease) in deposits from
central bank and increase/(decrease) in working capital of the Banking operations disposal group separately following the sale of
Banking operations. These were previously included in the subsection relating to Tesco Bank. There is no impact on net cash
generated from operating, investing, or financing activities, and no impact on any APMs.
(b) Comparative net (investments in)/proceeds from sale of short-term investments has been re-presented as cash inflows from
maturing short-term investments – deposits, cash outflows on investing in short-term investments – deposits and (investments
in)/proceeds from other short-term investments. There is no impact on net cash generated from operating, investing, or financing
activities, and no impact on any APMs.
The notes on pages 141 to 211 form part of these financial statements.
| 52 weeks | 52 weeks | ||
| ended | ended | ||
| 22 February | 24 February | ||
| 2025 | 2024 | ||
Notes | £m | £m | |
Cash inflows from maturing short-term investments – deposits (b) | |||
Cash outflows on investing in short-term investments – deposits (b) | ( | ( | |
(Investments in)/proceeds from other short-term investments (b) | ( | ||
Proceeds from sale of other investments | |||
Purchase of other investments | ( | ( | |
Interest received | |||
Cash inflows from derivative financial instruments | |||
Cash outflows from derivative financial instruments | ( | ( | |
Net cash generated from/(used in) investing activities | ( | ( | |
| Cash flows generated from/(used in) financing activities | |||
Own shares purchased for cancellation | 30 | ( | ( |
Own shares purchased for share schemes, net of cash received from employees | 28 | ( | ( |
Repayment of capital element of obligations under leases | ( | ( | |
Cash outflows exceeding the incremental increase in assets in a property buyback | ( | ( | |
Increase in borrowings | |||
Repayment of borrowings | ( | ( | |
Cash inflows from derivative financial instruments | |||
Cash outflows from derivative financial instruments | ( | ( | |
Dividends paid to equity owners | 9 | ( | ( |
Net cash generated from/(used in) financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the year | |||
Effect of foreign exchange rate changes | ( | ||
| Cash and cash equivalents, including cash held in the Banking operations | |||
| disposal group, at the end of the year | |||
| Less: Cash held in the Banking operations disposal group | ( | ||
Cash and cash equivalents at the end of the year | 19 |
Tesco PLC Annual Report and Financial Statements 2025
140.
Notes to the Group financial statements
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
141.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 1 Accounting policies, judgements and estimates continued
Tesco PLC Annual Report and Financial Statements 2025
142.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
143.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 1 Accounting policies, judgements and estimates continued
Tesco PLC Annual Report and Financial Statements 2025
144.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
145.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 1 Accounting policies, judgements and estimates continued
Tesco PLC Annual Report and Financial Statements 2025
146.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
147.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 1 Accounting policies, judgements and estimates continued
| Continuing | Continuing | |||||
| operations | operations | |||||
| Central | at constant | Foreign | at actual | |||
52 weeks ended 22 February 2025 | UK & ROI | Europe | exchange | exchange | exchange | |
At constant exchange rates | Notes | £m | £m | £m | £m | £m |
Revenue | 3 | 65,667 | 4,580 | 70,247 | (331) | 69,916 |
Less: Fuel sales | (6,133) | (155) | (6,288) | 8 | (6,280) | |
Sales | 59,534 | 4,425 | 63,959 | (323) | 63,636 | |
Adjusted operating profit | 3,022 | 116 | 3,138 | (10) | 3,128 | |
Adjusting items | 5 | (287) | (137) | (424) | 7 | (417) |
Operating profit | 2,735 | (21) | 2,714 | (3) | 2,711 | |
Adjusted operating margin | 4.6% | 2.5% | 4.5% | 4.5% |
| Continuing | ||||
| operations | ||||
| Central | at actual | |||
52 weeks ended 22 February 2025 | UK & ROI | Europe | exchange | |
At actual exchange rates | Notes | £m | £m | £m |
Revenue | 3 | 65,583 | 4,333 | 69,916 |
Less: Fuel sales | (6,133) | (147) | (6,280) | |
Sales | 59,450 | 4,186 | 63,636 | |
Adjusted operating profit | 3,016 | 112 | 3,128 | |
Adjusting items | 5 | (287) | (130) | (417) |
Operating profit | 2,729 | (18) | 2,711 | |
Adjusted operating margin | 4.6% | 2.6% | 4.5% | |
Share of post-tax profit/(loss) of joint ventures and associates | 14 | (4) | ||
Finance income | 6 | 254 | ||
Finance costs | 6 | (746) | ||
Profit/(loss) before tax | 2,215 |
Tesco PLC Annual Report and Financial Statements 2025
148.
| Continuing | ||||
| operations | ||||
| UK & ROI | Central | at actual | ||
| 52 weeks ended 24 February 2024 | (restated*) | Europe | exchange | |
At actual exchange rates | Notes | £m | £m | £m |
Revenue | 3 | 63,691 | 4,496 | 68,187 |
Less: Fuel sales | (6,536) | (174) | (6,710) | |
Sales | 57,155 | 4,322 | 61,477 | |
Adjusted operating profit | 2,739 | 90 | 2,829 | |
Adjusting items | 5 | 16 | (24) | (8) |
Operating profit | 2,755 | 66 | 2,821 | |
Adjusted operating margin | 4.3% | 2.0% | 4.1% | |
Share of post-tax profit/(loss) of joint ventures and associates | 14 | 6 | ||
Finance income | 6 | 267 | ||
Finance costs | 6 | (805) | ||
Profit/(loss) before tax | 2,289 |
| Central | Total | ||
| UK & ROI | Europe | segments | |
52 weeks ended 22 February 2025 | £m | £m | £m |
| Capital expenditure (including acquisitions through business | |||
| combinations): | |||
Property, plant and equipment (a) | 1,264 | 98 | 1,362 |
Goodwill and other intangible assets (b) | 332 | 10 | 342 |
| Depreciation and amortisation: | |||
Property, plant and equipment | (850) | (87) | (937) |
Right of use assets | (501) | (49) | (550) |
Other intangible assets | (276) | (11) | (287) |
| UK & ROI | Central | Total | |
(restated (c) ) | Europe | segments | |
52 weeks ended 24 February 2024 | £m | £m | £m |
| Capital expenditure (including acquisitions through business | |||
| combinations): | |||
Property, plant and equipment (a) | 1,099 | 99 | 1,198 |
Goodwill and other intangible assets (b) | 258 | 12 | 270 |
| Depreciation and amortisation: | |||
Property, plant and equipment | (810) | (86) | (896) |
Right of use assets | (497) | (46) | (543) |
Other intangible assets | (243) | (12) | (255) |
Note 3 Revenue
52 weeks | 52 weeks | ||
2025 | 2024 | ||
Continuing operations | Notes | £m | £m |
UK | 53,619 | 51,718 | |
ROI | 2,974 | 2,891 | |
Booker | 8,990 | 9,082 | |
UK & ROI | 2 | 65,583 | 63,691 |
Hungary | 1,445 | 1,512 | |
Czech Republic | 1,471 | 1,554 | |
Slovakia | 1,417 | 1,430 | |
Central Europe | 2 | 4,333 | 4,496 |
Total Group | 2 | 69,916 | 68,187 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
149.
Financial statementsStrategic report
Notes to the Group financial statements continued
52 weeks | 52 weeks | |
2025 | 2024 | |
£m | £m | |
Fees payable to the Company’s auditor and its associates for the audit of the Company and Group financial statements | 4.1 | 4.3 |
The audit of the accounts of the Company’s subsidiaries | 10.8 | 10.4 |
Total audit services | 14.9 | 14.7 |
Audit-related assurance services | 0.9 | 0.9 |
Non-audit services | 0.8 | 0.3 |
Total non-audit services | 1.7 | 1.2 |
Total auditor’s remuneration | 16.6 | 15.9 |
52 weeks | 52 weeks | ||
2025 | 2024 | ||
Notes | £m | £m | |
Wages and salaries | 7,473 | 6,999 | |
Social security costs | 609 | 548 | |
Post-employment defined benefit charges | 29 | 17 | 15 |
Post-employment defined contribution charges | 29 | 454 | 415 |
Share-based payments expense | 28 | 136 | 128 |
Termination benefits | 37 | 56 | |
Total | 8,726 | 8,161 | |
Less: Discontinued operations | (110) | (157) | |
Total continuing operations | 8,616 | 8,004 |
| Average number of | Average number of full-time | |||
| employees | equivalents | |||
2025 | 2024 | 2025 | 2024 | |
(restated (a) ) | (restated (a) ) | |||
UK & ROI | 318,756 | 313,033 | 208,650 | 203,107 |
Central Europe | 22,352 | 22,359 | 20,490 | 20,529 |
Total continuing operations | 341,108 | 335,392 | 229,140 | 223,636 |
Discontinued operations (b) | 2,363 | 2,126 | 2,253 | 2,023 |
Tesco PLC Annual Report and Financial Statements 2025
150.
Note 5 Adjusting items
Group income statement
Refer to Note 1 for further details regarding the assessment of items as adjusting.
52 weeks ended 22 February 2025
Profit/(loss) for the year included the following adjusting items:
| Total adjusting | Adjusting items | ||||||
| items included | included within | ||||||
| Administrative | within operating | Finance income/ | discontinued | Total adjusting | |||
| Cost of sales | expenses | profit | (costs) | Taxation | operations | items | |
£m | £m | £m | £m | £m | £m | £m | |
Property transactions (a) | 1 | 1 | 2 | - | - | - | 2 |
Net impairment (loss)/reversal of non-current assets (b) | (274) | (12) | (286) | - | 57 | - | (229) |
Restructuring (c) | (38) | (5) | (43) | - | 11 | - | (32) |
Amortisation of acquired intangible assets (d) | - | (76) | (76) | - | 19 | - | (57) |
Banking operations disposal costs (e) | (8) | (6) | (14) | - | 4 | - | (10) |
Net pension finance income/(costs) (f) | - | - | - | (32) | 8 | - | (24) |
Fair value remeasurements of financial instruments (f) | - | - | - | 76 | (20) | - | 56 |
Total adjusting items from continuing operations | (319) | (98) | (417) | 44 | 79 | - | (294) |
Adjusting items relating to discontinued operations (g) | - | - | - | - | - | (65) | (65) |
Total adjusting items | (319) | (98) | (417) | 44 | 79 | (65) | (359) |
(a) Includes profit of £3m relating to the sale of four malls and the leaseback of the four associated stores in Central Europe. Refer to Note 8. In the prior year, predominantly related to the disposal of surplus properties generating a profit before tax of £63m.
(b) Refer to Note 15 for further details on net impairment (loss)/reversal of non-current assets.
(c) Provisions relating to operational restructuring changes announced as part of ‘Save to invest’, a multi-year programme which commenced in June 2022. The total cost of the programme recognised as adjusting since its start date is £(275)m (2024: £(232)m). Future cost
savings will not be reported within adjusting items.
(d) Amortisation of acquired intangibles relates to inorganic business combinations and does not reflect the Group’s ongoing trading performance.
(e) Costs incurred within the continuing Group in relation to the sale of Banking operations.
(f) Net pension finance costs and fair value remeasurements of financial instruments are included within adjusting items, as they can fluctuate significantly due to external market factors that are outside management’s control. Refer to Note 6 for details of finance income
and costs. Refer to Note 29 for details of pension schemes.
(g) Comprises fair value remeasurement of the disposal group of £(64)m (2024: £(732)m) (refer to Note 8), separation costs incurred within the disposal Group in relation to the sale of Banking operations of £(23)m (2024: £(11)m) and the associated tax of £22m (2024: £115m).
52 weeks ended 24 February 2024
Profit/(loss) for the year included the following adjusting items:
| Total adjusting | Adjusting items | ||||||
| items included | included within | ||||||
| Administrative | within operating | Finance income/ | discontinued | Total adjusting | |||
| Cost of sales | expenses | profit | (costs) | Taxation | operations | items | |
£m | £m | £m | £m | £m | £m | £m | |
Property transactions | 6 | 69 | 75 | - | (18) | - | 57 |
| Disposal of China associate in a prior year | - | 9 | 9 | - | 23 | - | 32 |
Net impairment (loss)/reversal of non-current assets | 35 | (7) | 28 | - | 38 | - | 66 |
Restructuring | (45) | (5) | (50) | - | 12 | - | (38) |
| Amortisation of acquired intangible assets | - | (74) | (74) | - | 18 | - | (56) |
| Disposal of subsidiary | - | 12 | 12 | - | - | - | 12 |
| Banking operations disposal costs | - | (8) | (8) | - | - | - | (8) |
| Net pension finance income/(costs) | - | - | - | (18) | 5 | - | (13) |
| Fair value remeasurements of financial instruments | - | - | - | 38 | (10) | - | 28 |
Total adjusting items from continuing operations | (4) | (4) | (8) | 20 | 68 | - | 80 |
| Adjusting items relating to discontinued operations | - | - | - | - | - | (628) | (628) |
Total adjusting items | (4) | (4) | (8) | 20 | 68 | (628) | (548) |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
151.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 5 Adjusting items continued
| Cash flows from | Cash flows from | Cash flows from | ||||
| operating activities | investing activities | financing activities | ||||
52 weeks | 52 weeks | 52 weeks | 52 weeks | 52 weeks | 52 weeks | |
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
£m | £m | £m | £m | £m | £m | |
Property transactions (a) | - | - | 130 | 53 | - | - |
Disposal of subsidiaries (b) | - | - | - | 15 | - | - |
Restructuring (c) | (55) | (100) | - | - | - | - |
| Disposal of China associate | - | - | - | 9 | - | - |
| Acquisition of property | - | - | - | 7 | - | - |
| joint venture | ||||||
| Special dividend | - | - | - | - | - | (1) |
| Disposal of Banking | (26) | - | 586 | - | - | - |
operations (d) | ||||||
Total adjusting items from continuing operations | (81) | (100) | 716 | 84 | - | (1) |
Adjusting items relating to discontinued operations (e) | - | (1) | (429) | - | - | - |
Total | (81) | (101) | 287 | 84 | - | (1) |
52 weeks | 52 weeks | ||
2025 | 2024 | ||
Continuing operations | Notes | £m | £m |
| Finance income | |||
Interest income on bank balances | 113 | 133 | |
Interest income on short-term investments | 119 | 117 | |
Interest income on loans to joint ventures and associates | 7 | 2 | |
Interest income on other investments | 12 | 12 | |
Interest income on net investment in leases | 1 | 2 | |
Finance income on reinsurance contracts held | 2 | 1 | |
Total finance income | 254 | 267 | |
| Finance costs | |||
GBP MTNs and loans | (204) | (190) | |
EUR MTNs | (82) | (113) | |
USD bonds | (16) | (15) | |
Interest expense on lease liabilities* | (370) | (373) | |
Finance expense on insurance contracts issued | (11) | (7) | |
Interest expense on bank overdrafts | (97) | (116) | |
Undrawn committed facility fee | (5) | (5) | |
Unwind of discount on provision | (5) | (6) | |
Total finance costs before adjusting items | (790) | (825) | |
Fair value remeasurements of financial instruments | 76 | 38 | |
Net pension finance income/(costs) | 29 | (32) | (18) |
Total finance costs | (746) | (805) | |
Net finance costs | (492) | (538) |
Tesco PLC Annual Report and Financial Statements 2025
152.
Note 7 Taxation
Recognised in the Group income statement
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
| Current tax (credit)/charge | ||
UK corporation tax | 394 | 351 |
Overseas tax | 88 | 71 |
Adjustments in respect of prior years | (18) | (29) |
464 | 393 | |
| Deferred tax (credit)/charge | ||
Origination and reversal of temporary differences | 137 | 133 |
Adjustments in respect of prior years | 6 | (4) |
Change in tax rate | 4 | 3 |
147 | 132 | |
Total income tax (credit)/charge | 611 | 525 |
Reconciliation of effective tax charge
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
Profit/(loss) before tax | 2,215 | 2,289 |
Tax credit/(charge) at the UK corporation tax rate of 25% (2024: 24.45%) | (554) | (560) |
| Effect of: | ||
Non-qualifying depreciation | (41) | (39) |
Expenses not deductible | (20) | (24) |
| Property items taxed on a different basis to accounting entries | - | 6 |
Net impairment (loss)/reversal of non-current assets | (8) | 46 |
Unrecognised tax losses | (3) | - |
Differences in overseas taxation rates | 11 | 15 |
Adjustments in respect of prior years | 12 | 33 |
Share of profits/(losses) of joint ventures and associates | (1) | 2 |
Change in tax rate | (4) | (3) |
Irrecoverable withholding tax | (3) | (1) |
Total income tax credit/(charge) | (611) | (525) |
Effective tax rate (statutory) | 27.6% | 22.9% |
Reconciliation of effective tax charge on adjusted profit before tax
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
Profit/(loss) before tax | 2,215 | 2,289 |
Exclude: Adjusting items | 373 | (12) |
Adjusted profit before tax | 2,588 | 2,277 |
Tax credit/(charge) at the UK corporation tax rate of 25% (2024: 24.45%) | (647) | (557) |
| Effect of: | ||
Non-qualifying depreciation | (41) | (39) |
Expenses not deductible | (21) | (23) |
Unrecognised tax losses | (3) | - |
Differences in overseas taxation rates | 20 | 19 |
Adjustments in respect of prior years | 12 | 10 |
Share of profits/(losses) of joint ventures and associates | (1) | 2 |
Change in tax rate | (6) | (4) |
Irrecoverable withholding tax | (3) | (1) |
Total income tax credit/(charge) before adjusting items | (690) | (593) |
Adjusted effective tax rate | 26.7% | 26.0% |
Tax on items credited directly to the Group statement of changes in equity
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
| Current tax credit/(charge) on: | ||
Share-based payments | 14 | - |
| Deferred tax credit/(charge) on: | ||
Share-based payments | 22 | 10 |
| Total tax on items credited/(charged) to the Group statement of changes | 36 | 10 |
| in equity |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
153.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 7 Taxation continued
Tax relating to components of the Group statement of comprehensive income/(loss)
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
| Current tax credit/(charge) on: | ||
| Pensions | - | 159 |
| Deferred tax credit/(charge) on: | ||
Pensions | (93) | (95) |
Fair value of movement on financial assets at fair value through other comprehensive income | (3) | (4) |
| Finance income/expenses on insurance contracts issued and reinsurance contracts held | - | 1 |
Fair value movements on cash flow hedges | 7 | (5) |
Total tax on items credited/(charged) to Group statement of comprehensive income/(loss) | (89) | 56 |
| Property-related | Acquired | Post-employment | Share-based | Short-term timing | Financial | |||
items (a) | intangibles | benefits (b) | payments | differences | Tax losses | instruments | Total | |
Continuing operations | £m | £m | £m | £m | £m | £m | £m | £m |
At 25 February 2023 | (434) | (95) | 255 | 39 | 63 | 146 | (9) | (35) |
(Charge)/credit to the Group income statement | (85) | 18 | 2 | - | 11 | (73) | (5) | (132) |
| (Charge)/credit to the Group statement of changes in equity | - | - | - | 10 | - | - | - | 10 |
| (Charge)/credit to the Group statement of comprehensive income/(loss) | - | - | (95) | - | - | - | (8) | (103) |
Discontinued operations | 27 | - | - | - | - | - | (3) | 24 |
Foreign exchange and other movements | (1) | - | - | - | - | - | - | (1) |
At 24 February 2024 | (493) | (77) | 162 | 49 | 74 | 73 | (25) | (237) |
(Charge)/credit to the Group income statement | (100) | 19 | 2 | (5) | 8 | (68) | (3) | (147) |
| (Charge)/credit to the Group statement of changes in equity | - | - | - | 22 | - | - | - | 22 |
| (Charge)/credit to the Group statement of comprehensive income/(loss) | - | - | (93) | - | - | - | 4 | (89) |
| Acquisition | - | (5) | - | - | - | - | - | (5) |
At 22 February 2025 | (593) | (63) | 71 | 66 | 82 | 5 | (24) | (456) |
Tesco PLC Annual Report and Financial Statements 2025
154.
2025 | 2024 | |
£m | £m | |
Deferred tax assets | 47 | 32 |
Deferred tax liabilities | (503) | (269) |
(456) | (237) |
2025 | 2024 | |
£m | £m | |
Deductible temporary differences | 40 | 38 |
Tax losses | 180 | 180 |
220 | 218 |
2025 | 2024 | |||
| Banking | ||||
| Other* | operations | Other* | Total | |
£m | £m | £m | £m | |
| Assets of the disposal group | - | 7,698 | - | 7,698 |
Non-current assets classified as held for sale | 50 | - | 85 | 85 |
| Total assets of the disposal group and non-current | 50 | 7,698 | 85 | 7,783 |
| assets classified as held for sale | ||||
| Liabilities of the disposal group | - | (7,122) | - | (7,122) |
Total net assets of the disposal group and non-current assets classified as held for sale | 50 | 576 | 85 | 661 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
155.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 8 Discontinued operations and assets classified as held for sale continued
2025 | 2024 | |
| Banking | Banking | |
| operations | operations | |
£m | £m | |
Revenue | 547 | 710 |
Operating costs | (448) | (637) |
Operating profit (a) | 99 | 73 |
Net finance costs | (1) | (6) |
Profit before tax | 98 | 67 |
Taxation | (24) | (19) |
Profit after tax | 74 | 48 |
Remeasurement of the disposal group to fair value less costs to sell (a)(b) | (64) | (732) |
Tax on remeasurement of the disposal group to fair value less costs to sell (c) | 16 | 112 |
Profit after tax of discontinued operations | 26 | (572) |
| 2025 | |
| £m | |
Gross proceeds | 614 |
Costs to sell* | (28) |
Proceeds less costs to sell | 586 |
| Net book value of assets disposed | |
Loans and advances to customers | (8,071) |
Derivative financial instruments | (34) |
Trade and other receivables | (87) |
Cash and cash equivalents | (429) |
Trade and other payables | 38 |
Borrowings | 550 |
Provisions | 17 |
Lease liabilities | 15 |
Deposits from customers | 6,926 |
Derivative financial instruments | 14 |
Excess loss on remeasurement of the disposal group | 475 |
Net book value of assets disposed | (586) |
| Profit/(loss) on disposal of Banking operations | - |
2025 | 2024 | |
| Banking | Banking | |
| operations | operations | |
£m | £m | |
Net cash flows from operating activities | 171 | 162 |
Net cash flows from investing activities | (436) | (22) |
Net cash flows from financing activities | (2) | 548 |
Net cash flows from discontinued operations | (267) | 688 |
Tesco PLC Annual Report and Financial Statements 2025
156.
Note 9 Dividends
2025 | 2024 | |||
Pence/share | £m | Pence/share | £m | |
Paid prior financial year final dividend (a) | 8.25 | 576 | 7.05 | 506 |
Paid interim dividend (b) | 4.25 | 289 | 3.85 | 271 |
| Amounts recognised through equity as distributions | 865 | 777 | ||
| to owners | ||||
| (Increase)/decrease in unclaimed dividends | - | (1) | - | - |
| Paid 2021 special dividend | - | - | 50.93 | 1 |
Dividends paid in the financial year | 864 | 778 | ||
Proposed final dividend at financial year end |
(a) Excludes £5m prior financial year final dividend waived (2024: £6m) and includes the write-back of unclaimed dividends and
forfeited shares of £nil (2024: £4m).
(b) Excludes £2m interim dividend waived (2024: £2m).
The proposed final dividend was approved by the Board of Directors on 9 April 2025 and is subject to
the approval of shareholders at the AGM. The proposed dividend has not been included as a liability as
at 22 February 2025. If approved by shareholders, it will be paid on 27 June 2025 to shareholders who
are on the register of members at close of business on 16 May 2025.
A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their
dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last
date for receipt of a new election is 6 June 2025.
For all dividends, including the 2021 special dividend paid following the disposal of the Thai and
Malaysia businesses, the Group has a share forfeiture programme following the completion of a
tracing and notification exercise to any shareholders who have not had contact with Tesco PLC over
the past 12 years, in accordance with the provisions set out in the Company’s Articles of Association.
£nil (2024: £2m) of unclaimed dividends in relation to these shares have been adjusted for in retained
earnings. Refer to Note 30 for further details.
Note 10 Earnings/(losses) per share and diluted earnings/(losses) per share
For the 52 weeks ended 22 February 2025 there were 83 million (2024: 79 million) potentially dilutive
share options and awards. As the Group has recognised a profit for the year from its continuing
operations, dilutive effects have been considered in calculating diluted earnings per share.
52 weeks ended 22 February 2025 | 52 weeks ended 24 February 2024 | |||||
| Dilutive share | Dilutive share | |||||
| options and | options and | |||||
| Basic | awards | Diluted | Basic | awards | Diluted | |
| Profit/(loss) (£m) | ||||||
Continuing operations* | 1,600 | - | 1,600 | 1,760 | - | 1,760 |
Discontinued operations | 26 | - | 26 | (572) | - | (572) |
Total | 1,626 | - | 1,626 | 1,188 | - | 1,188 |
| Weighted average number | 6,835 | 83 | 6,918 | 7,097 | 79 | 7,176 |
| of shares (millions) | ||||||
| Earnings/(losses) per share | ||||||
| (pence) | ||||||
Continuing operations | 23.41 | (0.28) | 23.13 | 24.80 | (0.27) | 24.53 |
Discontinued operations | 0.38 | - | 0.38 | (8.06) | 0.09 | (7.97) |
Total | 23.79 | (0.28) | 23.51 | 16.74 | (0.18) | 16.56 |
* Excludes profits/(losses) attributable to non-controlling interests of £4m (2024: £4m).
APM: Adjusted diluted earnings/(losses) per share
52 weeks | 52 weeks | ||
Continuing operations | Notes | 2025 | 2024 |
Profit before tax (£m) | 2,215 | 2,289 | |
Exclude: Adjusting items (£m) | 5 | 373 | (12) |
Adjusted profit before tax (£m) | 2,588 | 2,277 | |
Adjusted profit before tax attributable to the owners of the parent (£m)* | 2,584 | 2,273 | |
Taxation on adjusted profit before tax attributable to the owners of the parent (£m) | 7 | (690) | (593) |
Adjusted profit after tax attributable to the owners of the parent (£m) | 1,894 | 1,680 | |
Basic weighted average number of shares (millions) | 6,835 | 7,097 | |
Adjusted basic earnings per share (pence) | 27.71 | 23.67 | |
Diluted weighted average number of shares (millions) | 6,918 | 7,176 | |
Adjusted diluted earnings per share APM (pence) | 27.38 | 23.41 |
Refer to previous table for footnote.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
157.
Financial statementsStrategic report
Notes to the Group financial statements continued
2025 | 2024 | |||||||||
| Other | Other | |||||||||
| Customer | intangible | Customer | intangible | |||||||
Goodwill | Software (a) | relationships | assets (b) | Total | Goodwill | Software (a) | relationships | assets (b) | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| Cost | ||||||||||
Opening balance | 4,515 | 1,837 | 718 | 383 | 7,453 | 4,785 | 2,034 | 718 | 384 | 7,921 |
Foreign currency translation | (4) | (5) | - | - | (9) | (8) | (19) | - | (1) | (28) |
| Additions | - | 285 | - | 1 | 286 | - | 275 | - | - | 275 |
Acquired through business combinations | 38 | - | 18 | - | 56 | 17 | - | - | - | 17 |
| Reclassification | - | - | - | - | - | - | (10) | - | - | (10) |
| Transfer to disposal group classified as held for sale | - | - | - | - | - | (211) | (266) | - | - | (477) |
| Disposals | - | (398) | - | (11) | (409) | (68) | (177) | - | - | (245) |
Closing balance | 4,549 | 1,719 | 736 | 373 | 7,377 | 4,515 | 1,837 | 718 | 383 | 7,453 |
| Accumulated amortisation and impairment losses | ||||||||||
Opening balance | 387 | 1,238 | 450 | 312 | 2,387 | 458 | 1,410 | 376 | 302 | 2,546 |
Foreign currency translation | (2) | (3) | - | - | (5) | (3) | (17) | - | - | (20) |
Amortisation charge for the year (c) | - | 210 | 76 | 1 | 287 | - | 205 | 74 | 1 | 280 |
Impairment losses (d) | - | 35 | - | - | 35 | - | 24 | - | 2 | 26 |
Reversal of impairment losses (d) | - | (8) | - | - | (8) | - | (13) | - | - | (13) |
| Reclassification | - | - | - | - | - | - | (16) | - | 7 | (9) |
| Transfer to disposal group classified as held for sale | - | - | - | - | - | - | (183) | - | - | (183) |
| Disposals | - | (395) | - | (11) | (406) | (68) | (172) | - | - | (240) |
Closing balance | 385 | 1,077 | 526 | 302 | 2,290 | 387 | 1,238 | 450 | 312 | 2,387 |
Net carrying value | 4,164 | 642 | 210 | 71 | 5,087 | 4,128 | 599 | 268 | 71 | 5,066 |
Tesco PLC Annual Report and Financial Statements 2025
158.
Note 12 Property, plant and equipment
2025 | 2024 | |||||
| Land and | Land and | |||||
buildings (a) | Other (b) | Total | buildings (a) | Other (b) | Total | |
£m | £m | £m | £m | £m | £m | |
| Cost | ||||||
Opening balance | 22,966 | 6,130 | 29,096 | 22,650 | 5,844 | 28,494 |
Foreign currency translation | (129) | (40) | (169) | (200) | (69) | (269) |
Additions (c)(d) | 504 | 857 | 1,361 | 445 | 753 | 1,198 |
| Acquired through business combinations | - | 1 | 1 | - | - | - |
Reclassification | (2) | 2 | - | 10 | 32 | 42 |
Transfers (to)/from assets classified as held for sale | (55) | - | (55) | 161 | 8 | 169 |
| Transfer to disposal group classified as held for sale | - | - | - | (10) | (10) | (20) |
Disposals | (190) | (627) | (817) | (90) | (428) | (518) |
Closing balance | 23,094 | 6,323 | 29,417 | 22,966 | 6,130 | 29,096 |
| Accumulated depreciation and impairment losses | ||||||
Opening balance | 7,969 | 3,906 | 11,875 | 7,780 | 3,852 | 11,632 |
Foreign currency translation | (52) | (26) | (78) | (76) | (48) | (124) |
Depreciation charge for the year | 464 | 473 | 937 | 449 | 450 | 899 |
Impairment losses (e) | 292 | 119 | 411 | 236 | 95 | 331 |
Reversal of impairment losses (e) | (197) | (37) | (234) | (395) | (61) | (456) |
| Reclassification | - | - | - | (1) | 39 | 38 |
Transfers (to)/from assets classified as held for sale | (21) | - | (21) | 58 | 3 | 61 |
| Transfer to disposal group classified as held for sale | - | - | - | (9) | (7) | (16) |
Disposals | (120) | (615) | (735) | (73) | (417) | (490) |
Closing balance | 8,335 | 3,820 | 12,155 | 7,969 | 3,906 | 11,875 |
Net carrying value (f) | 14,759 | 2,503 | 17,262 | 14,997 | 2,224 | 17,221 |
Construction in progress included above (g) | 155 | 361 | 516 | 109 | 280 | 389 |
(a) The estimated fair value of land and buildings is £15.0bn (2024: £15.0bn). Refer to Note 15 for details of the methodology applied to determine fair value.
(b) Other assets consist of fixtures and fittings with a net carrying value of £1,874m (2024: £1,679m), office equipment with a net carrying value of £269m (2024: £234m) and motor vehicles with a net carrying value of £360m (2024: £311m). Depreciation charge for the year is
£(306)m (2024: £(291)m), £(75)m (2024: £(69)m) and £(92)m (2024: £(90)m), respectively.
(c) Prior year includes £65m of land and buildings related to obtaining control of The Tesco Coral Limited Partnership, which was not impaired on acquisition.
(d) Includes £199m (2024: £107m) relating to store buybacks, direct store purchases and refits associated with both direct store purchases and business combinations.
(e) Refer to Note 15.
(f) Includes £3,128m (2024: £3,129m) of assets pledged as security for secured bonds (refer to Note 22) and £820m (2024: £829m) of property held as security in favour of the Tesco PLC Pension Scheme (refer to Note 29).
(g) Construction in progress does not include land.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
159.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 13 Leases
Group as lessee
Lease liabilities represent rentals payable by the Group for certain retail, distribution and office properties and other assets such as motor vehicles. The leases have varying terms, purchase options, escalation
clauses and renewal rights. Purchase options and renewal rights, where they occur, are at market value. Escalation clauses are in line with market practices and include inflation-linked, fixed rates, resets to
market rents and hybrids of these.
Right of use assets
2025 | 2024 | |||||
Land and buildings | Other | Total | Land and buildings | Other | Total | |
£m | £m | £m | £m | £m | £m | |
| Net carrying value | ||||||
Opening balance | 5,365 | 113 | 5,478 | 5,387 | 113 | 5,500 |
Additions (including sale and leaseback transactions) | 476 | 66 | 542 | 305 | 39 | 344 |
Acquired through business combinations | 5 | - | 5 | - | - | - |
Depreciation charge for the year | (512) | (38) | (550) | (508) | (36) | (544) |
Impairment losses (a) | (223) | (2) | (225) | (213) | (1) | (214) |
Reversal of impairment losses (a) | 130 | - | 130 | 131 | - | 131 |
| Derecognition on acquisition of property joint venture | - | - | - | (17) | - | (17) |
| Transfer to disposal group classified as held for sale | - | - | - | (9) | - | (9) |
Other movements (b) | 190 | (1) | 189 | 289 | (2) | 287 |
Closing balance | 5,431 | 138 | 5,569 | 5,365 | 113 | 5,478 |
(a) Refer to Note 15.
(b) Other movements include lease terminations, modifications and reassessments, foreign exchange, reclassifications between asset classes and entering into finance subleases.
Lease liabilities
The following tables show the discounted lease liabilities included in the Group balance sheet and a
maturity analysis of the contractual undiscounted lease payments. A reconciliation of the Group’s
opening to closing lease liabilities balance is presented in Note 32.
2025 | 2024 | |
£m | £m | |
Current | 618 | 584 |
Non-current | 7,098 | 7,038 |
Total lease liabilities | 7,716 | 7,622 |
2025 | 2024 | |
Maturity analysis – contractual undiscounted lease payments | £m | £m |
Within one year | 995 | 944 |
Greater than one year but less than two years | 973 | 928 |
Greater than two years but less than three years | 940 | 903 |
Greater than three years but less than four years | 896 | 872 |
Greater than four years but less than five years | 855 | 831 |
Greater than five years but less than 10 years | 3,489 | 3,444 |
Greater than 10 years but less than 15 years | 1,951 | 1,954 |
After 15 years | 777 | 881 |
Total undiscounted lease payments | 10,876 | 10,757 |
Amounts recognised in the Group income statement
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
Interest expense on lease liabilities* | 377 | 373 |
| Variable payment expenses not included in lease liabilities | - | 1 |
Expenses relating to short-term leases | 24 | 26 |
| Expenses relating to leases of low value assets (excluding amounts | 1 | 1 |
| already included in short-term leases above) |
* Interest expense on lease liabilities is presented gross of £7m hedging impact (2024: £nil).
Sale and leaseback related to assets previously classified as held for sale
During the year, the Group sold four mall properties previously classified as held for sale in Central
Europe, leasing back four stores within those sites. Refer to Note 8 for details of the net proceeds and
profit from the transaction. The stores are being leased back over 30-year lease terms at market
rentals with options to extend. These store leases have resulted in lease liability additions of £23m.
The sale and leaseback transaction allows the Group to relinquish control over the malls while
continuing to operate the stores within those sites.
Tesco PLC Annual Report and Financial Statements 2025
160.
Operating lease payments receivable maturity analysis
2025 | 2024 | |
£m | £m | |
Within one year | 61 | 63 |
Greater than one year but less than two years | 35 | 33 |
Greater than two years but less than three years | 28 | 30 |
Greater than three years but less than four years | 27 | 23 |
Greater than four years but less than five years | 18 | 23 |
Greater than five years but less than 10 years | 30 | 33 |
Greater than 10 years but less than 15 years | 9 | 11 |
After 15 years | 29 | 28 |
Total undiscounted operating lease payments receivable | 237 | 244 |
52 weeks | 52 weeks | |
2025 | 2024 | |
£m | £m | |
Total cash outflow for leases | 980 | 1,000 |
Future possible cash outflows not included in the lease liability
Some leases contain break clauses or extension options to provide operational flexibility. Potential
future undiscounted lease payments not included in the reasonably certain lease term, and hence
not included in lease liabilities, total £13.4bn.
Future increases or decreases in rentals linked to an index or rate (not arising on a sale and leaseback
transaction) are not included in the lease liability until the change in cash flows takes effect.
Approximately 76% (2024: 76%) of the Group’s lease liabilities are subject to inflation-linked rentals, of
which 89% (2024: 85%) have inflation caps, with a weighted average cap of 4.3% (2024: 4.3%). A further
17% (2024: 17%) are subject to rent reviews. Rental changes linked to inflation or rent reviews typically
occur on an annual or five-yearly basis. Of the inflation-linked leases with caps, 33% (2024: 31%) of the
lease liability value was hedged through index-linked swaps. Refer to Note 27.
The Group is committed to payments totalling £125m (2024: £181m) in relation to leases that have been
signed but have not yet commenced.
Group as lessor
The Group leases out owned properties and sublets leased properties under operating and finance
leases. Such properties include malls, mall units, stores, units within stores, distribution centres and
residential properties.
Amounts recognised in the Group income statement
52 weeks | 52 weeks | |
2025 | 2024 | |
Continuing operations | £m | £m |
Finance lease – interest income (a) | 1 | 2 |
Operating lease – rental income (b) | 100 | 96 |
(a) Comprises £1m (2024: £2m) of sublease interest income.
(b) Includes £28m (2024: £26m) of sublease rental income.
Finance lease payments receivable
The finance lease receivable (net investment in the lease) included in the Group balance sheet is
£23m (2024: £27m).
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
161.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 14 Group entities continued
| Nature of | Business | Share of issued share capital, loan | Principal area | ||
| relationship | activity | capital and debt securities | Country of incorporation | of operation | |
| Included in ‘UK property joint ventures’: | |||||
The Tesco Blue Limited Partnership | Joint venture | Property investment | 50% | England | United Kingdom |
The Tesco Passaic Limited Partnership | Joint venture | Property investment | 50% | England | United Kingdom |
The Tesco Navona Limited Partnership | Joint venture | Property investment | 50% | England | United Kingdom |
The Arena Unit Trust | Joint venture | Property investment | 50% | Jersey | United Kingdom |
| Included in ‘Other joint ventures and associates’: | |||||
Tesco Mobile Limited | Joint venture | Telecommunications | 50% | England | United Kingdom |
Booker India Limited | Joint venture | Retail | 49% | India | India |
Trent Hypermarket Private Limited | Joint venture | Retail | 50% | India | India |
W23 Global GP LLP | Associate | Investment management | 20% | England | International |
Tesco PLC Annual Report and Financial Statements 2025
162.
| UK property joint ventures | ||
2025 | 2024 | |
£m | £m | |
| Summarised balance sheet | ||
Non-current assets (a) | 1,794 | 1,829 |
Current assets (excluding cash and cash equivalents) | 8 | 8 |
Cash and cash equivalents | 12 | 12 |
Current liabilities (b) | (68) | (65) |
Non-current liabilities (b) | (2,247) | (2,265) |
Net liabilities | (501) | (481) |
Group’s share in ownership | 50% | 50% |
Group’s share of net liabilities | (251) | (241) |
Deferred property profits offset against carrying amounts | (57) | (56) |
Cumulative unrecognised losses (c) | 134 | 138 |
Cumulative unrecognised hedge reserves (c) | 174 | 159 |
| Carrying amount | - | - |
| Summarised income statement | ||
Revenue | 184 | 188 |
Profit and total comprehensive income (d) | - | - |
Dividend received by the Group (e) | 1 | 7 |
Joint ventures | Associates | |||
2025 | 2024 | 2025 | 2024 | |
£m | £m | £m | £m | |
Aggregate carrying amount of individually immaterial joint ventures and associates | 105 | 102 | 5 | - |
Group’s share of losses for the year | (5) | (1) | - | - |
Tesco PLC Annual Report and Financial Statements 2025
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163.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 15 Impairment of non-current assets
Impairment losses and reversals
Goodwill
There was no impairment of goodwill balances in the current year (2024: £211m related to the sale of the Group’s Banking operations).
Other non-current assets
The tables below summarise the Group’s pre-tax impairment losses and reversals on other non-current assets, aggregated by segment due to the large number of individually immaterial cash-generating units.
This includes any (losses)/reversals recognised immediately prior to classifying an asset or disposal group as held for sale but excludes any changes in fair value less costs to sell post classification as held for
sale. There were no impairment losses or reversals in the year (2024: £nil) with respect to investments in joint ventures and associates. Impairments are typically treated as adjusting where there is significant
volatility arising from inputs outside the control of management.
UK & ROI | Central Europe | Total | Net | ||||
| Impairment | Impairment | Impairment | Impairment | Impairment | Impairment | Impairment | |
| loss | reversal | loss | reversal | loss | reversal | (loss)/reversal | |
52 weeks ended 22 February 2025 | £m | £m | £m | £m | £m | £m | £m |
| Group balance sheet | |||||||
Other intangible assets | (35) | 8 | - | - | (35) | 8 | (27) |
Property, plant and equipment | (336) | 233 | (75) | 1 | (411) | 234 | (177) |
Right of use assets | (165) | 125 | (60) | 5 | (225) | 130 | (95) |
| Investment property | - | 1 | - | - | - | 1 | 1 |
Total impairment (loss)/reversal of other non-current assets | (536) | 367 | (135) | 6 | (671) | 373 | (298) |
| Group income statement | |||||||
Cost of sales (a) | (517) | 360 | (134) | 5 | (651) | 365 | (286) |
Administrative expenses (b) | (19) | 7 | (1) | 1 | (20) | 8 | (12) |
Total impairment (loss)/reversal from continuing operations | (536) | 367 | (135) | 6 | (671) | 373 | (298) |
(a) Of which £(274)m is adjusting (2024: £35m).
(b) Of which £(12)m is adjusting (2024: £(7)m).
UK & ROI | Central Europe | Total | Net | ||||
| Impairment | Impairment | Impairment | Impairment | Impairment | Impairment | Impairment | |
| loss | reversal | loss | reversal | loss | reversal | (loss)/reversal | |
52 weeks ended 24 February 2024 | £m | £m | £m | £m | £m | £m | £m |
| Group balance sheet | |||||||
Other intangible assets | (26) | 13 | - | - | (26) | 13 | (13) |
Property, plant and equipment | (306) | 449 | (25) | 7 | (331) | 456 | 125 |
Right of use assets | (187) | 122 | (27) | 9 | (214) | 131 | (83) |
| Investment property | - | - | (1) | - | (1) | - | (1) |
Total impairment (loss)/reversal of other non-current assets | (519) | 584 | (53) | 16 | (572) | 600 | 28 |
| Group income statement | |||||||
Cost of sales (a) | (518) | 584 | (46) | 15 | (564) | 599 | 35 |
Administrative expenses (b) | (1) | - | (7) | 1 | (8) | 1 | (7) |
Total impairment (loss)/reversal from continuing operations | (519) | 584 | (53) | 16 | (572) | 600 | 28 |
Refer to previous table for footnotes.
The net impairment loss is primarily due to increases in discount rates, as a result of the continued upward trend in government bond rates, as well as future cost pressures. The gross non-current asset
impairment losses and reversals largely reflect normal fluctuations expected from store-level performance, as well as any specific store closures.
Tesco PLC Annual Report and Financial Statements 2025
164.
Net carrying value of non-current assets
The net carrying values of other non-current assets and the recoverable amounts of impaired other
non-current assets, for which an impairment loss has been recognised or reversed, have been
aggregated by segment due to the large number of individually immaterial cash-generating units.
UK & ROI | Central Europe | Total | |
At 22 February 2025 | £m | £m | £m |
| Net carrying value | |||
Other intangible assets | 892 | 31 | 923 |
Property, plant and equipment | 15,951 | 1,311 | 17,262 |
Right of use assets | 5,094 | 475 | 5,569 |
Investment property | 15 | 9 | 24 |
Other non-current assets | 21,952 | 1,826 | 23,778 |
Goodwill (a) | 4,164 | - | 4,164 |
Investments in joint ventures and associates (b) | 110 | - | 110 |
Net carrying value of non-current assets | 26,226 | 1,826 | 28,052 |
| Recoverable amount of impaired other non-current | |||
assets for which an impairment loss has been recognised or reversed, supported by: | |||
Value in use | 2,703 | 145 | 2,848 |
Fair value less costs of disposal (c) | 1,570 | 357 | 1,927 |
4,273 | 502 | 4,775 |
(a) Goodwill of £4,164m (2024: £4,128m) consists of UK £3,702m (2024: £3,664m), dunnhumby £141m (2024: £142m), money services
£171m (2024: £171m), insurance £118m (2024: £118m) and ROI £32m (2024: £33m).
(b) The carrying value of the Group’s investments includes Trent Hypermarket Private Limited £60m (2024: £63m).
(c) Due to the individual nature of each property, fair values are classified as Level 3 within the fair value hierarchy. Certain store
cash-generating units are supported by fair value less costs of disposal where their current use is for trading. This use is
consistent with the Group’s property strategy and expected future investment in these store cash-generating units.
| UK & ROI | Total continuing | ||
(restated (d) ) | Central Europe | operations | |
At 24 February 2024 | £m | £m | £m |
| Net carrying value | |||
Other intangible assets | 905 | 33 | 938 |
Property, plant and equipment | 15,755 | 1,466 | 17,221 |
Right of use assets | 5,039 | 439 | 5,478 |
Investment property | 15 | 9 | 24 |
Other non-current assets | 21,714 | 1,947 | 23,661 |
Goodwill (a) | 4,128 | - | 4,128 |
Investments in joint ventures and associates (b) | 102 | - | 102 |
Net carrying value of non-current assets | 25,944 | 1,947 | 27,891 |
| Recoverable amount of impaired other non-current | |||
assets for which an impairment loss has been recognised or reversed, supported by: | |||
Value in use | 3,284 | 143 | 3,427 |
Fair value less costs of disposal (c) | 1,531 | 216 | 1,747 |
4,815 | 359 | 5,174 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
165.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 15 Impairment of non-current assets continued
Value in use
Retail
Estimates for value in use calculations include discount rates, long-term growth rates, expected
changes to future cash flows, including volumes and prices, and the probabilities assigned to cash flow
scenarios. Estimates are based on past experience and expectations of future changes in the market,
including the prevailing economic climate and global economy, competitor activity, market dynamics,
changing customer behaviours, structural challenges facing retail and the resilience afforded by the
Group’s operational scale.
Cash flow projections are based on the Group’s three-year internal forecasts, the results of which are
reviewed by the Board. The forecasts include best estimate assumptions on inflation, which differ by
both country and revenue and cost categories. These cash flows are then extrapolated to five years
based on management’s expectations, and beyond five years based on estimated long-term average
growth rates. Long-term growth rates are based on inflation forecasts by recognised bodies.
Group-level cash flow forecasts are allocated to store-level cash-generating units based on their
relative current year actual sales performance, after adjusting for one-off cash flows affecting
particular stores.
The Group applies an expected cash flow approach by probability-weighting different cash flow
scenarios. The greatest probability weighting is applied to the cash flows derived from the three-year
internal forecasts. One downside scenario takes account of the risks presented by ongoing geopolitical
events triggering global supply chain challenges and resurgent inflation, leading to weak consumer
confidence and further intensifying competition in the sector. A second downside scenario takes
account of climate change impacts. These are consistent with the viability statement scenarios (see
the Longer term viability statement in the Strategic report). The viability statement scenarios reflect
‘severe but plausible’ risks, to which management applies probability weightings in order to reflect
management’s best estimate of future economic conditions. There is also an upside scenario which
assumes a moderate outperformance of the three-year internal forecasts.
In addition to the climate change scenario included within the probability-weighted cash flows,
the Group incorporates other climate change related assumptions into the impairment modelling,
including, but not limited to, investments in technology to aid the Group’s net zero commitments,
the costs associated with replacing end-of-life assets with more environmentally-friendly alternatives,
and assumptions over the cash flow profile of the Group’s fuel business.
Pre-tax nominal discount rates that reflect the current market assessment of the time value of money
are derived from the Group’s post-tax weighted average cost of capital, adjusted for specific risks
relating to each geographical region or cash-generating unit for which the cash flows have not been
adjusted. The Group engages independent valuation specialists to determine appropriate discount
rates. Risk-free rates are based on government bond rates, adjusted for each geographical region,
and equity risk premia and equity betas are based on data from recognised bodies. The capital asset
pricing model is used to calculate the cost of equity.
Insurance and Money Services
Value in use is calculated by discounting post-tax free cash flows. Cash flow projections are based on
the three-year internal forecasts approved by the Board. The forecasts are extrapolated to five years
based on management’s expectations and beyond five years based on estimated long-term average
growth rates. The long-term growth rates are based on inflation and GDP growth forecasts by
recognised bodies. The post-tax discount rate is the cost of equity, which is calculated using the
capital asset pricing model. The Group engages independent valuation specialists to determine
appropriate discount rates. Risk-free rates are based on government bond rates and equity risk
premia and equity betas are based on data from recognised bodies.
Fair value less costs of disposal
Fair values of owned properties are determined with regard to the market rent for the stores or for
alternative uses with investment yields appropriate to reflect the physical characteristics of the
property, location, performance, infrastructure, energy efficiency rating, redevelopment potential
and other factors. Fair values of leased properties are determined with regard to the discounted
market rent for the property over the remaining period of the lease, reflecting the condition and
location of the property and the local rental market, adjusted for a suitable void period. Fair values of
the Group’s properties were determined with the assistance of independent professional valuers where
appropriate. Costs of disposal are estimated based on past experience in each geographical region.
Investments in joint ventures and associates
The recoverable values of investments in joint ventures and associates are estimated taking into
account forecast cash flows, equity valuations of comparable entities and/or recent transactions
for comparable businesses.
Tesco PLC Annual Report and Financial Statements 2025
166.
Key assumptions and sensitivity
Key assumptions
For value in use calculations, the key assumptions to which the recoverable amounts are most sensitive are discount rates, long-term growth rates and future cash flows (incorporating sales volumes, prices
and costs). For fair value less costs of disposal calculations, the key assumption is property fair values.
The discount rates and long-term growth rates relating to the goodwill carrying values that are
significant to the Group’s total goodwill are:
| UK | ||
2025 | 2024 | |
% | % | |
Pre-tax discount rates | 9.1 | 8.6 |
Post-tax discount rates | 6.8 | 6.4 |
Long-term growth rates | 2.0 | 2.0 |
The discount rates and long-term growth rates for the Group’s portfolio of store cash-generating
units, aggregated by segment due to the large number of individually immaterial store cash-generating
units, are:
UK & ROI | Central Europe | |||
2025 | 2024 | 2025 | 2024 | |
% | % | % | % | |
Pre-tax discount rates | 8.2 - 9.1 | 7.8 - 8.5 | 8.9 - 12.9 | 8.2 - 12.6 |
Post-tax discount rates | 6.8 - 7.2 | 6.4 - 6.8 | 7.0 - 8.5 | 6.5 - 8.3 |
Long-term growth rates | 2.0 | 2.0 | 2.0 - 3.0 | 1.8 - 3.1 |
Sensitivity
The Group has carried out sensitivity analyses on the reasonably possible changes in key assumptions in the impairment tests for (a) the goodwill carrying values that are significant compared to the Group’s
total goodwill and (b) for its portfolio of store cash-generating units.
(a) Neither a reasonably possible increase of 1.0%pt in discount rates, a 5.0% decrease in future cash flows nor a 0.5%pt decrease in long-term growth rates would indicate impairment in the goodwill carrying
values that are significant compared to the Group’s total goodwill.
(b) While there is not a significant risk of an adjustment to the carrying amount of any one store cash-generating unit that would be material to the Group as a whole in the next financial year, the table below
summarises the reasonably possible changes in key assumptions which most impact the impairment of the Group’s entire portfolio of store cash-generating units, presented in aggregate due to the large
number of individually immaterial store cash-generating units. For the probability-weighted cash flow scenarios, the impairment is most sensitive to the downside scenario relating to geopolitical and global
supply issues (weighting 6.5%). Impairment is not highly sensitive to the climate or upside scenarios. The reasonably possible change below applies the corresponding change to the base scenario.
| 2025 | |||
Key assumption | Reasonably possible change Impact on impairment | £m | |
Post-tax discount rates* | Increase of 1.0%pt for each geographic region | Increase | (342) |
Decrease of 1.0%pt for each geographic region | Decrease | 316 | |
Future cash flows | Increase of 5.0% for each geographic region | Decrease | 138 |
Decrease of 5.0% for each geographic region | Increase | (142) | |
Long-term growth rates | Increase of 0.5%pt for each geographic region | Decrease | 94 |
Decrease of 0.5%pt for each geographic region | Increase | (92) | |
Property fair values | Increase of 10.0% for each geographic region | Decrease | 190 |
Decrease of 10.0% for each geographic region | Increase | (200) | |
Geopolitical and global supply downside scenario weighting | Increase of 5.0%pt for each geographic region | Increase | (127) |
Decrease of 2.5%pt for each geographic region | Decrease | 63 |
* Sensitivities are applied to post-tax discount rates used to derive the pre-tax discount rates.
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Governance Additional information
167.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 16 Other investments
2025 | 2024 | |||||||
Fair value | Fair value | |||||||
Fair value through other | Fair value through other | |||||||
| At amortised | through | comprehensive | At amortised | through | comprehensive | |||
cost (a) | profit/loss | income | Total | cost (a) | profit/loss | income | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Investments in debt instruments (b)(c) | 196 | - | 855 | 1,051 | 1,033 | - | 682 | 1,715 |
| Investments in equity instruments | - | - | 19 | 19 | - | - | 19 | 19 |
Property fund and other investments (d) | - | 15 | - | 15 | - | 18 | - | 18 |
Other investments | 196 | 15 | 874 | 1,085 | 1,033 | 18 | 701 | 1,752 |
| Of which: | ||||||||
Current | 7 | 15 | 129 | 151 | 81 | 17 | 108 | 206 |
Non-current | 189 | - | 745 | 934 | 952 | 1 | 593 | 1,546 |
196 | 15 | 874 | 1,085 | 1,033 | 18 | 701 | 1,752 | |
(a) The ECLs in the year are immaterial (2024: immaterial).
(b) Investments in debt instruments at amortised cost includes secured bond assets of £192m (2024: £196m) related to the purchase of debt held in UK property joint ventures. Included within Investments in debt instruments at amortised cost at 24 February 2024 was
£832m which the Group sold prior to the sale of Banking operations.
(c) Investments in debt instruments held at fair value through other comprehensive income primarily relate to £679m (2024: £555m) of fixed-interest corporate bonds and £168m (2024: £118m) of government-backed investment securities held in the Insurance business.
(d) Includes £15m (2024: £17m) of property fund investments in the Insurance business.
Note 17 Inventories
2025 | 2024 | |
£m | £m | |
Goods held for resale | 2,765 | 2,632 |
Development properties | 3 | 3 |
2,768 | 2,635 |
Goods held for resale are net of commercial income. Refer to Note 21.
Cost of inventories from continuing operations recognised as an expense for the 52 weeks ended 22 February 2025 was £50,920m (52 weeks ended 24 February 2024: £50,191m). In addition, inventory losses
and provisions from continuing operations recognised as an expense for the 52 weeks ended 22 February 2025 were £1,440m (52 weeks ended 24 February 2024: £1,355m).
Tesco PLC Annual Report and Financial Statements 2025
168.
2025 | 2024 | |
£m | £m | |
Trade receivables | 652 | 576 |
Prepayments | 136 | 129 |
Accrued income (a) | 243 | 230 |
Other receivables (b) | 183 | 274 |
Amounts owed by joint ventures and associates (c) | 154 | 176 |
Total trade and other receivables | 1,368 | 1,385 |
| Of which: | ||
Current | 1,210 | 1,349 |
Non-current | 158 | 36 |
1,368 | 1,385 |
| Up to six | Six to 12 | Greater than | |||
| months past | months past | 12 months | |||
| Not past due | due | due | past due | Total | |
At 22 February 2025 | £m | £m | £m | £m | £m |
Trade receivables | 623 | 49 | 6 | 8 | 686 |
Other receivables | 150 | 17 | 10 | 27 | 204 |
Trade and other receivables | 773 | 66 | 16 | 35 | 890 |
| Allowance for expected credit losses: | |||||
At the beginning of the year | (22) | (5) | (5) | (27) | (59) |
| (Increase)/decrease in allowance, including | 3 | (3) | 1 | 2 | 3 |
recoveries, (charged)/released to the Group income statement | |||||
Amounts written off | 1 | - | - | - | 1 |
At the end of the year | (18) | (8) | (4) | (25) | (55) |
| Up to six | Six to 12 | Greater than | |||
| months past | months past | 12 months | |||
| Not past due | due | due | past due | Total | |
At 24 February 2024 | £m | £m | £m | £m | £m |
Trade receivables | 540 | 62 | 6 | 9 | 617 |
Other receivables | 242 | 17 | 6 | 27 | 292 |
Trade and other receivables | 782 | 79 | 12 | 36 | 909 |
| Allowance for expected credit losses: | |||||
At the beginning of the year | (24) | (6) | (6) | (26) | (62) |
| (Increase)/decrease in allowance, including | 1 | 1 | 1 | (1) | 2 |
recoveries, (charged)/released to the Group income statement | |||||
Amounts written off | 1 | - | - | - | 1 |
At the end of the year | (22) | (5) | (5) | (27) | (59) |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
169.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 19 Cash and cash equivalents and short-term investments
Cash and cash equivalents
2025 | 2024 | |
£m | £m | |
Cash at bank and on hand | 2,190 | 2,300 |
Short-term deposits | 65 | 40 |
Cash and cash equivalents in the Group balance sheet | 2,255 | 2,340 |
Bank overdrafts | (856) | (812) |
Cash and cash equivalents in the Group cash flow statement | 1,399 | 1,528 |
Short-term investments
2025 | 2024 | |
£m | £m | |
Money market funds, deposits and similar instruments | 2,223 | 2,128 |
Note 20 Trade and other payables
2025 | 2024 | |
£m | £m | |
Trade payables | 6,692 | 6,644 |
Not subject to supplier financing arrangements | 5,608 | 5,598 |
Subject to supplier financing arrangements (a) | 1,084 | 1,046 |
Other taxation and social security | 504 | 434 |
Other payables (b)(c) | 1,849 | 1,864 |
Amounts payable to joint ventures and associates (d) | 7 | 7 |
Accruals | 943 | 931 |
Contract liabilities | 409 | 423 |
Total trade and other payables | 10,404 | 10,303 |
| Of which: | ||
Current | 10,364 | 10,264 |
Non-current | 40 | 39 |
10,404 | 10,303 |
(a) Trade payables include £740m (2024: £780m) that suppliers have chosen to early-fund.
(b) Other payables include £943m (2024: £877m) of goods and services not for resale payables, of which £782m (2024: £752m) is not
subject to supplier financing arrangements and £161m (2024: £125m) is subject to supplier financing arrangements. Other payables
include £88m (2024: £73m) that suppliers have chosen to early-fund.
(c) Other payables include £757m (2024: £779m) of staff payables. The remaining balances within other payables are individually
immaterial.
(d) Refer to Note 31.
Trade and other payables are net of commercial income. Refer to Note 21.
Contract liabilities represent the consideration received for performance obligations not yet satisfied,
predominantly in relation to Clubcard points. The majority of the revenue deferred at the current
financial year end will be recognised in the following financial year.
Supplier financing
Suppliers can choose whether to access supplier financing arrangements, which are provided by
different third-party banks in different countries. Commercial requirements, including payment terms
or the price paid for goods, do not depend on whether a supplier chooses to access such
arrangements. The arrangements support the Group’s suppliers by giving them the option to receive
early payment from the banks in advance of the Group’s normal payment terms, often at a lower cost
than they could obtain themselves.
The funding cost is set by the provider banks but based on Tesco’s credit risk and the appropriate
country risk premium. If suppliers choose not to access early payment, the provider banks pay the
suppliers on the Group’s normal payment terms. The Group pays the provider banks on the Group’s
normal payment terms, regardless of whether the supplier has chosen to access funding early.
The Group currently offers supplier financing arrangements in the UK, Republic of Ireland and Asia.
The Group’s normal payment terms range from five–90 days (2024: five–90 days) and are dependent
on the country, product category and volume of the Group’s annual purchases from the supplier.
Shorter payment terms are provided for certain perishable goods and where the Group’s annual
purchases from the supplier are lower than a set threshold in each country. Payment terms are the
same regardless of whether a supplier participates in a supplier financing arrangement.
There were no material business combinations or foreign exchange differences in the year relating to
amounts owed under supplier financing arrangements (2024: none).
Note 21 Commercial income
Below are the commercial income balances included within inventories and trade and other
receivables, or netted against trade and other payables.
2025 | 2024 | |
£m | £m | |
| Current assets | ||
Inventories | (14) | (12) |
| Trade and other receivables | ||
Trade/other receivables | 110 | 86 |
Accrued income | 142 | 136 |
| Current liabilities | ||
| Trade and other payables | ||
Trade payables | 173 | 138 |
Tesco PLC Annual Report and Financial Statements 2025
170.
2025 | 2024 | |||
Par value | Maturity | £m | £m | |
Bank loans and overdrafts (a) | - | - | 882 | 838 |
Tesco Bank Senior MREL Notes (b) | £145m | Jul 2025 | - | 143 |
Secured bonds (c) | ||||
5.5457% Secured Bond | £169m | Feb 2029 | 162 | 195 |
6.067% Secured Bond | £200m | Feb 2029 | 197 | 196 |
SONIA + 1.3193% Secured Bond | £50m | Feb 2029 | 49 | 49 |
6.0517% Secured Bond | £247m | Oct 2039 | 304 | 321 |
5.6611% Secured Bond | £277m | Oct 2041 | 353 | 366 |
5.4111% Secured Bond | £178m | Jul 2044 | 152 | 155 |
| Unsecured bonds | ||||
| Fixed rate bonds | ||||
2.5% MTN | €473m | Jul 2024 | - | 410 |
2.5% MTN | £400m | May 2025 | 405 | 390 |
0.875% MTN | €750m | May 2026 | 624 | 643 |
6% MTN | £38m | Dec 2029 | 42 | 42 |
2.75% MTN | £450m | Apr 2030 | 380 | 369 |
4.25% MTN | €500m | Feb 2031 | 447 | 454 |
5.5% MTN | £67m | Jan 2033 | 75 | 76 |
5.13% MTN | £350m | May 2034 | 356 | - |
5.5% MTN | £250m | Feb 2035 | 253 | 258 |
6.15% USD Bond | $355m | Nov 2037 | 341 | 346 |
4.875% MTN | £14m | Mar 2042 | 14 | 14 |
5.125% MTN | €147m | Apr 2047 | 125 | 206 |
5.2% MTN | £14m | Mar 2057 | 14 | 14 |
LPI and RPI-linked bonds (d) | ||||
3.322% LPI MTN | £210m | Nov 2025 | 429 | 415 |
1.982% RPI MTN | £196m | Mar 2036 | 397 | 382 |
Sustainability-linked bonds (e) | ||||
1.875% MTN | £400m | Nov 2028 | 400 | 399 |
0.375% MTN | €750m | Jul 2029 | 549 | 538 |
6,950 | 7,219 | |||
| Of which: | ||||
Current | 1,861 | 1,536 | ||
Non-current | 5,089 | 5,683 | ||
6,950 | 7,219 |
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Governance Additional information
171.
Financial statementsStrategic report
Notes to the Group financial statements continued
| Legal and | Operational | |||||
| Property | Restructuring | regulatory | insurance | Other | ||
| provisions | provisions | provisions | provisions | provisions | Total | |
£m | £m | £m | £m | £m | £m | |
At 24 February 2024 | 204 | 53 | 67 | 152 | 5 | 481 |
Foreign currency translation | (1) | - | - | (1) | - | (2) |
| Acquired through business | 1 | - | - | - | - | 1 |
| combinations | ||||||
Amount released in the year | (10) | (2) | (8) | (23) | (1) | (44) |
Amount provided in the year | 11 | 51 | 25 | 73 | 1 | 161 |
Amount utilised in the year | (10) | (60) | (5) | (61) | - | (136) |
Unwinding of discount | 5 | - | - | - | - | 5 |
At 22 February 2025 | 200 | 42 | 79 | 140 | 5 | 466 |
2025 | 2024 | |
£m | £m | |
Current | 300 | 306 |
Non-current | 166 | 175 |
466 | 481 |
Current | 1 to 5 years | 6 to 10 years | 11 to 15 years | Over 15 years | Total | |
£m | £m | £m | £m | £m | £m | |
Property provisions | 42 | 38 | 35 | 21 | 222 | 358 |
Tesco PLC Annual Report and Financial Statements 2025
172.
Note 24 Insurance
Balances disclosed in this note relate to the Group’s subsidiary, Tesco Underwriting Limited (TU), part
of the UK & ROI segment.
52 weeks | 52 weeks | |
2025 | 2024 | |
£m | £m | |
Contracts measured under premium allocation approach (PAA) | 692 | 449 |
Expected incurred claims and other insurance service expenses | 19 | 44 |
Change in non-financial risk adjustment for risk expired | 1 | 2 |
Contractual service margin (CSM) recognised for services provided | 13 | 19 |
Contracts not measured under PAA* | 33 | 65 |
Insurance revenue | 725 | 514 |
52 weeks | 52 weeks | |
2025 | 2024 | |
£m | £m | |
Incurred claims and other directly attributable expenses | 595 | 506 |
Amortisation of insurance acquisition cash flows | (4) | (4) |
Losses on onerous acquired claims | 2 | 1 |
Changes to fulfilment cash flows relating to incurred claims | 5 | (49) |
Insurance service expenses | 598 | 454 |
2025 | 2024 | |||||
| Insurance | Reinsurance | Net | Insurance | Reinsurance | Net | |
| contract | contracts | (liabilities)/ | contract | contracts | (liabilities)/ | |
| liabilities | held | assets | liabilities | held (a) | assets (a) | |
£m | £m | £m | £m | £m | £m | |
(Liabilities)/assets for remaining coverage | (270) | 181 | (89) | (260) | 168 | (92) |
(Liabilities)/assets for incurred claims | (382) | (57) | (439) | (266) | (43) | (309) |
(652) | 124 | (528) | (526) | 125 | (401) | |
Contracts measured under PAA | (510) | 71 | (439) | (364) | 62 | (302) |
| Contracts not measured | (142) | 53 | (89) | (162) | 63 | (99) |
under PAA (b) | (652) | 124 | (528) | (526) | 125 | (401) |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
173.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 24 Insurance continued
Insurance contract liabilities
The following table provides a reconciliation of the movements in the total insurance contract liabilities in the current and prior year. This is split between liabilities for remaining coverage (LRC), representing
the Group’s obligation for insured events related to the unexpired portion of the coverage period, and liabilities for incurred claims (LIC), representing outstanding claims and incurred but not reported claims
and other incurred insurance expenses.
2025 | 2024 | |||||||||
| Liability for | Liability for | Liability for | Liability for | |||||||
| remaining coverage | incurred claims | remaining coverage | incurred claims | |||||||
| Estimates of | Risk | Estimates of | Risk | |||||||
| Excluding | present value | adjustment | Excluding | present value | adjustment | |||||
| loss | Loss | of future cash | for non- | loss | Loss | of future cash | for non- | |||
| component | component | flows | financial risk | Total | component | component | flows | financial risk | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Opening balance | 258 | 2 | 250 | 16 | 526 | 272 | 2 | 209 | 18 | 501 |
Insurance revenue | (725) | - | - | - | (725) | (514) | - | - | - | (514) |
| Insurance service expenses | ||||||||||
Incurred claims and other directly attributable expenses (a) | 16 | (1) | 572 | 8 | 595 | 36 | (1) | 473 | (2) | 506 |
Amortisation on insurance acquisition cash flows | (4) | - | - | - | (4) | (4) | - | - | - | (4) |
| Losses on onerous acquired claims and reversals of those losses | - | 2 | - | - | 2 | - | 1 | - | - | 1 |
| Changes to fulfilment cash flows relating to incurred claims | - | - | 5 | - | 5 | - | - | (49) | - | (49) |
Total insurance service expenses | 12 | 1 | 577 | 8 | 598 | 32 | - | 424 | (2) | 454 |
Total insurance service result | (713) | 1 | 577 | 8 | (127) | (482) | - | 424 | (2) | (60) |
| Insurance finance (income)/expenses | ||||||||||
Insurance finance expenses recognised in the income statement | 1 | - | 10 | - | 11 | 1 | - | 6 | - | 7 |
Insurance finance (income)/expenses recognised in other comprehensive income | 7 | - | (7) | - | - | 8 | - | (4) | - | 4 |
Total insurance finance (income)/expenses | 8 | - | 3 | - | 11 | 9 | - | 2 | - | 11 |
| Insurance cash flows | ||||||||||
Premiums received for insurance contracts issued (b) | 721 | - | - | - | 721 | 515 | - | - | - | 515 |
Incurred claims and other expenses paid (a) | (1) | - | (472) | - | (473) | (21) | - | (385) | - | (406) |
Insurance acquisition cash flows (b) | (6) | - | - | - | (6) | (35) | - | - | - | (35) |
Total insurance cash flows | 714 | - | (472) | - | 242 | 459 | - | (385) | - | 74 |
Closing balance | 267 | 3 | 358 | 24 | 652 | 258 | 2 | 250 | 16 | 526 |
(a) Incurred claims and related cash flows presented within LRC relate to the settlement of the acquired claims. The time difference between settlement of the development of the claim and payment is not significant to present within LIC.
(b) Comparatives have been re-presented to move certain commission balances between Premiums received for Insurance contracts issued and Insurance acquisition cash flows.
Tesco PLC Annual Report and Financial Statements 2025
174.
Insurance contract liabilities not measured under the PAA
The following table provides a reconciliation of the movements in the insurance contract liabilities for contracts not measured under the PAA:
2025 | 2024 | |||||||
| Estimates of | Risk adjustment | Estimates of | Risk adjustment | |||||
| present value of | for non-financial | present value of | for non-financial | |||||
| future cash flows | risk | CSM | Total | future cash flows | risk | CSM | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Opening balance* | 84 | 5 | 73 | 162 | 138 | 7 | 66 | 211 |
| Changes that relate to current service | ||||||||
| CSM recognised for the year | - | - | (13) | (13) | - | - | (19) | (19) |
| Change in risk adjustment for non-financial risk for risk expired | - | (1) | - | (1) | - | (2) | - | (2) |
Experience adjustments | (2) | - | - | (2) | (13) | - | - | (13) |
| Changes that relate to future service | ||||||||
Changes in estimates that adjust the CSM | (8) | - | 8 | - | (24) | - | 24 | - |
| Changes in estimates that result in losses and reversals of losses on onerous | - | - | 3 | 3 | - | - | 2 | 2 |
| acquired claims | ||||||||
Total insurance service result | (10) | (1) | (2) | (13) | (37) | (2) | 7 | (32) |
| Insurance finance (income)/expenses | ||||||||
Insurance finance expenses recognised in the income statement | 1 | - | - | 1 | 1 | - | - | 1 |
Insurance finance expenses recognised in other comprehensive income | 7 | - | - | 7 | 8 | - | - | 8 |
Total insurance finance (income)/expenses | 8 | - | - | 8 | 9 | - | - | 9 |
| Insurance cash flows | ||||||||
Incurred claims and other expenses paid | (15) | - | - | (15) | (26) | - | - | (26) |
Total insurance cash flows | (15) | - | - | (15) | (26) | - | - | (26) |
Closing balance* | 67 | 4 | 71 | 142 | 84 | 5 | 73 | 162 |
* Contracts not measured under the PAA relate to claims liabilities acquired on the acquisition of TU. The acquired claims liabilities are included in the LRC from the acquisition date and measured under the GMM as their coverage relates to the discovery of the ultimate
cost of acquired claims, which will spread over multiple years. Refer to Note 1 for further details.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
175.
Financial statementsStrategic report
Notes to the Group financial statements continued
Note 24 Insurance continued
2025 | 2024 (a) | |||||||||
Assets for remaining coverage | Assets for incurred claims | Assets for remaining coverage | Assets for incurred claims | |||||||
| Excluding | Estimates of | Risk | Estimates of | Risk | ||||||
| loss- | Loss- | present value | adjustment | Excluding | Loss- | present value | adjustment | |||
| recovery | recovery | of future cash | for non- | loss-recovery | recovery | of future cash | for non- | |||
| component | component | flows | financial risk | Total | component | component | flows | financial risk | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Opening balance | 167 | 1 | (48) | 5 | 125 | 160 | 1 | (32) | 6 | 135 |
Allocation of reinsurance premiums | (282) | - | - | - | (282) | (194) | - | - | - | (194) |
| Amounts recoverable from reinsurers | ||||||||||
Amounts recoverable for incurred claims and other incurred insurance service expenses | (4) | - | 236 | 2 | 234 | (6) | - | 158 | (1) | 151 |
| Recoveries of losses on onerous acquired claims and reversal of those losses | - | 1 | - | - | 1 | - | - | - | - | - |
| Changes to amounts recoverable for incurred claims | - | - | (15) | - | (15) | - | - | (5) | - | (5) |
Net expenses from reinsurance contracts held | (286) | 1 | 221 | 2 | (62) | (200) | - | 153 | (1) | (48) |
| Reinsurance finance income/(expenses) | ||||||||||
| Reinsurance finance income recognised in the income statement | - | - | 2 | - | 2 | - | - | 1 | - | 1 |
Reinsurance finance income/(expenses) recognised in other comprehensive income | (2) | - | 3 | - | 1 | 1 | - | - | - | 1 |
Total reinsurance finance income/(expenses) | (2) | - | 5 | - | 3 | 1 | - | 1 | - | 2 |
| Reinsurance cash flows | ||||||||||
Premiums paid for reinsurance contracts held | 68 | - | - | - | 68 | 42 | - | - | - | 42 |
Amounts received from reinsurers relating to incurred claims | (1) | - | (9) | - | (10) | (1) | - | (5) | - | (6) |
Total reinsurance cash flows | 67 | - | (9) | - | 58 | 41 | - | (5) | - | 36 |
Other movements (b) | 233 | - | (233) | - | - | 165 | - | (165) | - | - |
Closing balance | 179 | 2 | (64) | 7 | 124 | 167 | 1 | (48) | 5 | 125 |
Tesco PLC Annual Report and Financial Statements 2025
176.
2025 | 2024 | |||||||
| Estimates of | Risk adjustment | Estimates of | Risk adjustment | |||||
| present value of | for non-financial | present value of | for non-financial | |||||
| future cash flow | risk | CSM | Total | future cash flow | risk | CSM | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Opening balance* | 36 | 3 | 24 | 63 | 38 | 2 | 32 | 72 |
| Changes that relate to current service | ||||||||
| CSM recognised for the year | - | - | (1) | (1) | - | - | (1) | (1) |
| Change in risk adjustment for non-financial risk for risk expired | - | - | - | - | - | - | - | - |
| Experience adjustments | - | (1) | - | (1) | (7) | - | - | (7) |
| Changes that relate to future service | ||||||||
Changes in estimates that adjust the CSM | (9) | (1) | 10 | - | 6 | 1 | (7) | - |
| Changes in estimates that result in losses and reversals of losses on onerous | - | - | 1 | 1 | - | - | - | - |
| acquired claims | ||||||||
| Changes that relate to past service | ||||||||
Changes to incurred claims component | (6) | - | - | (6) | - | - | - | - |
Total net expenses from reinsurance contracts held | (15) | (2) | 10 | (7) | (1) | 1 | (8) | (8) |
| Reinsurance finance income/(expenses) | ||||||||
Reinsurance finance income/(expenses) recognised in other comprehensive income | (2) | - | - | (2) | 1 | - | - | 1 |
Total reinsurance finance income/(expenses) | (2) | - | - | (2) | 1 | - | - | 1 |
| Reinsurance cash flows | ||||||||
Amounts received from reinsurers relating to incurred claims | (1) | - | - | (1) | (2) | - | - | (2) |
Total reinsurance cash flows | (1) | - | - | (1) | (2) | - | - | (2) |
Closing balance* | 18 | 1 | 34 | 53 | 36 | 3 | 24 | 63 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
177.
Financial statementsStrategic report
Notes to the Group financial statements continued
Recoveries
The provisions are initially estimated at a gross level and a separate calculation is carried out to
estimate the size of reinsurance recoveries. The Group is covered by a variety of reinsurance
programmes. The methods used by the Group take into account historical data, specific details for
individual large claims and details of the reinsurance programme to assess the expected size of
reinsurance recoveries. Recoveries through salvage and subrogation are estimated and recorded as
part of the liability for incurred claims based on a combination of suitable benchmark assumptions
and the observed development to date.
Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that the Group requires for bearing
uncertainty around the amount and timing of the cash flows of groups of insurance contracts. The
Group has used a confidence level (probability of sufficiency) approach at the 80th percentile.
Discount rate
Insurance contract liabilities are calculated by discounting expected future cash flows using a yield
curve based on a replicating portfolio and utilising a top-down approach. The replicating portfolio is a
reference portfolio of government and corporate bonds matching the expected maturity profile of
claims liabilities with resulting yield curve adjusted to eliminate credit risk spread.
The yield curves applied for discounting future cash flows of liabilities for incurred claims are listed
below:
Mean 11 - 100 | |||||
One year | Three years | Five years | 10 years | years | |
% | % | % | % | % | |
As at 22 February 2025 | 4.1% | 4.4% | 4.5% | 4.6% | 4.7% |
As at 24 February 2024 | 4.9% | 4.7% | 4.6% | 4.4% | 4.3% |
Note 24 Insurance continued
Analysis of CSM
The following table shows an analysis of the expected recognition of the CSM remaining at the end of
the reporting period in relation to acquired claims in the income statement:
22 February 2025 | 24 February 2024 | |||
| Insurance | Reinsurance | Insurance | Reinsurance | |
| contract liabilities | contract assets | contract liabilities | contract assets | |
Less than one year | (17) | 4 | (20) | 4 |
One to five years | (21) | 11 | (33) | 13 |
More than five years | (33) | 19 | (20) | 7 |
Total | (71) | 34 | (73) | 24 |
Process used to determine assumptions
The nature of insurance makes it very difficult to predict with certainty the likely outcome of any
particular claim and the ultimate cost of notified claims. Each notified claim is assessed on a separate,
case-by-case basis with due regard to the claim circumstances and historical evidence of the size of
similar claims and provisions are based on information currently available. However, the ultimate
liabilities may vary as a result of subsequent developments.
Sources of data
The sources of data used as inputs for the assumptions are internal, using detailed studies that are
carried out at least annually to ensure that the assumptions are consistent with observable market
prices or other published information. When there is insufficient information to make a reliable best
estimate of claims development, suitable benchmark assumptions are used.
Methods
The cost of outstanding claims and the incurred but not reported (IBNR) claims provisions are
estimated using various statistical methods, which extrapolate the development of paid and incurred
claims, average cost per claim and ultimate claim numbers for each accident period based upon
observed development of earlier periods, with reference to suitable benchmarks. The key
methods are:
– development factor methods, which use historical data to estimate the paid and incurred to date as
proportions of the ultimate claim cost;
– individual claim assessment methods, which use claim-specific details for large individual claims to
estimate the ultimate claim cost; and
– benchmarking methods, which use the experience of comparable, more mature classes, or market
data to estimate the cost of claims.
To the extent that these methods use historical claims development information, they also assume
that the historical claims development pattern will occur again in the future, after allowing (where
possible) for instances where this might not be the case, such as changing economic or legal trends.
Tesco PLC Annual Report and Financial Statements 2025
178.
Actual claims payments are compared with previous estimates of the undiscounted amounts of the
claims in the tables below on a gross and net of reinsurance basis.
Claims development (gross)
2022 | 2023 | 2024 | 2025 | Total | |
Estimate of gross undiscounted ultimate claims costs | £m | £m | £m | £m | £m |
At end of the financial year | 233 | 280 | 365 | 442 | |
One year later | 233 | 289 | 356 | - | |
Two years later | 211 | 300 | - | - | |
Three years later | 215 | - | - | - | |
Current estimate of cumulative claims | 215 | 300 | 356 | 442 | 1,313 |
Cumulative payments to date | (182) | (228) | (270) | (258) | (938) |
Gross undiscounted liabilities for incurred claims | 33 | 72 | 86 | 184 | 375 |
Value of risk adjustment | 21 | ||||
Effect of discounting | (32) | ||||
Gross claims liabilities | 364 | ||||
Ancillary claims and expense liabilities | 18 | ||||
Total gross liabilities for incurred claims | 382 |
Claims development (net)
2022 | 2023 | 2024 | 2025 | Total | |
Estimate of net undiscounted ultimate claims costs | £m | £m | £m | £m | £m |
At end of the financial year | 150 | 169 | 220 | 258 | |
One year later | 151 | 176 | 209 | - | |
Two years later | 130 | 180 | - | - | |
Three years later | 138 | - | - | - | |
Current estimate of cumulative claims | 138 | 180 | 209 | 258 | 785 |
| Cumulative payments net of reinsurance | (109) | (136) | (164) | (149) | (558) |
| recoveries to date | |||||
| Net undiscounted liabilities for incurred | 29 | 44 | 45 | 109 | 227 |
| claims | |||||
Value of risk adjustment | 15 | ||||
Effect of discounting | (22) | ||||
Net claims liabilities | 220 | ||||
Quota share funds withheld* | 201 | ||||
Ancillary claims and expense liabilities | 18 | ||||
Total net liabilities for incurred claims | 439 |
* Quota share funds represent reinsurance premiums withheld, which will be utilised to offset recoveries receivable from
reinsurers.
The Group provides information on the gross and net claims development from the date of acquisition
of TU in May 2021 to the current reporting period, as it was not party to claims made prior to the
acquisition date.
Note 25 Deposits from central bank
2025 | 2024 | |
£m | £m | |
| Deposits from central bank | - | 908 |
| Of which: | ||
| Current | - | 108 |
| Non-current | - | 800 |
| - | 908 |
The prior year includes deposits from central bank of £908m drawn under the Bank of England’s Term
Funding Scheme with incentives for small and medium-sized enterprises (TFSME). The amounts were
repaid in full in the current year.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
179.
Financial statementsStrategic report
Notes to the Group financial statements continued
2025 | 2024 | ||||||||
At fair value | At fair value | ||||||||
At fair value through other | At fair value through other | ||||||||
through profit | comprehensive | through profit | comprehensive | ||||||
| At amortised cost | or loss | income | Total | At amortised cost | or loss | income | Total | ||
At 22 February 2025 | Notes | £m | £m | £m | £m | £m | £m | £m | £m |
| Financial assets | |||||||||
Cash and cash equivalents | 19 | 2,194 | 61 | - | 2,255 | 2,305 | 35 | - | 2,340 |
Short-term investments | 19 | 837 | 1,386 | - | 2,223 | 1,239 | 889 | - | 2,128 |
Trade receivables | 18 | 652 | - | - | 652 | 576 | - | - | 576 |
Other receivables | 18 | 183 | - | - | 183 | 274 | - | - | 274 |
Joint ventures and associates loan receivables | 31 | 97 | - | - | 97 | 96 | - | - | 96 |
Other investments | 16 | 196 | 15 | 874 | 1,085 | 1,033 | 18 | 701 | 1,752 |
| Derivative financial instruments: | |||||||||
| Interest rate swaps | - | 24 | - | 24 | - | 44 | - | 44 | |
| Cross-currency swaps | - | 138 | - | 138 | - | 182 | - | 182 | |
| Index-linked swaps | - | 646 | - | 646 | - | 583 | - | 583 | |
| Forward foreign currency contracts | - | 27 | - | 27 | - | 25 | - | 25 | |
| Diesel forward contracts | - | - | - | - | - | 2 | - | 2 | |
4,159 | 2,297 | 874 | 7,330 | 5,523 | 1,778 | 701 | 8,002 | ||
| Financial liabilities | |||||||||
Trade payables | 20 | (6,692) | - | - | (6,692) | (6,644) | - | - | (6,644) |
Accruals | 20 | (943) | - | - | (943) | (931) | - | - | (931) |
Other payables | 20 | (1,849) | - | - | (1,849) | (1,864) | - | - | (1,864) |
Borrowings | 22 | (6,950) | - | - | (6,950) | (7,219) | - | - | (7,219) |
Deposits from central bank | 25 | - | - | - | - | (908) | - | - | (908) |
Lease liabilities | 13 | (7,716) | - | - | (7,716) | (7,622) | - | - | (7,622) |
| Derivative financial instruments: | |||||||||
| Interest rate swaps | - | (74) | - | (74) | - | (105) | - | (105) | |
| Cross-currency swaps | - | (130) | - | (130) | - | (139) | - | (139) | |
| Forward foreign currency contracts | - | (11) | - | (11) | - | (20) | - | (20) | |
| Diesel forward contracts | - | (2) | - | (2) | - | (2) | - | (2) | |
(24,150) | (217) | - | (24,367) | (25,188) | (266) | - | (25,454) | ||
Tesco PLC Annual Report and Financial Statements 2025
180.
22 February 2025 | 24 February 2024 | ||||
| Carrying | Fair | Carrying | Fair | ||
| value | value (a) | value | value (a) | ||
Level | £m | £m | £m | £m | |
| Financial assets measured at amortised cost | |||||
Investment in debt instruments at amortised cost (b)(c) | 1 and 2 | 196 | 201 | 1,033 | 838 |
Joint ventures and associates loan receivables | 2 | 97 | 105 | 96 | 97 |
| Financial liabilities measured at amortised cost | |||||
| Borrowings | |||||
Amortised cost | 1 | (4,916) | (4,651) | (5,067) | (4,794) |
Bonds in fair value hedge relationships | 1 | (2,034) | (2,088) | (2,152) | (2,211) |
Level 1 | Level 2 | Level 3 | Total | |
At 22 February 2025 | £m | £m | £m | £m |
| Assets | ||||
Investments at fair value through other comprehensive income | 855 | - | 19 | 874 |
Short-term investments at fair value through profit or loss | 1,386 | - | - | 1,386 |
| Cash and cash equivalents at fair value through profit or loss | - | 61 | - | 61 |
| Other investments at fair value through profit and loss | - | - | 15 | 15 |
| Derivative financial instruments: | ||||
| Interest rate swaps | - | - | 24 | 24 |
| Cross-currency swaps | - | - | 138 | 138 |
| Index-linked swaps | - | - | 646 | 646 |
| Foreign currency forward contracts | - | 27 | - | 27 |
Total assets | 2,241 | 88 | 842 | 3,171 |
| Liabilities | ||||
| Derivative financial instruments: | ||||
| Interest rate swaps | - | - | (74) | (74) |
| Cross-currency swaps | - | - | (130) | (130) |
| Foreign currency forward contracts | - | (11) | - | (11) |
| Diesel forward contracts | - | (2) | - | (2) |
| Total liabilities | - | (13) | (204) | (217) |
Net assets | 2,241 | 75 | 638 | 2,954 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
181.
Financial statementsStrategic report
Notes to the Group financial statements continued
2025 | 2024 | |||
| Uncollateralised | Unlisted | Uncollateralised | Unlisted | |
| derivatives | investments | derivatives | investments | |
£m | £m | £m | £m | |
At the beginning of the year | 545 | 37 | 379 | 34 |
Gains/(losses) recognised in finance costs (a) | (14) | (1) | 9 | (2) |
Gains/(losses) recognised in other comprehensive income not reclassified to the income statement | - | 4 | - | - |
Gains/(losses) recognised in other comprehensive income that may | 35 | - | 15 | - |
subsequently be reclassified to the income statement | ||||
| Impairment recognised in cost | - | (10) | - | - |
| of sales | ||||
| Additions | - | 5 | - | 5 |
Settlements | 38 | - | - | - |
Transfers of assets to Level 3 (b) | - | - | 142 | - |
Transfers of assets from Level 3 (c) | - | (1) | - | - |
At the end of the year | 604 | 34 | 545 | 37 |
Note 26 Financial instruments continued
Level 1 | Level 2 | Level 3 | Total | |
At 24 February 2024 | £m | £m | £m | £m |
| Assets | ||||
Investments at fair value through other comprehensive income | 682 | - | 19 | 701 |
Short-term investments at fair value through profit or loss | 889 | - | - | 889 |
| Cash and cash equivalents at fair value through profit or loss | - | 35 | - | 35 |
| Other investments at fair value through profit and loss | - | - | 18 | 18 |
| Derivative financial instruments: | ||||
| Interest rate swaps | - | 29 | 15 | 44 |
| Cross-currency swaps | - | - | 182 | 182 |
| Index-linked swaps | - | - | 583 | 583 |
| Foreign currency forward contracts | - | 25 | - | 25 |
| Diesel forward contracts | - | 2 | - | 2 |
Total assets | 1,571 | 91 | 817 | 2,479 |
| Liabilities | ||||
| Derivative financial instruments: | ||||
| Interest rate swaps | - | (9) | (96) | (105) |
| Cross-currency swaps | - | - | (139) | (139) |
| Foreign currency forward contracts | - | (20) | - | (20) |
| Diesel forward contracts | - | (2) | - | (2) |
| Total liabilities | - | (31) | (235) | (266) |
Net assets | 1,571 | 60 | 582 | 2,213 |
Tesco PLC Annual Report and Financial Statements 2025
182.
| Related amounts not offset in | ||||||
| the Group balance sheet | ||||||
| Gross amounts of | ||||||
| Gross amounts | financial assets/ | Net amounts | ||||
| of recognised | (liabilities) offset in | included | Collateral | |||
| financial assets/ | the Group balance | in the Group | Financial | (received)/ | ||
| (liabilities) | sheet | balance sheet | instruments | pledged | Net amount | |
At 22 February 2025 | £m | £m | £m | £m | £m | £m |
| Financial assets | ||||||
Derivative financial instruments | 835 | - | 835 | (115) | - | 720 |
Trade receivables | 758 | (106) | 652 | - | - | 652 |
Total assets | 1,593 | (106) | 1,487 | (115) | - | 1,372 |
| Financial liabilities | ||||||
Derivative financial instruments | (217) | - | (217) | 115 | - | (102) |
Trade payables | (6,798) | 106 | (6,692) | - | - | (6,692) |
Total liabilities | (7,015) | 106 | (6,909) | 115 | - | (6,794) |
| Related amounts not offset in | ||||||
| the Group balance sheet | ||||||
| Gross amounts of | ||||||
| Gross amounts | financial assets/ | Net amounts | ||||
| of recognised | (liabilities) offset in | included | Collateral | |||
| financial assets/ | the Group balance | in the Group | Financial | (received)/ | ||
| (liabilities) | sheet | balance sheet | instruments | pledged | Net amount | |
At 24 February 2024 | £m | £m | £m | £m | £m | £m |
| Financial assets | ||||||
Derivative financial instruments | 836 | - | 836 | (118) | (20) | 698 |
Trade receivables | 667 | (91) | 576 | - | - | 576 |
Total assets | 1,503 | (91) | 1,412 | (118) | (20) | 1,274 |
| Financial liabilities | ||||||
Derivative financial instruments | (266) | - | (266) | 118 | - | (148) |
Trade payables | (6,735) | 91 | (6,644) | - | - | (6,644) |
Total liabilities | (7,001) | 91 | (6,910) | 118 | - | (6,792) |
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Notes to the Group financial statements continued
Note 27 Financial risk management
The main financial risks faced by the Group and the management of these risks are set out below, and include market risk (foreign exchange, interest rate, inflation and commodity prices), credit risk, liquidity
risk, capital risk and insurance risk.
Description of risks | Management policy | Hedging strategy |
| Transactional exposure that arises from the cost of | The Group’s policy is to hedge currency exposure that could significantly | Foreign currency forward contracts which are designated as cash flow |
| future purchases of goods, where those purchases | impact the Group income statement. Minimum and maximum hedge limits | hedges. These are denominated in the same currency as the highly probable |
| are denominated in a currency other than the | are in place depending on whether forecast spend is committed or | future sales and purchases, which are expected to occur within a maximum |
| functional currency of the purchasing company. | uncommitted but highly probable. | 24-month period, and the hedge ratio is determined to be 1:1. |
| Translation exposure that arises from exchange rate | Translation risk related to foreign subsidiaries is not actively hedged. | Euro-denominated borrowings are used to hedge the exposure of a portion |
| movements in connection with translating the Group’s | However, to reduce this exposure in relation to the net assets of foreign | of the Group’s net investments in overseas operations which have a Euro |
| foreign subsidiaries’ revenue, expenses, assets and | subsidiaries, net investment hedging is undertaken. | functional currency, against changes in value due to changes in foreign exchange |
| liabilities into Pounds Sterling. | rates. The Group has established a hedge ratio of 1:1, as the underlying risk of the | |
| hedging instrument is identical to the hedged risk component. | ||
| Loans to and from subsidiaries in currencies other | The Group's policy is to swap 100% of the foreign currency debt back | Foreign currency derivatives and borrowings in matching currencies, which |
| than in the entity’s functional currency. | to Pounds Sterling or designate as a net investment hedge. | are not formally designated as accounting hedges as gains and losses will |
| naturally offset in the income statement. | ||
Debt issued in a currency other than Pounds Sterling. | The Group’s policy is to swap 100% of the foreign currency debt back to Pounds | Cross-currency swaps, which are designated as fair value hedges |
| Sterling, unless there are appropriate matching foreign currency assets. | or economic hedges. |
Description of risks | Management policy | Hedging strategy |
| Debt issued at variable interest rates as well as cash | The Group's policy is to manage its cash flow and fair value risk on a net debt | Interest rate swap contracts are used to fix interest rates on senior unsecured |
| deposits and short-term investments, giving rise to | basis (senior unsecured debt, lease liabilities, cash and cash equivalents and | debt or investments issued at floating rates, creating a cash flow hedge; and for |
| cash flow risk, and debt issued at fixed interest rates | short-term investments). | senior unsecured debt or investments issued at fixed rates to generate variable |
| giving rise to fair value risk. | interest exposure, creating a fair value hedge. The terms of the swap contracts | |
| match the terms of the borrowings or investments including notional amounts | ||
| and maturity, interest settlement and interest rate reset dates, and the Group | ||
| has established a hedge ratio of 1:1 for the hedging relationships as the underlying | ||
| risk of the derivative contract is identical to that of the hedged item. |
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184.
2025 | 2024 | |||||
Fixed | Floating | Total | Fixed | Floating | Total | |
£m | £m | £m | £m | £m | £m | |
| Cash and cash equivalents | - | 2,255 | 2,255 | 28 | 2,312 | 2,340 |
| Short-term investments | - | 2,223 | 2,223 | - | 2,128 | 2,128 |
Investments in debt instruments at amortised cost | 196 | - | 196 | 577 | 456 | 1,033 |
Investments at fair value through other comprehensive income | 866 | 8 | 874 | 687 | 14 | 701 |
Investments at fair value through profit or loss | 15 | - | 15 | 18 | - | 18 |
Joint ventures and associates loan receivables | 97 | - | 97 | 96 | - | 96 |
Lease liabilities | (7,716) | - | (7,716) | (7,622) | - | (7,622) |
Borrowings (a) | (6,043) | (907) | (6,950) | (6,353) | (866) | (7,219) |
Assets of the Banking operations disposal group (b) | - | - | - | 4,090 | 3,925 | 8,015 |
Liabilities of the Banking operations disposal group (c) | - | - | - | (4,806) | (2,183) | (6,989) |
| Deposits from central bank | - | - | - | - | (908) | (908) |
| Derivative effect: | ||||||
Interest rate swaps | 1,464 | (1,464) | - | (720) | 720 | - |
Cross-currency swaps | 902 | (902) | - | 920 | (920) | - |
Total | (10,219) | 1,213 | (9,006) | (13,085) | 4,678 | (8,407) |
Percentage of interest-bearing debt at fixed rate | 83% | 83% | ||||
Weighted average rate of interest paid on senior unsecured debt, excluding joint ventures and associates | 4.8% | 4.8% |
Description of risks | Management policy | Hedging strategy |
| Index-linked debt, where the principal is indexed to | The Group’s policy is to hedge inflation in total balance sheet debt (including index-linked bonds and RPI- | LPI debt (where principal is indexed to RPI, with an |
| increase/decrease in line with either RPI or LPI. | linked lease liabilities) on a portfolio basis alongside its interest rate risk management. Interest and inflation | annual maximum increase of 5% and a minimum of |
| risk in total balance sheet debt are managed to a combined target of 50% fixed, with a tolerance of 15%, | 0%) and RPI debt are hedged back to fixed rate using | |
| where RPI-linked rents are considered to be floating. | derivative contracts designated as cash flow hedges. | |
| Index-linked lease liabilities, where the liability is indexed | Indexed liabilities arising from property joint ventures | |
| to increase/decrease in line with either RPI or LPI. | are fully hedged using derivative contracts which | |
| economically hedge the lease liability inflation uplift. |
Description of risks | Management policy | Hedging strategy |
| Changes in commodity prices largely relating to diesel | The Group policy is to hedge a minimum of 50% of the forecast uncommitted exposure within the next | Forward derivative contracts which are designated as |
| for own use. | 12 months. | cash flow hedges are used to hedge future purchases |
| of diesel for own use. These are denominated in the | ||
| same currency and volume as the forecast purchases | ||
| and the hedge ratio is determined to be 1:1. |
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Notes to the Group financial statements continued
Note 27 Financial risk management continued
2025 | 2024 | |||
| Income gain/ | Equity gain/ | Income gain/ | Equity gain/ | |
| (loss) | (loss) | (loss) | (loss) | |
£m | £m | £m | £m | |
1% increase in interest rates | (21) | 2 | 3 | 2 |
5% appreciation of the Euro | (9) | (47) | (5) | (49) |
5% appreciation of the US Dollar | (10) | 38 | 2 | 38 |
| 50 basis points parallel upward shift in the forward | 82 | 20 | 93 | 23 |
| inflation curve | ||||
| 10% increase in commodity prices* | - | 6 | 1 | 10 |
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186.
2025 | 2024 | |||||||
Asset | Liability | Asset | Liability | |||||
Fair value | Notional | Fair value | Notional | Fair value | Notional | Fair value | Notional | |
£m | £m | £m | £m | £m | £m | £m | £m | |
| Fair value hedges | ||||||||
Interest rate swaps | 24 | 414 | (72) | 1,100 | 44 | 916 | (103) | 1,152 |
| Cross-currency swaps | - | - | (118) | 621 | - | - | (126) | 640 |
Banking operations disposal group (a) | - | - | - | - | 50 | 3,355 | (16) | 1,543 |
| Cash flow hedges | ||||||||
| Interest rate swaps | - | - | (2) | 50 | - | - | (2) | 50 |
Index-linked swaps (b) | 299 | 406 | - | - | 265 | 406 | - | - |
Foreign currency forward contracts | 25 | 1,094 | (8) | 601 | 20 | 818 | (17) | 862 |
| Diesel forward contracts | - | 20 | (2) | 41 | 2 | 31 | (2) | 57 |
| Derivatives not in a formal hedge relationship | ||||||||
Cross-currency swaps | 138 | 308 | (12) | 95 | 182 | 790 | (13) | 94 |
Index-linked swaps | 347 | 2,074 | - | - | 318 | 2,074 | - | - |
Foreign currency forward contracts | 2 | 285 | (3) | 545 | 5 | 379 | (3) | 433 |
| Diesel forward contracts | - | - | - | - | - | 1 | - | 4 |
Banking operations disposal group (a) | - | - | - | - | 4 | 315 | (1) | - |
Total | 835 | 4,601 | (217) | 3,053 | 890 | 9,085 | (283) | 4,835 |
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Notes to the Group financial statements continued
Note 27 Financial risk management continued
2025 | 2024 | |||||
| More than five | More than five | |||||
Maturity profile | Up to one year | One to five years | years | Up to one year | One to five years | years |
| Notional amount (£m) | ||||||
| Fair value hedges | ||||||
Interest rate swaps – GBP | 400 | - | 700 | 150 | 726 | 766 |
| Interest rate swaps – EUR | - | - | 414 | - | - | 426 |
Cross currency swaps (GBP: EUR) (a) | - | 621 | - | - | - | 640 |
Banking operations disposal group (b) | - | - | - | 2,695 | 2,157 | 46 |
| Cash flow hedges | ||||||
Index-linked swaps (c) | 210 | - | 196 | - | 210 | 196 |
| Interest rate swaps | - | 50 | - | - | 50 | - |
| Average net interest rate (pay)/receive | ||||||
| Fair value hedges | ||||||
Interest rate swaps – GBP | (3.41)% | - | (3.04)% | 4.39% | (3.58)% | (3.67)% |
| Interest rate swaps – EUR | - | - | 0.59% | - | - | (0.88)% |
Cross currency swaps (GBP: EUR) (a) | - | (5.19)% | - | - | - | (5.91)% |
Banking operations disposal group (b) | - | - | - | (0.50)% | (1.18)% | (1.05)% |
| Cash flow hedges | ||||||
Index-linked swaps | (4.23)% | - | (4.21)% | - | (4.23)% | (4.21)% |
| Interest rate swaps | - | (0.45)% | - | - | 0.29% | - |
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188.
2025 | 2024 | ||||||
| Accumulated | Accumulated | ||||||
| amounts of fair | Changes in | amounts of fair | Changes in | ||||
| value adjustments | fair value for | value adjustments | fair value for | ||||
| Carrying amount | on hedged item | calculating hedge | Carrying amount | on hedged item | calculating hedge | ||
| assets/(liabilities) | assets/(liabilities) | ineffectiveness | assets/(liabilities) | assets/(liabilities) | ineffectiveness | ||
Balance sheet classification | £m | £m | £m | £m | £m | £m | |
| Interest rate risk | |||||||
Fixed-rate investment securities | Other investments | - | - | - | 377 | 32 | 12 |
Fixed-rate bonds (a) | Borrowings | (2,492) | 114 | 36 | (2,615) | 142 | 50 |
Fixed-rate loans (b) | Assets of the disposal group | - | - | - | 3,355 | 33 | 41 |
Fixed-rate savings (b) | Liabilities of the disposal group | - | - | - | (1,543) | (1) | 1 |
2025 | 2024 | ||||||
| Change in | Change in | ||||||
| value of hedging | Change in value of | value of hedging | Change in value of | ||||
| instrument for | hedged item for | Cumulative | instrument for | hedged item for | Cumulative | ||
| calculating hedge | calculating hedge | impact on hedging | calculating hedge | calculating hedge | impact on hedging | ||
| ineffectiveness | ineffectiveness | reserve (a) | ineffectiveness | ineffectiveness | reserve (a) | ||
Hedging instrument | £m | £m | £m | £m | £m | £m | |
| Interest rate/inflation risk | |||||||
Index-linked bonds | Index-linked swaps | 32 | (20) | 10 | 25 | (17) | 16 |
Borrowings | Interest rate swaps | 1 | (1) | 5 | 1 | (1) | 7 |
| Foreign currency risk | |||||||
Forecasted purchases | Foreign currency forward contracts | 10 | (10) | 8 | 31 | (31) | 6 |
| Commodity risk | |||||||
Forecasted purchases | Diesel forward contracts | (3) | 3 | (1) | 9 | (9) | (1) |
| Interest rate/foreign currency risk | |||||||
MTNs (b) | Cross-currency swaps | - | - | 46 | - | - | 75 |
2025 | 2024 | ||
| Line item in Group | Hedge ineffectiveness | Hedge ineffectiveness | |
| income statement | recognised | recognised | |
| that includes hedge | in profit or loss | in profit or loss | |
| ineffectiveness | £m | £m | |
| Fair value hedges – interest rate risk | |||
Borrowings | Finance cost | (1) | (9) |
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Notes to the Group financial statements continued
Note 27 Financial risk management continued
| Interest rate/ | ||||||
| foreign currency | ||||||
| Interest rate/inflation risk | risk | Foreign currency/commodity risk | ||||
| Foreign currency | ||||||
| Index-linked | Interest rate | Cross-currency | forward | Diesel forward | Hedging | |
| swaps | swaps | swaps | contracts (a) | contracts (a) | reserve (b) | |
£m | £m | £m | £m | £m | £m | |
At 25 February 2023 | 34 | 5 | 25 | (24) | (7) | 33 |
Net fair value gains/(losses) | 24 | - | - | (39) | 1 | (14) |
Amount reclassified to finance income/(cost) in Group income statement | (52) | (2) | (2) | - | - | (56) |
| Transfer from hedging reserve to retained earnings | - | - | 44 | - | - | 44 |
| Amount reclassified to inventories | - | - | - | 71 | 8 | 79 |
Tax | 7 | - | (10) | - | (2) | (5) |
At 24 February 2024 | 13 | 3 | 57 | 8 | - | 81 |
Net fair value gains/(losses) | 32 | 1 | - | 10 | (3) | 40 |
Amount reclassified to finance income/(cost) in Group income statement | (38) | (1) | (30) | (2) | - | (71) |
| Amount reclassified to inventories | - | - | - | (7) | 3 | (4) |
Tax | 1 | - | 8 | (2) | - | 7 |
At 22 February 2025 | 8 | 3 | 35 | 7 | - | 53 |
| Nominal amount | Cumulative impact | ||
| of hedging | Nominal amount of | on net investment | |
| instrument | hedged item | hedges | |
£m | £m | £m | |
At 25 February 2023 | (1,325) | 1,325 | (794) |
Discontinued hedges in the year (a) | 653 | (653) | 9 |
New hedges designated in the year (b) | (436) | 436 | 9 |
Change in value for calculating ineffectiveness | 40 | (40) | 22 |
At 24 February 2024 | (1,068) | 1,068 | (754) |
Change in value for calculating ineffectiveness | 33 | (33) | 33 |
At 22 February 2025 | (1,035) | 1,035 | (721) |
Tesco PLC Annual Report and Financial Statements 2025
190.
Description of risk | Management policy | Measurement |
| A counterparty will not meet its obligations leading to | For cash and cash equivalents, short-term investments, other investments, and derivative financial | The Group monitors the exposure, credit rating, |
| a financial loss for the Group. This arises from cash | instruments: | outlook, and credit default swap levels of these |
| and cash equivalents, short-term investments, trade | – the Group holds positions with an approved list of investment-grade rated counterparties. | counterparties on a regular basis. |
| receivables, other receivables, joint venture and | – counterparty credit limits are set to minimise the concentration of risk and are set taking into account | Counterparty credit limits are reviewed every |
| associate loan receivables, reinsurance contract assets, | the type and value of the specific financial asset. | six months and may be updated throughout the |
| other investments, and derivative financial instruments. | For trade receivables, other receivables, joint venture and associate loan receivables, and reinsurance | financial year. |
| contract assets: | Refer to page 192 for information on the Group’s ECLs. | |
| – the Group’s credit risk is managed with various mitigating controls including credit checks, credit | ||
| insurance, and master netting agreements. Due to the nature of the business, there is little concentration | ||
| of risk due to the large number of customers which are spread across wide geographical areas. |
2025 | 2024 | |
£m | £m | |
Cash and cash equivalents | 2,255 | 2,340 |
Short-term investments | 2,223 | 2,128 |
Trade receivables | 652 | 576 |
Other receivables | 183 | 274 |
Joint venture and associates loan receivables | 97 | 96 |
Assets of the Banking operations disposal group (a) | - | 7,698 |
Other investments | 1,085 | 1,752 |
| Derivative financial assets: | ||
Interest rate swaps | 24 | 44 |
Cross-currency swaps | 138 | 182 |
Index-linked swaps | 646 | 583 |
Foreign currency forward contracts | 27 | 25 |
| Diesel forward contracts | - | 2 |
| Off balance sheet: | ||
Loan commitments (b) | - | 12,850 |
Maximum exposure to credit risk | 7,330 | 28,550 |
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Notes to the Group financial statements continued
Note 27 Financial risk management continued
2025 | 2024 | |||||||||
Rating | AAA | AA | A | BBB | Total | AAA | AA | A | BBB | Total |
Cash and cash equivalents (a) | - | - | 1,355 | 35 | 1,390 | - | - | 1,517 | 15 | 1,532 |
Short-term investments | 1,389 | 3 | 731 | 100 | 2,223 | 889 | 203 | 986 | 50 | 2,128 |
Investment in debt securities at amortised cost (b) | - | - | - | 192 | 192 | 391 | 48 | 393 | 196 | 1,028 |
Investment at fair value through other comprehensive income (c) | 156 | 123 | 341 | 235 | 855 | 117 | 100 | 287 | 178 | 682 |
Investments at fair value through profit or loss (d) | - | - | - | - | - | - | 1 | - | - | 1 |
Assets of the Banking operations disposal group (e) | - | - | - | - | - | - | 54 | - | - | 54 |
| Derivative financial assets: | ||||||||||
| Interest rate swaps | - | 12 | 12 | - | 24 | - | 36 | 8 | - | 44 |
| Cross-currency swaps | - | - | 138 | - | 138 | - | - | 181 | 1 | 182 |
| Index-linked swaps | - | - | 299 | 347 | 646 | - | - | 134 | 449 | 583 |
| Foreign currency forward contracts | - | 5 | 22 | - | 27 | - | 2 | 18 | 5 | 25 |
| Diesel forward contracts | - | - | - | - | - | - | - | 1 | 1 | 2 |
Description of risk | Management policy | Measurement |
| Difficulty in meeting the obligations associated with the | The Group finances its liquidity position and its operations by a combination of retained profits, disposals of | Liquidity risk is continuously monitored by short-term |
| Group’s financial liabilities. | assets, debt capital market issuance, bank borrowings, and leases. The policy is to maintain a prudent level | and long-term cash flow forecasts. |
| of cash together with sufficient committed bank facilities to meet liquidity needs as they arise, to maintain | ||
| a smooth debt profile and to ensure maturing senior unsecured debt will not exceed £1.5bn in any 12-month | ||
| period. | ||
| The Group is exposed to liquidity risk from daily calls on | The Group manages its liquidity risk by having an investment guideline that it maintains sufficient liquidity, | |
| its cash resources, including from claims arising on its | or its financial assets can be realised at short notice in the event of a major adverse event. The Group may | |
insurance contracts. There is a risk that cash will not be available to settle liabilities when they fall due. | also make use of borrowing facilities if required. |
Tesco PLC Annual Report and Financial Statements 2025
192.
2025 | 2024 | |||||
| Short-term | Long-term | Short-term | Long-term | |||
| rating | rating | Outlook | rating | rating | Outlook | |
| Rating agency | ||||||
Fitch | F3 | BBB - | Stable | F3 | BBB - | Stable |
Moody’s | P - 3 | Baa3 | Stable | P - 3 | Baa3 | Stable |
Standard & Poor’s | A - 3 | BBB - | Positive | A - 3 | BBB - | Stable |
2025 | 2024 | |
£m | £m | |
Expiring in less than one year | 38 | 238 |
| Expiring between one and two years | - | - |
Expiring in more than two years | 2,500 | 2,500 |
Total | 2,538 | 2,738 |
| Due within | Due between 1 | Due between 2 | Due between 3 | Due between 4 | Due beyond 5 | |
| 1 year | and 2 years | and 3 years | and 4 years | and 5 years | years | |
At 22 February 2025 | £m | £m | £m | £m | £m | £m |
| Non-derivative financial liabilities | ||||||
Borrowings | (1,748) | (686) | (71) | (718) | (687) | (3,117) |
Interest payments on borrowings | (202) | (175) | (166) | (162) | (138) | (798) |
Lease liabilities | (995) | (973) | (940) | (896) | (855) | (6,217) |
Trade payables | (6,692) | - | - | - | - | - |
Other payables | (1,815) | (15) | (6) | (1) | (1) | (11) |
Accruals | (943) | - | - | - | - | - |
| Derivative financial liabilities | ||||||
| Net settled derivative contracts – receipts | - | - | - | - | - | 7 |
Net settled derivative contracts – payments | (22) | (18) | (18) | (18) | (17) | - |
Gross settled derivative contracts – receipts | 1,145 | 113 | 2 | 2 | 623 | - |
Gross settled derivative contracts – payments | (1,194) | (155) | (33) | (33) | (681) | - |
Total | (12,466) | (1,909) | (1,232) | (1,826) | (1,756) | (10,136) |
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Notes to the Group financial statements continued
Note 27 Financial risk management continued
| Due within | Due between 1 | Due between 2 | Due between 3 | Due between 4 | Due beyond 5 | |
| 1 year | and 2 years | and 3 years | and 4 years | and 5 years | years | |
At 24 February 2024 | £m | £m | £m | £m | £m | £m |
| Non-derivative financial liabilities | ||||||
Borrowings | (1,416) | (891) | (706) | (71) | (718) | (4,148) |
Interest payments on borrowings | (205) | (221) | (130) | (153) | (149) | (906) |
Deposits from central bank – Tesco Bank | (151) | (820) | - | - | - | - |
Lease liabilities | (903) | (931) | (913) | (889) | (842) | (6,279) |
Trade payables | (6,644) | - | - | - | - | - |
Other payables | (1,831) | (13) | (5) | (1) | (1) | (13) |
Accruals | (931) | - | - | - | - | - |
Liabilities of the Banking operations disposal group (a) | (5,789) | (481) | (681) | (128) | (130) | (2) |
| Derivative financial liabilities | ||||||
Net settled derivative contracts – receipts | 8 | 5 | 4 | 2 | 1 | 3 |
Net settled derivative contracts – payments | (38) | (19) | (16) | (15) | (15) | (8) |
Gross settled derivative contracts – receipts (b) | 1,282 | 8 | 110 | 2 | 2 | 643 |
Gross settled derivative contracts – payments (b) | (1,343) | (41) | (150) | (31) | (30) | (680) |
Total on balance sheet | (17,961) | (3,404) | (2,487) | (1,284) | (1,882) | (11,390) |
| Off balance sheet | ||||||
Contractual lending commitments (c) | (12,850) | - | - | - | - | - |
Total | (30,811) | (3,404) | (2,487) | (1,284) | (1,882) | (11,390) |
2025 | 2024* | |||
£m | % | £m | % | |
Due within one year | 166 | 31 | 144 | 34 |
Due within one and two years | 80 | 15 | 57 | 13 |
Due within two and three years | 56 | 11 | 44 | 10 |
Due within three and four years | 32 | 6 | 28 | 7 |
Due within four and five years | 23 | 4 | 18 | 4 |
Due beyond five years | 174 | 33 | 138 | 32 |
Total | 531 | 100 | 429 | 100 |
Tesco PLC Annual Report and Financial Statements 2025
194.
Description of risk | Management policy |
| Risks accepted through the provision of insurance products in return for a premium, exposed through the | TU operates a separate risk framework with dedicated risk and compliance teams and a suite of TU risk |
wholly-owned subsidiary, Tesco Underwriting Limited (TU). These risks may or may not occur as expected and the amount and timing of these risks are uncertain and determined by events outside of the Group’s control | policies to ensure that the TU insurance portfolio is operating within the agreed risk appetite. |
| (e.g. flood or vehicular accident). |
Risks | Description of risks | Mitigation |
Underwriting | Policies not priced correctly due to underestimating the frequency and/or severity | The Group has large numbers of policyholders with homogeneous exposures such as car and home |
| of the claims and/or that payments are required under conditions that were not | policies. Products are priced based on the Group’s knowledge using past exposures, historical losses (plus | |
| anticipated. | an appropriate allowance for incurred but not reported (IBNR) losses) and external data sources, with the | |
| appropriate adjustments to reflect anticipated future market conditions and expenses. | ||
Claims reserving | Estimates of insurance liabilities prove to be insufficient through inaccurate | The aim of the reserving policy is to provide estimates of insurance liabilities that are accurate and reliable |
| forecasting, adverse random variation and additional expenses. | across each line of business and are consistent over the time period required to settle all the claims. | |
| Provisions are monitored on an ongoing basis by a reserving committee and the TU board, and an annual | ||
| independent review is undertaken. | ||
Claims management | Claims management risk may arise in the event of inaccurate or incomplete case | The Group’s approach to claims management focuses upon creating a successful balance between |
| reserving or settlement, poor customer service, claims fraud, ineffective or | satisfying the needs of the customer against control of the overall cost of the provision of the service that | |
| inefficient claim processes or excessive costs of handling claims. | meets those needs in agreement with its service provider. Customers include both the insured as well as | |
| others that believe the insured has breached a duty of care. | ||
Reinsurance | Reinsurance contracts, placed to reduce exposure to specific risks, events, and | The reinsurance programme is subject to considerable scenario planning and approved by the Reinsurance |
| accumulations, fail to perform as planned and do not reduce the gross cost of | Committee and the TU board. All reinsurers in the reinsurance programme have a minimum credit rating of A. | |
| claims in terms of the limits purchased, by risks not being appropriately covered, | ||
| by reinsurance bad debts or by there being gaps in the programme. |
Category | Description | Mitigation |
| High-severity, low | High-severity, low frequency events (e.g. natural disasters) represent a material risk | Making appropriate allowance within the price calculated by underwriters and by purchasing a reinsurance |
| frequency event | as the occurrence of such an event would have a significant adverse impact on TU’s | programme that limits the impact of these events, using non-proportional reinsurance treaties to manage |
| concentrations | cash flows and profitability. | retention levels and the limits of protection. |
| Geographic and | Material geographical concentrations of risk exist in property portfolios such that | The Group only writes policies in the UK. TU models its exposure to this risk to estimate its probable |
| demographic | natural disasters (e.g. floods) may give rise to a large number of material damage | maximum loss and purchases reinsurance to significantly reduce its exposure to such events. |
| concentrations | and business interruption claims. | |
Economic conditions | The insurance portfolio exposes a potential accumulation of different risks in | The Group aims to ensure it charges the right premium for the business underwritten and it focuses on |
| the event of difficult economic conditions or more challenging points in the | maintaining prices in such difficult market conditions. It also monitors claims closely to identify any that | |
| underwriting cycle. | may be exaggerated or fraudulent. | |
Total aggregate exposure | The total aggregate exposure that the Group is prepared to accept in relation to | The exposures are monitored on a regular basis by reviewing reports which show the key aggregations to |
| concentrations of risk. | which the Group is exposed and by using a number of modelling tools to monitor aggregation and simulate | |
| catastrophe losses in order to measure the effectiveness of the reinsurance programmes, and to quantify | ||
| the net exposure. Additional stress and scenario tests are run using these models during the year. |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
195.
Financial statementsStrategic report
Note 27 Financial risk management continued
Risk | Description of risk | Management policy | Measurement |
Capital risk | Ability to continue as a going concern in order to provide returns to shareholders | Group capital | Refer to Note 32 for the |
| and benefits for policyholders and other stakeholders, while protecting and | The Group manages its capital structure (net debt plus equity) and makes | value of Net debt, and | |
| strengthening the Group balance sheet through the appropriate balance of | adjustments to it: | the Group statement | |
| debt and equity funding, and ability to meet minimum capital requirements for | – in light of changes to economic conditions and the strategic objectives | of changes in equity for | |
| regulated businesses. | of the Group. | the value of the Group’s | |
| – through dividend payment to shareholders, buying back shares and | equity. | ||
| cancelling them or issuing new shares. During the current financial year, | |||
| the Group continued the share buyback programme and cancelled these | |||
| shares (refer to Note 30). | |||
| – by raising finance in the public debt markets and borrowing centrally | |||
| and locally from financial institutions, using a variety of capital market | |||
| instruments and borrowing facilities to meet the requirements of each | |||
| local business. | |||
| Insurance capital | |||
| Solvency II (SII) came into force on 1 January 2016. It provides a framework for | |||
| managing and measuring the risks and the solvency position for all insurance | |||
| companies in the EU. Following the UK's departure from the EU, the SII | |||
| framework continues to be applied in the UK and its requirements are | |||
| applicable to TU. TU assesses its Solvency Capital Requirement (SCR) using | |||
| Prudential Regulation Authority (PRA) Standard Formula (2024: Partial Internal | |||
| Model). TU also maintains a capital contingency plan supported by its direct | |||
| shareholder, Tesco Personal Finance Group Limited (TPFG). TPFG as the parent | |||
| entity of TU adheres to SII requirements and has complied with the supervisory | |||
| requirements of the PRA. During the year, the Group was compliant with the | |||
| externally imposed capital requirements. | |||
Operational insurance risk | The Group is inadequately protected from liabilities arising from unforeseen events | The Group purchased assets, earnings and combined liability protection from | Refer to Note 23 for |
| in its operations. | the open insurance market for higher value losses only. | details on operational | |
| The risk not transferred to the insurance market is retained within the Group | insurance provisions. | ||
| with some cover being provided by the Group’s captive insurance company, | |||
| ELH Insurance Limited in Guernsey, which is consolidated in the Group financial | |||
| statements, covering assets, earnings and combined liability. |
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
196.
Note 28 Share-based payments
The table below shows amounts charged to the Group income statement in respect of share-based
payments:
2025 | 2024 | |
£m | £m | |
| Income statement | ||
Equity-settled share-based payment charge (a) | 119 | 123 |
Cash-settled National Insurance contributions (b) | 17 | 5 |
136 | 128 |
(a) Includes £4m (2024: £6m) in relation to discontinued operations.
(b) Includes £1m (2024: £2m) in relation to discontinued operations.
2025 | 2024 | |
£m | £m | |
Share-based payment charge included in operating profit/(loss) | (136) | (128) |
Share-based payments non-cash movement | 37 | 78 |
Increase/(decrease) in trade and other payables* | 99 | 50 |
| Included in Group operating cash flows | - | - |
Cash paid to purchase own shares including related fees and taxes | (123) | (146) |
Cash received from employees exercising SAYE options | 69 | 53 |
Included in Group financing cash flows | (54) | (93) |
The table below presents the components of share-based payments recognised in the Group
statement of changes in equity:
2025 | 2024 | |
£m | £m | |
(Increase)/decrease in own shares held* | 239 | 184 |
Shares delivered to employees | (239) | (184) |
Cash received from employees exercising SAYE options | 69 | 53 |
Share-based payments charge to the income statement | 119 | 123 |
Movements in shares withheld to settle employee tax | 2 | 4 |
| Reclassification | - | 15 |
Increase/(decrease) to retained earnings | (49) | 11 |
Included in the Group statement of changes in equity | 190 | 195 |
* Decrease in own shares held is the gross amount of shares that the employees are entitled to receive.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
197.
Financial statementsStrategic report
Note 28 Share-based payments continued
Share option, share bonus and incentive schemes
The Company had nine share option schemes and four discretionary share award schemes in operation during the financial year, all of which are equity-settled schemes:
Arrangement | Participants | Term | Vesting requirements |
| Savings-related option schemes | |||
The Savings-related Share Option Scheme (1981) | UK colleagues | Three or five years. | The options are capable of being exercised at the |
The Irish Savings-related Share Option Scheme (2000) | ROI colleagues | Three or five years. | end of the term at a subscription price of not less |
The Savings-related Share Option Scheme (2021) | UK colleagues | Three or five years. | than 80% of the average of the middle-market |
| quotations of an Ordinary share over the three | |||
The International Savings-related Share Option Scheme (2021) | ROI colleagues | Three or five years. | dealing days immediately preceding the offer date. |
The Global Save As You Earn Plan (2023) | India and CE colleagues | Three years. | |
Discretionary option schemes (a) | |||
The Group Bonus Plan | Selected senior executives and senior | Granted as a proportion of annual bonus following | Dependent on the achievement of corporate |
| managers | the completion of a required service period and is | performance, individual targets and continuous | |
| normally exercisable between three and 10 years | employment. | ||
| from the date of grant for nil consideration. No | |||
| further options will be granted under this scheme. | |||
The Performance Share Plan (2011) | Selected senior executives and senior | Normally exercisable between the vesting date(s) | Conditional upon the achievement of specified |
| managers | set at grant and 10 years from the date of grant | performance targets over a three-year period | |
| for nil consideration. No further options will be | and/or continuous employment. | ||
| granted under this scheme. | |||
The Long-Term Incentive Plan (2015) | Selected senior executives and senior | Normally exercisable between the vesting date(s) | |
| managers | set at grant and 10 years from the date of grant for | ||
| nil consideration. | |||
| The Booker Group PLC Performance Share Plan (2008) | Selected Booker senior colleagues (Booker) | Normally exercisable between the third anniversary | Conditional upon the achievement of specified |
| (Booker PSP and CSOP) | of the original date of grant and 10 years from | performance targets over a three-year period and | |
| the date of grant for nil consideration. No further | continuous employment. Company Share Option | ||
| options will be granted under this scheme. | Plan options (CSOP options) which are linked to the | ||
| Booker PSP options are exercisable at a subscription | |||
| price equivalent to the market value of the Booker | |||
| Shares at the time of grant. | |||
Discretionary share award schemes (b) | |||
| The Performance Share Plan (2011) and the Long Term | Selected senior executives and senior | Awards made under these plans will normally vest | Conditional on the achievement of specified |
| Incentive Plan (2021) | managers | on the vesting date(s) set on the date of the award | performance targets over a three-year performance |
| for nil consideration. | period and/or continuous employment. | ||
The Group Bonus Plan and Deferred Bonus Plan (2019) | Selected senior executives and senior | Granted based on a percentage of salary, which | Conditional on completion of continuous |
| managers | is determined by the achievement of corporate | employment and achievement of corporate and | |
| and individual performance targets. The fair value | individual performance targets. | ||
| of shares awarded under these schemes is their | |||
| market value on the date of award. Expected | |||
| dividends are not incorporated into the fair value. |
(a) The Executive Directors participate in short-term bonus and long-term incentive schemes designed to align their interests with those of shareholders. Full details of these schemes can be found in the Directors’ remuneration report. Refer to pages 90 to 122.
(b) Until 2017, nil-cost options were awarded to selected senior executives using the Group Bonus Plan and Performance Share Plan, and conditional share awards were granted to selected senior executives and senior managers. Since 2018, conditional share awards have
been granted to all eligible colleagues.
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
198.
The following tables reconcile the number of share options outstanding and the weighted average exercise price (WAEP):
For the 52 weeks ended 22 February 2025
| Irish Savings and International | Booker Group PLC | |||||||||
| Savings-related | Savings-related | Nil cost | Global Savings-related | Performance | ||||||
Share Option Schemes | Share Option Schemes | Share Option Schemes | Share Option Schemes | Share Plan Scheme | ||||||
Options | WAEP | Options | WAEP | Options | WAEP | Options | WAEP | Options | WAEP | |
Outstanding at 24 February 2024 | 192,162,445 | 205.24 | 6,837,146 | 209.55 | 803,031 | - | 1,292,354 | 220.00 | 258,828 | - |
Granted | 48,584,817 | 279.00 | 1,480,934 | 279.00 | 21,358 | - | 622,815 | 279.00 | - | - |
Forfeited | (16,000,990) | 213.11 | (855,791) | 210.44 | - | - | (53,571) | 221.33 | (24,533) | - |
Exercised | (33,778,419) | 196.21 | (1,181,929) | 196.65 | (824,389) | - | - | - | (15,887) | - |
Outstanding at 22 February 2025 | 190,967,853 | 224.95 | 6,280,360 | 228.24 | - | - | 1,861,598 | 239.70 | 218,408 | - |
Exercise price range (pence) | 182.00 to 279.00 | 182.00 to 279.00 | - | 220.00 to 279.00 | - | |||||
Weighted average remaining contractual life (years)* | 2.71 | 2.43 | - | 2.94 | - | |||||
Exercisable at 22 February 2025 | 39,903 | 193.60 | 1,316 | 198.00 | - | - | - | - | 218,408 | - |
| Exercise price range (pence) | 188.00 to 198.00 | 198.00 to 198.00 | - | - | - | |||||
| Weighted average remaining contractual life (years)* | - | - | - | - | - | |||||
* Contractual life represents the period from award to the scheme end date. Certain schemes may be exercised later than vesting date at the discretion of the individual.
Share options were exercised on a regular basis throughout the financial year. The average share price during the 52 weeks ended 22 February 2025 was 335.25p (24 February 2024: 270.31p).
For the 52 weeks ended 24 February 2024
| Irish Savings and International | Booker Group PLC | |||||||||
| Savings-related | Savings-related | NII cost | Global Savings-related | Performance | ||||||
Share Option Schemes | Share Option Schemes | Share Option Schemes | Share Option Scheme | Share Plan Scheme | ||||||
Options | WAEP | Options | WAEP | Options | WAEP | Options | WAEP | Options | WAEP | |
Outstanding at 25 February 2023 | 176,035,795 | 199.35 | 6,724,207 | 205.67 | 2,111,675 | - | - | - | 366,639 | - |
Granted | 61,056,367 | 220.00 | 1,931,876 | 220.00 | 69,131 | - | 1,292,671 | 220.00 | - | - |
Forfeited | (19,939,606) | 200.81 | (893,588) | 206.55 | - | (317) | 220.00 | (22,659) | - | |
Exercised | (24,990,111) | 203.36 | (925,349) | 206.00 | (1,377,775) | - | - | - | (85,152) | - |
Outstanding at 24 February 2024 | 192,162,445 | 205.24 | 6,837,146 | 209.55 | 803,031 | - | 1,292,354 | 220.00 | 258,828 | - |
Exercise price range (pence) | 168.00 to 242.00 | 182.00 to 260.00 | - | 220.00 to 220.00 | - | |||||
Weighted average remaining contractual life (years)* | 2.79 | 2.50 | 2.08 | 3.60 | - | |||||
Exercisable at 24 February 2024 | 49,950 | 206.24 | 1,712 | 219.00 | 803,031 | - | - | - | 258,828 | - |
Exercise price range (pence) | 168.00 | to 219.00 | 219.00 to 219.00 | - | - | - | ||||
| Weighted average remaining contractual life (years)* | - | - | 2.08 | - | - | |||||
Refer to previous table for footnote.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
199.
Financial statementsStrategic report
Note 28 Share-based payments continued
The fair value of savings-related share options schemes is estimated at the date of grant using the
Black-Scholes option pricing model. The following table gives the assumptions applied to the options
granted in the respective periods shown.
2025 | 2024 | |
SAYE | SAYE | |
Expected dividend yield (%) | 4.21 - 4.42 | 4.48 - 4.61 |
Expected volatility (%) | 19.2 - 20.8 | 19.35 - 21.42 |
Risk-free interest rate (%) | 4.41 - 4.49 | 3.59 - 3.74 |
Expected life of option (years) | 3 or 5 | 3 or 5 |
Weighted average fair value of options granted (pence) | 77.71 | 66.76 |
Probability of forfeiture (%) | 6 - 12 | 6 - 12 |
Share price (pence) | 349.10 | 290.50 |
Weighted average exercise price (pence) | 279.00 | 220.00 |
Volatility is a measure of the amount by which a price is expected to fluctuate during a period. The
measure of volatility used in the Group’s option pricing models is the annualised standard deviation
of the continuously compounded rates of return on the share over a period of time. In estimating the
future volatility of the Company’s share price, the Board considers the historical volatility of the share
price over the most recent period that is generally commensurate with the expected term of the
option, taking into account the remaining contractual life of the option.
The number and weighted average fair value (WAFV) of share bonuses granted during the financial
year were:
2025 | 2024 | |||
Number | WAFV | Number | WAFV | |
of shares | pence | of shares | pence | |
Deferred Bonus P lan | 17,554,675 | 306.48 | 15,144,646 | 270.27 |
Performance Share Plan and Long-Term Incentive Plan | 21,370,918 | 309.88 | 25,497,401 | 253.25 |
Note 29 Post-employment benefits
Pensions
The Group operates a variety of post-employment benefit arrangements, covering both funded and
unfunded defined benefit schemes and defined contribution schemes.
Defined contribution
Defined contribution schemes are open to all Tesco employees in the UK and ROI.
Under the Group’s defined contribution pension schemes, employees of the Group pay contributions
to an independently administered fund, into which the Group also pays contributions based upon a
fixed percentage of the employee’s contributions. The Group has no further payment obligations once
its contributions have been paid. Contributions paid for defined contribution schemes in continuing
operations of £454m (2024: £415m) have been recognised in the Group income statement. This
includes £181m (2024: £166m) of salaries paid as pension contributions.
Defined benefit schemes
The Group has a defined benefit pension deficit of £307m (2024: £657m), and a defined benefit
pension surplus of £56m (2024: £22m), comprising a number of schemes. The most significant
schemes are for the Group’s employees in the UK and ROI, which are closed to future accrual.
The defined benefit pension deficit in the UK represents 122% (2024: 104%) of the net Group deficit.
United Kingdom
The principal scheme within the Group is the Tesco PLC Pension Scheme (the Scheme), the assets of
which are held as a segregated fund and administered by the Trustee.
The Scheme is established under trust law and has a corporate trustee (the Trustee) that is required
to run the Scheme in accordance with the Scheme’s Trust Deed and Rules and to comply with all
relevant legislation. Responsibility for the governance of the Scheme lies with the Trustee. The Trustee
is a company whose directors comprise:
1. representatives of the Group;
2. independent trustees; and
3. representatives of the Scheme participants, in accordance with its articles of association and
UK pension law.
On completion of a comprehensive strategic review of the Scheme’s long-term needs, the Trustee
appointed Schroders with effect from 28 June 2024 as the Scheme’s principal Outsourced Chief
Investment Officer (OCIO), under an investment management agreement. Schroders works with the
Trustee to implement the Scheme’s investment strategy and deliver security for the Scheme’s members.
As set out in the Annual Report and Group financial statements for 2024, the Group has continued to
monitor the Virgin Media vs NTL Pension Trustees and other related court cases. Following the Court
of Appeal’s decision to uphold the ruling of the High Court against Virgin Media, the Group has
continued to assess the extent to which the defined benefit schemes may be impacted by the
outcome of these cases. For the Group’s main scheme (Tesco PLC Pension Scheme), there are no
findings from the work undertaken to date that would require any adjustment to the Group’s financial
statements. Work is ongoing with regards to the smaller schemes within the UK (Booker & Budgens),
however given their comparable size, the Group does not anticipate any material findings.
Management will continue to monitor developments of the associated court cases and will assess any
change in risk and potential impact on the Group as required.
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
200.
Scheme funding
The Group considers two measures of the pension surplus/deficit. The accounting position is shown
on the Group balance sheet. The funding position, calculated at the triennial funding valuation, is used
to agree contributions made to the schemes. The two measures will vary because they are for
different purposes and are calculated at different dates and in different ways. The key calculation
difference is that the funding position considers the expected returns of scheme assets when
calculating the liability, whereas the accounting position calculated under IAS 19 discounts liabilities
based on high quality corporate bond yields.
The most recent completed triennial funding valuation of the Scheme was performed as at 31 March
2022 using the projected unit credit method. The funding position was a surplus of £0.9bn. The
Scheme remained in a funding surplus as at 22 February 2025.
Subsequent to this triennial funding valuation it was agreed that no further pension deficit
contributions would be required, with contributions next expected to be assessed at the 31 March
2025 triennial review. The Group paid £17m per annum (2024: £17m) to meet expenses of the Scheme,
including the Pension Protection Fund levy.
The most recent triennial funding valuation of the Booker Pension Scheme showed a deficit of £49m at
31 March 2024, with agreement for the current deficit contributions of £17m per annum to reduce to
£5m per annum from April 2026. The most recent triennial funding valuation of the Budgens Pension
Scheme showed a surplus of £2m at 31 March 2024. The Company and the Trustee have agreed that
no deficit contributions are currently required.
IFRIC 14
For schemes in an accounting surplus position, these surpluses are recognised on the balance sheet
in line with IFRIC 14, as the Group has an unconditional legal right to any future economic benefits by
way of future refunds following a gradual settlement.
Maturity profile of the defined benefit obligation
The estimated duration of the Scheme defined benefit obligation is an indicator of the weighted
average term of benefit payments after discounting. For the Scheme, this is 15 years.
Around 34% of the undiscounted benefits are due to be paid beyond 30 years’ time, with the last
payments expected to be over 80 years from now. The table below sets out the estimated
undiscounted benefit payments expected to be paid out over the life of the Scheme:
2025 | 2024 | |
£m | £m | |
Within the next 12 months | 393 | 363 |
Between one and 15 years | 8,888 | 8,361 |
Between 15 and 30 years | 13,000 | 12,774 |
Between 30 and 45 years | 8,736 | 8,893 |
Over 45 years | 2,530 | 2,802 |
Total expected undiscounted benefit payments | 33,547 | 33,193 |
The defined benefit obligation held by the Scheme is broken down as follows:
| % | |
Deferred members | 66 |
Current pensioners | 34 |
Risks
The Group bears a number of risks in relation to the Scheme, which are described below:
Risk | Description of risk | Mitigation |
| Investment | The Scheme’s defined benefit | The Trustee and the Group regularly monitor the funding |
| obligation is calculated using a | position and operate a diversified investment strategy. | |
| discount rate set with reference | The Trustee and the Group take a balanced approach to | |
| to corporate bond yields. If the | investment risk and have a long-term plan to significantly | |
| return on the Scheme’s assets | reduce the investment risk within the Scheme. | |
| underperforms this rate, the | ||
| accounting deficit will increase. | The Trustee considers climate risk as one of the key | |
| If the Scheme’s assets | investment risks faced by the Scheme and has set up a | |
| underperform the expected | Responsible Investment Committee to consider | |
| return for the funding valuation, | climate-related issues relating to the Scheme. | |
| this may require additional | The Scheme has also made a commitment to aim for | |
| contributions to be made by | investments to be net-zero by 2050. Further details on the | |
| the Group. | metrics, targets and actions taken in relation to climate risk | |
| can be seen in the Scheme’s Climate Change Report. | ||
| Inflation | The Scheme’s defined benefit | As part of the investment strategy, the Trustee aims to |
| obligation is linked to inflation. | mitigate this risk through investment in a liability-driven | |
| A higher rate of expected | investment (LDI) portfolio. | |
| long-term inflation will therefore | The portfolio invests in assets which increase in value as | |
| lead to higher liabilities, both for | inflation expectations increase. This mitigates the impact | |
| the IAS 19 and funding liability. | of any adverse movement in long-term inflation | |
| If the Scheme’s funding liability | expectations. | |
| increases, this may require | The Scheme’s holdings are designed to hedge against | |
| additional contributions to be | inflation risk for most of the funded liabilities. | |
| made by the Group. | ||
| Interest | A decrease in corporate bond | As part of the investment strategy, the Trustee aims to |
| rate | yields in isolation is expected | mitigate this risk through investment in an LDI portfolio. |
| to increase the accounting | The portfolio invests in assets which increase in value as | |
| deficit. Similarly, a decrease in | interest rates decrease. The Scheme’s holdings are | |
| gilt yields in isolation is | designed to hedge against interest rate risk for most of | |
| expected to have an adverse | the funded liabilities. | |
| impact on the funding position | ||
| of the Scheme. This may lead | Because the aim of the portfolio is to mitigate risk for the | |
| to additional contributions | funding position, ineffectiveness in hedging for the | |
| being made by the Group. | accounting deficit can arise where corporate bond and | |
| gilt yields diverge. This is partially offset by the Scheme’s | ||
| holdings in corporate bonds. | ||
| Using an LDI portfolio means a rise in interest rates can | ||
| lead to collateral calls. The Trustee and the Group | ||
| regularly monitor and manage the level of liquidity to | ||
| ensure it remains appropriate. | ||
| Life | The Scheme’s obligations are | To reduce this risk, changes to future benefits were |
| expectancy | to provide benefits for the life | introduced in June 2012 to increase the age at which |
| of the member and so | members can take their full pension by around two years. | |
| increases in life expectancy | The Trustee and the Group regularly monitor the impact | |
| will lead to a higher defined | of changes in longevity on the Scheme defined benefit | |
| benefit obligation. | ||
| obligation. |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
201.
Financial statementsStrategic report
Note 29 Post-employment benefits continued
The Group operates an operations and audit pensions committee to further strengthen the Scheme’s
Trustee governance and provide greater oversight and stronger internal control over the Group’s risks.
A second committee, the Group pensions committee provides an additional layer of governance and
risk management. Further mitigation of the risks is provided by external advisors and the Trustee who
considers the funding position, fund performance and impacts of any regulatory changes.
Scheme principal assumptions
Financial assumptions
The principal assumptions, on a weighted average basis, used by external actuaries to value the
defined benefit obligation of the Scheme were as follows:
2025 | 2024 | |
% | % | |
Discount rate | 5.7 | 5.1 |
Price inflation | 3.0 | 2.9 |
Rate of increase in deferred pensions* | 2.6 | 2.5 |
| Rate of increase in pensions in payment* | ||
Benefits accrued before 1 June 2012 | 2.9 | 2.8 |
Benefits accrued after 1 June 2012 | 2.6 | 2.5 |
* In excess of any guaranteed minimum pension (GMP) element.
Discount rate
The discount rate for the Scheme is determined by reference to market yields of high-quality
corporate bonds of suitable currency and term to the Scheme cash flows and extrapolated based on
the trend observable in corporate bond yields.
Inflation
The inflation assumption is used to determine increases in pensions linked to RPI and CPI inflation
within sections of the Scheme, subject to relevant maximum and minimum increases.
RPI inflation is derived by reference to the difference between fixed-interest and index-linked
long-term government bonds. To account for the premium that investors are willing to pay to mitigate
the risk that inflation is higher than expected, the inflation assumption incorporates an inflation risk
premium. CPI inflation is set by reference to RPI.
The Group uses a bifurcated approach to pre- and post-2030 assumptions, reflecting the impact of
the RPI reforms from 2030 onwards. In consultation with external actuaries, the inflation risk premium
has been set at 0.3% p.a. pre-2030 and 0.5% p.a. post-2030, which is a weighted average of 0.44%
(2024: 0.44%). The CPI differential has been set as 1.0% p.a. pre-2030 and 0.1% p.a. post-2030, which is
a weighted average of 0.43% lower than RPI (2024: 0.46%).
Mortality assumptions
The Trustee’s actuary conducted a mortality analysis of the Scheme as part of the triennial funding
valuation process. Subsequent to this analysis, the Group adopted the best estimate assumptions for
the calculation of the defined benefit obligation for the main UK scheme.
The mortality assumptions used are based on tables that have been projected to 2018 with CMI 2020
improvements. In addition, the allowance for future mortality improvements from 2018 has been
updated to be in line with CMI 2023, with a long-term improvement rate of 1.00% p.a., a 0% weighting
applied to both 2020 and 2021 data and a 25% weighting applied to 2022 and 2023, reflecting the
expectation that the COVID-19 pandemic has had an impact on future life expectancies.
The base tables used in calculating the mortality assumptions are different for various categories of
members, as shown below:
Pensioner | Non-Pensioner | ||
Male | Staff | 96% of SAPS S3 normal heavy | 100% of SAPS S3 normal heavy |
Senior Manager | 112% of SAPS S3 normal light | 113% of SAPS S3 normal light | |
Female | Staff | 105% of SAPS S3 normal heavy | 109% of SAPS S3 normal heavy |
Senior Manager | 87% of SAPS S3 all middle | 87% of SAPS S3 all middle |
The following table illustrates the life expectancy of an average member retiring at age 65 at the
balance sheet date and a member reaching age 65 at the balance sheet date +25 years. A comparison
between the two retiree dates illustrates the expected improvements in mortality over the next
25 years.
2025 | 2024 | ||
Years | Years | ||
Retiring at the balance sheet date at age 65: | Male | 19.6 | 19.5 |
Female | 22.2 | 22.1 | |
Retiring at the balance sheet date +25 years at age 65: | Male | 20.6 | 20.6 |
Female | 23.4 | 23.3 |
Sensitivity analysis of significant actuarial assumptions
The sensitivity of significant assumptions upon the Scheme defined benefit obligation are detailed below:
2025 | 2024 | |||
| Financial assumptions – Increase/(decrease) in UK defined | Discount rate | Inflation Rate | Discount rate | Inflation Rate |
| benefit obligation | £m | £m | £m | £m |
Impact of 0.1% increase of the assumption | (157) | 146 | (191) | 167 |
Impact of 0.1% decrease of the assumption | 168 | (135) | 191 | (167) |
Impact of 1.0% increase of the assumption | (1,459) | 1,492 | (1,686) | 1,770 |
Impact of 1.0% decrease of the assumption | 1,829 | (1,279) | 2,153 | (1,483) |
2025 | 2024 | |
Mortality assumptions – Increase/(decrease) in UK defined benefit obligation | £m | £m |
Impact of 1 year increase in longevity | 292 | 335 |
Impact of 1 year decrease in longevity | (325) | (371) |
The sensitivities reflect the range of recent assumption movements and illustrate that the financial
assumption sensitivities do not move in a linear fashion. Movements in the defined benefit obligation
from discount rate and inflation rate changes may be partially offset by movements in assets.
Overseas
The Group operates defined benefit schemes in ROI, which are closed to future accrual. An external
actuary, using the projected unit credit method, carried out the latest assessment of the ROI
schemes as at 22 February 2025. At the financial year end, the accounting surplus relating to ROI was
£46m (2024: £16m).
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
202.
Post-employment benefits other than pensions
The Group operates a scheme offering post-retirement healthcare benefits. The cost of providing these benefits has been accounted for on a similar basis to that used for defined benefit pension schemes.
The accounting deficit as at 22 February 2025 of £3m (24 February 2024: £4m) was determined in accordance with the advice of external actuaries. During both the current and prior year, £nil was charged to
the Group income statement and no benefits were paid.
Plan assets
The Group’s pension schemes hold assets that both provide returns and mitigate risk, including the volatility of future pension payments.
As a result of reviewing the Group’s strategic objectives, the Group transitioned the management of assets from Tesco Pension Investment Limited (TPI) to Schroders plc (Schroders) at the end of June 2024.
There has been no impact on the value of the assets as a result of the transfer of ownership.
The table below shows a breakdown of the combined investments held by the Group’s schemes:
2025 | 2024 | |||||||
Quoted | Unquoted | Total | Quoted | Unquoted | Total | |||
£m | £m | £m | % | £m | £m | £m | % | |
| Equities | ||||||||
UK | 47 | - | 47 | - | 58 | - | 58 | - |
Europe | 190 | - | 190 | 2 | 55 | - | 55 | - |
Rest of the world | 1,421 | - | 1,421 | 12 | 1,303 | - | 1,303 | 12 |
| 1,658 | - | 1,658 | 14 | 1,416 | - | 1,416 | 12 | |
| Bonds | ||||||||
Government | 259 | - | 259 | 2 | 570 | - | 570 | 5 |
Corporates – investment grade | 888 | - | 888 | 8 | 875 | - | 875 | 7 |
Corporates – non-investment grade | 433 | - | 433 | 4 | 155 | - | 155 | 1 |
| 1,580 | - | 1,580 | 14 | 1,600 | - | 1,600 | 13 | |
| Property | ||||||||
| UK | - | 666 | 666 | 6 | - | 854 | 854 | 7 |
| Rest of the world | - | 392 | 392 | 3 | - | 521 | 521 | 4 |
| - | 1,058 | 1,058 | 9 | - | 1,375 | 1,375 | 11 | |
| Alternative assets | ||||||||
| Hedge funds | - | - | - | - | - | 30 | 30 | - |
| Private equity | - | 864 | 864 | 7 | - | 982 | 982 | 8 |
Other | 119 | 1,679 | 1,798 | 15 | 93 | 1,701 | 1,794 | 15 |
119 | 2,543 | 2,662 | 22 | 93 | 2,713 | 2,806 | 23 | |
LDI portfolio | 6,327 | (2,509) | 3,818 | 33 | 5,723 | (1,527) | 4,196 | 35 |
Cash | 939 | - | 939 | 8 | 763 | - | 763 | 6 |
Total fair value of plan assets | 10,623 | 1,092 | 11,715 | 100 | 9,595 | 2,561 | 12,156 | 100 |
Quoted assets are those with a quoted price in an active market. Unquoted assets are valued in accordance with IFRS 13 ‘Fair value measurement’, using the most appropriate level within the fair value
hierarchy based on the specifics of the asset class, and in line with industry standard guidelines, including the RICS methodology for property and the IPEV guidelines for private equity.
The LDI portfolio consists of assets, including gilts and index-linked gilts and money market funds, of the value of £7,102m (2024: £6,556m) and associated repurchase agreements and swaps of £(3,284)m
(2024: £(2,360)m). Other alternative assets include infrastructure and private credit investments. Other derivatives are included in the asset category to which they relate, reflecting the underlying nature and
exposure of the derivative. The fall in fair value is primarily attributable to the increase in gilt yields during the year.
The plan assets include £185m (2024: £239m) relating to property used by the Group. Group property with net carrying value of £820m (2024: £829m) (refer to Note 12) and a value to the Scheme of at least
£775m (2024: £775m) is held as security in favour of the Scheme.
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Note 29 Post-employment benefits continued
Movement in the Group pension surplus/(deficit) during the financial period
Fair value of plan assets | Defined benefit obligation | Net defined benefit surplus/(deficit) | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
£m | £m | £m | £m | £m | £m | |
Opening balance | 12,156 | 13,025 | (12,787) | (13,416) | (631) | (391) |
| Current service cost | - | - | (17) | (15) | (17) | (15) |
Finance income/(cost) | 601 | 619 | (633) | (637) | (32) | (18) |
Included in the Group income statement | 601 | 619 | (650) | (652) | (49) | (33) |
| Remeasurement gain/(loss): | ||||||
| Financial assumptions gain/(loss) | - | - | 981 | 720 | 981 | 720 |
| Demographic assumptions gain/(loss) | - | - | 17 | 261 | 17 | 261 |
| Experience gain/(loss) | - | - | (62) | (182) | (62) | (182) |
Return on plan assets excluding finance income | (550) | (1,050) | - | - | (550) | (1,050) |
Foreign currency translation | (9) | (10) | 8 | 10 | (1) | - |
Included in the Group statement of comprehensive income/(loss) | (559) | (1,060) | 944 | 809 | 385 | (251) |
Employer contributions | 17 | 15 | - | - | 17 | 15 |
Additional employer contributions | 23 | 24 | - | - | 23 | 24 |
Benefits paid | (523) | (467) | 530 | 472 | 7 | 5 |
Other movements | (483) | (428) | 530 | 472 | 47 | 44 |
Closing balance | 11,715 | 12,156 | (11,963) | (12,787) | (248) | (631) |
Withholding tax on surplus (a) | (3) | (4) | ||||
Closing balance, net of withholding tax | (251) | (635) | ||||
| Consisting of: | ||||||
Schemes in deficit | (307) | (657) | ||||
Schemes in surplus (b) | 56 | 22 | ||||
Deferred tax asset/(liability) (c) | 71 | 162 | ||||
Surplus/(deficit) in schemes at the end of the year, net of deferred tax | (180) | (473) |
(a) The movement in the year is recognised through other comprehensive income in remeasurements of defined benefit pension schemes.
(b) Schemes in surplus in the UK are presented on the balance sheet net of a 25% (2024: 35%) withholding tax.
(c) Including £(6)m deferred tax liability relating to the ROI scheme in surplus where no withholding tax is applicable (2024: £(2)m).
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
204.
2025 | 2024 | |||
Or dinary shares of 61/3p each | Ordinary shares of 61/3 p each | |||
Number | £m | Number | £m | |
| Allotted, called-up and fully paid: | ||||
At the beginning of the year | 7,038,930,440 | 445 | 7,318,341,195 | 463 |
Shares cancelled | (302,088,678) | (19) | (279,410,755) | (18) |
At the end of the year | 6,736,841,762 | 426 | 7,038,930,440 | 445 |
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Note 30 Share capital and other reserves continued
| Capital | ||||||||
| redemption | Insurance finance | |||||||
reserve | Hedging reserve | Translation reserve | Own shares held* | Merger reserve | reserve | Total | ||
Notes | £m | £m | £m | £m | £m | £m | £m | |
At 24 February 2024 | 61 | 75 | 206 | (315) | 3,090 | 14 | 3,131 | |
| Other comprehensive income/(loss) | ||||||||
| Retranslation of net assets of overseas subsidiaries, joint ventures and associates | - | - | (89) | - | - | - | (89) | |
| Impact of net investment hedges | - | - | 33 | - | - | - | 33 | |
| Gains/(losses) on cash flow hedges | - | 40 | - | - | - | - | 40 | |
| Cash flow hedges reclassified and reported in the Group income statement | - | (69) | - | - | - | - | (69) | |
| Finance income/(expenses) from reinsurance contracts held | - | - | - | - | - | 1 | 1 | |
Tax relating to components of other comprehensive income | 7 | - | 7 | - | - | - | - | 7 |
| Total other comprehensive income/(loss) | - | (22) | (56) | - | - | 1 | (77) | |
| Transfer from translation reserve to retained earnings | - | - | 36 | - | - | - | 36 | |
| Inventory cash flow hedge movements | ||||||||
| (Gains)/losses transferred to the cost of inventory | - | (4) | - | - | - | - | (4) | |
| Total inventory cash flow hedge movements | - | (4) | - | - | - | - | (4) | |
| Transactions with owners | ||||||||
| Own shares purchased for cancellation | - | - | - | (1,016) | - | - | (1,016) | |
Own shares cancelled | 19 | - | - | 1,016 | - | - | 1,035 | |
| Own shares purchased for share schemes | - | - | - | (204) | - | - | (204) | |
Share-based payments | 28 | - | - | - | 239 | - | - | 239 |
Total transactions with owners | 19 | - | - | 35 | - | - | 54 | |
At 22 February 2025 | 80 | 49 | 186 | (280) | 3,090 | 15 | 3,140 |
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
206.
| Capital | ||||||||
| redemption | Insurance finance | |||||||
reserve | Hedging reserve | Translation reserve | Own shares held* | Merger reserve | reserve | Total | ||
Notes | £m | £m | £m | £m | £m | £m | £m | |
At 25 February 2023 | 43 | 27 | 322 | (359) | 3,090 | 16 | 3,139 | |
| Other comprehensive income/(loss) | ||||||||
| Retranslation of net assets of overseas subsidiaries, joint ventures and associates | - | - | (157) | - | - | - | (157) | |
| Impact of net investment hedges | - | - | 41 | - | - | - | 41 | |
| Gains/(losses) on cash flow hedges | - | (14) | - | - | - | - | (14) | |
| Cash flow hedges reclassified and reported in the Group income statement | - | (56) | - | - | - | - | (56) | |
| Finance income/(expenses) from insurance contracts issued | - | - | - | - | - | (4) | (4) | |
| Finance income/(expenses) from reinsurance contracts held | - | - | - | - | - | 1 | 1 | |
Tax relating to components of other comprehensive income | 7 | - | (5) | - | - | - | 1 | (4) |
| Total other comprehensive income/(loss) | - | (75) | (116) | - | - | (2) | (193) | |
| Transfer from hedging reserve to retained earnings | - | 44 | - | - | - | - | 44 | |
| Inventory cash flow hedge movements | ||||||||
| (Gains)/losses transferred to the cost of inventory | - | 79 | - | - | - | - | 79 | |
| Total inventory cash flow hedge movements | - | 79 | - | - | - | - | 79 | |
| Transactions with owners | ||||||||
| Own shares purchased for cancellation | - | - | - | (752) | - | - | (752) | |
Own shares cancelled | 18 | - | - | 752 | - | - | 770 | |
| Own shares purchased for share schemes | - | - | - | (140) | - | - | (140) | |
Share-based payments | 28 | - | - | - | 184 | - | - | 184 |
Total transactions with owners | 18 | - | - | 44 | - | - | 62 | |
At 24 February 2024 | 61 | 75 | 206 | (315) | 3,090 | 14 | 3,131 |
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Note 30 Share capital and other reserves continued
2025 | 2024 | |
Own shares purchased for share schemes | £m | £m |
Included in the Group statement of changes in equity | (204) | (140) |
| Payments in relation to prior year financial liabilities | - | (55) |
Shares withheld to settle employee tax | 81 | 49 |
Cash received from employees exercising SAYE options | 69 | 53 |
Included in the Group cash flow statement | (54) | (93) |
Notes to the Group financial statements continued
Note 31 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note. Transactions between the Group
and its joint ventures and associates are disclosed below:
Transactions
Joint ventures | Associates | |||
2025 | 2024 | 2025 | 2024 | |
£m | £m | £m | £m | |
Sales to related parties | 645 | 606 | - | - |
Purchases from related parties | 109 | 126 | - | - |
Dividends received | 2 | 9 | - | - |
Injection of equity funding | 10 | 9 | 5 | - |
Sales to related parties consist of service/management fees and loan interest.
Transactions between the Group and the Group’s pension plans are disclosed in Note 29.
Balances
Joint ventures | Associates | |||
2025 | 2024 | 2025 | 2024 | |
£m | £m | £m | £m | |
Amounts owed to related parties | (7) | (7) | - | - |
Amounts owed by related parties | 57 | 80 | - | - |
Lease liabilities payable to related parties (a) | (1,840) | (1,844) | - | - |
Loans to related parties (b) | 97 | 96 | - | - |
(a) Lease liabilities payable to related parties represent leases entered into by the Group for properties held by joint ventures.
Refer to Note 14 for further details.
(b) A 12-month ECL allowance is recorded on initial recognition. In the current and prior financial years, the ECL allowance was
immaterial.
Amounts owed to and owed by related parties are measured at amortised cost and the carrying
values approximate fair value. The undiscounted cash flow amounts owed to related parties are due
within one year and do not differ from the amounts included in the table above.
A number of the Group’s subsidiaries are members of one or more partnerships to whom the
provisions of the Partnerships (Accounts) Regulations 2008 apply. The financial statements for those
partnerships have been consolidated into these financial statements pursuant to Regulation 7 of
the Regulations.
Tesco PLC Annual Report and Financial Statements 2025
208.
2025 | 2024 | |
£m | £m | |
Salaries and short-term benefits | 28 | 28 |
Pensions and cash in lieu of pensions | 1 | 1 |
Share-based payments | 21 | 22 |
Joining costs and loss of office costs | 1 | - |
51 | 51 | |
| Attributable to: | ||
The Board of Directors (including Non-executive Directors) | 18 | 13 |
Executive Committee (members not on the Board of Directors) | 33 | 38 |
51 | 51 |
Note 32 Analysis of changes in net debt
The Group’s Net debt APM is defined in the Glossary.
2025 | 2024 | |
£m | £m | |
Borrowings, excluding overdrafts | (6,094) | (6,407) |
Lease liabilities | (7,716) | (7,622) |
Net financing derivatives | 602 | 544 |
Liabilities from financing activities | (13,208) | (13,485) |
Cash and cash equivalents in the balance sheet | 2,255 | 2,340 |
Overdrafts (a) | (856) | (812) |
Cash and cash equivalents (including overdrafts) in the cash flow statement | 1,399 | 1,528 |
Short-term investments | 2,223 | 2,128 |
Joint venture loans | 97 | 96 |
Interest and other receivables | 19 | 23 |
Net operating and investing derivatives | 16 | 26 |
Net debt APM (b) | (9,454) | (9,684) |
(a) Overdraft balances are included within borrowings in the Group balance sheet, and within cash and cash equivalents in the Group cash flow statement. Refer to Note 19.
(b) Following the disposal of the Group’s Banking operations, Net debt is now presented on a Group continuing operations basis including Insurance and Money Services, rather than on a Retail basis including Retail discontinued operations. The comparative has been restated.
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Note 32 Analysis of changes in net debt continued
The tables below set out the movements in liabilities arising from financing activities:
| Borrowings, | Net financing | Liabilities from | |||
| excluding | derivative financial | Share purchase | Group financing | ||
overdrafts | Lease liabilities | instruments (a) | obligations (b) | activities (a) | |
£m | £m | £m | £m | £m | |
At 24 February 2024 | (6,407) | (7,622) | 544 | - | (13,485) |
Cash flows arising from financing activities | 347 | 600 | (32) | 1,016 | 1,931 |
| Cash flows arising from operating activities: | |||||
Interest paid | 210 | 377 | 85 | - | 672 |
| Non-cash movements: | |||||
Fair value gains/(losses) | (92) | - | 96 | - | 4 |
Foreign exchange | 58 | 25 | - | - | 83 |
Interest income/(charge) | (210) | (377) | (91) | - | (678) |
| Acquisitions and disposals | - | (5) | - | - | (5) |
| Lease additions, terminations, modifications and reassessments | - | (714) | - | - | (714) |
| Share purchase agreements | - | - | - | (1,016) | (1,016) |
At 22 February 2025 | (6,094) | (7,716) | 602 | - | (13,208) |
(a) Net financing derivatives comprise those derivatives which hedge the Group’s exposures in respect of lease liabilities and borrowings. Net operating and investing derivatives of £16m (2024: £26m), which form part of the Group’s Net debt APM, are not included in liabilities
from Group financing activities.
(b) Share purchase obligations form part of the liabilities arising from the Group’s financing activities, but do not form part of Net debt. Cash flows arising from financing activities exclude £(91)m (2024: £(91)m) cash outflows relating to other cancellable arrangements and
prepayments, and £69m (2024: £53m) cash received from employees exercising SAYE options.
| Borrowings, | Net financing | Liabilities from | |||
| excluding | derivative financial | Share purchase | Group financing | ||
overdrafts | Lease liabilities | instruments (a) | obligations (b) | activities (a) | |
£m | £m | £m | £m | £m | |
At 25 February 2023 | (6,451) | (7,727) | 472 | (55) | (13,761) |
Cash flows arising from financing activities | (457) | 627 | 4 | 807 | 981 |
| Cash flows arising from operating activities: | |||||
Interest paid (c) | 192 | 373 | 125 | - | 690 |
| Non-cash movements: | |||||
Fair value gains/(losses) | (124) | - | 50 | - | (74) |
Foreign exchange | 101 | 46 | - | - | 147 |
Interest income/(charge) (c) | (217) | (373) | (108) | - | (698) |
| Acquisitions and disposals | - | 3 | - | - | 3 |
| Lease additions, terminations, modifications and reassessments | - | (588) | - | - | (588) |
| Share purchase agreements | - | - | - | (752) | (752) |
Transfer to disposal group | 549 | 17 | 1 | - | 567 |
At 24 February 2024 | (6,407) | (7,622) | 544 | - | (13,485) |
(a)-(b) Refer to previous table for footnotes.
(c) Interest paid and Interest income/(charge) have been re-presented in the prior year.
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2025
210.
Name | Company number | Name | Company number | Name | Company number |
Booker Group Limited | 5145685 | Spen Hill Regeneration Limited | 6418300 | Tesco Food Sourcing Limited | 7502096 |
Booker Wholesale Holdings Limited | 5137980 | Supermarket Income Investments UK (No16) Limited | 12605279 | Tesco Freetime Limited | 4345023 |
Buttoncase Limited | 5298861 | T & S Stores Limited | 1228935 | Tesco Fuchsia (3LP) Limited | 10127851 |
Day and Nite Stores Limited | 1746058 | Tapesilver Limited | 5205362 | Tesco Gateshead Property Limited | 8312532 |
Dillons Newsagents Limited | 140624 | Tesco (Overseas) Limited | 01611684 | Tesco Maintenance Limited | 6003554 |
dunnhumby Overseas Limited | 6601821 | Tesco Aqua Finco 2 Limited | 05888957 | Tesco Mobile Communications Limited | 4780729 |
dunnhumby Trustees Limited | 3565371 | Tesco Atrato (1LP) Limited | 6969529 | Tesco Mobile Services Limited | 4780734 |
Giant Booker Limited | 65519 | Tesco Atrato (GP) Limited | 6969536 | Tesco Navona (1LP) Limited | 7459436 |
Launchgrain Limited | 5260856 | Tesco Blue (3LP) Limited | 10127682 | Tesco Passaic (1LP) Limited | 7121667 |
Makro Holding Limited | 4310463 | Tesco Brislington Limited | 10701640 | Tesco Property Partner (GP) Limited | 4945955 |
Makro Properties Limited | 1273672 | Tesco Bury Limited | 3854371 | Tesco Property Partner (No.1) Limited | 4945945 |
Oakwood Distribution Limited | 5721635 | Tesco Coral (GP) Limited | 06640968 | Tesco Sarum (1LP) Limited | 7849948 |
Reskammel Property Company Limited | 13264276 | Tesco Distribution Holdings Limited | 3193655 | Tesco Sarum (GP) Limited | 7849882 |
Spen Hill Developments | 4827219 | Tesco Dorney (1LP) Limited | 8255488 | The Tesco Coral Limited Partnership | LP013072 |
Spen Hill Management Limited | 2460426 | Tesco Dorney (GP) Limited | 8255493 | Transcend Retail Solutions Limited | 14772291 |
Spen Hill Properties (Holdings) PLC | 2412674 | Tesco Family Dining Limited | 8514605 | TFSM Limited | 14263834 |
Note 34 Events after the reporting period
There were no material events after the reporting period requiring disclosure.
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211.
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Tesco PLC – Parent Company balance sheet
Notes
22 February 2025 24 February 2024
£m £m
Non–current assets
Investments 6 16,538 16,990
Receivables 7
-
234
Derivative financial instruments 8 869 949
17,407 18,173
Current assets
Receivables 7 542 537
Cash in hand 271 231
Derivative financial instruments 8 145
-
958 768
Current liabilities
Payables 9 (488) (756)
Borrowings 10 (534) (55)
(1,022) (811)
Net current assets/(liabilities) (64) (43)
Non–current liabilities
Payables 9 (1,941) (1,131)
Borrowings 10 (993) (1,473)
Derivative financial instruments 8 (12) (13)
Deferred tax liabilities 11 (13) (23)
(2,959) (2,640)
Net assets 14,384 15,490
Equity
Share capital 14 426 445
Share premium 5,165 5,165
Other reserves 14 2,892 2,865
Retained earnings (including profit for the financial year of £809m (2024: £1,866m)) 5,901 7,015
Total equity 14,384 15,490
The notes on pages 214 to 219 form part of these financial statements.
Ken Murphy Imran Nawaz
Directors
The Parent Company financial statements on pages 212 to 219 were approved and authorised for issue by the Directors on 9 April 2025.
Tesco PLC
Registered number 00445790
Tesco PLC Annual Report and Financial Statements 2025
212.
Tesco PLC – Parent Company statement of changes in equity
Share capital
(Note 14) Share premium
Other reserves
(Note 14) Retained earnings Total equity
£m £m £m £m £m
At 24 February 2024 445 5,165 2,865 7,015 15,490
Profit for the year
- - -
809 809
Other comprehensive income/(loss)
Gains on cash flow hedges
- -
34
-
34
Cash flow hedges reclassified and reported in the Company income statement
- -
(70)
-
(70)
Tax relating to components of other comprehensive income
- -
9
-
9
Total other comprehensive income/(loss)
- -
(27)
-
(27)
Total comprehensive income/(loss)
- -
(27) 809 782
Transactions with owners
Own shares purchased for cancellation
- -
(1,016)
-
(1,016)
Own shares cancelled (19)
-
1,035 (1,016)
-
Own shares purchased for share schemes
- -
(204)
-
(204)
Share-based payments
- -
239 (42) 197
Dividends
- - -
(865) (865)
Total transactions with owners (19)
-
54 (1,923) (1,888)
At 22 February 2025 426 5,165 2,892 5,901 14,384
Share capital
(Note 14) Share premium
Other reserves
(Note 14) Retained earnings Total equity
£m £m £m £m £m
At 25 February 2023 463 5,165 2,793 6,692 15,113
Profit for the year
- - -
1,866 1,866
Other comprehensive income/(loss)
Gains on cash flow hedges
- -
25
-
25
Cash flow hedges reclassified and reported in the Company income statement
- -
(55)
-
(55)
Tax relating to components of other comprehensive income
- -
(4)
-
(4)
Total other comprehensive income/(loss)
- -
(34)
-
(34)
Total comprehensive income/(loss)
- -
(34) 1,866 1,832
Transfer from hedging reserve to retained earnings
- -
44 (44)
-
Transactions with owners
Own shares purchased for cancellation
- -
(752)
-
(752)
Own shares cancelled (18)
-
770 (752)
-
Own shares purchased for share schemes
- -
(140)
-
(140)
Share-based payments
- -
184 30 214
Dividends
- - -
(777) (777)
Total transactions with owners (18)
-
62 (1,499) (1,455)
At 24 February 2024 445 5,165 2,865 7,015 15,490
The Company has considered the profits available for distribution to shareholders. At 22 February 2025, the Company had retained earnings of £5.9bn (2024: £7.0bn), of which £3.2bn is available for distribution
(2024: £4.2bn).
The notes on pages 214 to 219 form part of these financial statements.
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213.
Financial statementsStrategic report
Notes to the Parent Company financial statements
Note 1 Authorisation of financial statements and statement of compliance
with FRS 101
The Parent Company financial statements for the 52 weeks ended 22 February 2025 were approved
by the Board of Directors on 9 April 2025 and the Company balance sheet was signed on the Board’s
behalf by Ken Murphy and Imran Nawaz.
These financial statements were prepared in accordance with Financial Reporting Standard 101,
‘Reduced Disclosure Framework’ (FRS 101). The Company meets the definition of a qualifying entity
under FRS 100, ‘Application of Financial Reporting Requirements’ as issued by the Financial Reporting
Council.
The Company’s financial statements are presented in Pounds Sterling, its functional currency,
generally rounded to the nearest million.
The principal accounting policies adopted by the Company are set out in Note 2. The financial
statements have been prepared under the historical cost convention, except for certain financial
instruments and share-based payments that have been measured at fair value.
Note 2 Accounting policies
Basis of preparation of financial statements
The Parent Company financial statements have been prepared in accordance with FRS 101 and the
Companies Act 2006 (the Act).
FRS 101 sets out a reduced disclosure framework for a ‘qualifying entity’ as defined in the standard,
which addresses the financial reporting requirements and disclosure exemptions in the
individual financial statements of qualifying entities that otherwise apply the recognition,
measurement and disclosure requirements of adopted IFRS.
The financial year represents the 52 weeks to 22 February 2025 (prior financial year 52 weeks to
24 February 2024).
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available
under that standard in relation to business combinations, financial instruments, capital management,
presentation of comparative information in respect of certain assets, presentation of a cash flow
statement, impairment of assets, share-based payments, related party transactions and disclosure of
the possible impact of the application of a new IFRS that has been issued but is not yet effective.
Where required, equivalent disclosures are given in the consolidated financial statements of Tesco PLC.
The Parent Company financial statements are prepared on a going concern basis as set out in Note 1
of the consolidated financial statements of Tesco PLC.
The Directors have taken advantage of the exemption available under section 408 of the Companies
Act 2006 and not presented an income statement or a statement of comprehensive income/(loss)
for the Company alone.
A summary of the Company’s material accounting policies is set out below.
Investments in subsidiaries and joint ventures
Investments in subsidiaries and joint ventures are stated at cost less, where appropriate, provisions
for impairment. The Company tests the investment balances for impairment annually or when there
are indicators of impairment.
Foreign currencies
Transactions in foreign currencies are translated to the functional currency at the exchange rate on
the date of the transaction. At each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated to the functional currency at the rates prevailing
on the balance sheet date.
Share-based payments
The fair value of employee share option plans is calculated at the grant date using the Black-Scholes
model. The resulting cost is charged to the Company income statement over the vesting period. The
value of the charge is adjusted to reflect expected and actual levels of vesting. Where the Company
awards shares or options to employees of subsidiary entities, this is treated as a capital contribution.
Own shares held
Own shares represent the shares of Tesco PLC that are held by the Tesco International Employee Benefit
Trust, or which are purchased and held for cancellation as part of the share buyback programme. The
Company adopts a ‘look-through’ approach which, in substance, accounts for the trust as an extension
of the Company. Shares purchased for cancellation are included in own shares held until cancellation, at
which point they are transferred to retained earnings. Own shares held can include equity elements of
forward contracts where the Group has an obligation to purchase its own shares.
Financial instruments
Financial assets and financial liabilities are recognised in the Company balance sheet when the
Company becomes party to the contractual provisions of the instrument.
Receivables
Receivables are recognised initially at fair value, and subsequently at amortised cost using the
effective interest rate method, less any expected credit losses.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in
the assets of the Company after deducting all of its liabilities. Equity instruments issued by the
Company are recorded as the proceeds received, net of direct issue costs.
Borrowings
Borrowings and overdrafts are initially recognised at fair value and net of attributable transaction
costs. Subsequent to initial recognition, borrowings are stated at amortised cost with any differences
between proceeds and redemption value being recognised in the Company income statement over
the period of the borrowings on an effective interest basis.
Payables
Payables are recognised initially at fair value and subsequently at amortised cost using the effective
interest rate method.
Tesco PLC Annual Report and Financial Statements 2025
214.
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments to hedge its exposure to foreign exchange and
interest rate risks arising from operating, financing and investing activities. The Company does not
hold or issue derivative financial instruments for trading purposes.
Derivative financial instruments are recognised and stated at fair value. Where derivatives do not
qualify for hedge accounting, any gains or losses on remeasurement are immediately recognised in
the Company income statement. Where derivatives qualify for hedge accounting, recognition of any
resultant gain or loss depends on the nature of the hedge relationship and the item being hedged.
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 forecast transaction. The effective element of any
gain or loss from remeasuring the derivative designated as the hedging instrument is recognised
directly in the Company statement of comprehensive income/(loss) and accumulated in the hedging
reserve. The ineffective element is recognised immediately in the Company income statement.
The associated cumulative gain or loss is reclassified from other comprehensive income and recognised
in the Company income statement in the same period or periods during which the hedged transaction
affects the Company income statement. The classification of the effective portion when recognised in
the Company income statement is the same as the classification of the hedged transaction.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or
exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss
on the hedging instrument recognised in equity is retained in the Company statement of changes in
equity until the forecast transaction occurs or the original hedged item affects the Company income
statement. If a forecast hedged transaction is no longer expected to occur, the net cumulative gain
or loss recognised in the Company statement of changes in equity is reclassified to the Company
income statement.
Pensions
The Company participates in a Group defined benefit pension scheme which is closed to future
accrual. The net defined benefit cost and deficit/surplus for the scheme are borne and recognised by
another Group company, Tesco Stores Limited, as per the stated policy of the Group. The Company
also participates in a defined contribution scheme open to all UK employees. Payments to this scheme
are recognised as an expense as they fall due.
Taxation
Current tax is the expected tax payable on the taxable income for the financial year, using tax rates
enacted or substantively enacted by the balance sheet date.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset realised based on the tax rates that have been enacted or substantively enacted
by the balance sheet date.
The tax expense is recognised in the Company income statement, except when it relates to items
recognised directly in the Company statement of changes in equity or the Company statement of
comprehensive income/(loss), in which case the tax follows the same treatment.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are offset against each other when there is a legally enforceable
right to set off current tax assets against current tax liabilities and they relate to income taxes levied
by the same taxation authority on either the same taxable entity or different taxable entities which
intend to settle current tax assets and liabilities on a net basis.
The Company has applied the Pillar Two income taxes exception in IAS 12, so neither recognises nor
discloses information about deferred tax assets and liabilities related to Pillar Two income taxes.
Judgements and sources of estimation uncertainty
The preparation of the Company financial statements requires management to make judgements,
estimates and assumptions in applying the Company’s accounting policies to determine the reported
amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances. Actual results may differ
from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis,
with revisions to accounting estimates applied prospectively.
The preparation of the Company financial statements for the financial year did not require the
exercise of any critical accounting judgements. The Company’s evaluation of the recoverable amount
of investments in subsidiaries involves significant estimation uncertainty. The key assumptions to
which the recoverable amounts are most sensitive are disclosed in Note 6.
New standards and amendments effective for the current financial year
New standards, interpretations and amendments that became effective in the current financial year
have not had a material impact on the Company.
Note 3 Auditor remuneration
Fees payable to the Company’s auditor for the audit of the Company and Group financial statements
are disclosed in Note 4 to the Group financial statements.
Note 4 Dividends
For details of dividends see Note 9 to the Group financial statements.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
215.
Financial statementsStrategic report
Notes to the Parent Company financial statements continued
Note 5 Employment costs, including Directors’ remuneration
Notes
2025 2024
£m £m
Wages and salaries 13 10
Social security costs 2 2
Pension costs 13 1 1
Share-based payment expense 12 6 5
Total 22 18
The amounts above include recharges from other Group companies for Tesco PLC-related activities.
The average number of employees (all Directors of the Company) during the financial year was 11
(2024: 12).
The Schedule 5 requirements of SI 2008/410 for Directors’ remuneration are included within the
Directors’ remuneration report on pages 90 to 122.
Note 6 Investments
2025
£m
Cost
At 24 February 2024 17,511
Capital contributions 117
Return of capital contributions (233)
At 22 February 2025 17,395
Accumulated impairment losses
At 24 February 2024 (521)
Impairment (336)
At 22 February 2025 (857)
Net carrying value
At 22 February 2025 16,538
At 24 February 2024 16,990
Included in the return of capital contributions of £233m is the repayment of £150m of 11.5% fixed rate
reset AT1 securities from Tesco Personal Finance Group Limited. As a result, the Company’s
investment in Tesco Personal Finance Group Limited has reduced by £150m.
Following the Banking operations disposal in November 2024, the Company’s investment in Tesco
Personal Finance Group Limited has been impaired by £295m to a recoverable amount of £1.6bn. The
recoverable amount was estimated as the equity value of the subsidiary, comprising the value in use of
its Insurance and Money Services businesses, net of unallocated central assets and liabilities on the
subsidiary’s balance sheet. The methodology for calculating the value in use of Insurance and Money
Services is set out in Note 15 of the Group financial statements. The key assumptions are discount
rates of 9.0% and 11.2% for Insurance and Money Services respectively and a long-term growth rate
of 1.5%.
The remaining immaterial impairment of £41m relates to three other subsidiaries.
Sensitivity
The key sources of estimation uncertainty in determining the recoverable amount of investments in
trading subsidiaries are the discount rate, long-term growth rate and cashflows. Discount rates range
from 6.8% to 11.2% and long-term growth rates range from 1.5% to 3.0%. If the discount rates were to
increase by 1.0%pt, the carrying amount of investments would decrease by £1,010m. If the long-term
growth rates were to decrease by 0.5%pt, the carrying amount of investments would decrease by
£443m. If the future cashflows were to decrease by 5.0%, the carrying amount of investments would
decrease by £350m.
The Company’s subsidiary undertakings, joint ventures and associates are shown on pages 220 to
225.
Note 7 Receivables
2025 2024
£m £m
Amounts owed by Group undertakings* 517 747
Other receivables 25 24
Total receivables 542 771
Of which:
Current 542 537
Non-current
-
234
542 771
* Amounts owed by Group undertakings are non interest-bearing and are repayable on demand.
The expected credit loss on receivables is immaterial (2024: immaterial).
Tesco PLC Annual Report and Financial Statements 2025
216.
Note 8 Derivative financial instruments
2025 2024
Asset Liability Asset Liability
Fair value Notional Fair value Notional Fair value Notional Fair value Notional
£m £m £m £m £m £m £m £m
Cash flow hedges
Index-linked swaps* 296 406
- -
263 406
- -
Derivatives not in a formal hedge relationship
Cross-currency swaps 138 308 (12) 95 152 386 (13) 94
Index-linked swaps 580 3,089
- -
534 3,089
- -
Total 1,014 3,803 (12) 95 949 3,881 (13) 94
* The notional values of the index-linked swaps designated as cash flow hedges have been re-presented to show the original unindexed notional amounts. In the prior year, the table presented the notional values after inflation indexation. The current year notional value
after indexation for these swaps is £818m (2024: £790m).
Note 9 Payables
2025 2024
£m £m
Amounts owed to Group undertakings* 2,405 1,861
Other payables 22 23
Taxation and social security 2 3
Total payables 2,429 1,887
Of which:
Current 488 756
Non-current 1,941 1,131
2,429 1,887
* Amounts owed to Group undertakings are either interest-bearing or non interest-bearing depending on the type and duration of
the creditor relationship, with interest rates ranging from 5.1% to 5.2% (2024: 5.8% to 6.2%) and with maturities up to and
including February 2051.
Under the policy choice permitted by IFRS 17 ‘Insurance contracts’, the Company has elected to
recognise and measure financial guarantee contracts in accordance with IFRS 9 ‘Financial
instruments’. These balances, included in other payables, are immaterial.
The Company has entered into financial guarantee contracts to guarantee indebtedness held on the
balance sheets of Group undertakings amounting to £3.4bn (2024: £3.5bn). The Company has also
guaranteed derivative agreements of Group undertakings, of which those in a net liability position at
the reporting date total £0.1bn (2024: £0.1bn).
In addition, the Company has guaranteed the rental payments of certain Group undertakings relating
to a portfolio of retail stores, distribution centres and mixed-use retail developments amounting to
£4.9bn (2024: £5.1bn).
In the prior year the Company had guaranteed £0.9bn drawn by Tesco Bank under the Bank of
England’s Term Funding Scheme with incentives for small and medium-sized enterprises (TFSME).
The amounts were fully repaid in the current year.
Note 10 Borrowings
Par value Maturity
2025 2024
£m £m
Bank loans and overdrafts 90 32
LPI and RPI-linked bonds*
3.322% LPI MTN £210m Nov 2025 429 416
1.982% RPI MTN £196m Mar 2036 397 382
Other borrowings
6% MTN £38m Dec 2029 42 42
5.5% MTN £67m Jan 2033 75 76
6.15% USD Bond $355m Nov 2037 341 346
4.875% MTN £14m Mar 2042 14 14
5.125% MTN €147m Apr 2047 125 206
5.2% MTN £14m Mar 2057 14 14
Total 1,527 1,528
Of which:
Current 534 55
Non-current 993 1,473
1,527 1,528
* These bonds are redeemable at par, indexed for increases in the RPI over the life of the MTN. However, for the LPI-linked bond, the
maximum indexation of the principal in any one year is 5%, with a minimum of 0%. For the RPI-linked bond, refer to Note 27 to the
Group financial statements.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
217.
Financial statementsStrategic report
Notes to the Parent Company financial statements continued
Note 11 Taxation
The deferred tax liability recognised by the Company, and the movements thereon, during the current
financial year are as follows:
2025
£m
24 February 2024 (23)
Credit to the income statement 1
Movement in reserves for the year 9
22 February 2025 (13)
Note 12 Share-based payments
The Company’s equity-settled share-based payment schemes comprise various share schemes
designed to reward Executive Directors.
For further information on these schemes, including the valuation models and assumptions used,
refer to Note 28 to the Group financial statements.
Share option schemes
At 22 February 2025, there were 9,890 options outstanding (2024: 9,890) with a weighted average
exercise price (WAEP) of 182.00p (2024: 182.00p) and a weighted average remaining contractual life of
1.52 years (2024: 2.52 years). There were no options granted, exercised or forfeited in the 52 weeks
ended 22 February 2025 (52 weeks ended 24 February 2024: nil). There were no options exercisable at
22 February 2025 (2024: nil).
Share bonus and incentive schemes
Executive Directors participate in the Deferred Bonus Plan, a performance-related bonus scheme.
The amount paid is based on a percentage of salary and is paid partly in cash and partly in shares.
Bonuses are awarded to the Executive Directors who have completed a required service period and
depend on achievement of corporate and individual performance targets. For further information on
these schemes, including the valuation models and assumptions used, refer to Note 28 to the Group
financial statements.
The number and weighted average fair value (WAFV) of share bonuses granted during the financial
year were:
2025 2024
Number
of shares
WAFV
pence
Number
of shares
WAFV
pence
Deferred Bonus Plan 829,624 306.46 728,059 273.60
Performance Share Plan 2,018,282 308.40 2,312,987 252.00
Note 13 Pensions
The total cost of participation in the Tesco Retirement Savings Plan (a defined contribution scheme) to
the Company was £1m (2024: £1m). Further disclosure relating to all schemes can be found in Note 29
to the Group financial statements.
Note 14 Called-up share capital and reserves
Refer to Note 30 to the Group financial statements for details relating to called-up share capital.
Other reserves
The tables below set out the movements in other reserves:
Capital
redemption
reserve
Hedging
reserve
Own shares
held
Merger
reserve Total
£m £m £m £m £m
At 24 February 2024 61 69 (315) 3,050 2,865
Other comprehensive income/(loss)
Gains on cash flow hedges
-
34
- -
34
Cash flow hedges reclassified and reported
in the Company income statement
-
(70)
- -
(70)
Tax relating to components of other
comprehensive income
-
9
- -
9
Total other comprehensive income/(loss)
-
(27)
- -
(27)
Transactions with owners
Own shares purchased for cancellation
- -
(1,016)
-
(1,016)
Own shares cancelled 19
-
1,016
-
1,035
Own shares purchased for share schemes
- -
(204)
-
(204)
Share-based payments
- -
239
-
239
Total transactions with owners 19
-
35
-
54
At 22 February 2025 80 42 (280) 3,050 2,892
Tesco PLC Annual Report and Financial Statements 2025
218.
Capital
redemption
reserve
Hedging
reserve
Own shares
held
Merger
reserve Total
£m £m £m £m £m
At 25 February 2023 43 59 (359) 3,050 2,793
Other comprehensive income/(loss)
Gains on cash flow hedges
-
25
- -
25
Cash flow hedges reclassified and reported
in the Company income statement
-
(55)
- -
(55)
Tax relating to components of other
comprehensive income
-
(4)
- -
(4)
Total other comprehensive income
-
(34)
- -
(34)
Transfer from hedging reserve to retained
earnings
-
44
- -
44
Transactions with owners
Own shares purchased for cancellation
- -
(752)
-
(752)
Own shares cancelled 18
-
752
-
770
Own shares purchased for share schemes
- -
(140)
-
(140)
Share-based payments
- -
184
-
184
Total transactions with owners 18
-
44
-
62
At 24 February 2024 61 69 (315) 3,050 2,865
Note 15 Contingent liabilities
Contingent liabilities
Refer to Note 33 to the Group financial statements.
Note 16 Events after the reporting period
After the balance sheet date, Tesco Personal Finance Group Ltd, a subsidiary of Tesco PLC, completed
a capital reduction and its Board approved a capital distribution to Tesco PLC of £315m. It is due for
settlement after publication of the Annual Report and Financial Statements 2025. Once received, it
will reduce the carrying value of the Tesco PLC investment in the subsidiary. This is a non-adjusting
post balance sheet event.
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
219.
Financial statementsStrategic report
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
Armitage Finance Unlimited | 1 | GBP0.90 Ordinary | 100 | |
BF Limited | 8 | GBP0.000000011111111 | Ordinary | 100 |
Bishop’s Group Limited | 8 | GBP0.01 Ordinary | 100 | |
Booker Cash & Carry Limited | 8 | GBP1.00 Ordinary | 100 | |
Booker Direct Limited | 8 | GBP0.01 Ordinary | 100 | |
Booker Group Limited | 8 | GBP0.00000000055625 | Ordinary | 100 |
Booker Limited | 8 | GBP1.00 Ordinary | 100 | |
Booker Retail Partners (GB) Limited | 8 | GBP1.00 Ordinary | 100 | |
Booker Retail Limited | 8 | GBP0.10 Ordinary | 100 | |
Booker Pension Trustees Limited | 8 | Limited by Guarantee | – | |
Booker Wholesale Holdings Limited | 8 | GBP0.01 A1 Ordinary | 100 | |
Booker Unapproved Scheme Trustees Ltd | 8 | Limited by Guarantee | – | |
| Bourne End Residential Management | 1 | Limited by Guarantee | – | |
| Company Limited | ||||
Broughton Retail Park Nominee 1 Limited | 1 | GBP1.00 Ordinary | 100 | |
Broughton Retail Park Nominee 2 Limited | 1 | GBP1.00 Ordinary | 100 | |
Broughton Retail Park Nominee 3 Limited | 1 | GBP1.00 Ordinary | 100 | |
Broughton Retail Park Nominee 4 Limited | 1 | GBP1.00 Ordinary | 100 | |
Budgen Holdings Limited | 8 | GBP1.00 Ordinary | 100 | |
Budgens Pension Trustees No.2 Limited | 8 | GBP1.00 Ordinary | 100 | |
Budgens Property Investments Limited | 8 | GBP1.00 Ordinary | 100 | |
Budgens Stores Limited | 8 | GBP1.00 Ordinary | 100 | |
Buttoncase Limited † | 1 | GBP1.00 2% Cumulative | 100 | |
| Redeemable Preference | ||||
GBP1.00 Ordinary | 100 | |||
| Cardiff Cathays Terrace Management | 1 | Limited by Guarantee | – | |
Company Limited (a) | ||||
Day And Nite Stores Limited | 2 | GBP1.00 Cumulative Convertible | 100 | |
| Participating Preferred Ordinary | ||||
| GBP1.00 Cumulative | 100 | |||
| Redeemable Preference | ||||
GBP1.00 Ordinary | 100 | |||
Dillons Newsagents Limited* | 2 | GBP0.25 Non–Voting Ordinary | 100 | |
dunnhumby International Limited | 4 | GBP1.00 Ordinary | 100 | |
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
dunnhumby Limited | 4 | GBP0.05 Ordinary | 100 | |
| GBP0.10 A Ordinary | 100 | |||
| 100 | ||||
| GBP0.10 Deferred | ||||
dunnhumby Overseas Limited | 4 | GBP1.00 Ordinary | 100 | |
dunnhumby Trustees Limited | 4 | GBP1.00 Ordinary | 100 | |
Giant Bidco Limited | 8 | GBP1.00 Ordinary | 100 | |
Giant Booker Limited | 8 | GBP0.0025 | Ordinary | 100 |
Giant Midco Limited | 8 | GBP1.00 Ordinary | 100 | |
| Highams Green Management Company | 1 | Limited by Guarantee | – | |
| Limited | ||||
IRTH (15) Limited | 8 | GBP1.00 Ordinary | 100 | |
IRTH (19) Limited | 8 | USD0.000000052383172 | Ordinary | 100 |
Launchgrain Limited † | 1 | GBP1.00 Ordinary | 100 | |
Linnco Limited | 8 | GBP1.00 Ordinary | 100 | |
Londis (Holdings) Limited | 8 | GBP50.00 Ordinary | 100 | |
Londis Pension Trustees Limited | 8 | GBP1.00 Ordinary | 100 | |
Makro Holding Limited | 8 | GBP1.00 Ordinary | 100 | |
Makro Properties Limited | 8 | GBP1.00 Ordinary | 100 | |
Makro Self Service Wholesalers Limited | 8 | GBP1.00 A Ordinary | 100 | |
| GBP1.00 B Ordinary | 100 | |||
Maldon Finance Limited | 1 | GBP0.01 Ordinary | 100 | |
GBP0.000000000592 | A Preference | 100 | ||
GBP0.000000000222 | B Preference | 100 | ||
GBP0.000000000740 | C Preference | 100 | ||
Murdoch Norton Limited | 8 | GBP0.05 Ordinary | 100 | |
Oakwood Distribution Limited | 1 | GBP1.00 Ordinary | 100 | |
One Stop Community Stores Limited | 2 | GBP0.00001200004 | Ordinary | 100 |
One Stop Convenience Stores Limited | 2 | GBP1.00 Ordinary | 100 | |
One Stop Stores Limited †(b) | 2 | GBP1.00 Ordinary | 100 | |
One Stop Stores Trustee Services Limited | 2 | GBP1.00 Ordinary | 100 | |
Orpington (Station Road) Limited | 1 | GBP1.00 Ordinary | 100 | |
PTLL Limited | 1 | GBP1.00 Ordinary | 100 | |
Reskammel Property Company Limited | 1 | GBP1.00 Ordinary | 100 | |
Seacroft Green Nominee 1 Ltd | 1 | GBP1.00 Ordinary | 100 | |
Seacroft Green Nominee 2 Ltd | 1 | GBP1.00 Ordinary | 100 | |
Spen Hill Developments Limited | 1 | GBP1.00 Ordinary | 100 | |
Spen Hill Management Limited †(c) | 1 | GBP1.00 Ordinary | 100 | |
Spen Hill Properties (Holdings) plc † | 1 | GBP1.00 Ordinary | 100 | |
Spen Hill Regeneration Limited | 1 | GBP1.00 Ordinary | 100 | |
Spen Hill Residential No 1 Limited | 1 | GBP1.00 Ordinary | 100 | |
Spen Hill Residential No 2 Limited | 1 | GBP1.00 Ordinary | 100 | |
Tesco PLC Annual Report and Financial Statements 2025
220.
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Station House Welling Management Limited | 1 | Limited by Guarantee | – |
Statusfloat Limited | 1 | GBP1.00 Ordinary | 100 |
| Supermarket Income Investments UK | 1 | GBP1.00 Ordinary | 100 |
| (NO16) Limited | |||
T&S Stores Limited † | 2 | GBP0.05 Ordinary | 100 |
Tapesilver Limited † | 1 | GBP1.00 Ordinary | 100 |
Teesport (GP) Limited | 1 | GBP1.00 Ordinary | 100 |
The Teesport Unit Trust | 33 | – | 100 |
Tesco (Overseas) Limited † | 1 | GBP1.00 Ordinary | 100 |
Tesco Atrato (1LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Atrato (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
GBP1.00 B Ordinary | 100 | ||
Tesco Atrato (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Atrato (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Atrato (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Atrato Depot Propco Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Atrato Unit Trust | 33 | – | 100 |
Tesco Blue (3LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Blue (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
GBP1.00 B Ordinary | 100 | ||
Tesco Blue (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Blue (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Blue (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Blue Unit Trust | 33 | – | 100 |
Tesco Breakfast Unit Trust | 33 | – | 100 |
Tesco Brislington Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Bury Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Coral (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
| GBP1.00 B Ordinary | 100 | ||
Tesco Coral (Nominee) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Corporate Treasury Services PLC † | 1 | GBP1.00 Ordinary | 100 |
Tesco Depot Propco Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Distribution Holdings Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Distribution Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Dorney (1LP) Limited | 1 | GBP1.00 Ordinary | 100 |
| Tesco Dorney (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
| GBP1.00 B Ordinary | 100 | ||
Tesco Dorney (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Dorney (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Dorney (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 |
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
| Tesco Employees’ Share Scheme Trustees | 1 | GBP1.00 Ordinary | 100 |
Limited †(d) | |||
Tesco Family Dining Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Food Sourcing Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Freetime Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Fuchsia (3LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Gateshead Property Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Holdings Limited † | 1 | GBP0.10 Ordinary | 100 |
| GBP10 Preference | |||
Tesco International Services Limited † | 1 | GBP1.00 Ordinary | 100 |
Tesco Maintenance Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Mobile Communications Limited † | 1 | GBP1.00 Ordinary | 100 |
Tesco Mobile Services Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Navona (1LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Navona (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
GBP1.00 B Ordinary | 100 | ||
Tesco Navona (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Navona (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Navona (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Navona PL Propco Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Overseas Investments Limited † | 1 | GBP1.00 Ordinary | 100 |
Tesco Passaic (1LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Passaic (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
GBP1.00 B Ordinary | 100 | ||
Tesco Passaic (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Passaic (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Passaic (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Passaic PL Propco Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Pension Investment Limited (e) | 1 | GBP1.00 Ordinary | 100 |
Tesco Pension Trustees Limited † | 1 | GBP1.00 Ordinary | 100 |
Tesco Personal Finance Group Limited † | 6 | GBP0.10 A Ordinary | 100 |
Tesco Personal Finance Limited | 6 | GBP0.10 Ordinary | 100 |
Tesco Property (Nominees) Limited | 11 | GBP1.00 Ordinary | 100 |
Tesco Property (Nominees) (No.1) Limited | 11 | GBP1.00 Ordinary | 100 |
Tesco Property (Nominees) (No.2) Limited | 11 | GBP1.00 Ordinary | 100 |
Tesco Property Finance 1 Holdco Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Property Finance 1 PLC | 1 | GBP1.00 Ordinary | 100 |
GBP0.25 Ordinary (f) | 100 | ||
Tesco Property Holdings (No.2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Property Holdings Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Property Nominees (No.5) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
221.
Financial statementsStrategic report
Related undertakings of the Tesco Group continued
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Tesco Property Nominees (No.6) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Property Partner (GP) Limited † | 1 | GBP1.00 A Ordinary | 100 |
| GBP1.00 B Ordinary | 100 | ||
Tesco Property Partner (No.1) Limited † | 1 | GBP1.00 Ordinary | 100 |
Tesco Sarum (1LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Sarum (GP) Limited | 1 | GBP1.00 A Ordinary | 100 |
GBP1.00 B Ordinary | 100 | ||
Tesco Sarum (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Sarum (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Sarum (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Seacroft Ltd | 1 | GBP1.00 Ordinary | 100 |
Tesco Secretaries Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Services Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Stores Limited | 1 | GBP1.00 Ordinary | 100 |
GBP1.00 A Preference | 100 | ||
GBP1.00 B Preference | 100 | ||
Tesco Underwriting Limited | 31 | GBP1.00 A Ordinary | 100 |
| GBP1.00 B Ordinary | 100 | ||
The Big Food Group Limited | 8 | GBP0.10 Ordinary | 100 |
The Teesport Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Atrato Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Blue Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Coral Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Dorney Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Navona Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Passaic Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Property Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Sarum Limited Partnership | 1 | Limited Partnership | 100 |
TPI Fund Managers Limited | 1 | GBP1.00 Ordinary | 100 |
TPT Holdco No.1 Limited | 1 | GBP1.00 Ordinary | 100 |
Transcend Retail Solutions Limited | 1 | GBP1.00 Ordinary | 100 |
TSFM Limited | 1 | GBP1.00 Ordinary | 100 |
Venus Wine & Spirit Merchants PLC | 8 | GBP1.00 Ordinary | 100 |
Weymouth Avenue (Dorchester) Limited | 1 | GBP1.00 Ordinary | 100 |
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
Arena (Jersey) Management Limited † | 33 | GBP1.00 Ordinary | 100 | |
Cheshunt Holdings Guernsey Limited | 27 | GBP1.00 Ordinary | 100 | |
dunnhumby (Malaysia) Sdn Bhd | 10 | MYR1.00 Ordinary | 100 | |
dunnhumby (Thailand) Limited | 19 | THB100 Ordinary | 100 | |
dunnhumby Australia Pty Ltd | 64 | AUD1.00 Ordinary | 100 | |
dunnhumby Brasil Consultoria Ltda | 16 | BRL1.00 Ordinary | 100 | |
dunnhumby Canada Limited | 58 | CAD1.00 Ordinary | 100 | |
dunnhumby Chile SpA | 48 | CLP500,000 | Ordinary | 100 |
dunnhumby Colombia S.A.S. | 29 | COP1,000 | Ordinary | 100 |
| dunnhumby Consulting Services India | 59 | INR10 Ordinary | 100 | |
| Private Limited | ||||
dunnhumby Czech s.r.o. | 7 | CZK1.00 Ordinary | 100 | |
dunnhumby Denmark ApS | 56 | DKK1.00 Ordinary | 100 | |
dunnhumby Finland Oy | 30 | EUR1.00 Ordinary | 100 | |
dunnhumby France SAS | 18 | EUR2.00 Ordinary | 100 | |
dunnhumby Germany GmbH | 14 | EUR1.00 Ordinary | 100 | |
dunnhumby Hungary Kft | 32 | HUF1.00 Ordinary | 100 | |
dunnhumby Inc. | 35 | No Par Value Stock | 100 | |
| dunnhumby Information Technology | 61 | USD1.00 Common Stock | 100 | |
| Consulting (Shanghai) Company Limited | ||||
dunnhumby Ireland Limited | 66 | EUR1.00 Ordinary | 100 | |
| dunnhumby IT Services India Private | 36 | INR10 Ordinary | 100 | |
| Limited | ||||
dunnhumby Italia s.r.l | 37 | EUR1.00 Ordinary | 100 | |
dunnhumby Japan K.K. | 38 | JPY10,000 | Ordinary | 100 |
dunnhumby México S. de R.L. de C.V. | 68 | MXN1.00 Quota | 100 | |
dunnhumby Netherlands B.V. | 69 | EUR100 Ordinary | 100 | |
dunnhumby New Zealand | 63 | NZD1.00 Ordinary | 100 | |
dunnhumby Poland sp. z.o.o. | 42 | PLN50,000 | Ordinary | 100 |
dunnhumby SARL | 18 | EUR100 Ordinary | 100 | |
| dunnhumby Serviços de Promoção | 16 | BRL1.00 Ordinary | 100 | |
| Digital Ltda | ||||
dunnhumby Slovakia s.r.o. | 57 | No Par Value Ordinary | 100 | |
dunnhumby Spain S.L. | 50 | EUR1.00 Ordinary | 100 | |
dunnhumby South Africa (Pty) Ltd | 43 | ZAR1.00 Ordinary | 100 | |
dunnhumby Ventures LLC | 44 | USD1.00 Capital | 100 | |
Edson Properties Limited | 24 | EUR1.00 Ordinary | 100 | |
ELH Insurance Limited | 70 | GBP1.00 Ordinary | 100 | |
Gresham Properties Limited | 24 | EUR1.00 Ordinary | 100 | |
Tesco PLC Annual Report and Financial Statements 2025
222.
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
| Joyce’s Supermarkets (Oranmore) | 24 | EUR1.00 Ordinary | 100 | |
| Unlimited Company | ||||
Monread Developments Limited | 24 | EUR0.001 | Ordinary | 100 |
Nabola Development Limited | 24 | EUR1.25 A Ordinary | 100 | |
| EUR1.25 B Ordinary | 100 | |||
Omnisol Private Limited | 41 | INR10 Equity | 100 | |
Shopping Mall Eden s.r.o. | 7 | CZK1.00 Ordinary | 100 | |
Sociomantic Labs Private Limited | 46 | INR10 Ordinary | 100 | |
| Tesco Akadémia Képzési és Fejlesztési | 32 | HUF1.00 Business Share | 100 | |
| Korátolt Felelősségű Társaság | ||||
Tesco Angel Foundation | 32 | HUF1.00 Ordinary | 100 | |
Tesco Bengaluru Private Limited | 41 | INR10 Ordinary | 100 | |
Tesco Capital No. 1 Limited † | 28 | GBP0.50 A Ordinary | 100 | |
| GBP0.50 B Ordinary | 100 | |||
| GBP0.01 Guaranteed Cumulative Fixed | 100 | |||
| Rate Preference | 100 | |||
| GBP0.01 Preferred Ordinary | ||||
| Tesco Corporate Treasury Services | 24 | EUR1.00 Ordinary | 100 | |
| Europe Designated Activity Company | ||||
Tesco Franchise Stores ČR s.r.o. | 7 | CZK2,000,000 | Ordinary | 100 |
| Tesco-Global Stores Privately Held | 32 | HUF10 Common | 100 | |
| Company Limited | HUF10 Registered Preference | 100 | ||
| Liquidation | ||||
Tesco Holdings B.V. | 40 | EUR1.00 Ordinary | 100 | |
Tesco International Clothing Brand s.r.o. | 57 | EUR1.00 Ordinary | 100 | |
Tesco International Franchising s.r.o. | 57 | EUR1.00 Ordinary | 100 | |
Tesco International Sourcing Limited | 20 | HKD10 Ordinary | 100 | |
Tesco Ireland Holdings Limited | 24 | EUR0.00008 | Ordinary | 100 |
Tesco Ireland Limited | 24 | EUR1.25 Ordinary | 100 | |
| Tesco Ireland Pension Trustees | 24 | EUR1.25 Ordinary | 100 | |
| Designated Activity Company | ||||
| Tesco Joint Buying Service (Shanghai) | 17 | USD1.00 Ordinary | 100 | |
| Co. Limited | ||||
Tesco Mobile Ireland Limited | 24 | EUR1.00 Ordinary | 100 | |
Tesco Sourcing India Private Limited | 41 | INR10 Ordinary | 100 | |
Tesco Stores ČR a.s. | 7 | CZK250 Ordinary | 100 | |
Tesco Stores SR, a.s. | 57 | EUR33,193.92 Ordinary | 100 | |
| Tesco Technology and Services Europe | 3 | PLN50 Ordinary | 100 | |
| sp. zo.o. | ||||
Tesco Trustee Company of Ireland Limited † | 24 | EUR1.25 Ordinary | 100 | |
| TESCO-BST Üzleti és Technológiai | 25 | HUF10,000 | Ordinary | 100 |
| Szolgáltatások Zârtköruen Múködó | ||||
| Részvénytársaság | ||||
| Registered | ||
| Name of undertaking | address Class of share held | |
Acklam Management Company Limited | 9 | Limited by Guarantee – |
Berry Lane Management Company Limited | 9 | Limited by Guarantee – |
| Oxford Fox and Hounds Management | 9 | Limited by Guarantee – |
| Company Limited | ||
Tesco Aqua (GP) Limited (g) | 1 | GBP0.0001 A Ordinary 100 |
Tesco Aqua (FinCo2) Limited | 9 GBP1.00 Ordinary 100 | |
Tesco Lagoon GP Limited | 5 GBP1.00 Ordinary 100 | |
Tesco Property Partner (GP No.2) Limited (g) | 1 GBP1.00 A Ordinary | |
Tesco Red (GP) Limited (g) | 1 | GBP0.00001 A Ordinary 100 |
| GBP0.00001 B Ordinary 100 | ||
Tesco TLB Properties Limited (g) | 1 | GBP0.0000001 A Ordinary |
| GBP0.0000001 B Ordinary |
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Patrick C. Joyce Supermarket (Headford) ULC | 24 | EUR1.25 Ordinary | 100 |
Tesco Sourcing Chile SpA 22 CLP482.69 Nominal Ordinary 100
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
223.
Financial statementsStrategic report
Related undertakings of the Tesco Group continued
Associated undertakings
The following associated undertakings were incorporated in the United Kingdom
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Broadfields Management Limited | 12 | GBP0.10 Ordinary | 35.33 |
Drift East Management Limited | 65 | GBP0.01 B Ordinary | 17.50 |
Holmscroft H.C. Limited | 23 | GBP0.10 Ordinary | 14.29 |
Latitude Management Company Limited | 71 | GBP1.00 Ordinary | 0.95 |
Shire Park Limited | 15 | GBP1.00 Ordinary | 46.00 |
Tesco Jade (Nominee) Limited | 29 | GBP1.00 Ordinary | 30 |
Tesco Mobile Limited* | 1 | GBP0.10 A Ordinary | 100 |
GBP0.90 B Ordinary | 100 | ||
W23 Global Fund LP | 67 | Limited Partnership | 20 |
W23 Global GP LLP | 67 | Limited Liability Partnership | 20 |
W23 Global Limited | 67 | GBP1.00 Ordinary | 20 |
WBD (Chesterfield Management) Limited | 53 | GBP1.00 Ordinary | 16.67 |
The following associated undertakings were incorporated outside of the United Kingdom
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
Booker India Limited | 72 | INR5 Equity | 49 | |
| dunnhumby Mitsui Bussan Customer | 54 | JPY50,000 | Ordinary | 50 |
| Science Co., Ltd | ||||
dunnhumby Norge A.S. | 55 | NOK1,000 | Ordinary | 50 |
Fiora Hypermarket Limited | 26 | INR10 Equity | 49 | |
Fiora Online Limited | 76 | INR10 10% Non-Convertible | 49 | |
| Redeemable Preference | ||||
| INR10 0.01% Non-Cumulative | 49 | |||
| Redeemable Preference | ||||
| INR10 Equity | 49 | |||
| Longford Centre Management Services | 74 | EUR1.25 Ordinary | 53.23 | |
| Limited | ||||
Marketplacer Holdings Ltd | 73 | AUD1.37334 | Preference | 5.47 |
Merrion Shopping Centre Ltd | 24 | EUR0.012697 | Ordinary | 51.88 |
Tesco Mobile ČR s.r.o. | 7 | CZK100,000 | Ordinary | 50 |
Tesco Mobile Slovakia s.r.o. | 54 | EUR1.00 Ordinary | 50 | |
The Arena Unit Trust | 33 | – | 50 | |
The Blackpool Unit Trust | 33 | – | 50 | |
The Broadstairs Unit Trust | 33 | – | 50 | |
The Coventry Unit Trust | 33 | – | 50 | |
THPL Support Services Limited | 72 | INR100 Equity | 50 | |
Trent Hypermarket Private Limited | 13 | INR10 Equity | 50 | |
W23 Global Manager Pty Ltd | 75 | AUD1.00 Ordinary | 20 | |
Consolidated structured entities
Name of undertaking | Registered address | Nature of business |
Delamare Finance PLC | 11 | Securitisation entity |
Delamare Group Holdings Limited | 11 | Securitisation entity |
Tesco Property Finance 2 PLC | 11 | Securitisation entity |
Tesco Property Finance 5 PLC | 11 | Securitisation entity |
Tesco Property Finance 6 PLC | 11 | Securitisation entity |
* Undertaking where other share classes are held by a third party.
† Interest held directly by Tesco PLC.
(a) Company sold on 28 February 2025.
(b) 95% held by Tesco PLC.
(c) 66.6% held by Tesco PLC.
(d) 50% held by Tesco PLC.
(e) Shares held by Tesco Pension Trustees Limited (TPTL), the corporate trustee of the Tesco PLC Pension Scheme (the Scheme).
On behalf of the Scheme, TPTL holds a 50% shareholding in three property joint ventures with Tesco, and is the sole shareholder
of TPT Holdco No.1 Limited and Tesco Pension Investment Limited.
(f) One ordinary share of the same class partly paid.
(g) Company dissolved on 3 March 2025.
Tesco PLC Annual Report and Financial Statements 2025
224.
1 Tesco House, Shire Park, Kestrel Way, Welwyn Garden City, AL7 1GA, United Kingdom
2 Apex Road, Brownhills, Walsall, West Midlands, WS8 7HU, United Kingdom
3 ul. Przy Rondzie 4, 31-547 Kraków, Poland
4 184 Shepherds Bush Road, London, W6 7NL, United Kingdom
5 Atria One, 144 Morrison Street, Edinburgh, EH3 8EX, Scotland
6 2 South Gyle Crescent, Edinburgh, EH12 9FQ, United Kingdom
7 Vršovická 1527/68b, Vršovice, 100 00 Prague 10, Czech Republic
8 Equity House, Irthlingborough Road, Wellingborough, Northamptonshire, NN8 1LT, United Kingdom
9 Ernst & Young LLP, 1 More London Place, London, SE1 2AF, United Kingdom
10 Suite 13.03, 13th Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
11 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom
12 2 Paris Parklands, Railton Road, Guildford, Surrey, GU2 9JX, United Kingdom
13 26th Floor, Vios Tower, New Cuffe Parade, Sewri-Chembur Road, Near Imax Dome Theatre, Wadala, Antop Hill, Mumbai,
Maharashtra, India, 400037, India
14 Ritterstraße 6, 10969 Berlin, Germany
15 Riverside House, 3 Place Farm, Wheathampstead, St. Albans, AL4 8SB, United Kingdom
16 Avenida Brigadeiro Luís Antônio, No. 3530, CJ, 51 and 52 Jardim Paulista São Paulo 01402-001, Brazil
17 Unit 01, 02, 06, 07, 08, 09, Floor 17, No. 610 Xujiahui Road, Huangpu District, Shanghai, People’s Republic of China
18 Rue du Louvre, Spaces les Halles, Spaces 40, Paris 75001, France
19 No 319 Chamchuri Square Building, 24th Floor, Office no. 24116, Phayathai road, Pathumwan sub district, Pathumwan District,
Bangkok 10330, Thailand
20 2604-2605 AXA Tower, Landmark East, No. 100 How Ming Street, Kowloon, Hong Kong
21 5 Esperidon Street, 4th Floor, 2001 Strovolos, Nicosia, Cyprus
22 Avenida Santa María 5888, Piso 2 Zona A, Oficina 4, Vitacura, Santiago, 7660268, Chile
23 73 Union Street, Greenock, PA16 8BG, Ireland
24 Gresham House, Marine Road, Dun Laoghaire, Co. Dublin A96 HX70, Ireland
25 1138, Budapest, Váci út, 187, Hungary
26 Trent House, Plot No. C-60, G-Block, Besides Citi Bank, Bandra Kurla Complex, Bandra (East), Mumbai 400051, India
27 PO Box 25, Regency Court, Glategny Esplanade, St. Peter Port, Guernsey, GY1 3AP
28 Level 1, IFC1 Esplanade, St Helier, Jersey, JE2 3BX
29 Carrera 48, No 32B Sur 139, OF 909 P. 9, Envigado, Antioquia, Medelin 055428, Colombia
30 c/o Rantalainen Oy, Helsinki Rajatorpantie 8, 01600 Vantaa, Finland
31 The Omnibus Building, Lesbourne Road, Reigate, Surrey, RH2 7LD, United Kingdom
32 2040 Budaörs, Kinizsi út 1-3, Budapest, Hungary
33 47 Esplanade, St Helier, Jersey, JE1 0BD
34 No. 725 Metropolis Building, Level 20, Suite 161, Sukhumvit Road, Klongtan Nua
Sub-District, Wattana District, BANGKOK 10110, Thailand
35 c/o The Corporation Trust Company, 1209 Orange Street, Corporation Trust Center, Wilmington, DE 19801, United States
36 Ground Floor and First Floor, Worldmark 1, Asset Area 11, Aerocity, Hospitality District, Indira Ghandi Int. Airport, New Delhi,
South West Delhi DL 110037, India
37 Via Tiziano 32, Milan 20145, Italy
38 9th Floor, Shiroyama Trust Tower, 4-3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6009, Japan
39 38/39 Fitzwilliam Square, Dublin 2, Ireland
40 Willemsparkweg 150H, 1071 HS, Amsterdam, The Netherlands
41 81 & 82, Tesco Bengaluru Campus, EPIP Area, Whitefield, Bangalore, Karnataka 560066, India
42 ul. Grzybowska 2/29, 00-131 Warsaw, Poland
43 237 Aloe Ridge 2, Stoneridge Drive Greenstone Hill, Gauteng, Johannesburg 1610, South Africa
44 3300 Great American Tower, 301 East Fourth Street, Cincinnati, OH, 45202, United States
45 Windward 1, Regatta Office Park, PO Box 897, Grand Cayman KY1 – 1103, Cayman Islands
46 c/o Vaish Associates, 106, Peninsula Centre, Dr. S. S. Rao Road, Parel Mumbai 400012, India
47 6th Floor, 125 London Wall, London, EC2Y 5AS, United Kingdom
48 Antonio Bellet 444 Oficina 504 Comuna de Las Condes, Ciudad de Santiago, 7500025, Chile
49 163 Tras Street, #03-01, Lian Huat Building, 079024, Singapore
50 48, 1D, Calle de Hermosilla 1ª, Madrid 28001, Spain
51 Centre de Commerces et de, Loisirs, Cite Europe, 62231 Coquelles, France
52 27/F One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong
53 Barratt House, Cartwright Way Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF, United Kingdom
54 Pribinova 40, Bratislava 811 09, Slovakia
55 Rosenkrantzgate 16, Oslo O160, Norway
56 C/O GALST Advokataktieselskab, Gammel Strand 44, Kobenhavn K, 1202, Denmark
57 Cesta na Senec 2, Bratislava, 821 04, Slovakia
58 1400-340 Albert Street, Ottawa, Ontario K1R 0A5, Canada
59 4th Floor, Tower B, Paras Twin Towers, DLF Golf Course Road, Sector 54, Gurgaon, Haryana-HR, 122002, India
60 48 Rue Cambon, 75001, Paris, France
61 Room 1001, Enterprise Development Tower, Unit 01 – 10th Floor, No 398, Jiangsu Road, Changning District, Shanghai 200050,
People’s Republic of China
62 Room 2393, 2/F, No.3 Xuanhua Road, Changning District, Shanghai, People’s Republic of China
63 RSM New Zealand, Level 2, 60 Highbrook Drive, East Tamaki, Auckland, 2013, New Zealand
64 c/o RSM Australia Pty Ltd, Level 21, 55 Collins Street, Melbourne, VIC 3000, Australia
65 Prologis House, Blythe Gate, Blythe Valley Park, Solihull, England, B90 8AH
66 Floor 3, 2 Harbour Square, Crofton Road, Dun Laoghaire, Dublin A96D6R0, Ireland
67 8 Sackville Street, London, W1S 3DG, United Kingdom
68 Av President Masarik No. 111, Piso 1, Colina Polance V Seccion Delegacion Miguel Hidalgo, Mexico 11560, Mexico
69 Kingsfordweg 151, 1043 GR Amsterdam, The Netherlands
70 Dorey Court, Admiral Park, St. Peter Port, GY1 4AT, Guernsey
71 Queensway House, 11 Queensway, New Milton, Hampshire, England, BH25 5NR
72 C-60/G Block, Trent House, BKC, Near Citi Bank, Bandra (East), Mumbai 400051, India
73 c/o Automic Pty Ltd, Suite 5, Level 12, 530 Collins Street, Melbourne VIC 3000, Australia
74 Longford Shopping Centre, Longford Town, Co. Longford, Longford, N39 R7R6, Ireland
75 Suite 502, 80 Cooper Street, Surry Hills, New South Wales 2010, Australia
Tesco PLC Annual Report and Financial Statements 2025
Governance Additional information
225.
Financial statementsStrategic report
Supplementary information (unaudited)
One-year like-for-like sales performance (exc. VAT, exc. fuel)
Like-for-like sales
Q1 Q2 Q3 Q4 H1 H2 FY
2024/25 2024/25 2024/25 2024/25 2024/25 2024/25 2024/25
UK & ROI 3.6% 2.5% 2.8% 3.6% 3.1% 3.2% 3.1%
UK 4.6% 3.5% 3.8% 4.3% 4.0% 4.1% 4.0%
ROI 4.4% 5.1% 4.2% 4.5% 4.7% 4.4% 4.6%
Booker (1.3)% (2.5)% (2.6)% (0.6)% (1.9)% (1.6)% (1.8)%
Central Europe 0.6% 0.6% 2.8% 4.8% 0.6% 3.8% 2.2%
Like-for-like
sales growth
3.4% 2.4% 2.8% 3.7% 2.9% 3.2% 3.1%
Growth in sales (exc. VAT, exc. fuel)
Actual rates Constant rates
H1 H2 FY H1 H2 FY
2024/25 2024/25 2024/25 2024/25 2024/25 2024/25
UK & ROI* 4.1% 3.9% 4.0% 4.2% 4.1% 4.2%
UK* 5.4% 4.8% 5.1% 5.4% 4.8% 5.1%
ROI 3.6% 2.2% 2.9% 5.6% 5.6% 5.6%
Booker (1.7)% (0.3)% (1.0)% (1.7)% (0.3)% (1.0)%
Central Europe (4.2)% (1.9)% (3.0)% 0.9% 4.0% 2.5%
Growth in sales* 3.5% 3.5% 3.5% 4.0% 4.1% 4.0%
* H1 restated to include the Insurance and Money Services business.
Country level revenue detail is provided in Note 3.
UK sales area by size of store
22 February 2025 24 February 2024
Store size (sq. ft.) No. of stores Million sq. ft.
% of total
sq. ft. No. of stores
(a)
Million sq. ft.
(a)
% of total
sq. ft.
0–3,000 2,716 5.9 15.4% 2,675 5.8 15.0%
3,001–20,000 281 3.0 7.7% 279 2.9 7.5%
20,001–40,000 302 9.0 23.3% 279 7.6 19.6%
40,001–60,000 192 9.7 25.2% 174 8.5 22.0%
60,001–80,000 111 7.6 19.6% 139 9.4 24.3%
80,001–100,000 31 2.7 7.0% 40 3.5 9.0%
Over 100,000 6 0.7 1.8% 10 1.0 2.6%
Total
(b)
3,639 38.6 100.0% 3,596 38.7 100.0%
(a) The prior year has been re-presented for sales areas remeasurements.
(b) Excludes Booker and franchise stores.
Group space summary
Actual Group space – store numbers
(a)
2023/24
year end Openings
Closures/
disposals
Net gain/
(reduction)
(b)
2024/25
year end
Repurposing/
extensions
(c)
Large 809 2 (2)
-
809 30
Convenience 2,048 55 (9) 46 2,094
-
Dotcom only 6
- - -
6
-
Total Tesco 2,863 57 (11) 46 2,909 30
One Stop
(d)
733 7 (10) (3) 730
-
Booker 190
- - -
190
-
UK
(d)
3,786 64 (21) 43 3,829 30
ROI 170 12
-
12 182
-
UK & ROI
(d)
3,956 76 (21) 55 4,011 30
Czech Republic
(d)
184 3 (3)
-
184 14
Hungary 197 1
-
1 198 49
Slovakia
(d)
169 10
-
10 179 16
Central Europe
(d)
550 14 (3) 11 561 79
Group
(d)
4,506 90 (24) 66 4,572 109
UK (One Stop) 317 54 (17) 37 354
-
Czech Republic 119 1 (6) (5) 114
-
Franchise stores 436 55 (23) 32 468
-
Total Group 4,942 145 (47) 98 5,040 109
(a) Continuing operations.
(b) The net gain/(reduction) reflects the number of store openings less the number of store closures/disposals and, for sq. ft. tables,
adjustments for repurposing/extensions.
(c) Repurposing of retail selling space.
(d) Excludes franchise stores.
Tesco PLC Annual Report and Financial Statements 2025
226.
Actual Group space – ’000 sq. ft.
(a)
2023/24
year end
(e)
Openings
Closures/
disposals
Repurposing/
extensions
(c)
Net gain/
(reduction)
(b)
2024/25
year end
Large 31,344 38 (55) (235) (252) 31,092
Convenience 5,455 188 (28)
-
160 5,615
Dotcom only 716
- - - -
716
Total Tesco 37,515 226 (83) (235) (92) 37,423
One Stop
(d)
1,208 12 (15)
-
(3) 1,205
Booker 7,951
- - - -
7,951
UK
(d)
46,674 238 (98) (235) (95) 46,579
ROI 3,499 73
- -
73 3,572
UK & ROI
(d)
50,173 311 (98) (235) (22) 50,151
Czech Republic
(d)
4,101 61 (45) (32) (16) 4,085
Hungary 5,372 4
-
(60) (56) 5,316
Slovakia
(d)
3,213 19
-
(53) (34) 3,179
Central Europe
(d)
12,686 84 (45) (145) (106) 12,580
Group
(d)
62,859 395 (143) (380) (128) 62,731
UK (One Stop) 459 73 (23)
-
50 509
Czech Republic 108 1 (6)
-
(5) 103
Franchise stores 567 74 (29)
-
45 612
Total Group 63,426 469 (172) (380) (83) 63,343
(a)-(d) Refer to previous table for footnotes.
(e) The prior year has been re-presented for sales areas remeasurements.
Group space forecast to 28 February 2026 – ’000 sq. ft.
(a)
2024/25
year end Openings
Closures/
disposals
Repurposing/
extensions
(c)
Net gain/
(reduction)
(b)
2025/26
year end
Large 31,092 73
-
8 81 31,173
Convenience 5,615 150 (22) 3 131 5,746
Dotcom only 716
- - - -
716
Total Tesco 37,423 223 (22) 11 212 37,635
One Stop
(d)
1,205 17 (2)
-
15 1,220
Booker 7,951
-
(12)
-
(12) 7,939
UK
(d)
46,579 240 (36) 11 215 46,794
ROI 3,572 82
- -
82 3,654
UK & ROI
(d)
50,151 322 (36) 11 297 50,448
Czech Republic
(d)
4,085 33 (3) (17) 13 4,098
Hungary 5,316 16 (3) (49) (36) 5,280
Slovakia
(d)
3,179 116
-
(33) 83 3,262
Central Europe
(d)
12,580 165 (6) (99) 60 12,640
Group
(d)
62,731 487 (42) (88) 357 63,088
UK (One Stop) 509 11
- -
11 520
Czech Republic 103
-
(1)
-
(1) 102
Franchise stores 612 11 (1)
-
10 622
Total Group 63,343 498 (43) (88) 367 63,710
Refer to previous table for footnotes.
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
227.
Strategic report Additional information
Introduction
In the reporting of financial information, the Directors have adopted various Alternative performance
measures (APMs).
These measures are not defined by International Financial Reporting Standards (IFRS) and therefore
may not be directly comparable with other companies’ APMs, including those in the Group’s industry.
APMs should be considered in addition to, and are not intended to be a substitute for, or superior to,
IFRS measures.
Purpose
The Directors believe that these APMs assist in providing additional useful information on the trends,
performance and position of the Group. APMs aid comparability between geographical units or
provide measures that are widely used across the industry. They also aid comparability between
reporting periods; adjusting for certain costs or incomes that derive from events or transactions that
fall within the normal activities of the Group but which, by virtue of their size or nature, are adjusted,
can provide a helpful alternative perspective on year-on-year trends, performance and position that
aids comparability over time.
The alternative view presented by these APMs is consistent with how management views the business,
and how it is reported internally to the Board and Executive Committee for performance analysis,
planning, reporting, decision-making and incentive-setting purposes.
Further information on the Group’s adjusting items, which is a critical accounting judgement, can be
found in Notes 1 and 5.
Some of the Group’s IFRS measures are translated at constant exchange rates. Constant exchange
rates are the average actual periodic exchange rates for the previous financial period and are used to
eliminate the effects of exchange rate fluctuations in assessing performance. Actual exchange rates
are the average actual periodic exchange rates for that financial period.
All income statement measures are presented on a continuing operations basis.
Changes to APMs
Following the disposal of the Group’s Banking operations, management has reviewed the definition of
each APM, with the following changes:
– EBITDA (previously Retail EBITDA) has been refined to include the continuing Insurance and Money
Services business. This reflects the Group’s new segmental reporting structure (refer to Note 2) and
ensures that all continuing operations are included in the APM. Comparatives have been restated.
– Net debt has been refined to include the continuing Insurance and Money Services business and
exclude all discontinued operations. This reflects the Group’s new segmental reporting structure
(refer to Note 2) and ensures that all continuing operations are included in the APM. Comparatives
have been restated.
– The Group no longer makes the distinction between Retail and Tesco Bank (refer to Note 2).
Accordingly, Retail free cash flow is now called Free cash flow. Free cash flow does not include cash
generated directly by the Insurance and Money Services business but does include any ordinary cash
dividends this business pays to Tesco PLC.
In addition to the changes set out above, management has made the following clarifications:
– Free cash flow and Capex have been refined to also exclude refit costs directly associated with store
purchases (including those acquired through business combinations). Such costs are a necessary
and directly attributable cost of such acquisitions. The impact is immaterial to both the current and
prior year, and as such, comparatives have not been restated.
– The Group has updated the name Adjusted total finance costs to Adjusted net finance costs to
reflect that this APM includes finance income as well as finance cost. This name change does not
change the composition or quantification of the amount in the current or prior year.
Management has introduced one additional APM:
– Return on capital employed (ROCE), which is defined as Adjusted operating profit divided by the
average of opening and closing capital employed from continuing operations. This metric represents
the profit generated as a proportion of the total average capital that the business has utilised in the
period. Management believes this is a useful measure to assess performance.
Management has discontinued two APMs:
– Total indebtedness and Total indebtedness ratio are no longer used as APMs by management as they
do not drive decision making and therefore have less relevance in assessing performance.
Glossary – Alternative performance measures
Alternative performance
measures.
Tesco PLC Annual Report and Financial Statements 2025
228.
Group APMs
APM
Closest equivalent
IFRS measure
Adjustments to reconcile
to IFRS measure Definition and purpose
Income statement
Revenue measures
Sales Revenue – Fuel sales – Excludes the impact of fuel sales made at petrol filling stations. This removes volatilities outside of the control of management, associated
with the movement in fuel prices.
– This measure is presented on a country, segmental and Group continuing operations basis.
– This is a key management incentive metric.
Growth in sales No direct equivalent – Ratio N/A – Growth in sales is a ratio that measures year-on-year movement in Group sales for continuing operations for 52 weeks ended 22 February
2025 (52 weeks ended 24 February 2024). It shows the annual rate of increase in the Group’s sales and is considered a good indicator of how
rapidly the Group’s core business is growing.
– This measure is presented at both actual and constant foreign exchange rates.
Like-for-like (LFL) sales
growth
No direct equivalent – Ratio N/A – LFL sales growth is a measure of growth in Group online sales and sales from stores that have been open for at least a year (but excludes prior
year sales of stores closed during the year) at constant foreign exchange rates.
– It excludes revenue from dunnhumby and Insurance and Money Services, as this revenue is not directly linked to the sale of goods.
– It is a widely used indicator of a retailer’s current trading performance and is important when comparing growth between retailers that have
different profiles of expansion, disposals and closures.
Profit measures
Adjusted operating
profit
Operating profit from
continuing operations
(a)
– Adjusting items
(b)
– Adjusted operating profit is the headline measure of the Group’s performance, based on operating profit from continuing operations before
the impact of adjusting items. Refer to the APM Purpose section of the Glossary and Note 1 for further information on adjusting items.
– Amortisation of acquired intangibles is included within adjusting items because it relates to inorganic business combinations and does not
reflect the Group’s ongoing trading performance (related revenue and other costs from acquisitions are not adjusted).
– This measure is presented on a segmental and Group continuing operations basis.
– This is a key management incentive metric.
Adjusted net finance
costs
Net finance costs – Adjusting items
(b)
– Adjusting items within net finance costs include net pension finance income/(costs) and fair value remeasurements on financial instruments.
Net pension finance income/(costs) are impacted by corporate bond yields, which can fluctuate significantly and are reset each year based
on external market factors that are outside management’s control. Fair value remeasurements are impacted by changes to credit risk and
various market indices, applying to financial instruments resulting from liability management exercises, which can fluctuate significantly
outside of management’s control. This measure helps to provide an alternative view of year-on-year trends in the Group’s net finance costs.
Adjusted profit before
tax
Profit before tax – Adjusting items
(b)
– This measure is the summation of the impact of all adjusting items on profit before tax. Refer to the APM Purpose section of the Glossary and
Note 1 for further information on adjusting items.
Adjusted operating
margin
No direct equivalent – Ratio N/A – Adjusted operating margin is calculated as adjusted operating profit divided by revenue. Progression in Adjusted operating margin is an
important indicator of the Group’s operating efficiency.
Adjusted diluted
earnings
per share
Diluted earnings per
share from continuing
operations
– Adjusting items
(b)
– This metric shows the adjusted profit after tax from continuing operations attributable to owners of the parent divided by the weighted
average number of ordinary shares in issue during the financial period, adjusted for the effects of dilutive share options.
EBITDA (earnings
before adjusting
items, interest, tax,
depreciation and
amortisation)
Operating profit from
continuing operations
(a)
– Adjusting items
(b)
– Depreciation and
amortisation
– This measure is widely used by analysts, investors and other users of the accounts to evaluate comparable profitability of companies, as it
excludes the impact of differing capital structures and tax positions, variations in tangible asset portfolios, and differences in identification
and recognition of intangible assets. It is used to derive the Net debt/EBITDA ratio, and Fixed charge cover APMs.
Tax measures
Adjusted effective
tax rate
Effective tax rate – Adjusting items
(b)
– Adjusted effective tax rate is calculated as total income tax credit/(charge) excluding the tax impact of adjusting items, divided by adjusted
profit before tax. This APM provides an indication of the ongoing tax rate across the Group.
(a) Operating profit is presented on the Group income statement and is a generally accepted profit measure.
(b) Refer to Note 1 and Note 5.
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
229.
Strategic report Additional information
Group APMs continued
APM
Closest equivalent
IFRS measure
Adjustments to reconcile
to IFRS measure Definition and purpose
Balance sheet measures
Net debt No direct equivalent – N/A – Net debt excludes the net debt of discontinued operations to reflect the net debt obligations of the continuing business.
– Net debt comprises borrowings, lease liabilities and net derivative financial instruments, offset by cash and cash equivalents, short-term
investments, joint venture loans, and interest and other receivables.
– It is a useful measure of the progress in generating cash and strengthening of the Group’s balance sheet position, and is a measure widely used
by credit rating agencies.
Net debt/EBITDA
ratio
No direct equivalent – Ratio N/A – Net debt/EBITDA ratio is calculated as Net debt divided by the rolling 12-month EBITDA. It is a measure of the Group’s ability to meet its payment
obligations, showing how long it would take the Group to repay its current net debt if both net debt and EBITDA remained constant. It is widely
used by analysts and credit rating agencies.
Fixed charge cover No direct equivalent – Ratio N/A – Fixed charge cover is calculated as the rolling 12-month EBITDA divided by the sum of net finance costs (excluding net pension finance costs,
finance charges payable on lease liabilities, capitalised interest and fair value remeasurements on financial instruments) and all lease liability
payments from continuing operations. It is a measure of the Group’s ability to meet its payment obligations and is widely used by analysts
and credit rating agencies.
Capex Property, plant and
equipment, intangible
asset, and investment
property additions,
excluding those from
business combinations
– Additions relating to
property buybacks
and store purchases
– Additions relating
to decommissioning
provisions and
similar items
– Capex excludes additions arising from business combinations, buybacks of properties (typically stores), purchases of store properties, refits
associated with business combinations and purchases of store properties, as well as additions relating to decommissioning provisions and
similar items.
– Property buybacks and purchases of store properties are variable in timing, with the number and value of transactions dependent on
opportunities that arise within any given financial year. Excluding property buybacks and store property purchases therefore gives an
alternative view of trends in capital expenditure in the Group’s ongoing trading operations.
– Additions relating to decommissioning provisions and similar items are adjusted because they do not result in near-term cash outflows.
Return on capital
employed (ROCE)
No direct equivalent – Ratio N/A – Return on capital employed (ROCE) is Adjusted operating profit divided by the average of opening and closing capital employed from
continuing operations.
– Capital employed from continuing operations is defined as net assets of the Group excluding: the pension deficit/surplus; net assets of the
disposal group and non-current assets classified as held for sale; current and deferred tax balances and an adjustment to remove the impact
of deferred tax liabilities recorded against identified assets acquired in business combinations; and Net debt.
– This metric represents the profit generated as a proportion of the total average capital that the business has utilised in the period.
– Management believes this is a useful measure to assess performance.
Cash flow measures
Free cash flow No direct equivalent – N/A – Free cash flow includes:
– Continuing cash flows from operating activities of the business, excluding Insurance and Money Services and adjusting operating cash flows.
– Investing cash flows excluding Insurance and Money Services relating to: the purchase of property, plant and equipment (excluding property
buybacks and store purchases and refits associated with both store purchases and business combinations) and investment property;
purchase of intangible assets; dividends received from Insurance and Money Services (excluding special dividends); dividends received from
joint ventures and associates; and interest received.
– Financing cash flows excluding Insurance and Money Services relating to: market purchase of shares net of proceeds from shares issued in
relation to share schemes; and repayment of obligations under leases.
– Directors and management believe this provides a view of free cash flow generated by the Group’s trading operations, excluding Insurance and
Money Services, that is more predictable and comparable over time, and reflects the cash available to shareholders. Insurance and Money
Services is excluded because free cash flow is not a common metric within this industry.
– This is a key management incentive metric.
Glossary – Alternative performance measures continued
Tesco PLC Annual Report and Financial Statements 2025
230.
APMs: Reconciliation of income statement measures
Sales
A reconciliation of Sales is provided in Note 2.
Growth in sales and Like-for-like (LFL) sales growth
Continuing operations Notes 2025 2024
Revenue – current year (£m) 2, 3 69,916 68,187
Revenue – prior year (£m) 2, 3 68,187 65,322
Revenue growth 2.5% 4.4%
Exclude: Fuel impact 1.0% 3.0%
Growth in sales at actual rate 3.5% 7.4%
Exclude: Foreign exchange 0.5% (0.2)%
Growth in sales at constant rate 4.0% 7.2%
Exclude: Revenue from dunnhumby and Insurance and Money Services (0.4)% (0.2)%
Exclude: Underlying net new space impact (0.5)% (0.2)%
Like-for-like sales growth 3.1% 6.8%
Adjusted operating profit and EBITDA
2025 2024
(restated*)
Continuing operations Notes £m £m
Operating profit 2 2,711 2,821
Exclude: Adjusting items 5 417 8
Adjusted operating profit 2 3,128 2,829
Include: Depreciation and amortisation before adjusting items 1,697 1,619
EBITDA 4,825 4,448
* Following the disposal of the Group’s Banking operations, EBITDA is now presented on a Group continuing operations basis
including Insurance and Money Services rather than on a Retail basis. Comparatives have been restated.
Adjusted profit before tax
A reconciliation of Adjusted profit before tax is provided in the Group income statement.
Adjusted operating margin
A reconciliation of Adjusted operating margin is provided in Note 2.
Adjusted diluted earnings per share
A reconciliation of Adjusted diluted earnings per share is provided in Note 10.
Adjusted effective tax rate
A reconciliation of Adjusted effective tax rate is provided in Note 7.
APMs: Reconciliation of balance sheet measures
Net debt
A reconciliation of Net debt is provided in Note 32.
Reconciliation from Free cash flow to Net debt
2025 2024
(restated*)
Notes £m £m
Opening Net debt 32 (9,684) (10,049)
Free cash flow 1,750 2,063
Other cash movements:
Own shares purchased for cancellation (1,016) (752)
Dividends paid to equity owners (864) (778)
Adjusting items included in operating cash flow activities (81) (100)
Repayments of capital element of obligations under leases 600 625
Interest paid on lease liabilities 377 373
Net other interest paid/(received) 136 202
Proceeds from sale of property, plant and equipment, investment
property, intangible assets and assets held for sale
137 55
Cash outflows attributable to property buybacks and store purchases (225) (121)
Disposal of Banking operations, net of costs to sell 8 586
-
Other cash movements (21) (91)
Non-cash movements in Net debt:
Fair value movements 20 (80)
Foreign exchange movements 44 126
Net interest charge (144) (175)
Non-cash movements in lease liabilities (1,066) (916)
Non-cash movement arising from acquisitions and disposals (5) (68)
Other non-cash movements 2 2
Closing Net debt 32 (9,454) (9,684)
* Following the disposal of the Group’s Banking operations, Net debt is now presented on a Group continuing operations basis
including Insurance and Money Services, rather than on a Retail basis including Retail discontinued operations. Comparatives have
been restated.
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
231.
Strategic report Additional information
APMs: Reconciliation of balance sheet measures continued
Net debt/EBITDA ratio
2025 2024
(restated*)
Notes £m £m
Net debt 32 9,454 9,684
EBITDA 4,825 4,448
Net debt/EBITDA ratio 2.0 2.2
* Following the disposal of the Group’s Banking operations, EBITDA is now presented on a Group continuing operations basis
including Insurance and Money Services rather than on a Retail basis. Net debt is now presented on a Group continuing operations
basis including Insurance and Money Services, rather than on a Retail basis including Retail discontinued operations. Comparatives
have been restated.
Glossary – Alternative performance measures continued
Capex
Notes
2025 2024
£m £m
Property, plant and equipment additions
(a)
12 1,361 1,198
Goodwill and other intangible asset additions
(a)
11 286 275
Exclude: Additions from obtaining control of property joint venture
(b)
12
-
(65)
Exclude: Additions from property buybacks 12 (157) (78)
Exclude: Additions from store purchases and associated refits 12 (24) (29)
Exclude: Additions from refits associated with business combinations 12 (18)
-
Exclude: Additions relating to decommissioning provisions and similar items 9 13
Capex 1,457 1,314
(a) Excluding amounts acquired through business combinations.
(b) Acquisition of The Tesco Coral Limited Partnership in 2024.
Adjusted net finance costs and Fixed charge cover
Notes
2025 2024
(restated
(a)
)
£m £m
Net finance costs 6 492 538
Exclude: Net pension finance income/(costs) 6 (32) (18)
Exclude: Fair value remeasurements of financial instruments 6 76 38
Adjusted net finance costs
(b)
536 558
Exclude: Interest expense on lease liabilities
(c)
6 (377) (373)
Adjusted net finance cost, excluding finance charges payable on lease
liabilities
159 185
Include: Total lease liability payments 13 980 1,000
Exclude: Discontinued operations total lease liability payments (3) (3)
1,136 1,182
EBITDA 4,825 4,448
Fixed charge cover (ratio) 4.2 3.8
(a) Following the disposal of the Group’s Banking operations, EBITDA is now presented on a Group continuing operations basis
including Insurance and Money Services rather than on a Retail basis. Comparatives for EBITDA and Fixed charge cover (ratio) have
been restated. All other components of this APM were on a Group continuing operations basis so have not been restated.
(b) Adjusted net finance costs were previously called Adjusted total finance costs. The amended name more clearly reflects the
inclusion of both finance income and costs. The composition of the APM has not changed.
(c) Interest expense on lease liabilities is presented gross of £7m hedging impact (2024: £nil).
Return on capital employed (ROCE)
2025 2024
Notes £m £m
Adjusted operating profit 2 3,128 2,829
Capital employed from continuing operations:
Net assets 11,662 11,665
Exclude: Pension deficit/(surplus) gross of deferred tax 29 251 635
Exclude: Assets of the disposal group and non-current assets classified as
held for sale
(50) (7,783)
Exclude: Liabilities of the disposal group classified as held for sale
-
7,122
Exclude: Net current tax (asset)/liability (14) (109)
Exclude: Deferred tax assets (47) (32)
Exclude: Deferred tax liabilities 503 269
Exclude: Adjustment to remove the impact of deferred tax liabilities recorded
against identified assets acquired in business combinations
(133) (128)
Exclude: Net debt 32 9,454 9,684
Capital employed 21,626 21,323
Average capital employed from continuing operations
*
21,475 21,072
Return on capital employed (ROCE) 14.6% 13.4%
* The opening capital employed for 2024 is for the Retail business only because Banking operations were not classified as held for
sale at 25 February 2023. The closing capital employed for 2024, opening capital employed for 2025 and closing capital employed
for 2025 all include Insurance and Money Services. The 2025 ROCE would have been c.25bps lower had Insurance and Money
Services been excluded. The impact on 2024 of including Insurance and Money Services would also have been immaterial.
Tesco PLC Annual Report and Financial Statements 2025
232.
APMs: Reconciliation of cash flow measures
Free cash flow
Continuing operations excluding Insurance and Money
Services
Insurance and
Money Services
Discontinued
operations Tesco Group
Before adjusting
items Adjusting items Total Total Total Total
52 weeks ended 22 February 2025 £m £m £m £m £m £m
Operating profit/(loss) of continuing operations 2,973 (403) 2,570 141
-
2,711
Operating profit/(loss) of discontinued operations
- - - -
35 35
Depreciation and amortisation 1,680 78 1,758 17
-
1,775
Net impairment loss/(reversal) on property, plant and equipment, right of use assets, intangible
assets and investment property
12 286 298
- -
298
Net remeasurement (gain)/loss on non-current assets held for sale
- - - -
64 64
Defined benefit pension scheme payments (30)
-
(30)
- -
(30)
Share-based payments 39
-
39 (6) 4 37
Fair value movements included in operating profit/(loss)
- - -
(7) 16 9
Other reconciling items
(a)
18 (15) 3 8
-
11
Cash generated from/(used in) operations excluding working capital 4,692 (54) 4,638 153 119 4,910
(Increase)/decrease in working capital (45) (1) (46) (860) 53 (853)
Cash generated from/(used in) operations 4,647 (55) 4,592 (707) 172 4,057
Interest paid (755)
-
(755) (13) (1) (769)
Corporation tax paid (355)
-
(355) (11)
-
(366)
Net cash generated from/(used in) operating activities 3,537 (55) 3,482 (731) 171 2,922
Include the following cash flows generated from/(used in) investing activities:
Purchase of property, plant and equipment and investment property
(b)
(1,112)
-
(1,112) (2)
-
(1,114)
Purchase of intangible assets (280)
-
(280) (5) (7) (292)
Dividends received from joint ventures and associates 2
-
2
- -
2
Interest received 255
-
255
- -
255
Include the following cash flows generated from/(used in) financing activities:
Own shares purchased for share schemes, net of cash received from employees (54)
-
(54)
- -
(54)
Repayment of capital element of obligations under leases (598)
-
(598) (2) (2) (602)
Free cash flow 1,750
(a) Other reconciling items consist of individually immaterial items, primarily relating to (profit)/loss arising on sale of property, plant and equipment, investment property, intangible assets, assets classified as held for sale and early termination of leases. Refer to the Group
cash flow statement.
(b) Total purchase of property, plant and equipment and investment property in the Group cash flow statement of £(1,247)m (2024: £(1,108)m) excluding £(133)m (2024: £(59)m) of store buybacks, direct store purchases and refits associated with both direct store purchases
and business combinations.
During the year, the Insurance and Money Services business divested of an investment portfolio (refer to Note 16), included in Proceeds from sale of other investments in the Group cash flow statement, and
used the proceeds to settle deposits from central bank of £908m drawn under the Bank of England’s Term Funding Scheme with additional incentives for small and medium-sized enterprises (TFSME). Refer to
Note 25. The repayment of the deposit is included in (Increase)/decrease in working capital above.
No ordinary dividends were received by Tesco PLC from the Insurance and Money Services business (2024: £nil).
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
233.
Strategic report Additional information
Glossary – Alternative performance measures continued
APMs: Reconciliation of cash flow measures continued
Continuing operations excluding Insurance and Money Services
Insurance and
Money Services
Discontinued
operations Tesco Group
Before adjusting
items Adjusting items Total Total Total Total
52 weeks ended 24 February 2024 £m £m £m £m £m £m
Operating profit/(loss) of continuing operations 2,760 (5) 2,755 66
-
2,821
Operating profit/(loss) of discontinued operations
- - - -
(659) (659)
Depreciation and amortisation 1,602 75 1,677 17 29 1,723
Net impairment loss/(reversal) on property, plant and equipment, right of use assets, intangible
assets and investment property
-
(28) (28)
- -
(28)
Net remeasurement (gain)/loss on non-current assets held for sale
-
(12) (12)
-
732 720
Defined benefit pension scheme payments (29)
-
(29)
- -
(29)
Share-based payments 75
-
75 (3) 6 78
Fair value movements included in operating profit/(loss) 6
-
6 3 62 71
Other reconciling items
(a)
1 (84) (83) 9
-
(74)
Cash generated from/(used in) operations excluding working capital 4,415 (54) 4,361 92 170 4,623
(Increase)/decrease in working capital 418 (44) 374 (104) (7) 263
Cash generated from/(used in) operations 4,833 (98) 4,735 (12) 163 4,886
Interest paid (809)
-
(809) (14) (1) (824)
Corporation tax paid (214)
-
(214) (9)
-
(223)
Net cash generated from/(used in) operating activities 3,810 (98) 3,712 (35) 162 3,839
Include the following cash flows generated from/(used in) investing activities:
Purchase of property, plant and equipment and investment property
(b)
(1,039)
-
(1,039) (10)
-
(1,049)
Purchase of intangible assets (250)
-
(250) (6) (22) (278)
Dividends received from joint ventures and associates 9
-
9
- -
9
Interest received 249
-
249
- -
249
Include the following cash flows generated from/(used in) financing activities:
Own shares purchased for share schemes, net of cash received from employees (93)
-
(93)
- -
(93)
Repayment of capital element of obligations under leases (623)
-
(623) (2) (2) (627)
Free cash flow 2,063
Refer to previous table for footnotes.
Tesco PLC Annual Report and Financial Statements 2025
234.
Glossary
Other.
BPS
Basis points, or bps, is a unit of measurement equal to 1/100th of 1%.
CPI
Consumer price index.
Dividend per share
This is calculated as interim dividend per share paid plus final dividend per share declared
in respect of that financial year.
Enterprise value
This is calculated as market capitalisation plus net debt.
Expected credit loss (ECL)
Credit loss represents the portion of the debt that a company is unlikely to recover. The expected
credit loss is the projected future losses based on probability-weighted calculations.
ESG
Environmental, social and governance.
FTE
Full-time equivalents.
LPI
Limited price index.
Market capitalisation
The total value of all Tesco shares calculated as total number of shares multiplied by the
closing share price at the year end.
MTN
Medium term note.
MREL
Minimum requirements for own funds and eligible liabilities (European Banking Authority).
Net promoter score (NPS)
This is a loyalty measure based on a single question requiring a score between 0-10. The NPS is
calculated by subtracting the percentage of detractors (scoring 0-6) from the percentage of
promoters (scoring 9-10). This generates a figure between -100 and 100 which is the NPS.
RPI
Retail price index.
SONIA
Sterling Overnight Index Average.
Total shareholder return
The notional annualised return from a share, measured as the percentage change in the share price,
plus the dividends paid, with the gross dividends reinvested in Tesco shares. This is measured over
both a one and five-year period.
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
235.
Strategic report Additional information
Five-year record.
The statistics below reflect the latest published information. Following the disposal of the Group’s Banking operations, the remaining Insurance and Money Services business is now part of the UK & ROI segment.
The amended performance measures, including Return on capital employed and Net debt, are now shown on a Group continuing operations basis for 2025 and 2024. For the years before 2024, these measures
were reported on a Retail basis and have not been restated. The information for 2023 reflects the adoption of IFRS 17 and the presentation of Banking operations as a discontinued operation. For financial years
prior to 2023, these statistics are not restated and represent the comparatives from those years’ financial statements. During 2021, the Group disposed of its operations in Asia and agreed to dispose of its
operations in Poland, which were treated as discontinued. Refer to the Glossary for a full list of APMs and their definitions.
2021 2022 2023 2024 2025
Financial statistics (£m)
Sales
∆
UK & ROI
(a)
48,848 49,984 52,369 57,155 59,450
Central Europe 3,862 3,862 4,181 4,322 4,186
Tesco Bank
(b)
735 922 666
- -
Group sales
∆
53,445 54,768 57,216 61,477 63,636
Revenue
UK & ROI
(a)
53,170 56,404 60,246 63,691 65,583
Central Europe 3,982 4,018 4,410 4,496 4,333
Tesco Bank
(b)
735 922 666
- -
Group revenue 57,887 61,344 65,322 68,187 69,916
Adjusted operating profit/(loss)
∆
UK & ROI
(a)
1,839 2,481 2,307 2,739 3,016
Central Europe 124 168 180 90 112
Tesco Bank
(b)
(175) 176 22
- -
Group adjusted operating profit/(loss)
∆
1,788 2,825 2,509 2,829 3,128
Adjusted operating margin
∆
3.1% 4.6% 3.8% 4.1% 4.5%
Operating profit/(loss)
UK & ROI
(a)
1,890 2,191 1,249 2,755 2,729
Central Europe 127 193 144 66 (18)
Tesco Bank
(b)
(470) 176 17
- -
Group operating profit/(loss) 1,547 2,560 1,410 2,821 2,711
Share of post-tax profits/(losses) of joint ventures and
associates
26 15 8 6 (4)
Net finance costs (937) (542) (536) (538) (492)
Profit/(loss) before tax 636 2,033 882 2,289 2,215
Taxation (104) (510) (224) (525) (611)
Profit/(loss) for the year from continuing operations 532 1,523 658 1,764 1,604
Discontinued operations
(b)
5,426 (40) 78 (572) 26
Profit/(loss) for the year 5,958 1,483 736 1,192 1,630
Attributable to:
Owners of the parent 5,954 1,481 737 1,188 1,626
Non-controlling interests 4 2 (1) 4 4
Adjusted profit before tax
∆
1,134 2,197 1,954 2,277 2,588
Other financial statistics
Diluted earnings/(losses) per share – continuing
operations
5.58p 19.64p 8.81p 24.53p 23.13p
Adjusted diluted earnings per share
∆
9.24p 21.86p 20.53p 23.41p 27.38p
Dividend per share
(c)
9.15p 10.90p 10.90p 12.10p 13.70p
Cash generated from continuing operating activities
excluding Insurance and Money Services (£m)
(d)
321 3,614 3,752 3,712 3,482
Free cash flow (£m)
∆(e)
1,340 2,277 2,133 2,063 1,750
Return on capital employed (ROCE)
∆(e)
8.7% 12.1% 11.8% 13.4% 14.6%
Total shareholder return 2.6% 32.4% (10.5)% 17.8% 39.0%
Net debt (£m)
∆(e)
11,955 10,516 10,493 9,684 9,454
Enterprise value (£m) 29,336 32,403 28,562 29,452 34,657
Group statistics
(f)
Number of stores
(g)
4,673 4,752 4,859 4,942 5,040
Total sales area (’000 sq. ft.)
(g)(h)
63,980 64,034 63,835 63,426 63,343
Average employees 367,321 354,744 336,926 335,392 341,108
Average full-time equivalent employees (FTE) 242,911 231,223 222,306 223,636 229,140
UK & ROI statistics
(a)
Number of stores
(g)
4,008 4,074 4,169 4,273 4,365
Total sales area (’000 sq. ft.)
(g)(h)
50,443 50,588 50,735 50,632 50,660
Average full-time equivalent employees (FTE) 214,470 204,974 196,911 203,107 208,650
Sales (per FTE – £) 227,761 243,855 267,765 281,403 284,927
Weekly Sales (per sq. ft. – £)
(h)
18.63 19.03 19.88 21.71 22.57
∆ See APM definitions and reconciliations in the Glossary section on pages 228 to 235.
(a) Following the sale of the Group’s Banking operations, 2025 and 2024 UK & ROI information includes the retained Insurance and
Money Services business. Years prior to 2024 have not been restated.
(b) The 2023 statistics reflect the adoption of IFRS 17 and the presentation of Banking operations as a discontinued operation. Years
prior to 2023 have not been restated.
(c) Dividend per share relating to the interim and proposed final dividend.
(d) For 2021 to 2023, this measure excludes Tesco Bank.
(e) Following the sale of the Group’s Banking operations, Return on capital employed and Net debt are presented on a Group
continuing operations basis for 2025 and 2024. Both measures were previously on a Retail basis. Retail free cash flow is now called
Free cash flow and includes refits associated with store purchases and business combinations in 2025. Prior years have not been
restated. See Glossary for changes to APMs.
(f) On a continuing operations basis.
(g) Including franchise stores.
(h) 2024 has been re-presented for sales areas remeasurements. Refer to page 227.
2021 2022 2023 2024 2025
Tesco PLC Annual Report and Financial Statements 2025
236.
Directors’ report.
The Directors present their report, together
with the audited accounts for the 52 weeks
ended 22 February 2025.
In addition to the information set out herein,
and in accordance with section 414C(11) of the
Companies Act 2006, this Directors’ report
incorporates by reference the following sections
of the Annual Report:
– Strategic report;
– Corporate governance report;
– Group information, including Articles of
Association and material contracts;
– Financial statements; and
– Additional information.
The Strategic report and the Directors’ report
together constitute the management report as
required under Rule 4.1.8R of the Disclosure
Guidance and Transparency Rules.
Other information relevant to the Directors’
report, and which is incorporated by reference
into this report, can be found by referencing
the table to the right.
Directors’ statement of disclosure
of information to the auditor
Each of the persons who is a Director at the date
of approval of this Annual Report confirms that:
– So far as the Director is aware, there is no
relevant audit information of which the
Company’s auditor is unaware; and
– The Director has taken all the steps that he/she
ought to have taken as a Director in order to
make himself/herself aware of any relevant
audit information and to establish that the
Company’s auditor is aware of that information.
This confirmation is given and should be
interpreted in accordance with the provisions
of section 418 of the Companies Act 2006.
For and on behalf of the Board
Ken Murphy
Group Chief Executive
9 April 2025
Information Location in this Annual Report Pages
Appointment and retirement of Directors Nominations and Governance
Committee report
72 to 74
Business model and strategy Strategic report 18
Cautionary statement regarding forward-
looking information
Additional information 245
Corporate governance report Corporate governance report 52 to 123
Directors and their interests Corporate governance report,
Directors’ remuneration report
56 to 58, 90
to 116
Directors’ indemnities and insurance Corporate governance report 62
Dividends/Dividend policy Strategic report, Financial statements –
Note 9
28 and 157
Events after the reporting period Financial statements – Note 34 211
Financial instruments and financial
risk management
Financial statements – Notes 26 and 27 180 to 196
Future developments Strategic report 1 to 51
GHG emissions/SECR disclosures Strategic report 36 to 39
Going concern and viability statement Strategic report 50 and 51
Research and development Strategic report 1 to 51
Section 172 statement Corporate governance report 70
Share buybacks Strategic report, Financial statements –
Note 30, Additional information
22, 205 and
243
Share capital and control of the Company
and significant agreements
Financial statements – Note 30 205
Share forfeiture Strategic report, Sustainability Committee
report, Financial statements – Note 30
22, 79
and 205
Stakeholder engagement Corporate governance report 20 to 22
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
237.
Additional informationStrategic report
Compliance with the Groceries
(Supply Chain Practices) Market
Investigation Order 2009 and the
Groceries Supply Code of Practice
(the Code)
The Code regulates aspects of the commercial
relationship between 14 designated grocery
retailers in the UK and their suppliers of grocery
products. The aim of the Code is to establish and
embed the overarching principles of fairness and
lawfulness within retailer-supplier relationships.
Specific supplier protections under the Code
include the obligation for agreements to be in
writing and copies retained; reasonable notice
to be given of changes to the supply chain or
reduction in the volume of purchases; and a
number of provisions relating to payments to
suppliers, including obligations for retailers to
pay suppliers in full and without delay.
Retailer compliance with the Code is overseen
by the Groceries Code Adjudicator (GCA). In the
last year, we have actively engaged with the GCA
and were pleased to introduce the GCA to both
Matthew Barnes and Karen Whitworth. We also
hosted the GCA’s team at our Dagenham
distribution centre. We received positive
feedback from the GCA on both the meetings
with Matthew and Karen and on the distribution
centre site visit.
During the reporting year, we have continued to
enhance our Code compliance programme.
We have provided clear and regular guidance,
communications and training sessions that
incorporated feedback from suppliers and the
GCA. This year, we held mandatory masterclasses
with our buyers on delisting, and our request for
cost price changes (RFCPC) process. As usual, we
included various GSCOP scenarios in our annual
microlearning programme, ensuring that the
Code (and specifically, the GCA’s 7 Golden Rules)
are upheld.
In the GCA’s annual supplier survey for 2024,
95.8% of our suppliers recognised that we
comply ‘consistently well’ or ‘mostly well’ with
the Code.
In our own Supplier Viewpoint survey, conducted
in January 2025, the results continue to reflect
the progress we have made with our supplier
relationships. The total Group score for suppliers
rating their satisfaction with Tesco as either
‘extremely satisfied’ or ‘very satisfied’ exceeded
our targets and was the highest score to date at
88.2%. Our UK satisfaction score was 89.8% and
up 3% versus last year’s score of 86.9%. Among
topics relevant to the Code, our strongest UK
score in Viewpoint continues to be ‘Tesco pays
promptly (within policy terms)’ at 94%. 89.4% of
suppliers agreed that ‘Tesco treats me fairly’,
which was an increase on the year.
Also, in the 2024 independent, industry-wide
Advantage survey of retailers, we were pleased
to be ranked first for overall performance for
the ninth year running.
During the preceding financial year, we provided
mandatory annual refresher training for all
colleagues involved in buying groceries across
our business. This included not only the buying
teams but also a wider set of colleagues,
including those working in our quality and supply
chain divisions. In total, 1,506 colleagues
completed the GSCOP annual refresher training,
with the majority being trained via role-based
microlearning scenarios. 89% of colleagues said
that they found microlearning a better way to
learn and retain training than a single, longer
training module. In addition to refresher training,
235 new starters across our business completed
new starter GSCOP training. In addition to
computer-based training, we have also provided
numerous face-to-face training sessions on
GSCOP, whether on a standalone basis or
combined with another element of legal or
regulatory education.
During the preceding year, two Code-related
issues were raised by suppliers. In one of those
two matters, the supplier was seeking guidance
regarding an emergency product withdrawal.
Information required to be disclosed under the UK Listing Rules can be found on the following pages:
UK Listing Rule 6.6.1R Pages
Statement of capitalised interest 152 to 155
Allotment for cash of equity securities 150 to 152
Waiver of dividends 157 and 239
UK Listing Rule 6.6.6(8) Pages
Climate-related financial disclosures consistent with TCFD 36 to 39
UK Listing Rule 6.6.6(9) and (10) Pages
Diversity disclosures 23 and 75
Articles of Association
The Company’s Articles of Association may only
be amended by special resolution at a general
meeting of the shareholders. The Directors may
exercise all the powers of the Company subject
to the Articles of Association, relevant law and
any directions that may be given by the Company
at general meetings by shareholder resolution.
Anti-bribery matters
We have a zero-tolerance approach to bribery.
Our anti-bribery programme operates across
the Group. The programme is built around a
clear understanding of how and where bribery
risks affect our business and comprises of key
controls such as: policies (anti-bribery, gifts
and entertainment, conflicts of interest and
charitable donations); procedures (such as
conducting due diligence on suppliers, in
particular those who will engage public officials
on our behalf); training colleagues on bribery
risks every year and ongoing assurance
programmes to test that the controls are
functioning effectively. Bribery risk management
is discussed at senior leadership groups in each
business unit, including at the executive level,
and also with the Audit Committee.
Appointment and retirement
of Directors
The appointment and retirement of Directors
is governed by the Company’s Articles of
Association, the UK Corporate Governance
Code 2018, the Companies Act 2006 and other
related legislation. In the interests of good
governance, all Directors will retire and those
wishing to serve again will submit themselves
for re-election at the forthcoming AGM.
Chris Kennedy will stand for election as Director
at this year’s AGM, following his appointment to
the Board on 20 February 2025. Alison Platt,
having been appointed to the Board for nine
years, will step down from the Board at the
conclusion of the AGM, and will therefore not
be seeking re-election.
For additional information concerning the
Directors who served during the year and
changes to the composition of the Board,
see pages 54 to 59.
Directors’ report continued
Tesco PLC Annual Report and Financial Statements 2025
238.
In the other matter, the supplier was seeking
guidance about our annual payment terms
review. Both matters were resolved during
the reporting period.
Furthermore, three matters were reported as
ongoing from the FY 23/24 reporting period and
were carried over. Two matters have since been
resolved and one remains ongoing. The matter
that remains ongoing had escalated to a formal
dispute (as defined by Part 5, Article 11 of the
GSCOP Order). This matter has since been
resolved commercially, with the commercial
agreement being in place since June 2024.
Despite this, the supplier wishes to keep
the matter recorded as open whilst the
commercial agreement is in place. As a result,
at the end of FY 24/25 reporting period, there is
one ongoing matter.
Directors and their interests
The biographical details of the current serving
Directors are set out on pages 56 to 58.
The interests of Directors, and their immediate
families, who served during the year, in the
shares of Tesco PLC along with details of
Executive Directors’ share options, are
contained in the Directors’ remuneration report
set out on pages 90 to 116. At no time during the
year did any of the Directors have a material
interest in any significant contract with the
Company or any of its subsidiaries.
Directors’ indemnities and insurance
A qualifying third-party indemnity provision, as
defined in section 234 of the Companies Act
2006, is in force to the extent permitted by law
for the benefit of each of the Directors and
the Group Company Secretary (who is also a
Director of certain subsidiaries of the Company)
in respect of liabilities incurred as a result of
their office.
For further information, see page 62.
Dividend policy
It is the Board’s intention to continue to pay
a progressive dividend by aiming to grow the
dividend per share each year, broadly targeting
a 50% payout of adjusted earnings per share.
Dividends
The profit for the financial year, after taxation,
amounts to £1,604m (2023/24: £1,764m) from
continuing operations. The Directors have
declared dividends as follows:
Ordinary shares £m
Paid interim dividend of 4.25 pence
per share
(a)
(2023/24: 3.85 pence
per share) 289
Proposed final dividend of 9.45 pence
per share
(b)
(2023/24: 8.25 pence
per share) 637
Total dividend of 13.70 pence per share
for 2024/25 (2023/24: 12.10 pence
per share) 926
(a) Excludes £2m dividends waived (2023/24: £2m).
(b) Subject to shareholder approval at the 2025 AGM, the
final ordinary dividend will be paid on 27 June 2025 to all
shareholders on the register of members at the close of
business on 16 May 2025.
Certain nominee companies representing our
employee benefit trusts hold shares in the
Company in connection with the operation of
the Company’s share plans. Evergreen dividend
waivers remain in place on shares held by these
companies that have not been allocated
to employees.
For more information on dividends,
see page 28 and Note 9 on page 157.
Employment policies
Following negotiations with USDAW/SATA,
we have made significant enhancements to
our Company Sick Pay (CSP). Effective from
15 September 2024, we increased the CSP to a
maximum of 18 weeks for hourly paid colleagues
with 17 years’ service or more. Additionally, from
30 March 2025, Office and Distribution salaried
colleagues will transfer onto this enhanced
scheme, increasing their CSP from six weeks full
and three weeks half pay to a service-based
entitlement with a maximum of 18 weeks at
17 years’ service or more. This change ensures
that all colleagues receive equitable support
during times of illness.
In October 2024, we launched our new Bullying,
Harassment and Discrimination policy to support
colleagues across the Group. This policy is a
crucial part of ensuring that our workplace is
inclusive, safe, and a place where everyone
is treated fairly and with respect. Bullying,
harassment and discrimination have no place in
our business – we do not tolerate it in any form.
We are committed to addressing it when it
occurs and continuously learning and adapting
to foster a culture we can be proud of. To help
everyone understand their role in this, we have
been rolling out an e-Learning programme
across the Group. Leaders in the UK have
recently participated in Leading by Example
training, and now it’s time for WL1-2 colleagues
in the office to complete their compulsory
anti-harassment e-Learning.
We have enhanced our paternity pay so that all
weeks are paid at the higher of contractual pay
or average earnings over the previous 52 weeks.
In addition to this, we increased our paternity
leave by a further two weeks, fathers now get
six weeks. Our maternity pay has been improved
from 14 weeks full and 14 weeks half pay to
26 weeks full pay, followed by up to 13 weeks
Statutory Maternity Pay (SMP).
In line with our efforts to create a flexible and
collaborative work environment, we have
updated our office ways of working. We continue
to embrace a hybrid approach, with full-time
colleagues requested to spend a minimum of
three days coming together to work with others.
For part-time colleagues, the expectation is the
equivalent number of days to meet this principle.
This balance allows for effective collaboration
and teamwork while also providing the flexibility
to work independently from elsewhere.
These updates reflect our ongoing commitment
to supporting our colleagues and fostering a
positive, inclusive workplace culture. We believe
these changes will help us continue to attract
and retain top talent, ensuring Tesco remains a
great place to work. By prioritising the wellbeing
and development of our colleagues, we are
building a stronger, more resilient organisation
that is well-equipped to meet the challenges
of the future. In 2025, Tesco was recognised
by the British Quality Foundation for its
comprehensive approach to health and
wellbeing, including mental health support,
physical wellness programmes and partnerships
with leading health charities.
Our policies demonstrate our commitment to
providing equal opportunities to all colleagues,
irrespective of age, disability (including colleagues
who may have become disabled during service),
gender reassignment, marriage and civil
partnership, pregnancy or maternity, race,
religion or belief and sex or sexual orientation.
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
239.
Additional informationStrategic report
The Company is seeking to renew this authority
at the forthcoming AGM, within the limits set out
in the notice of that meeting.
The Company was authorised by shareholders at
the 2024 AGM to replace the existing authority
(as granted by shareholders at the AGM held on
16 June 2023) to purchase its own shares in the
market up to a maximum of approximately
10% of its issued share capital. The Company
is seeking to renew this authority at the
forthcoming AGM, within the limits set out in
the notice of that meeting.
Shares held by the Company’s Share Incentive
Plan (SIP) Trust, International Employee Benefit
Trust, Employees’ Share Scheme Trust and
Booker Group 2010 Employee Benefit Trust rank
pari passu with the shares in issue and have no
special rights. Voting rights and rights of
acceptance of any offer relating to the shares
held in these trusts rests with the trustees, who
may take account of any recommendation from
the Company. The trustees of the SIP Trust may
vote in respect of shares held in the SIP Trust,
but only as instructed by participants in the SIP
in respect of their free shares, partnership
shares and dividend shares. The trustees will
not otherwise vote in respect of shares held in
the SIP Trust.
The Company is not party to any significant
agreements that would take effect, alter or
terminate following a change of control of the
Company. The Company does not have
agreements with any Director or officer that
would provide compensation for loss of office or
employment resulting from a takeover, except
that provisions of the Company’s share plans
may cause options and awards granted under
such plans to vest on a takeover.
Share forfeiture
The Group has a share forfeiture programme
which it undertakes every two years, following
the completion of a shareholder tracing and
notification exercise. The Group will undertake
a new share forfeiture programme in FY 25/26.
For further information, see pages 22, 79
and Note 30 on page 205.
Streamlined energy and carbon
reporting (SECR) disclosures
A breakdown of our GHG emissions in
accordance with our regulatory obligation to
report GHG emissions pursuant to section 7 of
the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013 and the
Companies (Directors’ Report), and Limited
Liability Partnerships (Energy and Carbon
Report) Regulations 2018 can be found on
page 39. We continue to implement initiatives
to drive energy efficiency across our operations
in support of our net zero ambitions.
Examples include:
– Addressing emissions from heating, ventilation
and air conditioning (HVAC) by trialling low
carbon alternatives to gas boilers;
– Improving refrigeration efficiency and reducing
refrigerant emissions in our stores and
distribution centres;
– Switching from diesel to electric vans in our
home delivery fleet;
– Addressing transport emissions associated
with our distribution fleet, trialling fuel
alternatives while working directly with
manufacturers on even more sustainable
long-term solutions for decarbonisation; and
– Installing electric hook up points for our
refrigerated trucks and low emission
refrigeration units powered by electricity.
For further information,
see pages 36 to 39.
For and on behalf of the Board
Ken Murphy
Director
9 April 2025
Political donations
The Group did not make any political donations
or incur any political expenditure during the year
2024/25 (2023/24: £nil).
Share buyback programme
On 10 April 2024, the Company committed to
buying back an additional £1bn worth of shares
by April 2025, of which £250m was funded by a
one-off special dividend received from Tesco
Bank. This tranche completed in February 2025.
The Company intends to buy back a further
£1.45bn by no later than April 2026, of which
£700m will be funded by the proceeds of the
sale of Tesco Bank during the financial year.
This will be carried out by the Company using
the authority to purchase its own shares as
approved by shareholders. The sole purpose of
the share buyback programme is to reduce the
Company’s share capital.
For further details on the share buyback
programme, see pages 22, 243 and
Note 30 on page 205.
Share capital and control of the
Company and significant agreements
Details of the Company’s share capital, including
changes during the year in the issued share
capital and details of the rights attaching to the
Company’s Ordinary shares are set out in
Note 30 on page 205. No shareholder holds
securities carrying special rights with regards to
control of the Company. There are no
restrictions on voting rights or the transfer of
securities in the Company. The Company is not
aware of any agreements between holders of
securities that result in such restrictions.
The Company was authorised by shareholders at
the 2024 AGM to replace the existing authority
(as granted by shareholders at the AGM held on
16 June 2023) for Directors to allot new shares
that represent not more than one third of the
issued share capital of the Company. It was also
given the authority to allot relevant securities in
connection with a rights issue up to a further
one third of the issued share capital as at
1 May 2024. No shares were allotted under
that authority during the financial year.
Directors’ report continued
Going concern, longer term
prospects and viability statement
The Directors consider that the Group and the
Company have adequate resources to remain in
operation for the foreseeable future and have
therefore continued to adopt the going concern
basis in preparing the financial statements.
The UK Corporate Governance Code (available
at the FRC website www.frc.org.uk) requires the
Directors to assess and report on the prospects
of the Group over a longer period.
Our longer term viability statement is set
out on pages 50 and 51.
Modern Slavery Act
As per section 54(1) of the Modern Slavery Act
2015, our modern slavery statement is reviewed
and approved by the Board on an annual basis
and published on our Group website.
The statement covers the activities of Tesco PLC
and certain UK subsidiaries. It details policies,
processes and actions we have taken to ensure
that slavery and human trafficking are not taking
place in our supply chains or any part of our
business. Tesco is dedicated to tackling modern
slavery, both within our own operations and
supply chains, as well as the issue of forced
labour more broadly. Modern slavery is one
of our four key human rights strategic priority
areas, in which we work to bring about
change through our Improve, Transform
and Advocate model.
Our modern slavery statement can be
viewed at www.tescoplc.com.
Tesco PLC Annual Report and Financial Statements 2025
240.
NFSIS.
Non-financial and sustainability information statement
Reporting
requirement
Relevant policies and
documents that
govern our approach
Where to find more information
and outcomes
Page
Social matters – Customer
– Product safety and
food integrity
– Responsible sourcing
– People
– Our tax principles
– Responsible retailing of
alcohol, tobacco and
other age-restricted
products
Group whistleblowing policy 65
Sustainability Committee report 76
Group charitable donations policy 240
Groceries Supply Code of Practice (GSCOP) 238
Details of our sustainability strategy together
with ESG performance can be found in our
latest Sustainability Report at
www.tescoplc.com
Respect for
human rights
– Responsible sourcing Health and safety policy 44
Group whistleblowing policy 65
Sustainability Committee report 76
Human rights policy 44
Details of our modern slavery statement
can be found on our website at
www.tescoplc.com
Anti-
corruption and
anti-bribery
– Code of Business
Conduct
– GSCOP
– Group anti-bribery
policy
– Group fraud policy
– Group gift and
entertainment policy
– Tesco’s political
donations policy
– Cyber security
– Data privacy
Principal risks and uncertainties 40
Corporate governance report: purpose
and culture
65
Directors’ report: political donations,
anti-bribery matters, modern
slavery statement
238
and
240
How we
manage risk
– Schedule of matters
reserved for the Board
– Audit Committee
terms of reference
Principal risks and uncertainties 40
TCFD: risks and opportunities 48
Governance framework 61
Audit Committee report 80
Business model – Strategic drivers
– Performance
framework
– Schedule of matters
reserved for the Board
Our business model 18
Non-
financial key
performance
indicators
KPIs 19
TCFD 36
The table below constitutes the Company’s non-financial and sustainability information statement
as required by sections 414CA and 414CB of the Companies Act 2006. In addition, our website
www.tescoplc.com contains a wide range of non-financial information, including actions we take to
manage our environmental and social impact and look after our colleagues. The due diligence carried
out for each policy is contained within each respective policy’s documentation. Policies are available
on our website.
Reporting
requirement
Relevant policies and
documents that
govern our approach
Where to find more information
and outcomes
Page
Environmental
matters
– Group environment
policy
– Sustainability
policies on key
risk commodities
including soy, palm oil
and seafood
What we stand for 10
CEO review 11
UK market context 14
KPIs 19
Planet 32
Principal risks and uncertainties 40
Nature and TCFD 34
Sustainability Committee report 76
Audit Committee report:
environmental disclosures
81
Directors’ report (SECR) 237
Details of our sustainability strategy together
with ESG performance can be found in our latest
Sustainability Report at www.tescoplc.com
Colleagues – Code of Business
Conduct
– Health and safety
policy
– Bullying and
harassment policy
– Everyone’s welcome
policy
– Group whistleblowing
policy
– Colleague engagement
– Conflicts of interest
policy
What we stand for 10
KPIs 19
Principal risks and uncertainties 40
Corporate governance report:
purpose and culture
65
Board activity 67
Colleagues 69
Stakeholder engagement 20
Nominations and Governance Committee
report: diversity, equity and inclusion
75
Directors’ remuneration report 90
Directors’ report disclosures:
employment policies
239
Nominations and Governance Committee
report: conflicts of interest
73
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
241.
Additional informationStrategic report
Additional information
for shareholders.
Managing your shares and shareholder communication
The Company’s share register is maintained by our registrar, Equiniti. Shareholders can manage their holdings online or
elect to receive shareholder documentation in electronic form by setting up a Shareview portfolio.
Go Online. Go Paperless. It’s Simple.
Additional information for shareholders
Electronic communications
We encourage our shareholders to take advantage of electronic
communications. By signing up to receive electronic communications, you
will be helping to reduce print, paper and postage costs and the associated
environmental impact.
Tesco Share Account
The Tesco Share Account (TSA) is a free service available to Tesco
shareholders that allows you to hold your Tesco shares electronically. The
TSA is a sponsored nominee service operated for Tesco by Equiniti Financial
Services Limited, authorised and regulated by the FCA. Holding your shares
electronically removes the need to hold paper share certificates, making
dealing quicker and more secure. When you join the TSA, you remain the
beneficial owner of your shares and continue to have the right to receive
shareholder communications, vote at general meetings and to receive any
dividends paid on your shares.
Share dealing service
Equiniti offers shareholder services for dealing in Tesco PLC shares. Dealing
fees vary between brokers and you are recommended to check that you
are being charged the most competitive rate. For further information
please visit www.shareview.co.uk/dealing. Equiniti can also assist
with shareholding and voting queries. Please contact Equiniti online at
www.shareview.co.uk (from here, you can securely email them with
your enquiry).
Your dividend options
You have the option to reinvest your dividend to purchase shares by joining
the Tesco PLC Dividend Reinvestment Plan (the DRIP). For further
information please visit www.shareview.co.uk/info/drip (terms and
conditions apply).
It only takes a few minutes to register for a Shareview portfolio using your 11 digit Shareholder Reference Number.
You can either:
Register at www.shareview.co.uk/info/register
Elect to receive shareholder
communications electronically and
transfer your shares into the TSA
Update your details online
including change of address
and your dividend elections
Submit your proxy
voting instructions
Buy and sell shares easily
through your Shareview portfolio
Shareview
A free, easy and secure
service that enables you
to manage your
shareholding online.
www.shareview.co.uk
Scan the
QR code:
Tesco PLC Annual Report and Financial Statements 2025
242.
Annual General Meeting (AGM)
The 2025 AGM will be held on Thursday, 12 June 2025 at 11.30am in the Heart building on our Welwyn
Garden City campus. The Notice of Meeting and the Annual Report and Financial Statements 2025 are
available to view and download at www.tescoplc.com.
If you wish to view the AGM proceedings online, you can watch via the live webcast which will be
broadcast at 11.30am on the day of the AGM at www.tescoplc.com/AGM2025. The webcast is not
interactive, and it is not possible to vote or ask questions remotely.
Financial calendar 2025/26
22 February 2025
Financial year end 2024/25
12 June 2025
Annual General Meeting and Q1 trading statement
27 June 2025
Proposed payment date for final dividend
2 October 2025
Interim results announcement
8 January 2026
Q3 and Christmas trading statement
28 February 2026
Financial year end 2025/26
Please note that these dates are provisional and subject to change.
Feb 2025
Jun 2025
Oct 2025
Jan 2026
Feb 2026
American Depositary Receipts (ADRs)
The Company has a sponsored Level 1 ADR programme for which J.P. Morgan Chase Bank N.A. acts as
depositary. The ADRs are traded in the US, where one ADR represents three Ordinary shares. The ADR
programme confers the right to receive dividends in US Dollars.
ADR details
Symbol TSCDY
CUSIP 881575401
Exchange OTC
Ratio 1:3
Effective date 1 April 1992
All enquiries relating to the ADR programme should be directed to:
Shareowner Services
P.O. Box 64504
St. Paul, MN 55164-0504
Email: StockTransfer@equiniti.com
Website: www.adr.com
Share buyback programme
On 10 April 2024, the Company committed to buying back an additional £1bn worth of shares by
April 2025, of which £250m was funded by a one-off special dividend received from Tesco Bank.
This tranche completed in February 2025. The Company intends to buy back a further £1.45bn by no
later than April 2026, of which £700m will be funded by the proceeds of the sale of Tesco Bank during
the financial year. This will be carried out by the Company using the authority to purchase its own
shares as approved by shareholders. The sole purpose of the share buyback programme is to reduce
the Company’s share capital.
For more information on the share buyback programme,
see page 22 and Note 30 on page 205.
Tesco PLC Annual Report and Financial Statements 2025
Governance Financial statements
243.
Additional informationStrategic report
Major shareholders
Information provided to the Company by major shareholders pursuant to the FCA’s Disclosure
Guidance and Transparency Rules (DTR) are published via a Regulatory Information Service and are
available on the Company’s website. As at 22 February 2025 and the date of this report, the Company
had received notification of the following interests in voting rights pursuant to Chapter 5 of the DTR:
% of voting rights
(a)
BlackRock, Inc. 6.64
(a) Percentages are shown as a percentage of the Company’s total voting rights as at the date the Company was notified of the
change in holding.
Share register analysis
As at 22 February 2025, the Company had 6,736,841,762 shares in issue (24 February 2024:
7,038,930,440) and 195,332 registered holders of Ordinary shares (24 February 2024: 204,911).
Shareholdings are analysed below:
Breakdown of shareholdings
Range of shareholding
Number of
holdings
% of issued
share capital
1 – 500 130,667 0.22%
501 – 1,000 17,163 0.19%
1,001 – 5,000 32,637 1.14%
Over 5,001 14,865 98.45%
Total 195,332 100.00%
Breakdown of holders with over 5,000 shares
Range of shareholding
Number of
holdings
% of issued
share capital
5,001 – 10,000 7,789 0.82%
10,001 – 50,000 5,640 1.55%
50,001 – 100,000 366 0.37%
100,001 – 500,000 484 1.80%
500,001 – 1,000,000 154 1.62%
1,000,001 – 5,000,000 253 8.22%
Over 5,000,001 179 84.07%
Total 14,865 98.45%
Category of shareholders
Number of
holdings
% of total
registered
holders
Number of
Ordinary shares
% of issued
share capital
Private 193,324 98.97% 361,934,941 5.37%
Institutional and corporate 2,008 1.03% 6,374,906,821 94.63%
Shareholder security
In recent years, Tesco PLC has become aware that its shareholders (and holders of other Tesco
securities) have received unsolicited phone calls or correspondence concerning investment matters.
These callers can be very persistent and extremely persuasive and often have professional websites
and telephone numbers to support their activities. These callers will sometimes imply connection to
Tesco and provide incorrect or misleading information. Shareholders are advised to exercise caution
over any unsolicited advice, offers to buy shares at a discount or offers of free company reports.
Beware of share fraud
Spot the warning signs
Fraudsters will often:
1.
contact you
out of the blue;
2.
apply pressure
to invest quickly;
3.
downplay the risks
to your money;
4.
promise returns that sound
too good to be true; and
5.
state that the offer is only
available to you; or that you
cannot inform anyone else.
If you are suspicious, report it
You can report the firm or scam to the FCA
by contacting their Consumer Helpline on
0800 111 6768
or by visiting the
FCA’s website at
fca.org.uk/scamsmart
How to avoid investment scams
1.
Reject unexpected offers:
Scammers usually make
unsolicited phone calls, but
they can also contact you by
email, post, word of mouth
or at a seminar. If you have
been offered an investment
opportunity out of the blue,
it is likely to be a high-risk
investment or a scam.
2.
Check the FCA Warning List:
Use the FCA Warning List to
check the risks of a potential
investment opportunity –
you can also search to see if
the firm is known to be
operating without FCA
authorisation.
3.
Get impartial advice: Get
impartial advice before
investing – do not use an
advisor from the firm that
contacted you.
If you have lost money in a scam, contact Action Fraud on
0300 123 2040 www.actionfraud.police.uk
Additional information for shareholders continued
Tesco PLC Annual Report and Financial Statements 2025
244.
Cautionary statement regarding
forward looking information
Where this Annual Report contains forward-
looking statements, these are based on
current expectations and assumptions, and
speak only as of the date they are made.
These statements should be treated with
caution due to the inherent risks,
uncertainties and assumptions underlying
any such forward-looking information.
The Group cautions investors that a number
of factors, including matters referred to in
this document, could cause actual results
to differ materially from those expressed or
implied in any forward-looking statement.
Such factors include, but are not limited to,
those discussed under principal risks and
uncertainties on pages 40 to 47.
Forward-looking statements can be
identified by the use of relevant terminology
including the words: ‘may’, ‘will’, ‘seek’, ‘aim’,
‘anticipate’, ‘target’, ‘projected’, ‘expect’,
‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or
other words of similar meaning and include
all matters that are not historical facts. They
appear in a number of places throughout
this Annual Report and include statements
regarding the intentions, beliefs or current
expectations of our officers, Directors and
colleagues concerning, among other things,
the Group’s results of operations, financial
condition, liquidity, prospects, growth,
strategies and the business.
Neither the Group, nor any of its officers,
Directors or colleagues, provides any
representation, assurance or guarantee
that the occurrence of the events
expressed or implied in any forward-looking
statements in this Annual Report will
actually occur. Undue reliance should not
be placed on these forward-looking
statements. Other than in accordance with
our legal and regulatory obligations, the
Group undertakes no obligation to publicly
update or revise any forward-looking
statement, whether as a result of new
information, future events or otherwise.
Contact us.
Registered office
Tesco House
Shire Park
Kestrel Way
Welwyn Garden City
AL7 1GA
Website: www.tescoplc.com
Investor Relations
Investor Relations Department
Tesco House
Shire Park
Kestrel Way
Welwyn Garden City
AL7 1GA
This report is printed on Arctic Volume paper
and board.
The paper is Forest Stewardship Council
®
(FSC
®
)
certified from well managed forests and other
controlled sources.
The paper is Carbon Balanced with World Land
Trust, an international conservation charity,
which offset carbon emissions through the
purchase and preservation of high conservation
value land. Through protecting standing forests,
under threat of clearance, carbon is locked in
that would otherwise be released. These
protected forests are then able to continue
absorbing carbon from the atmosphere,
referred to as REDD (Reduced Emissions from
Deforestation and forest Degradation).
This is now recognised as one of the most
cost-effective and swiftest ways to arrest the
rise in atmospheric CO
2
and global warming
effects. Additional to the carbon benefits is
the flora and fauna this land preserves,
including a number of species identified at
risk of extinction on the IUCN Red List of
Threatened Species.
Printed in the UK by Pureprint Group,
a CarbonNeutral
®
company with
FSC
®
certification.
Photographer:
Mike Abrahams
Designed and produced by Conran Design Group.
If you have finished with this Annual Report
and no longer wish to retain it, please pass
it on to other interested readers or dispose
of it in your recycled paper waste.
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Website: www.shareview.co.uk
From here, you can securely email Equiniti
with your enquiry.
Group Company Secretary
Chris Taylor
Corporate brokers
Barclays Bank PLC
Citigroup Global Markets Limited
Independent auditors
Deloitte LLP
Golden
Tesco PLC
Tesco House
Shire Park
Kestrel Way
Welwyn Garden City
AL7 1GA
www.tescoplc.com
Value.
Quality.
Service.
It’s not a little thing.
It’s everything.
Independent auditor’s reasonable assurance report to the Members of Tesco PLC on the compliance
of the Electronic Format Annual Financial Report with Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.15R-DTR 4.1.18R
Report on compliance with the requirements for iXBRL mark up (‘tagging’) of consolidated financial
statements included in the Electronic Format Annual Financial Report.
We have undertaken a reasonable assurance engagement on the iXBRL mark up of consolidated
financial statements for the 52 weeks ended 22 February 2025 of Tesco PLC (the “company”) included
in the Electronic Format Annual Financial Report prepared by the company.
Opinion
In our opinion, the consolidated financial statements for the 52 weeks ended 22 February 2025 of the
company included in the Electronic Format Annual Financial Report, are marked up, in all material
respects, in compliance with DTR 4.1.15R-DTR 4.1.18R.
The directors’ responsibility for the Electronic Format Annual Financial Report prepared in compliance
with DTR 4.1.15R-DTR 4.1.18R
The directors are responsible for preparing the Electronic Format Annual Financial Report. This
responsibility includes:
• the selection and application of appropriate iXBRL tags using judgement where necessary;
• ensuring consistency between digitised information and the consolidated financial
statements presented in human-readable format; and
• the design, implementation and maintenance of internal control relevant to the application
of the DTR 4.1.15R-DTR 4.1.18R.
Our independence and quality control
We have complied with the independence and other ethical requirements of Financial Reporting
Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
We apply International Standard on Quality Monitoring (ISQM) 1 and, accordingly, maintain a
comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
Our responsibility
Our responsibility is to express an opinion on whether the iXBRL mark up of consolidated financial
statements complies in all material respects with DTR 4.1.15R-DTR 4.1.18R based on the evidence we
have obtained. We conducted our reasonable assurance engagement in accordance with
International Standard on Assurance Engagements (UK) 3000, Assurance Engagements Other than
Audits or Reviews of Historical Financial Information (‘ISAE (UK) 3000’) issued by the FRC.
A reasonable assurance engagement in accordance with ISAE (UK) 3000 involves performing
procedures to obtain reasonable assurance about the compliance of the mark up of the consolidated
financial statements with DTR 4.1.15R-DTR 4.1.18R. The nature, timing and extent of procedures
selected depend on the practitioner's judgement, including the assessment of the risks of material
departures from the requirements set out in the DTR 4.1.15R-DTR 4.1.18R, whether due to fraud or
error. Our reasonable assurance engagement consisted primarily of:
• obtaining an understanding of the iXBRL mark up process, including internal control over the
mark up process relevant to the engagement;
• reconciling the marked up data with the audited consolidated financial statements of the
company dated 9 April 2025;
• evaluating the appropriateness of the company’s mark up of the consolidated financial
statements using the iXBRL mark-up language;
• evaluating the appropriateness of the company’s use of iXBRL elements selected from a
generally accepted taxonomy and the creation of extension elements where no suitable
element in the generally accepted taxonomy has been identified; and
• evaluating the use of anchoring in relation to the extension elements.
In this report we do not express an audit opinion, review conclusion or any other assurance
conclusion on the consolidated financial statements. Our audit opinion relating to the consolidated
financial statements of the company for the 52 weeks ended 22 February 2025 is set out in our
Independent Auditor’s Report dated 9 April 2025.
Use of our report
Our report is made solely to the company’s members, as a body, in accordance with ISAE (UK) 3000.
Our work has been undertaken so that we might state to the company those matters we are required
to state to them in this report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company and the company’s members
as a body for our work, this report, or for the conclusions we have formed.
John Adam (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
6 May 2025