Value. Quality. Service.
Tesco PLC Annual Report and Financial Statements 2026
Every Little Helps.
At Tesco, Every Little Helps has always
been rooted in the real actions
our colleagues take every day
to support our customers.
These three words have guided
us for thirty years, and have never
been more relevant.
That’s not all, we have:
Over
10,000
products on Clubcard Prices
Customers made an average
annual saving of
£404
through Clubcard Prices*
7m
customers offered
Clubcard Challenges
Booker locked in
600
prices for catering
customers over
summer 2025
Value
We recognise how much value matters
to our customers, which is why our focus
is on delivering great prices on the lines
that matter most.
We are committed to supporting
our customers by helping them
make their money go further and
making everyday life that little
bit easier. Our Everyday Low
Prices commitment is keeping
prices low on more than
3,000 branded products
customers love.
Quality
We really care about great food, and our
expert product development teams work
hand-in-hand with our suppliers to develop
exciting new products and continually
improve existing ones.
We are proud of our partnerships, whether
that’s our work with farmers as British
agriculture’s biggest customer, or the many
other producers and suppliers we source
from. Together, we have developed a wide
range of award-winning products and ranges
– with awards this year in everything from
cheese and wine to fresh produce.
15%
increase in Finest
sales in the UK
* Average annual customer savings through
Clubcard Prices.
Whoosh.
®
Whoosh.
®
No.1
Supermarket of the Year
at the International Wine Challenge
84
Taste of Ireland awards
Launched over
2,000
new and improved products
Over
350
in-store pharmacies
73%
UK households are covered by
Whoosh rapid delivery service
5
Consecutive wins for Best Mobile
Network for Customer Service
at Uswitch Telecoms Awards
Service
Our colleagues go the extra mile when it
comes to service – whether that’s an extra
hand for customers who need it, or supporting
hundreds of schools to access free fruit and
veg for their pupils.
We want to make the shopping experience
as convenient as possible for our customers,
however they shop with us – whether that’s
in store, buying groceries online through our
core Grocery Home Shopping service and
Tesco Whoosh, or more recent additions
to our offer like Tesco Marketplace
and F&F Online.
Hello
Strategic report
Value, Quality and Service 02
Contents 04
Highlights of the year 05
Tesco at a glance 06
Our purpose framework 07
Chair’s statement 08
Group Chief Executive’s review 10
Market context 13
Our strategic ambitions 14
Our business model 16
Key performance indicators 17
Stakeholder engagement 18
Everyone’s welcome 20
Financial review 22
Sustainability 29
TCFD (including content finder index) 34
Principal risks and uncertainties 38
(including TCFD risks and opportunities)
Longer term viability statement 48
Governance
Governance overview 50
Governance introduction 52
Board of Directors 54
Governance framework 58
Board activity and section 172 statement 64
Nominations and Governance Committee 70
Sustainability Committee 74
Audit Committee 78
Directors’ remuneration report 88
Statement of Directors’ responsibilities 109
Financial statements
Independent auditor’s report 110
Group income statement 121
Group statement of comprehensive 122
income/(loss)
Group balance sheet 123
Group statement of changes in equity 124
Group cash flow statement 126
Notes to the Group financial statements 127
Tesco PLC – Parent Company balance sheet 200
Tesco PLC – Parent Company statement 201
of changes in equity
Notes to the Parent Company 202
financial statements
Related undertakings of the Tesco Group 208
Additional information
Supplementary information (unaudited) 214
Glossary – Alternative 216
performance measures
Glossary – Other 223
Five-year record 224
Directors’ report 225
NFSIS 229
Additional information for shareholders 230
Welcome to our Annual Report 2026
Tesco was built to be a champion for customers, serving
them every day with affordable, healthy and sustainable food.
Across the Group, our purpose is at the core of what we do:
serving our customers, communities and planet a little better
every day.
Our fantastic team of over 340,000 colleagues go above and
beyond to serve our customers. We work hard to be a place
where everyone is welcome, where all colleagues can be at
their best and build the skills to grow their careers.
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 34 and wherever you see this icon
T
Further reading
Please visit our website: tescoplc.com/investors
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
Tesco PLC Annual Report and Financial Statements 2026
04
2025/26
Highlights of the year
The Group’s statutory financial results for the year ended 28 February 2026 reflect a 53-week reporting period. Alternative Performance Measures (APMs) are presented for the 52 weeks to 22 February
2026 to aid comparability, except for Net debt which is presented at the balance sheet date. There is no impact from the additional week on Insurance and Money Services and Central Europe, which
report to the end of February every year.
In line with its treatment when presented last year, the performance of the Banking operations in FY 24/25 is presented as a discontinued operation. The Insurance and Money Services business (IMS) is
presented on a continuing operations basis and therefore within the headline performance measures. There are no discontinued operations in the current year.
All growth rates are shown at actual exchange rates.
Δ Alternative performance measures (APMs) – the Group has defined and outlined the purpose of its APMs in the Glossary starting on page 216.
(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 137.
(c) Further information on Net debt can be found in Note 31 on page 194.
(d) Free cash flow is an APM defined and outlined in the Glossary starting on page 216. See the Glossary starting on page 216 for details of changes to APMs.
(e) UK market share based on Worldpanel by Numerator Total Grocers Total Till Roll for the 12 weeks ended 22 February 2026.
(f) Brand NPS is based on BASIS Global Brand Tracker for 13 weeks ended 28 February 2026.
Group sales
Δ(a)
£66.6bn
4.6% (2025: £63.6bn)
Adjusted operating profit
Δ(b)
£3,152m
0.8% (2025: £3,128m)
Dividend per share
14.5p
5.8% (2025: 13.7p)
UK market share (sales value)
(e)
28.5%
24bps (2025: 28.3%)
Adjusted diluted EPS
Δ(b)
29.0p
6.0% (2025: 27.4p)
Free cash flow
Δ(d)
£1,957m
11.8% (2025: £1,750m)
Net debt
Δ(c)
£(10,563)m
(11.7)% (2025: £(9,454)m)
Group net promoter score
(f)
29pts
1pt (2025: 28pts)
Performance highlights Statutory measures
(on a continuing operations basis)
Revenue
£73.7bn
5.4% (2025: £69.9bn)
Profit before tax
£2,403m
8.5% (2025: £2,215m)
Operating profit
£2,985m
10.1% (2025: £2,711m)
Diluted EPS
27.1p
16.9% (2025: 23.1p)
Tesco PLC Annual Report and Financial Statements 2026
05
Governance Financial statements Additional informationStrategic report
Our
customers
are always at the core
Our
businesses
Who
we are
The value our businesses bring to customers and the Group
Tesco is a leading multinational grocery retailer, with
3,724 stores across the UK, ROI, Czech Republic,
Hungary and Slovakia. Across a range of formats,
including online, large and convenience stores, we
offer customers great value and quality on food and
groceries, as well as F&F Home and Clothing.
One Stop is a retail convenience business with over
1,000 company and franchise stores across the UK.
One Stop stores offer a wide range of groceries
and additional services, in the heart of local
communities.
www.tesco.com www.onestop.co.uk
dunnhumby is recognised as a leader in connecting
customer insight and action to build loyalty, drive
performance, and deliver results that last for retailers
and brands. We achieve this through a distinctive
combination of AI-enabled science, software,
and trusted advice together with over 35 years
of experience.
Tesco Insurance and Money Services is the UK’s
second largest provider of travel money, the third
largest ATM network in the UK, and serves more than
2.5 million customers across life, home, travel, pet
and car insurance.
www.dunnhumby.com
www.tescoinsurance.com and
www.tescotravelmoney.com
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.
Tesco Mobile is the UK’s largest mobile virtual network
operator, serving more than 5.5 million UK customers.
It was established in 2003 as a joint venture between
Tesco and O2. We now have nearly 600 phone shops
in total across the UK, ROI and Czech Republic.
www.booker.co.uk www.tescomobile.com
Tesco at a glance
Tesco PLC Annual Report and Financial Statements 2026
06
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.
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 is about listening to people
and then acting by changing and
innovating to meet their needs.
At Tesco, 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 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.
Our Tesco values are 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.
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
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,
and also reflects 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 through to insurance,
mobile, Booker’s wholesale customers, and dunnhumby’s retailer
and consumer goods clients.
Communities
The role we play in the thousands of communities we serve is vital
– whether it is creating good jobs, supporting local suppliers and
producers, redistributing surplus food, or helping children and
schools 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.
Tesco PLC Annual Report and Financial Statements 2026
07
Governance Financial statements Additional informationStrategic report
I‘m very proud of the many ways Tesco has
continued to deliver for all our stakeholders
in what has been a rapidly changing and
competitive landscape.
Throughout the year, Tesco’s core purpose of
serving our customers, communities and planet
a little better every day has acted as a guiding
principle, underpinning every decision and every
investment we make. This clarity of purpose,
combined with the extraordinary dedication of
our colleagues, has helped us navigate challenging
headwinds, both domestically and internationally,
and make meaningful progress across all parts of
the business.
Customers have always been the cornerstone
of everything we do, and this year has been no
exception. Colleagues across Tesco – from the
shop floor and distribution to our head office
support and technology teams – have stepped
up, finding ways to surprise and delight
customers with more personalised offers,
industry-leading availability, innovative new
products and the very best value.
Economic environment
We have delivered on our strategic priorities
against an economic backdrop that is undeniably
challenging. Inflation has been high; geopolitics
remains unstable and commodity prices have
fluctuated; Government regulatory and policy
costs have increased; we have seen relentless
competition; and continuing cost of living
pressures have impacted the finances of
millions of households.
Our response to those pressures has been to
double down on the basics of a brilliant shopping
trip – an absolute focus on value, quality and
service. That approach has resonated with
shoppers in all of our markets and we’ve seen
that not only in our market share, which reached
its highest levels since 2015, but in our customer
satisfaction scores which continue to perform
ahead of our competitors.
This would not have been possible without the
collective efforts of over 340,000 colleagues
across the business.
Investments
Together with our save to invest programme,
our strong performance has enabled us to
back long-term development programmes and
capital investment.
In this challenging environment, we’re always
looking for new ways to invest in our colleagues
and customers. Earlier last year I saw first-hand
one of our future-facing investments when
I visited our newly-opened distribution centre
in Aylesford.
This semi-automated centre is already helping
us to serve our customers in the south east of
England with fresh and frozen food, as well as
creating jobs and other benefits for the local
area. As well as Aylesford, we have signed an
agreement in the past year to develop another
new distribution centre at London Gateway,
which is due to open in 2029.
Health
As a leading food business we continue to do
everything we can to provide customers and
communities with healthy choices every time
they shop.
We have consistently found ways to support
customers and communities to live happier and
healthier lifestyles, whether that’s through the
free fruit we gave to children shopping with their
families in around 800 stores at the start of this
year or the extension of our free Fruit & Veg for
Schools programme, which has so far provided
15.7 million portions of fruit, to over 500 schools
across the country.
At the end of December 2025, we achieved our
healthy food sales target – 65% (by volume) of
all the food we sell in the UK and ROI is now
classified as healthy. We are determined to
ensure healthy lifestyles are accessible for
everyone – wherever they live and regardless
of their budget.
Chair’s statement
Chair’s
statement
Gerry Murphy,
Chair
Tesco PLC Annual Report and Financial Statements 2026
08
Spotlight on:
Sustainability
Meanwhile, our sustainability agenda –
particularly our progress towards net zero
emissions, decarbonisation initiatives and
partnerships with our farmers and wider supply
chain – has continued to reflect our role as a
responsible retailer and an industry leader in
tackling broader societal challenges.
In the past year we have made measurable
progress on our sustainability ambitions. From
reducing emissions in our operations to
accelerating progress on sustainable sourcing
and packaging reduction, we are continuing to
set a strong example in our sector.
Board
Over the course of the past 12 months, the
Board has continued to make decisions that
strengthen oversight of strategic risk and
focused on long-term value creation in areas
like AI – ensuring that Tesco is well positioned
to seize opportunities in the coming years.
I am grateful to all my fellow Directors and the
Executive team for their expertise and wisdom
which have been fundamental to our continued
success this year.
I would also like to extend a particular thanks
to Alison Platt who, after nine years as a Non-
executive Director and an important period
chairing our Remuneration Committee, retired
from the Board after the 2025 Annual General
Meeting. The Board and I would like to thank Alison
for her long service and wish her all the best
in the future.
Year ahead
In the year ahead we will navigate the current
period of uncertainty by staying true to our
values and doing everything we can to support
customers, colleagues and communities through
this challenging time. Our investment in strategic
growth, our outstanding leadership team and our
continued focus on innovation give us the right
fundamentals to do a great job for all the
stakeholders we serve.
Moreover, it gives us solid foundations to build
on Tesco’s established strengths and grow
new capabilities as we implement our evolved
strategy. This is based firmly on our renewed
commitment to Every Little Helps, providing
consistent, sustainable value for all our
stakeholders – customers, colleagues,
suppliers, communities and shareholders alike.
On behalf of all the Board, as always, I would
like to thank our colleagues for their dedication,
tireless effort and support.
Gerry Murphy
Chair, 15 April 2026
Tesco’s core purpose of serving our customers,
communities and planet a little better every day has acted
as a guiding principle, underpinning every decision we make
and every investment we undertake.
Supporting
schools with
fruit and veg
In 2024, in partnership with the British Nutrition
Foundation (BNF), we launched our free Fruit &
Veg for Schools programme in the UK, providing
over 400 schools which had a high proportion
of children on free school meals with funding
to purchase fruit and vegetables.
According to the BNF, only 12% of children aged
between 11 and 18 were meeting the government’s
recommendation of five portions of fruit and
vegetables a day.
By targeting schools with higher levels of free
school meal eligibility, the programme aims
to provide pupils with a nutritious boost.
Since the scheme began in October 2024,
we have provided a total of 15.7m portions of
fruit and veg, averaging 85 portions per pupil.
Our target for 2026 is to extend the programme
to around 1,000 schools across the UK.
In ROI, our focus on children’s access to fresh
produce and opportunities for young people
to develop lifelong food confidence has
grown substantially.
By the end of 2025, we were providing free,
nutritious fresh food every week during the
school term to more than 300 schools most
in need across Ireland, with 73% reporting
better school attendance.
In recognition of its impact, the programme
received the Chambers Ireland Sustainable
Business Impact Award in the Community
category in November 2025.
15.7m
extra portions of fruit
and vegetables distributed
in the UK, averaging 85
portions per pupil.
Tesco PLC Annual Report and Financial Statements 2026
09
Governance Financial statements Additional informationStrategic report
Over the past 12 months, we have continued
to do everything we can to deliver for our
customers. We have demonstrated not only the
strength but also the resilience of our business
by ensuring our focus never wavers from
delivering the best possible shopping trip,
with great value, quality and service.
Against an uncertain economic and geopolitical
backdrop, we have been able to win consistently
with customers and build on the positive
momentum we came into the year with. And
we’ve done it by doubling down on what matters
most to customers. A convenient shopping
experience that customers can rely on, with
great product availability and even better service.
Outstanding food and drink that’s surprised
and delighted customers. Even greater levels
of personalisation through Clubcard, and
innovations, from Whoosh to Marketplace,
that help us meet an even wider range of
customer needs.
One of our strengths is the relationships we
have, and we never lose sight of all the different
groups we serve, day-in, day-out – from our
customers, colleagues and communities to
our suppliers and shareholders.
Customers
For our customers, we know value is
as important as it has ever been in our 107-year
history. So, we have done everything we can in
the past year to deliver what customers expect
when they shop at Tesco: brilliant quality
products at the best possible prices.
We have done that through offering Aldi Price
Match on more than 600 lines, Clubcard Prices
on thousands of products each week, and the
bold commitment to keep prices low on 3,000
of the nation’s most-loved brands through
Everyday Low Prices.
And we have paired that value with first-class
quality. From fresh food to everyday essentials
we have continued to innovate with producers
and suppliers to ensure our shelves are packed
with hundreds of new and improved products
that reflect customer tastes as they evolve.
Our Finest range had another phenomenal year,
recording its third year of double-digit sales
growth, and our Finest wine took home the most
awards of all supermarket wine ranges at the
International Wine Challenge awards.
All these efforts have helped us to continue the
positive momentum in our customer satisfaction
scores. And we’ve grown our market share as
more customers have voted with their feet and
chosen to make Tesco part of their plans, both
in-store and online.
Group Chief Executive’s review
For more information
about our results use
the QR code above
Group Chief
Executive’s review
Ken Murphy,
Group Chief
Executive
Tesco PLC Annual Report and Financial Statements 2026
10
Communities
For the communities we serve, we’ve been doing
what we can to step up and make a positive
difference wherever we operate.
Through our Stronger Starts grant scheme we
awarded some £7.6m to around 7,300 projects
all over the UK – investing directly into
community initiatives that support local children
and young people to access new sports and play
equipment, as well as funds for healthy and
nutritious food.
At the same time, we expanded our flagship Free
Fruit & Veg for Schools programme to cover
more than 500 schools, helping even more
young people in schools with higher levels of free
school meal eligibility to access more fruit and
vegetables. In the year ahead, we are doubling
the size of that programme to around 1,000
schools nationwide.
Colleagues
For our colleagues, we recognise that none of
our success is possible without their dedication
and commitment to customers. I want to thank
all our colleagues for their hard work and for the
pride they bring to serving our customers and
communities. Every day, they deliver the great
service and standards that our customers rely on.
We recently announced an above-inflation pay
award that invested more than £200m in UK
hourly pay. Recognising their exceptional service
over the past year, we were pleased to announce
a £65m special performance award for colleagues
in our stores, distribution centres and customer
engagement centres.
We continue to invest in our broader package of
benefits, from our Save As You Earn share
scheme, to health and wellbeing support.
Strong foundations
Our effectiveness in meeting the needs of our
different stakeholders – and recognising how
their needs are continuing to evolve over time –
has underpinned the strong growth we’ve
achieved across the business this year, as well
as the market share gains we’ve made.
And they’re also a testament to the strategy we
set five years ago, in 2021, to build on the unique
advantages we have at Tesco in our scale and
reach. The four strategic drivers we set to help
maintain our competitiveness and accelerate
our growth – magnetic value, easily the most
convenient, I love my Tesco Clubcard and save
to invest – have fulfilled that purpose and built
strong foundations throughout the business.
Colleagues have also played a pivotal role in
helping us to constantly upgrade our online and
digital capabilities. We’ve doubled the size of our
tech team in the past six years, and you can see
the impact that has had on improving the Tesco
shopping experience, further personalising the
offers we give customers through Clubcard and
making our operations more efficient.
Online has been our fastest growing channel –
with sales up 11.2% this year, and we’ve
continued to grow and improve what we offer
our customers when they shop online with Tesco
– whether that’s launching F&F Online or growing
our third-party seller base on Marketplace.
Meanwhile, our rapid delivery service, Whoosh,
has proven incredibly popular with our
customers – so much so that we’ve now
expanded it to cover 73% of UK households.
And at the same time as doing all this, we’ve
remained incredibly disciplined and our save to
invest programme has helped us to carry on
driving efficiencies across the business; enabling
us to offset some of the inflationary pressures
we’ve been facing.
One of our strengths is the relationships we have,
and we never lose sight of all the different groups
we serve, day-in day-out – from our customers,
colleagues and communities to our suppliers
and shareholders.
Tesco PLC Annual Report and Financial Statements 2026
11
Governance Financial statements Additional informationStrategic report
Whoosh.
®
Whoosh.
®
Evolving our strategy
Together those drivers have helped keep our
focus on doing the basics brilliantly, while
exploring new opportunities in areas like digital,
convenience and personalisation. But as the
world continues to rapidly change all around us,
so too must our approach.
So, we have evolved our strategy to ensure that
we can keep winning with even more customers,
with our five strategic ambitions: winning in food;
meeting more everyday customer needs; being
the most strategic partner for suppliers;
connected, personalised and loved by
customers; and long-term business sustainability.
On pages 14 and 15, we set out more detail on
these ambitions, and how they fit together.
The ambitions are interconnected and mutually
reinforcing, and none of them are possible
without us building on all of our existing
strengths. Winning in food gives us permission
to meet more everyday needs; meeting more
needs gives us greater insight which helps us
personalise better and support our suppliers
more; and by using that to improve the
experience we offer customers, we want
them to love engaging with Tesco.
Need Anything From Tesco?
We have been serving customers and
communities across the UK for more than a
century, and we listen to them when they tell
us that their needs are changing. That spirit –
of truly understanding our customers – is the
essence of our new Need Anything From Tesco
campaign, and it underpins our recommitment
to Every Little Helps.
Every Little Helps will continue to guide everyone
at Tesco to think about the actions they can take
to make everyday life a little easier, or a little
better, for our customers. It could be free
nappies for premature babies or the biggest own
brand Free From range of any supermarket. Or it
could be making money go further with Clubcard
Reward Partners on everything from meals out
and holidays abroad to £2.50 cinema tickets.
Year ahead
We are all living through a period of real
uncertainty and, when faced with that
uncertainty, we will continue to do what we have
always done: put our customers first.
We are entering the year ahead in a position of
strength. Our evolved strategy combined with
our existing scale, our constantly improving
customer proposition and our disciplined
approach to managing costs will help ensure
Tesco continues to adapt and grow in what is
a rapidly changing world.
Ken Murphy
Group Chief Executive
15 April 2026
Rapid delivery
service continues
to grow
It was a strong year for Whoosh, which has resonated
with customers looking for a convenient and speedy
way to get groceries delivered to their door.
This year, Whoosh sales grew by 51% and we saw
an increase in the number of customers using the
service and how many products they bought.
We have been able to use our existing store
infrastructure to grow Whoosh availability quickly,
and the service is now available to 73% of the
UK population.
This year, we have also launched Whoosh in Ireland,
which is now available in 31 stores, and introduced
in the UK the option for customers to schedule an
order for later in the day.
Group Chief Executive’s review continued
Spotlight on:
More than
£400m
total Whoosh sales
51%
year-on-year growth
in Whoosh sales
Tesco PLC Annual Report and Financial Statements 2026
12
Spotlight on:
Consumer
sentiment
Spotlight on:
Competitive
environment
Spotlight on:
Health and
sustainability
Spotlight on:
Shopping
behaviour
Market context
How we are responding
– We price-match Aldi on more than 600
lines, we have more than 3,000 lines on
Everyday Low Prices and thousands of
Clubcard offers each week.
– Growing personalisation, with the launch
of Your Clubcard Prices, expansion of
Clubcard Challenges and more than 7
million customers receiving personalised
coupons every two weeks.
– New AI partnerships to inspire customers
with personalised product
recommendations and recipe ideas.
The UK is one of the world’s most
competitive grocery markets, with seven
retailers each holding more than 5% market
share. At the start of the year we saw a
further increase in the competitive intensity
of the UK market. We are committed to
ensuring that customers get the best value
in the market by shopping at Tesco and we
see further opportunities to protect and
strengthen our competitiveness.
Sources: Worldpanel
Many households have seen real wage
growth during the year, but subdued
consumer confidence has contributed to an
uptick in household savings. Further,
elevated geopolitical tension is putting
pressure on household incomes and many
consumers are delaying major purchases.
Value for money remains paramount.
Sources: Kokoro, ONS, GfK
The rising cost of dining out has resulted in
a shift towards eating in and a higher
demand for restaurant-quality food at
home. Online retail has grown to levels
seen during the COVID-19 pandemic, and
the convenience market also continues to
grow, driven by a trend towards little and
often shops and an increased demand for
rapid delivery services.
Sources: Kokoro, Worldpanel
Health is increasingly a priority for
consumers, leading to some changes in food
consumption and preparation, for example
more cooking from scratch. Consumers are
also more conscious of the social and
environmental impact of their consumption.
Sources: Kokoro
How we are responding
– We reduced the price of 10,000 lines in
the UK by an average reduction of 9.5%
since the start of the financial year.
– Exclusive Clubcard deals on everyday
services such as fixed prices for the length
of a contract with Tesco Mobile.
– Enhanced Clubcard reward partner deals
including triple voucher value at seven
leading restaurant chains and Tesco
Tuesdays – allowing Clubcard members
to get reduced price cinema tickets
at Cineworld.
How we are responding
– Sales of our Finest range products
increased by 15% year on year, with 750
new Finest products launched.
– Online sales growth of 11.2%, having
offered 100,000 additional online delivery
slots the week before Christmas.
– Tesco Whoosh sales increased by 51%,
with further growth in active customers
and basket sizes.
– Strong value and availability for Booker’s
catering customers has driven robust
growth and improved customer
satisfaction scores.
How we are responding
– Our focus on offering healthy, sustainable
and affordable food meant that we met our
65% healthy sales target for the UK and ROI.
– Our 5-a-day campaign encouraged over
2.4 million customers to eat more fruit and
vegetables by offering extra Clubcard points
and vouchers, and we offered free fruit
for kids in our stores during the summer.
– We remain focused on our commitment
to reaching net zero across our full value
chain by 2050.
– More than 500,000 customers served
in our UK pharmacies every week.
To serve our customers well, we have to understand what’s important to them by using our data and insights.
While the priorities for customers – and the political and economic contexts in which we operate – can vary
across the UK, Ireland and our three countries in Central Europe, we have identified a number of key trends
shaping the market.
Market
context
Tesco PLC Annual Report and Financial Statements 2026
13
Governance Financial statements Additional informationStrategic report
Our strategic ambitions
Our goal is to create long-term sustainable
value for all our stakeholders, by consistently
delivering for customers.
Over the past five years, we have made meaningful progress,
with material investments into price, quality and service driving
a significant increase in customer satisfaction and leading to our
highest market share for a decade.
The retail landscape continues to evolve. Households have had
to adjust to persistent cost of living pressures and competition
remains intense, with new entrants and technologies giving
customers more choice than ever. Customer expectations are
increasing too – in addition to great-tasting, high-quality food at the
best possible price, they also want nutritious products that support
their health goals, from a brand they can trust to do the right thing.
To continue delivering for all our stakeholders, we have evolved
our strategic ambitions into five mutually reinforcing goals.
Our strategic
ambitions
Connected,
personalised and
loved by customers
Delivered through our unique
digital gateway and unrivalled
network of physical stores
Being the most
strategic partner
for suppliers
Unlock stronger supplier
relationships and financial
benefits which can flow
back into our core
customer offer
L
o
n
g
-
t
e
r
m
b
u
s
i
n
e
s
s
s
u
s
t
a
i
n
a
b
i
l
i
t
y
Deliver the best
quality, value and
innovation in food
Winning in food
Grow household spend,
generating higher revenue
and enhanced data
Meeting more
everyday
customer needs
14
We are always looking for ways
to further strengthen our
resilience, efficiency and
sustainability. From best-in-
class store, transport and
distribution infrastructure,
optimised through our ongoing
save to invest programme,
to resilient and secure supply
chains, we are constantly
evolving our business model
to adapt to environmental and
geopolitical change.
As a key enabler, we will continue
to enhance our best-in-class
retail technology capability,
harnessing the power of new
and emerging AI.
Long-term
business
sustainability
We want shopping with us to be
easier, more personalised and
increasingly rewarding. As the
glue that holds the whole Tesco
ecosystem together, Clubcard
and new AI tools can make
every interaction more seamless
and relevant by anticipating
needs, offering timely
nudges and making smarter
recommendations.
Our unrivalled store network will
continue to meet local needs
better than anyone, with our
colleagues continuing to provide
the most helpful service.
Connected,
personalised
and loved by
customers
We want to help customers with
more of their daily needs, and
the frequency and trust we earn
through food allows us to serve
them a wider range of products
and services. In addition to
further growth in existing offers
such as F&F Clothing, Pharmacy,
Insurance and Money Services
and Tesco Mobile, we are
building emerging digital
businesses such as Tesco
Marketplace and F&F Online.
Meeting these additional needs
helps deepen our relationship
with customers, whilst
generating capital-light
revenue streams.
Meeting more
everyday
customer needs
By using our unique data and
insights to build new revenue
opportunities and partnerships,
we can work with our suppliers
to become the most strategic
retail partner for innovation and
brand-building. By leveraging our
store and digital footprint we will
grow advertising income with
Tesco Media and, as we meet
more everyday needs, we can
further build our understanding
of customers, creating a more
holistic data set.
The additional insights,
innovations and financial
benefits we generate can flow
back into our core customer
offer, further enhancing the
value we offer customers
and reinforcing our ability to
win in food.
Being the most
strategic partner
for suppliers
We want to deliver the very
best value, quality, range, and
innovation in food. Delicious,
affordable and nutritious food
matters more than ever to our
customers and their families,
and our ability to provide this
at the very best price underpins
our whole business.
Through our market-leading
presence across stores, online
grocery and rapid delivery,
combined with the reach of
Booker’s wholesale business, we
are better placed than anyone
to serve customers great value
and great tasting food wherever,
whenever and however they
want to be served.
Winning in food
Tesco PLC Annual Report and Financial Statements 2026
15
Governance Financial statements Additional informationStrategic report
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
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
Using our expertise and
working collaboratively with
suppliers to source quality
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 unique strengths
Our reach
With thousands of stores
and a thriving online business, we
have unparalleled scale to reach
customers, wherever they are
A best-in-class supply chain
Flexibility and resilience in our
supply chain helps us respond
better to external events
Breadth of offer
Leading range development
driven by insight and sourcing
expertise helps us react to
evolving customer demand
Knowing our customers
Through our retail expertise and
insight, we have a unique understanding
of what our customers want
Strong supplier relationships
Excellent links with suppliers
help drive greater quality,
value and availability
Investing in our business
Strong free cash flow
enables investment in
growth and innovation
Our business model
Tesco PLC Annual Report and Financial Statements 2026
16
Key performance indicators
Our Big 6 KPIs
The Group’s statutory financial results for the year ended 28 February 2026 reflect a 53-week reporting period. Alternative
Performance Measures (APMs) are presented for the 52 weeks to 22 February 2026 to aid comparability, except for Net debt which
is presented at the balance sheet date. There is no impact from the additional week on Insurance and Money Services and Central
Europe, which report to the end of February every year.
In line with its treatment when presented last year, the performance of the Banking operations in FY 24/25 is presented as a
discontinued operation. The Insurance and Money Services business (IMS) is presented on a continuing operations basis and therefore
within the headline performance measures. There are no discontinued operations in the current year.
Δ APMs. Measures with the Δ symbol are defined in the Glossary section on pages 216 to 223.
(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.
See Glossary, reconciliation of cash flow measures, for a reconciliation to the Group equivalent.
(d) Brand NPS is based on BASIS Global Brand Tracker for 13 weeks ended 28 February 2026.
(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)
on a 52-week basis, see pages 37 and 228.
Grow sales Deliver profit
Group sales
Δ
Group adjusted operating profit
Δ
Colleagues recommend us as a
great place to work and shop
Climate – reduce Scope 1 and 2
emissions by 60% by 2025
Recommend as a place to shop Carbon emissions (tCO
2
e)
(e)
Great Place to Work
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. It demonstrates
the Group’s performance in the retail, insurance
and money 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 4.3%
at constant exchange rates, with growth across
all operating segments.
£66.6bn
(2025: £63.6bn)
4.3%
(a)(b)
0.6%
(b)
£3,152m
(2025: £3,128m)
(5)pts
44pts
(2025: 49pts)
(3)%
82%
(2025: 85%)
(8)%
vs last year
(68)%
cumulative
reduction vs
baseline
0.7m
(2025: 0.8m)
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 0.6% at constant exchange rates
to £3,152m. Continued investments in value,
quality and service, drove strong sales growth
which, combined with a further contribution
from our save to invest programme, more than
offset operating cost inflation.
Improve operating cash flow Customers recommend us and
come back time and again
Operating cash flow
(c)
Group NPS
(d)
11.2%
(c)
£5.2bn
(2025: £4.6bn)
1pt
29pts
(2025: 28pts)
Why it is important: Strong cash generation
is important to our underlying philosophy with
which we manage our business.
What we measure: Free cash flow is the cash
generated from continuing operations. It is a
measure of the cash generation and working
capital efficiency of the retail business.
How we performed: We delivered another
strong year of operating cash flow of £5.2bn,
with the increase year-on-year driven
by profit growth and disciplined working
capital management.
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: When we get things right
for our 340,000 colleagues, we make it 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: Although these scores are
strong and ahead of industry benchmarks, it is
our priority to address the small decline.
Why it is important: This measure reflects the
importance we place on minimising our impact
on the planet and aligns to our commitment to
be net zero in our own operations by 2035.
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: We have achieved a
reduction in carbon emissions by switching to
renewable electricity, maintaining a consistent
focus on driving energy efficiencies and making
significant inroads to decarbonising our remaining
key hotspots. Carbon emissions have reduced by
(8)% vs last year.
Tesco PLC Annual Report and Financial Statements 2026
17
Governance Financial statements Additional informationStrategic report
importance on healthy, sustainable products
that are widely accessible and affordable and
recognises that continual innovation is essential
to meeting customer expectations and
responding to external challenges.
Suppliers
In the 2025 Advantage survey, our suppliers
have ranked us the #1 retailer to work with in
the UK for the 10th year running.
More detail can be found
in our Sustainability Report.
Priorities and engagement
We continue to build trusted relationships with
our suppliers and work with them to deliver
healthier, sustainable and affordable products
for our customers. We will always make clear our
responsible sourcing and ethical requirements
when working with suppliers.
We are proud to support British farmers,
growers and suppliers. They are vital in
safeguarding the future of the food industry in
the UK, and we have built long-term relationships
with many of our suppliers and growers.
Outcomes and highlights in 2025/26
We are pleased to have been voted the number
one retailer to deal with in the Advantage
supplier survey for the 10th year in a row.
We are committed to continuing to collaborate
with our suppliers as we work towards our own
net zero targets and support suppliers with their
own commitments.
In August 2025 we launched a programme
of additional financial incentives and data
collection support for 400 farmers across our
dairy, pig, lamb and beef Sustainable Farming
Groups to achieve key environmental and animal
welfare goals. Farmers could benefit from more
than £9.5m worth of additional payments in the
scheme’s first year.
Our overall supplier satisfaction score was
89%, which was up 1% year-on-year.
The Board is committed to ensuring decisions
align to our purpose, culture and values while
considering the benefits, risks, financial
implications and the wider impact on our
stakeholders.
Our ongoing engagement across the business
ensures the Board is informed of stakeholder
priorities and viewpoints. Further information on
our stakeholder groups and engagement
activities is set out within this section.
In fulfilling their duties under section 172 of the
Companies Act 2006, the Directors considered
the matters in section 172(1)(a)-(f) throughout
their decision making. The Board’s activities
together with our section 172 statement, are
detailed in the Corporate governance report
on pages 68 to 69.
Colleagues
More detail on our colleague policies,
reward and benefits can be found in our
Sustainability Report. More detail on
everyone’s welcome can be found on
pages 20 to 21. More detail on our
Colleague Contribution Panels can be
found on page 66.
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. Our News & Views communications
82%
of colleagues recommend Tesco as a great
place to work.
platform continues to enhance colleague
engagement. Through our Colleague
Contribution Panels and the results of our Every
Voice Matters engagement survey we receive
valuable feedback and insight on colleague views.
We have continued to collaborate with trade
unions on safety measures. Following an
industry-wide campaign, the government has
set out its plans to introduce a new standalone
offence of assaulting a retail worker.
Outcomes and highlights in 2025/26
We announced a more than £200m investment
in UK colleague pay.
Our colleagues have benefited from an
enhanced benefits package in recent years,
including access to a virtual GP service and
health and wellbeing advice. Colleagues have
also seen enhancements to paid maternity,
neonatal, fertility, adoption and kinship leave.
We take the safety of our colleagues very seriously
and have invested in measures including body
worn cameras, protective screens and door entry
systems for colleagues in store. Recently, we
deployed next-generation body cameras to
1,285 Express and 122 Dot Com sites.
We also gave all UK colleagues free access to the
Peoplesafe personal safety app, which can track
their journeys to and from work and help them
to raise the alarm if they don’t feel safe.
Board oversight
The Board recognises the importance of
fostering an environment where colleagues can
feel valued and achieve their full potential.
By drawing on a range of colleague insights,
regular updates on culture and other feedback
mechanisms, the Board maintains a clear
understanding of what matters most to our
people and what is needed to support future
growth. As our business evolves, we aim to equip
colleagues with the skills they need to succeed
now and in the future.
Customers
10,000
products on Clubcard Prices.
More detail on how we support
our customers can be found on
pages 14 to 15.
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 Clubcard data as well as independent
consumer research, helps us to really get
to know our customers.
We know household budgets remain under
pressure, so we have continued to invest
in making sure that customers get the best
possible value at Tesco.
Outcomes and highlights in 2025/26
We are committed to offering our customers
great value through Aldi Price Match on more than
600 lines, more than 3,000 products on Everyday
Low Prices and thousands of exclusive offers per
week through Clubcard Prices. Clubcard Prices
save customers up to £404 off their annual
grocery bill.
We reduced the price of 10,000 lines by an
average of around 9.5% since the start of the
financial year.
We are pleased that 65% of all the food we sell
in the UK and ROI is now classified as healthy
(by volume).
Board oversight
The Board is committed to responding to the
needs of our customers, so that we continue
to provide the highest possible quality at great
value. Oversight is maintained through regular
engagement surveys and customer insight
updates. The Board places particular
Stakeholder engagement
29 pts
Group net promoter score (NPS).
Stakeholder
engagement
Tesco PLC Annual Report and Financial Statements 2026
18
As part of the programme, 260 UK dairy farmers
which make up a significant part of our Tesco
Sustainable Dairy Group can earn up to an
extra 2.5p per litre of milk if key targets on
emissions reduction, animal health, feed
conversion efficiency and genetic
improvements are achieved.
Board oversight
The Board recognises the importance of building
responsible and collaborative relationships with
our suppliers, ensuring alignment with our Code
of Business Conduct. Our product teams closely
engage with suppliers. Updates are provided to
the Board and the Audit Committee. The Board
oversees sourcing priorities through our
sustainability strategy and receives regular
updates on product and supplier strategies.
Shareholders
More detail can be found in the
Financial review on pages 22 to 28.
Priorities and engagement
Regular dialogue with our shareholders, potential
investors and analysts provides insight to their
views and priorities, which is reflected in our
decision making.
Our capital allocation framework prioritises
reinvesting in the business, maintaining a strong
investment-grade balance sheet, paying
a progressive dividend, considering inorganic
growth, and returning surplus cash
to shareholders.
Outcomes and highlights in 2025/26
Our investments in value, quality and service
continue to resonate with customers and have
allowed us to make further market share gains.
We continue to see the buyback programme as
an ongoing and critical driver of shareholder
returns. In addition to £937m of dividends paid
£1.45bn
share buyback.
14.5p
per ordinary share full year dividend.
across the last year, we have now completed
our April 2025 commitment to buy back £1.45bn
worth of shares.
We have had regular dialogue with shareholders
during the year, with a particular focus on
consumer sentiment, the competitive environment
and our strategic priorities. This engagement helps
us to understand shareholder priorities and their
views on how we are progressing. We welcome
engagement with private shareholders, this year
our AGM will be digitally-enabled which will provide
all shareholders the opportunity to participate in
the meeting.
Board oversight
Senior management and our Investor Relations
team engage with existing and potential
institutional investors and analysts to discuss
company performance and strategy. Regular
updates are provided to the Board to ensure they
remain well-informed about market conditions,
shareholder priorities and wider sector or
macroeconomic factors. This enables the Board
to take these considerations into account when
making decisions and supports the delivery of
long-term value and strategic growth.
Communities
More detail can be found in our
Sustainability Report.
Priorities and engagement
We invest in communities to help them thrive,
by supporting schools and children’s groups,
food banks and other good causes.
We redistribute surplus food from our
distribution network and stores through our
charity and community partners, FareShare and
Olio. Colleagues and customers join our regular
food collections to support FareShare and
Trussell. We also provide financial support to
help the charities in their work. Our Community
Champions in stores across the UK help us build
Fruit & Veg for Schools supporting more
than 500 schools.
123 million meals donated across the
Group this year.
relationships with communities and support
local events and initiatives.
The Tesco Health Charity Partnership with
Cancer Research UK, British Heart Foundation,
and Diabetes UK was again voted the most
admired corporate-NGO partnership for a third
consecutive year in the C&E Corporate–Non-
Profit Partnerships Barometer. Since 2018, this
partnership has raised more than £36m to
support health research and healthier lifestyles.
Outcomes and highlights in 2025/26
This year we extended our national free Fruit &
Veg for Schools programme to more than 500
schools, as part of our broader work to give
children a healthier, stronger start in life and
help them thrive.
Our Community Food Connection scheme
has grown into the biggest food redistribution
initiative of its kind in the UK. To date it has
provided the equivalent of more than 380 million
meals to charities and local communities who
depend on the food they receive to support
people facing hunger.
Our Winter Food Collection, in aid of Trussell and
FareShare, saw almost 1.5 million meals worth of
long-life food items donated by shoppers.
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
More information on the planet initiatives
can be found on pages 30 to 31 and in our
Sustainability Report.
More detail can be found in the Financial
review on pages 22 to 28.
68%
reduction in emissions of own operations
since 2015/16.
Priorities and engagement
Tesco has longstanding commitments to tackle
climate change and operate in a responsible and
sustainable way that 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.
Outcomes and highlights in 2025/26
Following the publication of our Greenprint for
UK Farming report, our two low carbon farms
trial innovations that can help to reduce carbon
emissions, improve efficiency and protect and
restore nature. Broccoli from our low carbon
farm in Lincolnshire, grown by supplier
TH Clements, reached our supermarket
shelves for sale in September 2025.
We continued to reduce the environmental
impact of deliveries to our stores by rolling
out our 1,000th electric home delivery van.
We drove emissions reduction by adding 42
low-carbon trucks to our fleet, which transport
food and goods across Scotland, Cumbria and
Northumbria. The new fleet is powered by
biomethane, produced from food waste.
Board oversight
Tesco’s commitment to tackling climate change
underpins our approach to operate responsibly,
sustainably and in line with our values. Our planet
plan, overseen by the Sustainability Committee,
brings together the full range of initiatives to
reduce our Scope 1, 2 and 3 emissions. Regular
reporting to the Board and the Sustainability
Committee on progress against each pillar of
the plan enables effective monitoring of key
milestones and enhances understanding of
how our operations contribute to our
sustainability commitments.
Tesco PLC Annual Report and Financial Statements 2026
19
Governance Financial statements Additional informationStrategic report
Data as at
28 February 2026
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
Data as at
28 February 2026
No. of Board
members
% of the
Board
No. of senior members
on the Board
No. of Executive
Committee
% of Executive
Committee
Our colleagues are at the heart of everything we
do. How they are led, supported and developed
shapes the service we offer our customers.
Our everyone’s welcome Group policy sets out
how every colleague has a part to play to deliver
on our commitments to treat people how they
want to be treated and represent the diverse
customers and communities we serve.
Our colleague networks amplify, consult, and
celebrate inclusion across every part of our
business. These networks offer support and
guidance across six key areas: armed forces,
disability, LGBTQ+, parents and carers, race
and ethnicity, and gender equality. They create
spaces for colleagues to share challenges,
explore career growth, and connect with
like-minded individuals.
Our five colleague commitments guide our work
and are based on what colleagues have told us
will make the biggest impact.
At Tesco, everyone’s welcome.
This means that whoever you
are and wherever you work, we
always want you to feel valued,
celebrated, supported and that
you can be yourself. Creating an
inclusive culture is at the heart
of who we are.
Inclusion for all
We want colleagues to work in an environment
where they feel they can be themselves, are
valued, and see themselves represented
at every level.
This year, we launched our everyone’s welcome
policy, which sets out our expectations of
colleagues in living our values and creating
an inclusive culture. We have continued to
strengthen our managers’ capabilities, and
improved our employee assistance programme
so that colleagues can request to talk to
someone who has a similar background to them.
We also continued delivering our women’s
development programme, supporting over
218 women to realise their potential.
In the UK, we ranked in the Times Top 50 for
Gender Equality five years running and we
remain a Stonewall Top 50 LGBTQ+ employer.
This year we were accredited as a Stonewall
trailblazing employer — which is the highest level
of Stonewall’s Proud Employers Accreditation.
Flexibility for all
We are enabling colleagues to thrive at Tesco,
with a culture that embraces and supports
flexible working.
Colleagues tell us flexibility really matters.
To reflect this, our flexible working options
let colleagues choose what suits them best,
whether that is part-time hours, job-sharing
or something inbetween.
In 2025/26 we launched online flexible working
zones in all markets, giving colleagues and
managers practical resources and guidance to
understand the flexible working options available.
Accessible first
We are supporting our colleagues with different
accessibility needs, whether that’s in a physical
environment, our technology systems or the
communications we share.
In 2025, dunnhumby and Booker joined Tesco
Stores, Tesco Mobile and One Stop in achieving
Disability Confident leader (Level 3) and Tesco
Insurance and Money Services (IMS) achieved
Everyone’s welcome
Everyone’s
welcome
Below is the schedule in accordance with UK Listing Rule 6.6.6R(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.
1. Definition of top global leaders: work levels 4 to 6.
Men 7 64 3 7 64 175 65 168,169 49
Women 4 36 1 4 36 93 35 174,124 51
Not specified/prefer not to say 0 0 0 0 0 0 0 10 0.003
Gender identity
White British or other White (including minority-white groups) 9 82 3 8 73
Mixed/multiple ethnic groups 0 0 0 0 0
Asian/Asian British 2 18 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 1 9
Ethnic background
20
Disability Confident Employer (Level 2). Our
teams in ROI and India have also reached the
equivalent UK standard – reflecting progress in
recruitment, policy and wellbeing.
We know workplace adjustments are critical
to making employment sustainable for some
colleagues, so we have launched new resources
for colleagues and managers to empower them
to make quicker decisions with real examples of
workplace adjustments. Our partnership with
the Business Disability Forum has helped us
ensure we evolve our processes and follow
best practice.
Transform recruitment
We know that we can attract and retain the
best talent if our colleagues and candidates
experience a positive and inclusive recruitment
experience.
We launched the Tesco global careers website
in March 2025 across the Group, creating an
efficient and inclusive candidate experience.
This makes it easier for people to explore
opportunities to join Tesco and for colleagues
to progress their careers.
Developing careers
We believe every young person deserves the
chance to build a future, no matter who they
are or what their background is.
We welcomed our next cohort of 363 Stronger
Starts retail apprentices across the UK, as
part of our commitment to supporting under-
represented young people from high-
deprivation areas.
We also supported 400 young people through
the Movement To Work placement programme,
as part of a national coalition focused on
supporting young people aged 16–30 who are
not in education, employment or training.
In 2025/26 our Stronger Starts programme was
highly commended for DE&I Apprenticeship
Employer of the Year at the National
Apprenticeship and Skills Awards, and we proudly
took home the Inclusive Recruitment Award at
the TIARA Awards Europe, alongside The King’s
Trust Volunteering Award.
Colleague
safety
Colleague safety is a subject that is crucially
important to Tesco.
We have invested tens of millions of pounds in
safety measures over the last four years, including
investing in security officers, the refurbishment of
our security hub in Daventry, and in other practical
measures including body worn cameras, protective
screens and door entry systems.
In September we made the Peoplesafe App
available to around 300,000 UK colleagues as
a free benefit, to track their journeys and help
them to raise the alarm if they don’t feel safe.
The introduction of the app follows feedback from
colleagues who said they sometimes felt unsafe
travelling to and from work.
It helps address situations such as walking in
an unfamiliar area late at night, facing aggression
on the night bus or tube after a night out or using
a private taxi alone.
As a further safety measure, we have provided
body worn cameras to 7,000 delivery drivers
working from 122 stores.
The cameras, which have already been rolled out
to in-store colleagues, act as a deterrent and have
been shown in trials to reduce serious incidents
against drivers by 50%. The cameras will only
be turned on if a driver feels unsafe.
Spotlight on:
Around
300,000
UK colleagues have access to the
Peoplesafe App as a free benefit
Spotlight on:
Women in
leadership
at Tesco
Bengaluru
In January 2026, Dame Carolyn Fairbairn,
Caroline Silver and Karen Whitworth visited
Tesco Bengaluru. During the visit, they
hosted a Women in Leadership session
with around 25 senior women leaders from
the business.
The session provided an open forum for
discussion, beginning with reflections
from the Non-executive Directors on their
career journeys, followed by an interactive
question and answer session. The
discussion covered a range of themes,
including the transition from executive
director to non-executive director, how
non-executive directors continue to
develop their knowledge and balance
priorities, and the importance of
psychological safety and the role it plays in
supporting women in leadership positions.
Tesco PLC Annual Report and Financial Statements 2026
21
Governance Financial statements Additional informationStrategic report
Imran Nawaz,
Chief Financial
Officer
Financial review
Group review of performance
On a continuing operations basis
1
FY 25/26 FY 25/26 FY 24/25
Change
at actual
rates
Change
at actual
rates
Change
at constant
rates
53 weeks 52 weeks 52 weeks 53 weeks 52 weeks 52 weeks
Sales (exc. VAT, exc. fuel)
2
£67,725m £66,588m £63,636m 6.4% 4.6% 4.3%
Fuel £5,987m £5,876m £6,280m (4.7)% (6.4)% (6.5)%
Revenue (exc. VAT, inc. fuel) £73,712m £72,464m £69,916m 5.4% 3.6% 3.3%
Statutory operating profit £2,985m £2,711m 10.1%
Adjusted operating profit
2
£3,194m £3,152m £3,128m 2.1% 0.8% 0.6%
Adjusted net finance costs
2
£(541)m £(531)m £(536)m (0.9)% 0.9%
Joint ventures and associates £(1)m £(1)m £(4)m
Tax on adjusted profit £(712)m £(703)m £(690)m (3.2)% (1.9)%
Adjusted profit after tax
2
£1,940m £1,917m £1,898m 2.2% 1.0%
Adjusting items after tax £(153)m £(294)m
Statutory profit after tax £1,787m £1,604m 11.4%
Adjusted diluted EPS
2
29.0p 27.4p 6.0%
Statutory diluted EPS 27.1p 23.1p 16.9%
Dividend per share 14.5p 13.7p 5.8%
Net debt
2
£(10,563)m £(9,454)m (11.7)%
Free cash flow
2
£1,957m £1,750m 11.8%
Capex
4
£1,511m £1,457m 3.7%
The Group’s statutory financial results for the year ended 28 February 2026 reflect a 53-week reporting period. Alternative Performance
Measures (APMs) are presented for the 52 weeks to 22 February 2026 to aid comparability, except for net debt which is presented at the
balance sheet date. There is no impact from the additional week on Insurance and Money Services and Central Europe, which report
to the end of February every year. Unless otherwise stated, commentary is on a 52-week basis.
Sales
2
increased by 4.3% at constant rates with growth across all operating segments. Group
volumes continued to grow, supported by further investments in the customer offer, made partially
in response to an increased level of competitive intensity in the UK. Revenue increased by 3.3%,
which included a (6.5)% decline in fuel sales, driven primarily by lower retail fuel prices year-on-year.
Adjusted operating profit
2
increased by 0.6% at constant exchange rates or 0.8% at actual rates.
We continued to invest in value, quality, and service, driving strong sales growth. Combined with
a further c.£535m delivered through our save to invest programme, this sales growth more than
offset our investments into the customer offer and operating cost inflation.
Financial
review
Tesco PLC Annual Report and Financial Statements 2026
22
Statutory operating profit for the 53 weeks to 28 February 2026 increased by 10.1%. The prior year
was impacted by a £(286)m non-cash net impairment charge versus £(53)m in the current year.
The current year also benefited from an additional week’s trading.
Adjusted net finance costs
2
were slightly lower year-on-year, reflecting lower effective borrowing rates
on new debt issued, partially offset by higher lease interest costs. In addition, FY 25/26 benefited from
interest income earned on the c.£700m proceeds from the disposal of our Banking operations, which
has now been returned to shareholders.
The increase in tax on adjusted profit was driven by higher adjusted profit, with the Group’s Adjusted
effective tax rate steady at 26.8% (FY 24/25: 26.7%).
Adjusted diluted EPS
2
grew by 6.0%, supported by £1.45bn of share buybacks during the year and
growth in Adjusted profit after tax
2
. Statutory diluted EPS for the 53 weeks grew by 16.9%, higher than
Adjusted diluted EPS
2
growth due to an additional week’s trading and last year’s non-cash impairment
charge. We propose to pay a final dividend of 9.7 pence per ordinary share, taking the full year
dividend to 14.5 pence, up 5.8%.
We generated free cash flow
2
of £1,957m, up 11.8% year-on-year. Strong working capital management
and solid sales performance drove a net working capital inflow of £385m, which more than offset
increased cash tax payments and increased capex in technology and our distribution network.
Net debt
2
increased by £(1,109)m with the prior year including c.£700m of proceeds from the sale of
our Banking operations which has now been returned to shareholders, and lease liabilities increased
by £(168)m driven by lease renewals and extensions. This increased our Net debt/EBITDA ratio to
2.1 times versus 2.0 times at the end of last year.
Further commentary on these metrics can be found below
and a full income statement can be found on page 121.
Operating segment presentation – UK & ROI and Booker
As communicated at the half year, following changes to the Group Executive Committee, Booker,
which was reported as part of the UK & ROI operating segment in previous years, now meets the
definition of an operating segment, as set out in IFRS 8 ‘Operating Segments’. Our full-year results are
therefore presented on this basis.
1. In line with its treatment when presented last year, the performance of the Banking operations in FY 24/25 is presented as a
discontinued operation. The Insurance and Money Services business (IMS) is presented on a continuing operations basis and
therefore within the headline performance measures. There are no discontinued operations in the current year.
2. The Group has defined and outlined the purpose of its APMs, including its performance highlights, in the Glossary starting on page
216. The Group’s statutory financial results for the year ended 28 February 2026 reflect a 53-week reporting period, with the
prior year reflecting a 52-week period to 22 February 2025. APMs for FY 25/26 are presented for the 52 weeks to 22 February
2026 to aid comparability, with net debt presented as at the balance sheet date. There is no impact from the additional week on
the IMS and Central Europe businesses, which report to the end of February every year.
3. 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, IMS and mall rental
income as this revenue is not directly linked to the sale of goods.
4. Capex excludes additions arising from business combinations, property buybacks (typically stores) and other store purchases and
their associated refit costs. Refer to page 220 for further details.
Segmental review of performance:
Sales performance:
(exc. VAT, exc. fuel)
2,3
52-week basis
On a continuing operations basis
1
Sales
(£m)
LFL sales
change
3
Total sales change
at actual rates
Total sales change
at constant rates
– UK 49,819 4.2% 4.9% 4.9%
– ROI 3,239 4.6% 8.9% 6.6%
UK & ROI 53,058 4.2% 5.1% 5.0%
Booker 9,040 0.2% 0.6% 0.6%
Central Europe 4,490 2.2% 7.2% 3.7%
Group 66,588 3.5% 4.6% 4.3%
Further information on sales performance is included in the Supplementary information
starting on page 214.
Adjusted operating profit
2
performance:
52-week basis
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 2,745 0.7% 0.7% 4.7% (15)bps
Booker 292 0.7% 0.7% 3.2% 0bps
Central Europe 115 2.7% (0.9)% 2.5% (10)bps
Group 3,152 0.8% 0.6% 4.3% (12)bps
Further information on operating profit performance is included in Note 2 starting on page 134.
UK & ROI overview:
Like-for-like sales for the UK & ROI segment increased by 4.2%, with market share gains and volume
growth in both markets. The sales performance in the UK reflects a strong customer reaction to our
targeted investments in price and the shopping experience, made partially in response to an increase
in competitive intensity in the UK, with both markets also benefitting from warmer weather in the first
half of the financial year.
UK & ROI adjusted operating profit was £2,745m, up 0.7% at constant rates. The strong sales
performance and a further contribution from our ongoing save to invest programme more than offset
our investments in the customer offer and ongoing cost inflation, which included increased National
Insurance contributions and the new Extended Producer Responsibility (EPR) levy.
UK – Strong positive response to targeted investments driving further market share gains:
Like-for-like sales grew by 4.2%, with growth delivered across all channels.
Overall market share increased by +24bps to 28.5%. Across the last three years we have gained
+122bps of market share and in December 2025 we reached our highest share in a decade.
Tesco PLC Annual Report and Financial Statements 2026
23
Governance Financial statements Additional informationStrategic report
Throughout the year we have continued to prioritise investment in our customer offer. As a result, we
have maintained our strong price position against the market, helping support a further year-on-year
improvement in our net promoter score, including improvements across Value and Reputation.
Food like-for-like sales grew by 5.2%, with a strong contribution from fresh food which grew 6.9%.
We launched over 2,000 new and improved products, including a large-scale refresh of our frozen
food offer. Dine-in ranges, such as our Finest Valentine’s and Finest Steakhouse ranges have
performed well, as customers looked to enjoy restaurant-inspired meals at home. In the first half
of the year, good weather helped support our sales and, later in the year, we were pleased with our
continued market share gains and the customer response to our new and improved Christmas ranges.
Tesco Finest saw sales growth of 14.5%, continuing to benefit from strong volume growth.
In January, we expanded our Everyday Low Prices commitment from 1,000 to 3,000 products, sitting
alongside Aldi Price Match on over 600 lines and thousands of Clubcard Prices every week. Over
10,000 products were cheaper at the end of the year than at the start, with an average price
reduction of 9.5%.
Clothing like-for-like sales grew 5.1% driven by a continued strong performance in womenswear, with
expanded ranges in activewear and our curated ‘F&F Edit’ ranges both performing well. Growth was
also supported by the launch of F&F Online during the year, which offers customers access to a much
fuller range of clothing.
Home like-for-like sales declined (0.7)% but grew 1.8% on an underlying basis when excluding the
impact of the transition to a commission model with the Entertainer for toys, which completed in the
second half of FY 24/25. 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. Underlying
growth was primarily driven by the continued success of our relaunched F&F Home range.
Like-for-like sales grew across both our large and convenience store formats. Large store like-for-like
sales grew 3.9% as we maintained our market-leading availability and saw a positive customer
response to investments made to the overall shopping experience, in particular in customer service
and at the checkout. Convenience like-for-like sales grew by 0.3%, with convenience market share
growing +71bps year-on-year, with strong food performance offsetting the ongoing decline in the
tobacco market.
Online sales grew by 11.2%, including a c.2ppts contribution from Tesco Whoosh, our rapid delivery
service, where we extended national coverage to 73% of households. Average online orders per week
for our grocery home shopping business grew 6.0% year-on-year as we rolled out further
improvements to our website. The number of delivery saver subscribers increased by 7.6% to 834k,
while online market share (which excludes rapid grocery) grew +30bps to 35.7%.
FY 25/26
Online performance (excluding Tesco Marketplace) 52 weeks YoY change
Sales inc. VAT £7.5bn 11.2%
Online % of UK total sales 14.3% 0.8%
Grocery home shopping:
– Orders per week 1.22m 6.0%
– Basket size £112 2.7%
Average weekly traffic to Tesco Marketplace more than doubled during the year and average basket
spend grew by c.90%. As part of our work to further enhance the seller experience and provide an
even better proposition for customers, we have now successfully migrated Tesco Marketplace to a
new Mirakl platform.
ROI – Ongoing volume growth driving further market share gains:
Our Ireland business delivered sales growth of 6.6% at constant rates, with strong like-for-like sales
growth of 4.6%. Our market share grew +32bps to 24.2%, the fourth consecutive year of share growth.
New space also supported sales growth, which included the opening of four new superstores and
five Express stores during the year.
Food like-for-like sales grew by 5.1%, with a strong contribution from our core fresh food offer.
Food growth was further supported by a strong Tesco Finest performance where sales were up
11.8% year-on-year.
We delivered like-for-like sales growth across all channels, with Online delivering 17.4% growth
year-on-year. We launched Tesco Whoosh in Ireland this year, which is now in 31 stores, and we expect
the service to meaningfully contribute to our online business moving forward. Large store sales grew
3.1% as we continue to improve price competitiveness in the market, with our price index improving
year-on-year.
Non-food sales were broadly flat on an underlying basis when excluding the impact from the transition
to a commission model with the Entertainer for toys.
Booker overview
Robust growth across core retail and catering:
Sales
£m
52 weeks LFL
Core retail 3,307 2.2%
Core catering* 2,752 3.8%
Tobacco 1,532 (9.5)%
Best Food Logistics 1,449 0.6%
Total Booker 9,040 0.2%
* Includes sales to small businesses and sales from Venus Wine and Spirit Merchants Limited, which was acquired in June 2024 and
is included in like-for-like growth from June 2025.
Booker like-for-like sales grew 0.2%, with robust growth in core retail and catering offset by the
continuing decline in the tobacco market. Best Food Logistics delivered like-for-like growth of
0.6% despite continued weakness in parts of the fast-food market.
Core retail grew by 2.2%, including the impact from the ending of a lower-margin national account in
August 2025. We continue to see strong growth in our core symbol brands with a further 369 net new
retailer partners across the year and we saw further improvements in customer satisfaction scores
across our retail customer base. Core catering performed well with like-for-like sales growth of 3.8%,
supported by a strong contribution from Venus, our specialist wine and spirit merchant, and good
weather over the summer. Customer satisfaction scores also improved in catering, and we continued
to deliver great value and availability.
Booker operating profit grew 0.7% to £292m, with a strong contribution from save to invest and sales
growth helping to offset significant cost inflation.
Financial review continued
Tesco PLC Annual Report and Financial Statements 2026
24
Central Europe overview
Strong delivery amidst increased competition and ongoing regulatory pressure:
Like-for-like sales grew by 2.2%, with food growing by 2.6% across the region. Fresh food grew by 4.1%
as customers continued to value our competitive price position and high-quality offer amid increased
competition and ongoing regulatory pressure. Tesco Finest sales also continued to perform well,
up 33.5%.
Large, Convenience and Online all delivered like-for-like growth across the region, with Online growing
by 17.5%. Convenience like-for-like sales grew 3.1% and Large store like-for-like sales grew 1.4%, with
the channel weighed by softer non-food sales, impacted by challenging consumer confidence and
poor weather during key trading periods.
Central Europe delivered adjusted operating profit of £115m, up 2.7% at actual exchange rates but
down by (0.9)% at constant rates. The decline in constant rate profitability includes the impact from
the disposal of certain mall properties in the prior year. Excluding this impact, adjusted operating
profit grew 8.1% year-on-year at constant rates, supported by a strong contribution from our save to
invest initiatives, helping to offset the impact of increased competition, particularly in Slovakia, and
ongoing regulatory pressure.
Adjusting items:
FY 25/26
£m
53 weeks
FY 24/25
£m
52 weeks
Net impairment charge on non-current assets (53) (286)
Amortisation of acquired intangible assets (78) (76)
Separation costs related to disposal of Banking operations (28) (14)
Restructuring and adjusting property transactions (50) (41)
Total adjusting items included within operating profit (209) (417)
Net finance (costs)/income (40) 44
Taxation
96 79
Total adjusting items included within profit after tax from continuing
operations (153) (294)
Adjusting items included within discontinued operations – (65)
Total adjusting items (153) (359)
Adjusting items are excluded from our adjusted profit performance by virtue of their size and nature,
to provide a helpful perspective of the year-on-year performance of our ongoing business.
Total adjusting items in statutory operating profit from continuing operations resulted in a net charge
of £(209)m, compared to a net charge of £(417)m in the prior period.
Whilst overall performance was strong across our operating segments, we recognised a non-cash net
impairment charge of £(53)m in the current year, principally reflecting an increase in the competitive
intensity in the Slovakian market. In the prior year there was a £(286)m non-cash net impairment
charge, mainly reflecting an increase in discount rates across the Group.
We continue to present amortisation of acquired intangible assets, principally relating to the merger
with Booker, as an adjusting item. The amortisation of acquired intangible assets was £(78)m
(FY 24/25: £(76)m).
We incurred £(28)m of separation costs relating to the disposal of our Banking operations (FY 24/25:
£(14)m), with the transition activities expected to complete in FY 26/27.
Restructuring and adjusting property transactions in the current year mainly relates to our save to
invest programme and costs associated with our multi-year programme to optimise our distribution
network in the UK. The prior year costs primarily related to our save to invest programme.
Adjusting items in net finance (costs)/income and tax are explained in the relevant sections below.
Adjusting items included within discontinued operations in the prior year primarily related to fair value
remeasurement of assets of the disposal group associated with the sale of our Banking operations
to Barclays in November 2024.
Further detail on adjusting items can be found in Note 5, starting on page 137.
Net finance costs:
On a continuing operations basis
1
FY 25/26
£m
53 weeks
FY 25/26
£m
52 weeks
FY 24/25
£m
52 weeks
Net interest costs (140) (137) (157)
Net finance expenses from insurance contracts (11) (11) (9)
Finance charges payable on lease liabilities (390) (383) (370)
Adjusted net finance costs (541) (531) (536)
Fair value remeasurements of financial instruments (26) 76
Net pension finance costs (14) (32)
Adjusting items included in net finance costs (40) 44
Statutory net finance costs (581) (492)
Adjusted net finance costs of £(531)m on a 52-week basis were slightly lower than last year (FY 24/25:
£(536)m), reflecting lower effective borrowing rates on new debt issued, partially offset by higher lease
interest costs. In addition, FY 25/26 benefited from interest income earned on the cash received from
the disposal of our Banking operations in the second half of FY 24/25. Now that these proceeds have
been returned to shareholders, we expect adjusted net finance costs to normalise to levels similar
to FY 23/24 (£(558)m).
Within adjusting items, fair value remeasurements of financial instruments led to a charge of £(26)m,
compared to income of £76m in the prior year. The charge mainly relates to non-cash mark-to-market
movements on certain derivative financial instruments which hedge inflation on some of our lease
arrangements. The movement principally reflects changes in long-term UK inflation expectations since
the start of the year.
Net pension finance costs decreased by £18m, driven by a reduction in the opening net deficit position
of the defined benefit pension plans.
Statutory net finance costs of £(581)m were £(89)m higher than last year, largely due to the impact
of adjusting items explained above.
Further detail on finance income and costs can be found in Note 6 on page 138,
as well as further detail on the adjusting items in Note 5, starting on page 137.
Tesco PLC Annual Report and Financial Statements 2026
25
Governance Financial statements Additional informationStrategic report
Group tax:
On a continuing operations basis
1
FY 25/26
£m
53 weeks
FY 25/26
£m
52 weeks
FY 24/25
£m
52 weeks
Tax on adjusted profit (712) (703) (690)
Tax on adjusting items 96 79
Statutory tax on profit (616) (611)
Tax on adjusted profit on a 52-week basis was £(703)m, slightly higher than last year primarily reflecting
an increase in adjusted profit, with the adjusted effective tax rate steady at 26.8% (FY 24/25: 26.7%).
The adjusted effective tax rate is higher than the UK statutory rate of 25%, primarily due to the
depreciation of assets which do not qualify for tax relief. We expect our FY 26/27 adjusted effective
tax rate to remain around 27%.
Adjusting tax credits in both years primarily relate to deferred tax on impairment charges on qualifying
assets and the amortisation of acquired intangible assets.
Statutory tax on profit of £(616)m was £(5)m higher than last year, primarily due to an increase in
adjusted profit, partially offset by higher tax credits on adjusting items.
Earnings per share:
On a continuing operations basis
1
FY 25/26
£m
53 weeks
FY 25/26
£m
52 weeks
FY 24/25
£m
52 weeks YoY change
Adjusted diluted EPS 29.0p 27.4p 6.0%
Statutory diluted EPS 27.1p 23.1p 16.9%
Statutory basic EPS 27.5p 23.4p 17.3%
On a total basis, including
discontinued operations
Statutory diluted EPS 27.1p 23.5p 15.1%
Statutory basic EPS 27.5p 23.8p 15.4%
Adjusted diluted EPS was 29.0p, 6.0% higher year-on-year, driven by a reduction in the number of
shares in issue from our ongoing share buyback programme and growth in adjusted operating profit.
Statutory diluted EPS was 27.1p, a year-on-year increase of 16.9%. The higher statutory growth rate in
diluted EPS is due to a lower level of adjusting items in the current year and the effect of an additional
week’s trading profits.
Dividend:
We propose to pay a final dividend of 9.7 pence per ordinary share, which combined with the interim
dividend of 4.8 pence per ordinary share paid in November 2025, takes the full year dividend to
14.5 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 15 April 2026 and is subject
to the approval of shareholders at this year’s Annual General Meeting. The final dividend will be paid on
26 June 2026 to shareholders who are on the register of members at close of business on 15 May 2026
(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 5 June 2026.
Summary of Net debt (at the balance sheet date):
Feb-26
£m
Feb-25
£m
Movement
£m
Net debt before lease liabilities (2,679) (1,738) (941)
Lease liabilities (7,884) (7,716) (168)
Net debt (10,563) (9,454) (1,109)
Net debt/EBITDA* 2.1x 2.0x
* Net debt to EBITDA is calculated using EBITDA on a 52-week basis.
Net debt was £(10,563)m, an increase of £(1,109)m year-on-year. The increase in Net debt is mainly due
to the prior year including c.£700m of proceeds from the sale of our Banking operations which were
returned to shareholders via additional share buybacks during the year. Lease liabilities increased by
£(168)m driven by lease renewals and extensions, partially offset by the buyback of seven leasehold
sites across the UK and Booker.
We generated Free cash flow on a 52-week basis of £1,957m, which more than covered cash outflows
relating to our ongoing share buyback programme of £(750)m and dividend payments of £(937)m.
Our Net debt to EBITDA ratio was 2.1 times at the end of the year, up from 2.0 times at the end
of last year.
We continue to hold strong levels of liquidity totalling £2.9bn including cash, highly liquid short-term
deposits and money market investments. In addition, we have an undrawn £2.5bn committed revolving
credit facility which is in place until at least November 2027.
Fixed charge cover remained broadly in line with last year at 4.1 times (FY 24/25: 4.2 times).
Defined benefit pension schemes (at the balance sheet date):
Feb-26
£m
Feb-25
£m
Movement
£m
Defined benefit schemes in surplus 324 56 268
Defined benefit schemes in deficit (127) (307) 180
Deferred tax asset 23 71 (48)
Surplus/(deficit) in schemes at the
end of the year (net of deferred tax) 220 (180) 400
Net of tax, the net IAS 19 pension position improved from a deficit of £(180)m to a surplus of £220m,
principally reflecting asset performance. The principal defined benefit pension plan within the Group
is the Tesco PLC Pension Scheme (the Scheme), a UK scheme that has been closed to future accrual
since 2015.
During the year, we completed the 31 March 2025 triennial funding valuation for the Scheme together
with the Scheme trustee. This showed that the actuarial position of the Scheme for funding purposes
was in surplus, with a funding level of 106% (31 March 2022: 104%). As a result, it was agreed with the
Scheme trustee that no pension deficit contributions would be required from the Group.
Further detail on post-employment benefits can be found in Note 28, starting on page 185.
Financial review continued
Tesco PLC Annual Report and Financial Statements 2026
26
Summary free cash flow:
The following table reconciles Group Adjusted operating profit to Free cash flow (on a 52-week basis).
Further details are included in the Glossary starting on page 216.
On a continuing operations basis
1
FY 25/26
£m
FY 24/25
£m
Movement
£m
Adjusted operating profit (53-week basis) 3,194
Less: Adjusted operating profit (for week 53) (42)
Adjusted operating profit (52-week basis) 3,152 3,128 24
Less: IMS adjusted operating profit (167) (155) (12)
Retail adjusted operating profit 2,985 2,973 12
Add back: Depreciation and amortisation 1,764 1,680 84
Share-based payments and other items 66 69 (3)
Pensions (31) (30) (1)
Decrease/(increase) in working capital 385 (45) 430
Cash generated from operations
before adjusting items
5,169 4,647 522
Cash capex (1,515) (1,392) (123)
Net interest paid (518) (503) (15)
Tax paid (497) (355) (142)
Dividends received 52 2 50
Repayment of capital element
of obligations under leases
(634) (595) (39)
Own shares purchased for share schemes (100) (54) (46)
Free cash flow (52-week basis) 1,957 1,750 207
Memo (not included in Free cash flow definition):
– Net acquisitions and disposals (18) (61)
– Property buybacks, store purchases
and disposal proceeds
(144) (93)
– Restructuring and property transactions
in adjusting items
(54) (55)
We delivered Free cash flow of £1,957m, with cash generated from operations improving by £522m
year-on-year, driven by working capital inflows and growth in Adjusted operating profit. Free cash
flow was £207m higher than last year, with the increase in cash generated from operations partly
offset by higher cash capex, tax payments and own shares purchased for employee share schemes.
The net working capital inflow of £385m is mainly driven by our solid sales performance, which led to
higher trade payables, strong working capital management, and a payable relating to the new EPR levy.
Cash capex was £(123)m higher than last year, reflecting incremental investments to optimise our
distribution network, refresh and enhance our store estate, and deliver a more personalised and
connected experience for our customers.
Net interest paid was £(15)m higher year-on-year, principally due to the timing of coupon payments.
Tax payments increased by £(142)m year-on-year mainly driven by the end of historical tax deductions
and the prior year benefitting from a tax deduction arising on the disposal of our Banking operations.
Dividends received were £50m higher, reflecting dividends received from Insurance and Money Services.
Within the memo lines shown, the net £(18)m acquisitions and disposals outflow includes the
settlement of deferred consideration on Booker’s acquisition of Venus Wine and Spirit Merchants PLC.
The £(144)m net outflow relating to property transactions primarily relates to the buyback of seven
stores in the UK and Booker. Restructuring and property transactions in adjusting items of £(54)m
primarily relates to operational restructuring changes as part of our save to invest programme.
Tesco PLC Annual Report and Financial Statements 2026
27
Governance Financial statements Additional informationStrategic report
Capital expenditure and space:
UK & ROI Booker Central Europe Group
FY 25/26 FY 24/25 FY 25/26 FY 24/25 FY 25/26 FY 24/25 FY 25/26 FY 24/25
Capex (52-week basis) £1,347m £1,284m £57m £63m £107m £110m £1,511m £1,457m
Openings (k sq.ft.) 361 311 – – 48 84 409 395
Closures (k sq.ft.) (94) (98) (11) – (6) (45) (111) (143)
Repurposed (k sq.ft.) 2 (235) – – (57) (145) (55) (380)
Net space change (k sq.ft.) 269 (22) (11) – (15) (106) 243 (128)
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 reflects space changes over the 53-week statutory financial year and excludes space relating
to franchise stores.
Capital expenditure shown in the table above reflects expenditure on ongoing business activities across the Group, excluding property buybacks.
Our capital expenditure for the full year was £1,511m, an increase of £54m compared to last year. We continue to invest in opportunities to grow our store estate and further enhance the in-store experience
for our customers. Over the course of the year, we opened a total of 77 stores in the UK, 9 in ROI and 7 in Central Europe. Additionally, we refreshed 300 stores across the Group.
In addition to continuing to invest in our core assets, we have stepped up our investment in delivering efficiencies across our operations, including the opening of our Aylesford distribution centre and a first
phase investment in our new distribution centre at DP World London Gateway. The London site is expected to open in 2029 and will leverage the latest technology to enhance our supply chain and support
future growth.
Statutory capital expenditure for the financial year was £1.7bn, including property buybacks and store purchases.
We expect around £1.6bn of capital expenditure in FY 26/27, as we continue to invest in attractive opportunities to optimise our existing operations, improve our technology and digital capability,
whilst continuing to enhance our existing store estate.
Further details of current space can be found in the Supplementary information starting on page 214.
Property value (at the balance sheet date):
UK & ROI Booker Central Europe Group
Feb-26 Feb-25 Feb-26 Feb-25 Feb-26 Feb-25 Feb-26 Feb-25
Property
1
– fully owned
Estimated market value £15.5bn £15.0bn £0.4bn £0.4bn £1.8bn £1.6bn £17.7bn £17.0bn
NBV £15.2bn £14.9bn £0.4bn £0.4bn £1.4bn £1.3bn £17.0bn £16.6bn
% store selling space owned 58% 58% 29% 29% 65% 64% 60% 59%
% property owned by value
2
61% 61% 27% 26% 62% 55% 60% 60%
1. Stores, malls, investment property, offices, distribution centres, fixtures and fittings, 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 £0.7bn to £17.7bn. The increase was largely driven by a modest increase in rental values, with yields remaining fairly stable
across the Group. The UK & ROI increase in market value also reflects the buyback of seven stores in the UK. The market value represents a surplus of £0.7bn over the net book value.
Group store selling space ownership percentage was 60%, marginally higher year-on-year, driven by store buybacks in the UK.
Financial review continued
Tesco PLC Annual Report and Financial Statements 2026
28
Since 2015/16 we have reduced Group
Scope 1 and 2 emissions by
68%
We aim to be net zero across
our own operations by the end of
2035
Sustainability
Focused
Sustainability is built 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.
Tesco PLC Annual Report and Financial Statements 2026
29
Governance Financial statements Additional informationStrategic report
Sustainability
Global food production generates a third of
greenhouse gas emissions and as much as 40%
of food produced goes uneaten. Meanwhile the
impact of extreme weather events such as
droughts and floods, and threats to nature such
as declining soil health are impacting food supply
chains, including the farmers and suppliers we
rely on. It’s clear sustainability will become ever
more critical to building a stronger, more
resilient business.
We continue to be guided by our planet plan,
which brings together our key areas of activity
under six pillars, and reflects the
interdependencies of the food system and the
natural environment. Alongside delivering the
plan for our own operations, we continue to look
at ways we can have the greatest impact, both in
the supply chain, and in our customers’ homes.
The plan includes work in the following areas:
improving the way we source our products;
helping our customers to eat a healthier and
more sustainable diet; championing new
solutions that will mean we all waste less; and
ensuring we protect and restore nature in
landscapes connected to food production.
We recognise the growing link between
environmental and human impacts in our supply
chain. To read more about our work to protect
and maintain the human rights of everyone
working in our business and our wider supply
chains, please see our Modern Slavery Statement
for more details www.tescoplc.com/modern-
slavery-statement.
Our plan continues to be focused on our
commitment to reaching net zero across our full
value chain by 2050, validated in line with the
Science Based Targets initiative (SBTi) pathway
for limiting global warming to no more than 1.5°C
average above pre-industrial levels. We took
positive steps in a number of areas last year,
but we know future progress will be harder
won and will depend on tackling some of the
most challenging issues facing our food system
at an industry level.
This year marked a significant year for our
commitments, with a number coming to an end
in December 2025. The new commitments we
have made this year to take us to 2030 and
beyond reflect our aim to prioritise areas where
we can have the most significant impact, as well
as meeting the expectations of our stakeholders.
Read more in our Sustainability Report.
Improve our products
This pillar comprises the largest emissions
hotspots across our value chain, at around 50%,
and covers the production of all our products,
from raw material extraction and agriculture
to logistics and manufacturing. It’s vital we
continue to improve the way we source our
products, helping to reduce emissions, protect
nature and create more resilient supply chains
for the future.
We continue to support our British farmers in
producing affordable, healthy, sustainable food,
and recognise the role they play in helping us
reach our climate and nature goals. In response
to recommendations set out in our Greenprint
for UK Farming report, we have implemented a
number of new initiatives across our Sustainable
Farming Groups designed to improve our
farmers’ profitability and efficiency.
Up to 400 of our UK-based farmers across our
dairy, lamb, beef and pig farming groups can now
benefit from additional financial incentives to
achieve key environmental and animal welfare
goals. We have also invested in an environmental
data baselining programme for 360 of our
beef and lamb farmers, which will see them
collect soil, water and biodiversity data for
the first time. Our low carbon concept farm
in Lincolnshire has been trialling a number
of innovations throughout the year.
With the help of our trusted farmers and
suppliers, we have also completed the global
roll-out of LEAF Marque certification, helping
5,600 fruit and vegetable growers implement
measures to reduce emissions, protect nature,
and bolster resilience.
We continue to make progress in animal welfare,
completing the roll out of enhancements in
chicken welfare across our UK supply base,
and meeting our commitment to source 100%
cage-free shell eggs and ingredient eggs for
Tesco UK and ROI. This commitment will now be
incorporated into our sourcing policy for eggs.
Due to market challenges in Hungary and Slovakia,
and avian influenza challenges in the UK, we fell
short of achieving our commitments in CE and
Booker. We continue to play our part in protecting
marine environments and fishing stocks, ensuring
all our Own Brand tuna products are now
MSC-certified across the Group.
Decarbonising transport
Transport comprises around 50% of our
operational (Scope 1 and 2) emissions. We are
working to switch all our fleets to low-carbon
alternatives by 2035, where possible, based
on available market solutions. Last year we
introduced our 1,000th electric home delivery
van in the UK, as well as rolling out 42 low carbon
bio-CNG trucks at our Livingston distribution
centre. We are also celebrating 20 years of our
Tesco rail service this year. The service now
moves a total of 7 million cases of goods a week
across the country rather than by lorry, helping
to reduce emissions.
Reduce store emissions
We continue to work towards reaching net zero
in our own operations by the end of 2035. Last
year, we were pleased to have reduced our
Scope 1 and 2 emissions by 68%, exceeding our
operational emissions reduction target of 60%.
In December 2025, we launched our low carbon
concept store in Harrogate, Yorkshire. The store
brings together a number of sustainability
features, including solar panels on the roof –
which are expected to generate 20% of the
store electricity use, rainwater harvesting to
help flush the toilets, and doors on fridges to
reduce our energy consumption, as well as
reducing the energy used to heat and cool the
store. See more in our low carbon concept store
spotlight, page 75.
More widely in the UK, we continued to roll out
improvements across our store estate, including
adding doors to our fridges, with 332 larger
stores now completed.
Planet plan
The Sustainability Committee receive
detailed updates on the planet plan at each
meeting, covering progress, achievements,
challenges and risks across all six pillars:
Planet
To protect our planet for future
generations, we recognise we
have a role to play in creating a
more resilient and sustainable
food system – it’s central to
how we do business and plays
a pivotal role in our purpose.
Improve our products
Reduce store emissions
Support sustainable consumption
Eliminate waste
Decarbonise transport
Protect nature
Tesco PLC Annual Report and Financial Statements 2026
30
Support sustainable consumption
We are committed to supporting the diets of our
customers by making healthy options affordable
and attractive for all and making healthier
choices simpler and more convenient. Healthy
food should be accessible to everyone –
wherever they live, whoever they are, and
whatever their budget.
We are pleased to have reached our target of
increasing the proportion of healthy food sold to
65% of total UK and ROI sales by the end of 2025.
We have achieved this goal by helping customers
switch to more whole foods including fruit and
veg, whole grains, beans and pulses. However,
we know there is more work to do, and our new
commitment on health reflects this.
Last summer we introduced a series of initiatives
to help customers get more of their 5-a-day,
including Clubcard Prices and personalised
Clubcard rewards on fruit and veg, as well as free
fruit for kids in store. We have also continued
to make our Own Brand products healthier by
reducing salt, fat and sugar, minimising additive
use where possible, and adding in veg, protein
and fibre.
We know longstanding change comes through
industry-wide collaboration. That is why we are
encouraging the whole food industry to play their
part too. We have measured and published our
own healthier food sales for a number of years.
In May, alongside our health charity partners,
we called on the government to commit to
mandatory reporting on sales of healthy food
for all supermarkets and major food businesses.
We welcomed the government’s announcement
in the summer to introduce mandatory reporting
and look forward to working with them on the
detail of the new Healthy Food Standard.
Eliminate waste
We aim to minimise food waste and packaging
across our supply chain, our own operations and
in our customers’ homes. While we didn’t hit our
stretching target to reduce food waste across
our own operations by 50% by 2025, we remain
committed to achieving this before 2030, in line
with the UN SDG Target 12.3 to halve global food
waste by this date. We continue to make good
progress – across CE and Booker we have
achieved our 50% reduction target, and
recorded a 24% reduction across the Group.
Our food waste hierarchy guides our plans,
covering end-to-end food waste reduction,
including increasing food redistribution through
our charity partners and colleagues.
This year, we celebrated the 10th anniversary of
our Community Food Connection programme.
Since its launch, we have donated over 83.1 million
meals to charities and communities across the
UK. This milestone reflects the strength of our
partnerships with FareShare, FoodCloud and Olio.
We have made further progress to reduce food
waste in our operations, opening a new facility
with engineering company, RenEco to turn
surplus food into animal feed. The site in
Northamptonshire unpacks bakery and fresh
produce items which are no longer suitable for
human consumption, and transforms it into
a pulp or crumb to feed to animals.
We continue to reduce plastic use across our
operations, while also ensuring 99% of our Own
Brand packaging is recyclable, either at home or
through in store collections. This year, we have
launched our new commitment to lead the
industry in accelerating the transition to
circularity by 2035, starting with an effective
Extended Producer Responsibility (EPR) policy
and the rollout of a Deposit Return Scheme (DRS)
for the UK.
Protect nature
The food system relies on healthy soils, clean
freshwater, and thriving pollinator populations.
We are collaborating with our suppliers and
partners to adopt a landscape-based approach,
transforming our supply chains holistically to
achieve lasting environmental benefits for both
climate and nature.
Tackling deforestation in 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) legislation.
For more information on our approach to
nature, please visit the nature section of
this report.
Spotlight on:
Low carbon
concept farms
Our Greenprint for UK Farming report sets out
a key part of our approach to sustainable agriculture
is understanding the barriers farmers face,
and the support they need. Informed by our
farmers, our Greenprint for UK Farming
report set out recommendations for
industry and government to help farmers
transition to a low carbon agriculture sector.
One of the key areas identified in the report
was supporting innovation.
Our low carbon concept farms – in partnership
with key vegetable suppliers, and with livestock
processor, ABP, are exploring current and
future innovations such as low carbon
fertilisers, alternative fuels, state-of-the-art
cold storage, and carbon removal techniques,
as well as improvements in soil health, grazing
management, biodiversity assessment and
management, and genetic improvements.
The farms aim to provide farmers in our supply
network with a practical demonstration of
a route to net zero.
Our suppliers Branston, TH Clements and
Heygates, have successfully grown potatoes,
broccoli and wheat on our arable farm this year.
50 tonnes of broccoli and purple sprouting broccoli
hit the shelves in September last year, giving customers
a taste of veg grown using a variety of low carbon
techniques including cover cropping, which locks
nutrients into the soil and improves drainage.
More than 20 acres of potatoes were grown using low
carbon methods, with around 260,000 two kilo packs
of potatoes hitting Tesco shelves earlier this year.
The potato crops grown at the farm have benefited
from a variety of growing techniques to reduce their
environmental impact. As we begin the second year
of the project, we will be adding peas and leeks into
the rotation with our supplier Greenyard Frozen.
More than
20 acres
of potatoes were grown using
low carbon methods
31
Governance Financial statements Additional informationStrategic report
Tesco PLC Annual Report and Financial Statements 2026
Sustainability continued
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.
Given the interconnectedness between the
climate and nature crises, we continue to strive
for a nature-led transition to net zero. Our planet
plan includes a full pillar of work on nature,
informed by focus areas in the Taskforce on
Nature-related Financial Disclosures (TNFD)
framework: protecting and restoring habitats and
species; preventing freshwater resources from
overuse and pollution, and building healthy soils.
TNFD disclosures
We continue to progress towards alignment with
the framework, which provides organisations
with the tools to report on risks related to
biodiversity loss and ecosystem degradation. The
below is designed to provide a status update on
our work so far on nature-related governance,
strategy, risk and impact management, and
metrics and targets. We have also provided
information on our LEAP (locate, evaluate, assess
and prepare) assessment, 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.
Strategy
Undertaking TNFD’s LEAP assessment gave us an
overarching view of nature risk and opportunity.
In the last year, we have focused efforts on
taking forward recommendations from the
assessment. This includes working more closely
with sourcing teams and suppliers to embed
bottom-up insights into our approach and define
practical actions to mitigate risk and leverage
opportunities. This work is also supporting us
to further refine our strategy, ensuring we
continue to focus on areas that are most
relevant to our business.
In 2025, we expanded the reach of our Nature
Programme, to incorporate seven different
projects across key sourcing landscapes in our
supply chain, building healthy and resilient
ecosystems alongside food production. These
projects include: working with Forestry England
to increase biodiversity in the Blackdown Hills
region of England; with RSPB, to build habitats for
at-risk bird species such as Turtle Doves across
East Anglia; with the Rivers Trust, to improve
water management practices in the River
Boyne catchment in Northern Ireland; with
Herefordshire Rural Hub, delivering landscape
recovery in the river corridors of the Wye and
Lugg in Herefordshire; with ANSE (Asociación de
Naturalistas del Sureste) and key fruit supplier
AMFRESH in southeastern Spain, to help create
a more resilient supply chain in the region; with
Earthworm Foundation, working with two cocoa
cooperatives in Cote D’Ivoire to build capacity
for agroforestry and soil health; and with the
Sea Ranger Service, to help restore seagrass
off the coast of the Netherlands – an area
used to source several species of wild caught
fish, including plaice, cod and haddock.
Risks and impacts
Acting on the recommendations from the
TNFD LEAP assessment, we have taken steps
to further integrate nature-related risks and
opportunities into our existing risk management
processes. This includes updating our principal
risks to embed nature further, acknowledging
both the impacts and dependencies of our
business on the natural world.
Metrics and targets
For forest risk commodities such as soy and
palm, we remain fully committed to sourcing only
from verified deforestation and conversion free
farms. For soy, our focus remains on engaging
with industry and our suppliers to align on
pathways to bring deforestation and conversion
free soy to the UK. Across all forest risk
commodities, we will be working with our
suppliers to implement the delayed EUDR
legislation. We will also continue supporting
farmers directly through the Responsible
Commodities Facility (RCF), a system
of financial incentives for farmers in Brazil
who commit to deforestation and conversion
free soy production.
We recognise the critical importance in
protecting water resources for food security,
nature and local communities. We continue to
support a combined industry aim of sourcing
50% of the UK’s fresh food and drink from areas
of sustainable water management by 2030
through the UK Food and Drink Pact’s Water
Roadmap. Alongside other signatories, we fund
several multi-year water stewardship projects,
led by delivery partners such as local Rivers
Trusts, WWF and Good Stuff International,
which support suppliers, farmers and local
Nature
As a food retailer, we rely on
healthy soils, clean, fresh
water and thriving pollinator
populations to help produce
our food.
32
communities to improve water quality, availability
and resilience in key sourcing regions across
our UK and global supply chains.
Assessing nature-related impacts and
dependencies remains complex, particularly
within our supply chains, due to diverse sourcing
locations, varying data availability and evolving
global methodologies. Through our Nature
Programme and within our Sustainable Farming
Groups, we are trialling TNFD aligned nature-
related metrics with selected project partners
and suppliers, focusing on areas such as water,
soil health and biodiversity outcomes. This
approach will support us to build a more
consistent, actionable evidence base that
will strengthen future reporting and inform
targeted action in priority sourcing regions.
Nature Programme
partnership with ANSE
As part of our Nature Programme, we have partnered
with local e-NGO ANSE (Asociación de Naturalistas del
Sureste), which leads on the conservation of natural
habitats and biodiversity in southeastern Spain, AMT
FRESH, part of AMFRESH Group, and a group of key
produce suppliers to Tesco, to support a more resilient
food supply chain in the region.
We are working with nine suppliers to collect baseline
data on soil health, water management, and biodiversity
and provide tailored support to growers to implement
nature-friendly practices such as planting hedgerows,
incorporating organic matter into the soil, and trialling
water-efficient irrigation systems.
These measures aim to support improvements in soil
health, reduce water consumption, and enhance the
overall resilience of farming systems. The actions taken
aim to support continuous improvement against the
Linking Environment and Farming (LEAF) certification
standards, with learnings being shared with
the wider industry.
As the project progresses, the hedgerows and permanent
ground cover will mature, providing habitats for wildlife
and improving soil health and water retention. Over time,
these practices aim to contribute towards creating a
nature-positive farming system that is resilient to climate
change and supports long-term food production, while
contributing to the protection of the Mar Menor basin.
Since the launch of the project, we have made strong
progress, implementing on-farm improvements, including
the planting of more than 22 hectares of native plants,
such as hedgerows, grasses, shrubs, and trees to
support sustainable pest control, water management
and soil health.
Spotlight on:
We are working with
nine
suppliers to collect
baseline data on soil
health, water management,
and biodiversity.
33
Governance Financial statements Additional informationStrategic report
Tesco PLC Annual Report and Financial Statements 2026
Climate-related financial disclosures
We have disclosed a TCFD statement since 2019
and have now met the full disclosure requirement
for the fifth consecutive year. Our TCFD
disclosures are integrated throughout the Annual
Report, providing deeper insight into the actions
underpinning our planet plan and our work to
build a more resilient supply chain (see the TCFD
content finder on the right of this page). 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.
TCFD
Task Force on Climate-related Financial Disclosures
TCFD content finder
Governance
Board oversight of climate risks and
opportunities pages 58, 59, 63 and 75
Management’s role in assessing and
managing climate-related risks and
opportunities page 41
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 35, 36, 46 and 47
Strategic resilience taking into account
different climate-related scenarios
pages 35, 36, 46 and 47
Risk management
Processes for identifying, assessing
and managing climate-related risks
page 38
How they are integrated into the
organisation’s overall risk management
pages 39 and 82
Metrics and targets
Climate-related metrics and targets
pages 36 and 37
Greenhouse gas emissions and
related risks page 37
T
Content elsewhere in the Annual Report that
relates to TCFD is indicated with this icon
Board level
Executive level
Functional/Management level
Board
Audit
Committee
Sustainability
Committee
Remuneration
Committee
ESG reporting and
disclosure group
Operational
decarbonisation
steering group
Planet
steering group
Executive Committee
Planet committee
We are committed to net zero across our
own operations by 2035. Our approach
prioritises avoiding and reducing emissions
first, with offsetting used only for residual
emissions. To reflect this approach, ‘net zero
operations’ is a more accurate description
than our previous wording of ‘carbon
neutral’. This is a change in wording only. Our
targets, baselines and methodologies remain
unchanged, and the updated language aligns
with evolving expectations from regulators,
investors and assurance providers.
Tesco PLC Annual Report and Financial Statements 2026
34
manufacturing or transport of products.
To address these hotspots, our strategy is
to engage our farmers and suppliers across
multiple ways:
Implementing strong standards: We have been
strengthening our standards over the years,
ensuring suppliers put in place best practices
to produce high-quality products while lowering
emissions and impacts on the environment.
We build on existing guidance from external
partners such as LEAF to ensure actions are
scaled across our whole supply chain.
Incentives and partnership with farmers:
We also incentivise more sustainable practices
through the Sustainable Farming Groups.
In August 2025 we launched a programme
of additional financial incentives for more
than 400 farmers across our dairy, pig, lamb
and beef Sustainable Farming Groups to achieve
key environmental and animal welfare goals.
Cross-industry collaboration: Implementing
some of these new practices will take a
collaborative and coordinated approach with
the rest of the industry. That is why we have
collaborated with Arla and Műller in the Future
Dairy Partnership with an ambition to prove that
net zero dairy at scale, in harmony with nature,
is possible. Our approach to partnership goes
beyond retail only, for example on the Exchange
Market with the Soil Association Exchange
bringing together landowners, banks, suppliers
and retailers to collectively incentivise
regenerative practices in arable farming.
Engaging suppliers: The technology to reduce
manufacturing emissions is readily available so our
focus is on engaging suppliers and sharing how we
are achieving Scope 1 and 2 decarbonisation. Last
year, we ran open webinars aimed at sharing best
practice for decarbonising manufacturing and
transport emissions across our supply chain.
We have also begun site visits with key suppliers
to better understand their progress and share
practical learnings.
Science-based targets and net zero: 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.
We are also working closely with our top 50 food
and grocery supplier partners to develop joint
sustainability plans.
2. Decarbonise transport
Our strategy is to shift all fleets to low carbon
alternatives by 2035, based on market-ready
solutions. We are on track to deliver a fully
electric UK home delivery fleet by 2030 under
our EV100 pledge, while also working with
suppliers on long-term sustainable transport
options. This includes moving more freight by
rail, improving transport efficiency through
backhauling and double stacking trials, adding
electric hook ups at our Aylesford distribution
centre, and fitting all new Booker vehicles with
low rolling resistance tyres.
To bridge the gap while long-term technologies
develop, we have expanded alternative fuel
trials. This year we tested Hydrotreated
Vegetable Oil (HVO) across the entire Booker
Best Food Logistics fleet, one Tesco UK DC and
three One Stop DCs, we also introduced 42 new
Bio-CNG trucks at Livingston DC, these fleet
changes cut emissions by up to 83% compared
with diesel. These trials provide an interim
solution as we transition to long-term, low-
carbon technologies.
3. Reduce store emissions
Reducing store emissions relies on managing
consumption and ensuring renewable energy
is available to power our stores.
We moved to 100% renewable electricity
procurement across the Group six years ago, a
decade ahead of our RE100 target. We achieved
this through a combination of renewable energy
certificates, investing in the installation of solar
panels and wind turbines at our stores and DCs
to generate renewable electricity on-site, and
through off-site PPAs. We are working to
further develop on-site and off-site renewable
generation supply to cover 60% of our electricity
demand by 2030.
In the UK, we have continued to reduce energy
consumption by fitting fridge doors across 79%
of our convenience stores and in 332 larger
stores. These measures mean fridges need to
use less electricity to keep cool, and less heating
is needed to maintain the ambient temperature
in store.
For heating and cooling, we are phasing out gas
boilers and introducing electric heat pumps,
now used in over 95% of UK convenience stores.
We are also optimising heating settings and
retiring older, less efficient combined heat
and power units.
4. Support sustainable consumption
Shifting demand towards sustainable choices,
such as diverse proteins and more fruit and veg,
is key to achieving a net zero food system.
Our long established approach focuses on
making healthier, more sustainable diets easy
and affordable through reformulation, pricing,
promotions and stronger ranges, including
plant-based protein. We continue to expand
health focused products, such as our Gut Sense
and Protein ranges, and encourage customers to
choose naturally plant-based options like beans
and pulses through great value and simple
recipe inspiration.
Across the Group, our innovation programme
identifies and scales future healthy and
sustainable ingredients by working with global
technology partners, established suppliers and
new entrants. We offer great value fruit and veg
through Aldi Price Match, Fresh 5 and Clubcard
Prices, and our 5-a-day campaigns use Clubcard
personalisation to reward and guide customers
towards healthier choices tailored to their needs
and preferences.
5. Eliminate waste
Food waste occurs across every stage of the
value chain – from surplus at farm level, through
manufacturing and transport, to operational
waste in our stores and distribution centres,
and ultimately in customers’ homes. Meaningful
progress therefore requires coordinated,
industry-wide collaboration with suppliers,
redistribution partners, policymakers and
other retailers.
Strategy
Reducing emissions to net zero and
implementing mitigation measures within
our supply chain are the key to addressing
the risks driven by climate change.
That is why, in 2023 we set ambitious net zero
commitments aligned with a 1.5°C pathway across
the full value chain validated by the SBTi – one
of the first companies globally to set a validated
forests, land and agriculture (FLAG) target.
To achieve our commitments, we have mapped
out voluntary stretching interim targets to
reduce absolute Scope 1 and 2 emissions from
our own operations by 85% by 2030 from a
2015/16 baseline year, and 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 68% vs our
2015/16 baseline. On Scope 3, our interim targets
include 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 aim to 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 and GHG
Protocol guidance.
Our strategy to deliver against this commitment
is called the planet plan, covering six different
areas. Pages 30 and 31 describe the planet plan
in detail and below is a summary of our strategy
across the six pillars.
This includes considerations for a strategic and
rounded approach as recommended by the
Transition Plan Taskforce framework. As such,
we aim to not only focus on our own net zero
targets, but also work on building adaptation
and resilience to the effects of climate change,
and drive industry system change.
1. Improve our products
Pillar one of our planet plan is about minimising
the impact on the environment and communities
of producing the things we sell. This includes
addressing the main hotspots of emissions in the
process of growing the food on farm and in the
Tesco PLC Annual Report and Financial Statements 2026
35
Governance Financial statements Additional informationStrategic report
Across our operations, we apply the food waste
hierarchy to minimise surplus and waste. Edible
food is redistributed daily through our partners
such as FareShare and Olio, and converted to
animal feed through RenEco.
We also work with suppliers through the Target,
Measure, Act framework to help halve supply
chain food waste by 2030, in line with SDG 12.3.
Annual reporting of food waste volumes and
destinations helps us track progress and
identify hotspots.
Household food waste represents around 60%
of total UK food waste, making customer facing
interventions essential. We encourage customers
to adopt a ‘useup day’ and make use of the food
already in their kitchens before shopping. Tools
such as our realfood.tesco.com/what-can-i-
make-with webpage provide recipe inspiration
to help customers reduce waste at home.
We continue to reduce plastic use across our
operations, while also ensuring 99% of our Own
Brand packaging is recyclable, either at home or
through in-store collections. This year, we have
launched a new commitment to lead industry to
accelerate the transition to circularity by 2035,
starting with an effective Extended Producer
Responsibility (EPR) policy and Deposit Return
Scheme (DRS), this includes DRS rollout in the
UK by Autumn 2027.
6. Protect nature
Protecting and restoring nature is fundamental
to the resilience of our business. Our ability to
source quality food relies on healthy soils, clean
water, thriving ecosystems, and stable climates.
Climate volatility caused by climate change and
ecosystem loss reduces yields and puts key
sourcing regions at risk. We aim to deliver this
through two connected areas of work. We work
with our suppliers and farmers to protect nature
on farms and build supply chain and on-farm
resilience through responsible sourcing
practices. We also collaborate with others
through partnerships that aim to protect
nature within sourcing regions and food
production landscapes.
Tackling deforestation in 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) legislation.
Find out more about the work we are doing to
protect nature on page 32.
Ability to adjust or adapt our strategy
Climate considerations are embedded within our
overall business strategy, capital allocation
processes and risk management framework,
supporting informed decision making across
short, medium and long-term time horizons.
Our scale, cash-generative business model and
diversified funding base provides resilience
to climate-related risks and flexibility to respond
to both transition and physical scenarios,
including periods of heightened market volatility
or increased investment requirements. Funding
oversight is governed through established
governance arrangements, including Audit
Committee oversight.
Risks and opportunities modelling
Our approach to identifying climate-related risks
and opportunities aligns with our corporate risk
management framework (RMF). Climate and
environmental sustainability and security of
supply are recognised as principal business risks,
comprising a number of underlying climate-
related critical risk events, each assessed
against risk appetite and defined mitigations.
This assessment has been leveraged and
supplemented with a qualitative evaluation of
the related financial implications, enabling the
modelling of a focused set of material climate-
related risks. This approach draws on the
robustness of our RMF to ensure attention is
directed to the risks most likely to have a
significant financial impact on our business.
Our scenario modelling combines scientific
research, economic forecasts and analysis of
the current operating environment with internal
data, including financial forecasts, emissions
information and the locations of our facilities.
Climate-related risks and opportunities are
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 2026 Performance Share Plan
(PSP) continues to incorporate sustainability metrics including those for Scope 1 and 2 emissions
reduction. For more information on the sustainability metrics included within our PSP, see page 92.
Metrics and targets supporting our Scope 1 and 2 commitment include:
Metric 2025/26 2024/25 Target/Commitment
Emissions reduction in Scope 1 and 2 vs 2015
baseline
68% 65% Reduce absolute Scope 1 and
2 emissions by 85% by 2030,
(ahead of our SBTi target of
82% by 2032).
EV100 – % of UK delivery van fleet that is
electric
21% 13% Fully UK electric Tesco home
delivery fleet by 2030.
Proportion of generated volume from on-
site and off-site PPAs, as a percentage of
electricity consumption at a Group level
24% 19% Procure Group electricity
demand increasingly via Power
Purchase Agreements (PPAs)
and on-site generation at 60%
by December 2030.
To support the delivery of our decarbonisation plans we have an internal carbon price (ICP). This aims to
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 is reviewed annually and
governed by our Group operational decarbonisation steering group.
Task Force on Climate-related Financial Disclosures continued
evaluated at Group level, with subsequent
modelling carried out on the same basis.
Three warming scenarios were modelled,
covering 3°C (current policies), 2°C (delayed
transition) and 1.5°C (net zero 2050) pathways
which were selected as three plausible scenarios
providing the necessary assessment on which to
review our mitigation plans. For transitional risks,
pathways are based on the Network for Greening
the Financial System (NGFS) scenarios. For the
chronic physical risk, pathways are based on the
Intergovernmental Panel on Climate Change’s
(IPCC’s) Representative Concentration Pathways
(RCPs). Our disclosure incorporates the 1.5°C
pathway, aligned to the Paris Agreement and our
stated targets, and a 3°C pathway aligned to
current policies, to ensure we cover a 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. The disclosed risk values are
based upon modelling conducted this year and
therefore reflect our current risk assessment.
Whilst our scenario analysis is informed by
the latest credible economic and climate
projections, there is an inherent level of
uncertainty within both the underlying models
and our assumptions, particularly when
considering medium to long-term time horizons.
We will continue to develop our climate-related
modelling capabilities to enhance our
assessment of potential climate-related risks
and opportunities. This includes expanding data
coverage and strengthening key assumptions
used to assess the potential financial impacts
of different climate pathways.
Further information about our principal risks
and uncertainties, including our TCFD risks
and opportunities, can be found on pages 38
to 49.
Tesco PLC Annual Report and Financial Statements 2026
36
Next steps
Thanks to the significant progress we have made in recent years in reducing our Scope 1 and 2 emissions,
these now represent around 1% of our total emissions. To further reduce emissions we will continue
rolling out efficiency measures like installing doors on fridges, low-carbon asset replacement for
refrigeration, and heat pump installations. We also continue to expand our Dotcom fleet electrification
and explore options for our larger fleet assets. 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, innovation and best
practice, and regularly reviewing progress against key measures. As our pilots across dairy, beef,
produce and arable continue we will apply the learnings in our wider supply chain.
Greenhouse gas emissions and energy consumption*
2025/26
(52 Week)
2025/26
(53 Week) 2024/25
Base year
2015/16
Scope 1 (tonnes of CO
2
e) 734,003
◊
748,889
◊
802,425 1,240,871
Scope 2
(a)
market-based method (tonnes of CO
2
e) 5,789
◊
5,992
◊
5,497 1,095,671
Scope 2 location-based method (tonnes of CO
2
e) 498,345
◊
507,856
◊
582,298 1,657,316
Total Scope 1 and Scope 2 market-based (tonnes of CO
2
e) 739,792
◊
754,881
◊
807,921 2,336,542
Scope 1 and Scope 2 market-based carbon intensity
(kg CO
2
e/sq.ft. of Tesco stores and DCs) 8.39
◊
8.56
◊
9.25 26.29
CO
2
e saved from exporting renewable energy
to the National Grid (tonnes of CO
2
e) 61 62 398 –
Total annual energy consumption (GWh) 5,113 5,221 5,420 6,823
UK only total Scope 1 and Scope 2 market-based
(tonnes of CO
2
e) 638,552 651,181 699,447 1,751,572
UK only Scope 1 and Scope 2 market-based carbon
intensity (kg CO
2
e/sq.ft. of Tesco stores and DCs) 9.69 9.88 10.65 26.29
UK only annual energy consumption (GWh) 4,253 4,341 4,549 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.
Business travel emissions for the 53-week year were 15,560 tonnes of CO
2
e.
(a) 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.
◊ 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. Deloitte has issued an unqualified opinion over the selected data.
Our method statement can be accessed at www.tescoplc.com/reporting-hub?activeTab=methodologies.
Metrics supporting our Scope 3 commitment include:
Metric 2025/26 2024/25 Target/Commitment
Percentage of palm oil physically
certified to Roundtable on Sustainable
Palm Oil (RSPO) standard
100% 100% We continue to report 100% palm
oil in our Own Brand products is
certified to RSPO standards. In
addition, against our commitment
to be 100% vDCF excluding
derivatives by December 2025,
we delivered 99%.
Percentage of soy used in our own
brand supply chain that is verified
deforestation conversion-free (vDCF)
14% 9% Achieve deforestation and
conversion-free soy.
Percentage change in tonnes of food
wasted as percentage of tonnes of
food handled compared to baseline
year (2016/17)
24%
reduction
14%
reduction
Halve food waste in our own
operations and supply chain
by December 2030.
Details of the methodologies for the above metrics and further information on our progress against
these targets can be found at www.tescoplc.com/latest-sustainability-report. 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.
Our total emissions footprint (based on 52 weeks)
68.1m
tCO
2
e/year
Scope 1
Refrigerants, HVAC, transport (logistics) 1%
Scope 2
Purchased electricity 0%
Scope 3
Purchased goods and services
(including deforestation) (Cat 1) 53%
Fuel- and energy-related activities (Cat 3) 5%
Upstream transportation and distribution (Cat 4) 1%
Downstream transportation and distribution (Cat 9) 5%
Use of sold products (Cat 11) 33%
End-of-life treatment of sold products (Cat 12) 1%
Investments (Cat 15) 0%
Capital goods, waste generated in operations,
business travel and employee commuting, processing
use of sold products, downstream leased assets and
franchises (Cat 2, 5, 6, 7, 10, 13, 14) 1%
Our total footprint has been calculated using Scope 1 and 2 emissions from 2025/26, fuel related emissions from 2025/26 and other
Scope 3 emissions based on 2024/25. 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 2025/26 emissions within
SBTi scope were estimated at 55.7 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. Our Group inventory shows a
reduction of 7% of emissions since our baseline in 2019/20. Our total emissions footprint is now 68.1 million tCO
2
e/year, down from
73.1 million tCO
2
e/year in 2024/25. This change has primarily been driven by a reduction in fuel and energy related activities, including
the sale and use of fuel, reflecting wider customer behaviour change. Deloitte have assured selected categories of our Scope 3 footprint
to the value of 15,709,312 tCO
2
e.
Compliance statement
Tesco PLC has complied with all of the requirements of UKLR 6.6.6R (8) 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 34 to 37 and 46 to 47 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/esg-assurance.
Tesco PLC Annual Report and Financial Statements 2026
37
Governance Financial statements Additional informationStrategic report
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 the Group’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. During the
Risk management framework
Risk control assurance methodologyGovernance
* In addition to the Group risk and compliance committee, there are other internal stakeholder risk committees (e.g. cyber and privacy risk committee, AI strategy governance
group, planet committee).
T
Content elsewhere in the Annual Report that
relates to TCFD is indicated with this icon.
Principal risks are significant risks that could affect our strategic ambitions, future performance,
viability, and/or reputation. Full disclosure of these risks is included on pages 40 to 45.
Board
Audit Committee
Group Chief Executive
and Executive Committee
Group risk and
compliance committee*
Business and functional
leadership team
Top down
Bottom up
T
Tesco PLC Annual Report and Financial Statements 2026
38
year, we refreshed the risk controls and
assurance (RCA) methodology and embedded
it further in the business; by conducting
workshops to continue to train colleagues
and reinforce the RMF.
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, financial, 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 the Group’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.
We take a structured and proactive approach to
defining and applying our risk appetite, using it as a
key mechanism to guide decision making across
the Group. Our risk appetite is defined based on
the critical risk events which underpin our principal
risks, and are reviewed annually, challenged by
senior leadership, and approved by the Board to
ensure they remain aligned to our strategy,
operating model and external environment. This
process informs the controls we prioritise, the
mitigations we design and the level of risk we are
prepared to accept in pursuit of our objectives.
During the year, we have further embedded and
strengthened our approach to risk appetite, with a
continued focus on building a strong risk culture
and reinforcing behaviours that support informed
and balanced decisions across all business
operations. A clear example is our approach to
Artificial Intelligence, where our risk appetite helps
us differentiate between use cases that offer
meaningful productivity benefits within acceptable
risk parameters, and those that require enhanced
controls due to higher risk profiles.
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
principal and emerging 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 58 and 59.
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-by-
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 further align our risk
appetite approach and support its
application across the organisation.
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 (internal 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. We have
strengthened the governance environment by
updating the terms of reference for key oversight
committees, ensuring each forum has the right
mandate, decision-making authority and cadence
to provide robust risk and control oversight. The
principal risk 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 page 49.
As at year-end FY 25/26, there are 12 Group
principal risks. In light of recent geopolitical
uncertainties, heightened market volatility, and the
accelerating effects of climate change on supply
security incidents, we have increased the likelihood
of a minor disruption in our ‘Security of supply’ 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.
Additionally, the ‘Climate change’ risk has been
broadened to include elements of sustainability,
hence has been renamed to ‘Climate and
environmental sustainability’. This risk will now
include nature-related risks such as biodiversity
loss, pollution, soil degradation and water
scarcity. The ‘Responsible sourcing’ and ‘Product
safety and food integrity’ risks have been
consolidated into a single combined risk to
better reflect how the business operates, as it
allows us to assess these risks holistically rather
than in isolation.
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 40 to
45. We have an ongoing dedicated programme
to respond to the requirements under the
updated Provision 29 of the UK Corporate
Governance Code effective FY 26/27, with
regular updates to the Audit Committee. Refer
to Corporate governance section on page 61, for
further detail on the preparation for Provision 29.
Tesco PLC Annual Report and Financial Statements 2026
39
Governance Financial statements Additional informationStrategic report
Being the
most strategic
partner for
suppliers
3
Meeting more
everyday
customer
needs
2
Long-term
business
sustainability
5
Winning in food
1
Connected,
personalised
and loved by
customers
4
Principal risks and uncertainties continued
Risk type
Strategic Change Operational Financial Compliance
Residual risk movement (after taking current responses and controls into consideration)
Risk increasing No risk movement Risk decreasing
Principal risk Residual risk movement Key responses and controls
Cyber security
†
A cyber security incident can result in disruption and
operational impact to our organisation as well as
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.
3
2
5
1
As in previous years, the importance of
cyber security remains paramount. We
continue to invest in building the right
defensive capabilities, including focus
on recovery and resilience, 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.
– We ensure our security operations centre’s ability to detect, report, and respond to security incidents
stays aligned with the changing threat environment.
– We learn from external events and continuously adapt our cyber security controls as a result, including
for example the increasing use of artificial intelligence by threat actors.
– 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 and
compliance with regulation.
– Significant progress continues to be 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.
– We regularly run business resilience exercises to assess the effectiveness of our plans against severe
scenarios and interconnected risks, such as geopolitical risk.
– 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.
4
We hold large amounts of customer and
colleague personal data. Although the
threat landscape is ever changing, we
continue to enhance how we monitor
and manage the risk closely through
structured implementation of our Group
privacy compliance programme, robust
governance, and oversight mechanisms,
therefore, the risk remains stable.
– 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. The privacy assurance programme is established alongside the
implementation of controls.
– We continue to learn from external events and adapt our controls as a result.
– 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.
† Indicates that the principal risk has been included as part of the longer term viability scenarios detailed on page 49.
Strategic ambitions
Tesco PLC Annual Report and Financial Statements 2026
40
Principal risk Residual risk movement Key responses and controls
Climate and environmental
sustainability
†
Failure to meet our climate and nature commitments under
our planet plan and failure to respond effectively to evolving
regulatory, stakeholder, and market expectations could lead
to significant financial, operational, and reputational impacts.
These include increased costs, supply chain disruption,
regulatory penalties, loss of consumer trust, and reduced
competitiveness. This encompasses both physical and
transition impacts, such as inadequate response to climate
change, regulatory changes and consumer preferences,
insufficient progress on sustainable packaging, and failure
to manage nature-related risks including biodiversity loss,
pollution, soil degradation and water scarcity.
Oversight: Planet committee, Executive Committee,
Sustainability Committee, Audit Committee, Board.
3
5
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 the Group’s sustainability commitments,
including those related to climate change. The committee is chaired by the Chief Communications
and Sustainability 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 34 to 37.
T
– Closely aligned with our work on climate, we continue to evolve our approach to nature, including our
ongoing work to align with the Taskforce on Nature-related Financial Disclosures (TNFD) framework. We
have leveraged the LEAP (locate, evaluate, assess, and prepare) approach to establish nature-related
dependencies, impacts, risks and opportunities for high-risk commodities, and to identify and evaluate
the effectiveness of levers to address these risks as well as identify opportunities to support business
priorities. We report our progress on this in our section on Nature, see pages 32 and 33 and in our
Sustainability Report.
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: Geopolitics governance forum, Group risk
and compliance committee, Executive Committee, Audit
Committee, Board.
3
2
5
1
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,
customers and colleagues and implement
appropriate response strategies. In the
prior year, the risk score was increased
to reflect heightened geopolitical
uncertainty and in response we also
established a Geopolitics governance
forum to enhance oversight and risk
management. During the year, geopolitical
risks have continued to materialise,
including the ongoing Middle East conflict.
The Group continues to monitor events
closely and implement appropriate
mitigating actions and therefore the
overall net risk position has not been
increased further.
– 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. The
newly established Geopolitics governance forum further strengthens this by providing structured insight
and challenge on global developments. 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.
– Our management, along with the Geopolitics governance forum, with regular Board oversight diligently
monitors events, including the current conflict in the Middle East, 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.
Tesco PLC Annual Report and Financial Statements 2026
41
Governance Financial statements Additional informationStrategic report
Principal risks and uncertainties continued
Principal risk Residual risk movement Key responses and controls
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: Technology risk and compliance committee,
AI strategy governance group, Executive Committee,
Audit Committee, Board.
3
2
5
4
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 capacity of
our underlying technology platforms
and infrastructure, upskilling our team
and attracting new talent. Enhanced
governance is provided through
dedicated technology and AI 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.
– 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 strategy governance group ensures Tesco has a well-balanced approach to exploit AI
opportunities, in alignment with good practice and accepted principles for responsible use of AI.
Product safety and responsible
sourcing
†
Failure to ensure that our products are safe, legal, and
responsibly sourced. This includes not meeting required
product safety, integrity and traceability standards, as well
as failing to uphold fundamental human rights, fair working
conditions and ethical practices within our production and
sourcing activities. Such failures could result in illness, injury,
death, regulatory or legal action, and significant reputational
harm, ultimately affecting our company performance.
Oversight: Group risk and compliance committee,
Sustainability Committee, Executive Committee, Audit
Committee, Board.
3
2
1
Product safety and responsible sourcing
are closely linked. Both risks relate to our
global supply chain and share regulatory
and reputational consequences.
We manage these risks in a similar
way through standards, policies and
compliance programmes. By combining
these risks, we are aligning to how we
manage these within the business. The
regulatory environment has continued
to evolve alongside global supplier cost
pressures, and heightened expectations
around ethical production. However,
we have continued to strengthen our
established safety, quality and ethical
sourcing frameworks, including enhanced
governance and monitoring to ensure
standards are continually met. As a result
of these actions, the overall risk remains
stable year-on-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
have specialists who maintain product quality and standards through routine site visits, checks and
inspections. They also respond to product complaints and quality issues. Our responsible sourcing
policies and guidance help to 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. We respond promptly to any identified product quality,
safety, or human rights issues, ensuring they are fully investigated and addressed through clearly
defined processes.
– 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, and on an ongoing basis, 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 audits 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 suppliers’ sites is maintained.
– We operate risk-based quality assurance programmes, which are focused on sample-based testing of
our products to ensure compliance with our standards and regulations, and monitor supplier compliance
with our standards related to human rights.
– 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 also provide targeted training for colleagues and suppliers dealing with specific
regulations related to human rights and modern slavery.
– We use certification schemes and participation in voluntary industry schemes to support our standards.
† Indicates that the principal risk has been included as part of the longer term viability scenarios detailed on page 49.
Tesco PLC Annual Report and Financial Statements 2026
42
Principal risk Residual risk movement Key responses and controls
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.
5
1
We continue to make significant
investments in safety and security
controls to address the rise in theft and
violence that led to a greater threat to the
safety of our colleagues. We implemented
specific response strategies and
enhanced our monitoring to ensure we
continue to provide a safe environment
for all our colleagues and customers, and
that we manage increased regulatory
enforcement of health and wellbeing. As
a result of these actions, the overall risk
remains stable year-on-year.
– 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. We have enhanced monitoring by adopting a severity
model to understand the impact of our controls in driving down severity.
– 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.
People
Failure to attract, retain and develop the required talent
and capabilities, embed our values in our culture, and
maintain compliance across our people-related obligations,
could impact on the delivery of our purpose and business
performance.
Oversight: People risk and compliance committee,
Nominations and Governance Committee, Remuneration
Committee, Executive Committee, Audit Committee, Board.
2
5
1
4
Market competition for key leadership
and specialist talent remains strong within
the retail sector and wider economy.
Wage inflation and other macroeconomic
conditions continue to influence this risk.
We are strengthening our people-related
compliance programmes in response
to an increasingly complex landscape.
We have also established a strategic
workforce planning capability to enable
us to anticipate and plan for workforce
trends, talent and skill requirements.
On this basis, with these mitigations in
place, focused on attracting and retaining
colleagues, maintaining competitive
compensation, and securing specialist
skills, the risk remains unchanged.
– Our talent planning and people development processes are established across the Group to identify,
monitor and develop the skills required to deliver our strategic objectives. This 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 Nominations
and Governance Committee.
– We continue to invest in our ability to attract and develop talent. During the year, we have further
embedded our global careers website and recruitment platform to support the building of inclusive,
diverse talent pipelines and to enhance the candidate experience.
– 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.
– We carry out periodic internal compliance reviews, including Right to Work checks, National Minimum
Wage and working time requirements, to maintain robust people related controls across the Group.
– 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 strengthen our mental, physical, and financial wellbeing offer,
supported by core health services such as virtual GP access, occupational health and our employee
assistance programme to help colleagues stay well and return to work safely.
– 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 2026
43
Governance Financial statements Additional informationStrategic report
Principal risks and uncertainties continued
Principal risk Residual 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.
3
2
5
1
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 of key areas, including management’s monitoring of
available liquidity, financing and funding, its hedging strategy as well as its associated internal controls.
Customer, competition and markets
†
Inability to clearly understand changing customer behaviours
and respond to the fast evolving competitive digital
landscape pose significant challenges to our business. In this
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.
3
2
5
1
4
Strong and sustained UK market share
gains reflect continued focus on value,
quality, and service. Ongoing investment
in price competitiveness, customer
experience, and digital engagement
(including Clubcard and retail media)
has contributed to a resilient position
in a challenging market and therefore
the risk remains stable.
– 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
customers 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.
† Indicates that the principal risk has been included as part of the longer term viability scenarios detailed on page 49.
Tesco PLC Annual Report and Financial Statements 2026
44
Principal risk Residual risk movement Key responses and controls
Security of supply
†
Disruption in our supply chain due to adverse macroeconomic
conditions, geopolitical events, climate change, nature related
risks 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.
3
2
5
1
Continued macro uncertainty and global
disruptions, such as extreme weather,
crop failures, logistical challenges, and
geopolitical tensions, continue to impact
the availability of raw materials and food
supply, with particular concern where
no viable substitutes or alternatives
exist. We maintain a robust supplier
review programme and actively monitor
emerging geopolitical and climate
risks to safeguard continuity of supply.
Whilst we have not seen any significant
disruptions in our product availability
across stores, the external landscape of
heightened geopolitical uncertainties,
market volatility, potential cyber threats
across the supply chain, and accelerating
climate-related impacts on supply
security has meant we see an increased
likelihood of a minor event occurring.
– We have a robust supply base review process allowing us to review and reduce our reliance on single
suppliers, where appropriate. 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 potential 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.
Regulatory and compliance
†
Failure to comply with legal and other requirements (such
as anti-bribery, fraud, 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.
3
5
1
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.
– 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 fraud 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.
Emerging risk themes
Emerging risk themes are reported and discussed at the Audit Committee and Board 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. Artificial intelligence (AI) has been recognised as an emerging risk for several years, and this year we have embedded its potential impacts
within our principal risks. This approach ensures that AI-related risks and opportunities are considered across our risk framework, supporting informed decision making and safeguarding long-term resilience
for our stakeholders.
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Governance Financial statements Additional informationStrategic report
Principal risks and uncertainties continued
T
TCFD risks and opportunities
The following tables summarise the financial value at risk associated with two material transition risk
categories (policy and consumer market) and one physical risk (food sourcing) over the short term
(five years) and medium term (10 years), alongside 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 horizon provides insight
into the development of transition-related risks and opportunities and 20 years captures the
evolution of physical and transition risks. Additionally, we have provided a qualitative policy risk
disclosure relating to petrol and diesel demand but have chosen not to disclose values due to
commercial sensitivity.
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.
Management assesses risk on a continuous basis, considering the risk to our 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 page 38, which includes controls and assurance activities, 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.
The most recent principal risk review was presented to the Board, Audit Committee and Executive
Committee in February 2026. Following this review, and recognising the interdependencies between
climate and nature, the ‘Climate change’ risk has been broadened and renamed to ‘Climate and
environmental sustainability’. This risk now incorporates nature-related risks such as biodiversity
loss, pollution, soil degradation and water scarcity. Climate and environmental sustainability is
assessed to be one of our most material risks determined by a combination of likelihood and
potential financial impact. Additionally, in light of the accelerating effects of climate change on
supply security incidents, and other external factors, we have increased the likelihood of a minor
disruption in our ‘Security of supply’ risk.
More information can be found on pages 41 and 45.
Policy risk
Annual mitigated profit impact
Pathway Five-year outlook 10-year outlook 20-year outlook
3°C Not material Not material Carbon prices and their global application remain
at current levels, which leads to a minimal financial
impact to our business.
1.5°C £200–250m £300–350m Carbon prices begin to eventually plateau and are
sustained at this level, with widespread adoption
across the developed and developing economies.
We continue to assess the impact of carbon pricing, which mainly influences the costs we pay
suppliers. Under a 3°C pathway, we assume no change to current carbon taxes, resulting in a
non-material impact, while the 1.5°C pathway models widespread adoption of increasing rates of
carbon taxation. The model assumes emissions reduce in line with our net zero plan, with most
financial risk mitigated through consumer behaviour and general market pricing. Our model is based
upon current carbon prices and the extent of emissions covered, which is then extrapolated
out across each warming scenario. 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 and adoption to remain stable, and therefore immaterial
financial impact.
Our risk assessment for the 1.5°C scenario has increased since our previous disclosure, reflecting
the limited global progress on emissions reductions since it was last modelled. As a result, achieving
this aspirational pathway would now require more rapid and decisive action, which is reflected in a
higher assumed carbon price, broader policy coverage, and therefore the higher risk value
modelled. Our 3°C scenario output values remain in line with our previous disclosure.
In addition to carbon pricing, we are actively monitoring any further policy risk associated with the
UK Government’s legislated timeline to end sales of new combustion engine vehicles by 2030 and
hybrid vehicles by 2035. In this context, our modelling, which is aligned to the UK National Energy
System Operator’s Future Energy Scenarios, indicates a potential volume risk as electric vehicle
adoption continues to accelerate. While this decline represents a headwind for the business, our
petrol filling stations (PFS) benefit from being well-integrated within our store estate and remain
conveniently located for the shopping missions of our customers, providing an important degree
of defensive resilience. We continue to monitor policy, technology, and consumer behaviour trends
closely and are assessing a range of strategic options to ensure our PFS network remains relevant
and well positioned as mobility patterns evolve.
Tesco PLC Annual Report and Financial Statements 2026
46
Food sourcing risk
Annual mitigated profit impact
Pathway Five-year outlook 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.
Over the last year, we have evolved our methodology for assessing this risk and developed an
approach that more closely aligns with our sourcing strategy. Our model focuses on a defined group
of fresh produce lines and commodities where we believe there is the greatest insight to be gained
from detailed climate modelling.
We assess the impact of chronic drought and water scarcity on global production of these
commodities, evaluating how changes in crop yields may affect unit pricing. The analysis considers
both positive and negative yield impacts arising from changing weather patterns, recognising that
climate change may result in regional variability rather than uniform outcomes.
The modelling assumes that sufficient volumes can continue to be sourced to meet demand. This
approach enables us to better understand potential cost volatility linked to physical climate-related
risks, rather than focusing on absolute availability constraints. We have assumed that most of the
financial risk would be mitigated by means of shifts in consumer behaviour and general market
pricing, this assumption has the effect of condensing the risk values within the £0-50m range
in all scenarios.
Overall, this methodology allows us to identify commodities that may be more exposed to climate-
driven price variability and to use these insights to inform sourcing strategy, supplier engagement,
and longer-term resilience planning.
Consumer market risk
Annual unmitigated profit impact
Pathway Five-year outlook 10-year outlook 20-year outlook
3°C £0–50m £0–50m Consumer participation in the resale market
continues to grow steadily, but the impact is more
greatly felt within the high-value and luxury brand
markets.
1.5°C £50–100m £100–150m Consumers reduce clothing purchase frequency,
with resale platforms increasingly serving the mass
market.
This risk models the impact of customers’ sustainable purchasing decisions, for example placing a
greater importance on the environmental impact of a product. Previous modelling indicated the
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 therefore focuses on non-food categories and this year we refined our approach to
reflect evolving consumer trends within the clothing market. We assess the financial impact of
consumers adopting more sustainable behaviours, including wearing garments for longer and
increasing their participation in second-hand and upcycling markets. Our modelling assumes
demand is equally affected across all clothing categories and the risk presented assumes no
mitigating actions are taken.
During 2025/26, we strengthened our capability to ‘design for circularity’ by training colleagues in
the UK and across our sourcing hubs on circular design principles. This means creating products
which are designed for durability and longevity so they stay in use for as long as possible, whilst also
considering how products can be managed when they reach the end of their lifespan. Additionally,
we operate clothing takeback and textile recycling bins in around 2,000 UK stores in partnership
with the Salvation Army Trading Company Limited. This helps to ensure that donated textiles are
managed responsibly by sorting them for reuse or recycling.
Technology risk
We previously disclosed a risk that existing capital assets are rendered obsolete through the
introduction of low-carbon equivalent technology, resulting in the need to write off the value of our
assets. Given our continued programme of capital investment, aligned to our operational net zero
commitment and a 1.5°C pathway we have assessed this risk is now highly unlikely to materialise. We will
continue to monitor this risk internally but have discontinued the disclosure on grounds of immateriality.
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, we can
expand our plant-based ranges to cater to consumer demand and mitigate some of the risks
due to consumption habits changing.
– 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. Fridge doors have been added to 79% of our UK
convenience stores, and we have now fitted them in 332 of our larger stores.
– Electric vehicle charging: we are uniquely positioned to offer customers a convenient place to
charge their electric vehicles while they shop, with over 2,600 EV charging bays located across our
UK store car parks. In June 2025, we expanded this offering through our partnership with POD,
introducing the ability for customers to earn Clubcard points on EV charging top-up transactions.
– Access to less volatile energy prices by increasingly procuring energy for stores via our onsite and
offsite long-term PPAs and self-generating on-site. This year, we opened Aylesford Distribution
Centre which is equipped with the largest number of solar panels across our estate. We have
also added rooftop solar panels to 29 of our existing stores in 2025/26, with a potential annual
generation of over 8,000MWh.
Tesco PLC Annual Report and Financial Statements 2026
47
Governance Financial statements Additional informationStrategic report
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 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, whilst
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, insurance and money services, and
data science.
Refer to the Chief Executive’s review on page 10
and the Financial review on pages 22 to 28 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 38
to 47.
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 148 to 152.
Longer term
viability statement
Tesco PLC Annual Report and Financial Statements 2026
48
Scenario Associated principal risk Description
Geopolitical events trigger
higher inflation which,
together with weak
macroeconomic
fundamentals, weaken
consumer confidence,
further intensifying
competition in the sector
– Geopolitics and other global events
– Security of supply
– Product safety and responsible
sourcing
– Macroeconomic exposures
– Customer, competition and markets
Geopolitical events trigger supply chain volatility and commodity price inflation,
resulting in resurgent cost inflation in the markets in which we operate over a
sustained period.
The Group incurs elevated levels of cost inflation across goods purchased for sale
to customers and the operating cost base. 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 as inflationary pressures together with weak
macroeconomic fundamentals and an uncertain fiscal and regulatory environment,
weaken consumer confidence, leading to competition in the grocery sector
intensifying further.
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
– Data privacy
– Regulatory and compliance
– Customer, competition and markets
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 have 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 and environmental
sustainability
– Geopolitics and other global events
– Security of supply
– Product safety and 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 156 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 49
and incorporating by reference pages 68
and 69 and pages 225 to 228) 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
15 April 2026
Tesco PLC Annual Report and Financial Statements 2026
49
Governance Financial statements Additional informationStrategic report
Corporate governance report
Governance
overview
Contents
Governance overview 50
Governance introduction 52
Board of Directors 54
Governance framework 58
Purpose and culture 62
Role of the Board 63
Board activity 64
Board performance review 67
Section 172 statement 68
Committee reports
Nominations and Governance 70
Sustainability 74
Audit 78
Directors’ remuneration report 88
Directors’ report 225
Compliance with the UK Corporate
Governance Code 2024 (the Code)
During the year, the Company was in full
compliance with all applicable principles and
provisions set out in the Code. The Board is aware
of the upcoming requirements under Provision 29
which is applicable in FY 26/27, and it intends
to be compliant. More information can be found
on page 61.
Monitoring compliance with the Code is the
responsibility of the Nominations and Governance
Committee, which receives regular updates and
reports its finding to the Board. Details of how the
Code has been applied can be found throughout
this Corporate governance report, the Strategic
report and the committee reports.
Principles of the Code Read more Pages
Board
leadership and
company
purpose
Long term, sustainable success of the Company
Viability statement Pages 48 to 49
Chair’s letter Pages 52 to 53
Board activity Pages 64 to 65
Our strategic ambitions Pages 14 to 15
Purpose and culture Everyone’s welcome Pages 20 to 21
Purpose and culture Page 62
What we stand for Page 7
Resources and controls Managing our risks Pages 38 to 39
Stakeholder (inc. workforce) engagement Stakeholder engagement Pages 18 to 19
Q&A with the Colleague Contribution
Panels hosts
Page 66
Section 172 statement and key
strategic decisions
Pages 68 to 69
Approach to remuneration Page 91
Division of
responsibilities
Role of the Board and Executive Division of responsibilities Page 60
Governance framework Page 58
Role of the Board Page 63
Executive Committee Page 59
Composition,
succession and
evaluation
Composition Our Board Pages 54 to 57
Appointments to the Board and succession planning Board composition, expertise and
succession planning
Pages 70 to 71
Balanced board Nominations and Governance Committee Pages 70 to 73
Board performance and evaluation Board performance review Page 67
Audit, risk and
internal control
Audit Committee report Audit Committee Pages 78 to 87
Principal risks and uncertainties Principal risks and uncertainties Pages 38 to 47
Remuneration Directors’ remuneration report Directors’ remuneration report Pages 88 to 108
Tesco PLC Annual Report and Financial Statements 2026
50
Governance
at a glance
Tenure
Average tenure: 4 years and 6 months
0 1 2 3 4 5 6
5+
3 – 5
0 – 3
Gender % Ethnicity %
28 Feb 26
Male 64%
Female 36%
28 Feb 26
White 82%
Ethnically diverse 18%
Geographic expertise Independence
28 Feb 26
UK 11
Europe 7
Rest of World 5
28 Feb 26
Independent 8
Executive 2
Chair 1
Board Attendance during FY 25/26
(a)
Board
Nominations
and Governance
Committee
Audit
Committee
Sustainability
Committee
Remuneration
Committee
Gerry Murphy 6/6 4/4 – – –
Ken Murphy 6/6 – – – –
Imran Nawaz 6/6 – – – –
Melissa Bethell 6/6 4/4 5/5 – 4/4
Bertrand Bodson 6/6 4/4 – 4/4 –
Carolyn Fairbairn 6/6 4/4 5/5 4/4 4/4
Thierry Garnier 6/6 4/4 – 4/4 –
Stewart Gilliland 6/6 4/4 – 4/4 4/4
Chris Kennedy
(b)
6/6 3/4 5/5 – –
Caroline Silver
(c)
6/6 3/4 5/5 – –
Karen Whitworth 6/6 4/4 5/5 4/4 4/4
(a) Alison Platt stepped down from the Board in June 2025. During this period, she attended all meetings
she was eligible to attend.
(b) Tesco PLC Board and Committee meetings are scheduled two years in advance. Chris Kennedy joined the
Board in February 2025 and was unable to attend one scheduled Nominations and Governance Committee
meeting due to prior commitments.
(c) Caroline Silver was unable to attend one scheduled Nominations and Governance Committee meeting
due to prior commitments.
Key highlights
Total dividend per share for the year
14.5p
Shares bought back since April 2025
351,658,966
Average vote % in favour of
all resolutions at the 2025 AGM
97%
Number of colleagues who would
recommend Tesco as a Great Place
to Work
82%
Board composition
Tesco PLC Annual Report and Financial Statements 2026
51
Strategic report Financial statements Additional informationGovernance
Dear Shareholder
I am pleased to present our Governance report
for the year ended 28 February 2026. This report
demonstrates our commitment to maintaining
high standards of governance. We are fully
compliant with the UK Corporate Governance
Code (the Code) this year. These standards
support the Board in providing effective
leadership and sound decision making. Our robust
corporate governance framework enables us to
deliver long-term sustainable growth and ensures
the Board maintains appropriate oversight of
the material issues facing the Group.
This section includes the reports of the
Nominations and Governance Committee,
Sustainability Committee, Audit Committee and
Remuneration Committee and highlights key
developments and achievements during the year.
Our evolving strategy
The Board remains focused on ensuring that our
strategy delivers long-term value for all
stakeholders, recognising their continuing evolving
needs while staying aligned with our purpose and
values. Over the year, we have actively overseen
the Group’s strategic progress, receiving regular
updates from management on performance
against our strategic drivers and the evolution of
the long-term strategy and the Group’s priorities.
The Board’s oversight has included reviewing the
development of our new strategic ambitions,
including progress in data and the role of artificial
inteligence in how we serve and keep winning with
even more customers. We also considered wider
market forces, cost pressures and the investment
needed to strengthen the core of the business.
Taking a structured and disciplined approach
enables us to ensure that the evolving strategy is
delivered responsibly and continues to support
sustainable performance.
Engaging with our stakeholders
The insight our stakeholders provide shapes how
we make decisions. The Board receives regular
updates on customer expectations and
colleague sentiment. This includes deep dives,
stakeholder dashboards and direct engagement
with colleagues through our Colleague
Contribution Panels and Every Voice Matters
surveys, which are central to our oversight
of culture and help inform decision making.
We receive views from suppliers through
feedback mechanisms and independent surveys,
informing our oversight of responsible sourcing
and long-term partnerships.
In addition, we consider the views of shareholders
through ongoing dialogue and remain committed
to supporting the communities we serve and
overseeing delivery of our sustainability
commitments. Together, this engagement ensures
our decisions reflect the needs of the people
who rely on us.
Further information on how the Board
engages with stakeholders can be found on
pages 18 to 19.
Our culture
A strong and healthy culture, across the
business and within the Boardroom, is essential
to delivering long-term, sustainable success,
and the Board places significant importance
on monitoring it effectively.
Our purpose and values underpin the way we
work and help embed a culture where everyone
feels welcome. All colleagues are assessed against
our Win Together behaviours through the
Your Contribution framework, and for senior
management, performance outcomes are
reviewed to ensure alignment not only with our
long-term priorities but also with our purpose
and values.
Further information on how the Board
monitors culture can be found on page 62.
Board performance
It is essential we also remain focused on
maintaining a high-performing, skilled and diverse
Board. This year, we completed an internal Board
performance review and also reviewed the
performance of each director and Board
Committee to ensure they continue to engage
and operate effectively and provide robust
oversight of governance, risk management,
sustainability and the long-term strategy.
Governance
introduction
Gerry Murphy,
Chair
We remain focused on maintaining high
standards of governance to deliver long-term
sustainable growth for our stakeholders.
Corporate governance report continued
Tesco PLC Annual Report and Financial Statements 2026
52
The internal review concluded that the Board
continues to operate effectively, with a healthy
culture of openness and constructive challenge,
while remaining connected to stakeholders views
and operational performance. Over the coming
year, the Board’s focus will be on further
developing our long-term strategy, and continuing
to monitor succession and composition, ensuring
the right balance of skills, expertise and diversity
are on the Board in line with the work undertaken
by the Nominations and Governance Committee.
Further information on the Board’s
performance review can be found on page 67.
Board changes
There has been one change to the composition of
the Board during the year. In June 2025, Alison
Platt stepped down at the Annual General
Meeting, having served nine years as a Non-
executive Director on the Board. I am grateful to
Alison for her outstanding contribution and
commitment to the Board.
As at the date of this Report, the Board
comprises 36% female directors, reflecting Alison
Platt’s retirement during the year. We recognise
that we have not met the Listing Rule requirement
of 40% female representation, and we are not in
line with our diversity, equity and inclusion (DE&I)
policy objective of between 40% and 60% Board
gender balance.
Following Alison’s departure, the Board took the
opportunity to strengthen its succession planning
through a review of its composition and future
requirements, alongside an external assessment
of the Board’s current skills and expertise and
those required to deliver the Group’s long-term
strategy. This assessment, facilitated by Calibro
Consult Limited, has informed the Board’s
thinking on future capability needs and the
development of a role profile.
As a result of this work, the Board has
commenced the search for a new Non-executive
Director, with diversity considerations embedded
alongside skills and expertise. The Board is
committed to restoring compliance with
the Listing Rules and meeting its DE&I policy
objectives over the coming year.
Further information on our succession
planning and DE&I commitments can
be found within the Nominations and
Governance Committee Report
on pages 70 to 73.
Our Code readiness programme
We have continued momentum on the next
phase of our readiness programme for Provision
29 of the Code. The Board receives regular
updates on the strengthening of our risk and
internal control framework. The steps that have
been taken have further embedded consistency
across the Group and positioned us well for full
implementation of the new requirements, ahead
of the Board providing our first declaration in the
2027 Annual Report.
Further information on our Code readiness
can be found on page 61.
Looking ahead
Given the challenging market conditions, we are
focused on continuing to deliver consistent
sustainable value for all our stakeholders in the
years ahead, by implementing our new strategic
ambitions and focusing on innovation and growth.
On behalf of the Board, I would like to thank our
colleagues for their dedication and support.
I would also like to extend my thanks to all our
stakeholders for their continued support and
trust in our future success.
Gerry Murphy
Chair
15 April 2026
Key highlights from the Board in 2025/26
Investing in our long-term strategy
Evolved the long-term strategy and continued to invest in future success, with focus on exploring
new opportunities while we keep winning with even more customers. This included exploring
opportunities in AI, advancing personalisation and further strengthening our online proposition.
Embedding sustainability
Oversaw the continued integration of sustainability into our long-term strategy, receiving regular
updates on the planet plan, while the Sustainability Committee received deep dives on each pillar.
This year, we transitioned from our 2025 commitments to a sharper set of ambitions that support
sustainable, long-term growth.
Return of capital to our shareholders
Further progress made in returning capital to shareholders as part of our ongoing share buyback
programme. In April 2025 we committed a further £1.45bn for share buybacks to April 2026, taking
our total planned buybacks since the programme began in October 2021 to £4.25bn and reinforcing
our focus on long-term value creation.
Developing Board succession, skills and expertise
Conducted a review of the Board’s skills and expertise to ensure continued alignment with our
long-term strategy and DE&I commitments. This year, we commenced an assessment of the
Board’s collective capabilities as part of our succession planning process. We considered the
future skills mix required to deliver the strategy over the coming years, supporting the
maintenance of an effective Board and ensuring orderly succession in the years ahead.
2026/27 Key focus
– Continue to evolve and embed the long-term strategy, ensuring we deliver sustained value, quality
and service for our customers, while strengthening the capabilities needed to support future growth.
– Maintain a strong focus on Board composition, progressing our diversity, equity and inclusion
commitments and ensuring that succession planning and skills development supports an effective
Board for the years ahead.
– Deepen alignment between the strategy and our sustainability commitments, ensuring that the
planet plan commitments are fully integrated into long-term plan and supported by investment
and expertise.
Tesco PLC Annual Report and Financial Statements 2026
53
Strategic report Financial statements Additional informationGovernance
Ken Murphy,
Group Chief Executive
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)
Imran Nawaz,
Chief Financial Officer
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
N
Dr Gerry Murphy,
Chair
Appointed September 2023
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
Trustee: The Burberry Foundation
Senior advisor: Perella Weinberg Partners
Mentor: Chair Mentors International
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
Board of Directors
Board of
Directors
Tesco PLC Annual Report and Financial Statements 2026
54
Key:
A
Audit Committee
N
Nominations and Governance Committee
R
Remuneration Committee
S
Sustainability Committee
Committee Chair
Dame Carolyn Fairbairn DBE,
Senior Independent Director
Appointed September 2023
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 the media,
government and financial sectors.
External appointments
Current:
Non-executive director: HSBC Holdings plc
Honorary fellow: Gonville and Caius College, Cambridge,
and of Nuffield College, Oxford
Advisory council member: Frontier Economics
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
Chair of the board of trustees: Royal Mencap Society
Senior positions: McKinsey & Company, BBC and ITV plc
Member: Number 10 Policy Unit
SRNA
Melissa Bethell,
Independent Non‑executive Director
Appointed September 2018
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.
External appointments
Current:
Non-executive director: Diageo PLC, Exor N.V., Brillio LLC,
The Magnum Ice Cream Company N.V.
Senior advisor: Atairos
Director: Ocean Outdoor
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
RNA
Bertrand Bodson,
Independent Non‑executive Director
Appointed June 2021
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
SN
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Thierry Garnier,
Independent Non‑executive Director
Appointed April 2021
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
SN
Stewart Gilliland,
Independent Non‑executive Director
Appointed March 2018
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: Nature’s Way Foods Ltd
Interim executive chair: IG Design Group plc
Past:
Chair: Booker Group plc and C&C Group plc
Chief executive: Müller Dairies UK and Ireland
Non-executive director: Chapel Down Group plc and Mitchells &
Butlers plc
Senior positions: Whitbread PLC and Interbrew
SRN
Chris Kennedy,
Independent Non‑executive Director
Appointed February 2025
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.
External appointments
Current:
Chief financial officer and chief operating officer: ITV plc
Trustee: EMI Group Archive Trust
Past:
Chief financial officer: Micro Focus International plc, ARM
Holdings plc and easyJet plc
Non-executive director: Whitbread PLC, Great Ormond St
Hospital Foundation Trust
Senior positions: EMI Group
NA
Board of Directors continued
Tesco PLC Annual Report and Financial Statements 2026
56
Caroline Silver,
Independent Non‑executive Director
Appointed October 2022
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.
Chair of audit committee: National Film and Television School
Other: International Advisory Board of Adobe Inc, board of
trustees of V&A Foundation, Moelis & Company
Past:
Chair: PZ Cussons plc
Non-executive director: Meggitt PLC, M&G PLC and Bupa Limited
Board member: London Ambulance Service NHS Trust
Other: Moelis & Company, Morgan Stanley, Merrill Lynch and
Victoria and Albert Museum
NA
Karen Whitworth,
Independent Non‑executive Director
Appointed June 2021
Skills, experience and competences
Karen has significant retail, strategic and financial 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
SRNA
Chris Taylor,
Group Company Secretary
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.
Director changes during the year
Alison Platt stepped down as a director in June 2025 after nine years’
service as a Non-executive Director on the Board and Remuneration
Committee Chair.
Additional external commitments
During the year, the Board approved the additional external
commitments taken on by Gerry Murphy, Karen Whitworth, Carolyn
Fairbairn, Melissa Bethell and Stewart Gilliland. 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 their 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 72.
Key:
A
Audit Committee
N
Nominations and Governance Committee
R
Remuneration Committee
S
Sustainability Committee
Committee Chair
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Strategic report Financial statements Additional informationGovernance
T
T
T
Audit
Committee
Nominations and
Governance Committee
Remuneration
Committee
Sustainability
Committee
Committee Chair:
Karen Whitworth
Oversees the integrity of the
financial reporting and audit
process, and the maintenance
of appropriate internal controls
and risk systems, including the
effectiveness of internal and
external audit, financial fraud
risk, and whistleblowing. In
addition, it reviews sustainability-
related disclosures, KPIs, and
management’s process for
identifying sustainability risks
and internal controls.
Committee Chair:
Gerry Murphy
Reviews the size, composition,
tenure and skills of the Board.
As part of this, it leads the
Board appointment process
and makes recommendations
to ensure orderly succession
to both the Board and senior
management positions, as well
as overseeing a diverse talent
pipeline. In addition, it oversees
the governance arrangements
of the Group and ensures they
are managed to a high standard.
Committee Chair:
Melissa Bethell
Determines remuneration policy
and packages for Executive
Directors and senior managers,
having regard to pay across
the Group and the views of
stakeholders. Additionally,
sets the broad structure for
the Company’s remuneration
policy and determines the
remuneration of the Chair,
the Executive team and Group
Company Secretary. It is also
responsible for reviewing
workforce remuneration and
the alignment of incentives and
reward with company culture.
Committee Chair:
Stewart Gilliland
Provides oversight on the
Group’s planet plan, community
and human rights initiatives
to support the delivery of the
Group’s purpose, strategic
ambitions and sustainability
commitments. Additionally
oversees the Group’s social
and environmental obligations,
including climate-related
matters, and is responsible
for monitoring progress
towards our commitments.
More information can be
found in the Audit
Committee Report on
pages 78 to 87.
More information can be
found in the Nominations
and Governance Committee
Report on pages 70 to 73.
More information can be
found in the Directors’
remuneration report on
pages 88 to 108.
More information can be
found in the Sustainability
Committee Report on
pages 74 to 77.
Our governance framework underpins the
Group’s ability to achieve its purpose and deliver
on its strategy. By maintaining the highest
standards of corporate governance and ensuring
a clear division of responsibility, the Board
ensures it operates effectively and provides
robust oversight of matters material to the
Group. This approach enables sound decision
making by the Board, informed by the interests
of a diverse range of stakeholders.
The Board is supported by four Board
Committees, each operating under a terms of
reference which ensure that specific matters
receive appropriate discussion, consideration
and challenge. In addition, Committees work
together in collaboration to oversee specific
matters. For example, the Sustainability
Committee works closely with the Remuneration
Committee on sustainability-related
performance reward metrics and with the
Audit Committee on sustainability reporting.
Furthermore, while the Board sets the Group’s
purpose, value, and long-term objectives and
reserve certain matters, the day-to-day
management of the Group is delegated to
the Group Chief Executive, who is supported
by the Group Executive Committee.
Disclosure Committee
The Board delegates responsibility to the
Disclosure Committee to consider timely and
accurate disclosure of sensitive information.
Further details of the Board, Matters
Reserved and the Executive Committee can
be found on pages 63 and 59 respectively.
Board
Chair Executive Directors Senior Independent Director Non-executive Directors
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.
More information on the role and responsibilities of the Board can be found on page 63.
Board Committees
Governance framework
Governance
framework
Tesco PLC Annual Report and Financial Statements 2026
58
T
Executive Committee
The Board delegates responsibility to the Group Chief Executive for overseeing the day-to-day
operations of the Group, as well as formulating, implementing and managing the Group’s strategic
objectives as approved by the Board. The Group Chief Executive is supported by the Executive
Committee, which is comprised of the Executive Directors, CEOs of our business units, and senior
management in key functional roles. The Committee operates within, and is guided by, its terms
of reference which are reviewed annually and available on our website at www.tescoplc.com.
The Executive Committee has 11 scheduled meetings per year, together with more informal weekly
check-in meetings. During the year, Matthew Barnes and Matt Simister left the business and were
succeeded by Ashwin Prasad, whose role expanded from his previous position as Chief Commercial
Officer to become UK CEO, and Jonny McQuarrie who joined the Committee as the new CEO, Central
Europe. In addition, Natasha Adams was appointed as the newly established Chief Strategy and
Transformation Officer, with Geoff Byrne succeeding her and joined the committee as CEO, Ireland
and Northern Ireland. Christine Heffernan also took on additional responsibility to become the Chief
Communications and Sustainability Officer.
Ken Murphy
Group Chief Executive
Member since October 2020
Imran Nawaz
Chief Financial Officer
Member since May 2021
Natasha Adams
Chief Strategy and
Transformation Officer
Member since June 2018
Geoff Byrne
CEO, Ireland and Northern Ireland
Member since June 2025
Guus Dekkers
Chief Technology Officer
Member since May 2021
Christine Heffernan
Chief Communications and
Sustainability Officer
Member since March 2019
Kay Majid
Group General Counsel
Member since July 2024
Jonny McQuarrie
CEO, Central Europe
Member since July 2025
Ashwin Prasad
UK CEO
Member since September 2020
Emma Taylor
Chief People Officer
Member since March 2022
Andrew Yaxley
CEO, Booker
Member since July 2018
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.
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 risks and internal controls are being identified, managed and monitored appropriately.
– 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.
Executive level committees
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. These
committees provide updates to the Board, Audit, Sustainability and Executive Committee on matters
of significance.
T
Group risk and compliance
Oversight of key business, operational
and compliance risks on behalf of the
Executive Committee, including the
assessment of emerging risks and the
effectiveness of mitigation activities, and
reports twice‑yearly to the Executive
Committee and Audit Committee.
Planet
Reviews and monitors delivery of the Group’s
planet plan, commitments, climate initiatives
and expenditure, making recommendations
to the Executive Committee and
Sustainability Committee.
Read more about our sustainability
governance framework in our
Sustainability Report.
Cyber and privacy
Oversees and monitors the Group’s cyber
risk exposure, including the effectiveness
of governance and management plans,
with significant matters escalated to the
Board or Audit Committee as appropriate.
AI strategy governance
Responsible for the definition and
execution of the Group’s AI strategy,
guiding prioritisation decisions, informed
by the relative risk and reward. Matters
of significance are raised at the Board
or Audit Committee as appropriate.
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Governance framework continued
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.
In addition, Non-executive Directors take on
the role of workforce engagement and host
the Colleague Contribution Panels (CCP) held
in the UK and Central Europe. These additional
responsibilities are set out in the table to
the right.
Further details on the CCP can be found
on page 66.
All Directors have access to the advice of the
Group Company Secretary and 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.
Chair The Chair is responsible for the leadership of the Board, ensuring effectiveness and leading strategic oversight of the Group
by setting the Board’s agenda, culture and values. In addition, the Chair is responsible for fostering open and constructive
debate among Directors and, as part of this, meets regularly with Non-executive Directors without Executive Directors
present. Furthermore, the Chair maintains key internal and external stakeholder relationships and communicates their views
to the Board, as well as overseeing key governance matters such as performance evaluations of the Board and Committees
and driving succession planning.
Senior Independent
Director
The Senior Independent Director acts as a sounding board to the Chair and a trusted intermediary for other Non-executive
Directors. The role’s key responsibilities include overseeing the annual evaluation of the Chair’s performance, conducted
with the Non-executive Directors and informed by Executive Director feedback, and then discussing the findings directly
with the Chair. In addition, the Senior Independent Director oversees the recruitment process for a new Chair and
provides an additional point of contact for shareholders through direct engagement and regular briefings from the
Group Company Secretary.
Non-executive
Directors
Non-executive Directors provide independent insight and experience to the Board, providing objective oversight and
independent judgement to the decision-making process. Their responsibilities include constructively challenging the
Executive Directors, monitoring and scrutinising management’s performance in achieving agreed goals and objectives
and playing leading roles within Board Committees to best utilise their independent and diverse skills and experience.
Group Chief
Executive
The Group Chief Executive has delegated authority from the Board to oversee the day-to-day operations of the Group and
is supported in this role by the Group Executive Committee. In addition, the role provides effective leadership, coordination,
and performance management of the Executive team to ensure alignment and delivery of the Group’s objectives.
Chief Financial
Officer
The Chief Financial Officer supports the Group Chief Executive in the development and execution of the Group’s strategy.
In addition, the role is responsible for the financial leadership of the Group, overseeing the annual budget process and
ensures effective financial reporting and controls are in place.
Workforce
engagement
Board host
The workforce engagement Board hosts work with the CCP representatives to develop a greater understanding of colleagues’
views on the operations of the business. They monitor actions to address issues raised by the CCP and, with support from
the Chief People Officer, report back to the Board to ensure all Directors have awareness of colleague views and that these
are reflected in decision making. In addition, they provide CCP representatives with an awareness of Board and business
priorities and the impact on business practices.
More information on the CCPs can be found on page 66.
Group Company
Secretary
The Group Company Secretary supports the Board and Committee Chairs in shaping forward agendas and ensures that
Board members receive information in a timely manner. The role assists the Chair with developing and implementing Board
induction programmes, coordinating ongoing director training, and provides advice on Board procedure and wider corporate
governance matters. Additionally, the role serves as a key point of contact for shareholders on corporate governance related
matters and oversees internal evaluations of the Board and its Committees at the Chair’s request.
Division of
responsibilities
Tesco PLC Annual Report and Financial Statements 2026
60
Worked closely with key
stakeholders across the
business to define our approach
to Provision 29 and initiate
our readiness programme.
Full implementation of the new requirements under
Provision 29. The Board to carry out a review of the
effectiveness of the Group’s risk management and
internal control framework. Our first declaration on
the effectiveness of our material controls will be
included as part of the 2027 Annual Report.
Identified the risks that the Board
considers material to the business,
derived from our principal risks.
Code
readiness
Provision 29 of the UK Corporate
Governance Code 2024 introduces new
requirements for Boards to describe how
they monitor the effectiveness of their
internal control and risk management
framework, and to provide a declaration on
the effectiveness of their material controls.
To prepare for our first declaration in the
2027 Annual Report, we initiated a
three‑year programme in 2024 to
strengthen where required and align our
processes across the business.
The timeline summarises the steps we have
taken so far and the activities planned as we
move towards full implementation.
Spotlight on:
FY 24/25
FY 26/27
1. Preparation phase2. Reporting phase
FY 25/26
– Identified the material controls which support
the mitigation of the material risks in scope.
– Developed expected standards for our material
controls to ensure they are designed
to operate effectively.
– Assessed all material controls against our expected
standard, identified any specific enhancements
where required and worked with all relevant
stakeholders to deliver these.
– Strengthened the governance environment by
updating the terms of reference for key governance
forums, ensuring each forum has the right mandate,
decision‑making authority and cadence to provide
robust risk and control oversight.
– Mapped existing assurance activities against the
material controls, to ensure that the Board is
comfortable with the level of assurance to support
the future Board declaration.
– Developed a robust end‑to‑end sign‑off process with
material control owners and simulated the roll up for
the Board declaration process, further embedding
alignment to the Code ahead of full implementation.
– Regular updates provided to the Audit Committee
and the Board to support effective oversight and
feedback on the proposed approach.
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Purpose
and culture
How the Board monitors culture
Our colleagues are central to the strength of
our culture, and the Board draws on a range
of reports and engagement channels to
understand how our values are lived across
the Group. Regular people updates, including
succession, talent and DE&I progress, sit
alongside insights from Every Voice Matters,
our Colleague Contribution Panels and the
independent Protector Line. Together with
site visits, these mechanisms provide the
Board with a clear view of colleague sentiment
and behaviours, helping us monitor cultural
health and ensure our culture supports our
purpose and strategy.
Code of Business Conduct
Our Code of Business Conduct plays a central
role in embedding our purpose, values and
expected behaviours. All colleagues complete
mandatory training on joining and refresh
annually thereafter. The Board and its
Committees draw on insights from Code
compliance reporting, training completion,
and trends from the Protector Line to assess
whether our culture is operating as intended.
The annual compliance results are reported
to the Audit Committee and contribute to
the Board’s overall view of culture across
the Group.
Please visit www.tescoplc.com to view
Tesco’s Code of Business Conduct.
Our Protector Line
The Protector Line is our independent and
confidential whistleblowing service, providing
colleagues and suppliers with a safe way to
raise concerns about misconduct or breaches
of our Code of Business Conduct. The Audit
Committee receives biannual reports on case
trends and outcomes and escalates significant
issues to the Board. This insight helps us assess
whether colleagues feel able to speak up and
whether our response reflects the culture and
values we expect across the Group.
Colleague Contribution Panels
Colleague Contribution Panels (CCPs) enable
the Board to hear directly from a range of
colleagues about how our culture is
experienced across the business. The panels
are hosted by two Non-executive Directors,
Carolyn Fairbairn and Melissa Bethell, and meet
four times a year split across the UK and ROI,
and Central Europe. After each panel, the
hosts provide a formal report to the Board
summarising key themes, cultural insights and
any areas requiring follow-up. This regular
reporting gives the Board clear line of sight into
colleague sentiment and how consistently our
values are being lived across the Group.
4
CCPs held during the year
For further information on the
CCPs, page 66.
Every Voice Matters
Every Voice Matters (EVM) is a key way for us to
understand how colleagues experience our
culture across the Group. As our largest
colleague engagement programme, it provides
regular insight into what colleagues value and
where further focus may be needed. The Board
receives updates on EVM results, including
sentiment trends and priority themes, helping
us assess how consistently our values are being
lived across the business. The Executive
Committee reviews the findings and ensures
appropriate action is taken, giving the Board
assurance that colleague feedback leads to
meaningful change. The Board also receive high
level insights from supplier engagement surveys,
providing an external perspective on how our
culture is reflected. Together, these inputs help
the Board monitor the health of our culture.
Colleague participation in the
Every Voice Matters survey
73%
Diversity, equity and inclusion
We are committed to fostering a diverse and
inclusive culture, guided by our five colleague
commitments: Inclusion for All, Flexibility for All,
Accessible First, Transforming Recruitment and
Developing Careers. Across the Group, more
than 25 colleague networks help celebrate
diversity and amplify the voices of colleagues
to create a workplace where everyone feels
represented and able to be themselves.
The Board supports and monitors delivery
of our diversity, equity and inclusion strategy,
receiving regular updates on progress against
each of the five commitments.
For further information on diversity,
equity and inclusion at Tesco, page 20.
Colleague performance – Your
Contribution
Performance and reward also play an
important role in reinforcing the culture we
want to see across the Group. Through the
Your Contribution framework, all colleagues
are assessed against both strategic delivery
and our Win Together behaviours, ensuring
performance outcomes reflect how results
are achieved as well as what is delivered. For
Executive Committee members and senior
management, the Board, Remuneration
Committee and Nominations and Governance
Committee monitor performance outcomes
to ensure they remain aligned with our
purpose, values and long-term priorities.
Further information on Executive
remuneration can be found in the
Directors’ remuneration report on
pages 94 to 96.
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.
Governance framework continued
Tesco PLC Annual Report and Financial Statements 2026
6262
Role of
the Board
Effective governance begins with clarity and
transparency around how the Board conducts its
work and the framework within which it operates.
This section outlines the role and responsibilities
of the Board, its oversight activities and how it
ensures it works to support the long-term
success of the Group.
Schedule of matters reserved
T
for the Board
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. To ensure these matters remain
robust and relevant to the material topics of the
Group, these are reviewed annually and were last
reviewed in February 2026.
The full schedule of matters reserved for
the Board can be found on our website at
www.tescoplc.com.
Board purpose and
T
responsibilities
The Board is responsible for setting the purpose
and strategic direction of the Group and
promoting long-term sustainable success. In
doing so, the Board actively sets and monitors
culture to ensure that the long-term aspirations
of the Group are supported by the right culture,
values and behaviours.
To support its work, the Board operates within a
robust governance framework and is bolstered
by its Committees. Each Committee provides
specialist oversight of specific areas and
produce written and verbal feedback to the
Board following their meetings. This structure
helps facilitate efficient oversight and promotes
informed decision making.
The Board strives to ensuring the business
operates responsibly and sustainably, consistent
with our values. As part of this, climate-related
considerations are integrated into our
governance framework, with defined roles and
responsibilities captured within the schedule of
matters reserved for the Board and Committee
terms of reference.
The Board retains overall responsibility for
ensuring that resources are available to deliver
objectives and strategic priorities. It oversees
the responsible and efficient use of these
resources through comprehensive systems and
controls across the Group to support effective
management and decision making. Clear
guidance on governance frameworks is provided
through the Group’s delegation of authority,
matters reserved for the Board and Committee
terms of references.
For more information on our governance
framework see page 58.
Board operations
The Board held six scheduled meetings during
the year, each including discussion on relevant
strategic matters, as well as an additional
strategy day at which senior management
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 that meeting discusses the matters
proposed with the Director concerned
whenever possible, seeking their support and
feedback accordingly. The Chair subsequently
represents those views at the meeting.
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 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
and governance which includes our sustainability
commitments, risk, internal controls, culture,
and stakeholders are discussed at the
appropriate time. These planners are subject
to regular review by the Chair of the Board, or
relevant Committee, to ensure sufficient time is
allotted to encourage constructive discussion,
debate, and challenge during meetings.
Standardised paper templates are used so that
Directors receive high-quality, clear and timely
information. These templates help to maintain
consistency across papers, highlight key issues
and decisions required, and support effective
oversight, challenge and decision making.
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 during the year.
Each Board meeting begins with a meeting of
the Chair and Non-executive Directors only,
providing an independent forum for discussion,
free from management.
For more information, see our Board
activity on pages 64 to 66.
Culture and strategy
The Board is responsible for shaping and
reviewing the Group’s strategy throughout the
year. Regular strategic updates and dedicated
sessions provide visibility of performance against
our priorities, as well as an insight into emerging
customer behaviours, market trends and the
wider environment in which we operate.
Deep-dive discussions into each of our business
areas enable the Board to consider
opportunities and challenges and ensure the
strategy remains robust. This continuous
oversight maintains a clear direction and helps
to embed strategy across the organisation.
The Board is also responsible for defining the
Company’s purpose, values and behaviours and
ensuring these are embedded across the Group.
This culture underpins our ability to deliver our
strategic objectives and aims to create a
workplace where all colleagues feel welcome
and able to be themselves. In support of this,
the Group maintains a clear diversity, equity
and inclusion strategy as well as a Board-level
diversity, equity and inclusion policy.
For more information on the Purpose
and culture, see page 62.
Risk management and
internal controls
The Board retains ultimate responsibility for the
Group’s risk management and internal control
systems. As part of this, a comprehensive risk
management framework is in place across
the Group, setting out the policies, tools
and standardised processes that enable
management to identify, assess and monitor
risks. While the framework is established at
a Group level, day-to-day management of risks
is undertaken by the relevant business units
and functions.
The Audit Committee, on behalf of the Board,
also undertakes an annual effectiveness
assessment of the principal and emerging risks
facing the Group and considers any actions
taken to mitigate them, reviews key risk
movements and monitors the implementation
of any actions arising from these assessments.
For more information, see our Principal
risks and Internal controls on pages 40
to 45.
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Strategic report Financial statements Additional informationGovernance
Board
activity
Operational performance 20%
Strategy and purpose 28%
Financial performance, risk management
and internal controls 18%
Governance and culture 15%
Stakeholder engagement 19%
Operational
performance
Strategy
and purpose
Financial performance, risk
management and internal controls
The Board
– Receives regular updates from the Group Chief
Executive on the operational performance of
the Group.
– Receives business unit updates throughout
the year to cover an overview of performance,
market conditions, customer perception,
challenges and opportunities.
– Receives trading updates on managing
capacity through peak trading, stock
management and resourcing.
– Receives health and safety updates focusing
on people safety, the safety framework and
strategy, progress against priorities and
opportunities for improvement.
– Undertakes regular site visits, both individually
and collectively, throughout the year which
provide invaluable oversight and understanding
of the Group’s day-to-day operations.
The Board
– Receives updates from the Group
Chief Executive and Chief Strategy and
Transformation Officer detailing all material
matters, wider performance against strategic
drivers and KPIs, and ongoing developments
on the Group’s evolving strategy.
– Undertakes annual strategy-focused Board
days which provide an opportunity to deep-
dive into each business area, and to provide
oversight, challenge and inform the Group’s
short, medium and long-term strategy.
– Receives technology updates providing
an overview of technical capability,
transformation and AI, as well as updates
on new and emerging technologies that
could be adopted to deliver our purpose.
– Reviewed and agreed the strategic agenda
for FY27.
The Board
– Receives updates from the Chief Financial
Officer on the Group’s financial position, viability,
performance against budget and the long-term
plan. Additional updates are provided on the
performance against the Big 6 KPIs.
– Monitors significant or principal risks facing
the Group and receives information on
internal controls and reporting and risk
management systems.
– Approves capital allocation framework, dividend
policy and shareholder return mechanisms,
as well as debt capital market activities.
– Maintains visibility of the property strategy,
including the approval of the annual
property valuation.
Focus: festive strategy
The Board reviewed the Christmas 2025 strategic
plan aimed at building on last year’s success and
maintaining operational excellence during the
festive season. These discussions focused on
trade plans, product innovation, marketing and
seasonal investment with the aim of maximising
performance and customer experience during
the period.
Focus: strategy and brand
Throughout the year the Board focused on the
evolving strategy. As part of that, the Board
discussed the development of Tesco’s refreshed
brand strategy, offering challenge, guidance,
and insight to ensure that the brand strategy
remained firmly rooted in the Group’s purpose
and values.
Focus: competitive pressures
The Board received regular updates on the
competitive intensity in the UK market during the
year and approved the necessary price investment
to react to the competitive intensity. The Board
closely monitored the customer reaction to the
price investment and was encouraged by the
Group’s continued market share momentum.
More information on operations and
performance found on pages 6 and 17.
More information on our strategy and
purpose can be found on pages 7 and 14.
More information on our financial
performance, risk management and internal
controls can be found on pages 22 to 28,
and 38 to 39.
Board activity
Tesco PLC Annual Report and Financial Statements 2026
64
Governance
and culture
Stakeholder
engagement
The Board
– Oversees the Group’s diversity, equity and
inclusion strategy and receives regular updates
on progress against these commitments, as well
as any areas identified for further development.
– Oversees and monitors the management
succession and talent plans to ensure the
talent pipeline meets the future requirements
of the Group.
– Reviews governance matters at each meeting,
including regulatory developments, ongoing
shareholder programmes, shareholder
documentation and Non-executive Director fees.
– Reviews the annual renewal of the Directors’
and Officers’ liability insurance and approves any
material contracts taking into consideration the
associated operational and financial benefits.
The Board
– Receives updates on colleague engagement
initiatives and colleague matters to understand
the views of our workforce. These are reported
in the form of our CCP hosts, Every Voice Matters
surveys, talent updates and the colleague News
and Views communnications platform.
– Reviews the results, action plans and
development areas from our customer,
colleague and supplier insight surveys.
– Receives regular reports on sustainability
and community strategies, including
performance against our sustainability goals
and objectives, as well as longer-term
community investment initiatives.
– Receives regular updates from Investor
Relations which provide the Board with
feedback on investor views, expectations,
market conditions, share price performance
and outlook.
Focus: evolving Colleague Contribution Panels
(CCPs)
Following colleague feedback, improvements were
introduced to support deeper conversations
and clearer feedback between the CCPs and
the Board, including simplified agendas, broader
representation, and enhanced briefing and
feedback for the hosts before each meeting.
Focus: continuation of the share
buyback programme
Following the sale of our Banking operations and
the strength of our balance sheet, the Board
reviewed various shareholder return mechanisms
and approved an additional share buyback
programme totalling £1.45bn during the year,
which completed in January 2026.
More information on how the Board
monitors and engages with culture can
be found on page 62.
More information on our stakeholders,
mechanisms of engagement, and
sustainability initiatives can be found
on pages 18 to 19 and 30 to 31.
Board visits
During the year, Directors spent time
individually and collectively visiting
operational sites, enabling direct
engagement with senior management and
colleagues. These visits provided valuable
insight into day-to-day operations,
challenges and opportunities across the
Group, strengthening the Board’s
understanding of performance, culture
and colleague experience.
Visits covered a broad range of offices,
stores, depots, distribution and fulfilment
centres. These included: Aylesford
Distribution Centre (DC), a flagship site
modernising the fresh and frozen network
which showcased the new AI capabilities
and investment in innovation to improve our
distribution capacity; Livingston, Reading
DCs and the Belfast Fresh Depot and Enfield
customer fulfillment centre to review
picking and delivery operations and meet
with senior management and colleagues;
Harrogate, our first low carbon concept
store; Beckton Gallions Reach, a multi-
format store converted to include an urban
fulfilment centre; several Booker sites to
review save to invest initiatives, catering
range development and the fresh operating
model and multiple stores across the
Republic of Ireland and Northern Ireland.
Directors spent time visiting our Tesco
Business Solutions offices in Bengaluru and
the contact engagement centre in Dundee,
which provided an opportunity to review
financial and commercial developments,
evolving technology and AI and TBS’s role in
driving efficiencies and the initiatives that
TBS have undertaken within the community.
In addition, Directors visited Star locations,
which are part of our joint venture
operation in India, including the new
purpose-built DC in Bengaluru which
combines fresh, chilled and ambient
operations, as well as several stores,
such as Hoodi and Sampi, to experience
the new blueprint model.
Spotlight on:
65
Strategic report Financial statements Additional informationGovernance
Why are the CCPs important
to you as Board Hosts?
C: For me, the CCPs are an essential part of my
role as a Board member. They help ensure that
we remain connected to the experiences of our
colleagues and understand how our decisions
impact them at work. Hosting the CCPs has
provided invaluable insight into colleagues’ lived
experiences and the issues that matter most
to them. I value the open discussions at each
panel and the way these insights directly inform
Board-level decision making.
M: As the CE Board host, the CCPs are
important because they ensure the
perspectives of our international colleagues are
directly heard. Hosting the CE panel provides
an important connection to our international
colleagues and reinforces that Group decisions
can have different impacts across our markets.
It is critical that we understand those
differences, hear colleagues’ experiences
first hand and recognise the contribution
they make across the business.
What stood out most from the CCP
discussions that were held this year?
C: What stood out most was colleagues’ interest
in the role of AI in improving productivity,
personalisation for our customers, and health
and safety. While many colleagues are
optimistic, we like many other businesses
recognise the need to continue to provide
colleagues with clarity, training and reassurance
about how AI will be used responsibly.
I particularly valued colleagues’ openness about
wanting to build their confidence in using AI.
I also noticed a clear increase in confidence
between the July and November sessions,
reflecting the impact of the training that we
have already introduced to some colleagues.
The feedback is very helpful as we continue
to explore how AI can further support us
as a business.
M: Colleagues in CE are also curious about
technology, but what stood out most for me
was their strong desire to be involved in shaping
change. This was particularly evident in
discussions on sustainability, where colleagues
showed real passion for how initiatives work
in practice and how their local store or
distribution centre contributes to our
sustainability commitments. Colleagues were
keen to highlight where infrastructure or
operational constraints can create barriers,
and how these could be addressed to support
delivery. This was closely linked to feedback on
communications, with colleagues wanting to
know more about our sustainability activity.
How have these insights influenced
Board discussions and actions?
C: The insights from the CCPs have reinforced
the importance of pace, clarity and engagement
as our thinking on AI continues to develop.
The feedback helps us to be aware of the
support that colleagues would like as any
new technology is introduced.
M: The feedback has shown us that colleagues
have a real passion about sustainability as
a topic and want to know more about our
ambitions in this area. So, we are now exploring
how we can raise even more awareness at
a local level.
What are your priorities for
CCPs in the year ahead?
C: As we continue to evolve our approach to AI,
sustainability and wellbeing, the CCPs will
remain an important forum for testing our
thinking and understanding how change is
experienced across all levels of the business.
M: Looking ahead, it will be important to build
on the strong engagement we have seen.
I would like to see us continue to adapt the
format to reflect local needs, while maintaining
consistency of themes across the Group.
Above all, the CCPs should continue to provide
colleagues with a meaningful opportunity
to be heard and to help shape the future
of the business.
Colleague Contribution Panels
(CCPs) are one of the Board’s key
mechanisms for hearing directly
from colleagues across the Group.
They help us understand how
colleagues experience our culture,
how strategic decisions land in
their day-to-day work, and where
we can do more to support them.
Each year, CCPs provide the Board with
valuable insight into the issues that matter
most to colleagues, helping to shape a working
environment where everyone feels heard,
valued and able to thrive.
During the year, four panels were held: two
covering the UK & ROI and subsidiaries, and
two for Central Europe (CE). The sessions were
hosted by Carolyn Fairbairn (C) and Melissa
Bethell (M) on behalf of the Board, in their roles
as Workforce Engagement Hosts, with
additional Board members in attendance.
Panels were held both virtually and in person,
including a site visit for our UK colleagues
to our new distribution centre in Aylesford.
A summary of colleague feedback and
actions were provided to the Board, with
key discussion themes also shared at Executive
and management level to ensure feedback
is acted upon.
Q&A with
the hosts
Spotlight: Colleague Contribution Panels
Melissa Bethell
Carolyn Fairbairn
Board activity continued
Tesco PLC Annual Report and Financial Statements 2026
66
Performance
review
The Chair and Board focus on maintaining a high-performing, skilled and diverse Board aligned to our
strategy. Performance is assessed annually through a structured review of the Board, its Committees
and individual Directors. These performance reviews follow a three-year cycle, combining internal
and external evaluations to drive continuous improvement. Last year, we completed an externally
facilitated Board evaluation.
This year marked the start of a new three-year cycle, with the Board undertaking an internal review
led by the Chair and supported by the Company Secretary. The Chair also receives a separate annual
performance review, led by the Senior Independent Director.
During the year the Nominations and Governance Committee undertook a Board composition
and succession review to enable it to plan for succession both to the Board as a whole and to the
Board Committees.
More information on the review can be found in the Nominations and
Governance Committee Report on pages 70 to 73.
Progress against FY 24/25 external Board performance review
Action identified Progress against action
Develop and implement the
Group’s long-term strategy
and growth ambitions
The Board continued to develop the Group’s long-term strategy
through regular updates from the Group CEO and dedicated
strategy sessions during the year. This included a three-day strategy
session in June 2025, the annual strategy day in November 2025, and
consideration of the FY26/27 strategy in February 2026.
Shape the agenda and Board
focus with a balance of
operational oversight and
strategic development
Following a review of the Board forward planner, regular strategy
sessions were embedded into the annual agenda. The Board also
received a presentation on organisational readiness to support
delivery of the long-term strategy.
Enhance our strategic enablers
through technology and our
people with a focus on succession
and talent planning, capability,
diversity and expertise
The Board reviewed its composition and succession planning, which
included an external assessment of the Board skills matrix. This work
supported planning for orderly succession and will help ensure that
the right balance of skills, experience and diversity are considered.
Evolve the appetite for risk
in alignment with the
long-term strategy
The risk appetite framework was refreshed alongside the risk, control
and assurance methodology. In addition, the Audit Committee
undertook deep dives on key principal risks and risk events throughout
the year to ensure alignment with the long-term strategy.
FY 25/26 internal Board performance review
Board Outlook was appointed to facilitate the internal Board performance review. Board Outlook has
no other connection to Tesco. The platform provides a customisable questionnaire-based framework
which is designed to use data and analytics to identify both strengths and opportunities for improvement.
The questionnaires were finalised by the Chair with the support of the Company Secretary, and the
evaluation process was overseen by the Nominations and Governance Committee.
September
Priorities session
Discussions with
the Chair on scope
and customisation
of questionnaires
October
Online
questionnaires
Questionnaires
circulated to
the Board
December
Results
Findings were
shared with the
Chair and Company
Secretary
February
Action plan
Findings and key
themes were
discussed with
the Board
Areas of focus identified by the review:
Based on the feedback received during the evaluation process, the following key themes and actions
will be monitored by the Nominations and Governance Committee during the year.
Key themes and actions
Strategy development and oversight
Ensure that strategy development and integration are regular Board agenda items, with clear KPIs
to enable progress and implementation to be measured.
Future capability and organisational readiness
Continue to monitor the progress of the people and technology strategic enablers to ensure that the
necessary infrastructure, talent and succession plans are developed and implemented in order to deliver
the longer-term strategy.
Board composition and succession
Continue to monitor succession at Board and senior management level, taking into consideration
the longer-term strategy, as well as broader diversity requirements.
Board ways of working
An ongoing action to review Board processes and papers to ensure that Board meetings are focused
on discussing the strategic pillars and areas where Board input will help drive the business forward.
As part of the Board performance review, a review of each Board Committee was undertaken.
No issues were identified, and all Committees were confirmed as operating effectively, further
information on each Committee’s performance review can be found within their respective
Committee reports. The performance of each Director was evaluated as part of the internal review,
with all Directors confirming they continue to have sufficient time, commitment and independence
to discharge their responsibilities.
Year 1
2025/26
Internal Review
Year 2
2026/27
Internal Review
Year 3
2027/28
External Review
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Strategic report Financial statements Additional informationGovernance
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 18
to 19.
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
A
Consequences of any decisions
in the long term
Chair’s statement and Group Chief Executive’s review 8 to 9 and 10 to 12
Our market context and Our strategic ambitions 13 to 15
Our business model and Key performance indicators 16 to 17
Longer term viability statement 48 to 49
Board activity and Key strategic decisions 64 to 65 and 69
B
Interests of the employees
Key performance indicators 17
Everyone’s welcome 20 to 21
Stakeholder engagement 18 to 19
Corporate governance report 62 and 65
Nominations and Governance Committee 70 to 73
Directors’ remuneration report 89 to 92 and 97 to 102
Directors’ report 227
C
Foster business relationships with
suppliers, customers and others
Chair’s statement and Group Chief Executive’s review 8 to 9 and 10 to 12
Our market context and Our strategic ambitions 13 to 15
Our business model and Key performance indicators 16 to 17
Principal risks and uncertainties 38 to 45
Stakeholder engagement 18 to 19
D
Impact of our operations on the
community and environment
Our market context 13
Planet, Nature and TCFD 30 to 37 and 46 to 47
Stakeholder engagement 18 to 19
Board activity and Key strategic decisions 64 to 65 and 69
Sustainability Committee report 74 to 77
E
Maintain a reputation for high standards
of business conduct
Our purpose framework and Our business model 7 and 16
Governance framework 58 to 60
Purpose and culture 62
Board activity and Key strategic decisions 64 to 65 and 69
F
Acting fairly between members of
the Company
Our strategic ambitions and Key performance indicators 14 to 15 and 17
Board activity and Key strategic decisions 64 to 65 and 69
Stakeholder engagement 18 to 19
More information on the Board’s activities and how we engage with our stakeholders can be found on
pages 18 to 19 and pages 64 to 65.
Board activity continued
Tesco PLC Annual Report and Financial Statements 2026
68
Key strategic decisions
Competitive pressures Brand
At the start of the financial year, we identified an increase in the competitive intensity of the UK market.
At a point where regulatory cost pressure had increased; notably higher National Insurance contributions
and the Extended Producer Responsibility (EPR) levy, our reaction needed careful consideration to
balance the needs of all our stakeholders.
A comprehensive review of the FY25/26 budget against the long-term plan and strategic priorities,
enabled the Board to endorse the necessary price investment to react to the increased competitive
intensity. In backing this decisive action, the Board took careful account of the need to protect Tesco’s
leading customer proposition whilst ensuring the Group continued to deliver for all stakeholders.
Throughout the year, the Board has closely monitored customer response to the investment and is
particularly encouraged by the Group’s continued market share momentum.
Building upon the insights gained from the budget review and in light of the increase in competitive
intensity, the Board approved the extension of the Group’s save to invest programme, targeting
approximately £500m in savings for FY25/26. Strong progress has been made, driven by management
identifying opportunities to simplify operations and improve productivity, resulting in savings beyond
the £500m target.
The Board recognises the critical role our colleagues have in delivering excellent customer experience and
oversaw continued investment in our colleagues, ensuring teams are fairly rewarded, equipped, and able
to support and serve our customers.
Additional stakeholder considerations included a clear focus on shareholder interests, ensuring
the Group continues to deliver sustainable returns through our dividend policy and ongoing share
buyback programme.
During the year, the Board provided strategic oversight of the development and recent launch of Tesco’s
refreshed brand strategy which builds upon the strength of the Every Little Helps promise. Recognising
the distinctiveness of our brand, the Board endorsed the creation of a new brand message Need
Anything From Tesco? designed to give a renewed relevance to our iconic slogan and invite a nationwide
conversation that brings Every Little Helps to life. Throughout this year, the Board received regular
updates on the evolving brand strategy, offering challenge, guidance, and insight to ensure the outcome
was aligned to our purpose and ensure that our customers remain central to any proposals.
As part of the brand strategy refresh, the Board recognised the importance of our colleagues and the
role our teams play in delivering the promises embedded within our purpose and aimed to ensure that
the brand strategy championed the role of our colleagues. In doing so, the Board was supportive of
colleague-based initiatives and the colleague first approach which aimed to drive colleague advocacy
while promoting a culture of helpfulness and community.
In addition, when considering the brand strategy, the Board recognised the important role Tesco plays
within our communities and ensuring the brand strategy remained firmly rooted within the Group’s
purpose and values.
Strategy
Throughout the year, the Board provided robust oversight of our long-term strategic ambitions offering its expertise and constructive challenge to help us navigate changing customer needs and emerging opportunities.
Through its approval of the budget and long-term plan, the Board scrutinised the investments needed for the Group to fulfil these ambitions. During the period, the Group announced a multi-million pound investment in a new
automated distribution centre at DP World London Gateway, which is expected to open in 2029.
A key element of our strategic ambition is to create the most connected, personalised and rewarding customer experience supported by the use of data and partnerships to fuel growth. Rapid advancements in AI present
significant opportunities to enhance our customer offering through Clubcard and the development of new strategic partnerships. The Board has played an active role in shaping and adapting the strategy to ensure that these
opportunities are fully captured.
The Board closely monitored the Group’s progress in strengthening digital engagement, notably through the Tesco app, and in rolling out personalised reward programmes including Clubcard Challenges and the most recent
launch of Your Clubcard Prices. As the Group builds its capabilities the Board have overseen the use of in-house and external expertise, including the agreement signed with Mistral AI to create new generated AI solutions for
different parts of Tesco’s business. The Board has also reviewed the continued contribution of dunnhumby, whose analytics have supported initiatives such as new ranging tools designed to better adapt ranges to suit local
customer preferences. Together with dunnhumby, Tesco Media has delivered strong growth and played an important part in making Tesco the most strategic long-term partner for innovation and brand building.
Strengthening long-term business sustainability remains a core strategic ambition. With this ambition covering many of our principal risks, including security of supply and climate and environmental sustainability, the Board
plays a central role in identifying, monitoring and overseeing the associated risks and controls, supported by the Audit and Sustainability Committees.
Tesco PLC Annual Report and Financial Statements 2026
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Strategic report Financial statements Additional informationGovernance
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 these 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.
– Monitor 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 2024 is set
out on page 50.
2025/26 Committee effectiveness
review
The 2025/26 Committee effectiveness review
formed part of this year’s internal Board and
Committee performance review and concluded
that the Committee continued to operate
effectively. The frequency and duration of
meetings, as well as the Committee’s overall
composition, were considered appropriate and
fostered high-quality discussion. Meetings were
considered to be well-chaired and supported
by clear, informative papers.
Committee priorities for 2026/27
The Committee will continue to consider future
succession planning at both Board and senior
management level. This will include consideration
of the Group’s strategic ambitions and longer-
term plans, together with continued attention
to broader diversity requirements.
Committee membership
and meetings
The Committee is composed of the
Non-executive Chair and eight independent
Non-executive Directors. The Committee held
four scheduled meetings during the year with a
focus on talent management and future
requirements, succession planning, diversity,
equity and inclusion, Board composition and
Board effectiveness.
Board composition, expertise and
succession planning
To maintain alignment between the Board’s
composition and the Group’s strategic priorities,
the Committee regularly reviews the size and
structure of the Board and its Committees.
These reviews ensure that membership reflects
an appropriate mix of skills, knowledge,
experience and diversity. The Committee
acknowledges the importance of attracting
individuals with a diverse range of backgrounds
who can contribute a wealth of knowledge,
understanding and experience of the
communities where Tesco operates.
As reported last year, there has been one
change to the Board during the year. Alison Platt
retired as a Director following nine years’ service
in June 2025. Following his appointment in
February 2025, Chris Kennedy undertook a
tailored induction plan during the year. Details
of his induction are outlined on page 72.
The Committee oversees a formal and
transparent process for identifying and assessing
potential candidates, whilst ensuring that robust
succession plans are in place for orderly
succession to the Board.
Committee membership
1
and tenure
Director Member since
Gerry Murphy, Committee Chair September 2023
Melissa Bethell June 2024
Bertrand Bodson June 2024
Carolyn Fairbairn June 2024
Thierry Garnier June 2024
Stewart Gilliland April 2019
Chris Kennedy February 2025
Caroline Silver June 2024
Karen Whitworth June 2024
1. Alison Platt was a member of the Nominations and Governance Committee until her departure
in June 2025. She attended one meeting during this period.
Committee priorities for 2026/27
– Board and Committee composition: succession planning, skills and
experience matrix.
– Senior management succession planning and future talent requirements.
– Diversity, equity and inclusion strategy and progress.
– Board governance: Board performance review and progress against
2025/26 actions, time commitments and independence.
– Non-executive Director recruitment.
Chair of the Board and Committee Chair
Gerry Murphy
Nominations and Governance Committee
70
Tesco PLC Annual Report and Financial Statements 2026
NED succession planning and skills matrix
As part of the succession planning process,
the Board reviews Committee composition to
ensure that each Committee is appropriately
sized and has the necessary skills and expertise.
This includes meeting certain governance
requirements for key roles such as the Chairs of
the 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 effective succession planning, the
Committee maintains and annually reviews a
detailed skills matrix which highlights the key
competencies, experience, and skills of the
Board. This process ensures that there is broad
experience on the Board and that it retains the
critical skills needed to achieve the Group’s
long-term strategy and objectives, while
maintaining a cultural alignment between
members. The skills matrix also identifies any
expertise that could be lost when a Non-
executive Director retires from the Board and
helps inform succession plans accordingly.
Following Alison Platt’s retirement from the Board
in June 2025, the Board took the opportunity
to strengthen its succession planning through
a comprehensive review of skills and expertise.
As part of this exercise, the Committee engaged
with Calibro Consult Limited to undertake an
assessment of the skills required to deliver on our
strategic priorities, a summary of their findings
can be found to the right of this page. In light
of this exercise, it was decided to pause the
Non-executive Director recruitment process until
the skills assessment exercise had completed, to
ensure the relevant skills and experience required
were captured in the role profile and the wider
succession planning review. Following completion
of the skills assessment exercise, Korn Ferry have
been engaged and a search is underway for a new
Non-executive Director. Calibro Consult Limited
has no other connection to Tesco or any of its
Directors and Korn Ferry has no other connection
to Tesco or any of its Directors beyond its
capacity in assisting with the Group’s leadership,
talent and succession planning.
For more details on the experience of the
Board, see pages 54 to 57.
Senior talent planning
The Board recognises the need to create
conditions that foster talent and encourage all
colleagues to achieve their full 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 foster a diverse
group of leaders with the right skills to deliver
our business strategy and the Committee has
focused on achieving this by critically evaluating
internal talent pipelines against our ambitions.
The Committee strongly believes that an
inclusive culture is a key driver of business
success and is committed to building a
leadership team that offers diverse
perspectives, insights and critical challenge to
strengthen decision making, risk management
and 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 are
aligned in taking a more strategic and future-
focused view of succession, using refreshed
success profiles to support more robust career
and development discussions with successors.
This is essential to ensure a consistent level of
quality in management, and mitigate instability
arising from 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.
As part of the Group’s talent planning and
succession programme, the Committee
discussed changes to the Executive Committee
during the year, which included appointing
Ashwin Prasad as UK CEO, combining his previous
remit as Chief Commercial Officer with oversight
of our retail, customer, and product teams;
appointing Natasha Adams as Chief Strategy and
Transformation Officer, a newly established role
to accelerate strategic delivery and drive
innovation; Christine Heffernan taking additional
responsibility as Chief Communications and
Sustainability Officer; as well as the
appointments of Geoff Byrne as CEO of Tesco
Ireland and Northern Ireland and Jonny
McQuarrie as CEO of Central Europe.
Committee activity
April
2025
July
2025
October
2025
February
2026
Board and Committee composition and evaluation
Talent management and succession planning
Governance
Diversity, equity and inclusion
Terms of reference and Committee performance review
Spotlight on:
Expertise
To support long-term succession planning and
ensure the Board continues to provide strong
oversight and challenge, Calibro Consult
Limited carried out an assessment of the
Board’s current capabilities and future needs.
Through individual discussions with Directors,
the review evaluated the expertise required
to support delivery of the Group’s strategy,
identified skills expected to be lost through
upcoming Non-executive Director retirements,
and considered the succession needs of both
the Board and its Committees.
The assessment also highlighted priority skills
for future recruitment, drawing on insights
from the most recent Board Performance
Review undertaken by Board Outlook Limited,
the results of which are set out below:
Board skills
Retail and supply chain
E-commerce and digital
Innovation and
transformation
Technology and data
Consumer and market
Strategy
Marketing and brand
Talent, leadership
and culture
Government engagement
Corporate governance
Investor engagement
Remuneration
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71
Strategic report Financial statements Additional informationGovernance
Nominations and Governance Committee continued
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 2025/26 external effectiveness review of the
Board, Committees and Directors, considering
the key themes and focus of the review. The
Board reviewed the progress made against the
actions identified through the 2024/25
effectiveness review and discussed whether any
further actions were required.
The Committee also undertakes a thorough
evaluation of performance when a Non-executive
Director reaches three- and six-years’ service
and consider the Director’s commitment,
contribution, and overall effectiveness. During the
year, the Committee reviewed the effectiveness
of Caroline Silver, who completed her three years
of service. Following a comprehensive
assessment, it was concluded that Caroline
should continue in her role as Non-executive
Director.
Details of the 2025/26 Board performance
review can be found on page 67.
A review of the Committee’s terms of reference
and the 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.
Director induction
All new Directors receive a comprehensive
six-month induction programme designed to
support their understanding of the business and
tailored to their individual needs. The Chair and
the Group Company Secretary are responsible
for delivering the programme which covers the
Company’s purpose and values, strategy, key
areas of the business and corporate governance.
The programme includes introductory meetings
with each Board and Executive Committee
member, the Group Company Secretary, the
Company’s advisors and senior managers across
the Group, including Tesco Mobile, dunnhumby,
Booker, F&F, Insurance and Money Services.
Directors also undertake site visits across
various store formats, distribution centres and
urban fulfilment centres, providing first-hand
insight into business operations and an
opportunity to meet colleagues.
As part of the induction, Directors meet the
Committee Chairs relevant to their
appointments, along with senior management
covering key issues within each Committee’s
remit. The Committee reviews the induction plan
ahead of a new Director joining. Following
appointment, Directors agree individual training
and development needs with the Chair.
Chris Kennedy induction
Since his appointment in February 2025, Chris
Kennedy has completed a bespoke induction
programme that has involved introductory
meetings with key stakeholders including
members of the Board, senior management and
the external auditor. In addition, he has
undertaken a series of site visits, including Tesco
Business Solutions in Bengaluru, distribution and
urban fulfilment centres, and a large multi-
format store. This programme spanned several
months and aimed to provide detailed business
insights along with a greater understanding of
the Group’s operations. Feedback will be taken
from this induction programme to help inform
future induction plans going forward.
NED time commitments
The Board recognises the importance of
Non-executive Directors having sufficient time to
commit to the business. Before appointment,
the Committee reviews each candidate’s existing
commitments, including other directorships,
to ensure they can devote the necessary time
to the role.
On appointment, letters of appointment set out
the expected time commitment, acknowledging
that this may vary depending on business needs.
The Committee regularly reviews Directors’
commitments to confirm they continue to have
adequate time for their duties. Each Director
completes a self assessment of time spent on
external commitments, which supports the
Committee’s evaluation. This assessment
considers the number and nature of each
Director’s external roles and whether they have
demonstrated the capacity to meet their
responsibilities at Tesco, including during 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. Once
requested, an assessment will be conducted
which considers time commitments,
effectiveness, independence and the impact of
any cross-directorships to ensure that any
additional roles or commitments will not impact
a Directors’ role or commitment to Tesco.
Further details on Non-executive Directors’
external appointments are set out on
pages 54 to 57.
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 UK Corporate
Governance Code 2024.
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
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 2026 AGM.
Tesco PLC Annual Report and Financial Statements 2026
72
Diversity, equity and inclusion
We recognise the importance of having an
inclusive and diverse Board and workforce.
Our ambition is 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:
Inclusion for all
1
Flexibility for all
2
Accessible first
3
Transform recruitment
4
Developing careers
5
Board diversity, equity and inclusion policy
The Board’s diversity, equity and inclusion policy
(the Policy), introduced in July 2019, is reviewed
annually by the Committee to monitor progress
and make updates where necessary. 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 thrive.
Through its succession plans, the Board
considers the overall diversity of the Tesco PLC
Board, its Committees and the Executive
Committee, while ensuring the right blend of
skills and experience are in place for oversight,
challenge and to support the Group’s success.
Gerry Murphy
Committee Chair
15 April 2026
Board diversity
Policy objectives Implementation Progress against objectives
A gender balance between 40%
and 60% on the Board.
Regular succession planning sessions are undertaken throughout
the year to review Board and Committee composition 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.
The Board comprises 36% female directors.
Following the retirement of Alison Platt in June
2025, the Board reduced from five female
directors to four. As a result, the Board
conducted a review of its composition and
succession plan, in conjunction with an
external assessment of the current skills and
expertise on the Board and the skills required
to deliver on our strategic priorities. This
assessment has supported the Board’s thinking
on future requirements and has supported
the development of a role profile. The Board
have now commenced their search for
a new Non-executive Director taking into
consideration the Policy. The Board recognises
the importance of having a diverse
composition to support the delivery of the
long-term strategy. The Board is committed
to ensuring compliance with the Policy over
the next year.
At least one Director from a
non-white ethnic minority
background on the Board.
Consideration is given to this as part of the succession
planning process.
The Board is currently 18% ethnically diverse,
with both Melissa Bethell and Imran Nawaz
being from Asian backgrounds. Therefore,
meeting the Parker Review recommendations.
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 37% female
representation of our top global
leaders by 2026, expanding to
include senior managers after
this point, with a target of 42%
representation at senior
manager and above by 2028.
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.
We have achieved 35% female representation
of our top global leaders (director and above)
which is aligned to the threshold target of the
2023 Performance Share Plan (PSP) diversity
and inclusion measure. In 2026, the Board
intends to update the Policy to align with
the threshold PSP target.
To achieve 19% ethnically diverse
representation of our top global
leaders by 2028.
13.4% 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 UK Listing Rule 6.6.6R(10), can be found on page 20.
All data within this table is as at 28 February 2026
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Strategic report Financial statements Additional informationGovernance
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 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
– Receive and review 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.
Committee composition
and performance
The Sustainability Committee is composed of
five independent Non-executive Directors and is
chaired by Stewart Gilliland. The Board is
satisfied that all members of the Committee
bring a mix of skills and experience to support
the Board’s oversight of sustainability matters.
The Committee held four scheduled meetings
during the year. In addition, a joint meeting of the
Committee and the Remuneration Committee
was held to consider matters relating to the
sustainability metrics for senior leadership’s
Performance Share Plan. Each meeting followed
an agenda structured around the Group’s planet
plan, commitments, performance monitoring,
and key areas of focus for the year. Regular
attendees include the Non-executive Chair,
Group Chief Executive, Chief Communications
and Sustainability Officer, Group Finance
Director, Group Quality, Technical and
Sustainability Director and the Group
Company Secretary.
A forward-looking planner is maintained
and regularly reviewed to ensure that the
Committee’s responsibilities are discharged
in full and that relevant developments in
sustainability, regulatory expectations and
stakeholder priorities are brought to the
Committee’s attention. The planner also
incorporates site visits across the Group,
enabling the Committee to see sustainability
initiatives and progress in action. In addition,
the Committee receives scheduled deep dives
on priority topics which align with the Group’s
sustainability strategy and material issues.
These deep dives are described in more detail
later on in this report, page 76.
Committee Chair
Stewart Gilliland
Sustainability
Committee
Committee membership and tenure
Director Member since
Stewart Gilliland, Committee Chair June 2021
Bertrand Bodson June 2021
Carolyn Fairbairn September 2023
Karen Whitworth June 2021
Thierry Garnier June 2024
Focus during 2025/26
– Monitored delivery of the planet plan, the progress against the net zero
glidepath and Scope 1–3 emissions, including the transition from our
2025 commitments.
– Received deep dives across all six planet plan pillars, covering product
sustainability, transport and store decarbonisation, healthy diets, waste,
and nature.
– Oversaw the delivery and impact to the sustainability strategy of key
regulatory and reporting developments.
– Reviewed human rights, community programmes and current
sustainability issues including sourcing, animal welfare, food security and
stakeholder expectations.
Committee priorities for 2026/27
– Continued deep dives into the six planet plan pillars and the review of
progress towards the Group’s commitments.
– Enhanced focus on competitive advantage and the integration of the
new commitments into the long-term strategy.
– Strengthen customer messaging to ensure our sustainability efforts are
communicated clearly and consistently.
– Ongoing oversight of emerging sustainability-related reporting and
regulatory requirements, including forthcoming climate and nature
disclosures, and supporting the strengthening of material controls to
ensure sustainability-related risks are embedded within the Group’s
internal control framework.
Sustainability Committee
74
Tesco PLC Annual Report and Financial Statements 2026
An internal review of the Committee’s
effectiveness was conducted during the year.
The review concluded that the Committee
continues to operate effectively and that the
Board has confidence in its oversight of
sustainability matters. It highlighted strong
Committee structure, composition and
leadership, and recognised the value of the
Committee’s work in supporting the Group’s
sustainability commitments. Focus areas going
forward will include customer messaging,
strengthening the integration of sustainability
into strategy and brand, and maintain a clear and
balanced agenda. In order to streamline the
effectiveness of the Committee, a review of the
forward planner has been undertaken. In
addition, scheduled deep dives into each of the
sustainability-related principal risks and critical
risk events will be undertaken by the Board as
part of the assurance of non-financial controls
under Provision 29 of the UK Corporate
Governance Code 2024.
How the Committee discharged
its responsibilities
During the year, the Committee’s principal
activities were as detailed below:
Integrated sustainability strategy
Throughout the year, the Committee oversaw
integration of sustainability into the Group’s
long-term strategy, receiving updates on
progress against the net zero glidepath, Scope 1,
2 and 3 emissions, and the progress of 2025
commitments. It considered the strategic
integration of sustainability into the brand and
customer proposition, including opportunities
linked to security of supply, healthy and
sustainable customer experience, packaging
circularity, and emerging green business models.
The Committee also reviewed the development
of post-2025 commitments, noting the
importance of aligning long-term targets with
customer priorities and commercial outcomes.
Spotlight on:
Our low carbon
concept store
In November 2025, the Chair of the Committee visited our new Harrogate
superstore ahead of its launch, to gain first-hand insight into how our low
carbon concept is being delivered in practice. The visit provided the opportunity
to witness the innovations being rolled out across the estate and highlighted
where further opportunities exist.
Harrogate marks an important step in delivering our long-term climate
commitments. The Committee will use the insights from the visit to inform
its oversight of future developments and retrofitting existing stores, ensuring
we continue to design and operate stores that support a lower carbon, more
resilient business.
For more information on our Harrogate superstore,
please visit www.tescoplc.com.
Committee activity
April
2025
July
2025
September
2025
February
2026
Sustainability glidepath and strategy
Planet Plan
Pillar 1: Improve our products
Pillar 2: Decarbonise transport
Pillar 3: Reduce store emissions
Pillar 4: Support sustainable consumption
Pillar 5: Eliminate waste
Pillar 6: Protect nature
Regulatory and reporting compliance
Human rights
Community programmes
Current issues
External trends, risks and sustainability coverage
Governance-related matters
T
75
Strategic report Financial statements Additional informationGovernance
Sustainability Committee continued
to strengthen our approach to additives included
updated supplier guidance and the rollout of
a refreshed additive policy. Evolving customer
trends and the external regulatory landscape
were also discussed. The update outlined
emerging priorities for shifting diets towards
lower-carbon and nutrient-dense foods,
supported by data-led insight into protein
consumption patterns and opportunities
to promote alternatives such as fish, beans
and pulses.
Eliminate waste
The update highlighted progress in preparing for
the Extended Producer Responsibility (EPR) and
Deposit Return Scheme (DRS) legislation, which is
reshaping packaging design, recyclability
requirements and future compliance costs. The
deep dive also highlighted the Group’s efforts to
reduce food surplus, including improvements to
store routines, upgrades to supply chain settings
and the commissioning of a new animal feed
processing facility capable of converting surplus
waste at scale. There was a dedicated focus on
strengthening traceability and assurance across
waste streams, with focus on improving
soft-plastic recycling capacity and capability.
Protect nature
The update highlighted work to improve
freshwater resources, improve soil health and
restore habitats through a combination of
nature-based solutions, enhanced
environmental standards and landscape-scale
partnerships. Progress through the Nature Fund
projects included farm assessments, tailored
management plans and on-farm interventions
aimed at strengthening biodiversity and building
long-term resilience. The session also covered
our TNFD readiness, including modelling of
nature-related risks across priority commodities.
Ongoing challenges were discussed such as data
availability and the impact of water stress, and
the Committee reviewed actions to strengthen
supplier engagement and integrate nature
considerations into commercial decision making.
Planet plan
The Committee received deep dives on the
planet plan at each meeting, covering progress,
achievements and risks across all six pillars:
Improve our products
Reduce store emissions
Support sustainable consumption
Eliminate waste
Decarbonise transport
Protect nature
These updates provided insights on priority
topics that connect directly to the planet plan
pillars and the Group’s commitments. These
sessions provide the Committee with the
opportunity to explore specific issues in more
detail and understand operational challenges
and risks. The deep dives provided to the
Committee are aligned to each pillar, and further
detail of each deep dive is provided on this page.
Further information on our planet plan can be
found on pages 30 and 31.
Improve our products
The Committee received a deep dive covering
the broad and complex set of upstream
sustainability impacts across agriculture,
deforestation, manufacturing and marine
sourcing. Much of this activity sits outside our
direct control, requiring close collaboration
with suppliers, industry bodies and government.
The Committee were advised of the strong
delivery across the 2025 commitments, but also
the challenges in achieving verified deforestation
and conversion-free soy given the scale and
complexity of global supply chains. The session
highlighted increased supplier engagement,
with major suppliers reporting manufacturing
Community programmes
Community activity was monitored through
updates on Group-wide programmes including
Stronger Starts, the Blue Token scheme, Fruit &
Veg for Schools and wider charitable
partnerships across the UK, ROI and Central
Europe. These reviews covered programme
reach, customer and colleague engagement,
operational delivery in stores and opportunities
to strengthen visibility and participation.
Highlights from the year included the role played
by our Community Champions in supporting
local schools, communities and charities in the
UK. The reach of our Stronger Starts programme
in Central Europe which has provided more than
£6.5m in funding since 2016 and 25 million meals
donated to FareShare since 2021 by Booker.
Alignment with the emerging brand strategy was
considered, particularly around health and
nutrition, alongside options to enhance supplier
involvement and deepen impact measurement.
Members of the Committee visited Greenley’s
Junior School in Buckinghamshire, one of the
first to be supported by our Fruit & Veg for
Schools programme, to see first hand how the
funding is helping improve access to nutritious
food for the 150 pupils who attend. Serving a
community where 32% of housing is social
housing, Greenley’s have used the funding to
increase variety in fruit and vegetables offered
at breakfast, lunch and break times, with all
children now receiving daily fresh fruit. The
school has seen a noticeable improvement in
children who would typically avoid fruit and
vegetables, with pupils becoming more open to
trying new foods. The Committee also reviewed
the progress made in ROI to increase children’s
access to fresh produce, and with support from
the Group’s suppliers, by the end of 2025 we
were delivering free, nutritious fresh food every
week of the school term to over 300 schools.
Building on this impact, and following the
completion of the Group’s annual share forfeiture
programme, the Committee approved the use of
approximately £3.1m of these forfeited funds to
expand the Fruit & Veg for Schools programme,
increasing its reach from 517 schools to more
than 1,000 schools across the UK.
emissions data, alongside progress through
sustainable farming groups, low-carbon concept
farms and trials of low-carbon fertiliser and
methane-reducing additives. The Committee
also discussed the pressures facing UK
agriculture and the importance of supporting
innovation and resilience across the value chain.
Our operations
These pillars cover emissions generated across
our operations, including all sites and logistics.
Decarbonise transport
The session outlined the reductions already
achieved, driven by the continued electrification
of our home-delivery fleet, expansion of biofuel
and hydrotreated vegetable oil use, and trials
of low-emission refrigeration technologies.
Members reviewed the operational challenges
associated with transitioning heavy logistics
to zero-emission solutions, including the
limited availability of long-range electric
vehicles, infrastructure constraints and
the substantial electrical capacity required
at distribution centres.
Reduce store emissions
The deep dive highlighted strong performance
on store emissions driven by the transition to
renewable electricity, continued rollout of
CO₂-based refrigeration systems, completion
of the phasing out of F-gas across most of the
estate and the installation of heat pumps and
chiller doors to improve energy efficiency.
The operational constraints affecting the pace
of delivery include limited market capacity
for refrigeration and HVAC equipment and the
need to reshape future plans to match supplier
availability. The session also covered the
increasing pressure on electrical infrastructure,
alongside work which is underway to strengthen
energy resilience.
Healthy sustainable diets
The session highlighted that we have met our
healthy-sales target, achieved through
reformulation, expanded Own Brand innovation
and initiatives that encourage customers to
choose healthier options. The actions taken
Tesco PLC Annual Report and Financial Statements 2026
76
Human rights
A deep dive on human rights provided members
with an overview of key risks, progress on
enhanced due diligence and updates on serious
incidents across the supply chain. Updates
highlighted the expansion of digital threat
intelligence tools and the deployment of new
on-the-ground human rights specialists
by relevant teams in our food supply chain,
alongside strong progress in rolling out our
Human Rights Blueprint. The Committee
acknowledges the importance of maintaining
a proactive approach addressing areas such
as modern slavery, worker welfare and
sustainable livelihoods, supported by clearer
visibility, stronger supplier collaboration and
continued investment in due diligence capability.
Governance and stakeholder engagement
During the year, the Committee oversaw
governance and reporting requirements linked
to sustainability, including regular updates on
emerging regulation such as EU Deforestation
Regulation, EPR, DRS and Corporate
Sustainability Reporting Directive, and reviewed
associated risks, supplier readiness and
compliance activity. It reviewed the Group’s
sustainability-related disclosures, and supported
the Audit Committee with assurance processes,
including the work on non-financial controls
under Provision 29. The Committee completed
its annual review of the Committee terms of
reference and an internal effectiveness review.
The Committee also received updates on
stakeholder engagement, covering ESG investor
expectations, sustainability communications and
media coverage, and engagement with industry
bodies and non-governmental organisations
on issues such as human rights, animal welfare,
river pollution and deforestation.
Stewart Gilliland
Committee Chair
15 April 2026
2.4
million
customers were invited
to earn personalised
Clubcard stamps on
fresh fruit and veg
5-a-day
campaign
Helping customers eat more fruit and veg is one of
the simplest and most effective ways to help support
the health of the nation. The government’s published
‘Good Food Cycle’ rightly identified the importance
of getting more people eating more fresh produce
and the health benefits of doing so are clear.
With customers telling us that cost, convenience
and kitchen confidence makes it harder for families
to follow a healthy diet, we launched a summer
2025 campaign to help millions eat more fruit and
vegetables. Running across Tesco stores and online,
the campaign featured a range of initiatives aimed
at helping improve the accessibility and affordability
of healthier food.
These included inviting 2.4 million customers to earn
personalised Clubcard stamps on fresh fruit and veg,
which could be converted into bonus Clubcard points
and vouchers. We also launched Clubcard Challenges,
which offered customers the chance to earn extra
points on frozen fruit and vegetables, beans and
pulses, and introduced new Clubcard Prices and
offers on fruit, veg and healthy lunchbox snacks.
Building on the success of the summer 2025 campaign,
in January 2026 we ran a second campaign across
stores and online to further support healthier choices.
The campaign featured promotions on fresh and frozen
fruit and vegetables and included free fruit for kids in
stores. Based on post-campaign customer research,
41% of customers reported that the campaign reminded
or encouraged them to choose healthier options.
Spotlight on: healthy and sustainable diets
77
Strategic report Financial statements Additional informationGovernance
Key responsibilities
The Audit Committee continues to focus on
issues most relevant to the Group’s financial
reporting and internal controls, 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, review and challenge areas
of judgement within the Financial statements
and disclosures, including any impacts
from the external environment on key
accounting judgements.
– Review the Group’s assessments of going
concern, available liquidity, 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
any recommendations.
– Assess the effectiveness of the external
auditor’s work.
– 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 and
critical internal controls.
– Review the effectiveness of the Group’s
internal control and risk management
framework, including key financial, operational
and compliance risk and controls.
– Review management’s approach to the
identification and assessment of principal
and emerging 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 Group
Audit processes.
– Review the annual audit plan.
– Review reports from the Group Audit function
and consider management’s response to
any major external or Group 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 Chair
Karen Whitworth
Audit
Committee
Committee membership and tenure
Director Member since
Karen Whitworth, Committee Chair June 2021
Melissa Bethell September 2018
Carolyn Fairbairn June 2024
Chris Kennedy February 2025
Caroline Silver October 2022
Focus during 2025/26
– Key accounting judgements and estimates.
– Reporting and assurance.
– Internal controls.
– Risk management and risk appetite.
– Readiness for Provision 29 of the UK Corporate Governance Code 2024.
Committee priorities for 2026/27
– Oversee and monitor the financial and non-financial controls programme
to support the declarations required by the Board in 2027 in accordance
with Provision 29 of the UK Corporate Governance Code 2024.
– Enhance the internal and external audit process through data-led metrics.
– Continue to review the transition, controls and system separation of the
Insurance and Money Services business.
– Further enhance the risk management framework.
For more details on our fair, balanced and understandable
consideration, see page 80.
The Committee has continued to oversee high-quality financial reporting
and assurance while driving further enhancements to the Group’s risk
management, governance and internal controls, supporting our
preparations for Provision 29. This work has further strengthened our
governance and control environment and improved the clarity and
consistency of how risks and controls are managed across the business.
Audit Committee
Tesco PLC Annual Report and Financial Statements 2026
7878
Tesco PLC Annual Report and Financial Statements 2026
78
Tesco PLC Annual Report and Financial Statements 2026
Committee composition
and performance
The Committee is composed of five independent
Non-executive Directors, 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 54 to 57.
The Committee held five scheduled meetings
during the year. Each meeting followed an
agenda to reflect the financial reporting cycle
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, Group
Company Secretary, senior management from
Group Finance and representatives of the
external auditor.
Members of the Committee meet regularly
with management to understand more about
developments in 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 the Chief
Audit and Risk Officer 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 Audit Committee meeting for discussion.
Provision 29 of the UK Corporate
Governance Code 2024
The Board will be required to provide a
declaration on the effectiveness of material
controls, under Provision 29 of the UK Corporate
Governance Code 2024, at the end of FY27.
The Board will be required to provide:
– a description of how the Board has monitored
and reviewed the effectiveness of the risk
management and internal control framework;
– a declaration of effectiveness of the material
controls as at the balance sheet date; and
– a description of any material controls which
have not operated effectively as at the balance
sheet date, the action taken, or proposed, to
improve them and any action taken to address
previously reported issues.
Provision 29:
Four material control pillars
Financial
Operational
Reporting
Compliance
Further information on the status of our
preparations for Provision 29 of the UK
Corporate Governance Code 2024 is on
page 61.
Over the past two years, the Committee has
undertaken a comprehensive review of the
Provision 29 requirements and assessed which
controls are material. Materiality has been
determined against a range of measures across
our principal risks and supporting critical risk
events using both quantitative and qualitative
assessments. The Board and Committee have
been actively engaged throughout the scoping
and assessment of the material risks and
material controls. Consideration has also been
given to the appropriate levels of assurance
required to provide support for the future Board
declaration. The Board has strong visibility
of progress across all four pillars of the
programme, and the Committee will continue
to oversee compliance with the requirements.
Going concern and viability
The Committee considered the going concern
and longer term viability statement covering a
period of 18 months and three years from the
balance sheet date respectively. This included
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:
– Geopolitical events triggering higher inflation
which, together with weak macroeconomic
fundamentals, weaken consumer confidence,
further intensifying competition in the sector;
– data breach; and
– climate change.
More information on the viability statement
scenarios can be found on pages 48 and 49.
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 certain mitigating
actions within management’s control. The
Committee considered it appropriate to prepare
the Group’s Financial statements on a going
concern basis.
The Committee has a forward-looking planner
which is regularly reviewed 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. Risk deep dives
on particular topics which align to the Group’s
principal risks are held as part of the Audit
Committee meetings. 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 FY27.
The 2025/26 Committee effectiveness review
was undertaken as part of the Board
performance review. The review found that the
Committee was effective. Meetings were well
chaired, with appropriate challenge and good
quality papers. The review found that there was
a good mix of skills and members were well
informed, prepared and able to challenge.
Audit Committees and the External Audit:
Minimum Standard
The Committee confirms that it has complied
with the Financial Reporting Council’s Audit
Committees and the External Audit: Minimum
Standard (Standard). This report describes how
the Committee has complied with each relevant
provision of the Minimum Standard during the
year. A copy of the Standard can be found
at www.FRC.org.uk.
Statutory Audit Services Order 2014
The Group has complied with the provisions of
the Statutory Audit Services Order 2014.
Tesco PLC Annual Report and Financial Statements 2026
79
Strategic report Financial statements Additional informationGovernance
Audit Committee continued
The Committee, having completed its review,
recommended to the Board that, when taken
as a whole, the Annual Report and Financial
Statements 2026 is fair, balanced and
understandable, and provides the information
necessary for shareholders to assess the
Group’s position and performance, business
model and strategy. Confirmation by the
Board is set out in the Statement of Directors’
responsibilities on page 109 and is supported by
the independent auditor’s report on pages 110
to 120 outlining their reporting responsibilities.
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. The Committee considered the
Annual Report and Financial Statements 2026
and concluded that the disclosures, as well as
the processes and controls underlying its
production, were appropriate.
The Committee reviewed the Group’s funding,
liquidity and capital allocation, which included
a review of shareholder returns and the
Company’s distributable reserves ahead
of dividend declarations. It also considered
changes to segmental reporting, the impact
of FY 25/26 being a 53-week year, and the
implications of new Extended Producer
Responsibility regulations. The Committee
received updates on key accounting judgements
including store impairments, defined benefit
pension valuations and adjusting items. The
impairment methodology and details of the
impairment review of non-current assets can
be found in Note 15. In April 2026, in light of the
conflict in the Middle East, the Committee
considered management’s assessment of the
impact on the financial statements, in particular
with respect to impairment, pensions and
related sensitivity disclosures. For further
information, refer to Note 1. The Committee
reviewed the tax strategy and reporting
alongside updates from business unit
finance directors.
More detail on our 53-week disclosures
can be found on page 216.
Fair, balanced and understandable
On behalf of the Board, the Audit Committee
undertook a review of the Annual Report and
Financial Statements 2026, 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 2026 provided the necessary
information to assess the Company’s position
and performance, business model and strategy.
As part of the fair, balanced and understandable
review, the following points were considered:
– Are the Annual Report and Financial
Statements 2026 open and honest?
– Are weaknesses, difficulties and challenges as
well as successes reported where appropriate?
– Do the Annual Report and Financial Statements
2026 have a sense of realism and balance?
– Are the most important issues included?
– Is there a clear explanation of KPIs that were
met, are on track, and were not met?
– Is there a strong link between the business
model, strategy, KPIs and reward?
– Is there consistency between the different
sections of the report?
The Annual Report and Financial Statements
2026 has been reviewed by management,
as well as independent functions, who
performed verification and assessment.
Frequency of reporting
April
2025
July
2025
September
2025
November
2025
February
2026
Financial statements and reporting
Key accounting judgements
Going concern and viability
Full and half-year reporting
and disclosures
Sustainability reporting and assurance
Did you know:
The Group is committed to
fair and balanced reporting
which is understandable for
its stakeholders.
Tesco PLC Annual Report and Financial Statements 2026
80
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 Group Audit and the
external auditor. The Committee was satisfied with how each of the significant issues discussed were addressed.
Matter considered
How the matter was addressed by the Committee Sources of further information
Going concern basis for
the financial statements
and viability statement
The Committee reviewed and challenged management’s assessment of forecast cash flow scenarios including the impact of trading
and expenditure plans, higher inflation, weakening consumer confidence, intensifying competition, a data breach as a result of a
cyber event and climate change.
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.
For further information see
pages 48 and 49.
Impairment 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 of £53m 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 higher inflation, weakening consumer confidence, intensifying competition,
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.
For further information see
Note 15 to the financial
statements.
Pensions Accounting for defined benefit pension schemes remains an area of significant focus for the Group given the sensitivity of the
liabilities to changes in certain 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, and concluded they were reasonable. The Committee also reviewed the sensitivity disclosures provided on the
key assumptions.
For further information see
Notes 1 and 28 to the financial
statements.
Segmental reporting Following changes to the Group Executive Committee and management reporting to the Chief Operating Decision Maker in the year,
the Committee reviewed the change to the Group’s segmental reporting to present Booker as a separate operating and reportable
segment. The Committee concluded that they were comfortable with this change.
For further information see
Notes 1 and 2 to the financial
statements.
Recognition and disclosure
of commercial income
The Committee continued to monitor commercial income controls across the Group and discussed the outcome of internal audits
on commercial income, including any identified improvement recommendations. The Committee reviewed key drivers of
movements in the income statement and balance sheet and concluded that they were comfortable with the accounting and
presentation of commercial income.
For further information
see Notes 1 and 21 to the
financial statements.
Adjusting items The Committee considered the presentation of the Group’s financial statements, 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, restructuring and the amortisation of intangible assets, principally related to the acquisition of Booker.
The Committee concurred with management that the treatment was clear, balanced and consistently applied.
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.
Alternative performance
measures (APMs)
The Committee reviewed the Group’s APMs presentation and disclosure, including their level of prominence and the clarity of APM
reconciliations. The Committee was comfortable that the definitions were appropriate and any changes in presentation resulting
from week 53 reporting were appropriately disclosed.
For further information on the
Group’s APMs, see pages 217
to 222.
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81
Strategic report Financial statements Additional informationGovernance
Frequency of reporting
April
2025
July
2025
September
2025
November
2025
February
2026
Financial strategy and planning
Capital allocation, funding proposals,
liquidity management and dividend
Business updates
Business transformation
Audit Committee continued
team based in TBS work hand-in-hand with the
business to identify data-led insights and
opportunities for value creation and working
capital optimisation, whilst the finance
operations team continue to drive automation
and standardisation in our processes.
The Committee received periodic updates about
the impact of market movements on the funding
position of the Group’s pension schemes and
discussed the results of the main UK pension
scheme triennial valuation from March 2025,
the movement in the IAS19 position, and the
assumptions used. The funding position
remained in surplus.
In addition, the Committee received updates
about other key areas of the business, including
Group Tax to review the Group’s approach to tax
which is published on the Company’s website;
Group Property to review the annual property
valuation; and updates on transformation
projects.
Environmental disclosures
and assurance
The Committee also reviewed climate risk-
related disclosures and continued to monitor
the reporting and disclosure plans relating to
sustainability-related matters, including key
areas of strategic progress and KPI performance
and a review of progress to strengthen internal
controls under the Internal Controls over
Non-Financial Reporting (ICNFR) programme to
support the Provision 29 UK Corporate
Governance Code assurance statement in 2027.
The external auditor has provided limited
assurance over selected information including
sustainability metrics in the Performance Share
T
Funding, liquidity and capital
allocation
As appropriate during the year, the Committee
reviewed the Group’s capital allocation
framework and its plans for shareholder returns,
including ordinary dividends and the share
buyback programme. It also discussed with
management its plans for refinancing as well as
an optimal net debt position.
Business updates
Throughout the year, the Committee received
detailed business updates which provided insight
into the financial performance and key
achievements, priorities and challenges across
the Group. Including UK, ROI, Central Europe,
Tesco Business Solutions (TBS), Group Pensions,
and Insurance and Money Services. In addition,
the Committee had oversight of the transition
and separation from the banking operations
which were sold in 2024.
Given the importance of the Group’s TBS team in
India to the overall effectiveness of the Group’s
financial control environment, all members of
the Committee have made visits to them. The
TBS team delivers large components of our
end-to-end transactional financial processes
from paying our suppliers to closing our books,
with responsibility for a significant proportion of
our internal controls over financial reporting.
They have continued to drive standardisation
and efficiencies in process delivery, along with
driving continuous improvement in the control
environment, with particular focus this year on
the transition and transformation of a number of
the Booker financial processes. The Financial
Planning & Analysis team and enterprise analytics
Plan targets and sustainability-linked financing,
the description of activities undertaken to
meet TCFD recommendations including
the climate scenario analysis and resulting
financial effects of climate-related risks and
opportunities. 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 regular updates on
the regulatory developments of sustainability
reporting which included updates on the EU
Omnibus review of the Corporate Sustainability
Reporting Directive (CSRD), the UK consultation
on the adoption of International Sustainability
Standards Board standards under a UK
Sustainability Reporting Standard and the
Hungarian ESG Act and the impact these
developments would have on the Group.
For further information on the Group’s
environmental commitments and details of
the sustainability-linked targets, visit
www.tescoplc.com.
Spotlight on:
TBS
Audit Committee members visits
Members travelled to India to meet with
the Tesco Business Solutions (TBS)
management team and colleagues across
the TBS business. Discussions focused on
TBS performance, strategy, talent and
capabilities with examples of how the TBS
team provide support across the business.
Members received a deep dive on the
work to support the ICFR programme and
the progress on data-led insights.
Members received a detailed overview of
the technical capabilities, finance
operations and controls functions within
TBS and had the opportunity to host a
colleague engagement session and join the
local colleague engagement session.
Tesco PLC Annual Report and Financial Statements 2026
82
Internal financial controls
During the year, on behalf of the Board, the
Committee conducted a review of the
effectiveness of management’s internal financial
controls framework. The Committee did this
principally through updates provided to it by
management, Group Controls and Compliance,
Group Audit, and the external auditor.
Management is responsible for identifying and
managing financial risks, and for maintaining an
effective internal financial controls framework
that identifies financial risks, maps these to
controls and gives assurance over the effective
operation of its control activities.
Throughout the year, work continued to embed
the Internal Controls over Financial Reporting
(ICFR) programme as a business-as-usual activity,
and the Committee received regular updates
from the Group Financial Controller on the
progress of the ICFR programme, including the
progress made within TBS, IT General Controls
and IT automated business process controls.
Management operates a three lines of defence
model, including financial controls testing by the
Group Controls and Compliance team which is
independent of the relevant control operators
and use of the Group Audit function as a third
line of defence. Such testing includes validation
of IT general controls, IT automated controls
as well as manual business process control
activities, and entity level controls.
The ICFR programme will support the Provision
29 Code assurance statement in FY27.
The ICFR Framework
Did you know:
Significant progress has been
made over the last two years
in improving and enhancing
the Tesco IT general control
environment, facilitating
greater reliance on automated
controls within our ICFR
framework, and enhanced
reliance on our control
environment by our external
auditor.
Such controls mitigate Group-wide risks to our financial reporting. They are designed
to ensure Tesco has a strong control environment. Examples include Annual Code of
Conduct Attestations, Group Audit Independence and the Audit Committee review of
Key Regulatory Disclosures.
A defined set of financial controls established to provide assurance over the effective
financial operation of the business. From FY27 the Board are required to provide a formal
declaration of the effectiveness for each of these controls. The ICFR programme along
with specific business controls over significant judgement and estimates form our material
controls for ICFR. These are tested annually as part of our internal assurance programme
over our material controls.
A larger set of controls which provide breadth of coverage across our financial processes
and a strong foundation on which our material controls are built. These will be tested
annually.
These are the controls over our business processes that mitigate the financial risks
associated with our end-to-end processes impacting our financial reporting. They are
designed to ensure our financial statement assertions are covered. All remaining controls
other than those classed as ‘Material’ and ‘Critical’ are classed as ‘Other ICFR’ controls and
will be tested on a rolling three-year basis.
ITGCs are controls over our systems, mitigating IT/system risks relating to the integrity of
our financial reporting. They are designed to ensure that the data within our systems and
processes they perform is controlled. Examples: change management, user access and
data recovery, those systems which are key to support our material and critical controls
are tested on an annual basis across two testing cycles.
Entity Level Controls
(ELCs)
IT General
Controls (ITGCs)
Other
controls
Critical
controls
Material
controls
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83
Strategic report Financial statements Additional informationGovernance
Audit Committee continued
Risk management
Maintaining a strong risk and internal control
environment is fundamental to the Group’s
governance framework. Throughout the year,
the Committee received updates on the
strengthening of the risk management
framework, Group risk register and principal and
emerging risks, discussing risk appetite, critical
risk events supporting each principal risk and
mitigations in place.
The Audit Committee, on behalf of the Board,
undertakes an annual effectiveness assessment
to manage the 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. Risk deep dives are scheduled with
the Committee throughout the year to align with
our principal risks and these will support the
Provision 29 Code assurance statement. An
invite to these sessions is extended to the Board,
providing them 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 on cyber,
technology, data governance and AI have
been undertaken.
The Committee reviewed the prioritisation of
risks, risk movement 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 consolidation of the
‘Product Safety and Food Integrity’ and
Responsible Sourcing risks into a single combined
risk, Product Safety and Responsible Sourcing.
This consolidation is to better reflect how the
business operates to manage these risks. The
Security of Supply risk score has increased
reflecting a combination of factors within our
supply chain, including recent geopolitical
uncertainties, heightened market volatility, and
the accelerating effects of climate change on
supply security incidents. In addition, the
previously named Climate Change risk has been
broadened to Climate & Environmental
Sustainability to incorporate wider sustainability
considerations.
During the year management has further
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
Committee reviewed Group Risk’s future risk
roadmap which set out Group Risk’s newly
defined purpose and the opportunities to
support the business through enhancing how
risk and opportunity are built into key
decision making.
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.
Further details on our Principal risks and
uncertainties and the Group’s risk management
framework are set out on pages 38 to 47.
Frequency of reporting
April
2025
July
2025
September
2025
November
2025
February
2026
Risk management and internal controls
Review of principal and emerging risks
Risk management business updates
Internal controls: ICFR, IT general
controls and ICNFR
Readiness for Provision 29
Risk deep dive
Spotlight on:
AI governance
AI is crucial for delivering Tesco’s long-term
strategic opportunities. Our approach to AI
is focused on improving the experience for
our customers, colleagues, and suppliers,
while also enhancing our operations.
We use AI developed both in-house and
with partners. For example, Artificial
Intelligence allows us to find the most
efficient routing for online orders to create
more delivery slots for customers, helps
with complex demand forecasting to ensure
great product availability and reduce waste.
It is also used to better serve customers
and provide them with the most helpful and
relevant experiences.
Our AI capability continues to rapidly
expand and in December 2025, we
announced a three-year agreement with
Mistral AI, as part of our strategy to bolster
the use of artificial intelligence in our retail
operations.
The Audit Committee has considered AI
from the perspective of both a standalone
emerging risk and as a capability
increasingly embedded across core
processes. We took the decision to embed
AI risks across the most relevant principal
risks rather than having it as a standalone
principal risk as this is in line with how it is
managed across the business, and ensures
it is overseen through the most relevant
governance structures. In parallel,
management has formalised our AI
governance to provide clear oversight,
establishing dedicated executive level and
operational forums. The Committee has
reviewed this structure and the governance
in place to ensure that risks are identified
and managed proportionately. We are using
our risk, controls and assurance framework
to ensure these risks are identified and
managed effectively, underpinned by
responsible AI principles we have adopted
in line with regulation and good practice.
Tesco PLC Annual Report and Financial Statements 2026
84
risk profile, business objectives and the external
environment. Any changes proposed to the plan
are approved by the Committee. At each
meeting, the Committee receives updates on
the outcome of the work performed and the
follow up actions required. This year audits have
covered a wide spectrum of business activities
with a focus on technology and cyber resilience,
assurance over core governance and regulatory
readiness, and risk management of new strategic
initiatives. The audit process continues to be
strengthened through the use of data analytics
and AI, and this will remain a focus through FY27.
The Committee has reviewed the 2026/27 audit
plan, which aligns to the Group’s principal risks,
and has a focus on technology and cyber
defences, data governance, and upcoming
regulatory reporting, such as Provision 29 of
the UK Corporate Governance Code.
Audit and assurance policies
Periodically, the Committee receives internal
policies for review and adoption including the
non-audit fees policy, the employment of former
Group audit plan
Group audit is part of the Group Risk and Audit
function. It reports directly to the Committee
Chair and administratively to the Chief Financial
Officer, with a remit to provide independent and
objective assurance, to evaluate and improve
the effectiveness of risk management, control
and governance. Its purpose, authority and
responsibilities are defined in the Group Audit
charter, which is reviewed and approved
annually by the Committee. The Committee
monitors the activity, role and effectiveness of
the Group Risk and Audit function and regular
meetings were held without management
present to foster open communication.
Group audit’s activity is primarily driven by the
annual Group 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
Group audit plan is reviewed throughout the
year to ensure it remains appropriate and is
updated as necessary to reflect any changes in
Frequency of reporting
April
2025
July
2025
September
2025
November
2025
February
2026
Group audit
Audit outcomes
Group audit plan
Group audit and risk effectiveness
employees of the external auditor policy and the
external reporting assurance (non-financial
information) policy which sets out the Group’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.
Group Audit, external audit and
Group risk effectiveness reviews
In accordance with the Audit Committee terms of
reference and the Internal Audit Code of Practice,
an annual assessment of the effectiveness of the
Group audit and external auditor functions is
required. This year, this was expanded to the
effectiveness of the Risk function following the
appointment of the Chief Audit and Risk Officer
and Group Risk Director who joined the business
at the start of the year.
The effectiveness 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.
The Committee noted the strengths and
discussed areas for improvement concluding
that, through this assessment and ongoing
review and oversight of assurance activities,
the Committee was satisfied with the
effectiveness of the Group Audit and Risk
functions and the external auditor.
Key outputs from Audit and Risk effectiveness reviews
Effectiveness review Areas covered Summary of findings
Risk management Composition and expertise
Quality of work
Risk culture and overall performance
The assessment highlighted strengths
in risk expertise, governance, and
integration of risk considerations into
strategic and operational decision making.
Areas for improvement included further
strengthening strategic collaboration
with functions and focusing further on
concentration risks in AI, technology, and
core services.
Group audit Composition and expertise
Audit planning
Quality of work
Effective relationships
Overall performance
The assessment highlighted strong team
expertise, high quality of work, effective
relationships, and robust audit planning.
Areas of improvement included further
enhancing engagement and sharing
insights more widely across the business.
External audit Work of external audit
Quality of reporting
Relationship with the external auditor
Structure of the external audit
Overall performance
The assessment highlighted high levels
of independence, objectivity, and value
provided through audit insights. Areas of
improvement included further adoption
of digital audit tools to drive efficiency
and continue enhancing the conciseness
and clarity of reporting through the
audit process.
Tesco PLC Annual Report and Financial Statements 2026
85
Strategic report Financial statements Additional informationGovernance
Total auditor fees
Audit fees
Non-audit fees – average non-audit fee
2023/24 2024/25
£14.7m
£1.2m
9%
£15.9m
Total fees
2025/26
£13.8m
£1.4m 10%
£15.2m
Total fees
£14. 9m
£1.7m
12%
£16.6m
Total fees
Audit Committee continued
External audit
The Audit Committee assesses the ongoing
effectiveness and quality of the external auditor
and audit process through a number of
methods. At each meeting, the Committee
considers reports from the external auditor
which provides its views on the half and full year
Financial statements. This includes a view on
management’s key accounting judgements,
updates on its audit plan and fees. The auditor’s
independence and an overview of non-audit
services. Through these updates, the Committee
receives an early warning of any matters arising,
management letter observations, updates on
ongoing progress and scope of the external
auditor’s work. Audit Committee members
attended a deep dive hosted by Deloitte into
the evolving use of technology through the
audit process.
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
compliance with reporting requirements.
In addition, the FRC’s quality review team
undertook a routine review of Deloitte’s audit
work of the Group’s financial reporting for the
FY 24/25, with the result being good with limited
improvements required. A copy of the AQR
report was provided by the FRC to the
Committee Chair and was subsequently noted
at an Audit Committee meeting.
Deloitte has been the external auditor since
2015. Following the tender process undertaken
in 2023, Deloitte was reappointed as 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.
Richard Muschamp replaced John Adam as the
lead audit partner in April 2025, following the
completion of John’s five-year tenure in that
role. Richard shadowed John during FY 24/25,
observing all Audit Committee meetings, so was
in a good position to take on the role of lead
audit partner.
The Committee review 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,
providing additional comfort to the Committee
on the quality and effectiveness of the external
auditor. The Committee acknowledged the FRC’s
review of the Annual Report and Financial
Statements 2025, noting that the FRC had no
questions or queries to raise in relation to the
auditor, which was approved by shareholders at
the 2024 and 2025 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 FY 26/27. The
reappointment is subject to approval at the
forthcoming Annual General Meeting.
Frequency of reporting
April
2025
July
2025
September
2025
November
2025
February
2026
External auditor
External auditor report
Engagement letter and fees
External audit plan
External audit effectiveness review
Tesco PLC Annual Report and Financial Statements 2026
86
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 to make it 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. The non-audit fees represented 10%
of audit fees.
Fees paid to the external auditor are set out in
Note 4 to the Financial statements.
Ethics, compliance, fraud and
whistleblowing
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,
failure to prevent fraud and received and
reviewed biannual ethics and compliance data
covering the aforementioned items.
Frequency of reporting
April
2025
July
2025
September
2025
November
2025
February
2026
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
The Committee discussed the controls and
mitigating actions deployed to identify
compliance breaches in support of the Group’s
overall compliance strategy and Business Code
of Conduct. In addition the Committee received
updates on the systems in place to assess fraud
risk and the controls in place to manage and
mitigate identified risks. The Committee received
updates on the effectiveness of the Group’s
internal and independent external
whistleblowing arrangements and reviewed
compliance with GSCOP. The Committee
monitors the relationship with the Groceries
Code Adjudicator and receives reports on
supplier engagement and the internal auditing of
ethical business processes. As part of its annual
engagement, the Committee Chair met with the
Groceries Code Adjudicator during the year.
For more information on GSCOP compliance
see page 226.
Karen Whitworth
Committee Chair
15 April 2026
External audit fees: non-audit and audit-related services
Increase No change Decrease
Nature of service
Level of fees in
2025/26 (£m)
Level of fees in
2024/25 (£m) Change
Safeguards to preserve independence
and objectivity
Interim review:
performance
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
0.3 0.5 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
performance
under International
Standards of Review
Engagements 3000
(Revised) and 3410
0.5 0.6 Scope of work sets out Deloitte’s
and management’s responsibilities
ensuring management take all
management roles. Deloitte do
not take any management roles
or responsibilities. Application
of engagement quality control
review process.
Total 1.4
(a)
1.7
(b)
(a) £213,380 of the 2025/26 fees are not subject to the cap (all within other non-audit services).
The remaining fees are all subject to the cap.
(b) £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.
Tesco PLC Annual Report and Financial Statements 2026
87
Strategic report Financial statements Additional informationGovernance
Remuneration
Committee
Chair’s
statement
Dear Shareholder,
On behalf of the Remuneration Committee,
I am pleased to present my first Directors’
remuneration report, having taken over from
Alison Platt as Chair of the Committee on
12 June 2025. I would like to take this opportunity
to thank Alison for her excellent work as Chair
and her support to me personally during the
transition of roles.
Having reviewed the Directors’ Remuneration
Policy last year, the Committee’s conclusion was
that the existing policy is working effectively and
no changes were required. We are grateful for the
strong shareholder support at the 2025 AGM,
with 97% approval of both the remuneration
policy and the remuneration report.
Delivering our strategic priorities
Under the leadership of Ken Murphy and his
team, Tesco continues to offer great value,
reward customer loyalty and provide outstanding
service, all while identifying opportunities to
operate more efficiently and invest in our
colleagues. The resultant growth in sales, profit
and market share has delivered financial
performance above the challenging targets set
for both annual bonus and the long-term
Performance Share Plan (PSP).
Living our purpose
We are proud that strategic progress and
financial success have been achieved while
delivering on our purpose of serving our
colleagues, customers, communities and planet
a little better every day. Importantly, all of our
stakeholders are benefiting from Tesco’s
success. This is an important lens for the
Committee when we consider remuneration
outcomes.
Executive Director remuneration
outcomes
The remuneration for our Executive Directors is
closely tied to the strong performance of the
business. Our policy is comparable to other FTSE
50 companies and reflects the complexities of
managing a large-scale operation. A significant
portion of the total package has been achieved
due to Ken Murphy and Imran Nawaz meeting or
exceeding challenging targets in a competitive
sector, creating value for all stakeholders.
When setting targets for the 2025/26
performance year, the Committee took into
account increased competition in the UK
market, whilst also ensuring that targets remain
appropriately challenging. Maintaining our
market share is essential for Tesco’s long-term
performance and the Board was fully supportive
of management’s proposals to invest significantly
in its pricing strategy. In addition, the business
faced exceptional operating cost increases,
including a material increase in UK National
Insurance. As a result of these headwinds, the
annual profit target for bonus was set at a slightly
lower level than the prior year and this was also
reflected in setting the 2025 PSP targets.
The Committee monitored performance
throughout the year and, in determining variable
pay outcomes, verified that the expected
headwinds had materialised and price
investment completed as expected.
Whilst the environment has been challenging,
total revenue increased and the Group delivered
a profit in excess of the prior year, underpinned
Committee Chair
Melissa Bethell
Committee membership and tenure
Director Member since
Melissa Bethell June 2024
Carolyn Fairbairn September 2023
Stewart Gilliland June 2023
Karen Whitworth June 2024
Alison Platt was Chair of the Remuneration Committee until her departure in June 2025.
Focus during 2025/26
– Executive Director and senior executive market benchmarks.
– Wider workforce reward, including hourly rates and impact
of Employment Rights Act 2025.
– Review of strategic measures for variable reward, including joint
meeting with Sustainability Committee.
Committee priorities for 2026/27
– Maintain dialogue with major shareholders and other stakeholders.
– Conduct external market reviews of remuneration for Executive Directors
and senior executives.
– Monitor strategy progress to keep pay policies aligned to long-term goals
and stakeholder interests.
– Apply a sustainability lens to remuneration decisions.
– Gather and consider colleague views and oversee wider workforce reward to
ensure fairness, transparency and consistency across the Group.
Directors’ remuneration report
Directors’ remuneration report index
Chair’s statement 88
At a Glance 90
Approach to remuneration 91
Remuneration for 2025/26 94
Implementation of remuneration
policy for 2026/27 97
Wider remuneration at Tesco 98
Committee governance 102
Further remuneration disclosures 103
88
Tesco PLC Annual Report and Financial Statements 2026
by strong performances from all our subsidiaries.
Despite the increase in competitive intensity, the
Group was able to grow volumes and our UK
market share position throughout FY25/26 with
a series of targeted price investments and a
commitment to quality. Tesco was able to offset
a significant portion of the increased price
investment and fund an above-inflation increase
in colleague pay through disciplined cost control
and our save to invest programme.
Tesco’s strong performance is reflected in the
variable pay outcomes. The overall formulaic
vesting level for the 2025/26 annual bonus is
91.7% of maximum for Ken Murphy and 93.7% for
Imran Nawaz. Based on the strong performance
colleagues not in a bonus plan in May 2026. This
will be made to colleagues supporting our UK and
ROI businesses, equivalent to 1.25% of pay (£347
on average for a full-time colleague). This is in
addition to an hourly rate pay increase above
inflation in March 2026.
Despite the economic challenges, Tesco has
continued to lead the way, being recognised as
Britain’s Favourite Supermarket for the eleventh
consecutive year at the Grocer Gold Awards and
delivering on its commitments to shareholders.
Therefore no discretion was applied to adjust
the formulaic outcomes. Further details of the
performance outcomes versus targets and the
vesting of these awards can be found in the
Remuneration for 2025/26 section on page 94.
Ken Murphy and Imran Nawaz’s total
remuneration for 2025/26 was £10.842m and
£5.714m respectively. The increase in total
remuneration is due to a combination of share
price growth and higher bonus levels, which
reflect strong performance against stretching
targets over a challenging period.
Of Ken Murphy’s total remuneration, £2.756m/
25% represents growth from share price
appreciation and dividend equivalents.
Looking ahead to 2026/27
Our pay philosophy for all colleagues is to set
salaries around the relevant market midpoint
and provide variable pay opportunities that
deliver upper quartile outcomes when we
outperform against our challenging targets.
When considering base salary increases for our
senior executives, the Committee remains
mindful of the wider colleague experience and
our fairness principles. Effective 24 May 2026,
Ken Murphy and Imran Nawaz will receive base
salary increases of 3.0% and 8.2% respectively.
The overall increase in Executive Director pay of
4.9% is below the 5.1% increase for UK hourly-
paid colleagues. Benefits packages and pension
allowance remain unchanged.
In determining the salary increase for Imran
Nawaz, the Committee noted that FTSE 50
companies continue to increase variable pay to
compete globally. The Committee also noted
high salary levels in the FMCG (fast-moving
consumer goods) sector.
outcomes over the three-year period, the
formulaic level of vesting for the 2023 PSP is
74.4% of maximum for both Executive Directors.
The PSP awards are subject to a further
two-year holding period.
The Committee considered the annual bonus
and PSP formulaic outcomes and concluded that
the remuneration policy operated as intended.
The Committee is satisfied that the measures
and targets set were robust and challenging,
reflecting the business performance and wider
stakeholder experience.
As in previous years when our business
performance has been strong, a special
performance award will be awarded to
When consulting with shareholders on the
Remuneration Policy through 2024/25, we noted
an emerging trend for increases in variable pay
opportunities at FTSE 100 companies. The annual
update from the Committee’s independent
remuneration adviser highlighted a continuation
of this trend and we have therefore considered
carefully whether the current opportunities for
the CEO and CFO are competitive. Following this
review we have concluded that changes are not
required for either the bonus or PSP opportunities,
but we will continue to monitor market practice.
The Committee undertakes a review of incentive
measures and weightings at least annually to
ensure that our variable pay plans use the most
effective measures to support our strategic
priorities. Our review this year concluded that the
addition of a market share measure in the PSP (10%
weighting) would make the incentive more aligned
to our strategy to drive long-term growth in both
our core operations and emerging revenue
streams. To accommodate this new measure, and
keep the PSP design simple, the Committee has
removed food waste reduction from the 2026 PSP
and marginally reduced the combined weighting of
the remaining PSP measures from 16.7% to 15%.
While food waste continues to be an important
part of our strategy, we feel confident that we will
achieve our targeted 50% reduction (vs a 2017
baseline) by the completion of the 2025 PSP cycle.
This gives us the opportunity to evolve the 2026
PSP scheme to align to future strategic priorities,
which will run to 2029.
Together with my Committee members,
I would like to thank our shareholders for their
ongoing support and our colleagues for their
continued commitment to our customers
and our communities.
Melissa Bethell
Committee Chair
15 April 2026
Tripled the products on
Everyday Low Prices to
3,000
£404 average annual
customer savings through
Clubcard Prices
More than 123 million
meals donated throughout
the Group this year
15.7 million
portions of fruit and
vegetables provided to
schools since October 2024
82% of colleagues
regard Tesco as a Great
Place to Work
15% and 20%
colleague discount
events over the year
14.5p full year dividend
per ordinary share
£1,450m share
buy-back in 2025/26
1st place in the
Advantage supplier
survey for the 10th
consecutive year
89% supplier
satisfaction
68% reduction in
emissions of own
operations since 2015/16
1,249 electric vans in
operation – on course for
all UK home delivery fleet
to be electric by 2030
Key stakeholders and wider factors considered
Customers
Communities
Colleagues
Shareholders
Suppliers
Planet
Tesco PLC Annual Report and Financial Statements 2026
89
Strategic report Financial statements Additional informationGovernance
Directors’ remuneration report continued
At a glance
Single total figure of remuneration
Salary Benefits Pension Annual bonus PSP
(a)
PSP performance growth
(b)
2024/25
2025/26
0 £1m £2m £3m £4m £5m £6m £7m £8m £9m £10m £11m
2024/25
2025/26
Ken Murphy
Imran Nawaz
£5.71m
£5.07m
£10.84m
£9.76m
(a) The PSP figures for 2025/26 relate to the 2023 PSP award and are estimates based on the average share price over the
three months to 28 February 2026 of 447.91p. These will be restated in next year’s Directors’ remuneration report to show
the actual value upon vesting.
(b) Growth due to share price appreciation and dividend equivalents.
(c) Fixed pay, benefit and pension figures reflect a 53-week period in 2025/26 vs a 52-week period in 2024/25.
Elements of our Executive RemunerationRemuneration outcomes for 2025/26
Base pay
Annual
bonus
Pension
and benefits
PSP
Total
remuneration
Implementation in 2026/27
Increase for
UK hourly paid
colleagues’
pay
Up 5.1%
Annual bonus
Maximum
opportunity
250% of
base salary
Base pay from 24 May 2026
Ken Murphy
£1.539m
+3.0%
Imran Nawaz
£0.900m
+8.2%
PSP
Maximum
opportunity
275% of
base salary
No change in
performance measures
Profit
50%
Sales
30%
Individual
20%
93.7%
100.0
%
91.7%
100.0
%
20.0%
18.0%
20.0%
23.7%
30.0%
50.0%
74.4%
100.0%
1.0%
8.3%
0%
8.3%
8.3%
37.2%
37.5
%
27.9%
37.5%
Annual bonus 2023 PSP
Measure Outcome Max Measure Outcome Max
Profit EPS
Sales FCF
Individual –
Ken Murphy
Carbon
reduction
Individual –
Imran Nawaz
Food waste
reduction
Total –
Ken Murphy
Diversity, equity
and inclusion
Total –
Imran Nawaz
Total
Total pay over five years
Fixed
pay
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
Base salary,
benefits and
pension
PSP
Two-year holding periodThree-year performance period
Market share measure added
and ESG weighting reduced
EPS
37.5%
FCF
37.5%
Market
share
10%
ESG
15%
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.
Key
performance
highlights
Market share based on Worldpanel by Numerator Total Grocers Total Till Roll for 12 weeks ended
22 February 2026. Sales and profit growth refers to the Group’s Sales (exc. VAT, exc. fuel) and
adjusted operating profit respectively. Growth is shown on a comparable 52-week basis and is
calculated at constant rates. TSR is from 22 February 2025 to 28 February 2026.
Total shareholder return (TSR)
33.1%
UK market share up to
28.5%
Sales up
4.3%
Profit up
0.6%
Tesco PLC Annual Report and Financial Statements 2026
90
Wider colleague engagement
Engaging with colleagues and understanding
their views is vital to the Committee and its
decision making. One of the ways we do this is via
our Colleague Contribution Panels (CCPs) where
we also engage with colleagues on executive
remuneration policy changes. This year, four
CCPs took place, enabling Non-executive
Directors to hear the views from colleagues
across the Group. Melissa Bethell, as Chair of the
Committee, and Carolyn Fairbairn, a Committee
member, host the CCPs on behalf of the Board,
ensuring direct Committee access to colleagues’
insights. Further details on this year’s CCPs can
be found on page 66.
In addition, our Directors regularly visit stores,
distribution centres, customer engagement
centres and offices to meet with colleagues and
listen to their views on life at Tesco. The findings
from the Every Voice Matters survey are another
important source of information to guide our
remuneration approach.
The Committee considers a range of factors to drive pay for performance:
Approach to
remuneration
Reward principles
There are four key principles which guide our approach to reward for all our colleagues, including
Executive Directors:
Positioning of remuneration versus the FTSE 50
Lower quartile to median Median to upper quartile Tesco
Total remuneration (£’000)
Target
Ken Murphy Imran Nawaz
Maximum Target Maximum
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1. Simple
Helping all colleagues to understand how
they are rewarded
2. Fair
Achieving consistent outcomes through
flexible and transparent policies
Benchmarking philosophy
When setting the remuneration of Executive
Directors, the Committee considers their pay
position versus Executive Directors of other
FTSE 50 companies. The chart on the right sets
out the market positioning of the Group Chief
Executive and Chief Financial Officer for
2025/26, based 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, to ensure remuneration levels are
consistent with the approved Remuneration
Policy.
The Committee is comfortable that the market
position between median and upper quartile is
reflective of the performance and experience of
the Executive Directors at Tesco.
3. Competitive
Setting pay with reference to internal
relativity and external market practices
4. Sustainable
A responsible and flexible approach,
aligned to business strategy and
performance
At each Remuneration Committee meeting,
members also review a workforce dashboard
which sets out key demographic information,
including turnover rates, average pay position at
each work level and a comparison of the hourly
rate with other retailers. The Committee is
therefore well-informed to take into account
colleagues’ views and pay when setting the pay
of Executive Directors and senior executives.
Pay for performance
Reward
principles
Benchmarking
philosophy
Wider
colleague
engagement
Strategic
alignment
Shareholder
alignment
Tesco PLC Annual Report and Financial Statements 2026
91
Strategic report Financial statements Additional informationGovernance
Strategic alignment
The tables below set out the performance measures we use within our incentive plans and how these align to our strategy and purpose to deliver the Group’s financial, operational and sustainability plans.
Bonus measures Alignment to strategy Alignment to purpose
Group sales
(30% for 2025/26 and 2026/27)
If delivered successfully, our winning in food ambition will help us meet more
everyday customer needs and drive sales growth. We will also use our unique
data and insights to build new revenue opportunities and partnerships, which
can flow back into enhancing our core customer offer.
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% for 2025/26 and 2026/27)
Our strategic ambitions support profit growth with a wider range of
products and services. By delivering across stores, online grocery and rapid
delivery, as well as other business areas, we help customers with many of
their daily needs and deepen relationships.
Individual performance
(20% for 2025/26 and 2026/27)
Individual objectives are aligned to our strategic ambitions. Further details
are set out on page 14.
Individual objectives are aligned to each part of our purpose: customers,
communities and planet.
PSP measures Alignment to strategy Alignment to purpose
Financial measures (75%)
Cumulative free cash flow
(37.5% for 2025/26 and 2026/27)
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 ambitions 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% for 2025/26 and 2026/27)
Strategic measures (25%)
Market share
(0% for 2025/26, 10% for 2026/27)
By meeting more everyday customer needs and creating a connected and
personalised experience loved by our customers, we aim to make shopping
with us easier and increasingly rewarding.
When we serve customers well – understanding, anticipating and responding
to their needs and expectations – they will choose to shop with us.
Carbon reduction
(8.3% for 2025/26, 7.5% for 2026/27)
Aligns to our commitment to be net zero 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 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% for 2025/26, 0% for 2026/27)
Aligns to our commitment to deliver a 50% reduction in food waste in our
own operations, compared with a baseline of 2016/17. For further details,
please refer to the Sustainability Report. While this measure has been
removed for the 2026 PSP, it remains a strategic priority, and we expect to
meet our target (vs 2017) by the end of the 2025 PSP cycle in 2028.
Diversity, equity and inclusion
(8.3% for 2025/26, 7.5% for 2026/27)
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 regularly review our sustainability-linked performance measures to ensure they reflect material elements of our sustainability strategy which can be directly influenced and reliably measured.
Further details of our approach to sustainability are detailed on pages 30 to 33.
Our purpose
Serving our customers , communities and planet a little better every day.
Directors’ remuneration report continued
Tesco PLC Annual Report and Financial Statements 2026
92
Shareholder alignment
Annual bonus measures are selected to provide
direct alignment with the Group’s short-term
operational targets and are supportive of the
strategic priorities and long-term objectives. To
align executives with shareholders, 50% of bonus
is paid in shares, deferred for at least three years.
The PSP performance measures are selected to
ensure that Executive Directors are incentivised,
and appropriately awarded, to deliver the
Group’s purpose and strategy. There is a
requirement to acquire a significant shareholding
and to hold vested awards in a corporate-
sponsored nominee account. This encourages
alignment of interests between executives and
shareholders and long-term sustainable returns.
We have maintained a weighting of 75% for key
long-term financial measures. The remaining
25% is based on strategic measures. For the
2026 PSP, we are introducing a market share
measure. This will incentivise Executive Directors
to drive long-term growth across both core
operations and emerging revenue streams.
Annual bonus and PSP performance measures are
monitored every six months by the Committee.
At the end of the performance period, we assess
the formulaic outcome of each performance
measure. The Committee then considers whether
the formulaic outcomes are fair in the context of
the Group’s performance and the wider
stakeholder experience (which can be found on
page 96) and can use its discretion to adjust the
formulaic outcomes.
Pay for performance
An overarching aim of our remuneration
approach is to align Executive Director
remuneration with business performance. To
ensure targets for the annual bonus and PSP are
challenging, a variety of factors are considered,
including the Board-approved budget and Long
Term Plan (LTP), external consensus, prior-year
achievement and the Board’s assessment of how
achievable the budget is.
The graph below compares the Company’s
TSR against the FTSE 100 index, of which the
Company has been a constituent member
throughout the period. The table below the
graph shows the Group Chief Executive’s annual
remuneration over the same period. The strong
returns, particularly over the past three years,
demonstrate that our remuneration approach
has led to alignment between remuneration
levels and Tesco performance.
Historical total shareholder return performance
Value of hypothetical
£100 invested
FTSE 100 Tesco
Source: Workspace
by LSEG
0
50
100
150
200
250
300
350
400
103
112
124
128
134
155
161
172
200
350
100
100
129
124
133
130
129
178
169
189
263
261
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25
(b)
2025/26
Group Chief Executive
single total figure of
remuneration (£’000)
Ken Murphy – – – – 992 4,745 4,443 10,243 9,763 10,842
Sir Dave Lewis
(a)
4,147 5,113 4,600 6,328 1,650 – – – – –
Annual bonus outturn
(% of maximum award) 76.0% 73.0% 52.5% 75.9% 0% 95.0% 79.1% 95.0% 78.8% 91.7%
PSP vest
(% of maximum award) – 30.0% 28.8% 48.8% 23.1% – – 85.0% 75.6% 74.4%
(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) 2024/25 PSP estimated values have been restated based on share price of 402.50p at the time of the PSP vesting.
Tesco PLC Annual Report and Financial Statements 2026
93
Strategic report Financial statements Additional informationGovernance
Remuneration
for 2025/26
Single total figure of remuneration – Executive Directors (audited)
The following table sets out the single total figure of remuneration (STFR) for 2025/26 and 2024/25 for
the Executive Directors. The single figure of remuneration has increased in 2025/26. This has been
driven by higher bonus/PSP levels.
Ken Murphy Imran Nawaz
2025/26
(£’000)
2024/25
(£’000)
2025/26
(£’000)
2024/25
(£’000)
Fixed pay
(a)
Salary 1,515 1,454 840 790
Benefits 124 88 112 92
Pension 114 109 63 59
Total fixed pay 1,753 1,651 1,015 941
Variable pay
Annual bonus (cash and deferred shares) 3,424 2,885 1,949 1,616
PSP
(b)
5,665 5,227 2,750 2,513
Total variable pay 9,089 8,112 4,699 4,129
Total remuneration 10,842 9,763 5,714 5,070
(a) Fixed pay, benefit and pension figures reflect a 53-week period in 2025/26 vs a 52-week period in 2024/25.
(b) The PSP figures for 2025/26 relating to the 2023 PSP award are an estimated value based on the average share price over the
three months to 28 February 2026 of 447.91p. 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 2024/25 have been restated, using the
actual share price at the date of vesting of 402.50p and includes dividend equivalents in respect of vested shares. Executive
Directors are subject to a two year post-vesting holding period after the shares are released.
The Committee is satisfied that the STFR for each Executive Director is appropriate. The total
aggregate remuneration paid to all Directors in 2025/26 was £18.6m (2024/25: £16.7m).
Base salary (audited)
Executive Directors’ salaries were increased on 25 May 2025 by 2.0% from £1,464,440 to £1,493,729 for
Ken Murphy and by 4.0% from £800,000 to £832,000 for Imran Nawaz. These figures are for a 52-week
period. Details of increases to be applied in 2026 are set out on page 97.
Benefits (audited)
Car and driver
(£’000)
Health benefits
(£’000)
Life assurance
(£’000)
Other benefits
(a)
(£’000)
Total
(£’000)
Ken Murphy 90 3 11 20 124
Imran Nawaz 104 2 6 0 112
(a) Includes one-off installation of security equipment for Ken Murphy at Tesco’s request.
Directors’ remuneration report continued
Did you know:
More than two-thirds of the CEO’s remuneration is delivered in
shares, helping to align his pay with shareholder interests.
Illustrative total remuneration scenarios 2026/27
Fixed pay Annual bonus Long-term incentive Share price increase
Minimum MinimumOn target
(a)
Maximum Maximum
(with 50%
share price
growth)
On target
(a)
Maximum Maximum
(with 50%
share price
growth)
100% 28% 18% 15% 100% 29% 19% 15%
30%
39%
32%
42%
43% 35%
18%
30%
39%
32%
41%
42% 35%
18%
Ken Murphy
Group Chief Executive
Imran Nawaz
Chief Financial Officer
£1.78m
£6.35m
£9.86m
£11.97m
£1.08m
£3.75m
£5.80m
£7.04m
(a) ‘On target’ scenario assumes annual bonus outturn of 50% and long-term incentive vesting at 62.5% of maximum
opportunity.
Tesco PLC Annual Report and Financial Statements 2026
94
Achievement of individual objectives (20% of annual bonus)
Ken Murphy
Objective
Key performance
indicators
Summary of
performance Assessment
Delivery of strategic
growth drivers
– Delivery of key
milestones, including
technology roadmap
– Operating profit
contribution from
growth plans
– Delivered milestones,
as agreed within Long
Term Plan
– Operating profit
contribution from
growth plans, in line
with plan
Achieved
Brand strategy
development
– Brand strategy and
campaigns developed
and launched
– Growth in Customer
NPS, year-on-year
– Sustained colleague
engagement levels
– Brand platform and
Need Anything from
Tesco campaigns in
place
– UK Customer NPS +1
YOY, alongside YOY
improvements across
all sub-pillars ahead of
market average
– Colleague engagement
at 82% versus a global
retail benchmark of
71%
Overachieved
Progress plans for
future shape of the
organisation, aligned
with strategy
development
– Organisational design
priorities delivered
– Associated talent and
capability plans in place
– Agreed organisational
changes made across
the year
– Strategic workforce
planning analysis
completed, and built
into forward plans
including AI workforce
considerations
– Key appointments for
strategic drivers made
via talent acquisition
and development
plans
– AI and digital skills plan
in delivery for 2,000
priority colleagues,
enabled by new
learning infrastructure
Overachieved
Imran Nawaz
Objective
Key performance
indicators
Summary of
performance Assessment
Deliver Group-wide save
to invest target
– Deliver £500m
savings target
– Develop plan to
deliver savings
beyond 25/26
– Execute quarterly
second line audits
– Delivered savings of
£535m (+7% vs
target)
– Long-term savings
plan agreed,
inclusive of capital
allocation for
initiatives
– Quarterly second
line audits
completed with
green outcomes
Overachieved
Funding of strategic
growth drivers
– Capital and
resource allocation
plans in place to
deliver strategic
growth drivers
– Plan for capital and
resource allocation
set out within Long
Term Plan
– Capital review
principles and
strategy governance
forum in place to
support
prioritisation
Overachieved
Finance strategy
development and delivery
of associated plans
– Define 3+ year
finance strategy,
inclusive of
operating model
and AI enablement
plans
– Enhancement of
financial planning
and analytical
capability
– Long-term finance
strategy defined
with AI for finance
plans in place; focus
areas include
forecasting and cash
controls
– Successful
implementation of
new planning tool;
initial capabilities live
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 2026
95
Strategic report Financial statements Additional informationGovernance
2025/26 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. As set out below, the
2025/26 annual bonus outcome is 91.7% of maximum for Ken Murphy and 93.7% 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 88, the Committee is satisfied that the formulaic annual bonus outcomes are appropriate and reflect Tesco’s performance over the performance period.
2025/26
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 1,494 250 91.7 229.3 3,424 1,712
Imran Nawaz 832 250 93.7 234.3 1,949 974
* Bonus outcome was determined as follows:
Weighting
Threshold
(25% payout)
Target
(50% payout)
Stretch
(100% payout)
Actual*
(at constant rates)
Outcome
Ken Murphy Imran Nawaz
Group adjusted operating profit 50% £2.6bn £2.9bn £3.1bn £3.2bn 50.0% 50.0%
Group sales 30% £63.2bn £65.2bn £67.2bn £66.4bn 23.7% 23.7%
Individual objectives 20% Details of performance are set out on page 95 18.0% 20.0%
Total (% of maximum) 91.7% 93.7%
* Actuals are on a 52-week basis.
2023 PSP vesting in 2025/26 (audited)
The 2023 PSP award outcomes are set out in the table below, with the overall outcome 74.4% of
maximum. As set out in the Chair’s letter, the Committee is satisfied that the formulaic PSP outcomes
are appropriate and reflect performance over the performance period, with no windfall gains.
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 1,557,113 74.4% 2,909 2,280 476 5,665 03/07/2026 03/07/2028
Imran Nawaz 755,874 74.4% 1,412 1,107 231 2,750 03/07/2026 03/07/2028
(a) Calculated using the grant price of 251.1p.
(b) Calculated using the difference between the grant price of 251.1p and the average closing share price over the three months to
28 February 2026 of 447.91p.
* PSP outcome was determined as follows, with both targets and performance on a 52-week basis:
Weighting
Threshold
(25% payout)
Stretch
(100% payout) Actual Outcome
Cumulative free cash flow 37.5% £3,854m £5,788m £5,770m 37.2%
Adjusted diluted EPS 37.5% 21.7p 32.8p 29.0p 27.9%
Sustainability measures
(a)
:
– Carbon reduction 8.3% 58% 62% 68% 8.3%
– Food waste reduction 8.3% 51% 57% 24% 0.0%
– Diversity, equity and inclusion
(gender/ethnicity)
8.3% 35%/16% 42%/18% 35%/13% 1.0%
Total 74.4%
(a) Actual performance against the Sustainability measures are rounded to the nearest whole percentage number, in line with our
published methodologies.
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.
Directors’ remuneration report continued
Executive Director shareholdings (% of base salary) (audited)
Shares owned outright Deferred share awards Vested PSP shares subject to two-year holding period
400%
Total
778%
390%126% 262%
Ken Murphy
Target
300%
Total
889%
323%323% 243%
Imran Nawaz
Target
Further details of Executive Directors’ shareholdings and share interests are shown on page 106.
Tesco PLC Annual Report and Financial Statements 2026
96
Implementation of remuneration policy for 2026/27
Summary of policy for Executive Directors approved by shareholders at the AGM on 12 June 2025 can be found at tescoplc.com/media/ky0bfwpo/tesco_ar25_interactive.pdf.
Payment and strategic link Operation Implementation in 2026/27
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 effective on or around 1 June, based on:
– 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.
Increases of 3.0% and 8.2% will be applied to the salaries of Ken
Murphy and Imran Nawaz, respectively. Salaries from 24 May 2026 are:
Ken Murphy: £1,538,541
Imran Nawaz: £900,000
The overall Executive Director increase of 4.9% is below the 5.1%
increase awarded to the wider workforce.
Benefits
Supports attraction
and retention
Core benefits include a car or cash allowance and a driver, incapacity benefits, private medical insurance and
life assurance. Other benefits (e.g. relocation, security and commuting support) may be offered as required.
There is no pre-determined maximum limit.
Normal Company benefit provision.
See page 100 for further details of benefits provided in 2025/26.
Pension
Supports attraction
and retention
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
interests of Executive
Directors with shareholders
through partial deferral of the
award 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. Dividend equivalents in the form of additional shares are payable on deferred annual
bonus awards that vest. Malus and clawback provisions apply.
Maximum bonus opportunity for Ken Murphy and Imran Nawaz is 250%
of base salary, with performance measures of 50% Group adjusted
operating profit, 30% Group sales, 20% individual performance.
The Board considers bonus targets to be commercially sensitive.
Full disclosure will be made in next year’s annual report.
See page 96 for details of annual bonus outturns for 2025/26
and page 102 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. The holding period continues to operate post-cessation of
employment, with shares held in a corporate sponsored nominee account.
The maximum award opportunity for Ken Murphy and Imran Nawaz has
been set as 275% of base salary for 2026/27. Performance measures
(as a percentage of maximum) are 37.5% adjusted diluted EPS, 37.5%
cumulative free cash flow, 10% market share and 15% sustainability
measures.
See pages 96 and 104 for details of 2023 PSP outturn and the PSP
awards to be granted in 2026. Details of malus and clawback
provisions can be found on page 102.
All-colleague share plans
Builds colleague share
ownership, aligning their
interests with shareholders
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 2026/27.
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: After leaving the Company, Executive Directors are required to
hold the lower of their shareholding requirement or their actual shareholding for two years.
Shareholding requirement will continue to be operated in 2026/27.
See page 106 for further details of Executive Directors
shareholdings and interests in share awards.
Tesco PLC Annual Report and Financial Statements 2026
97
Strategic report Financial statements Additional informationGovernance
Wider remuneration
at Tesco
Our pay and reward framework
Remuneration for most colleagues is principally fixed pay to support a good standard of living which
aligns with discussions with our trade unions. 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
2026 Every Voice Matters colleague survey, 65% of colleagues agreed that the total reward package at
Tesco is competitive, which is well ahead of relevant external benchmarks. In addition, 82% of
colleagues said they are able to work flexibly and 85% feel they can be themselves at Tesco, without
fear of judgement. 71% of colleagues feel Tesco supports them with their mental and physical
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 82% of colleagues regard
Tesco as a Great Place to Work (11% ahead of the global retail benchmark).
Fair pay
We have a strong track record of making
substantial investments in pay. In 2025/26
we announced an above-inflation pay
increase of 5.1% for Tesco UK store
colleagues, an investment of over £200m.
This will increase the UK national hourly rate
to £13.28 and represents a pay increase of
43% over the last five years for hourly-paid
store colleagues. The London Location
Allowance will also increase from £1.21 to
£1.27, equating to an hourly rate of £14.55
for colleagues within the M25.
We feel a duty of care to provide our
colleagues with a balanced reward package
that supports their different needs.
We believe that we are positioned
competitively for both basic pay and total
reward across all our markets.
Tesco is one of the few supermarkets in the
UK to have full recognition and collective
bargaining agreements with an independent
trade union for all its hourly-paid colleagues.
First signed in 1998, our partnership
agreement with USDAW was renewed in 2022
and ensures we continue to work together to
secure the best possible level of support and
voice for our store colleagues. This
agreement is the largest in the UK and one of
the largest in Europe.
£12.02
2024
£12.45
from the end of
March 2025
£12.64
from the end of
August 2025
+5.1%
between August 2025 and March 2026
£13.28
from the end of
March 2026
Spotlight on:
Directors’ remuneration report continued
Key EVM scores
Great Place to Work Great Place to Work global retail benchmark
Total reward package is competitive Total reward global retail benchmark
70%
80%
60%
50%
40%
2022 2023 2024 2025 2026
90%
Hourly rate increase
Tesco PLC Annual Report and Financial Statements 2026
98
Share schemes
ownership
As the business delivers, our all-colleague
share schemes deliver too, which helps
build financial resilience. We have two
all-colleague share schemes:
– The Share Incentive Plan (SIP) – Buy As You
Earn (BAYE) – enables colleagues to
purchase shares monthly, out of pre-tax
pay, meaning a tax/national insurance
saving. The benefits of share ownership
occur immediately, for example rights to
receive dividends (which in turn, if
reinvested in shares, are tax-free after
three years). If a colleague chooses to sell
their shares, any gain is free of capital
gains tax.
– Save As You Earn (SAYE) creates a regular
savings habit. Colleagues enter into an
‘option agreement’ to put aside a set
amount of money each month for three or
five years. In return, at the end of this
period,they can either take their savings
back or exercise their option and convert
savings into shares. For the third
consecutive year, we have set the option
price at a 20% discount, the maximum
allowed under HMRC rules. If a colleague
chooses to sell their shares, any gain
above the annual capital gains tax
allowance may be subject to capital gains
tax. However, we offer the choice to
transfer shares into an ISA, where any sale
is free of capital gains tax and dividends
received do not count towards the
dividend allowance.
Over 22,000 colleagues are shareholders via
the BAYE and over 58,000 colleagues
participate in the SAYE. Last year, more than
17,000 colleagues shared in a profit of
around £30m. This year, more than 22,000
colleagues shared in a profit of £134m.
Spotlight on:
More than
22,000
colleagues shared
in a profit of
£134m
Gender pay
Our 2025 Gender Pay report shows the median gender pay gap for Tesco UK colleagues has fallen to
4.7% (versus 5.1% in 2024), significantly below the 2025 UK national average of 12.8% – consistent
progress, reducing from 6.7% in 2021. 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 2.4%.
The mean gender bonus gap for Tesco UK Retail has increased from 36.7% to 53.9%. We report our
gender bonus gap based on actual bonuses paid, without considering prorating for part-time working.
If we use a full time equivalent for part-time colleagues, our median bonus gap reduces to 6.7%. In the
2025 reporting period, we made a 1.5% ‘Thank You’ payment to all hourly-paid colleagues working
across our stores, distribution and CECs. Therefore, if the bonus gap is compared to 2023, when a
‘Thank You’ payment was last awarded, the mean gap decreased by 4.4% in 2025, and the median gap
reduced by 2.3%. 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.
Ethnicity pay
We are also making progress in ethnic representation. For the third year, we have chosen to publish
our ethnicity pay gap which shows that the median gap for Tesco Stores Limited is −5% (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 on shifts that attract a premium payment
or work in a store that attracts a location allowance.
The ethnicity bonus gap mean is 22.9% reflecting a lower proportion of ethnically diverse colleagues in
senior roles. Comparing the bonus gap to 2023, when ‘Thank You’ payments were last made to all
hourly paid colleagues working across stores, the mean bonus gap has reduced by 8.9% and the
median has reduced by 2.9%.
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: https://www.tescoplc.com/
media/0qqhoomq/tesco-everyones-welcome-report-2025_final-270326.pdf
Gender pay gap Tesco UK
Median gender pay gap Excluding premiums UK median
0.0%
20.0%
15.0%
10.0%
5.0%
2021 2022 2023 2024 2025
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Cascade of remuneration
The table below summarises the reward and benefits package of UK colleagues and how it compares to Executive Directors’ remuneration.
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 colleague deals and offers. In 2024, we launched a
flexible benefits platform for our salaried colleagues in the UK.
Executive Directors also receive market-competitive
benefits, including the same discount in store as other
colleagues. Further details are set out on page 97.
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.
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 linked to
the same financial performance measures as all salaried
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.
Directors’ remuneration report continued
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100
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 240,000
UK-based colleagues in our major subsidiary, Tesco Stores Limited. These are mostly 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.
The following table shows the ratio between the consolidated single total figure of remuneration
(STFR) of the Group Chief Executive for 2025/26 and the lower, median and upper quartile pay of our
UK colleagues. We also show for comparison the pay ratios for the six preceding years.
Total pay ratio
2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
Ratio of CEO’s STFR
25th percentile 355:1 136:1 251:1 231:1 447:1 411:1 436:1
50th percentile 305:1 118:1 224:1 197:1 431:1 373:1 420:1
75th percentile 279:1 116:1 216:1 182:1 388:1 325:1 385:1
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.
2025/26
Group Chief Executive’s base salary (53 weeks) £1,515,132
Group Chief Executive’s total pay and benefits £10,842,069
UK colleagues’ salary
Colleague at 25th percentile £23,720
Colleague at 50th percentile £24,581
Colleague at 75th percentile £27,096
UK colleagues’ total pay and benefits
Colleague at 25th percentile £24,879
Colleague at 50th percentile £25,830
Colleague at 75th percentile £28,180
The total full-time equivalent (FTE) pay and benefits for the relevant colleagues are based on the
period from Sunday, 2 February 2025 to Saturday, 31 January 2026. 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, as well as share price and dividend performance over
the PSP vesting period. The Group Chief Executive’s PSP award will vest at 74.4% of maximum in 2026
and the annual bonus paid out at 91.7% of maximum, which have resulted in an increase in the Group
Chief Executive’s pay ratio numbers this year.
As we set out on page 91, 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.
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Key responsibilities
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. It considers
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.
2025/26 effectiveness review of the
Remuneration Committee
The effectiveness of the Committee was
assessed as part of the 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 supported well
by the internal reward team and PwC as external
advisors. The Board is assured by the quality of
the work performed by the Committee.
Discretion, malus and clawback
The Committee has discretion to scale back
deferred share and PSP awards under certain
conditions, such as if results are materially
misstated, reputational damage, misconduct or
errors. Under malus, deferred share and
unvested PSP awards can be reduced or made
subject to additional conditions. Clawback allows
for repayment of previously paid-up cash
bonuses for three years and PSP awards for two
years after the vesting date. The clawback
periods purposefully align with the bonus
deferral period and PSP holding period. Further
details can be found in the Remuneration Policy
here: www.tescoplc.com.
Malus and clawback provisions were not used in
2025/26.
Remuneration advisor
The Committee has appointed PwC as an
independent external advisor to ensure that the
Committee continues to operate in line with best
practice. It is a member of the Remuneration
Consultants Group and operates under the code
of conduct of executive remuneration consulting.
PwC was initially appointed in 2015 and
reappointed in 2020 following a competitive
tender. Total fees for advice provided to the
Committee were £80,500 excluding VAT, based
partly on a fixed fee and partly on a time and
materials basis.
The wider PwC firm provided Tesco with 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 remuneration advisor does not have
connections with any individual directors which
might compromise their independence or
objectivity.
Regular attendees to meetings include the
Non-executive Chair, Group Chief Executive,
Chief People Officer, remuneration experts from
the People function and the remuneration
advisor. No Directors or executives are present
when their own remuneration is discussed. For
items where financial performance is assessed,
the Chief Financial Officer and members of his
management team also attend. The Group
Company Secretary is Secretary to the
Committee.
High performance
culture
A key part of our reward design is driving a high-performance culture,
focused on great customer outcomes, with business and individual goals
rewarded.
Our colleague performance management approach, Your Contribution, aims
to ensure all colleagues are nurtured, developed and motivated to do their
best in service of our customers, community and planet. Every colleague can
play their part wherever they are in the business. We take a rounded view of
each colleague’s contribution, looking at what we do and how we do it.
Demonstrating how we live our values, purpose and win together behaviours
is at the heart of our performance management approach. We also apply a
line manager standard for managers.
When the business performs strongly, all share in this success. For most
colleagues, therefore, the majority of their bonus is linked to business
performance.
To check our culture is delivering for customers, we ask colleagues how they
feel about our customer focus. 78% agreed that we put customers at the
heart of every decision we make and 77% agreed that where they work,
people act on feedback from customers.
Spotlight on:
78%
of colleagues agree that
we put customers at
the heart of every
decision we make
Committee
governance
Directors’ remuneration report continued
102
Further remuneration
disclosures
2025 deferred bonus award grant (audited)
The following table summarises the deferred bonus awards made to Executive Directors on 12 May 2025 in respect of 50% of the 2024/25 bonus outcome. Awards were made in the form of conditional awards
which will vest and be released on 12 May 2028, subject to continuous employment.
Executive Director
Number of
shares granted
Value at
award date
Vesting
date
Market price
on grant
(a)
Ken Murphy 383,228 £1,442,470 12/05/2028 376.4p
Imran Nawaz 214,665 £807,999 12/05/2028 376.4p
(a) Based on five-day average share price.
2025 PSP grant (audited)
The following table summarises the PSP awards made to Executive Directors on 23 June 2025.
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% 1,029,357 £4,107,752 26/02/2028 23/06/2028 399.1p
Imran Nawaz Conditional award 275% 573,347 £2,287,999 26/02/2028 23/06/2028 399.1p
The performance measures
(b)
and targets for the 2025 PSP are:
Weighting Threshold
(c)
Stretch
Adjusted diluted EPS 37.5% 26.5p 39.7p
Cumulative free cash flow 37.5% £3,600m £5,400m
Sustainability measures
(d)
:
– 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) 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) The basis for sustainability measures is set out on page 92, in line with our strategic priorities.
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2026 PSP grant
The table below sets out the performance measures
(a)
and targets for the PSP award grant to be made in June 2026.
Weighting Threshold Stretch
Adjusted diluted EPS 37.5% 28.3p 42.4p
Cumulative free cash flow 37.5% £3,807m £5,711m
Market share 10% Targets not disclosed
(b)
Sustainability measures
(c)
:
– Carbon reduction 7.5% 72% 78%
– Diversity, equity and inclusion (gender/ethnicity) 7.5% 42%/18% 46%/20%
(a) All measures have linear vesting between threshold and stretch.
(b) Targets are commercially sensitive and will be disclosed after the end of the performance period.
(c) The basis for sustainability measures is set out on page 92, 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.
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
2023 PSP (0.5)p
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
2023 PSP
2024 PSP
£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
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 127.
2024/25
£m
52 weeks
2025/26
£m
53 weeks
%
change
Executive Directors’ remuneration
(a)
15 17 11.6%
Dividends and share buybacks 1,881 2,380 26.5%
Total income tax charge from continuing operations 611 616 0.8%
Colleague costs 8,726 9,461 8.4%
(a) The Executive Directors’ remuneration figure for 2024/25 has been restated using the actual PSP value on vesting.
For every £1 we spent on Executive Directors’ remuneration in 2025/26, £37 was payable in tax and
£571 was spent on colleague costs. In addition, £57 was made in dividend payments to shareholders
for every £1 spent on Executive Directors’ remuneration.
Directors’ remuneration report continued
Tesco PLC Annual Report and Financial Statements 2026
104
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 (% change)
(d)
Bonus (% change)
(d)
2021/22 2022/23 2023/24 2024/25 2025/26
(e)
2021/22 2022/23 2023/24 2024/25 2025/26
(e)
2021/22 2022/23 2023/24 2024/25 2025/26
Executive Directors
Ken Murphy 0% 1.7% 2.8% 3.0% 2.2% 18.9% 170.5% (50.0)% (26.1)% 36.4%
(f)
100% (14.8)% 23.7% (14.6)% 18.7%
Imran Nawaz – 3.7% 4.0% 5.4% 4.3% – 162.2% (24.8)% (6.1)% 19.6% – (8.3)% 25.1% (5.4)% 20.6%
Chair
Gerry Murphy – – – 4.4% 3.2% – – – (32.8)% 12.8% – – – – –
Colleagues
Average UK colleague
(a)
3.3% 8.6% 9.1% 9.1% 5.2% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A
Non-executive
Directors
Melissa Bethell
(b)
2.2% 3.2% 3.1% 27.0% 23.6% – – – – – – – – – –
Bertrand Bodson – 2.5% 3.1% 15.0% 7.0% – – – – – – – – – –
Carolyn Fairbairn – – – 50.0% 15.8% – – – – – – – – – –
Thierry Garnier – 2.3% 3.1% 15.0% 7.0% – – – – – – – – – –
Stewart Gilliland 2.8% 2.8% 25.0% 10.7% 3.2% – – – – – – – – – –
Chris Kennedy – – – – 7.0% – – – – – – – – – –
Caroline Silver – – 4.2% 15.0% 7.0% – – – – – – – – – –
Karen Whitworth – 3.0% 3.6% 40.2% 12.7% – – – – – – – – – –
Former Directors
(c)
Alison Platt 2.8% 13.8% 8.1% 4.5% 2.9% – – – – – – – – – –
(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 12 June 2025 Melissa Bethell was appointed Chair of the Remuneration Committee.
(c) Alison Platt stepped down from the Board on 12 June 2025. To enable a meaningful year-on-year comparison her fees have been pro-rated for the purposes of comparison.
(d) 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.
(e) Calculations for the salary and benefits are based on a 52-week like-for-like comparison to previous years. Calculation for the bonus is like-for-like based on year-end salary.
(f) Increase in benefits due to one-off installation of security equipment and take up of green car scheme.
Please see page 106 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.
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.
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 on the right.
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 2026 AGM.
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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 96.
Unvested
PSP awards
(a)
Deferred annual
bonus awards
(b)
Buyout
awards
Vested but
unexercised share
options
SAYE
options Total
Ken Murphy At 23/02/2025 4,635,933 1,759,292 – – 9,890 6,405,115
Granted 1,029,357 383,228 – – – 1,412,585
Dividend equivalents 151,345 53,999 – – – 205,344
Vested/released (1,298,582) (662,539) – – – (1,961,121)
Lapsed (408,715) – – – – (408,715)
Exercised – – – – – –
At 28/02/2026 4,109,338 1,533,980 – – 9,890 5,653,208
Imran Nawaz At 23/02/2025 2,322,984 808,269 – – – 3,131,253
Granted 573,347 214,665 – – – 788,012
Dividend equivalents 77,041 27,962 – – – 105,003
Vested/released (624,311) (256,520) – – – (880,831)
Lapsed (196,496) – – – – (196,496)
Exercised – – – – – –
At 28/02/2026 2,152,565 794,376 – – – 2,946,941
(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.
Executive Director shareholdings counting towards shareholding requirement (audited)
Shareholding
requirement
(% of salary)
Shareholding
requirement
value £
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
23/02/25 28/02/26 23/02/25 28/02/26 23/02/25 28/02/26 23/02/25 28/02/26
Ken Murphy 400% £5,974,916 778% 80,982 547,597 932,425 813,009 925,184 1,663,947 1,938,591 3,024,553
Imran Nawaz 300% £2,496,000 889% 854,974 1,035,331 428,383 421,019 439,746 770,630 1,723,103 2,226,980
(a) Share price used is the acquisition price of the shares owned outright or in a holding period and the closing share price on 28 February 2026 for deferred share awards.
(b) Net number of shares after deemed statutory deductions of 47% count towards the shareholding requirement.
Between 28 February and 15 April 2026 Ken Murphy acquired 57 partnership shares under the BAYE plan. No other changes in Executive Director share interests occurred in the period.
Funding of equity awards
Awards granted under Tesco employee share plans are satisfied primarily through shares purchased in the market. The Company monitors the number of shares issued and their impact on dilution limits
against the Investment Association’s guidelines (10% in any 10-year period under all plans) and our own internal limitation (5% for executive plans). Dilution up to 28 February 2026 was 1.45% and 0.02% for all
colleague share plans and executive share plans respectively.
Directors’ remuneration report continued
Tesco PLC Annual Report and Financial Statements 2026
106
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 2025, 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 £750,000 and increase the average total fees paid to Non-executive
Directors from 17 August 2025 by 3.00%, lower than for the wider workforce. Details of the remuneration arrangements for the Board Chair and Non-executive Directors are set out overleaf.
18/08/2024 to
16/08/2025
From
17/08/2025 Increase
Board Chair fee £727,000 £750,000 3.16%
Non-executive Director fee £87.500 £90,250 3.14%
Additional fees:
Senior Independent Director £36,000 £37,000 2.78%
Chairs of the Audit, Remuneration and Sustainability Committees £36,000 £37,000 2.78%
Membership of Audit, Nominations and Governance, Remuneration and Sustainability Committees £17,000 £17,500 2.94%
Colleague Contribution Panel £3,500 £3,500 0.00%
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.
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 was eligible for the Colleague Clubcard discount. Gerry Murphy also received healthcare benefits. 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.
2025/26 2024/25
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 160
4 164 127
1 128
Bertrand Bodson N S 1 June 2021 126 1 127 115 – 115
Carolyn Fairbairn A N R S 1 September 2023 202 2 204 171 1 172
Thierry Garnier N S 30 April 2021 126 5 131 115 4 119
Stewart Gilliland N R S 5 March 2018 163 2 165 155 1 156
Chris Kennedy A N 20 February 2025 126 2 128 1 – –
Gerry Murphy N 1 September 2023 753 4 757 716 4 720
Caroline Silver A N 1 October 2022 126 2 128 115 2 117
Karen Whitworth A N R S 18 June 2021 181 2 183 157 1 158
Former Directors
Alison Platt N R 1 April 2016 44 1 45 140 1 141
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 2026 AGM. Alison Platt stepped down from the Board on 12 June 2025. Fees, expenses and
benefits reflect a 53-week period in 2025/26 compared to a 52-week period in 2024/25.
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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 28 February and 15 April 2026.
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
(a)
Shares held at
22/02/2025
Shares held at
28/02/2026
Value of
shareholding
(% of base fee)
(b)
Melissa Bethell 37,447 37,447 186%
Bertrand Bodson 63,581 65,705 326%
Carolyn Fairbairn 35,000 35,000 174%
Thierry Garnier 15,000 15,000 74%
Stewart Gilliland
(c)
55,248 56,867 282%
Chris Kennedy – 31,144 155%
Gerry Murphy 90,000 90,000 54%
Caroline Silver 15,000 15,000 74%
Karen Whitworth 52,300 52,300 260%
(a) Alison Platt held 39,527 shares from 22 February 2025 until she retired from the Board on 12 June 2025.
(b) The value of Non-executive Directors’ shareholdings is based on the average share price over the three months to 28 February 2026 of 447.91p. The range of the Company’s share price for the year was 314.6p to 501.2p. The year-end share price was 480.6p (2024/25:
374.1p).
(c) Shares held in the joint names of Stewart Gilliland and his wife, Michelle Gilliland.
Voting at AGM
The table below sets out the voting outcome on the remuneration report at the 2025 AGM.
Votes for
(millions)
Votes against
(millions)
Votes withheld
(millions)
Remuneration report 4,637 145 3
96.97% 3.03%
The remuneration policy received strong shareholder support at the 2025 AGM.
Votes for
(millions)
Votes against
(millions)
Votes withheld
(millions)
Remuneration policy 4,632 144 10
96.99% 3.01%
The Committee engages in regular dialogue with shareholders and annually invites major investors to discuss its remuneration practices and governance matters. 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.
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 15 April 2026.
Melissa Bethell
Committee Chair
Directors’ remuneration report continued
Tesco PLC Annual Report and Financial Statements 2026
108
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 54 to 57,
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
2026, 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,
Chris Taylor
Group Company Secretary
15 April 2026
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109
Strategic report Financial statements Additional informationGovernance
Independent auditor’s report
to the members of Tesco PLC
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 (2024/25: £125m). It is
4.74% (2024/25: 4.67%) of the primary benchmark used to determine the materiality, total adjusted
profit before tax including net pension finance income/(cost), as described further on page 115.
Scoping
Our scoping provides audit coverage of 97% (2024/25: 97%) of revenue from continuing operations,
92% (2024/25: 94%) of profit before tax from continuing operations and 96% (2024/25: 94%) of total
assets.
Significant changes in our approach
There are no significant changes in our approach in comparison to the prior year.
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 28
February 2026 and of the Group’s profit for the 53-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).
Independent auditor’s report
Tesco PLC Annual Report and Financial Statements 2026
110
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 and repayment terms
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 £17,728m
(2024/25: £17,262m) of property, plant, and equipment and £5,777m (2024/25: £5,569m)
of right-of-use assets at 28 February 2026. Under IAS 36 Impairment of Assets, the Group must
complete an impairment review of its store portfolio where there are indicators of impairment
or reversal. As a result of the Group’s store impairment review completed during the year, a net
impairment loss of £53m (2024/25: £298m) was recognised. This includes an impairment charge
of £478m (2024/25: £671m) and an impairment reversal of £425m (2024/25: £373m).
The impairment review involves judgement in identifying indicators of impairment and estimating
the recoverable amount based on the higher of ‘value in use’ or ‘fair value less costs of disposal’.
Value in use is calculated using probability-weighted cash flows reflecting the Group’s best
estimate of future trading performance. Significant judgement is required to forecast cash flows
for the next three years which are derived from the Board-approved Long Term Plan (LTP) before
being allocated to stores using a top-down approach, 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. The impairment model is particularly sensitive to changes to the Year 3 cash
flows, which are discounted into the long term in the value in use calculation. Other key
assumptions include the probability weighting between the cash flow scenarios, the discount
rate and the long term growth rate.
Fair value less costs of disposal are estimated 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.
In making its 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 inflation, as well
as competitors actions and strategies that impact the retail market) on forecast cash flows
and property fair values where conditions existed at the balance sheet date.
Further details of the basis for value in use and fair value less costs of disposal, and associated
sensitivities, are set out in Note 15.
The Audit Committee’s discussion of this key audit matter is set out on page 81.
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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;
– challenging the key assumptions utilised in the value in use cash flow forecasts with reference to
historical trading performance, current market conditions (including the impacts of government
policies, changes to prices of goods for resale and fluctuations in inflation, as well as competitor
actions, consumer behaviour, climate change impact and our wider industry knowledge) and the
impacts of the Group’s strategic initiatives. As part of our assessment, we considered external data
sources to challenge the key assumptions, including collating and analysing a wider set of external
data such as analyst reports, relevant news articles, and reliable independent reports on ongoing
retail market trends;
– 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;
– evaluating the Group’s inputs to, and the appropriateness of, its discount rate and the validity of its
long-term growth rate, supported by our valuation specialists;
– assessing the mechanical accuracy and integrity of the value in use model prepared by the Group,
with involvement of our specialist modelling team;
– challenging the assumptions used by the Group in determining the fair market value of properties,
supported by our property valuation specialists, and assessing whether appropriate valuation
methodologies have been applied. For properties valued by an external valuer, we have evaluated
the competence, capabilities and objectivity of the Group’s valuers;
– performing a stand-back assessment to identify unusual trends and understand the factors driving
the impairment charge to identify any indicators of management bias. 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 whether the fair value is appropriate in these circumstances; and
– assessing and challenging the adequacy of the Group’s sensitivity analysis in relation to key
assumptions (including cash flows, discount rates, growth rates and property fair values) and
evaluating the sufficiency of sensitivity disclosures.
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.
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 when
the underlying product promotions have gone live in stores.
The variety and number of the buying arrangements with suppliers means there can be complexity
in determining if the performance obligations associated with the income have been satisfied. For
certain arrangements this gives 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 feature space deal types within the
Tesco UK retail business.
The Audit Committee’s discussion of this key audit matter is set out on page 81.
Independent auditor’s report continued
Tesco PLC Annual Report and Financial Statements 2026
112
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;
– using data analytics to identify commercial income deals with particular characteristics, such as
those related to feature space, and carried out further procedures on these, including arranging
one-on-one meetings with individual Tesco buyers and third party supplier representatives;
– using data matching analytics on a subset of the deals population, with reliance on the relevant
controls associated with the supplier approvals within our matching analytic population, to validate
the key deal attributes and determine whether the amounts recognised were accurate, recorded in
the correct period and the relevant performance obligations were met;
– for those deals and promotions not covered by the data matching analytic, 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, to confirm these were recognised accurately and the performance obligation had been
met. 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 occurrence of feature space deals by physically inspecting the placement of the
sampled products for a sample of deals;
– 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 circularising a sample of suppliers to obtain
details of a commercial income transaction entered into during the year and confirmed it was
recorded by the Group;
– 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;
– 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.
5.3. Pension valuation
Key audit matter description
As described in Note 1 (Accounting policies, judgements and estimates) and Note 28 (Post-
employment benefits) of the financial statements, the Group has a defined benefit pension plan in
the UK retail business. At 28 February 2026, the Group recorded a net retirement benefit surplus
before deferred tax of £197m (2024/25 deficit: £251m), comprising plan assets of £12,217m (2024/25:
£11,715m) and plan liabilities of £11,936m (2024/25: £11,963m). The net retirement surplus of £197m
(2024/25 deficit: £251m) before deferred tax comprises schemes in surplus of £324m (2024/25:
£56m) and schemes in deficit of £127m (2024/25: £307m).
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 81.
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;
– involving 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) 2024
mortality tables which include the updated 2024 actual mortality experience, with reference to
advice the Group has received from its actuaries; and
– assessing the competence, capabilities 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.
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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 previous years, we have reported certain IT control deficiencies within the retail IT system
applications which could have an adverse impact on the Group’s controls and financial reporting
systems. During the current year, a significant number of these have been remediated. The risk
associated with the deficiencies in the remaining retail in scope IT systems applications has been
assessed as low.
IT controls remediation is a complex multi-year project which includes the remediation of IT
deficiencies across a range of internally and externally hosted systems.
The Group has continued to implement its remediation plan related to Application User Access
Management and Privileged Access Management, with further progress made in restricting user
access, using a multi-layered access and control model. In addition, the Group has assessed there
is limited risk in the remaining in scope application systems where deficiencies have not yet been
remediated.
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 81.
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. Our planned approach considered the previously identified
deficiencies in the IT environment and the level of integration and inter-dependencies across the
systems.
Certain systems are further progressed along the remediation path, with IT controls reliance achieved
over an additional number of systems this year, allowing us to rely on the relevant automated controls
within these systems for part of the year.
During the year, our procedures included:
– obtaining an understanding of relevant controls over the information systems that are important to
financial reporting. This included understanding the changes made as part of the Group’s IT
remediation programme;
– obtaining an understanding of relevant controls which the Group has remediated, including those
areas related to longstanding issues referenced above. We used our automated controls testing tool
(ACTT) to support our IT controls testing across a number of relevant systems, including the testing
of key security configurations and user access; and
– considering management’s own risk assessment and development in the internal control
environment, we continued to perform substantive audit procedures where needed in response to
the unremediated deficiencies affecting the systems within the scope of our audit.
Key observations
We consider the overall level of risk associated with this key audit matter to have reduced compared
to the prior year. The Group has continued to implement its remediation plan and has completed the
remediation over the majority of the systems in scope for our audit. As noted above we achieved
controls reliance over an additional number of systems this year. The 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.
Independent auditor’s report continued
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114
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 (2024/25: £125m) £86m (2024/25: £96m)
Basis for
determining
materiality
4.74% (2024/25: 4.67%) of total adjusted profit
before tax, including net pension finance
income/(cost) of £2,638m (2024/25: £2,678m).
Materiality represents
less than 1% of net assets
(2024/25: less than 1%).
Rationale for the
benchmark
applied
The primary benchmark used to determine the
materiality is total adjusted profit before tax
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 0.17% (2024/25: 0.18%) of the
Group’s revenue from continuing operations
and 1.1% (2024/25: 1.1%) 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.
Adjusted profit
before tax from
continuing and
discontinued
operations
(including net
pension finance
income/(cost))
£2,638m
Component performance
materiality range £25.0m
to £56.5m
Audit Committee
reporting threshold
£6.25m
Group materiality £125m
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% (2024/25: 65%) of Group materiality 65% (2024/25: 65%) of
Parent Company materiality
Basis and rationale
for determining
performance
materiality
We have retained a lower percentage of materiality to determine our
performance materiality in 2025/26, consistent with previous years,
as the retail IT environment deficiencies noted in section 5.4 remained
unremediated or mitigated for at least part of the financial year. 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 (2024/25: £6.25m), 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.
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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 200 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 £25m and £56.5m (2024/25:
£23.4m and £62.4m).
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 Insurance Money Services (IMS). The components which were subject to audit procedures in the
current year represent 97% (2024/25: 97%) of revenue from continuing operations, 92% (2024/25:
94%) of profit before tax from continuing operations and 96% (2024/25: 94%) of total assets.
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 opposite.
Total assets
Audit of the entire financial information 78%
Specified audit procedures 18%
Review at group level 4%
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 92%
Review at group level 8%
Independent auditor’s report continued
Tesco PLC Annual Report and Financial Statements 2026
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At the Group level we tested the consolidation process, performed analytical procedures that
confirmed no significant risk of material misstatement in the aggregated financial information of
components not subject to audit procedures, and carried out audit procedures on centrally held
balances (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.
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 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 certain relevant 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.
In previous years we reported deficiencies in certain IT controls. As described in the Audit Committee
Report on page 83, the Group remediated deficiencies in certain application systems whilst also
assessing the risks within those systems that have not yet been remediated, with progress being
monitored. Accordingly, consistent with the prior year, we extended the scope of our substantive
audit procedures in response to the identified deficiencies.
As noted on page 114, considering the deficiencies and the level of integration and inter-dependencies
across the systems we did not plan to take a controls reliant audit approach for the majority of
systems in scope for our audit, except for the IMS business where 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 including insurance revenue, insurance service expense
and liability for incurred claims.
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.
Further details are set out in the ‘Retail technology environment’ key audit matter in section 5.4
above.
7.3. Use of audit technology
We embed technology and analytics throughout our audit to improve quality and effectiveness,
including in the areas of audit planning and risk assessment, controls testing, substantive testing, and
reporting.
At the planning stage, we use advanced data analytics to identify unusual trends, characteristics and
outliers to support our identification of audit risks. For example, we analysed the commercial income
data by identifying particular characteristics relating to feature space deals (see Section 5.2).
We have continued to leverage advanced data analytics to perform substantive procedures on
revenue for certain components, including the UK retail business, by reconciling reported revenue to
cash receipts obtained independently through Open Banking data flows. In addition, we used a
three-way match for certain components of commercial income in the UK retail business.
7.4. 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 34, the viability
statement on page 48, the principal risks on page 40, and in Note 15 of the financial statements.
The Group has set out their key commitments to:
– Achieve net zero across their own operations by 2035. This commitment is supported by targets to:
reduce absolute Scope 1 and 2 emissions by 85% by 2030; procure 60% of electricity by PPAs and
owned onsite generation assets by 2030.
– Achieve net zero across their value chain (Scope 3) by 2050. This commitment is supported by
targets to: reduce absolute Scope 3 emissions from energy and industrial sources by 55% by 2032,
and 90% by 2050; reduce absolute Scope 3 emissions from forests, land and agriculture by 39% by
2032 and 72% 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.
7.5. 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 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 October 2025 led
by the Group audit team. 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.
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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.
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 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, UK 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 IMS business, employment law, health
and safety and food safety laws and regulations.
Independent auditor’s report continued
Tesco PLC Annual Report and Financial Statements 2026
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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.
Report on other legal and regulatory requirements
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 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 UK 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 as set out on page 227;
– the Directors’ explanation as to its assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate as set out on page 48;
– the Directors’ statement on fair, balanced and understandable as set out on page 80;
– the Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 38;
– the section of the Annual Report that describes the review of effectiveness of risk management
and internal control systems set out on page 84; and
– the section describing the work of the Audit Committee set out on page 78.
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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 11 years, covering the years ending 27 February 2016 to 28 February 2026.
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).
Independent auditor’s report continued
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.
Richard Muschamp (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
15 April 2026
Tesco PLC Annual Report and Financial Statements 2026
120
Group income statement
The notes on pages 127 to 199 form part of these financial statements.
53 weeks ended | 52 weeks ended | ||||||
28 February 2026 | 22 February 2025 | ||||||
| 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 |
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GovernanceStrategic report Additional informationFinancial statements
Group statement of comprehensive income/(loss)
53 weeks ended | 52 weeks ended | ||
| 28 February 2026 | 22 February 2025 | ||
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 | 28 | ||
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 127 to 199 form part of these financial statements.
Tesco PLC Annual Report and Financial Statements 2026
122
28 February 2026 | 22 February 2025 | ||
Notes | £m | £m | |
| Non-current liabilities | |||
Trade and other payables | 20 | ( | ( |
Borrowings | 22 | ( | ( |
Lease liabilities | 13 | ( | ( |
Provisions | 23 | ( | ( |
Derivative financial instruments | 25 | ( | ( |
Post-employment benefit deficit | 28 | ( | ( |
Deferred tax liabilities | 7 | ( | ( |
( | ( | ||
Net assets | |||
| Equity | |||
Share capital | 29 | ||
Share premium | |||
Other reserves | 29 | ||
Retained earnings | |||
Equity attributable to owners of the parent | |||
Non-controlling interests | ( | ( | |
Total equity |
Group balance sheet
28 February 2026 | 22 February 2025 | ||
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 | 25 | ||
Post-employment benefit surplus | 28 | ||
Deferred tax assets | 7 | ||
| Current assets | |||
Other investments | 16 | ||
Inventories | 17 | ||
Trade and other receivables | 18 | ||
Derivative financial instruments | 25 | ||
Current tax assets | |||
Short-term investments | 19 | ||
Cash and cash equivalents | 19 | ||
Non-current assets classified as held for sale | 8 | ||
| Current liabilities | |||
Trade and other payables | 20 | ( | ( |
Borrowings | 22 | ( | ( |
Lease liabilities | 13 | ( | ( |
Provisions | 23 | ( | ( |
Insurance contract liabilities | 24 | ( | ( |
Derivative financial instruments | 25 | ( | ( |
Current tax liabilities | ( | ( | |
( | ( | ||
Net current liabilities | ( | ( |
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GovernanceStrategic report Additional informationFinancial statements
Group statement of changes in equity
| Other reserves | Non-controlling | |||||||
Share capital | Share premium | (Note 29) | Retained earnings | Total | interests | Total equity | ||
Notes | £m | £m | £m | £m | £m | £m | £m | |
At 22 February 2025 | ( | |||||||
| 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 | 28 | |||||||
| 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) | ( | ( | ||||||
| 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 | 29 | ( | ( | ( | ||||
Own shares cancelled | 29 | ( | ( | |||||
Own shares purchased for share schemes | 29 | ( | ( | ( | ||||
Share-based payments | 27 | ( | ||||||
Share forfeiture | 29 | |||||||
Dividends | 9 | ( | ( | ( | ||||
Transfer from own shares held to retained earnings | 29 | ( | ||||||
Tax on items (charged)/credited to equity | 7 | |||||||
Total transactions with owners | ( | ( | ( | ( | ( | |||
At 28 February 2026 | ( |
Tesco PLC Annual Report and Financial Statements 2026
124
| Other reserves | Non-controlling | |||||||
Share capital | Share premium | (Note 29) | 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 | 28 | | ||||||
| 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 | 29 | ( | ( | ( | ||||
Own shares cancelled | 29 | ( | ( | |||||
Own shares purchased for share schemes | 29 | ( | ( | ( | ||||
Share-based payments | 27 | ( | | |||||
Dividends | 9 | ( | ( | ( | ||||
Tax on items (charged)/credited to equity | 7 | | ||||||
Total transactions with owners | ( | ( | ( | ( | ||||
At 22 February 2025 | ( |
The notes on pages 127 to 199 form part of these financial statements.
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GovernanceStrategic report Additional informationFinancial statements
| 53 weeks | 52 weeks | ||
| ended | ended | ||
| 28 February | 22 February | ||
| 2026 | 2025 | ||
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 and assets classified as held for sale | |||
| 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 | ||
Adjustment for non-cash element of pensions charge | |||
Defined benefit pension scheme payments | 28 | ( | ( |
Share-based payments | 27 | ||
| 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 | ( | ||
| (Increase)/decrease in working capital of the Banking operations disposal | |||
| group | |||
(Increase)/decrease in working capital | ( | ||
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 | |||
Cash inflows from maturing short-term investments – deposits |
Group cash flow statement
| 53 weeks | 52 weeks | ||
| ended | ended | ||
| 28 February | 22 February | ||
| 2026 | 2025 | ||
Notes | £m | £m | |
Cash outflows on investing in short-term investments – deposits | ( | ( | |
(Investments in)/proceeds from other short-term investments | ( | ||
Proceeds from sale of other investments* | |||
Purchase of other investments | ( | ( | |
Interest received | |||
Net cash generated from/(used in) investing activities | ( | ( | |
| Cash flows generated from/(used in) financing activities | |||
Proceeds from sale of untraced shares | 29 | ||
Own shares purchased for cancellation | 29 | ( | ( |
Own shares purchased for share schemes, net of cash received from employees | 27 | ( | ( |
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 at the end of the year | 19 |
* Comparatives have been re-presented following the Group’s change in accounting policy for economic hedges. There is no impact
on Net increase/(decrease) in cash and cash equivalents, and no impact on any APMs. See Note 32 for more details.
The notes on pages 127 to 199 form part of these financial statements.
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Notes to the Group financial statements
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Note 1 Accounting policies, judgements and estimates continued
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Note 1 Accounting policies, judgements and estimates continued
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Note 1 Accounting policies, judgements and estimates continued
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Note 1 Accounting policies, judgements and estimates continued
| Total 52 | Total 53 | |||||||
| weeks at | weeks at | |||||||
| 53 weeks ended 28 | Central | constant | Foreign | Include | actual | |||
February 2026 | UK & ROI | Booker | Europe | exchange | exchange | 53rd week* | exchange | |
At constant exchange rates | Notes | £m | £m | £m | £m | £m | £m | £m |
Revenue | 3 | 58,731 | 9,040 | 4,474 | 72,245 | 219 | 1,248 | 73,712 |
Less: Fuel sales | (5,737) | - | (134) | (5,871) | (5) | (111) | (5,987) | |
Sales | 52,994 | 9,040 | 4,340 | 66,374 | 214 | 1,137 | 67,725 | |
Adjusted operating profit | 2,745 | 292 | 111 | 3,148 | 4 | 42 | 3,194 | |
Adjusting items | 5 | (84) | (81) | (31) | (196) | (1) | (12) | (209) |
Operating profit | 2,661 | 211 | 80 | 2,952 | 3 | 30 | 2,985 | |
Adjusted operating margin | 4.7% | 3.2% | 2.5% | 4.4% | 4.3% |
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| Central | Total 52 | Include | Total 53 | ||||
53 weeks ended 28 February 2026 | UK & ROI | Booker | Europe | weeks | 53rd week* | weeks | |
At actual exchange rates | Notes | £m | £m | £m | £m | £m | £m |
Revenue | 3 | 58,795 | 9,040 | 4,629 | 72,464 | 1,248 | 73,712 |
Less: Fuel sales | (5,737) | - | (139) | (5,876) | (111) | (5,987) | |
Sales | 53,058 | 9,040 | 4,490 | 66,588 | 1,137 | 67,725 | |
Adjusted operating profit | 2,745 | 292 | 115 | 3,152 | 42 | 3,194 | |
Adjusting items | 5 | (84) | (81) | (32) | (197) | (12) | (209) |
Operating profit | 2,661 | 211 | 83 | 2,955 | 30 | 2,985 | |
Adjusted operating margin | 4.7% | 3.2% | 2.5% | 4.3% | 4.3% | ||
| Share of post-tax profit/ | 14 | (1) | |||||
(loss) of joint ventures and associates | |||||||
Finance income | 6 | 233 | |||||
Finance costs | 6 | (814) | |||||
Profit/(loss) before tax | 2,403 |
| UK & ROI | Central | ||||
| 52 weeks ended 22 February 2025 | (restated*) | Booker | Europe | Total | |
At actual exchange rates | Notes | £m | £m | £m | £m |
Revenue | 3 | 56,593 | 8,990 | 4,333 | 69,916 |
Less: Fuel sales | (6,133) | - | (147) | (6,280) | |
Sales | 50,460 | 8,990 | 4,186 | 63,636 | |
Adjusted operating profit | 2,726 | 290 | 112 | 3,128 | |
Adjusting items | 5 | (209) | (78) | (130) | (417) |
Operating profit | 2,517 | 212 | (18) | 2,711 | |
Adjusted operating margin | 4.8% | 3.2% | 2.6% | 4.5% | |
| Share of post-tax profit/(loss) of joint ventures | 14 | (4) | |||
| and associates | |||||
Finance income | 6 | 254 | |||
Finance costs | 6 | (746) | |||
Profit/(loss) before tax | 2,215 |
| Central | Total 52 | Include 53rd | Total 53 | |||
UK & ROI | Booker | Europe | weeks | week (a) | weeks | |
53 weeks ended 28 February 2026 | £m | £m | £m | £m | £m | £m |
| Capital expenditure (including | ||||||
| acquisitions through business | ||||||
| combinations): | ||||||
Property, plant and equipment (b) | 1,182 | 75 | 97 | 1,354 | 15 | 1,369 |
Goodwill and other intangible assets (c) | 310 | - | 10 | 320 | 6 | 326 |
Depreciation and amortisation: | ||||||
Property, plant and equipment | (841) | (51) | (88) | (980) | (16) | (996) |
Right of use assets | (441) | (90) | (50) | (581) | (10) | (591) |
Other intangible assets | (212) | (78) | (11) | (301) | (6) | (307) |
| UK & ROI | Central | Total | ||
(restated (a) ) | Booker | Europe | segments | |
52 weeks ended 22 February 2025 | £m | £m | £m | £m |
Capital expenditure (including acquisitions through business combinations): | ||||
Property, plant and equipment (b) | 1,182 | 82 | 98 | 1,362 |
Goodwill and other intangible assets (c) | 276 | 56 | 10 | 342 |
| Depreciation and amortisation: | ||||
Property, plant and equipment | (800) | (50) | (87) | (937) |
Right of use assets | (419) | (82) | (49) | (550) |
Other intangible assets | (199) | (77) | (11) | (287) |
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Notes to the Group financial statements continued
Note 3 Revenue
53 weeks | 52 weeks | ||
2026 | 2025 | ||
Continuing operations | Notes | £m | £m |
UK | 56,590 | 53,619 | |
ROI | 3,299 | 2,974 | |
UK & ROI* | 59,889 | 56,593 | |
Booker | 9,194 | 8,990 | |
Hungary | 1,616 | 1,445 | |
Czech Republic | 1,562 | 1,471 | |
Slovakia | 1,451 | 1,417 | |
Central Europe | 2 | 4,629 | 4,333 |
Total Group | 2 | 73,712 | 69,916 |
* Comparatives have been restated to reflect the reclassification of the Booker business to its own segment. Refer to Note 2.
53 weeks | 52 weeks | |
2026 | 2025 | |
£m | £m | |
Fees payable to the Company’s auditor and its associates for the audit of the Company and Group financial statements | 4.1 | 4.1 |
The audit of the accounts of the Company’s subsidiaries | 9.7 | 10.8 |
Total audit services | 13.8 | 14.9 |
Audit-related assurance services | 0.8 | 0.9 |
Non-audit services | 0.6 | 0.8 |
Total non-audit services | 1.4 | 1.7 |
Total auditor’s remuneration | 15.2 | 16.6 |
53 weeks | 52 weeks | ||
2026 | 2025 | ||
Notes | £m | £m | |
Wages and salaries | 7,922 | 7,473 | |
Social security costs | 837 | 609 | |
Post-employment defined benefit charges | 28 | 20 | 17 |
Post-employment defined contribution charges | 28 | 486 | 454 |
Share-based payments expense | 27 | 140 | 136 |
Termination benefits | 56 | 37 | |
Total | 9,461 | 8,726 | |
| Less: Discontinued operations | - | (110) | |
Total continuing operations | 9,461 | 8,616 |
| Average number of | Average number of full-time | |||
| employees | equivalents | |||
2026 | 2025 | 2026 | 2025 | |
UK & ROI (a) | 298,794 | 303,775 | 193,002 | 194,893 |
Booker | 15,195 | 14,981 | 13,926 | 13,757 |
Central Europe | 22,134 | 22,352 | 20,260 | 20,490 |
Total continuing operations | 336,123 | 341,108 | 227,188 | 229,140 |
Discontinued operations (b) | - | 2,363 | - | 2,253 |
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Note 5 Adjusting items
Group income statement
Refer to Note 1 for further details regarding the assessment of items as adjusting.
53 weeks ended 28 February 2026
Profit/(loss) for the year included the following adjusting items:
| Total adjusting | ||||||
| items included | ||||||
| Administrative | within operating | Finance income/ | Total adjusting | |||
| Cost of sales | expenses | profit | (costs) | Taxation | items | |
£m | £m | £m | £m | £m | £m | |
Property transactions (a) | 3 | - | 3 | - | (2) | 1 |
Net impairment (loss)/reversal of non-current assets (b) | (48) | (5) | (53) | - | 39 | (14) |
Restructuring (c) | (31) | (22) | (53) | - | 11 | (42) |
Amortisation of acquired intangible assets (d) | - | (78) | (78) | - | 20 | (58) |
Separation programme costs related to disposal of Banking operations (e) | (15) | (13) | (28) | - | 16 | (12) |
Net pension finance income/(costs) (f) | - | - | - | (14) | 4 | (10) |
Fair value remeasurements of financial instruments (f) | - | - | - | (26) | 8 | (18) |
Total adjusting items (g) | (91) | (118) | (209) | (40) | 96 | (153) |
(a) Includes profits and losses related to the disposal of surplus properties.
(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, and a multi-year programme to restructure the UK distribution network, which commenced in the current year. The
total cost of the save to invest programme recognised as adjusting since its start date is £(316)m (2025: £(275)m). Future cost savings will not be reported within adjusting items.
(d) Amortisation of acquired intangibles relates to assets acquired through business combinations and does not reflect the Group’s ongoing trading performance.
(e) Separation programme costs incurred in the continuing Group in relation to the disposal of the Group’s Banking operations in the prior year.
(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 28 for details of pension schemes.
(g) For the 53 weeks ended 28 February 2026 (prior year 52 weeks ended 22 February 2025). The impact of adjusting items in the 53rd week is not material. See page 219.
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 | 1 | 1 | 2 | - | - | - | 2 |
Net impairment (loss)/reversal of non-current assets | (274) | (12) | (286) | - | 57 | - | (229) |
Restructuring | (38) | (5) | (43) | - | 11 | - | (32) |
| Amortisation of acquired intangible assets | - | (76) | (76) | - | 19 | - | (57) |
Separation programme costs related to disposal of Banking operations | (8) | (6) | (14) | - | 4 | - | (10) |
| Net pension finance income/(costs) | - | - | - | (32) | 8 | - | (24) |
| Fair value remeasurements of financial instruments | - | - | - | 76 | (20) | - | 56 |
Total adjusting items from continuing operations | (319) | (98) | (417) | 44 | 79 | - | (294) |
| Adjusting items relating to discontinued operations | - | - | - | - | - | (65) | (65) |
Total adjusting items | (319) | (98) | (417) | 44 | 79 | (65) | (359) |
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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 | ||||
53 weeks | 52 weeks | 53 weeks | 52 weeks | 53 weeks | 52 weeks | |
2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |
£m | £m | £m | £m | £m | £m | |
Property transactions (a) | (1) | - | 39 | 130 | (31) | - |
Restructuring (b) | (53) | (55) | - | - | - | - |
| Separation (costs)/ | (26) | (26) | - | 586 | - | - |
proceeds related to disposal of Banking | ||||||
operations (c) | ||||||
Disposal of subsidiaries (d) | - | - | 2 | - | - | - |
Total | (80) | (81) | 41 | 716 | (31) | - |
Adjusting items relating to discontinued operations (e) | - | - | - | (429) | - | - |
Total | (80) | (81) | 41 | 287 | (31) | - |
53 weeks | 52 weeks | ||
2026 | 2025 | ||
Continuing operations | Notes | £m | £m |
| Finance income | |||
| Interest income on: | |||
Bank balances | 103 | 113 | |
Short-term investments | 99 | 119 | |
Loans to joint ventures and associates | 7 | 7 | |
Other investments and receivables | 20 | 12 | |
Net investment in leases | 2 | 1 | |
Finance income on reinsurance contracts held | 2 | 2 | |
Total finance income | 233 | 254 | |
| Finance costs | |||
GBP MTNs and loans | (172) | (204) | |
EUR MTNs | (83) | (82) | |
USD bonds | (14) | (16) | |
Interest expense on lease liabilities * | (390) | (370) | |
Finance expense on insurance contracts issued | (13) | (11) | |
Interest expense on bank overdrafts | (91) | (97) | |
Undrawn committed facility fee | (5) | (5) | |
Unwind of discount on provision | (6) | (5) | |
Total finance costs before adjusting items | (774) | (790) | |
Fair value remeasurements of financial instruments | (26) | 76 | |
Net pension finance income/(costs) | 28 | (14) | (32) |
Total finance costs | (814) | (746) | |
Net finance costs | (581) | (492) |
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Note 7 Taxation
Recognised in the Group income statement
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
| Current tax (credit)/charge | ||
UK corporation tax | 456 | 394 |
Overseas tax | 85 | 88 |
Adjustments in respect of prior years | (35) | (18) |
506 | 464 | |
| Deferred tax (credit)/charge | ||
Origination and reversal of temporary differences | 84 | 137 |
Adjustments in respect of prior years | 26 | 6 |
| Change in tax rate | - | 4 |
110 | 147 | |
Total income tax (credit)/charge | 616 | 611 |
Reconciliation of effective tax charge
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
Profit/(loss) before tax | 2,403 | 2,215 |
Tax credit/(charge) at the UK corporation tax rate of 25% (2025: 25%) | (601) | (554) |
| Effect of: | ||
Non-qualifying depreciation | (41) | (41) |
Expenses not deductible | (24) | (20) |
Net impairment (loss)/reversal of non-current assets | 25 | (8) |
Unrecognised tax losses | (5) | (3) |
Differences in overseas taxation rates | 23 | 11 |
Adjustments in respect of prior years | 9 | 12 |
| Share of profits/(losses) of joint ventures and associates | - | (1) |
| Change in tax rate | - | (4) |
Irrecoverable withholding tax | (2) | (3) |
Total income tax credit/(charge) | (616) | (611) |
Effective tax rate (statutory) | 25.6% | 27.6% |
Reconciliation of effective tax charge on adjusted profit before tax
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
Profit/(loss) before tax | 2,403 | 2,215 |
Exclude: Adjusting items | 249 | 373 |
Adjusted profit before tax | 2,652 | 2,588 |
Tax credit/(charge) at the UK corporation tax rate of 25% (2025: 25%) | (663) | (647) |
| Effect of: | ||
Non-qualifying depreciation | (41) | (41) |
Expenses not deductible | (25) | (21) |
Unrecognised tax losses | (5) | (3) |
Differences in overseas taxation rates | 20 | 20 |
Adjustments in respect of prior years | 4 | 12 |
| Share of profits/(losses) of joint ventures and associates | - | (1) |
| Change in tax rate | - | (6) |
Irrecoverable withholding tax | (2) | (3) |
Total income tax credit/(charge) before adjusting items | (712) | (690) |
Adjusted effective tax rate | 26.8% | 26.7% |
The tax credit/(charge) for week 53 is £(9)m. The Adjusted effective tax rate is the same on both a
53-week and 52-week basis.
Tax on items credited directly to the Group statement of changes in equity
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
| Current tax credit/(charge) on: | ||
Share-based payments | 13 | 14 |
| Deferred tax credit/(charge) on: | ||
Share-based payments | 35 | 22 |
| Total tax on items credited/(charged) to the Group statement of changes | 48 | 36 |
| in equity |
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Notes to the Group financial statements continued
Note 7 Taxation continued
Tax relating to components of the Group statement of comprehensive income/(loss)
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
| Current tax credit/(charge) on: | ||
Pensions | 7 | - |
Fair value of movement on financial assets at fair value through other comprehensive income | (2) | - |
| Deferred tax credit/(charge) on: | ||
Pensions | (54) | (93) |
Fair value of movement on financial assets at fair value through other comprehensive income | (6) | (3) |
Finance income/(expenses) on insurance contracts issued and reinsurance contracts held | 1 | - |
Fair value movements on cash flow hedges | 5 | 7 |
Total tax on items credited/(charged) to Group statement of comprehensive income/(loss) | (49) | (89) |
| 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 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) |
(Charge)/credit to the Group income statement | (134) | 20 | 5 | 3 | 15 | (1) | (18) | (110) |
| (Charge)/credit to the Group statement of changes in equity | - | - | - | 35 | - | - | - | 35 |
| (Charge)/credit to the Group statement of comprehensive income/(loss) | - | - | (54) | - | - | - | - | (54) |
Foreign exchange and other movements | (1) | - | 1 | - | (1) | - | - | (1) |
At 28 February 2026 | (728) | (43) | 23 | 104 | 96 | 4 | (42) | (586) |
Tesco PLC Annual Report and Financial Statements 2026
140
2026 | 2025 | |
£m | £m | |
Deferred tax assets | 49 | 47 |
Deferred tax liabilities | (635) | (503) |
(586) | (456) |
2026 | 2025 | |
£m | £m | |
Deductible temporary differences | 41 | 40 |
Tax losses | 196 | 180 |
237 | 220 |
2026 | 2025 | |
£m | £m | |
Non-current assets classified as held for sale | 114 | 50 |
| 2025 | |
| £m | |
Revenue | 547 |
Operating costs | (448) |
Operating profit (a) | 99 |
Net finance costs | (1) |
Profit before tax | 98 |
Taxation | (24) |
Profit after tax | 74 |
Remeasurement of the disposal group to fair value less costs to sell (a)(b) | (64) |
Tax on remeasurement of the disposal group to fair value less costs to sell (c) | 16 |
Profit after tax of discontinued operations | 26 |
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Notes to the Group financial statements continued
Note 8 Discontinued operations and assets classified as held for sale continued
| 2025 | |
| £m | |
Net cash flows from operating activities | 171 |
Net cash flows from investing activities | (436) |
Net cash flows from financing activities | (2) |
Net cash flows from discontinued operations | (267) |
Note 9 Dividends
2026 | 2025 | |||
Pence/share | £m | Pence/share | £m | |
Paid prior financial year final dividend (a) | 9.45 | 626 | 8.25 | 576 |
Paid interim dividend (b) | 4.80 | 310 | 4.25 | 289 |
| Amounts recognised through equity as distributions | 936 | 865 | ||
| to owners | ||||
| (Increase)/decrease in unclaimed dividends | - | 1 | - | (1) |
Dividend paid in the financial year | 937 | 864 | ||
Proposed final dividend at financial year end |
(a) Excludes £5m prior financial year final dividend waived (2025: £5m) and £4m (2025: £nil) relating to shares cancelled prior to the
ex-dividend date. Presented net of £2m (2025: £nil) of unclaimed dividends credited to retained earnings.
(b) Excludes £2m interim dividend waived (2025: £2m) and £2m (2025: £nil) relating to shares cancelled prior to the ex-dividend date.
The proposed final dividend was approved by the Board of Directors on 15 April 2026 and is subject to
the approval of shareholders at the AGM. The proposed dividend has not been included as a liability as
at 28 February 2026. If approved by shareholders, it will be paid on 26 June 2026 to shareholders who
are on the register of members at close of business on 15 May 2026.
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 5 June 2026.
For all dividends, 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. £2m
(2025: £nil) of unclaimed dividends have been adjusted for in retained earnings. Refer to Note 29 for
further details.
Note 10 Earnings/(losses) per share and diluted earnings/(losses) per share
For the 53 weeks ended 28 February 2026 there were 99 million (2025: 83 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.
53 weeks ended 28 February 2026 | 52 weeks ended 22 February 2025 | |||||
| Dilutive share | Dilutive share | |||||
| options and | options and | |||||
| Basic | awards | Diluted | Basic | awards | Diluted | |
| Profit/(loss) (£m) | ||||||
Continuing operations * | 1,787 | - | 1,787 | 1,600 | - | 1,600 |
| Discontinued operations | - | - | - | 26 | - | 26 |
Total | 1,787 | - | 1,787 | 1,626 | - | 1,626 |
| Weighted average number | 6,507 | 99 | 6,606 | 6,835 | 83 | 6,918 |
| of shares (millions) | ||||||
| Earnings/(losses) per share | ||||||
| (pence) | ||||||
Continuing operations | 27.5 | (0.4) | 27.1 | 23.4 | (0.3) | 23.1 |
| Discontinued operations | - | - | - | 0.4 | - | 0.4 |
Total | 27.5 | (0.4) | 27.1 | 23.8 | (0.3) | 23.5 |
* Excludes profits/(losses) attributable to non-controlling interests of £nil (2025: £4m).
APM: Adjusted diluted earnings/(losses) per share
2026 | 2025 | ||||
| As reported | |||||
| on a 53-week | Exclude 53rd | On a 52-week | |||
Continuing operations | Notes | basis | week (a) | basis | 52 weeks |
Profit before tax (£m) | 2,403 | (25) | 2,378 | 2,215 | |
Exclude: Adjusting items (£m) | 5 | 249 | (7) | 242 | 373 |
Adjusted profit before tax (£m) | 2,652 | (32) | 2,620 | 2,588 | |
Adjusted profit before tax attributable to the owners of the parent (£m) (b) | 2,652 | (32) | 2,620 | 2,584 | |
| Taxation on adjusted profit before tax | 7 | (712) | 9 | (703) | (690) |
| attributable to the owners of the parent (£m) | |||||
Adjusted profit after tax attributable to the owners of the parent (£m) | 1,940 | (23) | 1,917 | 1,894 | |
| Basic weighted average number of shares | 6,507 | 3 | 6,510 | 6,835 | |
| (millions) | |||||
Adjusted basic earnings per share (pence) | 29.5 | 27.7 | |||
| Diluted weighted average number of shares | 6,606 | 2 | 6,608 | 6,918 | |
| (millions) | |||||
| Adjusted diluted earnings per share APM | 29.0 | 27.4 | |||
| (pence) |
(a) Refer to page 216 for details of week 53 adjustments for the Group’s APMs.
(b) Refer to previous table for footnote.
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2026 | 2025 | |||||||||
| 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 | 4,549 | 1,719 | 736 | 373 | 7,377 | 4,515 | 1,837 | 718 | 383 | 7,453 |
Foreign currency translation | 7 | 19 | - | 1 | 27 | (4) | (5) | - | - | (9) |
| Additions | - | 322 | - | 1 | 323 | - | 285 | - | 1 | 286 |
Acquired through business combinations | 3 | - | - | - | 3 | 38 | - | 18 | - | 56 |
| Disposals | - | (157) | - | (3) | (160) | - | (398) | - | (11) | (409) |
Closing balance | 4,559 | 1,903 | 736 | 372 | 7,570 | 4,549 | 1,719 | 736 | 373 | 7,377 |
| Accumulated amortisation and impairment losses | ||||||||||
Opening balance | 385 | 1,077 | 526 | 302 | 2,290 | 387 | 1,238 | 450 | 312 | 2,387 |
Foreign currency translation | 4 | 16 | - | 1 | 21 | (2) | (3) | - | - | (5) |
Amortisation charge for the year (c)(d) | - | 228 | 78 | 1 | 307 | - | 210 | 76 | 1 | 287 |
Impairment losses (e) | - | 26 | - | 1 | 27 | - | 35 | - | - | 35 |
Reversal of impairment losses (e) | - | (9) | - | - | (9) | - | (8) | - | - | (8) |
| Disposals | - | (155) | - | (3) | (158) | - | (395) | - | (11) | (406) |
Closing balance | 389 | 1,183 | 604 | 302 | 2,478 | 385 | 1,077 | 526 | 302 | 2,290 |
Net carrying value | 4,170 | 720 | 132 | 70 | 5,092 | 4,164 | 642 | 210 | 71 | 5,087 |
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Note 12 Property, plant and equipment
2026 | 2025 | |||||
| Land and | Land and | |||||
buildings (a) | Other (b) | Total | buildings (a) | Other (b) | Total | |
£m | £m | £m | £m | £m | £m | |
| Cost | ||||||
Opening balance | 23,094 | 6,323 | 29,417 | 22,966 | 6,130 | 29,096 |
Foreign currency translation | 287 | 89 | 376 | (129) | (40) | (169) |
Additions (c) | 458 | 911 | 1,369 | 504 | 857 | 1,361 |
| Acquired through business combinations | - | - | - | - | 1 | 1 |
Reclassification | 5 | - | 5 | (2) | 2 | - |
Transfers (to)/from assets classified as held for sale | (179) | (7) | (186) | (55) | - | (55) |
Disposals | (108) | (385) | (493) | (190) | (627) | (817) |
Closing balance | 23,557 | 6,931 | 30,488 | 23,094 | 6,323 | 29,417 |
| Accumulated depreciation and impairment losses | ||||||
Opening balance | 8,335 | 3,820 | 12,155 | 7,969 | 3,906 | 11,875 |
Foreign currency translation | 121 | 57 | 178 | (52) | (26) | (78) |
Depreciation charge for the year | 477 | 519 | 996 | 464 | 473 | 937 |
Impairment losses (d) | 168 | 102 | 270 | 292 | 119 | 411 |
Reversal of impairment losses (d) | (245) | (41) | (286) | (197) | (37) | (234) |
Transfers (to)/from assets classified as held for sale | (91) | (4) | (95) | (21) | - | (21) |
Reclassification | 4 | - | 4 | - | - | - |
Disposals | (87) | (375) | (462) | (120) | (615) | (735) |
Closing balance | 8,682 | 4,078 | 12,760 | 8,335 | 3,820 | 12,155 |
Net carrying value (e) | 14,875 | 2,853 | 17,728 | 14,759 | 2,503 | 17,262 |
Construction in progress included above (f) | 115 | 383 | 498 | 155 | 361 | 516 |
(a) The estimated fair value of land and buildings is £15.4bn (2025: £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 £2,183m (2025: £1,874m), office equipment with a net carrying value of £301m (2025: £269m) and motor vehicles with a net carrying value of £369m (2025: £360m). Depreciation charge for the year is
£(338)m (2025: £(306)m), £(82)m (2025: £(75)m) and £(99)m (2025: £(92)m), respectively.
(c) Includes £163m (2025: £199m) relating to store buybacks, direct store purchases and refits associated with both direct store purchases and business combinations.
(d) Refer to Note 15.
(e) Includes £3,372m (2025: £3,128m) of assets pledged as security for secured bonds (refer to Note 22) and £817m (2025: £820m) of property held as security in favour of the Tesco PLC Pension Scheme (refer to Note 28).
(f) Construction in progress does not include land.
Notes to the Group financial statements continued
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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
2026 | 2025 | |||||
Land and buildings | Other | Total | Land and buildings | Other | Total | |
£m | £m | £m | £m | £m | £m | |
| Net carrying value | ||||||
Opening balance | 5,431 | 138 | 5,569 | 5,365 | 113 | 5,478 |
Additions (including sale and leaseback transactions) | 296 | 98 | 394 | 476 | 66 | 542 |
| Acquired through business combinations | - | - | - | 5 | - | 5 |
Depreciation charge for the year | (542) | (49) | (591) | (512) | (38) | (550) |
Impairment losses (a) | (178) | (1) | (179) | (223) | (2) | (225) |
Reversal of impairment losses (a) | 130 | - | 130 | 130 | - | 130 |
Other movements (b) | 455 | (1) | 454 | 190 | (1) | 189 |
Closing balance | 5,592 | 185 | 5,777 | 5,431 | 138 | 5,569 |
(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 31.
2026 | 2025 | |
£m | £m | |
Current | 659 | 618 |
Non-current | 7,225 | 7,098 |
Total lease liabilities | 7,884 | 7,716 |
2026 | 2025 | |
Maturity analysis – contractual undiscounted lease payments | £m | £m |
Within one year | 1,040 | 995 |
Greater than one year but less than two years | 1,014 | 973 |
Greater than two years but less than three years | 972 | 940 |
Greater than three years but less than four years | 926 | 896 |
Greater than four years but less than five years | 862 | 855 |
Greater than five years but less than 10 years | 3,552 | 3,489 |
Greater than 10 years but less than 15 years | 1,900 | 1,951 |
After 15 years | 805 | 777 |
Total undiscounted lease payments | 11,071 | 10,876 |
Amounts recognised in the Group income statement
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
Interest expense on lease liabilities* | 404 | 377 |
Expenses relating to short-term leases | 24 | 24 |
| 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 £14m hedging impact (2025: £7m).
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Note 13 Leases continued
53 weeks | 52 weeks | |
2026 | 2025 | |
£m | £m | |
Total cash outflow for leases | 1,063 | 980 |
53 weeks | 52 weeks | |
2026 | 2025 | |
Continuing operations | £m | £m |
Finance lease – interest income (a) | 2 | 1 |
Operating lease – rental income (b) | 101 | 100 |
Operating lease payments receivable maturity analysis
2026 | 2025 | |
£m | £m | |
Within one year | 60 | 61 |
Greater than one year but less than two years | 34 | 35 |
Greater than two years but less than three years | 33 | 28 |
Greater than three years but less than four years | 24 | 27 |
Greater than four years but less than five years | 23 | 18 |
Greater than five years but less than 10 years | 32 | 30 |
Greater than 10 years but less than 15 years | 9 | 9 |
After 15 years | 22 | 29 |
Total undiscounted operating lease payments receivable | 237 | 237 |
Joint ventures | Associates | |||
2026 | 2025 | 2026 | 2025 | |
£m | £m | £m | £m | |
Aggregate carrying amount of individually immaterial joint ventures | 112 | 105 | 9 | 5 |
| and associates | ||||
Group’s share of losses for the year* | (2) | (5) | - | - |
Notes to the Group financial statements continued
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| UK property joint ventures | ||
2026 | 2025 | |
£m | £m | |
| Summarised balance sheet | ||
Non-current assets (a) | 1,766 | 1,794 |
Current assets (excluding cash and cash equivalents) | 7 | 8 |
Cash and cash equivalents | 13 | 12 |
Current liabilities (b) | (73) | (68) |
Non-current liabilities (b) | (2,170) | (2,247) |
Net liabilities | (457) | (501) |
Group’s share in ownership | 50% | 50% |
Group’s share of net liabilities | (229) | (251) |
Deferred property profits offset against carrying amounts | (56) | (57) |
Cumulative unrecognised losses (c) | 131 | 134 |
Cumulative unrecognised hedge reserves (c) | 154 | 174 |
| Carrying amount | - | - |
| Summarised income statement | ||
Revenue | 151 | 184 |
Profit and total comprehensive income (d) | - | - |
Dividend received by the Group (e) | 1 | 1 |
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Note 14 Group entities continued
Note 15 Impairment of non-current assets
Impairment losses and reversals
Goodwill
There was no impairment of goodwill balances in the current year (2025: £nil). Refer to Note 11 for details on the changes to the allocation of goodwill following the recognition of Booker as a separate operating
segment.
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 (2025: £nil) with respect to investments in joint ventures and associates and no impairments of other non-current assets in Booker (2025: £nil).
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 | |
53 weeks ended 28 February 2026 | £m | £m | £m | £m | £m | £m | £m |
| Group balance sheet | |||||||
Other intangible assets | (27) | 9 | - | - | (27) | 9 | (18) |
Property, plant and equipment | (246) | 278 | (24) | 8 | (270) | 286 | 16 |
Right of use assets | (153) | 112 | (26) | 18 | (179) | 130 | (49) |
Investment property | (2) | - | - | - | (2) | - | (2) |
Total impairment (loss)/reversal of other non-current assets | (428) | 399 | (50) | 26 | (478) | 425 | (53) |
| Group income statement | |||||||
Cost of sales (a) | (409) | 389 | (50) | 22 | (459) | 411 | (48) |
Administrative expenses (b) | (19) | 10 | - | 4 | (19) | 14 | (5) |
Total impairment (loss)/reversal from continuing operations | (428) | 399 | (50) | 26 | (478) | 425 | (53) |
(a) Of which £(48)m is adjusting (2025: £(274)m).
(b) Of which £(5)m is adjusting (2025: £(12)m).
Notes to the Group financial statements continued
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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) |
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Note 15 Impairment of non-current assets continued
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 have been aggregated by segment due to the large number of individually
immaterial cash-generating units.
| Central | ||||
UK & ROI | Booker | Europe | Total | |
At 28 February 2026 | £m | £m | £m | £m |
| Net carrying value | ||||
Other intangible assets | 726 | 164 | 32 | 922 |
Property, plant and equipment | 15,889 | 414 | 1,425 | 17,728 |
Right of use assets | 4,764 | 513 | 500 | 5,777 |
Investment property | 11 | - | 9 | 20 |
Other non-current assets | 21,390 | 1,091 | 1,966 | 24,447 |
Goodwill (a) | 3,799 | 371 | - | 4,170 |
Investments in joint ventures and associates (b) | 121 | - | - | 121 |
Net carrying value of non-current assets | 25,310 | 1,462 | 1,966 | 28,738 |
| Recoverable amount of impaired other non-current | ||||
assets for which an impairment loss has been recognised or reversed, supported by (c) : | ||||
Value in use | 2,694 | n/a | 210 | 2,904 |
Fair value less costs of disposal (d) | 1,483 | n/a | 375 | 1,858 |
4,177 | n/a | 585 | 4,762 |
(a) Goodwill of £4,170m (2025: £4,164m) consists of UK £3,331m (2025: £3,331m), Booker £371m (2025: £371m), dunnhumby £142m
(2025: £141m), money services £171m (2025: £171m), insurance £118m (2025: £118m) and ROI £37m (2025: £32m).
(b) The carrying value of the Group’s investments includes Trent Hypermarket Private Limited £67m (2025: £60m).
(c) Booker does not hold any impairment against its non-current assets therefore there is no recoverable amount to disclose.
(d) 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 | Central | |||
(restated (e) ) | Booker | Europe | Total | |
At 22 February 2025 | £m | £m | £m | £m |
| Net carrying value | ||||
Other intangible assets | 650 | 242 | 31 | 923 |
Property, plant and equipment | 15,559 | 392 | 1,311 | 17,262 |
Right of use assets | 4,670 | 424 | 475 | 5,569 |
Investment property | 15 | - | 9 | 24 |
Other non-current assets | 20,894 | 1,058 | 1,826 | 23,778 |
Goodwill (a) | 3,793 | 371 | - | 4,164 |
Investments in joint ventures and associates (b) | 110 | - | - | 110 |
Net carrying value of non-current assets | 24,797 | 1,429 | 1,826 | 28,052 |
| Recoverable amount of impaired other non-current | ||||
assets for which an impairment loss has been recognised or reversed, supported by (c) : | ||||
Value in use | 2,703 | n/a | 145 | 2,848 |
Fair value less costs of disposal (d) | 1,570 | n/a | 357 | 1,927 |
4,273 | n/a | 502 | 4,775 |
(a)–(d) Refer to previous table for footnotes.
(e) Comparatives have been restated to reflect the reclassification of the Booker business to its own segment. Refer to Note 2.
Impairment methodology
Cash-generating units
For impairment testing of other intangible assets, property, plant and equipment, right of use assets
and investment property, the Group treats each store as a separate cash-generating unit.
dunnhumby, insurance, and money services each represent separate cash-generating units.
The Group allocates goodwill to groups of cash-generating units based on the lowest level at which
goodwill is monitored by management. Following the reclassification of Booker to its own segment, the
groups of cash-generating units have changed. For the Group’s retail operations, each country
represents a group of cash-generating units and Booker, dunnhumby, insurance, and money services
each represent separate groups.
The recoverable amount of each cash-generating unit is the higher of its value in use and its fair value
less costs of disposal. The recoverable amount of a group of cash-generating units to which goodwill
has been allocated is determined based on value in use calculations.
Central assets such as distribution centres and associated costs are allocated to store cash-generating
units based on level of use, estimated with reference to sales. Urban fulfilment centres and associated
costs that are part of a store are included in the store cash–generating unit. Standalone customer
fulfilment centres, which support the online business, and their costs are each treated as a separate
cash-generating unit.
Notes to the Group financial statements continued
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Value in use
Retail and Booker
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 the business 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, applicable to 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 forecasts apply an expected cash flow approach by probability-weighting different
cash flow scenarios, with the greatest probability weighting applied to cash flows derived from the
three-year internal forecasts. 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.
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Note 15 Impairment of non-current assets continued
| 2026 | |||
Key assumption | Reasonably possible change | Impact on impairment | £m |
Post-tax discount rates* | Increase of 1.0%pt for each geographic region | Increase | (326) |
Decrease of 1.0%pt for each geographic region | Decrease | 309 | |
Future cash flows | Increase of 5.0% for each geographic region | Decrease | 136 |
Decrease of 5.0% for each geographic region | Increase | (143) | |
Long-term growth rates | Increase of 0.5%pt for each geographic region | Decrease | 96 |
Decrease of 0.5%pt for each geographic region | Increase | (96) | |
Property fair values | Increase of 10.0% for each geographic region | Decrease | 181 |
Decrease of 10.0% for each geographic region | Increase | (188) | |
Geopolitical and global supply downside scenario weighting | Increase of 5.0%pt for each geographic region | Increase | (108) |
Decrease of 2.5%pt for each geographic region | Decrease | 53 |
Notes to the Group financial statements continued
UK | Booker | |||
2026 | 2025 | 2026 | 2025 | |
% | % | % | % | |
Pre-tax discount rates | 9.1 | 9.1 | 9.7 | 9.6 |
Post-tax discount rates | 6.8 | 6.8 | 7.3 | 7.2 |
Long-term growth rates | 2.0 | 2.0 | 2.0 | 2.0 |
UK & ROI | Central Europe | |||
2026 | 2025 | 2026 | 2025 | |
% | % | % | % | |
Pre-tax discount rates | 7.8 - 9.1 | 8.2 - 9.1 | 8.7 - 10.9 | 8.9 - 12.9 |
Post-tax discount rates | 6.8 | 6.8 - 7.2 | 6.9 - 9.9 | 7.0 - 8.5 |
Long-term growth rates | 2.0 | 2.0 | 2.0 - 3.0 | 2.0 - 3.0 |
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Note 16 Other investments
2026 | 2025 | |||||||
Fair value | Fair value | |||||||
Fair value through other | Fair value through other | |||||||
| At amortised | through | comprehensive | At amortised | through | comprehensive | |||
cost (a) | profit or loss | income | Total | cost (a) | profit or loss | income | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Investments in debt instruments (b)(c) | 192 | - | 993 | 1,185 | 196 | - | 855 | 1,051 |
| Investments in equity instruments | - | - | 18 | 18 | - | - | 19 | 19 |
Property fund investments (d) | - | - | - | - | - | 15 | - | 15 |
Other investments | 192 | - | 1,011 | 1,203 | 196 | 15 | 874 | 1,085 |
| Of which: | ||||||||
Current | 7 | - | 213 | 220 | 7 | 15 | 129 | 151 |
Non-current | 185 | - | 798 | 983 | 189 | - | 745 | 934 |
| 192 | - | 1,011 | 1,203 | 196 | 15 | 874 | 1,085 | |
(a) The ECLs in the year are immaterial (2025: immaterial).
(b) Investments in debt instruments at amortised cost includes secured bond assets of £188m (2025: £192m) related to the purchase of debt held in UK property joint ventures.
(c) Investments in debt instruments held at fair value through other comprehensive income primarily relate to £648m (2025: £679m) of fixed-interest corporate bonds and £336m (2025: £168m) of government-backed investment securities held in the Insurance business.
(d) Included £15m of property fund investments in the Insurance business in the prior year, sold in the current year.
Note 17 Inventories
2026 | 2025 | |
£m | £m | |
Goods held for resale | 2,834 | 2,765 |
Development properties | 6 | 3 |
2,840 | 2,768 |
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 53 weeks ended 28 February 2026 was £53,318m (52 weeks ended 22 February 2025: £50,920m). In addition, inventory losses
and provisions from continuing operations recognised as an expense for the 53 weeks ended 28 February 2026 were £1,503m (52 weeks ended 22 February 2025: £1,440m).
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2026 | 2025 | |
£m | £m | |
Trade receivables | 636 | 652 |
Prepayments | 210 | 136 |
Accrued income (a) | 253 | 243 |
Other receivables (b) | 205 | 183 |
Amounts owed by joint ventures and associates (c) | 175 | 154 |
Total trade and other receivables | 1,479 | 1,368 |
| Of which: | ||
Current | 1,318 | 1,210 |
Non-current | 161 | 158 |
1,479 | 1,368 |
| Up to six | Six to 12 | Greater than | |||
| months past | months past | 12 months | |||
| Not past due | due | due | past due | Total | |
At 28 February 2026 | £m | £m | £m | £m | £m |
Trade receivables | 569 | 75 | 9 | 7 | 660 |
Other receivables | 180 | 12 | 9 | 31 | 232 |
Trade and other receivables | 749 | 87 | 18 | 38 | 892 |
| Allowance for expected credit losses: | |||||
At the beginning of the year | (18) | (8) | (4) | (25) | (55) |
| (Increase)/decrease in allowance, including | 1 | 1 | (1) | 2 | 3 |
recoveries, (charged)/released to the Group income statement | |||||
Amounts written off | 1 | - | - | - | 1 |
At the end of the year | (16) | (7) | (5) | (23) | (51) |
| 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) |
Note 19 Cash and cash equivalents and short-term investments
Cash and cash equivalents
2026 | 2025 | |
£m | £m | |
Cash at bank and on hand | 2,463 | 2,190 |
Short-term deposits | 52 | 65 |
Cash and cash equivalents in the Group balance sheet | 2,515 | 2,255 |
Bank overdrafts | (1,004) | (856) |
Cash and cash equivalents in the Group cash flow statement | 1,511 | 1,399 |
2026 | 2025 | |
£m | £m | |
Money market funds, deposits and similar instruments | 1,429 | 2,223 |
Notes to the Group financial statements continued
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Note 20 Trade and other payables
2026 | 2025 | |
£m | £m | |
Trade payables | 6,862 | 6,692 |
Not subject to supplier financing arrangements | 5,829 | 5,608 |
Subject to supplier financing arrangements (a) | 1,033 | 1,084 |
Other taxation and social security | 529 | 504 |
Other payables (b) | 1,984 | 1,849 |
Not subject to supplier financing arrangements | 1,845 | 1,688 |
Subject to supplier financing arrangements (a) | 139 | 161 |
Amounts payable to joint ventures and associates (c) | 11 | 7 |
Accruals | 987 | 943 |
Contract liabilities | 415 | 409 |
Total trade and other payables | 10,788 | 10,404 |
| Of which: | ||
Current | 10,746 | 10,364 |
Non-current | 42 | 40 |
10,788 | 10,404 |
(a) Trade payables include £679m (2025: £740m) that suppliers have chosen to early-fund. Other payables include £79m (2025: £88m)
that suppliers have chosen to early-fund.
(b) Other payables include £1,159m of goods and services not for resale (2025: £943m) and £610m (2025: £757m) of staff payables.
The remaining balances within other payables are individually immaterial.
(c) Refer to Note 30.
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 by no later
than 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, ROI and Asia.
The Group’s normal payment terms range from five–90 days (2025: 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 (2025: 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.
2026 | 2025 | |
£m | £m | |
| Current assets | ||
Inventories | (14) | (14) |
| Trade and other receivables | ||
Trade receivables | 105 | 110 |
Accrued income | 130 | 142 |
| Current liabilities | ||
Trade payables | 157 | 173 |
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2026 | 2025 | |||
Par value | Maturity | £m | £m | |
Bank loans and overdrafts (a) | - | - | 1,026 | 882 |
Secured bonds (b) | ||||
5.5457% Secured Bond | £130m | Feb 2029 | 125 | 162 |
6.067% Secured Bond | £200m | Feb 2029 | 200 | 197 |
SONIA + 1.3193% Secured Bond | £50m | Feb 2029 | 50 | 49 |
6.0517% Secured Bond | £236m | Oct 2039 | 288 | 304 |
5.6611% Secured Bond | £271m | Oct 2041 | 341 | 353 |
5.4111% Secured Bond | £173m | Jul 2044 | 149 | 152 |
| Unsecured bonds | ||||
| Fixed rate bonds | ||||
2.5% MTN | £400m | May 2025 | - | 405 |
0.875% MTN (c) | €750m | May 2026 | 661 | 624 |
6% MTN | £38m | Dec 2029 | 41 | 42 |
2.75% MTN | £450m | Apr 2030 | 403 | 380 |
4.25% MTN (c) | €500m | Feb 2031 | 453 | 447 |
3.375% MTN (c) | €500m | May 2032 | 445 | - |
5.5% MTN | £67m | Jan 2033 | 74 | 75 |
3.5% MTN | €500m | Oct 2033 | 440 | - |
5.13% MTN | £350m | May 2034 | 357 | 356 |
5.5% MTN | £250m | Feb 2035 | 246 | 253 |
6.15% USD Bond | $355m | Nov 2037 | 319 | 341 |
4.875% MTN | £14m | Mar 2042 | 15 | 14 |
5.125% MTN | €147m | Apr 2047 | 132 | 125 |
5.2% MTN | £14m | Mar 2057 | 14 | 14 |
LPI and RPI-linked bonds (d) | ||||
3.322% LPI MTN | £210m | Nov 2025 | - | 429 |
1.982% RPI MTN | £196m | Mar 2036 | 416 | 397 |
Sustainability-linked bonds (e) | ||||
1.875% MTN | £400m | Nov 2028 | 400 | 400 |
0.375% MTN | €750m | Jul 2029 | 601 | 549 |
7,196 | 6,950 | |||
| Of which: | ||||
Current | 1,824 | 1,861 | ||
Non-current | 5,372 | 5,089 | ||
7,196 | 6,950 |
Notes to the Group financial statements continued
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| Legal and | Operational | |||||
| Property | Restructuring | regulatory | insurance | Other | ||
| provisions | provisions | provisions | provisions | provisions | Total | |
£m | £m | £m | £m | £m | £m | |
At 22 February 2025 | 200 | 42 | 79 | 140 | 5 | 466 |
Foreign currency translation | 2 | - | - | 1 | - | 3 |
Amount released in the year | (8) | (4) | (1) | (15) | (1) | (29) |
Amount provided in the year | 10 | 42 | 15 | 70 | 2 | 139 |
Amount utilised in the year | (19) | (44) | (23) | (62) | - | (148) |
Unwinding of discount | 6 | - | - | - | - | 6 |
At 28 February 2026 | 191 | 36 | 70 | 134 | 6 | 437 |
2026 | 2025 | |
£m | £m | |
Current | 273 | 300 |
Non-current | 164 | 166 |
437 | 466 |
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 | 34 | 32 | 31 | 28 | 214 | 339 |
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Note 24 Insurance
Balances disclosed in this note relate to the Group’s subsidiary, Tesco Underwriting Limited (TU), part
of the UK & ROI segment.
53 weeks | 52 weeks | |
2026 | 2025 | |
£m | £m | |
Contracts measured under premium allocation approach (PAA) | 777 | 692 |
Expected incurred claims and other insurance service expenses | 29 | 19 |
Change in non-financial risk adjustment for risk expired | 2 | 1 |
Contractual service margin (CSM) recognised for services provided | 18 | 13 |
Contracts not measured under PAA* | 49 | 33 |
Insurance revenue | 826 | 725 |
53 weeks | 52 weeks | |
2026 | 2025 | |
£m | £m | |
Incurred claims and other directly attributable expenses | 748 | 595 |
Amortisation of insurance acquisition cash flows | 3 | (4) |
Losses on onerous acquired claims | 1 | 2 |
| Changes to fulfilment cash flows relating to incurred claims | - | 5 |
Insurance service expenses | 752 | 598 |
2026 | 2025 | |||||
| Insurance | Reinsurance | Net | Insurance | Reinsurance | Net | |
| contract | contracts | (liabilities)/ | contract | contracts | (liabilities)/ | |
| liabilities | held | assets | liabilities | held | assets | |
£m | £m | £m | £m | £m | £m | |
(Liabilities)/assets for remaining coverage | (211) | 176 | (35) | (270) | 181 | (89) |
(Liabilities)/assets for incurred claims | (561) | (53) | (614) | (382) | (57) | (439) |
(772) | 123 | (649) | (652) | 124 | (528) | |
| Contracts measured | (684) | 82 | (602) | (510) | 71 | (439) |
| under PAA | ||||||
| Contracts not measured | (88) | 41 | (47) | (142) | 53 | (89) |
| under PAA* | (772) | 123 | (649) | (652) | 124 | (528) |
Notes to the Group financial statements continued
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158
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.
2026 | 2025 | |||||||||
| 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 | 267 | 3 | 358 | 24 | 652 | 258 | 2 | 250 | 16 | 526 |
Insurance revenue | (826) | - | - | - | (826) | (725) | - | - | - | (725) |
| Insurance service expenses | ||||||||||
Incurred claims and other directly attributable expenses* | 22 | (1) | 709 | 18 | 748 | 16 | (1) | 572 | 8 | 595 |
Amortisation on insurance acquisition cash flows | 3 | - | - | - | 3 | (4) | - | - | - | (4) |
| Losses on onerous acquired claims and reversals of those losses | - | 1 | - | - | 1 | - | 2 | - | - | 2 |
| Changes to fulfilment cash flows relating to incurred claims | - | - | - | - | - | - | - | 5 | - | 5 |
Total insurance service expenses | 25 | - | 709 | 18 | 752 | 12 | 1 | 577 | 8 | 598 |
Total insurance service result | (801) | - | 709 | 18 | (74) | (713) | 1 | 577 | 8 | (127) |
| Insurance finance (income)/expenses | ||||||||||
Insurance finance expenses recognised in the income statement | 1 | - | 12 | - | 13 | 1 | - | 10 | - | 11 |
Insurance finance (income)/expenses recognised in other comprehensive income | (8) | - | 12 | - | 4 | 7 | - | (7) | - | - |
Total insurance finance (income)/expenses | (7) | - | 24 | - | 17 | 8 | - | 3 | - | 11 |
| Insurance cash flows | ||||||||||
Premiums received for insurance contracts issued | 773 | - | - | - | 773 | 721 | - | - | - | 721 |
Incurred claims and other expenses paid* | (18) | - | (572) | - | (590) | (1) | - | (472) | - | (473) |
Insurance acquisition cash flows | (6) | - | - | - | (6) | (6) | - | - | - | (6) |
Total insurance cash flows | 749 | - | (572) | - | 177 | 714 | - | (472) | - | 242 |
Closing balance | 208 | 3 | 519 | 42 | 772 | 267 | 3 | 358 | 24 | 652 |
* 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.
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Note 24 Insurance continued
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. These contracts 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.
2026 | 2025 | |||||||
| 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 | 67 | 4 | 71 | 142 | 84 | 5 | 73 | 162 |
| Changes that relate to current service | ||||||||
| CSM recognised for the year | - | - | (18) | (18) | - | - | (13) | (13) |
| Change in risk adjustment for non-financial risk for risk expired | - | (2) | - | (2) | - | (1) | - | (1) |
Experience adjustments | (8) | - | - | (8) | (2) | - | - | (2) |
| Changes that relate to future service | ||||||||
Changes in estimates that adjust the CSM | 5 | - | (5) | - | (8) | - | 8 | - |
| Changes in estimates that result in losses and reversals of losses on onerous | - | - | 1 | 1 | - | - | 3 | 3 |
| acquired claims | ||||||||
Total insurance service result | (3) | (2) | (22) | (27) | (10) | (1) | (2) | (13) |
| Insurance finance (income)/expenses | ||||||||
Insurance finance expenses recognised in the income statement | 1 | - | - | 1 | 1 | - | - | 1 |
Insurance finance expenses recognised in other comprehensive income | (8) | - | - | (8) | 7 | - | - | 7 |
Total insurance finance (income)/expenses | (7) | - | - | (7) | 8 | - | - | 8 |
| Insurance cash flows | ||||||||
Incurred claims and other expenses paid | (20) | - | - | (20) | (15) | - | - | (15) |
Total insurance cash flows | (20) | - | - | (20) | (15) | - | - | (15) |
Closing balance | 37 | 2 | 49 | 88 | 67 | 4 | 71 | 142 |
Notes to the Group financial statements continued
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160
2026 | 2025 | |||||||||
Assets for remaining coverage | Assets for incurred claims | Assets for remaining coverage | Assets for incurred claims | |||||||
| Excluding | Estimates of | Risk | Excluding | Estimates of | Risk | |||||
| loss- | Loss- | present value | adjustment | loss- | Loss- | present value | adjustment | |||
| recovery | recovery | of future cash | for non- | 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 | 179 | 2 | (64) | 7 | 124 | 167 | 1 | (48) | 5 | 125 |
Allocation of reinsurance premiums | (277) | - | - | - | (277) | (282) | - | - | - | (282) |
| Amounts recoverable from reinsurers | ||||||||||
Amounts recoverable for incurred claims and other incurred insurance service expenses | 6 | - | 217 | 7 | 230 | (4) | - | 236 | 2 | 234 |
| Recoveries of losses on onerous acquired claims and reversal of those losses | - | (2) | - | - | (2) | - | 1 | - | - | 1 |
| Changes to amounts recoverable for incurred claims | - | - | 2 | - | 2 | - | - | (15) | - | (15) |
Net expenses from reinsurance contracts held | (271) | (2) | 219 | 7 | (47) | (286) | 1 | 221 | 2 | (62) |
| Reinsurance finance income/(expenses) | ||||||||||
Reinsurance finance income recognised in the income statement | 1 | - | 1 | - | 2 | - | - | 2 | - | 2 |
Reinsurance finance income/(expenses) recognised in other comprehensive income | (1) | - | 2 | - | 1 | (2) | - | 3 | - | 1 |
| Total reinsurance finance income/(expenses) | - | - | 3 | - | 3 | (2) | - | 5 | - | 3 |
| Reinsurance cash flows | ||||||||||
Premiums paid for reinsurance contracts held | 56 | - | - | - | 56 | 68 | - | - | - | 68 |
Amounts received from reinsurers relating to incurred claims | (5) | - | (6) | - | (11) | (1) | - | (9) | - | (10) |
Total reinsurance cash flows | 51 | - | (6) | - | 45 | 67 | - | (9) | - | 58 |
Other movements* | 217 | - | (219) | - | (2) | 233 | - | (233) | - | - |
Closing balance | 176 | - | (67) | 14 | 123 | 179 | 2 | (64) | 7 | 124 |
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Note 24 Insurance continued
2026 | 2025 | |||||||
| 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 | 18 | 1 | 34 | 53 | 36 | 3 | 24 | 63 |
| Changes that relate to current service | ||||||||
| CSM recognised for the year | - | - | (2) | (2) | - | - | (1) | (1) |
| Change in risk adjustment for non-financial risk for risk expired | - | - | - | - | - | - | - | - |
| Experience adjustments | - | - | - | - | - | (1) | - | (1) |
| Changes that relate to future service | ||||||||
Changes in estimates that adjust the CSM | 3 | - | (3) | - | (9) | (1) | 10 | - |
| Changes in estimates that result in losses and reversals of losses on onerous | - | - | (2) | (2) | - | - | 1 | 1 |
| acquired claims | ||||||||
| Changes that relate to past service | ||||||||
Changes to incurred claims component | (1) | - | - | (1) | (6) | - | - | (6) |
Total net expenses from reinsurance contracts held | 2 | - | (7) | (5) | (15) | (2) | 10 | (7) |
| Reinsurance finance income/(expenses) | ||||||||
Reinsurance finance income/(expenses) recognised in other comprehensive income | (1) | - | - | (1) | (2) | - | - | (2) |
Total reinsurance finance income/(expenses) | (1) | - | - | (1) | (2) | - | - | (2) |
| Reinsurance cash flows | ||||||||
Amounts received from reinsurers relating to incurred claims | (6) | - | - | (6) | (1) | - | - | (1) |
Total reinsurance cash flows | (6) | - | - | (6) | (1) | - | - | (1) |
Closing balance | 13 | 1 | 27 | 41 | 18 | 1 | 34 | 53 |
Notes to the Group financial statements continued
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162
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:
28 February 2026 | 22 February 2025 | |||
| Insurance | Reinsurance | Insurance | Reinsurance | |
| contract liabilities | contract assets | contract liabilities | contract assets | |
Less than one year | (10) | 3 | (17) | 4 |
One to five years | (14) | 7 | (21) | 11 |
More than five years | (25) | 17 | (33) | 19 |
Total | (49) | 27 | (71) | 34 |
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 both internal and external, 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 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.
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 77.5th 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 28 February 2026 | 3.5% | 3.9% | 4.2% | 4.5% | 4.7% |
As at 22 February 2025 | 4.1% | 4.4% | 4.5% | 4.6% | 4.7% |
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Note 24 Insurance continued
The tables below compare actual claims payments with previous estimates of the undiscounted amounts of the claims on a gross and net of reinsurance basis.
Claims development (gross)
2022 | 2023 | 2024 | 2025 | 2026 | Total | |
Estimate of gross undiscounted ultimate claims costs | £m | £m | £m | £m | £m | £m |
At end of the financial year | 233 | 280 | 365 | 442 | 580 | |
One year later | 233 | 289 | 356 | 442 | - | |
Two years later | 211 | 300 | 350 | - | - | |
Three years later | 215 | 307 | - | - | - | |
Four years later | 215 | - | - | - | - | |
Current estimate of cumulative claims | 215 | 307 | 350 | 442 | 580 | 1,894 |
Cumulative payments to date | (200) | (259) | (292) | (323) | (285) | (1,359) |
Gross undiscounted liabilities for incurred claims | 15 | 48 | 58 | 119 | 295 | 535 |
Value of Risk Adjustment | 40 | |||||
Effect of discounting | (41) | |||||
Gross claims liabilities | 534 | |||||
Ancillary claims and expense liabilities | 27 | |||||
Total gross liabilities for incurred claims | 561 |
Claims development (net)
2022 | 2023 | 2024 | 2025 | 2026 | Total | |
Estimate of net undiscounted ultimate claims costs | £m | £m | £m | £m | £m | £m |
At end of financial year | 150 | 169 | 220 | 258 | 422 | |
One year later | 151 | 176 | 209 | 184 | - | |
Two years later | 130 | 180 | 208 | - | - | |
Three years later | 138 | 186 | - | - | - | |
Four years later | 138 | - | - | - | - | |
Current estimate of cumulative claims | 138 | 186 | 208 | 184 | 422 | 1,138 |
Cumulative payments net of reinsurance recoveries to date | (125) | (157) | (177) | (124) | (203) | (786) |
Net undiscounted liabilities for incurred claims | 13 | 29 | 31 | 60 | 219 | 352 |
Value of Risk Adjustment | 26 | |||||
Effect of discounting | (39) | |||||
Net claims liabilities | 339 | |||||
Quota share funds withheld* | 248 | |||||
Ancillary claims and expense liabilities | 27 | |||||
Total net liabilities for incurred claims | 614 |
* Quota share funds withheld relate to reinsurance premiums, 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.
Notes to the Group financial statements continued
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2026 | 2025 | ||||||||
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 | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | |
| Financial assets | |||||||||
Cash and cash equivalents | 19 | 2,471 | 44 | - | 2,515 | 2,194 | 61 | - | 2,255 |
Short-term investments | 19 | 713 | 716 | - | 1,429 | 837 | 1,386 | - | 2,223 |
Trade receivables | 18 | 636 | - | - | 636 | 652 | - | - | 652 |
Other receivables | 18 | 205 | - | - | 205 | 183 | - | - | 183 |
Joint ventures and associates loan receivables | 30 | 98 | - | - | 98 | 97 | - | - | 97 |
Other investments | 16 | 192 | - | 1,011 | 1,203 | 196 | 15 | 874 | 1,085 |
| Derivative financial instruments: | |||||||||
| Interest rate swaps | - | 14 | - | 14 | - | 24 | - | 24 | |
| Cross-currency swaps | - | 129 | - | 129 | - | 138 | - | 138 | |
| Index-linked swaps | - | 469 | - | 469 | - | 646 | - | 646 | |
| Forward foreign currency contracts | - | 11 | - | 11 | - | 27 | - | 27 | |
| Commodity derivatives | - | 5 | - | 5 | - | - | - | - | |
4,315 | 1,388 | 1,011 | 6,714 | 4,159 | 2,297 | 874 | 7,330 | ||
| Financial liabilities | |||||||||
Trade payables | 20 | (6,862) | - | - | (6,862) | (6,692) | - | - | (6,692) |
Accruals | 20 | (987) | - | - | (987) | (943) | - | - | (943) |
Other payables | 20 | (1,984) | - | - | (1,984) | (1,849) | - | - | (1,849) |
Borrowings | 22 | (7,196) | - | - | (7,196) | (6,950) | - | - | (6,950) |
Lease liabilities | 13 | (7,884) | - | - | (7,884) | (7,716) | - | - | (7,716) |
| Derivative financial instruments: | |||||||||
| Interest rate swaps | - | (56) | - | (56) | - | (74) | - | (74) | |
| Cross-currency swaps | - | (81) | - | (81) | - | (130) | - | (130) | |
| Forward foreign currency contracts | - | (34) | - | (34) | - | (11) | - | (11) | |
| Commodity derivatives | - | - | - | - | - | (2) | - | (2) | |
(24,913) | (171) | - | (25,084) | (24,150) | (217) | - | (24,367) | ||
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Note 25 Financial instruments continued
28 February 2026 | 22 February 2025 | ||||
| Carrying | Fair | Carrying | Fair | ||
| value | value* | value | value* | ||
Level | £m | £m | £m | £m | |
| Financial assets measured at amortised cost | |||||
Investments in debt instruments at amortised cost | 1 | 188 | 199 | 192 | 197 |
Investments in debt instruments at amortised cost | 2 | 4 | 4 | 4 | 4 |
Joint ventures and associates loan receivables | 2 | 98 | 107 | 97 | 105 |
| Financial liabilities measured at amortised cost | |||||
| Borrowings | |||||
Amortised cost | 1 | (5,406) | (5,263) | (4,916) | (4,651) |
Bonds in fair value hedge relationships | 1 | (1,790) | (1,849) | (2,034) | (2,088) |
Level 1 | Level 2 | Level 3 | Total | |
At 28 February 2026 | £m | £m | £m | £m |
| Assets | ||||
Investments at fair value through other comprehensive income | 993 | - | 18 | 1,011 |
Short-term investments at fair value through profit or loss | 716 | - | - | 716 |
| Cash and cash equivalents at fair value through profit or loss | - | 44 | - | 44 |
| Derivative financial instruments: | ||||
| Interest rate swaps | - | - | 14 | 14 |
| Cross-currency swaps | - | - | 129 | 129 |
| Index-linked swaps | - | - | 469 | 469 |
| Foreign currency forward contracts | - | 11 | - | 11 |
| Commodity derivatives | - | 5 | - | 5 |
Total assets | 1,709 | 60 | 630 | 2,399 |
| Liabilities | ||||
| Derivative financial instruments: | ||||
| Interest rate swaps | - | - | (56) | (56) |
| Cross-currency swaps | - | - | (81) | (81) |
| Foreign currency forward contracts | - | (34) | - | (34) |
| Total liabilities | - | (34) | (137) | (171) |
Net assets | 1,709 | 26 | 493 | 2,228 |
Notes to the Group financial statements continued
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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) |
| Commodity derivatives | - | (2) | - | (2) |
| Total liabilities | - | (13) | (204) | (217) |
Net assets | 2,241 | 75 | 638 | 2,954 |
2026 | 2025 | |||
| Uncollateralised | Unlisted | Uncollateralised | Unlisted | |
| derivatives | investments | derivatives | investments | |
£m | £m | £m | £m | |
At the beginning of the year | 604 | 34 | 545 | 37 |
Gains/(losses) recognised in finance costs (a) | (15) | - | (14) | (1) |
Gains/(losses) recognised in other comprehensive income not reclassified to the income statement | - | - | - | 4 |
Gains/(losses) recognised in other comprehensive income that may | 11 | - | 35 | - |
subsequently be reclassified to the income statement | ||||
| Impairment recognised in cost | - | - | - | (10) |
| of sales | ||||
Additions | 2 | - | - | 5 |
| Disposals | - | (16) | - | - |
Settlements | (127) | - | 38 | - |
Transfers of assets from Level 3 (b) | - | - | - | (1) |
At the end of the year | 475 | 18 | 604 | 34 |
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Note 25 Financial instruments continued
| Gross amounts of | |||||
| Gross amounts | financial assets/ | Net amounts | Related amounts | ||
| of recognised | (liabilities) offset in | included | not offset in | ||
| financial assets/ | the Group balance | in the Group | the Group balance | ||
| (liabilities) | sheet | balance sheet | sheet | Net amount | |
At 28 February 2026 | £m | £m | £m | £m | £m |
| Financial assets | |||||
Derivative financial instruments | 628 | - | 628 | (87) | 541 |
Trade receivables | 748 | (112) | 636 | - | 636 |
Total assets | 1,376 | (112) | 1,264 | (87) | 1,177 |
| Financial liabilities | |||||
Derivative financial instruments | (171) | - | (171) | 87 | (84) |
Trade payables | (6,974) | 112 | (6,862) | - | (6,862) |
Total liabilities | (7,145) | 112 | (7,033) | 87 | (6,946) |
| Gross amounts of | |||||
| Gross amounts | financial assets/ | Net amounts | Related amounts | ||
| of recognised | (liabilities) offset in | included | not offset in | ||
| financial assets/ | the Group balance | in the Group | the Group balance | ||
| (liabilities) | sheet | balance sheet | sheet | Net amount | |
At 22 February 2025 | £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) |
Notes to the Group financial statements continued
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Note 26 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, insurance risk and other risks.
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’ revenue and expenses is not | Euro-denominated borrowings are used to hedge the exposure of a portion |
| movements in connection with translating the Group’s | actively hedged. However, to reduce this exposure in relation to the net assets of | of the Group’s net investments in overseas operations which have a Euro |
| foreign subsidiaries’ revenue, expenses, assets and | foreign 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 that 100% of the foreign exchange risk is hedged. | Foreign currency derivatives and borrowings in matching currencies, which |
| than in the entity’s functional currency. | 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 or economic |
| Sterling, unless there are appropriate matching foreign currency assets. | 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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Note 26 Financial risk management continued
2026 | 2025 | |||||
Fixed | Floating | Total | Fixed | Floating | Total | |
£m | £m | £m | £m | £m | £m | |
| Cash and cash equivalents | - | 2,515 | 2,515 | - | 2,255 | 2,255 |
| Short-term investments | - | 1,429 | 1,429 | - | 2,223 | 2,223 |
Investments in debt instruments at amortised cost | 192 | - | 192 | 196 | - | 196 |
Investments at fair value through other comprehensive income | 1,003 | 8 | 1,011 | 866 | 8 | 874 |
| Investments at fair value through profit or loss | - | - | - | 15 | - | 15 |
Joint ventures and associates loan receivables | 98 | - | 98 | 97 | - | 97 |
Lease liabilities | (7,884) | - | (7,884) | (7,716) | - | (7,716) |
Borrowings | (6,142) | (1,054) | (7,196) | (6,043) | (907) | (6,950) |
| Derivative effect: | ||||||
Interest rate swaps | 1,088 | (1,088) | - | 1,464 | (1,464) | - |
Cross-currency swaps | 1,008 | (1,008) | - | 902 | (902) | - |
Total | (10,637) | 802 | (9,835) | (10,219) | 1,213 | (9,006) |
Percentage of interest-bearing debt at fixed rate | 85% | 83% | ||||
Weighted average rate of interest paid on senior unsecured debt | 4.0% | 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. | annual maximum increase of 5% and a minimum of |
| 0%) and RPI debt are hedged back to fixed rate using | ||
| 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 percentage of the forecast uncommited exposure (diesel: 50%, | Forward derivative contracts which are designated as |
| for own use and various other commodity price risks | other commodities: 20%) within the next 12 months. Hedging can be achieved by either creating a fixed | cash flow hedges are used to hedge future purchases. |
| affecting goods purchased for resale, including but not | price commitment with suppliers or through derivatives. | These are denominated in the same currency and |
| limited to: wheat, soybean meal, sugar, power, coffee | volume as the forecast purchases and the hedge ratio | |
| and cocoa. | is determined to be 1:1. |
Notes to the Group financial statements continued
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2026 | 2025 | |||
| Income gain/ | Equity gain/ | Income gain/ | Equity gain/ | |
| (loss) | (loss) | (loss) | (loss) | |
£m | £m | £m | £m | |
1% increase in interest rates | (23) | 1 | (21) | 2 |
5% appreciation of the Euro | (7) | (69) | (9) | (47) |
5% appreciation of the US Dollar | (8) | 50 | (10) | 38 |
| 50 basis points parallel upward shift in the forward | 73 | 19 | 82 | 20 |
| inflation curve | ||||
| 10% increase in commodity prices | - | 5 | - | 6 |
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2026 | 2025 | |||||||
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 | 14 | 438 | (54) | 700 | 24 | 414 | (72) | 1,100 |
Cross-currency swaps | 1 | 88 | (66) | 657 | - | - | (118) | 621 |
| Cash flow hedges | ||||||||
| Interest rate swaps | - | - | (2) | 50 | - | - | (2) | 50 |
Index-linked swaps | 157 | 196 | - | - | 299 | 406 | - | - |
Foreign currency forward contracts | 7 | 1,053 | (32) | 1,605 | 25 | 1,094 | (8) | 601 |
Commodity derivatives | 5 | 40 | - | 7 | - | 20 | (2) | 41 |
| Derivatives not in a formal hedge relationship | ||||||||
Cross-currency swaps | 128 | 303 | (15) | 89 | 138 | 308 | (12) | 95 |
Index-linked swaps | 312 | 2,074 | - | - | 347 | 2,074 | - | - |
Foreign currency forward contracts | 4 | 1,036 | (2) | 456 | 2 | 285 | (3) | 545 |
Total | 628 | 5,228 | (171) | 3,564 | 835 | 4,601 | (217) | 3,053 |
Notes to the Group financial statements continued
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2026 | 2025 | |||||
| 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 | - | 450 | 250 | 400 | - | 700 |
| Interest rate swaps – EUR | - | 438 | - | - | - | 414 |
| Cross-currency swaps (GBP: EUR)* | - | 657 | 88 | - | 621 | - |
| Cash flow hedges | ||||||
| Index-linked swaps | - | - | 196 | 210 | - | 196 |
| Interest rate swaps | - | 50 | - | - | 50 | - |
| Average net interest rate (pay)/receive | ||||||
| Fair value hedges | ||||||
| Interest rate swaps – GBP | - | (3.47)% | (0.22)% | (3.41)% | - | (3.04)% |
| Interest rate swaps – EUR | - | 0.91% | - | - | - | 0.59% |
| Cross-currency swaps (GBP: EUR)* | - | (4.46)% | (1.50)% | - | (5.19)% | - |
| Cash flow hedges | ||||||
| Index-linked swaps | - | - | (4.21)% | (4.23)% | - | (4.21)% |
| Interest rate swaps | - | (1.17)% | - | - | (0.45)% | - |
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Note 26 Financial risk management continued
2026 | 2025 | ||||||||||
| Changes in fair | Change in fair | Hedge | Changes in fair | Hedge | |||||||
| Accumulated | value of hedging | value of hedged | ineffectiveness | Accumulated | value of hedging | Change in fair value | ineffectiveness | ||||
| amounts of fair | instrument used | item used | recognised in the | amounts of fair | instrument used | of hedged item | recognised in the | ||||
| value adjustments | to calculate | to calculate | income statement | value adjustments | to calculate | used to calculate | income statement | ||||
| Carrying amount | on hedged item | ineffectiveness | ineffectiveness | through finance | Carrying amount | on hedged item | ineffectiveness | ineffectiveness | through finance | ||
| Balance sheet classification | assets/(liabilities) | assets/(liabilities) | gains/(losses) | gains/(losses) | costs | assets/(liabilities) | assets/(liabilities) | gains/(losses) | gains/(losses) | costs | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | ||
| Interest rate risk | |||||||||||
Fixed-rate bonds* | Borrowings | (2,225) | 39 | 80 | (81) | (1) | (2,492) | 114 | 36 | (37) | (1) |
2026 | 2025 | ||||||
| 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 | 11 | (11) | 1 | 32 | (20) | 10 |
Borrowings | Interest rate swaps | (1) | 1 | 3 | 1 | (1) | 5 |
| Foreign currency risk | |||||||
Forecast purchases | Foreign currency forward contracts | (98) | 98 | (23) | 10 | (10) | 8 |
| Commodity risk | |||||||
Forecast purchases | Commodity derivatives | 2 | (2) | 4 | (3) | 3 | (1) |
| Interest rate/foreign currency risk | |||||||
MTNs (b) | Cross-currency swaps | - | - | 44 | - | - | 46 |
Notes to the Group financial statements continued
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| Interest rate/ | ||||||
| foreign currency | ||||||
| Interest rate/inflation risk | risk | Foreign currency/commodity risk | ||||
| Foreign currency | ||||||
| Index-linked | Interest rate | Cross-currency | forward | Commodity | ||
| swaps | swaps | swaps | contracts (a) | derivatives (a) | Hedging reserve (b) | |
£m | £m | £m | £m | £m | £m | |
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 |
Net fair value gains/(losses) | 13 | (1) | - | (98) | 2 | (84) |
Amount reclassified to finance income/(cost) in Group income statement | (22) | (2) | (2) | 9 | 1 | (16) |
| Amount reclassified to inventories | - | - | - | 57 | 4 | 61 |
Tax | 3 | 1 | - | 3 | (2) | 5 |
At 28 February 2026 | 2 | 1 | 33 | (22) | 5 | 19 |
| Nominal amount | Cumulative impact | ||
| of hedging | Nominal amount of | on net investment | |
| instrument | hedged item | hedges | |
£m | £m | £m | |
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) |
Change in value for calculating ineffectiveness | (73) | 73 | (60) |
New hedges designated in the year* | (425) | 425 | (13) |
At 28 February 2026 | (1,533) | 1,533 | (794) |
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Note 26 Financial risk management continued
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 177 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. |
2026 | 2025 | |
£m | £m | |
Cash and cash equivalents | 2,515 | 2,255 |
Short-term investments | 1,429 | 2,223 |
Trade receivables | 636 | 652 |
Other receivables | 205 | 183 |
Joint venture and associates loan receivables | 98 | 97 |
Other investments | 1,203 | 1,085 |
| Derivative financial assets: | ||
Interest rate swaps | 14 | 24 |
Cross-currency swaps | 129 | 138 |
Index-linked swaps | 469 | 646 |
Foreign currency forward contracts | 11 | 27 |
Commodity derivatives | 5 | - |
Maximum exposure to credit risk | 6,714 | 7,330 |
Notes to the Group financial statements continued
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2026 | 2025 | |||||||||
Rating | AAA | AA | A | BBB | Total | AAA | AA | A | BBB | Total |
Cash and cash equivalents (a) | - | - | 1,149 | 4 | 1,153 | - | - | 1,355 | 35 | 1,390 |
Short-term investments | 716 | 9 | 704 | - | 1,429 | 1,389 | 3 | 731 | 100 | 2,223 |
Investments in debt securities at amortised cost (b) | - | - | - | 188 | 188 | - | - | - | 192 | 192 |
Investments at fair value through other comprehensive income (c) | 173 | 255 | 360 | 205 | 993 | 156 | 123 | 341 | 235 | 855 |
Investments at fair value through profit or loss (d) | - | - | - | - | - | - | - | - | - | - |
| Derivative financial assets: | ||||||||||
| Interest rate swaps | - | 7 | 7 | - | 14 | - | 12 | 12 | - | 24 |
| Cross-currency swaps | - | - | 129 | - | 129 | - | - | 138 | - | 138 |
| Index-linked swaps | - | - | 158 | 311 | 469 | - | - | 299 | 347 | 646 |
| Foreign currency forward contracts | - | 2 | 9 | - | 11 | - | 5 | 22 | - | 27 |
| Commodity derivatives | - | 1 | 4 | - | 5 | - | - | - | - | - |
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. |
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Note 26 Financial risk management continued
2026 | 2025 | |||||
| Short-term | Long-term | Short-term | Long-term | |||
| rating | rating | Outlook | rating | rating | Outlook | |
| Rating agency | ||||||
Fitch | F2 | BBB | Stable | F3 | BBB - | Stable |
Moody’s | P - 3 | Baa3 | Positive | P - 3 | Baa3 | Stable |
Standard & Poor’s | A - 2 | BBB | Stable | A - 3 | BBB - | Positive |
2026 | 2025 | |
£m | £m | |
| Expiring in less than one year | - | 38 |
Expiring between one and two years | 2,500 | - |
| Expiring in more than two years | - | 2,500 |
Total | 2,500 | 2,538 |
| 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 28 February 2026 | £m | £m | £m | £m | £m | £m |
| Non-derivative financial liabilities | ||||||
Borrowings | (1,729) | (71) | (718) | (723) | (918) | (3,070) |
Interest payments on borrowings | (174) | (230) | (193) | (169) | (162) | (707) |
Lease liabilities | (1,040) | (1,014) | (972) | (926) | (862) | (6,257) |
Trade payables | (6,862) | - | - | - | - | - |
Other payables | (1,949) | (13) | (8) | (2) | (1) | (11) |
Accruals | (987) | - | - | - | - | - |
| Derivative financial liabilities | ||||||
| Net settled derivative contracts – receipts | - | 18 | - | - | 5 | - |
Net settled derivative contracts – payments | (28) | (14) | (15) | (15) | (1) | (10) |
Gross settled derivative contracts – receipts | 1,903 | 159 | 2 | 654 | - | - |
Gross settled derivative contracts – payments | (1,983) | (186) | (30) | (670) | - | - |
Total | (12,849) | (1,351) | (1,934) | (1,851) | (1,939) | (10,055) |
Notes to the Group financial statements continued
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| 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) |
2026 | 2025 | |||
£m | % | £m | % | |
Due within one year | 200 | 31 | 166 | 31 |
Due within one and two years | 124 | 19 | 80 | 15 |
Due within two and three years | 85 | 13 | 56 | 11 |
Due within three and four years | 52 | 8 | 32 | 6 |
Due within four and five years | 32 | 5 | 23 | 4 |
Due beyond five years | 159 | 24 | 174 | 33 |
Total | 652 | 100 | 531 | 100 |
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Note 26 Financial risk management continued
d) Insurance risk
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). |
Types of insurance risk
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 motor 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 | |
| anticipated. | (plus an appropriate allowance for incurred but not reported 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 audit committee, | ||
| 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. |
Concentration of insurance risk
Concentration of insurance risk may exist where a particular event or series of events could impact significantly upon the Group’s liabilities. Such concentrations may arise from a single insurance contract or
through a small number of related contracts. The following are key categories of concentration risks that might result in significant impacts to the Group:
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 | 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. |
TU has carried out sensitivity analyses on the reasonably possible changes in its key business drivers, including interest yields, expenses and gross loss ratio, as well as executing the stress and scenario testing
programme on the insurance risk as part of contingency planning. These do not indicate a material impact to the Group’s overall financial position and performance.
Notes to the Group financial statements continued
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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 31 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 29); and | |||
| – 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 UK (SUK) provides a framework for managing and measuring the risks | |||
| and the solvency position for all insurance companies in the UK. TU assesses its | |||
| Solvency Capital Requirement (SCR) using Prudential Regulation Authority (PRA) | |||
| Standard Formula. 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 SUK 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. |
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Note 27 Share-based payments
The table below shows amounts charged to the Group income statement in respect of share-based
payments:
2026 | 2025 | |
£m | £m | |
| Income statement | ||
Equity-settled share-based payment charge (a) | 105 | 119 |
Cash-settled share-based payment charge | 19 | - |
Cash-settled National Insurance contributions (b) | 16 | 17 |
140 | 136 |
(a) Includes £nil (2025: £4m) in relation to discontinued operations.
(b) Includes £nil (2025: £1m) in relation to discontinued operations.
2026 | 2025 | |
£m | £m | |
Share-based payment charge included in operating profit/(loss) | (140) | (136) |
Share-based payments non-cash movement | 55 | 37 |
Increase/(decrease) in trade and other payables* | 85 | 99 |
| Included in Group operating cash flows | - | - |
Cash paid to purchase own shares including related fees and taxes | (152) | (123) |
Cash received from employees exercising SAYE options | 52 | 69 |
Included in Group financing cash flows | (100) | (54) |
The table below presents the components of share-based payments recognised in the Group
statement of changes in equity:
2026 | 2025 | |
£m | £m | |
(Increase)/decrease in own shares held* | 181 | 239 |
Shares delivered to employees | (181) | (239) |
Cash received from employees exercising SAYE options | 52 | 69 |
Share-based payments charge to the income statement | 105 | 119 |
Movements in shares withheld to settle employee tax | 1 | 2 |
Increase/(decrease) to retained earnings | (23) | (49) |
Included in the Group statement of changes in equity | 158 | 190 |
* Decrease in own shares held is the gross amount of shares that the employees are entitled to receive.
Notes to the Group financial statements continued
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182
Share option, share bonus and incentive schemes
The Company had six share option schemes and two discretionary share award schemes in operation during the financial year as detailed in the table below. References to arrangements with fully released and
lapsed awards have been removed from the table below.
Arrangement | Participants | Term | Vesting requirements |
| Savings-related option schemes | |||
The Savings-related Share Option Scheme (1981) | UK colleagues | 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 | than 80% of the average of the middle-market | |
The International Savings-related Share Option Scheme (2021) | ROI colleagues | quotations of an Ordinary share over the three | |
| 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 Booker Group PLC Performance Share Plan (2008) | Selected Booker senior colleagues | 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. The fair | Plan options (CSOP options) which are linked to the | ||
| value of this scheme was estimated at the date of | Booker PSP options are exercisable at a subscription | ||
| grant using the Monte Carlo option pricing model. | price equivalent to the market value of the Booker | ||
| Shares at the time of grant. | |||
Discretionary share award schemes (a) | |||
The Long-Term Incentive Plan (2021) | Selected senior executives and senior | Awards made under this plan will normally vest on | Conditional on the achievement of specified |
| managers | the vesting date(s) set on the date of the award | performance targets over a three-year performance | |
| for nil consideration. The fair value of shares | period and/or continuous employment. | ||
| awarded under this scheme is their market | |||
| value on the date of award. Expected dividends | |||
| are not incorporated into the fair value. Malus | |||
| and clawback provisions apply as described on | |||
| page 102. | |||
The Deferred Bonus Plan (2019) (b) | Selected senior executives and senior | Granted based on a percentage of salary, which is | Conditional on completion of continuous |
| managers | determined by the achievement of corporate and | employment and achievement of corporate and | |
| individual performance targets. The fair value of | individual performance targets. | ||
| shares awarded under this scheme is their market | |||
| value on the date of award. Expected dividends | |||
| are not incorporated into the fair value. Malus | |||
| and clawback provisions apply as described on | |||
| page 102. |
(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 88 to 108.
(b) The Group provides certain employees with a choice of cash or equity settlement, therefore the scheme is treated as a compound financial instrument. All other schemes are equity-settled.
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Note 27 Share-based payments continued
The following tables reconcile the number of share options outstanding and the weighted average exercise price (WAEP):
For the 53 weeks ended 28 February 2026
| 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 Scheme | Share Plan Scheme | ||||||
Options | WAEP | Options | WAEP | Options | WAEP | Options | WAEP | Options | WAEP | |
Outstanding at 22 February 2025 | 190,967,853 | 224.95 | 6,280,360 | 228.24 | - | - | 1,861,598 | 239.70 | 218,408 | - |
Granted | 42,121,394 | 353.00 | 1,191,069 | 353.00 | - | - | 1,027,927 | 329.69 | - | - |
Forfeited | (14,048,264) | 251.51 | (625,354) | 245.44 | - | - | (69,619) | 252.06 | (106,308) | - |
Exercised | (21,248,204) | 231.82 | (894,347) | 245.87 | - | - | (1,984) | 220.00 | (80,113) | - |
Outstanding at 28 February 2026 | 197,792,779 | 249.59 | 5,951,728 | 248.75 | - | - | 2,817,922 | 272.24 | 31,987 | - |
Exercise price range (pence) | 182.00 to 353.00 | 182.00 | to 353.00 | - | 220.00 to 353.00 | - | ||||
Weighted average remaining contractual life (years)* | 2.37 | 2.16 | - | 2.43 | - | |||||
Exercisable at 28 February 2026 | 35,203 | 226.43 | 346 | 260.00 | - | - | - | - | 31,987 | - |
Exercise price range (pence) | 219.00 to | 242.00 | 260.00 | to 260.00 | - | - | - | |||
| 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 weighted average share price at exercise during the 53 weeks ended 28 February 2026 was 378.80p (52 weeks ended 22
February 2025: 293.90p). The average share price during the 53 weeks ended 28 February 2026 was 414.32p (52 weeks ended 22 February 2025: 335.25p).
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 Scheme | 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 | 190,9 67,853 | 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)* | - | - | - | - | - | |||||
Refer to previous table for footnote.
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2026
184
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.
2026 | 2025 | |
SAYE | SAYE | |
Expected dividend yield (%) | 3.48 - 3.87 | 4.21 - 4.42 |
Expected volatility (%) | 19.1 - 22.2 | 19.2 - 20.8 |
Risk-free interest rate (%) | 3.77 - 3.99 | 4.41 - 4.49 |
Expected life of option (years) | 3 or 5 | 3 or 5 |
Weighted average fair value of options granted (pence) | 107.77 | 77.71 |
Probability of forfeiture (%) | 5.5 - 16.1 | 6 - 12 |
Share price (pence) | 449.80 | 349.10 |
Weighted average exercise price (pence) | 353.00 | 279.00 |
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, management 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:
2026 | 2025 | |||
Number | WAFV | Number | WAFV | |
of shares | pence | of shares | pence | |
Deferred Bonus Plan | 10,250,233 | 376.40 | 17,554,675 | 306.48 |
Long-Term Incentive Plan | 16,650,283 | 400.86 | 21,370,918 | 309.88 |
Note 28 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 £486m (2025: £454m) have been recognised in the Group income statement. This
includes £172m (2025: £181m) of salaries paid as pension contributions.
Defined benefit schemes
The Group has a defined benefit pension surplus of £324m (2025: £56m), and a defined benefit
pension deficit of £127m (2025: £307m), 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 obligation in the UK represents 94% (2025: 94%) of the Group defined
benefit obligation.
United Kingdom
The principal scheme within the Group is the Tesco PLC Pension Scheme (the Scheme), a UK scheme
that has been closed to future accrual since 2015. The assets of the Scheme 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.
Schroders is appointed by the Trustee 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 2025, the Group has continued to
monitor the Virgin Media vs NTL Pension Trustees and other related court cases. In June 2025 the UK
Government announced that it intends to introduce legislation to deal with issues arising from the
Virgin Media vs NTL Pension Trustees judgement. From the work performed to date, management’s
view continues to be that no material adjustments to the financial statements are needed as a result
of the judgement. 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 the legislation
and will assess any change in risk and potential impact on the Group as required.
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Note 28 Post-employment benefits continued
UK 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 latest triennial actuarial pension funding valuation for the Scheme as at 31 March 2025 using the
projected unit credit method showed a funding level under the Technical Provisions basis of 106% (31
March 2022: 104%). Following this triennial valuation, it was agreed with the Scheme Trustee that no
pension deficit contributions would be required from the Company. The Group previously contributed
£17m per annum to meet Scheme expenses, including the Pension Protection Fund (PPF) levy. In
December 2025 a new Schedule of Contributions was signed, confirming that this contribution would
reduce to £12m per annum including the PPF levy for the current financial year. Excluding the PPF levy,
the contribution for the next financial year will be £9m, and £11m per annum thereafter.
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 32% 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:
2026 | 2025 | |
£m | £m | |
Within the next 12 months | 439 | 393 |
Between 1 and 15 years | 9,072 | 8,888 |
Between 15 and 30 years | 12,901 | 13,000 |
Between 30 and 45 years | 8,451 | 8,736 |
Over 45 years | 2,297 | 2,530 |
Total expected undiscounted benefit payments | 33,160 | 33,547 |
The defined benefit obligation held by the Scheme is broken down as follows:
| % | |
Deferred members | 68 |
Current pensioners | 32 |
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 reduce the | |
| return on the Scheme’s assets | 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 set up a | |
| underperform the expected | Responsible Investment Committee to consider climate- | |
| return for the funding valuation, | 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 most of this risk through investment in a | |
| A higher rate of expected | liability-driven 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 of | |
| the IAS 19 and funding liability. | any adverse movement in long-term inflation expectations. | |
| If the Scheme’s funding liability | The Scheme’s holdings are designed to hedge against | |
| increases, this may require | inflation risk for most of the funded liabilities. | |
| additional contributions to be | ||
| made by the Group. | ||
| Interest | A decrease in corporate bond | As part of the investment strategy, the Trustee aims to |
| rate | yields in isolation would be | mitigate most of this risk through investment in an LDI |
| expected to increase the | portfolio. | |
| accounting deficit. Similarly, a | The portfolio invests in assets which increase in value as | |
| decrease in gilt yields in | interest rates decrease. The Scheme’s holdings are | |
| isolation would be expected to | designed to hedge against interest rate risk for most of the | |
| have an adverse impact on the | funded liabilities. | |
| funding position of the | ||
| Scheme. This may lead to | Because the aim of the portfolio is to mitigate risk for the | |
| additional contributions being | funding position, ineffectiveness in hedging for the | |
| 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 of | |
| will lead to a higher defined | changes in longevity on the Scheme defined benefit | |
| benefit obligation. | ||
| obligation. | ||
Notes to the Group financial statements continued
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186
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
consider 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:
2026 | 2025 | |
% | % | |
Discount rate | 5.7 | 5.7 |
Price inflation | 2.8 | 3.0 |
Rate of increase in deferred pensions* | 2.5 | 2.6 |
| Rate of increase in pensions in payment* | ||
Benefits accrued before 1 June 2012 | 2.7 | 2.9 |
Benefits accrued after 1 June 2012 | 2.5 | 2.6 |
* In excess of any guaranteed minimum pension 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 0.45%
(2025: 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 0.37% lower than RPI (2025: 0.43%).
Scheme 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 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 2024, with a long-term improvement rate of 1.0% p.a.
The base tables used in calculating the mortality assumptions are different for various categories of
members, as shown below:
Pensioner | Non-Pensioner | ||
Male | Staff | 103% of SAPS S4 normal heavy | 105% of SAPS S4 normal heavy |
Senior Manager | 106% of SAPS S4 normal light | 107% of SAPS S4 normal light | |
Female | Staff | 107% of SAPS S4 all heavy | 110% of SAPS S4 all heavy |
Senior Manager | 90% of SAPS S4 all middle | 90% of SAPS S4 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.
2026 | 2025 | ||
Years | Years | ||
Retiring at the balance sheet date at age 65: | Male | 19.5 | 19.6 |
Female | 22.4 | 22.2 | |
Retiring at the balance sheet date +25 years at age 65: | Male | 20.6 | 20.6 |
Female | 23.7 | 23.4 |
Sensitivity analysis of significant actuarial assumptions
The sensitivity of significant assumptions upon the Scheme defined benefit obligation are detailed below:
2026 | 2025 | |||
| 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) | 134 | (157) | 146 |
Impact of 0.1% decrease of the assumption | 157 | (134) | 168 | (135) |
Impact of 1.0% increase of the assumption | (1,400) | 1,412 | (1,459) | 1,492 |
Impact of 1.0% decrease of the assumption | 1,736 | (1,221) | 1,829 | (1,279) |
* Inflation sensitivities reflect changes in inflation rate and associated changes in the inflation-related assumptions.
2026 | 2025 | |
Mortality assumptions – Increase/(decrease) in UK defined benefit obligation | £m | £m |
Impact of 1 year increase in longevity | 314 | 292 |
Impact of 1 year decrease in longevity | (325) | (325) |
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 28 February 2026. At the financial year end, the accounting surplus relating to ROI was
£72m (2025: £46m).
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Note 28 Post-employment benefits continued
Post-employment benefits other than pensions
The Group has a statutory gratuity arrangement in India. 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 28 February 2026 of £10m (22 February 2025: £nil) was determined in accordance with the advice of external actuaries. The charge to the Group income statement in the year was £11m (2025: £nil), of
which £10m (2025: £nil) relates to past service cost. £1m (2025: £nil) was credited to the Group statement of comprehensive income/(loss) and no (2025: £nil) 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.
The table below shows a breakdown of the combined investments held by the Group’s schemes:
2026 | 2025 | |||||||
Quoted | Unquoted | Total | Quoted | Unquoted | Total | |||
£m | £m | £m | % | £m | £m | £m | % | |
| Equities | ||||||||
UK | 91 | - | 91 | 1 | 47 | - | 47 | - |
Europe | 266 | - | 266 | 2 | 190 | - | 190 | 2 |
Rest of the world | 1,590 | - | 1,590 | 13 | 1,421 | - | 1,421 | 12 |
| 1,947 | - | 1,947 | 16 | 1,658 | - | 1,658 | 14 | |
| Bonds | ||||||||
Government | 310 | - | 310 | 3 | 259 | - | 259 | 2 |
Corporates – investment grade | 640 | - | 640 | 5 | 888 | - | 888 | 8 |
Corporates – non-investment grade | 595 | - | 595 | 5 | 433 | - | 433 | 4 |
| 1,545 | - | 1,545 | 13 | 1,580 | - | 1,580 | 14 | |
| Property | ||||||||
| UK | - | 647 | 647 | 5 | - | 666 | 666 | 6 |
| Rest of the world | - | 310 | 310 | 3 | - | 392 | 392 | 3 |
| - | 957 | 957 | 8 | - | 1,058 | 1,058 | 9 | |
| Alternative assets | ||||||||
| Hedge funds | - | - | - | - | - | - | - | - |
| Private equity | - | 792 | 792 | 6 | - | 864 | 864 | 7 |
Other | 71 | 1,501 | 1,572 | 13 | 119 | 1,679 | 1,798 | 15 |
71 | 2,293 | 2,364 | 19 | 119 | 2,543 | 2,662 | 22 | |
LDI portfolio | 8,420 | (4,040) | 4,380 | 36 | 6,327 | (2,509) | 3,818 | 33 |
Cash | 1,024 | - | 1,024 | 8 | 939 | - | 939 | 8 |
Total fair value of plan assets | 13,007 | (790) | 12,217 | 100 | 10,623 | 1,092 | 11,715 | 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 £8,935m (2025: £7,102m) and associated repurchase agreements and swaps of £(4,555)m
(2025: £(3,284)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 plan assets include £204m (2025: £185m) relating to property used by the Group. Group property with net carrying value of £817m (2025: £820m) (refer to Note 12) and a value to the Scheme of at least
£775m (2025: £775m) is held as security in favour of the Scheme.
Notes to the Group financial statements continued
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188
Movement in the Group pension surplus/(deficit) during the year
2026 | 2025 | |||||
| Fair value of | Defined benefit | Fair value of | Defined benefit | |||
| plan assets | obligation | Net | plan assets | obligation | Net | |
£m | £m | £m | £m | £m | £m | |
Opening balance | 11,715 | (11,963) | (248) | 12,156 | (12,787) | (631) |
| Past service cost on plan amendments | - | (10) | (10) | - | - | - |
| Current service and administration costs | - | (10) | (10) | - | (17) | (17) |
Finance income/(cost) | 657 | (671) | (14) | 601 | (633) | (32) |
Included in the Group income statement | 657 | (691) | (34) | 601 | (650) | (49) |
| Remeasurement gain/(loss): | ||||||
| Financial assumptions gain/(loss) | - | 68 | 68 | - | 981 | 981 |
| Demographic assumptions gain/(loss) | - | 77 | 77 | - | 17 | 17 |
| Experience gain/(loss) | - | 59 | 59 | - | (62) | (62) |
Return on plan assets excluding finance income | 314 | - | 314 | (550) | - | (550) |
Foreign currency translation | 16 | (14) | 2 | (9) | 8 | (1) |
Included in the Group statement of comprehensive income/(loss) | 330 | 190 | 520 | (559) | 944 | 385 |
Employer contributions | 12 | - | 12 | 17 | - | 17 |
Additional employer contributions | 23 | - | 23 | 23 | - | 23 |
Benefits paid | (520) | 528 | 8 | (523) | 530 | 7 |
Other movements | (485) | 528 | 43 | (483) | 530 | 47 |
Closing balance | 12,217 | (11,936) | 281 | 11,715 | (11,963) | (248) |
Withholding tax on surplus (a) | (84) | (3) | ||||
Closing balance, net of withholding tax | 197 | (251) | ||||
| Consisting of: | ||||||
Schemes in deficit | (127) | (307) | ||||
Schemes in surplus (b) | 324 | 56 | ||||
Deferred tax asset/(liability) (c) | 23 | 71 | ||||
Surplus/(deficit) in schemes at the end of the year, net of deferred tax | 220 | (180) |
(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% (2025: 25%) withholding tax.
(c) Including £(9)m deferred tax liability relating to the ROI scheme in surplus where no withholding tax is applicable (2025: £(6)m).
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Note 29 Share capital and other reserves
2026 | 2025 | |||
Ordinary shares of 6 1/3p each | Ordinary shares of 6 1/3p each | |||
Number | £m | Number | £m | |
| Allotted, called-up and fully paid: | ||||
At the beginning of the year | 6,736,841,762 | 426 | 7,038,930,440 | 445 |
Shares cancelled | (351,658,966) | (22) | (302,088,678) | (19) |
At the end of the year | 6,385,182,796 | 404 | 6,736,841,762 | 426 |
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2026
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| 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 22 February 2025 | 80 | 49 | 186 | (280) | 3,090 | 15 | 3,140 | |
| Other comprehensive income/(loss) | ||||||||
Retranslation of net assets of overseas subsidiaries, joint ventures and associates | - | - | 166 | - | - | - | 166 | |
Impact of net investment hedges | - | - | (73) | - | - | - | (73) | |
Gains/(losses) on cash flow hedges | - | (84) | - | - | - | - | (84) | |
Cash flow hedges reclassified and reported in the Group income statement | - | (14) | - | - | - | - | (14) | |
Finance income/(expenses) on 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 | 6 |
Total other comprehensive income/(loss) | - | (93) | 93 | - | - | (2) | (2) | |
| Inventory cash flow hedge movements | ||||||||
(Gains)/losses transferred to the cost of inventory | - | 61 | - | - | - | - | 61 | |
Total inventory cash flow hedge movements | - | 61 | - | - | - | - | 61 | |
| Transactions with owners | ||||||||
Own shares purchased for cancellation | - | - | - | (1,443) | - | - | (1,443) | |
Own shares cancelled | 22 | - | - | 1,443 | - | - | 1,465 | |
Own shares purchased for share schemes | - | - | - | (279) | - | - | (279) | |
Share-based payments | 27 | - | - | - | 181 | - | - | 181 |
Transfer from own shares held to retained earnings | - | - | - | 44 | - | - | 44 | |
Total transactions with owners | 22 | - | - | (54) | - | - | (32) | |
At 28 February 2026 | 102 | 17 | 279 | (334) | 3,090 | 13 | 3,167 |
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| 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 | 27 | - | - | - | 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
Note 29 Share capital and other reserves continued
Tesco PLC Annual Report and Financial Statements 2026
192
Own shares held continued
2026 | 2025 | |
Own shares purchased for share schemes | £m | £m |
Included in the Group statement of changes in equity | (279) | (204) |
Shares withheld to settle employee tax | 50 | 81 |
Cash received from employees exercising SAYE options | 52 | 69 |
Outstanding amount recognised as financial liabilities* | 77 | - |
Included in the Group cash flow statement | (100) | (54) |
Note 30 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 | |||
2026 | 2025 | 2026 | 2025 | |
£m | £m | £m | £m | |
Sales to related parties | 847 | 645 | - | - |
Purchases from related parties | 128 | 109 | - | - |
Dividends received | 2 | 2 | - | - |
Injection of equity funding | 8 | 10 | 4 | 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 28.
Balances
Joint ventures | Associates | |||
2026 | 2025 | 2026 | 2025 | |
£m | £m | £m | £m | |
Amounts owed to related parties | (11) | (7) | - | - |
Amounts owed by related parties | 77 | 57 | - | - |
Lease liabilities payable to related parties (a) | (1,824) | (1,840) | - | - |
Loans to related parties (b) | 98 | 97 | - | - |
(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.
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Note 30 Related party transactions continued
2026 | 2025 | |
£m | £m | |
Salaries and short-term benefits | 30 | 28 |
Pensions and cash in lieu of pensions | 1 | 1 |
Share-based payments | 18 | 21 |
Joining costs and loss of office costs | 1 | 1 |
50 | 51 | |
| Attributable to: | ||
The Board of Directors (including Non-executive Directors) | 19 | 18 |
Executive Committee (members not on the Board of Directors) | 31 | 33 |
50 | 51 |
Note 31 Analysis of changes in net debt
The Group’s Net debt APM is defined in the Glossary.
2026 | 2025 | |
£m | £m | |
Borrowings, excluding overdrafts | (6,192) | (6,094) |
Lease liabilities | (7,884) | (7,716) |
Net financing derivatives | 476 | 602 |
Share purchase obligations | (77) | - |
Liabilities from financing activities | (13,677) | (13,208) |
Cash and cash equivalents in the balance sheet | 2,515 | 2,255 |
Overdrafts* | (1,004) | (856) |
Cash and cash equivalents (including overdrafts) in the cash flow statement | 1,511 | 1,399 |
Short-term investments | 1,429 | 2,223 |
Joint venture loans | 98 | 97 |
Interest and other receivables | 18 | 19 |
Net operating and investing derivatives | (19) | 16 |
Exclude: Share purchase obligations | 77 | - |
Net debt APM | (10,563) | (9,454) |
* 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.
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2026
194
The tables below set out the movements in liabilities 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 22 February 2025 | (6,094) | (7,716) | 602 | - | (13,208) |
Cash flows arising from financing activities (c) | 40 | 668 | (163) | 1,595 | 2,140 |
| Cash flows arising from operating activities: | |||||
Interest paid | 239 | 395 | 29 | - | 663 |
| Non-cash movements: | |||||
Fair value gains/(losses) | (59) | - | 53 | - | (6) |
Foreign exchange | (103) | (60) | - | - | (163) |
Interest income/(charge) | (215) | (404) | (45) | - | (664) |
| Lease additions, terminations, modifications and reassessments | - | (767) | - | - | (767) |
| Share purchase agreements | - | - | - | (1,672) | (1,672) |
At 28 February 2026 | (6,192) | (7,884) | 476 | (77) | (13,677) |
(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 £(19)m (2025: £16m), which form part of the Group’s Net debt APM, are not included in
liabilities from 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 £nil (2025: £(91)m) cash outflows relating to other cancellable arrangements and
prepayments, and £52m (2025: £69m) cash received from employees exercising SAYE options.
(c) Cash flows arising from financing activities for Borrowings, excluding overdrafts and Net financing derivative financial instruments are presented gross. In the Group cash flow statement, these amounts are presented net.
| 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 (c)(d) | 347 | 597 | (32) | 1,016 | 1,928 |
| Cash flows arising from operating activities: | |||||
Interest paid (d) | 210 | 380 | 85 | - | 675 |
| 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)-(c) Refer to previous table for footnotes.
(d) Following the Group’s change in presentation of economic hedges in the Group cash flow statement, Cash flows arising from financing activities and Interest paid within Lease liabilities have been re-presented by £3m each. See Note 32 for full details.
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GovernanceStrategic report Additional informationFinancial statements
Notes to the Group financial statements continued
As reported | Adjustment | Re-presented | |
£m | £m | £m | |
Interest paid | (769) | (3) | (772) |
Cash flows generated from/(used in) operating activities | 2,922 | (3) | 2,919 |
Proceeds from sale of other investments | 966 | 28 | 994 |
Investing cash inflows from derivative financial instruments | 29 | (29) | - |
Investing cash outflows from derivative financial instruments | (1) | 1 | - |
Net cash generated from/(used in) investing activities | (441) | - | (441) |
Repayment of capital element of obligations under leases | (602) | 3 | (599) |
Repayment of borrowings | (809) | 45 | (764) |
Financing cash inflows from derivative financial instruments | 485 | (424) | 61 |
Financing cash outflows from derivative financial instruments | (453) | 379 | (74) |
Net cash generated from/(used in) financing activities | (2,943) | 3 | (2,940) |
Net increase/(decrease) in cash and cash equivalents | (462) | - | (462) |
Free cash flow | 1,750 | - | 1,750 |
Tesco PLC Annual Report and Financial Statements 2026
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Name | Company number | Name | Company number | Name | Company number |
Booker Group Limited | 5145685 | T & S Stores Limited | 1228935 | Tesco Mobile Communications Limited | 4780729 |
Booker Wholesale Holdings Limited | 5137980 | Tapesilver Limited | 5205362 | Tesco Mobile Services Limited | 4780734 |
Buttoncase Limited | 5298861 | Tesco Atrato (1LP) Limited | 6969529 | Tesco Navona (1LP) Limited | 7459436 |
Dillons Newsagents Limited | 140624 | Tesco Atrato (GP) Limited | 6969536 | Tesco Newmarket Limited | 12605279 |
dunnhumby Overseas Limited | 6601821 | Tesco Blue (3LP) Limited | 10127682 | Tesco Passaic (1LP) Limited | 7121667 |
dunnhumby Trustees Limited | 3565371 | Tesco Coral (GP) Limited | 6640968 | Tesco Property Holdings (No. 2) Limited | 5888922 |
Giant Booker Limited | 65519 | Tesco Coral (Nominee) Limited | 6640901 | Tesco Property Holdings Limited | 2353133 |
Launchgrain Limited | 5260856 | Tesco Coral Limited Partnership | LP013072 | Tesco Property Nominees (No. 5) Limited | 5888952 |
Makro Holding Limited | 4310463 | Tesco Distribution Holdings Limited | 3193655 | Tesco Property Nominees (No. 6) Limited | 5902418 |
Makro Properties Limited | 1273672 | Tesco Dorney (1LP) Limited | 8255488 | Tesco Property Partner (GP) Limited | 4945955 |
Newross Property Limited* | 11185610 | Tesco Dorney (GP) Limited | 8255493 | Tesco Property Partner (No. 1) Limited | 4945945 |
Oakwood Distribution Limited | 5721635 | Tesco Family Dining Limited | 8514605 | Tesco Sarum (1LP) Limited | 7849948 |
Reskammel Property Company Limited | 13264276 | Tesco Freetime Limited | 4345023 | Tesco Sarum (GP) Limited | 7849882 |
Spen Hill Developments Limited | 4827219 | Tesco Fuchsia (3LP) Limited | 10127851 | Transcend Retail Solutions Limited | 14772291 |
Spen Hill Management Limited | 2460426 | Tesco Gateshead Property Limited | 8312532 | TSFM Limited | 14263834 |
Spen Hill Properties (Holdings) PLC | 2412674 | Tesco International Services Limited | 3176368 | ||
Spen Hill Regeneration Limited | 6418300 | Tesco Maintenance Limited | 6003554 |
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GovernanceStrategic report Additional informationFinancial statements
Note 33 Commitments and contingencies continued
Name | Company number | Name | Company number | Name | Company number |
Armitage Finance Unlimited | 5966324 | Murdoch Norton Limited | 548490 | Tesco Dorney (Nominee Holdco) Limited | 8255503 |
BF Limited | 4340809 | One Stop Community Stores Limited | 198980 | Tesco Employees' Share Scheme Trustees Limited | 2846605 |
Bishop's Group Limited | 103407 | One Stop Convenience Stores Limited | 2467178 | Tesco Navona (Nominee 1) Limited | 7459762 |
Booker Cash & Carry Limited | 5355306 | One Stop Stores Trustee Services Limited | 2477253 | Tesco Navona (Nominee 2) Limited | 7459765 |
Booker Retail Limited | 221722 | Orpington (Station Road) Limited | 5980835 | Tesco Navona (Nominee Holdco) Limited | 7459662 |
Bourne End Residential Management Company Limited | 12380854 | PTLL Limited | 8926930 | Tesco Navona PL Propco Limited | 7458609 |
Broughton Retail Park Nominee 1 Limited | 4319626 | Seacroft Green Nominee 1 Ltd | 4253497 | Tesco Passaic (Nominee 1) Limited | 7121666 |
Broughton Retail Park Nominee 2 Limited | 4319639 | Seacroft Green Nominee 2 Ltd | 4253572 | Tesco Passaic (Nominee 2) Limited | 7121664 |
Broughton Retail Park Nominee 3 Limited | 4319645 | Spen Hill Residential No 1 Limited | 6641084 | Tesco Passaic (Nominee Holdco) Limited | 7121480 |
Broughton Retail Park Nominee 4 Limited | 4319669 | Spen Hill Residential No 2 Limited | 6184538 | Tesco Passaic PL Propco Limited | 7121506 |
Budgen Holdings Limited | 161619 | Statusfloat Limited | 4661717 | Tesco Property (Nominees) (No.1) Limited | 4966637 |
Budgens Property Investments Limited | 3964478 | Tesco Atrato (Nominee 1) Limited | 6969531 | Tesco Property (Nominees) (No.2) Limited | 4966635 |
Budgens Stores Limited | 725281 | Tesco Atrato (Nominee 2) Limited | 6969540 | Tesco Property (Nominees) Limited | 4945975 |
Giant Bidco Limited | 5310162 | Tesco Atrato (Nominee Holdco) Limited | 6969528 | Tesco Property Finance 1 Holdco Limited | 5721633 |
Giant Midco Limited | 5310147 | Tesco Atrato Depot Propco Limited | 6969533 | Tesco Sarum (Nominee 1) Limited | 7851854 |
Highams Green Management Company Limited | 8114643 | Tesco Blue (Nominee 1) Limited | 5888920 | Tesco Sarum (Nominee 2) Limited | 7851858 |
IRTH (15) Limited | 652021 | Tesco Blue (Nominee 2) Limited | 5888921 | Tesco Sarum (Nominee Holdco) Limited | 7851190 |
IRTH (19) Limited | 4621007 | Tesco Blue (Nominee Holdco) Limited | 5888990 | Tesco Seacroft Ltd | 4253605 |
Linnco Limited | 1731059 | Tesco Depot Propco Limited | 6769537 | Tesco Secretaries Limited | 8730224 |
Londis (Holdings) Limited | 639798 | Tesco Dorney (Nominee 1) Limited | 8255640 | Tesco Services Limited | 7600956 |
Maldon Finance Limited | 12534413 | Tesco Dorney (Nominee 2) Limited | 8255645 | Weymouth Avenue (Dorchester) Limited | 2614345 |
Notes to the Group financial statements continued
Tesco PLC Annual Report and Financial Statements 2026
198
Note 34 Events after the reporting period
See Note 1 for details on the Group’s assessment of the impact of the conflict in the Middle East.
There were no other material events after the reporting period requiring disclosure.
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GovernanceStrategic report Additional informationFinancial statements
Tesco PLC – Parent Company balance sheet
Notes
28 February 2026 22 February 2025
£m £m
Non–current assets
Investments 6 16,276 16,538
Derivative financial instruments 8 812 869
17,088 17,407
Current assets
Receivables 7 296 542
Cash and cash equivalents 191 271
Derivative financial instruments 8
-
145
487 958
Current liabilities
Payables 9 (240) (488)
Borrowings 10 (41) (534)
Derivative financial instruments 8 (15)
-
(296) (1,022)
Net current assets/(liabilities) 191 (64)
Non–current liabilities
Payables 9 (2,391) (1,941)
Borrowings 10 (995) (993)
Derivative financial instruments 8
-
(12)
Deferred tax liabilities 11 (11) (13)
(3,397) (2,959)
Net assets 13,882 14,384
Equity
Share capital 14 404 426
Share premium 5,166 5,165
Other reserves 14 2,852 2,892
Retained earnings (including profit for the financial year of £2,002m (2025: £809m)) 5,460 5,901
Total equity 13,882 14,384
The notes on pages 202 to 207 form part of these financial statements.
Ken Murphy Imran Nawaz
Directors
The Parent Company financial statements on pages 200 to 207 were approved and authorised for issue by the Directors on 15 April 2026.
Tesco PLC
Registered number 00445790
Tesco PLC Annual Report and Financial Statements 2026
200
Tesco PLC – Parent Company statement of changes in equity
Notes
Share capital Share premium
Other reserves
(Note 14) Retained earnings Total equity
£m £m £m £m £m
At 22 February 2025 426 5,165 2,892 5,901 14,384
Profit for the year
- - -
2,002 2,002
Other comprehensive income/(loss)
Gains on cash flow hedges
- -
13
-
13
Cash flow hedges reclassified and reported in the Company income statement
- -
(24)
-
(24)
Tax relating to components of other comprehensive income
- -
3
-
3
Total other comprehensive income/(loss)
- -
(8)
-
(8)
Total comprehensive income/(loss)
- -
(8) 2,002 1,994
Transactions with owners
Own shares purchased for cancellation
- -
(1,443)
-
(1,443)
Own shares cancelled 14 (22)
-
1,465 (1,443)
-
Own shares purchased for share schemes
- -
(279)
-
(279)
Share-based payments
- -
181 (20) 161
Share forfeiture 14
-
1
- -
1
Dividends
- - -
(936) (936)
Transfer from own shares held to retained earnings
- -
44 (44)
-
Total transactions with owners (22) 1 (32) (2,443) (2,496)
At 28 February 2026 404 5,166 2,852 5,460 13,882
Notes
Share capital 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 14 (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
The Company has considered the profits available for distribution to shareholders. At 28 February 2026, the Company had retained earnings of £5.5bn (2025: £5.9bn), of which £3.2bn is available for distribution
(2025: £3.2bn).
The notes on pages 202 to 207 form part of these financial statements.
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GovernanceStrategic report Additional informationFinancial statements
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 53 weeks ended 28 February 2026 were approved
by the Board of Directors on 15 April 2026 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 53 weeks to 28 February 2026 (prior financial year: 52 weeks to
22 February 2025).
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
Investments in subsidiaries 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 employee benefit trusts, 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 trusts 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 and other
binding 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 2026
202
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments to hedge its exposure to foreign exchange, inflation
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 is the principal employer of 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.
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GovernanceStrategic report Additional informationFinancial statements
Note 5 Employment costs, including Directors’ remuneration
Notes
2026 2025
£m £m
Wages and salaries 12 13
Social security costs 2 2
Pension costs 13 1 1
Share-based payment expense 12 13 6
Total 28 22
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
(2025: 11).
The Schedule 5 requirements of SI 2008/410 for Directors’ remuneration are included within the
Directors’ remuneration report on pages 88 to 108.
Note 6 Investments
2026
£m
Cost
Opening balance 17,395
Capital contributions 98
Return of capital contributions (418)
Closing balance 17,075
Accumulated impairment losses
Opening balance (857)
Impairment reversal 58
Closing balance (799)
Net carrying value
At 28 February 2026 16,276
At 22 February 2025 16,538
The Company has recognised capital contributions of £98m relating to share awards made to the
employees of its directly and indirectly owned subsidiaries.
Included in the return of capital contributions of £418m is the repayment of capital of £315m from
Tesco Personal Finance Group Limited as part of the distribution of the Group’s Banking operations
disposal proceeds. The remaining £103m relates to recharging subsidiaries for settled share awards.
The Company has continued to monitor the recoverability of its investments in subsidiaries and
recognised a net release of £58m on certain investments. The release is driven by improvements in
forecast cash flows and a reduction in discount rates. The methodology applied is consistent with that
disclosed in Note 15 of the Group financial statements.
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 10.1% 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 £666m. If the long-term
growth rates were to decrease by 0.5%pt, the carrying amount of investments would decrease by
£82m. If the future cashflows were to decrease by 5.0%, the carrying amount of investments would
decrease by £59m.
The Company’s subsidiary undertakings, joint ventures and associates are shown on pages 208 to 213.
Note 7 Receivables
2026 2025
£m £m
Amounts owed by Group undertakings* 269 517
Other receivables 27 25
Total receivables 296 542
* Amounts owed by Group undertakings are non interest-bearing and are repayable on demand.
The expected credit loss on receivables is immaterial (2025: immaterial).
Notes to the Parent Company financial statements continued
Tesco PLC Annual Report and Financial Statements 2026
204
Note 8 Derivative financial instruments
2026 2025
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 156 196
- -
296 406
- -
Derivatives not in a formal hedge relationship
Cross-currency swaps 127 303 (15) 89 138 308 (12) 95
Index-linked swaps 529 3,089
- -
580 3,089
- -
Total 812 3,588 (15) 89 1,014 3,803 (12) 95
Note 9 Payables
2026 2025
£m £m
Amounts owed to Group undertakings* 2,530 2,405
Other payables 97 22
Taxation and social security 4 2
Total payables 2,631 2,429
Of which:
Current 240 488
Non-current 2,391 1,941
2,631 2,429
* 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 of 4.2% (2025: 5.1% to 5.2%) and with maturities up to and including February 2028.
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 £4.0bn (2025: £3.4bn). The Company has also
guaranteed derivative agreements of Group undertakings, of which those in a net liability position at
the reporting date total £nil (2025: £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
£4.7bn (2025: £4.9bn).
Note 10 Borrowings
Par value Maturity
2026 2025
£m £m
Bank loans and overdrafts 25 90
LPI and RPI-linked bonds*
3.322% LPI MTN £210m Nov 2025
-
429
1.982% RPI MTN £196m Mar 2036 416 397
Other borrowings
6% MTN £38m Dec 2029 41 42
5.5% MTN £67m Jan 2033 74 75
6.15% USD Bond $355m Nov 2037 319 341
4.875% MTN £14m Mar 2042 15 14
5.125% MTN €147m Apr 2047 132 125
5.2% MTN £14m Mar 2057 14 14
Total 1,036 1,527
Of which:
Current 41 534
Non-current 995 993
1,036 1,527
* These bonds are redeemable at par, indexed for increases in the RPI over the life of the MTN. Refer to Note 26 to the Group
financial statements.
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GovernanceStrategic report Additional informationFinancial statements
Note 11 Taxation
The deferred tax liability recognised by the Company, and the movements thereon, during the current
financial year are as follows:
£m
22 February 2025 (13)
Charge to the income statement (1)
Movement in reserves for the year 3
28 February 2026 (11)
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 27 to the Group financial statements.
Share option schemes
At 28 February 2026, there were 9,890 options outstanding (2025: 9,890) with a weighted average
exercise price (WAEP) of 182.00p (2025: 182.00p) and a weighted average remaining contractual life of
0.50 years (2025: 1.52 years). There were no options granted, exercised or forfeited in the 53 weeks
ended 28 February 2026 (52 weeks ended 22 February 2025: nil). There were no options exercisable at
28 February 2026 (2025: 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 27 to the Group
financial statements.
The number and weighted average fair value (WAFV) of share bonuses granted during the financial
year were:
2026 2025
Number
of shares
WAFV
pence
Number
of shares
WAFV
pence
Deferred Bonus Plan 597,893 376.40 829,624 306.46
Long-Term Incentive Plan 1,602,704 399.10 2,018,282 308.40
Note 13 Pensions
The total cost of participation in the Tesco Retirement Savings Plan (a defined contribution scheme) to
the Company was £1m (2025: £1m). Further disclosure relating to all schemes can be found in Note 28
to the Group financial statements.
Note 14 Called-up share capital and reserves
Refer to Note 29 to the Group financial statements for details relating to called-up share capital and
share forfeiture programme.
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 22 February 2025 80 42 (280) 3,050 2,892
Other comprehensive income/(loss)
Gains on cash flow hedges
-
13
- -
13
Cash flow hedges reclassified and reported
in the Company income statement
-
(24)
- -
(24)
Tax relating to components of other
comprehensive income
-
3
- -
3
Total other comprehensive income/(loss)
-
(8)
- -
(8)
Transactions with owners
Own shares purchased for cancellation
- -
(1,443)
-
(1,443)
Own shares cancelled 22
-
1,443
-
1,465
Own shares purchased for share schemes
- -
(279)
-
(279)
Share-based payments
- -
181
-
181
Transfer from own shares held to retained
earnings
- -
44
-
44
Total transactions with owners 22
-
(54)
-
(32)
At 28 February 2026 102 34 (334) 3,050 2,852
Notes to the Parent Company financial statements continued
Tesco PLC Annual Report and Financial Statements 2026
206
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
-
(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
Note 15 Contingent liabilities
Contingent liabilities
Refer to Note 33 to the Group financial statements.
Note 16 Events after the reporting period
There were no material events after the reporting period requiring disclosure.
Tesco PLC Annual Report and Financial Statements 2026
207
GovernanceStrategic report Additional informationFinancial statements
| 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 Pension Trustees Limited | 8 | Limited by Guarantee | – | |
Booker Retail Partners (GB) Limited | 8 | GBP1.00 Ordinary | 100 | |
Booker Retail Limited | 8 | GBP0.10 Ordinary | 100 | |
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 † | |||
Dillons Newsagents Limited* | 2 | GBP0.25 Non–Voting Ordinary | 100 | |
dunnhumby International Limited | 4 | GBP1.00 A Ordinary | 100 | |
dunnhumby Limited | 4 | GBP0.05 Ordinary | 100 | |
GBP0.10 A Ordinary | 100 | |||
GBP0.10 Deferred | 100 | |||
dunnhumby Overseas Limited | 4 | GBP1.00 Ordinary | 100 | |
dunnhumby Trustees Limited | 4 | GBP1.00 Ordinary | 100 | |
Giant Bidco Limited | 8 | GBP1.00 Ordinary | 100 | |
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
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 | |
Newross Property Limited (a) | 1 | GBP1.00 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 | 2 | GBP1.00 Ordinary | 100 (b) | |
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 | 1 | GBP1.00 Ordinary | 100 (c) | |
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 | |
Statusfloat Limited | 1 | GBP1.00 Ordinary | 100 | |
Tesco Newmarket Limited | 1 | GBP1.00 Ordinary | 100 | |
T&S Stores Limited | 2 | GBP0.05 Ordinary | 100 † | |
Tapesilver Limited | 1 | GBP1.00 Ordinary | 100 † | |
Tesco PLC Annual Report and Financial Statements 2026
208
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Teesport (GP) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
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 Blue (3LP) Limited | 1 | GBP1.00 Ordinary | 100 |
Tesco Blue (GP) Limited | 1 | GBP1.00 A Ordinary | 100 (d) |
GBP1.00 B Ordinary | 100 (d) | ||
Tesco Blue (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Blue (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Blue (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
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 (d) |
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 |
| Tesco Employees’ Share Scheme Trustees | 1 | GBP1.00 Ordinary | 100 (e) |
| Limited | |||
Tesco Family Dining 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 † |
GBP10.00 Preference | 100 † | ||
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 (d) |
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Tesco Navona (GP) Limited | 1 | GBP1.00 A Ordinary | 100 (d) |
1 | GBP1.00 B Ordinary | 100 (d) | |
Tesco Navona (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Navona (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Navona (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Navona PL Propco Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Overseas Investments Limited | 1 | GBP1.00 Ordinary | 100 † |
Tesco Passaic (1LP) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Passaic (GP) Limited | 1 | GBP1.00 A Ordinary | 100 (d) |
GBP1.00 B Ordinary | 100 (d) | ||
Tesco Passaic (Nominee 1) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Passaic (Nominee 2) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Passaic (Nominee Holdco) Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Passaic PL Propco Limited | 1 | GBP1.00 Ordinary | 100 (d) |
Tesco Pension Investment Limited | 1 | GBP1.00 Ordinary | 100 (d) |
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 (d) |
Tesco Property Finance 1 PLC | 1 | GBP1.00 Ordinary | 100 (d) |
GBP0.25 Ordinary (f) | 100 (d) | ||
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 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 PLC Annual Report and Financial Statements 2026
209
GovernanceStrategic report Additional informationFinancial statements
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Tesco Stores Limited | 1 | GBP1.00 Ordinary | 100 |
GBP1.00 A Preference | 100 | ||
GBP1.00 B Preference | 100 | ||
Tesco Underwriting Limited | 31 | GBP1.00 Ordinary | 100 |
The Big Food Group Limited | 8 | GBP0.10 Ordinary | 100 |
The Teesport Limited Partnership | 1 | Limited Partnership | 100 (d) |
The Tesco Atrato Limited Partnership | 1 | Limited Partnership | 100 |
The Tesco Blue Limited Partnership | 1 | Limited Partnership | 100 (d) |
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 (d) |
The Tesco Passaic Limited Partnership | 1 | Limited Partnership | 100 (d) |
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 (d) |
Transcend Retail Solutions Limited | 1 | GBP1.00 Ordinary | 100 |
TSFM Limited | 1 | GBP1.00 Ordinary | 100 |
Venus Wine & Spirit Merchants Limited | 8 | GBP1.00 Ordinary | 100 |
Weymouth Avenue (Dorchester) Limited | 1 | GBP1.00 Ordinary | 100 |
Related undertakings of the Tesco Group continued
Subsidiary undertakings incorporated in the United Kingdom continued International subsidiary undertakings
| Registered | % held by | |||
| Name of undertaking | address | Class of share held | Group | |
Arena (Jersey) Management Limited | 33 | GBP1.00 Ordinary | 100 † | |
dunnhumby (Thailand) Limited | 19 | THB100 Ordinary | 100 | |
dunnhumby Australia Pty Ltd | 39 | 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 | 53 | INR10.00 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 | 45 | USD1.00 Ordinary | 100 | |
| Consulting (Shanghai) Company Limited | ||||
dunnhumby Ireland Limited | 52 | EUR1.00 Ordinary | 100 | |
| dunnhumby IT Services India Private | 36 | INR10.00 Ordinary | 100 | |
| Limited | ||||
dunnhumby Italia s.r.l | 37 | EUR1.00 Ordinary | 100 | |
dunnhumby Japan K.K | 38 | JPY10,000.00 Ordinary | 100 | |
dunnhumby México S. de R.L. de C.V. | 49 | MXN1.00 Quota | 100 | |
dunnhumby Netherlands B.V. | 47 | EUR100 Ordinary | 100 | |
dunnhumby New Zealand | 23 | NZD1.00 Ordinary | 100 | |
dunnhumby Poland sp. z o.o. | 42 | PLN50,000 | Ordinary | 100 |
dunnhumby SARL | 10 | EUR100 Ordinary | 100 | |
| dunnhumby Serviços de Promoção Digital | 16 | BRL1.00 Ordinary | 100 | |
| Ltda | ||||
dunnhumby Slovakia s.r.o. | 57 | No Par Value Ordinary | 100 | |
dunnhumby South Africa (Pty) Ltd | 43 | ZAR1.00 Ordinary | 100 | |
dunnhumby Spain S.L | 50 | EUR1.00 Ordinary | 100 | |
dunnhumby Ventures LLC | 44 | USD1.00 Capital | 100 | |
ELH Insurance Limited | 34 | GBP1.00 Ordinary | 100 | |
Gresham Properties Limited | 24 | EUR1.00 Ordinary | 100 | |
| Longford Centre Management Services | 21 | EUR1.25 Ordinary | 56.90 | |
| Limited | ||||
Merrion Shopping Centre Ltd | 24 | EUR0.012697 | Ordinary | 51.88 |
Tesco PLC Annual Report and Financial Statements 2026
210
| Registered | % held by | ||||
| Name of undertaking | address | Class of share held | Group | ||
Nadační fond Tesco | 7 | CZK500 Capital | 100 | ||
Omnisol Private Limited | 41 | INR10.00 Equity | 100 | ||
Shopping Mall Eden s.r.o. | 7 | CZK | 100,000 | Ordinary | 100 |
Sociomantic Labs Private Limited | 46 | INR10.00 Ordinary | 100 | ||
| Tesco Akadémia Képzési és Fejlesztési | |||||
Korátolt Felelősségű Társaság | 32 | HUF1.00 Business Share | 100 | ||
Tesco Angel Foundation | 32 | HUF1.00 Assets | 100 | ||
Tesco Bengaluru Private Limited | 41 | INR10.00 Ordinary | 100 | ||
Tesco Capital No. 1 Limited | 28 | GBP1.00 A Ordinary | 100 † | ||
GBP0.50 B Ordinary | 100 † | ||||
| GBP0.01 Guaranteed Cumulative Fixed | 100 † | ||||
| Rate Preference | |||||
GBP0.01 Preferred Ordinary | 100 † | ||||
| Tesco Corporate Treasury Services | 24 | EUR1.00 Ordinary | 100 | ||
| Europe Designated Activity Company | |||||
Tesco Foundation (Nadaçia Tesco) | 57 | No Par Value Ordinary | 100 | ||
Tesco Franchise Stores ČR s.r.o. | 7 | CZK2,000,000 | Ordinary | 100 | |
| Tesco-Global Stores Privately Held | 32 | HUF10.00 Common | 100 | ||
| Company Limited | |||||
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 | HKD10.00 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) Co. | 17 | USD1.00 Ordinary | 100 | ||
| Limited | |||||
Tesco Mobile Ireland Limited | 24 | EUR1.00 Ordinary | 100 | ||
Tesco Sourcing India Private Limited | 41 | INR10.00 Ordinary | 100 | ||
Tesco Stores ČR a.s. | 7 | CZK250.00 Ordinary | 100 | ||
Tesco Stores SR, a.s. | 57 | EUR33,193.92 Ordinary | 100 | ||
| Tesco Technology and Services Europe | 3 | PLN50.00 Ordinary | 100 | ||
| Sp. z o.o. | |||||
Tesco Trustee Company of Ireland DAC | 24 | EUR1.25 Ordinary | 100 † | ||
| TESCO-BST Üzleti és Technológiai | 25 | HUF100,000 | Ordinary | 100 | |
| Szolgáltatások Zârtköruen Múködó | |||||
| Részvénytársaság | |||||
The Teesport Unit Trust | 9 | – | 100 (d) | ||
Tesco Atrato Unit Trust | 33 | – | 100 | ||
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Tesco Blue Unit Trust | 5 | – | 100 (d) |
Tesco Breakfast Unit Trust | 33 | – | 100 |
The Tesco Navona Unit Trust | 5 | – | 100 (d) |
The Tesco Passaic Unit Trust | 5 | – | 100 (d) |
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Day And Nite Stores Limited | 60 | GBP1.00 Ordinary | 100 |
Tesco Food Sourcing Limited | 60 | GBP1.00 Ordinary | 100 |
Tesco (Overseas) Limited | 60 | GBP1.00 Ordinary | 100 † |
Tesco Brislington Limited | 60 | GBP1.00 Ordinary | 100 |
Tesco Bury Limited | 60 | GBP1.00 Ordinary | 100 |
| Registered | % held by | ||
| Name of undertaking | address | Class of share held | Group |
Cheshunt Holdings Guernsey Limited | 27 | GBP1.00 Ordinary | 100 |
Patrick C. Joyce Supermarket (Headford) ULC | 24 | EUR1.25 Ordinary | 100 |
Tesco PLC Annual Report and Financial Statements 2026
211
GovernanceStrategic report Additional informationFinancial statements
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 |
Shire Park Limited | 15 | GBP1.00 Ordinary | 48.57 |
Tesco Mobile Limited* | 1 | GBP0.10 A Ordinary | 100 |
GBP0.90 B Ordinary | 100 | ||
W23 Global Fund LP | 51 | Limited Partnership | 20 |
W23 Global GP LLP | 51 | Limited Liability Partnership | 20 |
W23 Global Ltd | 51 | GBP1.00 Ordinary | 20 |
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 | 26 | INR 4.00 Equity | 49 | |
China Wisdom dunnhumby Limited (g) | 22 | No Par Value Ordinary | 50 | |
dunnhumby Norge A.S. | 55 | NOK1,000 | Ordinary | 50 |
Fiora Hypermarket Limited | 26 | INR10.00 Equity | 49 | |
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 | 5 | – | 50 | |
The Blackpool Unit Trust | 5 | – | 50 | |
The Broadstairs Unit Trust | 5 | – | 50 | |
The Coventry Unit Trust | 5 | – | 50 | |
Trent Hypermarket Private Limited | 13 | INR10.00 Equity | 50 | |
W23 Global Manager Pty Ltd | 59 | 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 |
Delamare 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) Newross Property Limited changed name to Tesco Newry Limited on 18 March 2026.
(b) 95% held by Tesco PLC.
(c) 66.6% held by Tesco PLC.
(d) Tesco Pension Trustees Limited (TPTL), a 100% owned subsidiary of the Group and the corporate trustee of the Tesco PLC Pension
Scheme (the Scheme), holds shares on behalf of the Scheme. These comprise 50% of the shares of three property joint ventures
with Tesco (The Tesco Blue Limited Partnership, The Tesco Passaic Limited Partnership, and The Tesco Navona Limited
Partnership), and 100% of the shares of TPT Holdco No.1 Limited and Tesco Pension Investment Limited. The other 50% of shares
in the three property joint ventures are held by other Group companies. Therefore, while the Group owns 100% of the shares in
these entities and their subsidiaries, it has only 50% of the beneficial interest in them and has joint control over them with the
Scheme. They are therefore accounted for as joint ventures. The Group has no beneficial interest in TPT Holdco No.1 Limited and
Tesco Pension Investment Limited, and so no entries for them are included in the accounts.
(e) 50% held by Tesco PLC.
(f) One ordinary share of the same class partly paid.
(g) This company is in liquidation.
Related undertakings of the Tesco Group continued
Tesco PLC Annual Report and Financial Statements 2026
212
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 22 Grenville Street, St Helier JE4 8PX, Jersey
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 Lime Grove House, Green Street, St Helier JE1 2ST, Jersey
10 15 rue de Bruxelles, 75009, Paris, France, 75009
11 5 Churchill Place, 10th Floor, London E14 5HU, 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, 07, 08, 09, Floor 17, No. 610 Xujiahui Road, Huangpu District, Shanghai, People’s Republic of China
18 5-7 rue des Italiens,75009 Paris, France
19 No 319 Chamchuri Square Building, 24th Floor, Phayathai road, Pathumwan sub district, Pathumwan District, Bangkok 10330,
Thailand
20 604-2605 AXA Tower, Landmark East, No. 100 How Ming Street, Kowloon, Hong Kong
21 Longford Shopping Centre, Longford Town, Co. Longford, Longford, N39 R7R6, Ireland
22 27/F One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong
23 RSM New Zealand, Level 2, 62 Highbrook Drive, East Tamaki, Auckland, 2013, New Zealand
24 Gresham House, Marine Road, Dun Laoghaire, Co. Dublin D01 F5P2, Ireland
25 II38, 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, Martello Court, Admiral Park, St. Peter Port GY1 3AP, Guernsey
28 Level 1, IFC1 Esplanade, St Helier JE2 3BX, Jersey
29 Carrera 48, No 32B Sur 139, OF 909 P. 9, Envigado, Antioquia, Medelin 055428, Colombia
30 Vanha Kaarelantie 33 A, Vantaa 01610, 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 JE1 0BD, Jersey
34 Dorey Court, Admiral Park, St. Peter Port, GY1 4AT, Guernsey
35 The Corporation Trust Company, 1209 Orange Street, Corporation Trust Center, Wilmington, Delaware19801, 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 c/o RSM Australia Pty Ltd, Level 27, 120 Collins Street, Melbourne, VIC 3000, Australia
40 6-H, Jan Luijkenstraat 6-H, 1071 CM, Amsterdam, The Netherlands
41 81 & 82, EPIP Area, Whitefield, Bangalore, Bangalore South, 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, Ohio 45202, United States
45 Room 1001, Enterprise Development Tower, Unit 01 – 10th Floor, No 398, Jiangsu Road, Changning District, Shanghai 200050,
People’s Republic of China
46 c/o Vaish Associates, 106, Peninsula Centre, Dr. S. S. Rao Road, Parel Mumbai 400012, India
47 Kingsfordweg 151, 1043 GR Amsterdam, The Netherlands
48 Antonio Bellet 444, Oficina 504, Comuna de Las Condes, Ciudad de Santiago, 7500025, Chile
49 Artemio del Valle Arizpe No 16, piso 2, Colonia del Valle, C.P.03100, Benito Juárez, Ciudad de México
50 48, 1D, Calle de Hermosilla 1ª, Madrid 28001, Spain
51 8 Sackville Street, London, W1S 3DG, United Kingdom
52 Floor 3, 2 Harbour Square, Crofton Road, Dun Laoghaire, Dublin A96D6R0, Ireland
53 4th Floor, Tower B, Paras Twin Towers, DLF Golf Course Road, Sector 54, Haryana-HR, Gurgaon 122002, India
54 Pribinova 40, Bratislava 811 09, Slovakia
55 Tordenskiolds gate 8, 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 Suite 502, 80 Cooper Street, Surry Hills, New South Wales 2010, Australia
60 1 More London Place, London SE1 2AF, United Kingdom
Tesco PLC Annual Report and Financial Statements 2026
213
GovernanceStrategic report Additional informationFinancial statements
Supplementary information (unaudited)
Like-for-like sales performance (exc. VAT, exc. fuel)
Like-for-like sales
Q1 Q2 Q3 Q4 H1 H2 FY
On a 52-week basis 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26
UK & ROI 5.1% 4.6% 4.0% 3.2% 4.9% 3.6% 4.2%
UK 5.1% 4.6% 3.9% 3.1% 4.9% 3.5% 4.2%
ROI 5.5% 4.0% 5.0% 3.9% 4.8% 4.4% 4.6%
Booker 2.0% 1.3% (0.9)% (1.8)% 1.7% (1.3)% 0.2%
Central Europe 4.1% 2.9% 1.2% 0.9% 3.4% 1.0% 2.2%
Like-for-like
sales growth
4.6% 4.0% 3.1% 2.4% 4.3% 2.7% 3.5%
Growth in sales (exc. VAT, exc. fuel)
Actual rates Constant rates
H1 H2 FY H1 H2 FY
On a 52-week basis 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26
UK & ROI 5.6% 4.7% 5.1% 5.6% 4.4% 5.0%
UK 5.6% 4.3% 4.9% 5.6% 4.3% 4.9%
ROI 6.4% 11.2% 8.9% 6.5% 6.7% 6.6%
Booker 2.4% (1.4)% 0.6% 2.4% (1.4)% 0.6%
Central Europe 4.4% 9.8% 7.2% 5.0% 2.4% 3.7%
Growth in sales 5.1% 4.2% 4.6% 5.1% 3.5% 4.3%
Country level revenue detail is provided in Note 3.
UK sales area by size of store
28 February 2026 22 February 2025
Store size (sq. ft.) No. of stores Million sq. ft.
% of total
sq. ft. No. of stores Million sq. ft.
% of total
sq. ft.
0–3,000 2,755 6.1 15.7% 2,716 5.9 15.4%
3,001–20,000 282 3.0 7.7% 281 3.0 7.7%
20,001–40,000 304 9.0 23.2% 302 9.0 23.3%
40,001–60,000 192 9.7 25.0% 192 9.7 25.2%
60,001–80,000 111 7.6 19.6% 111 7.6 19.6%
80,001–100,000 31 2.7 7.0% 31 2.7 7.0%
Over 100,000 6 0.7 1.8% 6 0.7 1.8%
Total* 3,681 38.8 100.0% 3,639 38.6 100.0%
* Excludes franchise stores.
Group space summary
Actual Group space – store numbers
2024/25
year end Openings
Closures/
disposals
Net gain/
(reduction)
(a)
2025/26
year end
Large 809 4
-
4 813
Convenience 2,094 65 (11) 54 2,148
Online only 6
- - -
6
UK excluding One Stop 2,909 69 (11) 58 2,967
One Stop
(b)
730 8 (24) (16) 714
UK
(b)
3,639 77 (35) 42 3,681
ROI 182 9
-
9 191
UK & ROI
(b)(c)
3,821 86 (35) 51 3,872
Booker 190
-
(1) (1) 189
Czech Republic
(b)
184 1 (1)
-
184
Hungary 198 3 (1) 2 200
Slovakia 179 3
-
3 182
Central Europe
(b)
561 7 (2) 5 566
Group excluding franchise stores 4,572 93 (38) 55 4,627
UK (One Stop) 354 67 (35) 32 386
Czech Republic 114 1 (2) (1) 113
Franchise stores 468 68 (37) 31 499
Total Group 5,040 161 (75) 86 5,126
(a) 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.
(b) Excludes franchise stores.
(c) The 2024/25 figures have been restated to exclude Booker. Refer to Note 2.
Tesco PLC Annual Report and Financial Statements 2026
214
Actual Group space – ’000 sq. ft.
2024/25
year end Openings
Closures/
disposals
Repurposing/
extensions
(d)
Net gain/
(reduction)
(a)
2025/26
year end
Large 31,092 71
- -
71 31,163
Convenience 5,615 186 (54)
-
132 5,747
Online only 716
- - - -
716
UK excluding One Stop 37,423 257 (54)
-
203 37,626
One Stop
(b)
1,205 15 (40)
-
(25) 1,180
UK
(b)
38,628 272 (94)
-
178 38,806
ROI 3,572 89
-
2 91 3,663
UK & ROI
(b)(c)
42,200 361 (94) 2 269 42,469
Booker
(e)
7,653
-
(11)
-
(11) 7,642
Czech Republic
(b)
4,085 20 (3) (16) 1 4,086
Hungary 5,316 9 (3) (29) (23) 5,293
Slovakia 3,179 19
-
(12) 7 3,186
Central Europe
(b)
12,580 48 (6) (57) (15) 12,565
Group excluding franchise
stores
62,433 409 (111) (55) 243 62,676
UK (One Stop) 509 102 (47)
-
55 564
Czech Republic 103 1 (2)
-
(1) 102
Franchise stores 612 103 (49)
-
54 666
Total Group 63,045 512 (160) (55) 297 63,342
(a)-(c) Refer to previous table for footnotes.
(d) Repurposing of retail selling space.
(e) The prior year has been re-presented for sales areas remeasurements.
Group space forecast to 27 February 2027 – ’000 sq. ft.
2025/26
year end Openings
Closures/
disposals
Repurposing/
extensions
(d)
Net gain/
(reduction)
(a)
2026/27
year end
Large 31,163 32
- -
32 31,195
Convenience 5,747 168 (11)
-
157 5,904
Online only 716
- - - -
716
UK excluding One Stop 37,626 200 (11)
-
189 37,815
One Stop
(b)
1,180
-
(15)
-
(15) 1,165
UK
(b)
38,806 200 (26)
-
174 38,980
ROI 3,663 105
- -
105 3,768
UK & ROI
(b)
42,469 305 (26)
-
279 42,748
Booker 7,642
- - - -
7,642
Czech Republic
(b)
4,086 18
-
(1) 17 4,103
Hungary 5,293
-
(51) (8) (59) 5,234
Slovakia 3,186 93
-
(18) 75 3,261
Central Europe
(b)
12,565 111 (51) (27) 33 12,598
Group excluding franchise
stores
62,676 416 (77) (27) 312 62,988
UK (One Stop) 564 46 (3)
-
43 607
Czech Republic 102
- - - -
102
Franchise stores 666 46 (3)
-
43 709
Total Group 63,342 462 (80) (27) 355 63,697
Refer to previous table for footnotes.
Tesco PLC Annual Report and Financial Statements 2026
215
GovernanceStrategic report Financial statements Additional informationAdditional 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,
and 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
There were no changes to APMs in the year.
Week 53 reporting
As with many retail businesses, the Group operates a weekly accounting calendar to ensure equal
trading days, and has a 53-week financial year every five to six years. As detailed in Note 1, the financial
statements cover the 53 weeks ended 28 February 2026 (prior financial year 52 weeks ended 22
February 2025) for the UK & ROI (excluding Insurance and Money Services) and Booker. For all other
operations, the results are for the calendar year ended 28 February 2026 (prior calendar year 28
February 2025).
In order to provide comparability with the prior year results, certain APMs are presented on a 52-week
basis by adjusting the Group’s statutory 53-week results to exclude the 53rd week for the UK & ROI
(excluding Insurance and Money Services) and Booker. No week 53 adjustments are required in
respect of the Group’s operations in Central Europe or Insurance and Money Services as these results
are already comparable with the prior year.
In determining the week 53 adjustments, revenue, sales, cost of goods sold and payroll expenses
predominantly represent the actual trading performance for week 53. Overhead expenses where
weekly data is not available are allocated proportionally based on the 5-week period ended 28
February 2026.
Glossary – Alternative performance measures
Alternative performance
measures
Tesco PLC Annual Report and Financial Statements 2026
216
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 fuel price volatility which is outside of the control of management.
– 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 from continuing operations on a 52-week basis. 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, Insurance and Money Services, and mall rental income 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 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, 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 2026
217
GovernanceStrategic report Financial statements Additional informationAdditional 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 – 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 the following cash flows (excluding Insurance and Money Services and adjusting cash flows):
– Continuing cash flows from operating activities of the business.
– Investing cash flows 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 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 2026
218
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 2026 2025
Revenue – current year on a 53-week basis (£m) 2,3 73,712 69,916
Exclude: 53rd week 2 (1,248) n/a
Revenue – current year on a 52-week basis (£m) 2 72,464 n/a
Revenue – prior year (£m) 2,3 69,916 68,187
Revenue growth 3.6% 2.5%
Exclude: Fuel impact 1.0% 1.0%
Growth in sales at actual rate 4.6% 3.5%
Exclude: Foreign exchange (0.3)% 0.5%
Growth in sales at constant rate 4.3% 4.0%
Exclude: Revenue from dunnhumby, Insurance and Money Services,
and mall rental income
(a)
(0.3)% (0.4)%
Exclude: Underlying net new space impact (0.3)% (0.5)%
Exclude: Impact of retail partnerships reclassification
(b)
(0.2)% n/a
Like-for-like sales growth 3.5% 3.1%
(a) From the start of the current financial year, mall rental income was reclassified from cost of sales to revenue. Prior year revenue
has not been restated as amounts were immaterial. This has no impact on Like-for-like (LFL) sales growth because mall rental
income is excluded in both years.
(b) From the start of the current financial year, certain retail partnerships income was reclassified from cost of sales to revenue.
Prior year revenue has not been restated as amounts were immaterial. Growth in retail partnerships income has been excluded in
the year of change to ensure a like-for-like comparison and will be included in future reporting periods.
Adjusted operating profit and EBITDA
2026 2025
As reported
on a 53-week
basis
Exclude 53rd
week
On a 52-week
basis 52 weeks
Continuing operations Notes £m £m £m £m
Operating profit 2 2,985 (30) 2,955 2,711
Exclude: Adjusting items 5 209 (12) 197 417
Adjusted operating profit 2 3,194 (42) 3,152 3,128
Include: Depreciation and amortisation before
adjusting items
1,813 (30) 1,783 1,697
EBITDA 5,007 (72) 4,935 4,825
Adjusted profit before tax
A reconciliation of Adjusted profit before tax is provided in Note 7.
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 31.
Reconciliation from Free cash flow to Net debt
2026 2025
Notes £m £m
Opening Net debt 31 (9,454) (9,684)
Free cash flow 1,957 1,750
Other cash movements:
Own shares purchased for cancellation (1,443) (1,016)
Dividends paid to equity owners (937) (864)
Adjusting items included in operating cash flow activities (80) (81)
Repayments of capital element of obligations under leases
(a)
668 597
Interest paid on lease liabilities
(a)
395 380
Net other interest paid/(received) 129 136
Proceeds from sale of property, plant and equipment, investment
property, intangible assets and assets held for sale
47 137
Cash outflows attributable to property buybacks and store purchases (191) (225)
Disposal of Banking operations, net of costs to sell 8
-
586
Free cash flow impact of 53rd week (163)
-
Other cash movements
(b)
5 (21)
Non-cash movements in Net debt:
Fair value movements (45) 20
Foreign exchange movements (98) 44
Net interest charge (122) (144)
Non-cash movements in lease liabilities (1,231) (1,066)
Non-cash movement arising from acquisitions and disposals
-
(5)
Other non-cash movements
-
2
Closing Net debt 31 (10,563) (9,454)
(a) Comparatives have been re-presented following the Group’s change in accounting policy for economic hedges. There is no impact
on Net debt. See Note 32 for further details.
(b) Predominantly relates to the equivalent of free cash flow for Insurance and Money Services and proceeds from/(purchase of)
other investments.
Tesco PLC Annual Report and Financial Statements 2026
219
GovernanceStrategic report Financial statements Additional informationAdditional information
APMs: Reconciliation of balance sheet measures continued
Net debt/EBITDA ratio
Net debt is presented as at the balance sheet date. EBITDA is presented on a 52-week basis.
2026 2025
Notes £m £m
Net debt 31 10,563 9,454
EBITDA 4,935 4,825
Net debt/EBITDA ratio 2.1 2.0
Adjusted net finance costs and Fixed charge cover
Notes
2026 2025
As reported
on a 53-week
basis
Exclude 53rd
week
On a 52-week
basis 52 weeks
£m £m £m £m
Net finance costs 6 581 (5) 576 492
Exclude: Net pension finance income/(costs) 6 (14)
-
(14) (32)
Exclude: Fair value remeasurements of
financial instruments
6 (26) (5) (31) 76
Adjusted net finance costs 541 (10) 531 536
Exclude: Interest expense on lease liabilities
*
6 (390) 7 (383) (377)
Adjusted net finance cost, excluding finance
charges payable on lease liabilities
151 (3) 148 159
Include: Total lease liability payments 13 1,063 (5) 1,058 980
Exclude: Discontinued operations total lease
liability payments
- - -
(3)
1,214 (8) 1,206 1,136
EBITDA 5,007 (72) 4,935 4,825
Fixed charge cover (ratio) 4.1 4.2
* Interest expense on lease liabilities is presented net of £14m hedging impact (2025: gross of £7m).
Capex
Notes
2026 2025
As reported
on a 53-week
basis
Exclude 53rd
week
On a 52-week
basis 52 weeks
£m £m £m £m
Property, plant and equipment additions* 12 1,369 (15) 1,354 1,361
Goodwill and other intangible asset
additions*
11 323 (6) 317 286
Exclude: Additions from property buybacks 12 (141)
-
(141) (157)
Exclude: Additions from store purchases and
associated refits
12 (22)
-
(22) (24)
Exclude: Additions from refits associated with
business combinations
12
- - -
(18)
Exclude: Additions relating to decommissioning
provisions and similar items
3
-
3 9
Capex 1,532 (21) 1,511 1,457
* Excluding amounts acquired through business combinations.
Return on capital employed (ROCE)
Adjusted operating profit is presented on a 52-week basis. Capital employed is presented as at the
balance sheet date.
2026 2025
Notes £m £m
Adjusted operating profit 2 3,152 3,128
Capital employed from continuing operations:
Net assets 11,457 11,662
Exclude: Pension deficit/(surplus) gross of deferred tax 28 (197) 251
Exclude: Non-current assets classified as held for sale (114) (50)
Exclude: Net current tax (asset)/liability (25) (14)
Exclude: Deferred tax assets (49) (47)
Exclude: Deferred tax liabilities 635 503
Exclude: Adjustment to remove the impact of deferred tax liabilities
recorded against identified assets acquired in business combinations
(133) (133)
Exclude: Net debt 31 10,563 9,454
Capital employed 22,137 21,626
Average capital employed from continuing operations 21,882 21,475
Return on capital employed (ROCE) 14.4% 14.6%
Glossary – Alternative performance measures continued
Tesco PLC Annual Report and Financial Statements 2026
220
APMs: Reconciliation of cash flow measures
Free cash flow
Continuing operations excluding Insurance and Money Services
Insurance and
Money Services Total Group
On a 52-week basis
(APM) Include 53rd week
On a 53-week basis
before adjusting
items
Adjusting items
Total Total Total
53 weeks ended 28 February 2026 £m £m £m £m £m £m £m
Operating profit/(loss) 2,985 42 3,027 (181) 2,846 139 2,985
Depreciation and amortisation 1,764 30 1,794 82 1,876 19 1,895
Net impairment loss/(reversal) on property, plant and equipment, right of use assets, intangible
assets and investment property
- - -
53 53
-
53
Net remeasurement (gain)/loss on non-current assets held for sale
- - -
1 1
-
1
Defined benefit pension scheme payments (31)
-
(31)
-
(31)
-
(31)
Share-based payments 56 2 58
-
58 (3) 55
Other reconciling items
(a)
10
-
10 (2) 8
-
8
Cash generated from/(used in) operations excluding working capital 4,784 74 4,858 (47) 4,811 155 4,966
(Increase)/decrease in working capital 385 (216) 169 (7) 162 40 202
Cash generated from/(used in) operations 5,169 (142) 5,027 (54) 4,973 195 5,168
Interest paid (745) (14) (759)
-
(759)
-
(759)
Corporation tax paid (497) 3 (494)
-
(494) (9) (503)
Net cash generated from/(used in) operating activities 3,927 (153) 3,774 (54) 3,720 186 3,906
Include the following cash flows generated from/(used in) investing activities:
Purchase of property, plant and equipment and investment property
(b)
(1,200) (7) (1,207) (4) (1,211) (4) (1,215)
Purchase of intangible assets (315) (5) (320)
-
(320) (2) (322)
Ordinary dividends received from Insurance and Money Services 50
-
50
-
50 (50)
-
Dividends received from joint ventures and associates 2
-
2
-
2
-
2
Interest received 227 4 231
-
231 4 235
Include the following cash flows generated from/(used in) financing activities:
Own shares purchased for share schemes, net of cash received from employees (100)
-
(100)
-
(100)
-
(100)
Repayment of capital element of obligations under leases (634) (2) (636) (31) (667) (1) (668)
Free cash flow 1,957
(a) Other reconciling items primarily relate to adjustment for non-cash element of pensions charge (2025: primarily relate 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 £(1,344)m (2025: £(1,247)m) excluding £(129)m (2025: £(133)m) of store buybacks, direct store purchases and refits associated with both direct store purchases
and business combinations.
Tesco PLC Annual Report and Financial Statements 2026
221
GovernanceStrategic report Financial statements Additional informationAdditional information
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 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
(c)
(758)
-
(758) (13) (1) (772)
Corporation tax paid (355)
-
(355) (11)
-
(366)
Net cash generated from/(used in) operating activities 3,534 (55) 3,479 (731) 171 2,919
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
(c)
(595)
-
(595) (2) (2) (599)
Free cash flow 1,750
(a)-(b) Refer to previous table for footnotes.
(c) As a result of the Group’s change in presentation of economic hedges in the Group cash flow statement, comparatives for Interest paid and Repayment of capital element of obligations under leases have been re-presented by £3m. There is no impact on the Free cash
flow APM. See Note 32 for full details.
Glossary – Alternative performance measures continued
Tesco PLC Annual Report and Financial Statements 2026
222
Glossary
Other
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.
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.
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.
Tesco PLC Annual Report and Financial Statements 2026
223
GovernanceStrategic report Financial statements Additional informationAdditional information
Five-year record
The statistics below reflect the latest published information:
– 2026 statutory measures are presented on a 53-week basis and 2026 APMs are presented on a 52-week basis (except for Net debt and the capital employed component of ROCE - see Glossary). All measures for
all other years are presented on a 52-week basis.
– In the current financial year, following changes to the Group Executive Committee and management reporting to the CODM, Booker is now a separate reportable segment. Comparatives for 2025 have been
restated, but years prior to this have not.
– From 2025, following the sale of the Group’s Banking operations, UK & ROI information includes the retained Insurance and Money Services business. Comparatives for 2024 have been restated, but years prior to
this have not.
– From 2025, following the sale of the Group’s Banking operations, Return on capital employed and Net debt are presented on a Group continuing operations basis. Both measures were previously on a retail basis.
Retail free cash flow was renamed Free cash flow and includes refits associated with store purchases and business combinations. Comparatives for 2024 have been restated, but years prior to this have not.
– In 2024, the Group adopted IFRS 17 and presented its Banking operations as a discontinued operation. Comparatives for 2023 have been restated, but years prior to this have not.
2022 2023 2024 2025 2026
Financial statistics (£m)
Sales
(a)
UK & ROI 49,984 52,369 57,155 50,460 53,058
Booker
- - -
8,990 9,040
Central Europe 3,862 4,181 4,322 4,186 4,490
Tesco Bank 922 666
- - -
Group sales
(a)
54,768 57,216 61,477 63,636 66,588
Revenue
UK & ROI 56,404 60,246 63,691 56,593 59,889
Booker
- - -
8,990 9,194
Central Europe 4,018 4,410 4,496 4,333 4,629
Tesco Bank 922 666
- - -
Group revenue 61,344 65,322 68,187 69,916 73,712
Adjusted operating profit
(a)
UK & ROI 2,481 2,307 2,739 2,726 2,745
Booker
- - -
290 292
Central Europe 168 180 90 112 115
Tesco Bank 176 22
- - -
Group adjusted operating profit
(a)
2,825 2,509 2,829 3,128 3,152
Adjusted operating profit margin
(a)
4.6% 3.8% 4.1% 4.5% 4.3%
Operating profit/(loss)
UK & ROI 2,191 1,249 2,755 2,517 2,687
Booker
- - -
212 215
Central Europe 193 144 66 (18) 83
Tesco Bank 176 17
- - -
Group operating profit 2,560 1,410 2,821 2,711 2,985
Share of post-tax profits/(losses) of joint ventures and
associates 15 8 6 (4) (1)
Net finance costs (542) (536) (538) (492) (581)
2022 2023 2024 2025 2026
Profit/(loss) before tax 2,033 882 2,289 2,215 2,403
Taxation (510) (224) (525) (611) (616)
Profit/(loss) for the year from continuing operations 1,523 658 1,764 1,604 1,787
Discontinued operations (40) 78 (572) 26
-
Profit/(loss) for the year 1,483 736 1,192 1,630 1,787
Attributable to:
Owners of the parent 1,481 737 1,188 1,626 1,787
Non-controlling interests 2 (1) 4 4
-
Adjusted profit before tax
(a)
2,197 1,954 2,277 2,588 2,620
Other financial statistics
Diluted earnings/(losses) per share – continuing operations 19.6p 8.8p 24.5p 23.1p 27.1p
Adjusted diluted earnings per share
(a)
21.9p 20.5p 23.4p 27.4p 29.0p
Dividend per share
(b)
10.90p 10.90p 12.10p 13.70p 14.50p
Free cash flow (£m)
(a)
2,277 2,133 2,063 1,750 1,957
Return on capital employed (ROCE)
(a)
12.1% 11.8% 13.4% 14.6% 14.4%
Net debt (£m)
(a)
10,516 10,493 9,684 9,454 10,563
Group statistics
(c)
Number of stores
(d)
4,752 4,859 4,942 5,040 5,126
Total sales area (’000 sq. ft.)
(d)(e)
64,034 63,835 63,426 63,045 63,342
Average employees 354,744 336,926 335,392 341,108 336,123
Average full-time equivalent employees (FTE) 231,223 222,306 223,636 229,140 227,188
UK & ROI statistics
Number of stores
(d)
4,074 4,169 4,273 4,175 4,258
Total sales area (’000 sq. ft.)
(d)(e)
50,588 50,735 50,632 42,709 43,033
Average full-time equivalent employees (FTE) 204,974 196,911 203,107 194,893 193,002
(a) See APM definitions and reconciliations in the Glossary section on pages 216 to 223.
(b) Dividend per share relating to the interim and proposed final dividend.
(c) On a continuing operations basis.
(d) Including franchise stores.
(e) 2025 has been re-presented for sales area remeasurements. Refer to page 215.
Five-year record
Tesco PLC Annual Report and Financial Statements 2026
224
The Directors present their report, together
with the audited accounts for the 53 weeks
ended 28 February 2026.
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.
– 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’
report
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.
Information Location in this Annual Report Pages
Appointment and retirement of Directors Nominations and Governance
Committee report
70 to 72
Business model and strategy Strategic report 16
Cautionary statement regarding forward-
looking information
Additional information 233
Corporate governance report Corporate governance report 50 to 109
Directors and their interests Corporate governance report,
Directors’ remuneration report
54 to 57
88 to 97
Directors’ indemnities and insurance Corporate governance report 60
Dividends/Dividend policy Strategic report, Financial
statements – Note 9
26 and 142
Employee engagement Strategic report,
Corporate governance report
18
62, 65 to
66, 91
Events after the reporting period Financial statements – Note 34 199
Financial instruments and financial
risk management
Financial statements – Notes 25
and 26
165 to 181
Future developments Strategic report 2 to 49
GHG emissions/SECR disclosures Strategic report 34 to 37
Going concern and viability statement Strategic report 48 to 49
Research and development Strategic report 2 to 49
Section 172 statement – including fostering
the Company’s relationships with suppliers,
customers and others
Corporate governance report 68
Share buybacks Strategic report, Financial
statements – Note 29,
Additional information
19, 190 and
227
Share capital and control of the Company
and significant agreements
Financial statements – Note 29 190
Share forfeiture Sustainability Committee report,
Financial statements – Note 30
76 and 190
Stakeholder engagement Strategic report 18 to 19
Tesco PLC Annual Report and Financial Statements 2026
225
GovernanceStrategic report Financial statements Additional information
Directors’ report continued
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
and corrupt business practices. 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.
Information required to be disclosed under the UK Listing Rules can be found on the following pages:
UK Listing Rule 6.6.1R Pages
Allotment for cash of equity securities 190
Waiver of dividends 142 and 226
UK Listing Rule 6.6.6(8)
Climate-related financial disclosures consistent with TCFD 34 to 37
UK Listing Rule 6.6.6(9) and (10)
Diversity disclosures 20 and 73
Appointment and retirement
of Directors
The appointment and retirement of Directors
is governed by the Company’s Articles of
Association, the 2024 UK Corporate Governance
Code, 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.
For additional information concerning the
Directors who served during the year and
changes to the composition of the Board,
see pages 53 to 57.
Directors and their interests
The biographical details of the current serving
Directors are set out on pages 54 to 57. 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 88 to 108. 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.
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 £1,787m (2024/25: £1,604m) from
continuing operations. The Directors have
declared dividends as follows:
Ordinary shares £m
Paid interim dividend of 4.80 pence per
share
(a)
(2024/25: 4.25 pence per share)
310
Proposed final dividend of 9.70 pence
per share
(b)
(2024/25: 9.45 pence
per share)
619
Total dividend of 14.50 pence per share
for 2025/26 (2024/25: 13.70 pence
per share)
929
(a) Excludes £2m dividends waived (2024/25: £2m).
(b) Subject to shareholder approval at the 2026 AGM, the final
ordinary dividend will be paid on 26 June 2026 to all
shareholders on the register of members at the close of
business on 15 May 2026.
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 26 and Note 9 on page 142.
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). We
have regular meetings with the GCA throughout
the year to discuss Code compliance and any
Code-related supplier issues.
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. As part of our compliance programme, 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, 1,493 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,
158 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.
Tesco PLC Annual Report and Financial Statements 2026
226
In the GCA’s annual supplier survey for 2025,
96.95% of our suppliers recognised that we
comply ‘consistently well’ or ‘mostly well’ with
the Code. In our own Supplier Viewpoint survey,
conducted in January 2026, 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’
was 88.9%, our highest score to date. Our UK
satisfaction score was 89.2%. Among topics
relevant to the Code, our strongest UK score in
Viewpoint continues to be ‘Tesco pays promptly
(within policy terms)’ at 96.5%. 89.2% of
suppliers agreed that ‘Tesco treats me fairly’.
Also, in the 2025 independent, industry-wide
Advantage survey of retailers, we were pleased
to be ranked first for overall performance for
the tenth year running.
In response to the 2025 GCA survey findings,
we implemented a targeted action plan focused
on forecasting, promotion funding, delisting,
and Requests for Cost Price Changes (RFCPCs).
Among other things, we enhanced forecasting
accuracy through system upgrades and supplier
engagement, clarified internal guidance and
controls to combat the perceived requirement
to predominantly fund promotions, created
category-specific delisting support programmes,
and increased resource in our validation teams
to improve RFCPC turnaround time.
Two Code-related issues were carried over from
the 24/25 reporting period and resolved during
the 25/26 reporting year. No formal Disputes
under the Code arose during the 25/26
reporting year. Seven new Code-related- issues
were raised by suppliers during the reporting
year. Two of those issues fell outside the scope
of the Code. Of the five issues within the
scope, two concerned delisting, two related
to RFCPCs and one involved invoice duplication.
Four of these issues were resolved and no
GSCOP breaches identified. One issue remains
ongoing. Based on the issues raised, we do
not consider there to be any material or
systemic GSCOP concerns evidenced during
the reporting year.
Employment policies
Following continued partnership negotiations
with USDAW, Tesco has built on the significant
enhancements already made to company sick
pay (CSP). In 2025, Office and Distribution
salaried colleagues transitioned onto the same
service-based CSP scheme as hourly-paid
colleagues, creating a single, consistent scheme
for all colleagues below Director level. Further
investment agreed through pay negotiations in
2025 increased the maximum CSP entitlement to
up to 20 weeks, depending on length of service,
reinforcing our commitment to fair and
meaningful support during periods of ill health.
Our Group anti-bullying, harassment and
discrimination policy, launched in 2024,
continues to underpin our inclusive culture.
Throughout 2025/26, the policy has been
supported by mandatory e-learning and
leadership training, with UK leaders completing
leading by example and compulsory anti-
harassment learning embedded across office
and operational roles. We remain committed
to addressing concerns promptly and fostering
safe, respectful workplaces.
Our family-friendly policies remain a key
strength. The improvements introduced in 2024
continue to apply in 2025/26, including 26 weeks’
full maternity pay, followed by up to 13 weeks’
statutory maternity pay, and six weeks paid
paternity leave, paid at the higher of contractual
pay or average earnings over the previous
52 weeks. These policies remain competitive,
with no further changes planned this year.
As part of the 2026 pay agreement with USDAW,
Tesco has also committed to introducing a new
domestic abuse policy, including up to three
days’ paid leave. This policy will go live later
in 2026, building on existing guidance and
reinforcing our focus on colleague safety
and wellbeing.
Our wider wellbeing offer continues to develop.
Alongside access to the virtual GP service, now
supporting over 17,000 colleagues, Tesco has
introduced additional financial and practical
support in 2026, including energy-switching
support, free will-writing and a lower-cost
Health cash plan. These enhancements sit
alongside our employee assistance programme
and external partnerships, providing holistic
support for colleagues.
In April 2025, the everyone’s welcome policy was
reviewed and refreshed, reaffirming Tesco’s
commitment to equal opportunities for all
colleagues, irrespective of age, disability
(including those who become disabled during
service), gender reassignment, marriage and
civil partnership, pregnancy or maternity,
race, religion or belief, sex or sexual orientation.
The policy underpins fair treatment across
recruitment, development, flexible working
and throughout the colleague’s employment.
We are committed to ensuring a fair, inclusive
and consistent process, in line with our
everyone’s welcome policy to ensure we select
the best candidate for every role. As a Disability
Confident employer, we actively support
employment, training and career development
opportunities for colleagues with disabilities.
Because of this, we have completed a full review
of our workplace adjustment policy and
supporting materials in 2025/26 working in
partnership with our trade union USDAW and the
business disability forum, moving away from
focusing on disability, and instead focusing on
the barriers a colleague may experience at work
and how we can best support them to remove
or reduce the impact of these barriers.
Tesco’s office ways of working continue to
support flexibility and collaboration through
a hybrid approach. Our office colleagues are
required to spend a minimum of 60% of their
time working in a work-related location or
external business meeting.
Together, these updates reflect Tesco’s
continued investment in its people and our
commitment to a positive, inclusive and
supportive workplace, ensuring Tesco remains
a great place to work now and in the future.
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 48 to 49.
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 diligent in tackling forced
labour and modern slavery more broadly. One of
our four key human rights strategic priority areas
is anti-slavery, in which we work to bring about
positive change in partnership with experts and
people representing lived-experience.
Our modern slavery statement can be viewed
at www.tescoplc.com/modernslavery.
Tesco PLC Annual Report and Financial Statements 2026
227
GovernanceStrategic report Financial statements Additional information
Political donations
The Group did not make any political donations
or incur any political expenditure during the year
2025/26 (2024/25: £nil).
Share buyback programme
On 10 April 2025, the Company committed
to buying back an additional £1.45bn worth of
shares by April 2026. This tranche completed
in January 2026.
For further details on the share buyback
programme, see page 19 and Note 29 on
page 190.
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 29 on page 190. 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 2025 AGM to replace the existing authority
(as granted by shareholders at the AGM held on
14 June 2024) 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
2025. No shares were allotted under that
authority during the financial year.
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 2025 AGM to replace the existing authority
(as granted by shareholders at the AGM held
on 14 June 2024) 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 undertakes an annual share forfeiture
programme, following the completion of a
shareholder tracing and notification exercise,
and in accordance with the Company’s Articles
of Association, the funds forfeited are returned
to the Group to use towards good causes.
In FY 25/26, the Group completed a share
forfeiture programme and as part of this
exercise, 279,670 shares were forfeited resulting
in approximately £2m. Additional funds were also
released which were retained from previous
programmes for late claims, this amount totalled
approximately £1m. Following a review of the
fund by the Sustainability Committee, the total
amount of approximately £3.1m is to be used to
expand the Fruit & Veg for Schools programme.
For further information, see page 76 and
Note 29 on page 190.
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 37. 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 UK
home delivery fleet;
– Addressing transport emissions associated
with our distribution fleet, trialling low-carbon
fuels while working directly with manufacturers
on long-term decarbonisation solutions such
as electric HGVs; and
– Installing electric hook up points for our
refrigerated trucks and low-emission
refrigeration units powered by electricity.
For further information, see pages 34 to 37.
For and on behalf of the Board
Chris Taylor
Group Company Secretary
15 April 2026
Directors’ report continued
Tesco PLC Annual Report and Financial Statements 2026
228
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 62
Sustainability Committee report 74
Group charitable donations policy 226
Groceries Supply Code of Practice (GSCOP) 226
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 43
Group whistleblowing policy 62
Sustainability Committee report 74
Principal risks and uncertainties 42
Details of our modern slavery statement can
be found in our latest Sustainability Report 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 42
Corporate governance report: purpose and
culture
62
Directors’ report: political donations,
anti-bribery matters, modern slavery statement
226
How we
manage risk
– Schedule of matters
reserved for the
Board
– Audit Committee
terms of reference
Principal risks and uncertainties 38
TCFD risks and opportunities 46
Governance framework 58
Audit Committee report 78
Business
model
– Strategic drivers
– Performance
framework
– Schedule of matters
reserved for the
Board
Our business model 16
Governance framework 62
Non-financial
key
performance
indicators
KPIs 17
TCFD 34
CFD 37
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 7
Chair’s statement 8
Market context 13
KPIs 17
Planet 30
Principal risks and uncertainties 41
Nature and TCFD 32
Sustainability Committee report 74
Audit Committee report:
environmental disclosures
82
Directors’ report (SECR) 228
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 7
KPIs 17
Principal risk and uncertainties 43
Corporate governance report:
purpose and culture
62
Board activity 64
Colleagues 65
Stakeholder engagement 18
Nominations and Governance Committee
report: diversity, equity and inclusion
73
Directors’ remuneration report 88
Directors’ report disclosures:
employment policies
227
Nominations and Governance Committee
report: conflicts of interest
72
NFSIS
Tesco PLC Annual Report and Financial Statements 2026
229
GovernanceStrategic report Financial statements Additional information
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).
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
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 2026
230
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
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 28 February 2026 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.
Annual General Meeting (AGM)
The 2026 AGM will be held at the Heart building, Shire Park, Welwyn Garden City, AL7 1GA and via the
Lumi Global Platform at 11.00am on Thursday, 18 June 2026. The Notice of Meeting and the Annual
Report and Financial Statements 2026 are available to view and download at www.tescoplc.com.
We strongly encourage shareholders to join the meeting via the Lumi Global platform so that the
Board can continue to strengthen its engagement with you. Information on how to join, vote and
ask questions can be found within the Notice of Meeting.
Financial calendar 2026/27
February 2026
28 February 2026
Financial year end 2025/26
May 2026
14 May 2026
Ex-dividend date, final dividend
15 May 2026
Record date to be eligible for final dividend
June 2026
18 June 2026
Annual General Meeting and Q1 trading statement
26 June 2026
Proposed payment date for final dividend
October 2026
8 October 2026*
Interim results announcement
January 2027
14 January 2027*
Q3 and Christmas trading statement
February 2027
27 February 2027*
Financial year end 2026/27
* Provisional dates which are subject to change.
Tesco PLC Annual Report and Financial Statements 2026
231
GovernanceStrategic report Financial statements Additional information
Share register analysis
As at 28 February 2026, the Company had 6,385,182,796 shares in issue (22 February 2025:
6,736,841,762) and 184,068 registered holders of Ordinary shares (22 February 2025: 195,332).
Shareholdings are analysed below:
Breakdown of shareholdings
Range of shareholding
Number
of holdings
% of issued
share capital
1 – 500 123,550 0.22%
501 – 1,000 15,927 0.18%
1,001 – 5,000 30,443 1.12%
Over 5,001 14,148 98.47%
Total 184,068 100%
Breakdown of holders with over 5,000 shares
Range of shareholding
Number
of holdings
% of issued
share capital
5,001 – 10,000 7,279 0.80%
10,001 – 50,000 5,417 1.58%
50,001 – 100,000 367 0.40%
100,001 – 500,000 497 1.90%
500,001 – 1,000,000 159 1.72%
1,000,001 – 5,000,000 250 8.96%
Over 5,000,001 179 83.11%
Total 14,148 98.47%
Category of shareholders
Number of
holdings
% of total
registered
holders
Number of
Ordinary shares
% of issued
share capital
Private 182,043 98.90% 347,053,827 5.44%
Institutional and corporate 2,025 1.10% 6,038,128,969 94.56%
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.
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.
0300 123 2040
www.reportfraud.police.uk
Beware of share fraud
Additional information for shareholders continued
Tesco PLC Annual Report and Financial Statements 2026
232
Cautionary statement regarding
forward-looking information
Where this Annual Report contains forward-
looking statements, these are based on
current expectations and assumptions
regarding anticipated developments and
other factors affecting Tesco. 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 and
developments 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 38 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. Forward-looking
statements speak only as of the date they
were made. 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.
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
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
This report is printed on Arctic Volume paper
and board. The paper is Forest Stewardship
CouncilR (FSCR) 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 CarbonNeutralR company with
FSCR 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.
Contact us
Tesco PLC
Tesco House
Shire Park
Kestrel Way
Welwyn Garden City
AL7 1GA
www.tescoplc.com
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 (‘tagging’) of consolidated
financial statements for the 53 week period ended 28 February 2026 of Tesco PLC (the “company”) included in
the Electronic Format Annual Financial Report prepared by the company.
Our assurance conclusion
Based on our procedures described in this report, and evidence we have obtained, in our opinion, the
consolidated financial statements for the 53 week period ended 28 February 2026 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.
Scope of our work
Tesco PLC has engaged us to conduct an independent 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 Financial Reporting Council, 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.
Directors’ responsibilities
The directors are responsible for preparing the Electronic Format Annual Financial Report in compliance with
DTR 4.1.15R-DTR 4.1.18R. 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.
• The design, implementation, and maintenance of internal control relevant to the application of DTR 4.1.15R-
DTR 4.1.18R.
Our responsibilities
We are responsible for:
• Planning and performing procedures to obtain sufficient appropriate evidence in order to express an
independent reasonable assurance conclusion on the iXBRL mark up.
• Reporting our conclusion in the form of an independent reasonable Assurance Report to the Members.
Our independence and competence
In conducting our engagement, we complied with the independence requirements of the FRC’s Ethical Standard
and the ICAEW Code of Ethics. The ICAEW Code is founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behaviour.
We applied the International Standard on Quality Management (UK) 1 (“ISQM (UK) 1”), issued by the Financial
Reporting Council. Accordingly, we maintained a comprehensive system of quality management including
documented policies and procedures regarding compliance with ethical requirements, professional standards
and applicable legal and regulatory requirements.
Key procedures performed
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
the DTR 4.1.15R-DTR 4.1.18R. The nature, timing and extent of procedures selected were based on our
professional judgement, including the assessment of the risks of material departures from the requirements set
out in 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.
• Assessing the D&I of relevant controls over the mark up process.
• Reconciling the marked up data with the audited consolidated financial statements of the company dated 15
April 2026.
• 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.
• 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 themselves. Our audit opinion on the consolidated financial statements of the
company for the 53 week period ended 28 February 2026 is set out in our Independent Auditor’s Report dated
15 April 2026.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with ISAE (UK) 3000 and our
agreed terms of engagement. Our work has been undertaken so that we might state to the company those
matters we have agreed to state to them in this report and for no other purpose.
Without assuming or accepting any responsibility or liability in respect of this report to any party other than the
company and the company’s members, we acknowledge that the company may choose to make this report
publicly available for others wishing to have access to it, which does not and will not affect or extend for any
purpose or on any basis our responsibilities. 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, for this
report, or for the conclusions we have formed.
Richard Muschamp (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
11 May 2026