Business Review and Future Developments

Directors report
WHAT IS A DIRECTORS’ REPORT?

The directors’ report of a listed company has an important role in meeting the
information needs of shareholders. The directors’ report contains information that
shareholders of the company would reasonably require to make an informed
assessment of:
• The operations of the company reported on,
• The financial position of that company, and
• The business strategies of that company and its prospects for future financial
years
The Directors of TESCO present their Strategic Report for the year ended 28 February 2019. The Annual
Report and Financial Statements comprises the Strategic Report, the Directors' Report, and the
Company and Consolidated Financial Statements and accompanying notes.
Business review and future developments
During the year, the business continued to deliver growth across its primary products (Credit Cards,
Personal Loans, Mortgages, Personal Current Accounts and Savings).
Mortgage balances grew by 25.1% in the period, reaching £3,753.2m (2018: £3,000.7m), while Credit
Card balances increased by 3.0% and Personal Loans by 6.7%.
Risk management
The Group's risk management disclosures are set out in the Strategic Report
The Board is also responsible for overall corporate governance, which includes overseeing an effective
system of risk management and that the level of capital and liquidity held is adequate and consistent
with the risk profile of the business
Credit risk
The risk that a borrower will default on a debt or obligation by failing to make contractually obligated
payments, or that the Group will incur losses due to any other counterparty failing to meet their
financial obligations.
Operational risk
The risk of potential error, loss, harm or failure caused by ineffective or inadequately defined processes,
system failure, improper conduct, human error, fraud or from external events.
Liquidity and Funding risk
Liquidity risk is the risk that the Group is not able to meet its obligations as they fall due. This includes
the risk that a given security cannot be traded quickly enough in the market to prevent a loss if a credit
rating falls.
Funding risk is the risk that the Group does not have sufficiently stable and diverse sources of funding.
Market risk
The risk that the value of earnings or capital is altered through the movement of market rates. This
includes interest rates, foreign exchange rates, credit spreads and equities.
Capital risk
The risk that the Group holds regulatory capital which is of insufficient quality and quantity to enable it
to absorb losses.
Going concern
The Directors have made an assessment of going concern, taking into account both current performance
and the Group’s outlook, including consideration of projections for the Group’s capital and funding
position. As a result of this assessment, the Directors consider that it is appropriate to adopt the going
concern basis of accounting in preparing the Company and Consolidated Financial Statements.
Dividends.
The profit for the financial year, after taxation, amounts to £1,320m
(2017/18: £1,210m) from continuing operations. The Directors have
declared dividends as follows:
Ordinary Shares £m
Paid interim dividend of 1.67 pence per share† (2017/18: 1 pence
per share)
Proposed final dividend of 4.10 pence per share (2017/18: 2 pence
per share) Total dividend of 5.77 pence per share for 2018/19*
(2017/18: 3 pence per share)
Share capital and control of the Company and

significant agreements.
No shareholder holds securities carrying special rights with regards to control of

the Company and there are no restrictions on voting rights or the transfer of
securities in the Company and the Company is not aware of any agreements
between holders of securities that result in such restrictions.
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. Voting rights are not exercisable by the employees on whose
behalf the shares are held in trust.
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. The
Company had been notified under Rule 5 of the DTR of the following interests in
voting rights in its shares as at 23 February 2019 and as at the date of this report:
Employment policies.
The development of our Colleague Help service puts information into the hands of
colleagues themselves, ensuring policies are better utilised, and available to all.
These new platforms provide helpful feedback and analytics which facilitate our
understanding of how and where we can continue to improve our offer.
Treating Customers Fairly
Treating Customers Fairly is central to the FCA’s principles for businesses and remains central to the
Tesco Values which sit at the heart of the business. These Values are designed to ensure that customer
outcomes match their understanding and expectations.
Political donations.
The Group did not make any political donations (2017/18: £nil) or incur any
political expenditure during the year (2017/18: £nil).
Modern Slavery Act.

The statement covers the activities of Tesco PLC and its subsidiaries and 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.
Anti-corruption and anti-bribery matters.

We have a zero-tolerance approach to bribery and our anti-bribery programme
operates around the Group. The programme is built around a clear understanding
of how and where bribery risks affect our business and comprises key controls.
Bribery risk management is discussed at senior leadership groups in each business
unit, including at the Group level, and also twice a year with the Audit Committee.
Statement of Directors’ responsibilities.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group’s transactions and disclose with
reasonable accuracy at any time the financial position of the Group and the
Company, and which enable them to ensure that the financial statements and the
Directors’ remuneration report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors are required by the Companies Act 2006 to prepare financial
statements for each financial year that give a true and fair view of the state of
affairs of the Group and the Company as at the end of the financial year, and of the
profit or loss of the Group for the financial year.
In preparing these financial statements, the Directors are required to:

 select suitable accounting policies and then apply them consistently;
 make judgments and accounting estimates that are reasonable and prudent;
 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 IFRS and
 prepare the financial statements on the going concern basis,

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Directors report

WHAT IS A DIRECTORS’ REPORT?

Business review and future developments

Share capital and control of the Company and

No shareholder holds securities carrying special rights with regards to control of

Treating Customers Fairly

Modern Slavery Act.

Anti-corruption and anti-bribery matters.

Statement of Directors’ responsibilities.

In preparing these financial statements, the Directors are required to:

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