Preliminary results 2020/21 TESCO WELL-PLACED TO BUILD ON MOMENTUM

On a continuing operations basis12020/212019/201 Change at actual ratesChange at constant rates
Headline measures2 (on a 52 week comparable basis):     
Group sales (exc. fuel)3£53.4bn£49.9bn 7.1%7.0%
– UK & ROI£48.8bn£44.9bn 8.8%8.6%
– Central Europe£3.9bn£4.0bn (2.1)%(0.6)%
– Tesco Bank£0.7bn£1.1bn (31.2)%(31.2)%
Group operating profit before exceptional items and amortisation of acquired intangibles4£1,815m£2,525m (28.1)%(28.3)%
– Retail£1,990m£2,332m (14.7)%(14.8)%
– Tesco Bank£(175)m£193m n/mn/m
Retail free cash flow1£1,187m£1,690m (29.8)% 
Net debt1,5£(12.0)bn£(12.3)bn down 2.8% 
Diluted EPS before exceptional and other items (adjusted for share consolidation)611.94p18.60p (35.8)% 
Dividend per share9.15p9.15p  
Statutory measures (on a 53-week prior year basis):
Revenue (inc. fuel)£57.9bn£58.1bn (0.4)% 
Operating profit£1,736m£2,206m (21.3)% 
Profit before tax£825m£1,028m (19.7)% 
Diluted EPS7.54p7.54p  

In December, we made a decision to repay business rates relief.  The full cost of business rates is therefore included as usual in the relevant measures above (i.e. this repayment has not been treated as an exceptional item).

Key headlines

  • Significant role supporting customers, colleagues, suppliers and communities throughout COVID-19 pandemic
  • Sales exceptionally strong; growing UK market share in the year and gaining customers from all key competitors7
  • Highest value perception in a decade; Aldi Price Match launched in March 2020 and then extended to >500 lines
  • Clubcard Prices launched in September and now extended to over 3,000 products; >two million more Clubcard app users
  • UK online sales £6.3bn8, up 77%; capacity > doubled to 1.5m slots/wk; West Bromwich UFC on track, UFC #2 opens in May
  • Concluded £8.2bn sale of Asia business9; £5.0bn returned to shareholders + £2.5bn one-off pension contribution
  • GHG emissions reduced 54% vs 2015 baseline; removed 1bn items of plastic; redistributed 82% of UK surplus food (+5% YoY)
  • Well set for the current year; strong improvement in profitability expected whilst trading conditions likely to remain volatile

Financial highlights

  • Group like-for-like sales growth10 +6.3% including UK +7.7%
  • Total retail operating profit before exceptional items and amortisation of acquired intangibles4 £1,990m, down (14.7)%
    • UK & ROI operating profit £1,866m

– after £(892)m UK COVID-19 costs (incl. third UK colleague bonus announced today) and after forgoing £535m business rates relief

– represents 11.4% growth year-on-year prior to forgoing business rates relies

  • Central Europe operating profit £124m, impacted by COVID-19 trading restrictions and Hungarian retail sales tax
  • Bank operating loss £(175)m, in line with guidance; £(295)m goodwill impairment driven mainly by increased discount rate
  • Retail free cash flow £1,187m; down year-on-year reflecting lower retail profit and last year’s £277m sale of Gain Land
  • Net debt down £0.3bn to £(12.0)bn; Total indebtedness down £1.9bn to £(13.0)bn (TIR: 3.6x, impacted by COVID-19)
  • Diluted adjusted EPS11.94p down (35.8)% reflecting lower profits
  • Proposed final dividend of 5.95pps to take full year dividend to 9.15pps – in line with last year and an exception to our policy, reflecting the importance the Board places on dividends paid to shareholders and its confidence in future cash flows

Ken Murphy, Chief Executive:

“Tesco has shown incredible strength and agility throughout the pandemic.  By putting our customers and colleagues first we have built a stronger business.  I’d like to say a huge thank you to the entire team for rising so selflessly to every challenge they’ve faced. Their efforts have been truly heroic.

While the pandemic is not yet over, we’re well-placed to build on the momentum in our business.  We have strengthened our brand, increased customer satisfaction and improved value perception.  We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform.  Sustainability is now an integral part of our business strategy and we’re doubling down on our efforts to reach net zero.

Our decision to protect and hold the dividend flat for this financial year demonstrates our commitment to shareholders.  We believe we can create significant further value for them and every stakeholder in our business by continuing to focus on value, loyalty and convenience for customers, underpinned by strong capital discipline.”


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