Tesco Plc · LSE:TSCO
Tesco — H1 2009/10 Earnings Presentation
66 slides from Tesco's earnings presentation, Oct 6, 2009
Slide 1: Interim Results 6 October 2009
Interim Results 6 October 2009
Slide 2: David Reid, Chairman
David Reid Chairman
Slide 3: Slide 3
Slide 4: Tesco Bank
Tesco Bank Instant Access Savings Account Upt y | I am a 3 4 LJUL — CLUBGARE = points = = SS, a Deposit and withdraw in store 7 days a week 0845 710 40 10 www.tescofinance.com TESCO | Evy Uitte bolps Every Wate holps TESCO CLUBCARD credit card The fastest way to collect Clubcard points Typical 16.9%
Slide 5: Korea
Korea TESCO | vey vite holps
Slide 6: Community and Environment
Community and Environment Green stores
Slide 7: Clubcard
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Slide 8: People
People
Slide 9: Laurie McIlwee, Group Finance Director
Laurie McIlwee Group Finance Director
Slide 10: Financial headlines
Financial headlines • Performed well in challenging environment • Robust trading numbers; market share gains • Step Change helped fund significant customer investment • Strong opening programme; focus on capital discipline • Acquisitions giving us momentum • On-track to reduce net debt by £1bn this
Slide 11: Group performance
Group performance * • Sales £30.4bn • Ex-petrol sales up 11.4% • Trading profit rose 14.0% to £1,551m • Group underlying profit before tax £1,571m, up 8.6% • Growth impacted by increased interest charge * All numbers are shown on a consistent calendar basis and exclude IFRIC13
Slide 12: Property
Property TESCO | Evy vittte alps
Slide 13: Group performance
Group performance • Group pre-tax profit up 1.5% • Lower growth rate principally due to non-cash IAS adjustments – Bank amortisation of intangibles – impairment of goodwill in Japan
Slide 14: Returns to shareholders
Returns to shareholders • Underlying diluted earnings per share up 9.1% to 14.48p • Proposed interim dividend 3.89p, up 9.0%, broadly in-line with underlying diluted EPS
Slide 15: UK
UK
Slide 16: UK trading profit
UK trading profit * • UK trading profit £1,155m, up 7.4% • UK margin up 20 basis points • Step Change programme on-track to deliver planned savings of £550m * Excludes Tesco Bank
Slide 17: Asia
Asia • Sales £4.4bn, up 38% at actual rates • Trading profit rose 21% to £175m • Acquisition in Korea will deliver strong profit growth in second half • Strong growth in Thailand • Worsened retail market conditions in Japan • Japan goodwill impairment £82m
Slide 18: Europe
Europe • Sales £4.8bn, up 1% • Performance in Poland and Hungary held up particularly well • Restructuring operations in Ireland • Ireland £15m exceptional charge • Coping with deep recession in Czech Republic, Slovakia and Turkey • Trading profit £191m
Slide 19: Fresh & Easy
Fresh & Easy
Slide 20: Retailing Services
Retailing Services • Profits £221m, up 11% • Investor seminar planned for November
Slide 21: Tesco Bank
Tesco Bank • Focus on re-platforming systems and infrastructure • Profits stable at £115m, after £15m integration costs • Prudent provision for bad debt - experience better than industry • Maintained balance sheet in net surplus
Slide 22: JVs and Associates
JVs and Associates • Profits were £22m principally from property and dunnhumby JVs • Last year’s number includes Tesco Bank as joint venture
Slide 23: Tax
Tax • Tax charged at an effective rate of 27.5% • Excluding Japan impairment, underlying rate is 26.7% • Broadly reflects expected position for year
Slide 24: Net debt
Net debt • Net debt £9.5bn • On-track to reduce to £8.5bn by year-end – managing capex back to long-term trend rate – improving working capital – using proceeds from property deals • Assuming stable Sterling, expect similar net debt reduction next year • Impact of hedging on net debt less than £100m
Slide 25: Property proceeds
Property proceeds • Proceeds £0.8bn in the half • Store yields at around 5.2% • Recent deal of £0.5bn at similar yield • Freehold mix strong – well above 70%
Slide 26: Net finance costs
Net finance costs • Net finance costs increased to £205m* • Underlying interest charge increased to £232m, from £112m • Increase driven principally by two acquisitions • Interest charge will reduce going forward * Includes the net return on our pension scheme’s assets and liabilities and the impacts
Slide 27: Pensions
Pensions • Important driver of staff loyalty • Corporate bond yields fallen in the half • IFRS pension deficit £1.4bn post-tax • IFRS deficit currently £1.1bn post-tax • Small and manageable actuarial deficit
Slide 28: Capital expenditure – H1
Capital expenditure – H1 £bn 2.8 2.5 2.4 2.0 1.6 1.6 1.6 1.3 1.2 1.0 0.8 0.4 05/06 06/07 07/08 08/09 09/10
Slide 29: Operating cash flow
Operating cash flow • Retail operating cash flow of £2.3bn, £0.7bn higher than capex • Started stock reduction programme • Larger cash improvement in second half
Slide 30: Slide 30
Slide 31: Terry Leahy, Chief Executive
Terry Leahy Chief Executive
Slide 32: Slide 32
Slide 33: International
International
Slide 34: International
International • Sales up 17% • Good contribution from new space • Profits grew slightly • Over 90% of profits from countries in which we have No. 1 or No. 2 market position • Market share gains in Europe and Asia
Slide 35: Sharing best practice
Sharing best practice Clubcard Discount Brands
Slide 36: Global clothing
Global clothing F&.e BLUE Poa j | A TESCO WG SRA 89S ot Phe We Er
Slide 37: Strong market share performance
Strong market share performance H1 H1 08/09 09/10 Hungary 15.1 16.4 Slovakia 14.9 15.4 Czech Republic 7.7 8.2 Poland 5.1 5.1 Source: GFK
Slide 38: Central Europe: Hungary, Poland
Central Europe Hungary Poland
Slide 39: Central Europe: Czech Republic, Slovakia
Central Europe Czech Republic Slovakia
Slide 40: Turkey
Turkey
Slide 41: Ireland
Ireland are ee Before €141.69 Now €86.40 Save up to Vson your weekly shopping lreland’s only super- market to make 12,500 long term price cuts Get border prices on your doorstep And you can still get all your Irish favourites
Slide 42: Slide 42
Slide 43: Korea
Korea
Slide 44: China
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Slide 45: Malaysia
Malaysia TESCO | vey vite holps
Slide 46: Japan
Japan
Slide 47: India
tedie Oazaer A TATA Enterprise STIKR x*Bazaar*
Slide 48: Fresh & Easy
Fresh & Easy ' Why Compromise’
Slide 49: Slide 49
Slide 50: UK
UK
Slide 51: Range
Range Discount Brands Market Value
Slide 52: Availability
Availability
Slide 53: Fresh food
Fresh food
Slide 54: Clubcard
Clubcard A chance Double Clubcard points Wi ) now across the store. (CLUBS:
Slide 55: Slide 55
Slide 56: Non-food
Non-food
Slide 57: clothingattesco.com
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Slide 58: Tesco Bank
Tesco Bank TESCO Bank My Accounts LE a a ae Log on [Tesco.com » Tesco Bank ad's Welcome to Tesco Bank. We hope you enjoy your visit, Question? suas ftcans | Eveuy Uitte bolps Loans » Whatever your needs a Tesco Loan could help » Clubcard Great low rate ” only 8.0% APR Typical for loans £7,500 to £14
Slide 59: tesco.com
tesco.com Favourites. Your regular in-store “| a shopping is waiting for you online. ccheanaainiaeniati i register now > M7 47 aw aw av
Slide 60: Tesco direct
Tesco direct 2 SE2 FO OPI order at tesc 2> order at tesco.com Autumr bet > @ oe 4 ( ; Clubcard | pointson all ‘ items order at tesco.: AL SERS 16 ——l 0.com Autumn Order at tese 08456004411 44 ££ QO2 SHO erat tesco.comidire Lal polps 44 Ee IS orcall0845 600 44 11 inter 2009
Slide 61: Telecoms
Telecoms Go on, haveaplay Just ask our friendly stato show youa live handse
Slide 62: Community and Environment: Carbon labelling
Community and Environment Carbon labelling
Slide 63: Community and Environment: Community Champions
Community and Environment Community Champions
Slide 64: Summary
Summary • Focus on sustainable, long-term growth • Our business model is resilient and adaptable • Well-placed in major growth regions • Prepared for a lower-carbon future • Well-positioned for the global recovery
Slide 65: Q&A
Q&A
Slide 66: Interim Results 6 October 2009
Interim Results 6 October 2009