RNS Number : 9141Y

Tesco PLC

18 May 2021

18 May 2021

Tesco PLC

Annual Report and Financial Statements and Notice of Annual General Meeting 2021

Further to the release of its preliminary results announcement on 14 April 2021, Tesco PLC (the "Company") announces that it has today published its Annual Report and Financial Statements 2021. In addition, the Company announces that its Notice of Annual General Meeting 2021 (the "Notice") has been sent to shareholders. The 2021 Annual General Meeting will be held at our Heart building, Shire Park, Welwyn Garden City, Herts, AL7 1TW on Friday, 25 June 2021 at 9.30 am (the "AGM").

We recognise the ongoing importance of engaging with investors, especially during these unprecedented times. In light of the current UK Government restrictions, we propose to follow a slightly different format for this year's events. We invite investors to join a Virtual Shareholder Event on Friday, 18 June 2021 at 2.00pm. This will allow shareholders to hear from the Board and ask questions relating to the business of the AGM. During this event, shareholders will receive presentations from the Group Chair, John Allan, and the Group Chief Executive, Ken Murphy, on the performance and activities of Tesco during the past year. This new event will also allow those shareholders who vote in advance of the AGM to do so after having heard from the Board. Following the latest guidance issued by the UK Government, it is not clear whether all shareholders who may wish to attend the AGM in person will be able to do so. Therefore, it is proposed that we hold the AGM with the minimum number of shareholders present (which will be facilitated by Tesco) as is required under the Company's articles of association to enable the business of the AGM to be conducted. Further information and the current arrangements for the AGM can be found on our website at www.tescoplc.com/AGM2021.

The Company's Annual Report and Financial Statements 2021, Notice of Annual General Meeting 2021 and Little Helps Plan Progress Update can be viewed on the Company's website at www.tescoplc.com .

In accordance with Listing Rule 9.6.1R, copies of the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

   --      Annual Report and Financial Statements 2021; 
   --      Notice of Annual General Meeting 2021; and 
   --      Proxy Form for the 2021 Annual General Meeting. 

The Company's preliminary consolidated financial information and information on important events that have occurred during the year, and their impact on the financial statements were included in the Company's preliminary results announcement on 14 April 2021. That information, together with the information set out below, which is extracted from the Annual Report and Financial Statements 2021, constitute regulated information, which is to be communicated to the media in full unedited text through a Regulatory Information Service in accordance with the FCA's Disclosure Guidance and Transparency Rules ("DTR"), Rule 6.3.5R. This announcement is not a substitute for reading the full Annual Report and Financial Statements 2021. Page and note references in the text below refer to page numbers and note references in the Annual Report and Financial Statements 2021. To view the preliminary results announcement, visit the Company's website: www.tescoplc.com .

   Enquiries:               Robert Welch 

Company Secretary

Tesco PLC

Tesco House

Shire Park

Kestrel Way

Welwyn Garden City



Tel: 07793 222569

LEI Number: 2138002P5RNKC5W2JZ46

Principal risks and uncertainties

Key Elements of our risk management framework

Our established risk management framework enables us to manage and report the risks that we face as a business. A risk that can seriously affect our performance, future prospects or reputation is termed a principal risk.

To manage our risks effectively we have identified a risk appetite which is driven by the following factors:

- our performance should be competitive, responsible and focused on creating value for all our stakeholders including customers, colleagues, suppliers and shareholders;

- our behaviours must be in line with our Code of Business Conduct to protect and enhance our reputation;

- we aim to operate our business within the capital allocation framework we have set out; and

   -           we seek to ensure that our principal risks are effectively managed. 

Principal risks are discussed and agreed by Executive management and the Audit Committee. These risks are cascaded to the business units (top-down), who manage and report on the principal risks and any additional significant business unit risks. Business units also escalate risks as appropriate (bottom-up) to the Executive Committee. Our regular risk discussions consider emerging risks and include horizon scanning, which are reported at business unit and Executive Committee levels.

The principal risks are discussed and evaluated through regular meetings with senior management. The Board discusses each principal risk at least annually to provide oversight and ensure they remain well-managed and relevant.

The seven steps of the risk, controls and assurance framework on page 31 are embedded within our business as key elements of how we manage our risks and ensure appropriate controls are in place.

The risk assessment process relies on our evaluation of the likelihood and impact of risks, and on the development and monitoring of appropriate internal controls. Risk registers, detailing the risks we face, are an important component of how we manage our risks.

Risk Management

We have carried out a robust review of our principal risks, which includes periodic assessments of the risks we believe could threaten our business model, future performance, solvency or liquidity.

The Brexit risk has reduced since last year when there was no clarity on the long-term trading relationship between the UK and EU once the transition period expired on 31 December 2020. The new UK-EU Trade and Cooperation Agreement (TCA) removed the uncertainty of a no-deal Brexit. While this has reduced the Brexit risk, uncertainty remains around the full effect of Brexit, how the TCA will be implemented and how the trading relationship will develop.

We reported the COVID-19 pandemic as a new principal risk last year, and it remains an elevated risk. The pandemic has had a more profound impact on economies and people than was then expected. Uncertainty remains as to whether the recent lockdowns and vaccination programme are sufficient to bring the pandemic under control and allow normal life to return and, if so, when. The impact of the pandemic is also reflected across many of the principal risks and our mitigation strategies for them.

Climate change has become a widely acknowledged global emergency and a key priority for governments, businesses and citizens around the world. While risks relating to climate change and sustainability have previously been integral parts of several of our principal risks, we have now included climate change as a separate principal risk.

Tesco Bank has been through a challenging year due to increased macroeconomic uncertainty driven by, among others, the COVID-19 pandemic, thereby increasing its risk profile.

During the year, we recognised the potential disruption arising from the lengthy regulatory processes involved in the sale of our businesses in Thailand and Malaysia, which was completed in December 2020. The actions we took to monitor and manage these risks proved effective.

The following table sets out our principal risks, their movement during the year, and a summary of key controls and mitigating factors. They do not include all our risks and they are not set out in priority order. Additional risks not presently known, or that we currently deem to be less material, may also have adverse effects.

As part of our continuous improvement approach to risk management, and aided by the appointment of a new Chief Audit and Risk Officer in September 2020, we will continue to develop our methodology and risk framework. This will enhance risk management in supporting effective decision-making. As part of this, we also continue to develop and enhance our approach to risk appetite.

 Principal risk               Risk movement                Key controls and mitigating 
 Failure to adapt             The new UK-EU Trade 
  to the UK's new trading     and Cooperation Agreement     *    We continue to assess and monitor the potential risks 
  relationship with           (TCA) came into effect             of Brexit and its impacts on our customers, 
  the EU, and how it          from 1 January 2021,               colleagues and shareholders. We are also taking 
  may develop as further      setting out the conditions         appropriate mitigation measures to address challenges 
  agreements are reached      for tariff-free trading            including logistics, resourcing and supply with clear 
  or political decisions      with the EU and removing           oversight by senior leaders and our Brexit Governance 
  made, results in            the uncertainty of                 Group. 
  disruption to our           a no-deal Brexit. 
  business, cost inflation    The business is impacted 
  and impacts on our          by more cumbersome            *    Our focus has been on avoiding transportation delays 
  ability to supply           border controls,                   and bottlenecks. We are also working to ensure the 
  our customers with          goods inspection,                  accuracy of documentation to avoid waste and to 
  the products and            and customs documentation,         ensure we maximise the shelf life of our fresh 
  at the prices they          with the most trade                produce by working with our logistics partners. 
  expect. These and           friction being between 
  any adverse impact          Great Britain and 
  of Brexit on the            Northern Ireland              *    We continue to work closely with Government, 
  UK economy could            and Ireland. The                   regulatory bodies and industry on implementing the 
  affect our business,        full effect of Brexit              TCA, sharing data and analysis to inform 
  financial results           on the business will               policymaking. 
  and operations.             emerge as new trade 
                              patterns are established 
                              and the new regulatory 
                              framework is better 
                              Risk decreasing 
                             ---------------------------  ------------------------------------------------------------ 
 The continuing global        During the year, 
 COVID-19 pandemic             governments around           *    The safety and wellbeing of our colleagues and 
 may have a significant        the world introduced              customers has been and continues to be our overriding 
 and prolonged impact          emergency public                  priority. Our Executive Committee is monitoring 
 on global economic            measures, including               events closely with regular Board oversight, 
 conditions, disrupt           travel bans, quarantines          evaluating the impacts and designing appropriate 
 our supply chain              and public lockdowns.             response strategies. 
 (including our supplier       These measures have, 
 base, specifically            to varying degrees, 
 regarding business            been relaxed then            *    Our teams continue to work tirelessly to implement 
 closure and consolidation,    reintroduced as COVID-19          specific actions to minimise disruption faced by our 
 labour shortage,              transmission subsided             customers in these challenging times. This includes 
 raw material supply           before surging again,             increasing our retail store colleague headcount (with 
 and cost inflation),          with new variants                 redeployment of colleagues where possible), securing 
 increase employee             adding to the speed               additional supply chain capacity to meet changes in 
 absences and adversely        of transmission.                  demand, implementing changes to stores (including 
 impact our operations         Vaccines have been                hours, additional security, hygiene and social 
 (including Tesco              developed and are                 distancing measures), and extending support to 
 Bank). Failure to             being rolled out                  colleagues and customers at increased risk. 
 adapt to changes              with significant 
 brought about by              coverage in our core 
 this and any future           UK market, however           *    We have developed practices within our stores and 
 pandemics in our              uncertainty remains               distribution centres, as well as for office 
 markets and the               as to whether recent              colleagues working from home, to help people adapt to 
 environment                   lockdowns and the                 the new ways of working. We have aligned our controls 
 in which we operate           vaccination programme             accordingly with appropriate assurance measures in 
 may adversely affect          are sufficient to                 place. 
 our competitiveness           bring the pandemic 
 and financial results.        under control and 
                               allow normal life            *    The availability of cash resources and committed 
                               to return and, if                 facilities, together with our strong cash flow, are 
                               so, when. It is also              supporting Tesco's liquidity and longer-term 
                               unclear how the pandemic          viability. 
                               will have changed 
                               the environment in 
                               which we operate 
                               and the choices customers 
                               No risk movement 
                             ---------------------------  ------------------------------------------------------------ 
 Data security and data privacy 
 Failure to comply            As a retail organisation, 
 with legal or regulatory     we hold a large amount        *    We put our customers and colleagues at the heart of 
 requirements relating        of personal data                   all decisions we make in relation to the processing 
 to data security             on customers and                   of personal data. Our data privacy and protection 
 and data privacy             colleagues. The threat             policies clearly set out how we can protect and 
 in the course of             landscape has been                 appropriately restrict customer, supplier and 
 our business activities      ever-growing while                 colleague data. Our multi-year technology security 
 results in reputational      we continue to invest              programme is driving enhanced data security 
 damage, fines or             in our security and                capabilities. 
 other adverse                privacy programmes. 
 consequences.                The move to homeworking 
 This includes criminal       for most office-based         *    We have an established team in our security 
 penalties and                colleagues during                  operations centre to detect, report and respond to 
 consequential                the pandemic has                   security incidents. 
 litigation which             presented its own 
 may result in an             security challenges 
 adverse impact on            and response requirements.    *    We have a third-party supplier assurance programme 
 our financial performance                                       focusing on third-party data security and privacy 
 or unfavourable effects      No risk movement                   risks. 
 on our ability to 
 do business. 
                                                            *    We have a privacy compliance programme, which 
                                                                 includes assessment and monitoring of risk across our 
                                                                 global business. 
                                                            *    There is regular reporting on progress and results of 
                                                                 the security and privacy programmes to governance and 
                                                                 oversight committees. 
                                                            *    We recognise the importance of training and 
                                                                 communication to help prevent data security and 
                                                                 privacy-related incidents and have regular induction, 
                                                                 awareness and refresher courses for our colleagues. 
                                                            *    We have next-generation, behaviour-based anti-virus 
                                                                 and malware solutions, data and payment encryption 
                                                                 and threat detection tools that help us reduce the 
                                                                 likelihood of being compromised. 
                             ---------------------------  ------------------------------------------------------------ 
 Health and safety 
 Failure to meet safety       The pandemic has 
  standards in relation       presented unique              *    We have a business-wide, risk-based safety framework 
  to our workplace            challenges for the                 which defines how we implement and report on safety 
  results in death            safety of our customers            controls to ensure that colleagues, contractors and 
  or injury to our            and colleagues. It                 customers have a safe place to work and shop. 
  customers, colleagues,      has driven the need 
  or third parties,           for rigorous risk 
  or in damage to our         assessment, the rapid         *    We require each business to maintain a comprehensive 
  operations and leads        rollout of new ways                risk register and safety improvement plan to document 
  to adverse financial        of serving customers               and track enhancements. 
  and reputational            and of working for 
  consequences.               colleagues, clear 
                              communication, and            *    Governance and oversight are established in the form 
                              close attention to                 of our Group Risk and Compliance Committee and 
                              and compliance with                business unit-specific health and safety committees. 
                              Government pronouncements.         These committees review critical metrics and monitor 
                                                                 the effectiveness of related controls. 
                              No risk movement 
                                                            *    Our safety audits, whistleblowing 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 enable us 
                                                                 continuously to seek and identify areas for potential 
                             ---------------------------  ------------------------------------------------------------ 
 Climate change 
 Climate change has           Climate change has 
  the potential to            become a widely               *    Our Little Helps Plan on pages 12 to 16 sets out our 
  change dramatically         acknowledged                       ambitions and action plans for addressing climate 
  the world in which          global emergency,                  change. The Board's Corporate Responsibility 
  we live and operate,        moving from an emerging            Committee provides governance and oversight. 
  and tackling climate        risk to a principal 
  change, by taking           risk for the business. 
  measures to limit                                         *    We have established a number of metrics with 
  its impact to manageable    New risk                           appropriate management oversight and governance 
  levels, has become                                             mechanisms to enable us to monitor progress. We are 
  a key priority for                                             working with third-party organisations to continue 
  governments, businesses                                        developing this suite of metrics. There is a level of 
  and citizens around                                            external assurance over the metrics, and we are 
  the world. Even if                                             working to further enhance and extend this. 
  manageable, the effect 
  of climate change 
  will be quite profound,                                   *    We seek to align our climate-related ambitions with 
  and these measures                                             our financial policies and have launched our first 
  will themselves have                                           sustainability-linked bond. We have also extended our 
  a significant impact                                           climate-related financial disclosures. 
  on economies and 
  the choices people 
  make. Climate change 
  has, therefore, moved 
  from an emerging 
  risk to a principal 
  risk for the business. 
                             ---------------------------  ------------------------------------------------------------ 
 Responsible sourcing and supply chain 
 Failure to meet product      The pandemic (and 
 safety standards              to an extent contingency     *    Our product standards, policies and guidance help 
 results in death,             planning for Brexit)              ensure that products are safe, legal and of the 
 injury or illness             put significant stress            required quality. They cover food and non-food, as 
 to customers. Failure         on our supply chain               well as goods and services not for resale. 
 to ensure that products       during the year. 
 are sourced responsibly       Surges in demand 
 across our supply             placed pressures             *    We have policies and guidance to help ensure human 
 chain (including              on supply, and some               rights are respected and environmental impacts are 
 fair pay for workers,         suppliers were unable             responsibly managed. These include a focus on 
 adhering to human             to maintain operating             appropriately monitoring conditions and progress, 
 rights, clean and             capacity. We have                 tackling endemic sector risks and addressing wider 
 safe working environments,    also had to adopt                 community needs. 
 meeting climate change        new approaches to 
 and sustainability            our technical and 
 commitments) and              supplier audits to           *    We run colleague training programmes on food and 
 that all social and           ensure our standards              product safety, responsible sourcing, hygiene 
 environmental standards       have been met. We                 controls, and also provide support for stores. We 
 are met, results              have continued to                 also provide targeted training for colleagues and 
 in supply chain               drive our environmental           suppliers dealing with specific challenges such as 
 disruption,                   agenda, including                 modern slavery. 
 regulatory breaches,          actions relating 
 and reputational              to deforestation 
 impacts of not meeting        and animal welfare.          *    Our crisis management procedures are embedded within 
 societal expectations.                                          operations to quickly resolve issues if non-compliant 
                               No risk movement                  products are produced or sold with clear escalation 
                                                            *    We operate supplier audit and product analysis 
                                                                 programmes to monitor product safety, traceability 
                                                                 and integrity, human rights and environmental 
                                                                 standards. They include unannounced audits of 
                                                                 suppliers' sites and facilities. 
                             ---------------------------  ------------------------------------------------------------ 
 Competition and markets 
 Failure to deliver           We continue to face 
  an effective, coherent      the challenges of             *    Our Board develops and regularly challenges the 
  and consistent strategy     a changing competitive             strategic direction of our business to enhance our 
  in response to our          landscape and price                ability to remain competitive on price, range and 
  competitors and changes     pressures across                   service. This includes developing our online channels 
  in market conditions        our markets. Our                   and multiple formats to allow us to compete in 
  result in a loss            strategies are                     different markets. 
  of market share and         well-developed 
  profitability.              and we review them 
                              regularly to remain           *    Our Executive Committee and operational management 
                              competitive and informed           regularly review markets, trading opportunities, 
                              by competitor and                  competitor strategy and activity. 
                              market activity. 
                              No risk movement              *    We carry out market scanning and competitor analysis 
                                                                 to refine our customer proposition. 
                             ---------------------------  ------------------------------------------------------------ 
 Failure to achieve           There has been ongoing 
 our transformation           delivery of key programmes    *    We have clear market strategies and business plans to 
 objectives due to            to meet our transformation         address changes to business priorities, strategic 
 poor prioritisation,         objectives while                   objectives and external market factors. 
 ineffective change           we continue to push 
 management and a             forward with new 
 failure to understand        initiatives.                  *    We have executive-level governance and oversight for 
 and deliver the technology                                      all activities to ensure programmes are adequately 
 required, results            No risk movement                   resourced, milestones achieved, and key rollout 
 in an inability to                                              decisions approved. 
 progress sufficiently 
 quickly to maintain 
 a competitive cost                                         *    Real-time independent assurance activities are 
 structure and generate                                          conducted during the transformation programme. 
 sufficient cash to 
 meet business objectives. 
                             ---------------------------  ------------------------------------------------------------ 
 Political, regulatory and compliance 
 Failure to comply            Long-term changes 
 with legal and other          in the global political      *    Wherever we operate, we aim to ensure that we 
 requirements in an            environment and societal          incorporate the impacts of political and regulatory 
 increasingly restrictive      expectations are                  changes in our strategic planning and policies. 
 regulatory environment        leading to greater 
 due to changes in             regulation of business 
 the global political          and potential penalties.     *    We have compliance programmes and committees to 
 landscape, results            In some markets,                  manage our most important risks (e.g. anti-bribery 
 in fines, criminal            regulations can result            and competition law) and we conduct assurance 
 penalties for Tesco           in favouring local                activities for each key risk area. 
 or colleagues,                companies. 
 litigation and an             No risk movement             *    Our Code of Business Conduct and various policies 
 adverse impact on                                               (e.g. gifts and entertainment, conflicts of interest) 
 our reputation, financial                                       are supported by new starter and annual compliance 
 results, and/or our                                             training and other tools such as our whistleblowing 
 ability to do business.                                         hotline. 
                                                            *    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. 
                             ---------------------------  ------------------------------------------------------------ 
 Failure of our IT           Dependence on technology 
  infrastructure or           continues to grow             *    Our multi-year programme continues to enhance our 
  key IT systems results      throughout the Group.              technology infrastructure and resilience 
  in a loss of information,   We continue to improve             capabilities. This involves significant investment in 
  inability to operate        our technology environment         our hosting strategy, partnering with cloud providers 
  effectively, financial      and invest in disaster             and re-engineering some of our legacy retail systems, 
  or regulatory penalties,    recovery and business              while building redundancy for key business systems. 
  and negative impacts        continuity, which 
  on our reputation.          are helping manage 
  Further, failure            our exposure to external      *    Our investment in data centre facilities is providing 
  to build resilience         threats.                           greater resiliency and oversight for our key systems. 
  at the time of investing 
  in and implementing         No risk movement 
  new technology results                                    *    Our technology security programme continues to 
  in potential loss                                              enhance our information security capabilities, 
  of operating capability.                                       thereby strengthening our infrastructure and 
                                                                 information technology general controls. 
                                                            *    We have combined governance processes to ensure 
                                                                 alignment between our technology disaster recovery 
                                                                 and business continuity activities. 
                             ---------------------------  ------------------------------------------------------------ 
 Failure to attract,          Market competition 
  retain and develop           for key leadership           *    Our talent planning and people development processes 
  the required capability      and specialist talent             are established across the Group. 
  and to embed our             remains strong. The 
  values in our culture        year has also presented 
  results in an impact         significant people           *    Talent and succession planning are regularly 
  on the delivery of           challenges in supporting          discussed by line management and the Executive 
  our purpose and business     vulnerable colleagues,            Committee, with regular oversight by the Nominations 
  performance.                 recruiting and training           and Governance Committee and the Board. 
                               huge numbers of new 
                               permanent and temporary 
                               colleagues, supporting       *    We have clear potential and performance criteria and 
                               the shift to homeworking          talent principles, underpinned by our employer value 
                               for most office-based             proposition and strategy. 
                               colleagues, reinforcing 
                               our culture and driving 
                               our diversity and            *    An independent assessment of all leadership-level 
                               inclusion programmes              promotions and external hires is conducted to ensure 
                               harder.                           capability, potential, leadership and values. 
                               No risk movement 
                                                            *    The Remuneration Committee agrees the objectives and 
                                                                 remuneration arrangements for senior management. 
                                                            *    Our 'how to' and 'when to' speak up programmes across 
                                                                 all areas include our protector line and complaints 
                                                                 process. These allow colleagues to raise in 
                                                                 confidence any workplace concerns such as dishonest 
                                                                 activity, bias or something that endangers colleagues 
                                                                 the public or the environment. 
                                                            *    Our established Group Diversity and Inclusion 
                                                                 strategy ensures 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 
                             ---------------------------  ------------------------------------------------------------ 
 Uncertainties (including     There remains considerable 
  the pandemic and            uncertainty as to             *    We have a value, price, promotions and Clubcard 
  the effects of Brexit)      the further impact                 strategy that drives our business priorities with 
  and macroeconomic           on the economy and                 governance and oversight mechanisms. 
  conditions impact           employment from the 
  our customers' budgets      pandemic and on 
  and force customers         households.                   *    We have a consistent approach to building impactful 
  to reappraise the           Also, the full effects             customer propositions, offering high-quality and 
  concepts of value           of Brexit on the                   competitive value while improving the customer 
  and loyalty in a            economy in the short               experience. 
  way to which we are         and longer term are 
  unable to respond.          unclear. However, 
                              we feel we have the           *    We undertake Group-wide customer insight analysis to 
                              right strategies                   improve our propositions by understanding and 
                              and processes in                   leveraging trends around customer behaviour, 
                              place to monitor                   expectations and experience across the different 
                              this risk and manage               parts of the business. 
                              it as far as circumstances 
                              will allow. The pandemic 
                              has seen a significant        *    We have well-established product development and 
                              shift in consumer                  quality management processes, which keep the needs of 
                              demand for online                  our customer central to our decision-making. 
                              shopping which led 
                              us to significantly 
                              increase our capacity.        *    We monitor the effectiveness of our processes by 
                                                                 regularly tracking our business and competitors 
                              No risk movement                   against measures that customers tell us are important 
                                                                 to their shopping experience. 
                             ---------------------------  ------------------------------------------------------------ 
 Brand, reputation and trust 
 Failure to create            There has been widespread 
 brand reappraisal             recognition of the            *    Our Group policies, procedures and our Code of 
 opportunities to              steps we took to                   Business Conduct set out the detailed expectations 
 improve quality,              feed the nation while              and behaviours that enable us to make the right 
 value and service             keeping customers                  decisions for our customers, colleagues, suppliers, 
 perceptions, as well          and colleagues safe                communities and investors. 
 as meet societal              during the year, 
 expectations in relation      prioritising vulnerable 
 to climate and                customers and providing       *    We listen to our customers and stakeholders as part 
 sustainability,               support for local                  of our communication and engagement programmes. We 
 results in a negative         communities around                 reflect their needs in our plans, which include 
 impact on the trust           the country. We are,               health, community, sourcing, climate and 
 which our communities         however, very aware                sustainability initiatives. 
 and stakeholders              that hard-won reputations 
 place in our brand.           can be quickly lost, 
                               and we continue to            *    The Board's Corporate Responsibility Committee 
                               implement initiatives              oversees all corporate responsibility activities and 
                               and activities aligned             initiatives, including climate and sustainability 
                               to our strategic                   programmes, to ensure alignment with customer 
                               priorities to continue             priorities and our brand strategy. 
                               to build and maintain 
                               No risk movement              *    We continue to use the advice of specialist external 
                                                                  agencies and our in-house marketing expertise to 
                                                                  maximise the value and impact of our brand. 
                             ---------------------------  ------------------------------------------------------------ 
 Tesco Bank 
 Tesco Bank is exposed        The pandemic has 
  to a number of risks,        resulted in lower            *    The Bank has a formal structure for reporting, 
  the most significant         trading activity,                 monitoring and managing risks. This comprises, at its 
  of which are operational,    lending balances                  highest level, the Bank's risk appetite, approved by 
  regulatory, credit,          and income in the                 the Bank Board and supported by the risk management 
  funding, liquidity,          Bank and increased                framework. 
  market and business          provisions for expected 
  risk.                        credit losses, reflecting 
                               forecast unemployment,       *    The Tesco PLC Board also reviews and approves the 
                               resulting in a loss               Bank's financial risk appetite. Risk appetite defines 
                               for the year. The                 the type and amount of risk that the Bank is prepared 
                               Bank continues to                 to accept to meet its strategic objectives. It forms 
                               actively manage the               a link between the day-to-day risk management of the 
                               risks to which it                 business and its strategic priorities, long-term plan 
                               is exposed and maintains    , 
                               significant regulatory            capital planning and stress-testing. Adherence to 
                               capital. While the                risk appetite is monitored monthly. 
                               overall risks facing 
                               the Bank are similar 
                               to that of a year            *    The risk management framework brings together 
                               ago, the risk profile             governance, risk appetite, the three lines of defence 
                               is judged to have           , 
                               increased, reflecting             the policy framework and risk management tools to 
                               the uncertainty as                support the business in managing risk as part of its 
                               to the timing and                 day-to-day activities. The framework includes 
                               strength of a recovery            scenario analysis and regular stress-testing of 
                               in the economy on                 financial resilience. 
                               which the financial 
                               performance of the 
                               Bank relies.                 *    There is Bank Board risk reporting throughout the 
                                                                 year, with updates to the Tesco PLC Audit Committee 
                               Risk increasing                   provided by the Bank's Chief Financial Officer and 
                                                                 Audit Committee Chairman. A member of the Tesco PLC 
                                                                 Board or Executive Committee is normally a member of 
                                                                 the Bank's Board to enhance visibility and knowledge 
                             ---------------------------  ------------------------------------------------------------ 
 Failure of our business      Tesco Group has traded 
  performance to deliver       robustly overall             *    We maintain an infrastructure of systems, policies 
  cash as expected;            through the pandemic              and reports to ensure discipline and oversight on 
  access to funding            and the injection                 liquidity matters, including specific treasury and 
  markets or facilities        of GBP2.5bn from                  debt-related issues. 
  being restricted;            the proceeds of the 
  failures in operational      sale of our Asia 
  liquidity and currency       business has greatly         *    Our treasury policies are regularly reviewed by 
  risk management;             reduced the prospect              management, the Executive Committee and the Board. 
  Tesco Bank cash call;        of having to make 
  or adverse changes           further pension deficit 
  to the pension deficit       contributions in             *    The Group's funding strategy is approved annually by 
  funding requirement          the future. The Group             the Board and includes maintaining appropriate levels 
  create calls on cash         has maintained an                 of working capital, undrawn committed facilities and 
  higher than anticipated,     Investment Grade                  access to the capital markets. 
  leading to impacts           rating from the credit 
  on financial performance,    rating agencies, 
  cash liquidity or            and maturing bonds           *    We regularly review liquidity levels and sources of 
  the ability to continue      and the revolving                 cash, and we maintain access to committed credit 
  to fund operations.          credit facilities                 facilities and debt capital markets. 
                               were refinanced. 
                               No risk movement             *    We have a long-term funding framework in place for 
                                                                 the pension deficit and there is ongoing 
                                                                 communication and engagement with the Pension 
                                                            *    While recognising that Tesco Bank is financially 
                                                                 separate from Tesco PLC, we continue to monitor the 
                                                                 activities of Tesco Bank that could give rise to 
                                                                 risks to Tesco PLC. 
                                                            *    The Audit Committee reviews and annually approves our 
                                                                 viability and going concern statements and reports 
                                                                 into the Board. 
                             ---------------------------  ------------------------------------------------------------ 

Indicates that the principal risk has been included as part of the longer-term viability scenarios as detailed on pages 38 and 39.

Internal control

The key elements of the Group's internal control framework are monitored throughout the year and the Audit Committee has conducted a review of the effectiveness of the Group's risk management and internal control systems on behalf of the Board. To support the Board's annual assessment, Group Risk and Audit prepared a report on the Group's principal risks and internal controls. This describes the risk management systems and key internal controls, as well as the work conducted in the year to improve the risk and control environment, including the level of assurance undertaken. The internal control framework is intended to effectively manage rather than eliminate the risk of failure to achieve our business objectives. It can only provide reasonable, but not absolute, assurance against the risk of material misstatement or financial loss.

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 international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The Group Financial Statements are also prepared in accordance with IFRS as issued by the International Accounting Standards Board. 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 United Kingdom 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 42 to 46, confirm 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, 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.



(END) Dow Jones Newswires

May 18, 2021 02:00 ET (06:00 GMT)

Tesco (LSE:TSCO)
Historical Stock Chart
From Jun 2021 to Jul 2021 Click Here for more Tesco Charts.
Tesco (LSE:TSCO)
Historical Stock Chart
From Jul 2020 to Jul 2021 Click Here for more Tesco Charts.