Tesco
Assumed Vision, Strategy & Priorities
Tesco – Assumptions Slide 1
© The Delos Partnership 2005
Key People
Terry Leahy became Chief
Executive in 1997. Joining Tesco in
1979, he held a number of
marketing and commercial
positions prior to being appointed
to the Board of Tesco PLC on 5
October 1992.
Richard Brasher Commercial
and Trading Director was
appointed to the Board on 15
March 2004. He joined Tesco
from RHM in 1986. He has held
a number of marketing,
commercial and store operations
positions, most recently Nonfood commercial Director.
Tesco – Assumptions Slide 2
Andrew Higginson, Finance and
Strategy Director was appointed to
the Board on 17 November 1997.
He is a member of the 100 Group
of Finance Directors, Chairman of
Tesco Personal Finance and Nonexecutive Director of C & J Clark
Limited and BSkyB Plc.
Philip Clarke
International and IT
Director was appointed
to the Board on 16
November 1998. Prior to
his appointment he held
a number of roles in store
operations, commercial
and marketing.
© The Delos Partnership 2005
David Potts, Retail and Logistics
Director was appointed to the Board
on 16 November 1998. He joined
Tesco in 1973. From 1997 he
directed the integration of our
businesses in Northern Ireland and
the Republic of Ireland before
returning to the UK in his current
role in July 2000.
Tim Mason
47, Marketing, e-commerce,
Property and Republic of Ireland
Director was appointed to the
Board on 16 February 1995. He
joined Tesco in 1982. He is a Nonexecutive Director of Capital
Radio plc.
5 Year Financials*
2001
2002
2003
2004
2005
£m
£m
%
%
20988
1054
5.0%
23653
1201
5.1%
26004
1361
5.2%
15.3%
30814
1600
5.2%
16.5%
33974
1962
5.8%
Earnings per Share
Divdend per Share
p
p
10.7
4.98
12.2
5.6
14
6.2
16.4
6.84
18.4
7.56
Intangibles
Fixed assets
Fixed investments
£m
£m
£m
154
9580
304
154
11032
317
890
12828
343
965
14094
336
1044
15495
414
Stocks
Debtors
Cash, securities
£m
£m
£m
838
322
534
929
454
670
1140
662
638
1199
826
1100
1309
1002
1146
Creditors short
Creditors long
£m
£m
4389
2329
4809
3181
5372
4570
5516
4961
6072
5281
Mkt capitalisation
£m
18197
17626
12159
Turnover
Pre tax profit
% operating profit/sales
Return on Capital Employed
* Source Hemscott
Tesco – Assumptions Slide 3
© The Delos Partnership 2005
2007
2006
Brokers Estimates
19.9
22
Tesco Europe
Europe
Tesco's expansion overseas includes six countries in
Europe: its business in the Republic of Ireland and five
businesses in Central Europe.
The hypermarket format has been the focus of their Central
European activities since 1994. At 50,000 square feet or
more, hypermarkets have the space to offer customers
extensive food and non-food ranges. More recently, they
have developed into new formats, including compact
hypermarkets and Express.
Tesco – Assumptions Slide 4
© The Delos Partnership 2005
Tesco International Strategy*
LOOKING FOR RETURNS…
• Commitment to expanding outside of the UK – Asia,
Europe (West & East)
• Tesco's international sales leaped by about a quarter to
£4.2 bn. in the first half of its financial year, within a 14
percent rise in overall sales to £18.8 bn.
* Source Andrew Higginson Tesco
Tesco – Assumptions Slide 5
© The Delos Partnership 2005
Tesco Europe
European Country
Year of Entry
Number of Stores
Sales Area (mft2)
Planned Store Openings 05/06
% Increase
Czech Republic
1996
25
2.1
8
32%
Hungary
1994
69
3.5
14
20%
Poland
1995
78
4.2
20
26%
Rep. of Ireland
1997
87
2
6
7%
Slovakia
1996
30
2.1
6
20%
Turkey
2003
5
0.4
3
60%
294
14.3
57
19%
TOTAL
Tesco – Assumptions Slide 6
© The Delos Partnership 2005
Tesco 2005 Interims
Key Numbers – Highlights
•
•
•
•
•
Sales up 14.1%
Pre-Tax profit up 18.7%
On track to develop 17,000 new jobs
UK Deflation of 2% (Price Cuts for Customers)
Ireland – Good 1st Half. 3 New Stores in H1
2005 and 3 new planned for H2 2005
Tesco – Assumptions Slide 7
© The Delos Partnership 2005
Tesco Values
What they say *
What others might say **
•
Customer – Lifetime Loyalty
•
Going the extra mile
• Getting smarter every day.
•
Treat people the way we like to be treated.
•
No-one tries harder for customers.
• Persistent and determined until they get what they
want.
•
We use simple processes so that shopping is
Better for customers, Simpler for staff and
Cheaper for Tesco.
•
Every little helps…
* Source Tesco Website
Tesco – Assumptions Slide 8
• Use their huge Purchasing power intelligently.
** Quotations from Sources with Tesco experience
© The Delos Partnership 2005
Tesco Europe Profit
2005 % Operating Profit/ Sales = 5.7%
Tesco – Assumptions Slide 9
© The Delos Partnership 2005
Assumed Tesco 2006/7 Priorities
• Geographic Sales increase
• Increased Market Share
• Customer Range, Choice & Value
• Operating profit improvement
• Costs / Restructuring
• Synergies & Processes
Tesco – Assumptions Slide 10
© The Delos Partnership 2005