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Tesco

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More than the weekly shop
Annual Review and Summary Financial Statement 2008

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Most people know something about Tesco. After all, we are the UK’s largest grocer and we’ve been serving customers for the best part of a century. What you might not know, is that Tesco is also the world’s third largest grocery retailer with operations in 12 international markets, employing over 440,000 people and serving millions of customers every week. We’re not simply about providing great quality food at affordable prices. We provide more choice than ever to more customers, whether it’s through our expanding international operations, innovative retailing services or our growing non-food offer. It doesn’t matter how people choose to shop with us or what they choose to buy, our core purpose remains the same – to create value for customers to earn their lifetime loyalty. We are also playing our part in tackling some of the social and environmental challenges we all face by putting community at the heart of what we do. From carrots to computers, from banking to broadband, from Shanghai to San Diego. We are…

…more than the weekly shop
Tesco PLC Annual Review and Summary Financial Statement 2008

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Tesco – the big picture
This has been another exciting year for Tesco. There have been some big developments – such as entry into the US – but there have also been many small improvements that, added together, mean our offer for customers is better than ever. We’re playing a more active role in the communities we serve, more of our people are being developed and our shareholders continue to benefit from our success. It’s the many small improvements that are behind our Every Little Helps philosophy. Whether it’s helping our customers to spend less, trying to ensure that they don’t queue at the checkouts or making sure that they can buy that extra product they’ve been looking for, Every Little Helps can become a great deal when everyone pulls in the same direction.

£51.8bn
Group sales

3,728
Stores worldwide

No. 3
Third largest grocery retailer in the world

13
Markets

440,000+
People worldwide

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UK (stores)
Scotland (116)

Key highlights > 2,115 stores > 280,373 staff
Northern Ireland (41) Wales (80) England (1,878)

In the UK, Tesco coped well with unseasonal summer weather, recovering competitors and a deteriorating non-food market, particularly in the second half, to deliver solid progress in the year by investing in improving the shopping trip for customers. UK sales grew by 6.7% in the year to £37.9 billion. Both customer numbers and spend per visit increased.

Europe (stores)
Republic of Ireland (100)

Key highlights > 746 stores > 83,705 staff
Czech Republic (96) Poland (301) Slovakia (60) Hungary (123) Turkey (66) In Central Europe we are emerging from a long period of economic instability and intense competition as one of the clear winners across the region. The prospects for improving returns, as we continue to build our market positions, and benefit from increased scale, regional economies and improved infrastructure, have never been better.

Asia (stores)

Key highlights > 814 stores > 77,554 staff
Japan (125) South Korea (137) China (56) Thailand (476) Malaysia (20) We have delivered a very strong performance in Asia, despite retail markets in our two largest countries – South Korea and Thailand – remaining subdued. We are now market leader in Malaysia, just seven years after we entered the country and we are accelerating growth and investment in China now that we have full management control of our business there.

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USA (stores)
Nevada (11)

Key highlights > 53 stores > 669 staff

Southern California (28) Arizona (14)

We are very encouraged by the start Fresh & Easy has made. The first stores opened only in November and we now have over 50 trading. The early response of customers to our offer has surpassed our expectations – with our research regularly confirming that they like the quality and freshness of our ranges, as well as the prices and the convenient locations of the stores.
Tesco PLC Annual Review and Summary Financial Statement 2008

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Financial highlights
Growth on 2007

11.1%
Group sales (including VAT)

11.8%
Underlying Group profit before tax

5.7%
Group profit before tax
(15.3% growth excluding last year’s exceptional items; principally the Pensions A-Day credit)

20.8%
Underlying diluted earnings per share*

14.2%
Diluted earnings per share

13.1%
Dividend per share 2008 2007 46,611 42,641 2,545 2,653 22.36 23.31 9.64 40,469 12.6%‡

Group sales (£m) (including value added tax) Group revenue (£m) (excluding value added tax) Underlying Group profit before tax (£m)† Group profit before tax (£m) Underlying diluted earnings per share (p) Diluted earnings per share (p) Dividend per share (p) Group enterprise value (£m) (market capitalisation plus net debt) Return on capital employed

51,773 47,298 2,846 2,803 27.02 26.61 10.90 37,656 12.9%§

* 13.1% growth on a normalised 28.9% tax rate. † Adjusted for IAS 32, IAS 39, the net difference between the IAS 19 Income Statement charge and ‘normal’ cash contributions for pensions and IAS 17 ‘Leases’ – impact of annual uplifts in rent and rent-free periods. In 2007 an adjustment was also made for Pensions adjustment – Finance Act 2006 and impairment of the Gerrards Cross site. § Using a ‘normalised’ tax rate before start-up costs in the US and Tesco Direct, and excludes the impact of foreign exchange in equity and our acquisition of a majority share of Dobbies. ‡ Including the one-off gain from Pensions A-Day, ROCE in 2007 was 13.6%.

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A successful year
I am pleased to report that in spite of some challenging market conditions we have once again delivered a strong set of results.
Sales have increased by 11.1% to £51.8 billion, Group profit before tax is up by 5.7% or by 15.3% if you exclude last year’s exceptionals – mainly the Pensions A-Day credit. Underlying profit has grown by 11.8% to £2,846 million. Underlying diluted earnings per share is up 13.1% using a normal tax rate, and the full-year dividend is also up 13.1%. These results demonstrate the real strength and diversity of the Group and reaffirm our broad long-term strategy for growth set out just over a decade ago. International is now a powerful driver of growth for the Group. This year our overseas business delivered very strong increases in sales and profit of 25.3% and 24.3% respectively. Our growth will continue as we begin to lay the foundations for our long-term international expansion through our entry into the new major markets of China and more recently the United States. UK sales are up 6.7% and trading profits grew by 7.1% – after start-up costs in the US and on Tesco Direct – to £2,050 million, helped by a solid margin performance. Group non-food sales rose 12% to £11.8 billion and non-food remains an important contributor to our growth. We are particularly pleased with the progress of Tesco Direct which has performed ahead of plan during its first full year of operation. It’s also been a good year for retailing services, with growing customer numbers and improving profits. Tesco Personal Finance this year celebrates its tenth anniversary, Telecoms is growing well, with Tesco Mobile alone attracting a quarter of a million new customers this year and breaking through to profitability. Dotcom has again delivered excellent growth in sales and profit. The introduction of Community to our strategy earlier this year has further focused our efforts on tackling important social and environmental challenges, ensuring that they are considered in our strategic decision-making. Following the introduction of the Community Plan in 2006, I’m pleased to say that we now have plans in nine countries, bringing together a range of community, environmental and health projects, tailored to local market needs, and the remaining three will be starting soon. In 2007, we continued our roll out of front of pack nutritional labelling across the Group, including Turkey, South Korea, China and Poland, where over a third of our own-brand products are now labelled. In the UK, we are still the only supermarket where all relevant products carry the labels – over 7,000 Tesco lines and nearer 20,000 when manufacturers’ brands using them are included. I’m also pleased to report that in the UK we have broken our ‘charity of the year’ record, raising more than double our ambitious target with £4.4 million being donated to the British Red Cross. Over the last few decades we have become skilled retail property developers, building a valuable property portfolio that powerfully underpins the business. Our programme of releasing value from property is on track and proceeds will be used to fund our business expansion and ongoing share buy-back. The Tesco team is now over 440,000 strong. It’s a big team, but we’re united by a common purpose – to create value for customers to earn their lifetime loyalty. This year the team has worked harder than ever to deliver an even better shopping trip for customers and our latest staff Viewpoint results show that morale is strong. I would like to thank all our people for their hard work which I know will continue in the year ahead. I’m delighted that their efforts have recently been recognised with Tesco winning Retailer of the Year at the World Retail Awards in Barcelona.

David Reid Non-Executive Chairman
Tesco PLC Annual Review and Summary Financial Statement 2008

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Our strategy
The UK is our biggest market and the core of our business. We aim to provide all our customers with excellent value and choice. This year recovering competitors and cautious consumers have made growth harder to come by, but with strong productivity, mix and margin control, we delivered good results.

Our aim is to be as strong in non-food as in food. This means offering the same great quality, range, price and service for our customers as we do in our food business. Our Group non-food sales have grown by 12% to £11.8 billion this year, accounting for 23% of our total sales.

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We added Community as the fifth part to our strategy this year. As modern economies may have to operate on about a fifth of the carbon they do today, we believe in the future it may not be a choice to be green, but that we can’t grow unless we’re green.

In te r n i o n a l at
Tesco has followed its customers into the growing world of retailing services, aiming to bring simplicity and value to complex markets. Services have performed well this year, with sales in our online businesses up over 30%, Tesco Mobile moving into profitability and Tesco Personal Finance getting back to a faster rate of growth.

Chief Executive Terry Leahy with Jackie B, Andy and Jackie M at the Tesco Extra in Cheshunt, UK

Tesco is an international retailer and wherever we operate we focus on giving local customers what they want. Our overseas business has had an excellent year, contributing over half of the growth in Group profit in the year.

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Strong growth across the Group
The breadth of the Group and the strength of our business model have enabled Tesco to deliver another year of double-digit sales, profit and earnings per share growth.
These results demonstrate that Tesco has again made strong progress. Sales, profits and returns have grown well, the growth has been broadly based and we are delivering on our commitments to shareholders. I believe these numbers also clearly show that our new businesses are coming of age, after years of patient investment. I am pleased about that because the breadth this gives the Group, combined with the strength of our business model, means that we are able to cope well with changing market conditions and at the same time make the necessary investment in our future growth – in the United States, China and Tesco Direct. International is an important part of this. It now makes more than £700 million of trading profit, which is about the same as the whole of Tesco did a decade ago, and it contributed over half of the growth in Group trading profit in the year. We have built a new Tesco in the last ten years, serving markets with hundreds of millions of customers – and I believe its growth prospects are even better than the original’s were back then. We saw excellent progress across the international business. Sales and profits grew well, returns rose again but the most striking improvements came in the strengthening positions we have in our chosen markets. We added over six and a half million square feet of new selling space overseas in the year – over three times as much as in the UK. Our focus on combining this organic growth with selective acquisitions is also delivering – in Poland, the Czech Republic and Malaysia – with more to come. Our international business now has the scale, the competitiveness and the momentum it needs to be a key driver of our growth for the longterm – because our operations in most of these markets can be two, three or more times larger than they are today. We have made solid progress in the UK. It hasn’t been an easy year for our core business – recovering competitors and cautious consumers made sales growth harder to come by. But with strong productivity, mix and margin control, we delivered good results and after a slower end to the year, we have come into the new financial year on better form, trading ahead of the industry and a little ahead of our planned performance range. I believe we are entering the kind of market conditions where Tesco’s strengths stand out; where customers will be looking to us to help them cope with higher bills for mortgages and fuel as well as higher taxes. As always, our focus will therefore be on improving their shopping trip – whether it’s in lower prices, shorter queues at checkouts or healthier products to feed the family. Customers recognise the improvements we are making. Whilst we have seen pleasing progress in Non-Food, this has been against a background of more subdued consumer spending in some product categories. Nevertheless, sales grew faster than the core business, profitability was strong and we saw good market share gains. Our core general merchandise categories, which are less sensitive to the economic cycle, grew well and we saw robust growth in newer areas such as electricals, furniture and DIY, helped in part by an excellent first full year of trading in Tesco Direct, our online and catalogue non-food business. Our Services businesses had another good year – again demonstrating the growing breadth of the Group – supported by our increasing strength as a leading internet retailer. Dotcom was on excellent form, with sales in our online business again up by over 30%. Tesco Telecoms performed well, driven by a very good performance in Tesco Mobile, our joint venture with O2, which moved into profit for the first time in the year. Elsewhere in Services, Tesco Personal Finance (TPF), which celebrates its tenth anniversary this year, has got back to a faster rate of growth, driven by a strong sequence of new product launches and a 20% rise in online sales. TPF has also weathered a difficult financial services market well – with falling bad debts and credit card arrears. But for the impact of last year’s floods on household insurance claims, we would have seen strong profit growth from TPF. Our work with communities and the environment has also seen Tesco make encouraging progress. To make sure this work gets the right focus

76m square feet of selling space
We plan to open over 11.5 million square feet of new Group space in the coming year, 80% of it outside of the UK.

USA

Republic Poland of Ireland UK Slovakia Czech China South Korea Republic Japan Turkey Hungary Malaysia Thailand

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60%+ of Group sales area is in International

We continue to support Cancer Research UK’s Race for Life series, which saw 665,000 people taking part in the 5km runs, including over 21,000 Tesco staff. Over the last six years we have helped raise over £180 million.

All our own-brand face tissues, kitchen towel and toilet tissue are FSC certified.

and priority in the business, we made an important change in 2007 by adding it to our four-part strategy for growth – so making Community the fifth element. As the first change of any kind to Tesco’s strategy in more than a decade, this represents a very significant commitment. More detail about our initiatives in this area can be found elsewhere in this review, in our separate Corporate Responsibility Review and on our website (www.tesco.com/crreview08). We are making strides towards a revolution in green consumption by incentivising the environmental option and making it affordable. We do not start from the position that it is a choice between growing or being green; that somehow we will give up a bit of potency in the focus of the business in pursuing these things. My strong belief is that this is not the case, and that being green will be a good way to grow and add value for shareholders whilst discharging our responsibilities to other stakeholders. That is why Tesco has taken a lead on these matters. Some key milestones passed this year included the early achievement of our target to reduce the number of free carrier bags issued to UK customers by 25% in a little over 12 months – saving well over one billion bags, far more than any other retailer. We are on track to save two billion this year. We have also halved our energy use per square foot of selling space since 2000, two years ahead of target. We have invested £25 million in creating a Sustainable Consumption Institute at the University of Manchester, bringing together world-leading experts from various disciplines. The Institute will help lead the way to a low-carbon economy and society. We plan to begin a programme of carbon labelling of our products in the early weeks of the current year, using our experience of putting clear, useful information in front of customers to help them make informed decisions about the CO2 implications of their product choices.

In summary: > Tesco is about growth and we are confident of sustaining strong growth in the future; > we do this by following the customer; as they change, we change > and this means our growth is broadly based, as our new businesses come through to scale and profitability; > it also means we can carry the costs of investing now in the new products and businesses which will drive our long-term growth > at the same time we can deliver improving returns and tangible benefits for shareholders; > we are meeting our responsibilities to other stakeholders by playing an innovative part in tackling some of the social and environmental challenges we all face; > we have delivered strong results by making shopping better for customers; and > Tesco is equipped to cope with changing market conditions and, whilst the current global economic background is a concern, we begin the new financial year with confidence.

Terry Leahy Chief Executive To view the full announcement visit: www.tesco.com/annualreview08/presentations

Every Little Helps…
>> Case study: Our Steering Wheel We operate a balanced scorecard approach to managing the business that is known within the Group as our Steering Wheel. This unites the Group’s resources and in particular focuses the efforts of our staff around our customers, people, operations, finance and the community. Its prime focus is as a management tool for the Company so that there is appropriate balance in the trade-offs that need to be made all the time between the main levers of management – such as operations measures, financial measures or delivery of customer metrics. It therefore enables the business to be operated and monitored on a balanced basis with due regard to the needs of all stakeholders. For the owners of the business, it is simply based around the philosophy that if we look after customers well and operate efficiently and effectively, shareholders’ interests will always be best served by the inevitable outputs of those – growth in sales, profits and returns. No-one tries harder for customers > Treat people how we like to be treated By making sure that we live by the Tesco values all our people understand what our purpose is – to create value for customers to earn their lifetime loyalty. This means we work as one team – the Tesco team, with over 440,000 people united by a common purpose. For our customers it can come down to that one person in-store who shared a smile or helped them pack their shopping bags. Our people are all individuals playing their part in serving customers as best they can. That is why we have recently launched a new staff uniform in the UK, including new badges that say more than just a name. Staff have a choice across a range of over 55 items. The look is stylish, comfortable and practical to wear. By the end of the year the new uniform will be rolled out to over 60% of our stores and depots. >> Case study: Community champions Developing our people isn’t just about making sure they have the right skills to do their job; it’s also about making them feel good about working for Tesco. Our people know that we have an opportunity to play an active part in the communities we serve. That is why we are making sure they have time to provide visible and practical local support by extending the number of Community Champions in our UK stores. Introduced in 2007, our Community Champions can spend around half their time on community activity, usually with schools and local charities. The trial in 22 stores up and down the country has proved successful in building relationships with communities and making a positive difference, and it has now been extended to 52 stores. Community Champions will also be appointed in four of our distribution centres this year. > Case study: Clubcard One of the tools we use to help us understand our customers’ needs is our world-leading loyalty programme, Clubcard. Not only does it enable us to thank our customers for shopping with us, it also provides invaluable information about what our customers want and how their needs change. This year we launched Clubcard in Malaysia and we already have over one million members. We also rolled out a similar member card scheme in China. Within the first six months the membership had grown to over 3.7 million customers and on average 5,000 new customers sign up every day. In the next year we plan to launch versions of Clubcard in Thailand, Hungary, Turkey, Slovakia and the Czech Republic. prices are good; > I can get what I want; > the aisles are clear; > I don’t queue; and > the staff are great. As well as making many small improvements in our stores, we remain focused on these five promises.
Tesco PLC Annual Review and Summary Financial Statement 2008

For example, our customers have told us that they are feeling the pinch, with many struggling to cope with higher mortgage costs and rising energy bills. In recognition of this, we have stepped up our efficiency saving programmes allowing us to invest heavily in price. Through cutting prices and special offers we have saved UK customers £400 million in less than three months. We’ve also made great progress on delivering our One in Front promise. This year an extra 22.5 million customers did not have to queue thanks to the hard work and effort put in by stores and our extra investment in hours at the checkout. Our customers have recognised this improvement by saying that we lead the market for ‘I Don’t Queue’. In addition, pre-sorted deliveries and updated warehouse plans have improved our replenishment process and availability, whilst ensuring that our aisles remain clear during busy periods.
What are Fresh & Easy customers saying?* > “Fresh & Easy is an awesome store! I love the idea of small store (easy to find product), fresh and cheap. Being a college student I have a tight budget for groceries but Fresh & Easy fits in that budget! I love this store!” > “Can’t think of a single negative thing to say. You’re definitely now our grocery store of choice.” > “This is the best market to EVER hit the US! I have visited the UK several times and have always envied their small fresh markets, and now I don’t have to, thanks to Fresh & Easy!” > “I have been searching for years to find a store that sold beautiful produce and healthy meals for my children. You are an answer to my prayers! I will now do my weekly shopping at your store.”
* Comments taken from customer emails.

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Our stores in the US are 10,000 sq ft, with a range of 3,500 products – small enough to shop easily, but big enough to do a full shop. These products have been carefully selected and by simplifying our operations we reduce our costs to keep prices low for customers.

We have built our own kitchen facility alongside our distribution centre at Riverside, California. In the kitchen we prepare our own range of fresh ready meals, sushi, sandwiches and salads, all of which are delivered daily to our stores.

Our simple packaging lets the food speak for itself and customers can see the products.

Fresh & Easy empowers customers to make greener choices. We only sell energyefficient light bulbs in our stores. We do not offer Styrofoam in our product range. We also offer a reusable plastic bag and canvas bags as alternatives for customers.

Our range is made up of authentic products and national brands as well as our own label so that every household can get what they want from their regular shopping, all at affordable prices.

Our Fresh & Easy brand products contain no artificial colours or flavours and no added trans fats. We only use preservatives when absolutely necessary. Our produce is packed date coded and delivered daily so our customers know it is fresh.

Fresh & Easy aims to source locally wherever possible. Over 60% of our produce and poultry comes from California.



Angelique and Rykeis Fresh & Easy, Compton, California, USA

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Creating leaders…
It’s a big task getting thousands of people to pull in the same direction. It takes strong leadership and that’s why at Tesco we don’t just have one leader, we have thousands of leaders.
We give our people the authority and support to do what’s necessary to serve a customer or solve a problem and there’s a lot of flexibility to bring the right mix of skills together to get the job done. You could say that the business operates under a unified command – it’s a flat structure, six levels from the checkout to the Board. In fact, many of our senior Directors started their careers on the shop floor. Wherever in the world we operate, we believe our people should have the opportunity to get on and most of our management positions are filled internally. To help support the development of our people, it’s important that we share our knowledge and have the right training in place to enable them to become leaders. That’s why we’ve developed a range of training programmes which are designed to equip our people with the skills they need to succeed. ‘Options’ – a tailored programme for our people who have been identified as having the potential to move to a bigger job – has this year helped us fill over 3,500 management positions in the UK. We now have our highest ever number of people on Options, both in the UK and across the international business. We are also rolling out our leadership training across the international business and recently held a ‘Leadership Train the Trainer’ session in Kuala Lumpur. Trainers from China, Hong Kong, India, South Korea, Thailand and Malaysia were given training on our Academy Leadership programmes including Influencing, Personal Effectiveness, Delegation and Performance Management. Each trainer can now deliver these important skills in their own country in both English and their own language. >> Case study: Chinese Graduate Scheme Our business in China is growing fast and we’re committed to recruiting talented people to help the business develop. We now recruit Chinese graduates studying at UK universities who spend six to nine months training in the UK to learn about the Tesco Group processes and the ‘Tesco Way’ of doing things, before moving back to China to complete their 12-month fast-track scheme. The specially designed programme gives our graduates the specialist technical skills they need to excel, not to mention the Tesco leadership skills they’ll need to succeed. Our first seven Chinese UK graduates, from the pilot programme, started working in Shanghai in July and ten newly recruited graduates are currently training in the UK business. > Case study: Foundation Degree Options Programme This year we launched our brand new training scheme – the Foundation Degree Options Programme. Running alongside our in-store development programme, ‘Options’, this is the very first higher education qualification to be offered to our store staff. Aimed at line managers, the programme has been developed with the University of the Arts London and Manchester Metropolitan University to provide our staff with a broader knowledge of the retail sector. It is a vocational degree equivalent to the first two years of a Bachelor’s Honours degree and the training includes intensive workshops and a specially developed online classroom facility. Upon completion the students will graduate with a Foundation Degree Award in Retailing (Tesco). > Case study: The Hindustan Service Centre (HSC) We now have almost three thousand people working in our service centre in Bangalore, India. Established three and a half years ago, the centre was initially designed for IT support, but it now has a much broader role, with responsibility for several of our finance and business processes. They have been crucial in establishing our Fresh & Easy business in the United States, looking after our finance, human resources and IT back-office processes from the outset and helping to ensure that Fresh & Easy is a low-cost business from the start. We have built the teams and processes together – a first for Tesco outside of the UK and Ireland. > Case study: Bag-less deliveries for Dotcom customers Earlier this year we decided to give our Dotcom customers the option of bag-less deliveries. They’d told us they wanted to do more to help the environment and we have been delighted with their response. 40% of our online customers now choose this option, helping us to reduce our overall single-bag use by over a billion in just one year. > Case study: Groceries delivered to your door in Ireland and South Korea Our Tesco.com model also operates in the Republic of Ireland and South Korea. In Ireland the service now covers over 70% of the country and we have over 200,000 registered customers. In South Korea we now have over 580,000 registered customers and we have increased the number of products available through the service to 14,200 – more than doubling the range this year. > Case study: Tesco Compare This year we launched Tesco Compare, a car insurance comparison site that allows customers to compare policies not just on price, but across 25 detailed product features to ensure they find the right insurance to suit their needs. This is the first time that a UK supermarket has offered personal finance products from a variety of brands and it’s proved very popular, with over 800,000 people visiting the site and searching for insurance policies. Tesco Compare has also been judged the best insurance comparison site by Defaqto and best on price by Consumer Intelligence. > Case study: Tesco diets.com The Tesco website is one of the most visited shopping sites in the UK and as well as shopping it offers a diverse range of services. It includes a wealth of information that can inform and empower customers to lead greener, healthier lives. With 40,000 regular users, Tesco diets.com is the UK’s biggest online dieting and healthy eating service. It offers a range of 16 different types of diet for those who just want a healthier diet such as GI, or a very specific health-based plan, such as diabetes or ‘heart smart’. All the eating plans are designed by our team of nutritionists and follow the UK government guidelines on healthy eating. > Case study: This year we opened our new Homeplus Jamsil store in Seoul. Built on ten floors, it’s a new-generation hypermarket with several unique features, including a wine bar, art gallery, health club, and even a golf range! The store also features our new checkout technology, developed in the UK, which monitors the number of people queuing, enabling us to more easily predict the number of checkouts that need to be open at any time. > Case study: In March 2008 we opened our latest energy-efficient green store in Bonyhád, Hungary. The store uses underground water to cool the refrigerators, improving their efficiency and reducing energy consumption. The water is also used to service the air conditioning – heating the store in winter and cooling it in summer. The water is then returned to the ground where it is cooled or heated, depending on the season, so it can be used again. > Case study: Our store in Colney Hatch is using the latest in environmental technology. We are extending the store by 22,700 sq ft to improve the service we provide for our customers. Through the inclusion of environmental initiatives such as a combined heat and power plant, solar panels and solar power heating, the extended store will actually use less energy than it used before the extension. check your shareholding; > access shareholder information; > elect to receive information electronically, getting quick access to these important documents and helping to save the environment by reducing the amount of paper used; > vote on the resolutions at the Annual General Meeting. To register, log on to www.shareview.co.uk and click on ‘register’. Your rights as a shareholder will not be affected in any way. If you have any questions about the service, please call 0871 384 2977. Security reminder Under the Companies Act 1985, Tesco is currently obliged to hold the names and addresses of all shareholders on a register of members and give a copy of this to the Registrar of Companies every year. The Registrar of Companies makes this list available to anyone who requests it and many companies use this information to market their services. We are aware that some of our shareholders have received unsolicited telephone calls or correspondence from companies concerning investment matters. Tesco has no relationship with and does not endorse any of the services offered by these companies. Details of any facilities that we endorse are included in our communications. If you are concerned about any direct mailing or telephone calls purporting to be from Tesco, please contact the Company Secretary (contact details below). Customer Services Tesco Customer Services Freepost SC02298 Dundee DD1 9NF Telephone 0800 505555 Investor Relations Investor Relations Department Tesco PLC Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL Telephone 01992 646484 Secretary and Registered Office Mr Jonathan Lloyd Tesco PLC Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL Telephone 01992 632222

Registrar and shareholding enquiries If you have administrative enquiries about your holding of Tesco PLC shares (other than ADRs) please contact: Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone 0871 384 2977 Consolidated tax vouchers If your dividend is paid directly into your bank or building society account you will receive one tax voucher each year. The consolidated tax voucher will be sent to you in December at the time that the interim dividend is paid and will cover both dividend payments in the tax year. This will help you to complete your tax return. This does not affect your dividends or the tax that you pay in any way. If you would prefer to receive a tax voucher with each dividend payment rather than one consolidated tax voucher each tax year, please call our shareholder helpline on 0871 384 2977. If your dividend is not currently paid directly to your bank or building society account and you would like to benefit from this service please contact Equiniti on 0871 384 2977 and they will be pleased to arrange this for you. By choosing to receive your dividends in this way you can avoid the risk of cheques getting lost in the post and ensure you receive your dividends on the payment day. Note: Consolidated tax vouchers are not available to institutional shareholders. Tesco website The Directors are responsible for the maintenance and integrity of the financial information on our website. This information has been prepared under relevant accounting standards and legislation. Tesco information, including the Annual Report and Financial Statements 2008 and our Corporate Responsibility Review 2008, is available on our website: www.tesco.com/annualreview08

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Tesco PLC Annual Review and Summary Financial Statement 2008

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Tesco PLC Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL

The use of the FSC logo identifies products which contain wood from well-managed forests certified in accordance with the rules of the Forest Stewardship Council. Printed on 100% recycled paper with FSC certification. All pulps are Elemental Chlorine Free (ECF) and the manufacturing mill is accredited with the ISO 14001 standard for environmental management. Printed by CTD using an alcoholfree process. The printing inks are made with non-hazardous vegetable oil from renewable sources. Over 90% of solvents and developers are recycled for further use and recycling initiatives are in place for all other waste associated with this production. CTD are FSC and ISO 14001 certified with strict procedures in place to safeguard the environment through all processes. Designed and produced by 35 Communications.

Cover: Irene Tesco Extra, Barrow-in-Furness, UK Back Cover: Hiromi Tesco Express, Tokyo, Japan

How to find out more online Every year, more and more information is available for our shareholders, staff and customers. www.tesco.com/annualreview08 ▼



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Every Little Helps www.tesco.com/annualreview08

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