Summary Report of the Directors

Principal activity and business review

The principal activity of the Group is retailing and associated activities in the UK, the Czech Republic, Hungary, Poland, the Republic of Ireland, Slovakia, Turkey, China, Japan, Malaysia, South Korea, Thailand and the United States. The Group also provides retail banking and insurance services through its subsidiary, Tesco Personal Finance. The Summary Financial Statement and Business Review.

Dividends

The Directors recommend the payment of a final dividend of 8.39 pence per ordinary share to be paid on 10 July 2009 to members on the Register at the close of business on 1 May 2009. Together with the interim dividend of 3.57 pence per ordinary share paid in December 2008, the total dividend for the year will be 11.96 pence, compared with 10.90 pence for the previous year, an increase of 9.7%.

Directors

Details of the current members of the Board are shown on the Board of Directors page. Mr R Brasher, Mr P Clarke, Mr A Higginson, Mr C Allen and Dr H Einsmann retire from the Board and, being eligible, offer themselves for re-election at the Annual General Meeting (AGM). Ms C McCall and Mr E Mervyn Davies resigned from the Board on 10 April 2008 and 31 October 2008 respectively. Mr L McIlwee was appointed to the Board on 27 January 2009. Ms J Tammenoms Bakker and Mr P Cescau joined the Board with effect from 1 January 2009 and 1 February 2009 respectively, and Mr K Hanna joined the Board with effect from 1 April 2009.

Corporate governance

Tesco PLC is committed to the highest standards of corporate governance. The Board considers that Tesco PLC complied in all respects with the Combined Code Principles of Good Governance and Code of Best Practice for the year ended 28 February 2009 with the exception of provision A.3.2, which requires that at least half the Board should comprise independent Non-executive Directors, in respect of which the company was not in compliance for part of the year. The Board recognises the importance of a balanced board with an appropriate level of independence. There were, however, unexpected resignations of two Non-executive Directors due to conflicts of interest, which resulted in the Board not being in balance. While the process of finding replacements was started immediately, the Board places a priority on ensuring the right candidates are selected and the process of recruiting individuals with the right experience, availability and skills to complement those of the existing Board can take a significant amount of time. The Company has appointed three new Non-executive Directors, two as replacements for the two Directors that resigned and one in order to ensure that the Board remained in balance once the new Group Finance Director was appointed. From 1 April 2009 the Board became once again fully compliant with provisions of the Combined Code. A full corporate governance statement is contained in the Annual Report and Financial Statements 2009.

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