Key performance indicators
Our KPIs measure how we are doing across the Group in terms of both operational and financial performance in the context of the key elements of our strategy.
More detailed definitions for our Group performance and Group financial KPIs can be found in the glossary PDF (0.03MB). All KPIs exclude the results from our operations in Japan for 2011/12 unless stated otherwise.
Group performance
Growth in underlying profit before tax
1.6%
| 08/09 | 09/10 | 10/11 | 11/12 |
|---|---|---|---|
| 9.8%* | 8.7% | 12.3% | 1.6% |
* Restated for IFRS 2 and IFRIC 13
Definition
Our underlying profit provides information on the underlying trend and performance of the business. It is adjusted for a number of (non-cash) accounting adjustments and one-off costs.
Performance
We saw modest progress in the year, with the rate of improvement impacted by two events: the Hungary crisis tax (£38 million) and the increase in provision for Payment Protection Insurance ('PPI') in Tesco Bank (£57 million). Growth before these impacts was 5.4%.
Return on Capital Employed ('ROCE')
13.3%
Definition
ROCE is a relative profit measurement that demonstrates the return the business is generating from its gross assets.
Performance
Although our UK performance was weaker than planned, ROCE improved by 40 basis points, benefiting from Japan now being classified as a discontinued operation.
Growth in underlying diluted earnings per share (at a constant tax rate)
2.1%
| 08/09 | 09/10 | 10/11 | 11/12 |
|---|---|---|---|
| 11.0% | 7.7% | 10.8% | 2.1% |
Definition
Underlying diluted earnings per share (‘EPS’) is the amount of underlying profit, adjusted for the number of shares in issue.
Performance
The growth in underlying diluted EPS reflects modest progress in earnings in the year. The proposed full year dividend per share grew by 2.1%, in line with this, to 14.76p, continuing our unrivalled record of consecutive years of dividend growth in the FTSE 100.
Group financial ratios
Total shareholder return ('TSR')
Definition
TSR is the notional annualised return from a share: the percentage change in the share price, plus the dividends paid and reinvested, over the last five years. For example, five-year TSR for 11/12 is the annualised growth in the share price from 06/07 and dividends, paid and reinvested in Tesco shares, as a percentage of the 06/07 share price.
Performance
Returns reduced reflecting the effect on our share price of our decision to invest significantly in the customer offer in the UK.
| 08/09 | 09/10 | 10/11 | 11/12 |
|---|---|---|---|
| 8.0% | 9.5% | 6.7% | (3.0)% |
Capital expenditure (‘capex’) % of sales
Definition
Capex is the investment in property, plant and equipment, investment property and intangible assets. This is divided by Group sales (inc. VAT, inc. petrol) to show a relative investment to sales.
Performance
This year we reduced our rate of capital investment to reflect the challenging trading environment and increased our focus on lower capital-intensive investments with high returns, such as online and convenience.
Last year we set a target of 5% to 5.5% of sales. We will reduce capex to £3.3 billion in 12/13 and, beyond that, comfortably less than 5.0% of sales.
Net indebtedness
Definition
Net indebtedness shows debt in relation to operating cashflow ('EBITDAR'). Debt is adjusted net debt, calculated as net debt, the pension deficit and the net present value of lease obligations.
Performance
Net indebtedness remained broadly flat, reflecting a slower than expected working capital improvement and higher pension deficit, offset by cash generated from retail operations (excluding working capital). Our target for net indebtedness is 2.5 times.
Gearing
| 08/09 | 09/10 | 10/11 | 11/12 |
|---|---|---|---|
| 74.4%* | 54.0% | 40.8% | 38.4%† |
Definition
The proportion of net assets financed through debt rather than equity, calculated as net debt divided by total equity.
Performance
Our gearing continued to decrease, reflecting our stable debt position despite our investment in assets growing.
* Restated for IFRS 2 and IFRIC 13.
† Includes Japan.
Fixed charge cover
Definition
The number of times that our operating cashflow ('EBITDAR') covers our debt obligations (largely rent and interest payments).
Performance
Our fixed charge cover remained broadly flat due to increased rent offsetting our reduced interest and increase in operating cashflow ('EBITDAR'). Our target is a level of cover in the band of 4 to 4.5 times.
Related information
Group strategy: To grow the UK core
UK like-for-like (inc. VAT, exc. petrol)
| 08/09 | 09/10 | 10/11 | 11/12 |
|---|---|---|---|
| 3.0 | 2.6% | 1.0% | 0.0% |
Definition
The growth in sales from stores that have been open for at least a year.
Performance
Having delivered a disappointing performance, particularly during the second half, our UK plan aims to drive stronger like-for-like sales.
UK trading profit
Definition
The profit generated from the UK business in its retail operations.
Performance
Having delivered a solid first half profit outcome, profits weakened in the second half, reflecting a disappointing sales performance and the initial investment in improving the shopping trip for customers which we began during the second half of the year.
Customer rating of overall shopping experience as excellent or good
76%
Definition
Percentage of customer ratings, measured in exit interviews.
Performance
Three quarters of customers find their shopping experience good or excellent, and 98% find it reasonable, good or excellent. With our UK Plan, we aim to improve customers' shopping experiences from reasonable to good and from good to excellent.
Source: Marketing Sciences.
Growth in UK online sales
+10%
Definition
The year-on-year sales growth from total tesco.com and online telecoms.
Performance
We are pleased with the performance of our online businesses. Our largest business, grocery, accelerated its already strong rate of growth through the year.
See how we are performing against our seven-part strategy.
Group strategy: To be an outstanding international retailer in stores and online
International trading profit
Definition
The profit generated from our international businesses in their retail operations.
Performance
We delivered strong profit growth of 18% against a background of very difficult economic conditions in several of our large markets.
Δ Re-presented to exclude Japan.
Proportion of customers pleased with their shopping trip
≥95%in 9 markets
Definition
The number of markets where at least 95% of customers asked were very or fairly satisfied with their overall shopping experience, the top two ratings.
Performance
The pleasing results reflect the improvements we have been driving internationally through different customer initiatives.
Source: Country customer satisfaction tracker.
Growth in international online sales
+40%
Definition
The year-on-year sales growth from our international online businesses.
Performance
From a low base we are starting to see accelerating growth, with our established international online operations in South Korea and the Republic of Ireland doing well.
Group strategy: To be as strong in everything we sell as we are in food
UK general merchandise, clothing and electricals range image
1stsupermarket
Definition
Our relative position among competitors, as rated by customers.
Performance
With a leading position among our supermarket peers, we are driving substantial improvements to our range in order to increase our competitiveness among specialist retailers, with plans for 200,000 products on Tesco Direct by Christmas.
Source: Marketing Sciences.
Proportion of UK customers buying general merchandise, clothing and electricals
37%down from 39% last year
Definition
The average weekly proportion of UK Clubcard customers who bought a general merchandise, clothing or electricals item.
Performance
With the current economic conditions, we are seeing subdued demand for discretionary items.
International general merchandise, clothing and electricals range image
9markets – 1st or 2nd place
Definition
The number of international markets where we are ranked first or second by customers for our general merchandise range. This excludes the US, where we operate convenience stores.
Performance
Our position reflects the strength of the F&F brand and of our Extra stores, which are introducing our customers to different ways of shopping, with stronger ranging and a distinctive look and feel for different categories.
Source: Country image tracker.
Proportion of general merchandise, clothing and electricals sourced as a Group
27%
Definition
The proportion, by sales, of general merchandise, clothing and electricals we buy together, through our Group Commercial function.
Performance
From this already substantial proportion of Group sourcing, we expect to increase the amount that we buy together in the coming years as we leverage Group skill and scale.
Group strategy: To grow retail services in all our markets
Bank profit
Definition
Trading profit measures the profit generated by the business in its operations. Baseline profit is measured before key non-trading provisioning movements, including Payment Protection Insurance ('PPI'), and before fair value, and provides information on business performance.
Performance
Baseline profit rose 29% in the year, reflecting strong business growth. By contrast, trading profit fell 36%, impacted by the increase in a provision for claims from historic sales of PPI; and the unwinding of the fair value provision, an accounting adjustment made at the time of acquisition in 2008.
Group strategy: To put our responsibilities to the communities we serve at the heart of what we do
For further Corporate Responsibility KPIs, please see our Corporate Responsibility Review 2012 at www.tescoplc.com/crreview
Reduction in CO2 emissions
| 08/09 | 09/10 | 10/11 | 11/12 |
|---|---|---|---|
| 4.8% | 7.8% | 7.7% | 5.0% |
Definition
The year-on-year reduction in greenhouse gas emissions from existing stores and distribution centres built before 2006/7, adjusted to exclude emissions from acquisitions and extensions.
Performance
We met our target for 2011/12 to reduce our CO2 emissions by 5%. Cumulatively, we have reduced our emissions from existing stores and distribution centres by 26% since 2006/07.
Supplier Viewpoint
74%
Definition
The percentage of positive scores from our annual survey of suppliers, Supplier Viewpoint, when we ask whether Tesco treats them with respect.
Performance
In 2011/12, we exceeded our target of 70%, representing generally strong supplier relationships.
Donation of pre-tax profits to charities and good causes
1.9%over £74.5m in total
Definition
Our contribution to charities and good causes through direct donations, cause-related marketing, gifts in kind, staff time and management costs.
Performance
We exceeded our target of donating 1% of pre-tax profits to charities and good causes, contributing over £74.5 million.
Group strategy: To be a creator of highly valued brands
Customer loyalty
9markets – 1st or 2nd place
Definition
The number of markets where we are placed 1st or 2nd for the proportion of customers who do over 50% of their shopping with a single retailer.
Performance
We are particularly pleased that we lead on loyalty in four of our markets and are second in a further five. This is an important indicator of our customers' satisfaction with the shopping trip and the Tesco brand and is supported by a loyalty scheme in each of our markets.
Source: Market research (GFK, Ipsos, Kantar).
Group-wide own-label participation
38%
- Tesco own-label brands
Definition
Own-label sales as a proportion of total Group sales. Own-label sales include Tesco brands (such as F&F, Finest or Venture brands) and unbranded products, such as produce. Tesco Bank and Tesco Mobile are not included.
Performance
Group own-label participation was stable in the year. Range & Quality is one part of our Plan for the UK, with Tesco Value now relaunched as Everyday Value and upgrades to over 8,000 Tesco standard lines planned.
Group strategy: To build our team so that we create more value
Staff retention
90%in the UK
Definition
The proportion of staff with over a year's service who have worked for Tesco in the UK throughout the year.
Performance
Our strong retention rate in the UK reflects our focus on creating good jobs and long-term careers, providing career development and an excellent benefits package.
Staff being trained for their next role
5.9%across the Group
Definition
The proportion of staff who are on development programmes training for their next role.
Performance
We exceeded our 5.6% target this year, demonstrating our commitment to supporting and developing our people so that they are able to advance their careers.
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