Preliminary Results 2017/18

11 April 2018

Tesco staff member talking to customers


Positive sales2 and profit3 growth, strong cash5 generation

  • Group sales2 up 2.3% to £51.0bn; ninth consecutive quarter of like-for-like sales growth in Q4
  • UK like-for-like sales7 up 2.2%; consistent strength in fresh food; (0.4)% drag from GM changes
  • Group operating profit before exceptional items3 up 28.4% to £1,644m
    • Includes £31m full year profits arising on property-related items (£(2)m net loss in second half)
  • Group operating margin3 2.9% (+57bps); 3.0% (+64bps) in 2H, well on track for 3.5-4.0% 2019/20 ambition
  • Retail operating cash flow5 up 21.7% to £2.8bn; Retail free cash flow5 of £1,377m
  • Net debt reduced by £1.1bn during the year to £(2.6)bn; total indebtedness £4.4bn lower to £(12.3)bn
  • Final dividend of 2.0p, giving FY dividend of 3.0p - reflects improved performance and Board confidence
  • Statutory revenue up 2.8% to £57.5bn; Profit before tax up £1,153m to £1,298m

Further progress against each of our six strategic drivers

  • Brand health8 continues to strengthen; quality perception +2.7 points and value perception +2.0 points9
  • In-year cost savings of £594m; savings of £820m to date towards £1.5bn medium-term target
  • Generated £2.8bn of retail operating cash5; £499m underlying working capital10 inflow
  • Improving the mix across geographies, channels and product; 16% GM range reduction in the UK
  • Released a further £290m value11 from property; 109 sites sold; 1.1m sq. ft. space re-purposed
  • Innovations including contactless Clubcard; own brand re-launch: new Wicked Kitchen vegan range

Booker merger completed

  • Booker FY results12 show continued customer satisfaction, top line growth, and strong cash generation
  • On track to deliver recurring run-rate of at least £200m pre-tax synergies; c.£60m in first year

1. The Group has defined and outlined the purpose of its alternative performance measures, including its headline measures, in the Glossary on page 55.

2. Group sales exclude VAT and fuel. Sales growth shown on a comparable days basis.

3. Excludes exceptional items by virtue of their size and nature in order to reflect management’s view of the performance of the Group.

4. Headline earnings per share measure excludes IAS 39 fair value remeasurements as well as exceptional items and IAS 19 net pension finance costs.  Full details of this measure can be found in Note 9, starting on page 38.

5. Net debt, retail operating cash flow and retail free cash flow exclude the impact of Tesco Bank in order to provide further analysis of the retail cash flow statement.

6. Net debt includes both continuing and discontinued operations.

7. Like-for-like is a measure of growth in Group online sales and sales from stores that have been open for at least a year at constant foreign exchange rates.

8. As per YouGov BrandIndex (customers recommend) February 2018.

9. Reflects year-on-year change in YouGov Brand perception measures of quality and value.

10. Working capital excluding the impact of exceptional items.

11. Value released from property relates to gross proceeds from property disposals in the year.

12. Booker unaudited results for the financial year to 30 March 2018. Further details can be found on page 13 of this release.