Interim Results 2011/12

Good progress around the world - decisive action in the UK

- Group sales up 8.8% to £35.5bn*, up 7.3% exc. petrol
- 6.2% rise in underlying profit before tax to £1.9bn
- 12.1% increase in statutory profit before tax to £1.9bn
- 3.7% growth in Group trading profit to £1.8bn, after £57m increase in Bank PPI** provision; 8.2% growth before Bank PPI provision increase and Hungary sales tax
- 4.5% UK trading profit growth; 11.8% growth in Europe, 18.7% in Asia
- US losses reduced by 23.2%; on track for sharp reduction in full year
- Underlying diluted EPS growth of 6.0%***; dividend per share growth of 5.9%
- Further rise in Group return on capital employed expected this year
- On track to create net 7,000 jobs in UK this year
- Ranked highest retailer for tackling climate change in the Carbon Disclosure Project Global 500

* Group sales (inc. VAT) exclude the accounting impact of IFRIC 13.
** Payment Protection Insurance (PPI).
*** Underlying diluted EPS growth calculated on a constant tax rate basis; 7.8% at actual tax rates.

Philip Clarke - Chief Executive

'I am pleased that excellent growth in Europe and Asia, as well as an encouraging performance in the United States, have supported further progress in the first half, despite the challenges of subdued demand in the UK, particularly in non-food categories.

We are taking decisive action in key areas to strengthen our performance going forward:

- First, we are making substantial changes to our core UK business to sharpen execution and competitiveness for customers – investing in price and promotions, ranging, service and store environment – in food, general merchandise, clothing and electronics;

- Second, we have decided to slow the final stage of Tesco Bank systems migration to ensure it is as smooth as possible for customers and staff as we prepare for growth next year;

- Third, the implementation of our plan to break-even in the US in 2012/13 is showing promising early results;

- Fourth, in line with our targets to improve investment returns, we are exiting Japan, having decided we cannot build a sufficiently scalable business there.

These actions reflect our focus on the immediate objectives I set out for the business last April and I am confident that these, combined with the strategic strength and diversity of the Group's businesses, mean we are well-positioned to make further progress during the second half.’


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