Interim Results 2020/21



On a continuing operations basis  
Change at
actual rates
Change at constant rates
Headline measures2:          
Group sales3 £26.7bn £25.0bn   6.6% 6.8%
- UK & ROI £24.3bn £22.4bn   8.6% 8.5%
- Central Europe £1.9bn £2.0bn   (4.3)% (1.5)%
- Tesco Bank £0.4bn  £0.6bn   (31.4)% (31.4)%
Group operating profit before exceptional items and amortisation of acquired intangibles4 £1,037m £1,229m   (15.6)% (15.8)%
- Retail £1,192m £1,142m   4.4% 4.2%
- Tesco Bank £(155)m £87m   n/m n/m
Retail free cash flow5 £554m £645m   (14.1)%  
Net debt5 £(12.5)bn £(12.6)bn   down 0.4%  
Interim dividend per share 3.20p 2.65p   20.8%  
Statutory measures:
Revenue £28.7bn £28.5bn   0.7%  
Operating profit £1,007m £1,054m   (4.5)%  
Profit before tax £551m £428m   28.7%  


Throughout the COVID-19 crisis, we have been guided by four key priorities: providing food for all, safety for everyone, supporting our colleagues and supporting our communities.  As a result, our 440,000 colleagues have been able to make a significant and lasting contribution towards keeping their nations fed.  At the same time, we have invested in value for customers and continued to make strategic progress as the business moves beyond the turnaround:

Customer satisfaction
  • Adapted offer to major shifts in customer buying habits; in UK, food sales up 9.2%, clothing down (17.2)%, GM down (0.3)%
  • Online delivery capacity more than doubled to reach 1.5m slots a week, including serving 674,000 vulnerable customers
  • c.90% of customers rating store safety highly; >1.1m customers more loyal to Tesco vs. pre-COVID6
  • ‘Aldi Price Match’ launched in March and then extended to >500 lines; switching gains from Aldi for first time in a decade7
  • Rewarding loyal customers through exclusive deals with extension of Clubcard Prices to c.2,000 products
  • Brand net promoter score up 2pts; recognised as ‘Brand of the Year’ in Marketing Week Masters Awards last month
  • Resilient Booker performance: Retail sales up 22%; Catering sales down (12)% - an improvement from 1Q driven by doubling of market share and benefit of Best Food Logistics
Cash profitability
  • Response to COVID-19 leading to £(533)m 1H UK costs as we prioritise customer and colleague safety
  • Retail operating profit before exceptional items and amortisation of acquired intangibles4 of £1,192m, +4.4%, margin 4.2%;
    • UK & ROI volume and business rates relief offset COVID-19 costs; CE held back by COVID-19 costs and new Hungarian tax
      • UK & ROI  £1,133m,  +6.4%,  margin 4.3%
      • Central Europe £59m,     (23.4)%,  margin 3.0%    
  • Bank operating loss before exceptional items £(155)m driven by provision for potential bad debts and reduced income; continue to expect operating loss of £(175)m-£(200)m this year; capital ratios and liquidity remain strong
  • Retail EBITDA8 £1,994m, +4.1% higher YoY
Cash flow
  • Retail free cash flow5 of £554m; stable YoY exc. £(148)m relating to buyback of five UK stores and lower property proceeds
  • Interim dividend 3.20p; 35% of last year’s full year dividend, in line with policy
  • Net debt5 of £(12.5)bn, down £0.1bn year-on-year
Sales of businesses in Thailand, Malaysia and Poland progressing well
  • £8.2bn9 sale of Thailand and Malaysia businesses approved by shareholders in May; regulatory approval and completion expected by the end of the calendar year, to be followed immediately by shareholder meeting to approve c.£5bn capital return and £2.5bn one-off contribution to eliminate pension funding deficit
  • Sale of Polish business to Salling Group A/S agreed in June; completion expected Spring 2021
Imran Nawaz to join Board as CFO in April 2021 – as separately announced this morning


Ken Murphy, Chief Executive:

“The first half of this year has tested our business in ways we had never imagined, and our colleagues have risen brilliantly to every challenge, acting in the best interests of our customers and local communities throughout.  I would like to thank all our colleagues for their amazing contribution and I am delighted and proud to be part of such an incredible team.

We are absolutely committed to continuing to invest in value for customers and safety for all in these uncertain times.

Tesco is a great business with many strategic advantages.  I'm excited by the range of opportunities we have to use those advantages to create further value for our customers and, in doing so, create value for all of our other stakeholders.”

Headline Group Results

Key segmental results:

  Sales2 Year-on-year change
(actual rates)
Year-on-year change
(constant rates)
Like-for-like sales change10   Operating Profit/(Loss) before
exceptional items and amortisation of acquired
Year-on-year change
(actual rates)
  Year-on-year change
(constant rates)
UK & ROI £24,337m 8.6% 8.5% 7.2%   £1,133m
4.30% margin
  - UK £19,537m 7.7% 7.7% 7.6%          
  - ROI £1,322m 16.3% 14.5% 15.5%          
  - Booker £3,478m 11.0% 11.0% 2.2%          
Central Europe £1,929m (4.3)% (1.5)% (0.9)%   £59m
2.96% margin
Retail £26,266m 7.5% 7.7% 6.5%   £1,192m
4.21% margin
Bank £386m (31.4)% (31.4)% -   £(155)m
Group £26,652m 6.6% 6.8% 6.5%   £1,037m
3.61% margin

 A full Group income statement can be found on page 15.  

26 weeks ended 29 August 2020

On a continuing operations basis
1H 2020/21    1H 2019/201    Year-on-year change 
exchange rates)
  Year-on-year change 
exchange rates)
Group sales (exc. VAT, exc. fuel)2 £26,652m   £24,952m   6.6%   6.8%
Fuel £2,066m   £3,560m   (42.0)%   (41.9)%
Revenue (exc. VAT, inc. fuel) £28,718m   £28,512m   0.7%   0.7%
Group operating profit before exceptional items and amortisation of acquired intangibles4 £1,037m   £1,226m   (15.6)%   (15.8)%
Include exceptional items and amortisation of acquired intangibles £(30)m   £(175)m        
Group statutory operating profit £1,007m   £1,054m   (4.5)%   (4.6)%
Adjusted Group profit before tax11 £717m   £873m   (17.9)%    
Group statutory profit before tax £551m   £428m   28.7%   28%
Interim dividend per share 3.20p   2.65p   20.8%    
Capex12 £0.4bn   £0.3bn        
Net debt5 £(12.5)bn   £(12.6)bn        
Retail free cash flow5 £0.6bn   £0.6bn        


We have not included the usual EPS measures in the tables above as we consider they do not provide a meaningful reflection of performance in the first half.  Adjusted diluted EPS of 5.75p (LY: 6.85p), which is our usual alternative performance measure, excludes earnings from our discontinued operations but does not take account of the share consolidation that is expected to take place following completion of the sale of our Asian businesses.  Statutory EPS of 4.72p (LY: 3.34p) does include earnings from discontinued operations, however the year-on-year shape is distorted as no depreciation has been charged this year after the related assets were reclassified as ‘held for sale’ on the balance sheet.

Adjusted diluted EPS will be refined at the full year to reflect the post-consolidation share base as if it had been in place from the start of the previous financial year.  The precise impact on the share base cannot be predicted now as it depends on the share price at the time of the consolidation.  However, based on a share price of 213.2p (being the average share price for the five days to 2 October 2020), the number of shares in issue would reduce by c.(24)%.  We can apply this reduction to the share base used for the interim measure to derive a ‘Pro forma’ Adjusted diluted EPS of 7.56p (LY: 9.01p), which we consider better reflects underlying performance in the half. 


  1. Prior year comparatives are restated for discontinued operations. Further details on discontinued operations can be found in Note 6, starting on page 38.

  2. The Group has defined and outlined the purpose of its alternative performance measures, including its headline measures, in the Glossary starting on page 58.

  3. Group Sales exclude VAT and fuel. Sales change shown on a comparable days basis for Central Europe.

  4. Excludes amortisation of acquired intangibles and excludes exceptional items by virtue of their size and nature in order to reflect management’s view of underlying performance.

  5. Net debt and retail free cash flow exclude the impact of Tesco Bank in order to provide further analysis of the retail cash flow statement. Net debt also includes lease liabilities following the adoption of IFRS 16. Net debt excluding lease liabilities was £(3.0)bn, up £0.2bn since year-end.

  6. Source: Kantar. The number of customers who became more loyal through COVID-19, shopping consistently with us between April and August.

  7. Source: Kantar. Net switching data 12 w/e 17 May 2020 and 12 w/e 6 September 2020.

  8. Retail EBITDA excludes the impact of Tesco Bank.

  9. $10.6bn enterprise value, on a cash and debt free basis, presented in GBP using a rate of USD1.29:£1.00. This is based on the average daily closing rate from Monday 2 to Friday 6 March 2020.

  10. 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 exchange rates).

  11. ‘Adjusted Group PBT’ measures exclude exceptional items, amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments.

  12. Capex is shown excluding property buybacks. Statutory capital expenditure (including property buybacks) for the 26 weeks ended 29 August 2020 was £0.5bn (LY £0.4bn).

Creating value for our key stakeholders

Our priorities in the half have been providing food for all, safety for everyone, supporting our colleagues and supporting our communities.  Over this period, we have continued to make further good progress, creating long-term and sustainable value for our key stakeholders.

  • Safety: quickly introduced series of social distancing measures in stores; c.90% of customers rating safety highly
  • Price: ‘Aldi Price Match’ extended to over 500 Tesco and branded products; delivering consistent low prices on products and brands that customers buy every week
  • Simpler shopping trip: improving customer visibility of our strong core value proposition, with fewer pack size variants, removal of unnecessary duplication from product ranges and fewer promotions
  • Online: more than doubled capacity from 0.6m to 1.5m slots a week; first Urban Fulfilment Centre (UFC) in West Bromwich Extra now fulfilling orders as part of programme to open more than 25 over next three years
  • Loyalty: extension of Clubcard Prices to c.2,000 products from September; Clubcard Plus subscriber base continues to grow, with basket size uplift exceeding expectations
  • Booker: adapting retail offer to meet greater demand for grocery products; supporting catering customers to move to a delivery model; well-placed to emerge in a stronger competitive position
  • Central Europe: completed strategic transformation to right-size all stores and simplify ranges across all markets
  • Ensured full pay from day one for all colleagues sick or self-isolating with COVID-19
  • 26,000 vulnerable colleagues supported with 12 weeks full pay as part of COVID-19 support measures
  • Paid 10% bonus to all front line colleagues as a thank you for going above and beyond from 9 March to 30 May
  • Created 16,000 new permanent roles in August to support the exceptional growth of our online business
  • Creating 1,000 work placements for young people as a leading supporter of the ‘Kickstart’ programme
  • Two mental wellbeing tools, Headspace and SilverCloud, made available for free to all our 300,000 UK colleagues
  • Launched our first Business Diversity Internship in September
Supplier partners
  • Collaborated across supply base to maintain availability and adapt to exceptional shift in demand due to COVID-19
  • Supported farmers hardest hit by the closure of large parts of the food service industry, including selling white shell eggs and buying products such as chicken and potatoes originally planned for use in restaurants
  • Moved to immediate payment of invoices for all small suppliers until January 2021
  • Pilot partnership launched with Loop in July for online delivery of products using only reusable packaging
  • Committed toa 300% increase in sales of plant-based proteins by 2025
  • Supplier viewpoint reached highest ever score of 79.5% (+6.7% pts YoY)
  • Interim dividend of 3.2p per share; set at 35% of last year’s full year dividend, in line with policy
  • Sale of Thailand and Malaysia businesses approved by shareholders in May, regulatory approval and completion of sale expected in 2H 2020; to be followed immediately by shareholder meeting to approve the return of capital
  • Sale of Polish business to Salling Group A/S agreed in June for net cash proceeds of c.£165m; completion expected in Spring 2021; additional proceeds of c.£140m expected from the sale of residual properties in 2021; will contribute to over £0.5bn total cumulative proceeds from the sale of our loss-making Polish business
  • Since outset of crisis, we have prioritised safety and colleague & customer welfare; we will continue to progress food waste and packaging reduction as part of our ongoing efforts to reduce our environmental footprint

Looking ahead

We will continue to be guided by our four key priorities in response to the COVID-19 crisis: providing food for all, safety for everyone, supporting our colleagues and supporting our communities.

We are continuing to invest in delivering great value to help customers in increasingly challenging times and, as a result, expect a broadly even balance to the year in terms of 1H/2H retail profitability. Whilst significant uncertainties remain, we now expect retail operating profit in the current year to be at least the same level as 2019/20 on a continuing operations basis.

We continue to expect to report a loss for the Bank of between £(175)m and £(200)m for the 2020/21 financial year. We will review any changes made to macro-economic forecasts and this could result in releases from or further additions to the bad debt provision. Whilst headline profitability is impacted in the short term, the Bank’s capital ratios and liquidity remain strong.

We will report our 3Q and Christmas Trading statement on Thursday 14 January 2021.


View the full statement here

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