Tesco PLC — Annual Report 2021

Apr 14, 2021

National Storage Mechanism

Additional information

RNS Number : 3720V
Tesco PLC
14 April 2021

Notes to the Group financial statements

Note 10 Goodwill and other intangible assets continued

Goodwill ��m	Software(a) ��m	Customer relationships(c) ��m	Intangible assets ��m	Total ��m
Cost
At 23 February 2019 (restated(b))	5,509	1,840	715	447
Foreign currency translation	(5)	(2)	-	(1)
Additions	-	188	-	19
Reclassification	-	40	-	(5)
Disposals	(27)	(198)	-	(2)
At 29 February 2020 (restated(b))	5,477	1,868	715	458
Accumulated amortisation and impairment losses
At 23 February 2019	641	1,254	72	321
Foreign currency translation	(4)	(1)	-	-
Charge for the year(e)	-	281	76	10
Impairment losses(f)	-	15	-	12
Reversal of impairment losses(f)	-	(31)	-	(7)
Reclassification	-	2	-	(3)
Disposals	-	(196)	-	(2)
At 29 February 2020	637	1,324	148	331

Goodwill ��m	Software ��m	Customer relationships ��m	Intangible assets ��m	Total ��m
Cost
At 24 February 2018 (restated(b))	2,417	3,166	-	392
Foreign currency translation	(6)	1	-	(1)
Additions	-	167	-	24
Acquired through business combinations	3,098	-	715	48
Reclassification	-	(140)	-	2
Disposals	-	(308)	-	(15)
Fully-amortised assets	-	(1,046)	-	(3)
At 23 February 2019 (restated(b))	5,509	1,840	715	447
Accumulated amortisation and impairment losses
At 24 February 2018	662	2,378	-	315
Foreign currency translation	(21)	-	-	(2)
Charge for the year	-	210	72	13
Impairment losses	-	15	-	27
Reversal of impairment losses	-	(2)	-	(24)
Disposals	-	(301)	-	(5)
Fully-amortised assets	-	(1,046)	-	(3)
23 February 2019	641	1,254	72	321

(b) Refer to Note 1 for further details regarding prior year restatement.

Note 11 Property, plant and equipment

Land and buildings ��m	Other(a) ��m	Total ��m
Cost
At 29 February 2020	24,868	6,925
Foreign currency translation	(38)	(15)
Additions(b)	927	623
Acquired through business combinations	8	4
Transfers (to)/from assets classified as held for sale	29	-
Transfer to disposal group classified as held for sale	(3,642)	(1,415)
Disposals	(128)	(379)
At 27 February 2021	22,024	5,743
Accumulated depreciation and impairment losses
At 29 February 2020	7,841	4,718
Foreign currency translation	(15)	(10)
Charge for the year	432	489
Impairment losses(c)	353	107
Reversal of impairment losses(c)	(515)	(43)
Transfers (to)/from assets classified as held for sale	15	-
Transfer to disposal group classified as held for sale	(1,386)	(987)
Disposals	(72)	(371)
At 27 February 2021	6,653	3,903
Net carrying value
At 27 February 2021(d)	15,371	1,840
At 29 February 2020	17,027	2,207
Construction in progress included above(e)
At 27 February 2021	77	210
At 29 February 2020	88	114

(a) Other assets consist of fixtures and fittings with a net carrying value of ��1,345m (2020: ��1,712m), office equipment with a net carrying value of ��213m (2020: ��245m) and motor vehicles with a net carrying value of ��282m (2020: ��250m)
(b) Includes ��476m of land and buildings related to obtaining control of The Tesco Property (No. 2) Limited Partnership, which was impaired by ��(32)m on acquisition (2020: ��914m of land and buildings related to obtaining control of The Tesco Atrato Limited Partnership, which was impaired by ��(287)m on acquisition). The ��476m additions comprised ��492m cost of acquisition offset by ��16m of historical deferred profit. Refer to the breakdown of assets and liabilities acquired within Note 33.
(c) Refer to Note 15.
(d) Includes ��2,099m (2020: ��1,406m) of assets pledged as security for secured bonds (refer to Note 23 and ��826m (2020: ��478m) of property held as security in favour of the Tesco PLC Pension Scheme (refer to Note 29.
(e) Construction in progress does not include land.

Land and buildings ��m	Other(a) ��m	Total ��m
Cost
At 23 February 2019	24,484	6,993
Foreign currency translation	(69)	(15)
Additions(b)	1,285	621
Reclassification	(24)	(28)
Classified as held for sale	(589)	(36)
Disposals	(219)	(610)
At 29 February 2020	24,868	6,925
Accumulated depreciation and impairment losses (restated)
At 23 February 2019	7,523	4,768
Foreign currency translation	(23)	(11)
Charge for the year	525	613
Impairment losses(c)	611	111
Reversal of impairment losses(c)	(391)	(104)
Reclassification	41	(23)
Classified as held for sale	(298)	(34)
Disposals	(147)	(602)
At 29 February 2020	7,841	4,718
Net carrying value(d)	17,027	2,207

(a)-(d) Refer to previous table for footnotes

Note 12 Leases

Group as lessee

Lease liabilities represent rentals payable by the Group for certain retail, distribution and office properties and other assets such as motor vehicles. The leases have varying terms, purchase options, escalation clauses and renewal rights. Purchase options and renewal rights, where they occur, are at market value. Escalation clauses are in line with market practices and include inflation-linked, fixed rates, resets to market rents and hybrids of these. In prior years, the Group entered into several joint ventures, and sold and leased back properties to and from these joint ventures over 20 to 30-year terms. On certain transactions, the Group has an option to buy back either the leased asset or the equity of the other party, at market value and at a specified date, typically at year 10. On some of these transactions the Group also has a lease-break option, which is exercisable if the buyback option is exercised and the associated debt in the joint venture is repaid. The lease liability in respect of these leases assumes that the lease-break option is not exercised. On 18 September 2020, the Group obtained control of The Tesco Property (No. 2) Limited Partnership, previously accounted for as a joint venture, through the acquisition of the other partner's 50% interest, at which point the associated property leases from the joint venture became intercompany leases and are eliminated on consolidation. Refer to Note 33 for further details.

Right of use assets	Land and buildings ��m	Other ��m	Total ��m
Net carrying value at 29 February 2020	6,734	140	6,874
Additions (including through business combinations)	308	42	350
Depreciation charge for the year	(517)	(49)	(566)
Impairment losses(a)	(225)	-	(225)
Reversal of impairment losses(a)	230	-	230
Derecognition on acquisition of property joint venture (Note 33)	(130)	-	(130)
Transfer to disposal group classified as held for sale	(724)	(20)	(744)
Other movements(b)	190	(28)	162
Net carrying value at 27 February 2021	5,866	85	5,951

(a) Refer to Note 15.
(b) Other movements include lease terminations, modifications and reassessments, foreign exchange, reclassifications between asset classes and entering into finance subleases.

Land and buildings ��m	Other ��m	Total ��m
Net carrying value at 23 February 2019	7,561	152
Additions (including through business combinations)	146	58
Depreciation charge for the year	(584)	(67)
Impairment losses(a)	(267)	-
Reversal of impairment losses(a)	182	-
Derecognition on acquisition of property joint venture	(335)	-
Other movements(b)	31	(3)
Net carrying value at 29 February 2020	6,734	140

(a)-(b) Refer to footnotes in table above.

Lease liabilities

The following tables show the discounted lease liabilities included in the Group balance sheet and a maturity analysis of the contractual undiscounted lease payments:

	2021 ��m	2020 ��m
Current	575	598
Non-current	7,827	8,968
Total lease liabilities	8,402	9,566

Maturity analysis - contractual undiscounted lease payments	2021 ��m	2020 ��m
Within one year	969	1,081
Greater than one year but less than two years	939	1,018
Greater than two years but less than three years	912	996
Greater than three years but less than four years	867	993
Greater than four years but less than five years	841	951
Greater than five years but less than ten years	3,597	4,178
Greater than ten years but less than fifteen years	2,443	2,810
After fifteen years	1,959	2,596
Total undiscounted lease payments	12,527	14,623

A reconciliation of the Group's opening to closing lease liabilities balance is presented in Note 32.

Notes to the Group financial statements

Note 12 Leases continued

Amounts recognised in the Group income statement

Continuing operations	52 weeks 2021 ��m	53 weeks 2020* ��m
Interest on lease liabilities	446	486
Variable payment expenses not included in lease liabilities	1	1
Expenses relating to short-term leases	17	14
Expenses relating to leases of low value assets (excluding amounts already included in short-term leases above)	1	-

• Comparatives have been restated to present Thailand, Malaysia and Poland as discontinued operations. Refer to Note 7 for further details.

Amounts recognised in the Group cash flow statement

	52 weeks 2021 ��m	53 weeks 2020 ��m
Total cash outflow for leases*	1,109	1,175

• Includes ��5m (2020: ��5m) related to Tesco Bank.

Future possible cash outflows not included in the lease liability

Some leases contain break clauses or extension options to provide operational flexibility. Potential future undiscounted lease payments not included in the reasonably certain lease term, and hence not included in lease liabilities, total ��10.8bn (2020: ��11.8bn). Future increases or decreases in rentals linked to an index or rate are not included in the lease liability until the change in cash flows takes effect. Approximately 75% (2020: 72%) of the Group's lease liabilities are subject to inflation-linked rentals and a further 15% (2020: 12%) are subject to rent reviews.# Notes to the Group financial statements

Note 13 Investment property

	2021 ��m	2020 ��m
Cost
At the beginning of the year	100	118
Foreign currency translation	1	(1)
Reclassification	(4)	(11)
Classified as held for sale	1	-
Disposals	(5)	(6)
At the end of the year	93	100
Accumulated depreciation and impairment losses
At the beginning of the year	74	82
Foreign currency translation	1	(1)
Charge for the year	1	1
Impairment losses for the year*	2	5
Reversal of impairment losses for the year*	(2)	(4)
Reclassification	(2)	(4)
Classified as held for sale	1	-
Disposals	(1)	(5)
At the end of the year	74	74
Net carrying value at the end of the year	19	26

Rental income earned from investment properties under operating leases 7 11
Direct operating expenses incurred on rental-earning investment properties - (3)

• Refer to Note 15.

The estimated fair value of the Group's investment property is ��0.1bn (2020: ��0.2bn). This fair value has been determined by applying an appropriate rental yield to the rentals earned by the investment property. A valuation has not been performed by an independent valuer.

Note 14 Group entities

The Group consists of the ultimate Parent Company, Tesco PLC, and a number of subsidiaries, joint ventures and associates held directly or indirectly by Tesco PLC. See pages 117 to 121 for a complete list of Group entities.

Subsidiaries

The accounting year ends of the subsidiaries consolidated in these financial statements are on or around 27 February 2021.

Consolidated structured entities

The Group has a number of securitisation structured entities established in connection with Tesco Bank's credit card securitisation transactions. Although none of the equity of these entities is owned by the Group, the Group has rights to variable returns from its involvement with these entities and has the ability to affect those returns through its power over them under contractual agreements. As such, these entities are effectively controlled by the Group, and are therefore accounted for as subsidiaries of the Group. These entities have financial year ends of 31 December. The management accounts of these entities are used to consolidate the results to 27 February 2021 within these financial statements.

Unconsolidated structured entities

In prior years, the Group sponsored a number of structured entities. The Group led the formation of the entities and its name appears in the name of the entities and/or on the debt issued by the entities. The structured entities were set up to finance property purchases by some of the UK property joint ventures in which the Group typically holds a 50% equity interest. The structured entities obtain debt financing from third-party investors and lend the funds to these joint ventures, who use the funds to purchase the properties. The liabilities of the UK property joint ventures include the loans due to these structured entities. The Group's exposure to the structured entities is limited to the extent of the Group's interests in the joint ventures. The liabilities of the structured entities are non-recourse to the Group. The Group concluded that it does not control, and therefore should not consolidate, these structured entities since it does not have power over the relevant activities of the structured entities, or exposure to variable returns from these entities.

Note 14 Group entities continued

Interests in joint ventures and associates

Principal joint ventures and associates

The Group's principal joint ventures and associates are:

Nature of relationship	Business activity	Share of issued share capital, loan capital and debt securities	Country of incorporation	Principal area of operation
Included in 'UK property joint ventures':
The Tesco Coral Limited Partnership	Joint venture	Property investment	50%	England
The Tesco Blue Limited Partnership	Joint venture	Property investment	50%	England
The Tesco Passaic Limited Partnership	Joint venture	Property investment	50%	England
The Tesco Navona Limited Partnership	Joint venture	Property investment	50%	England
The Tesco Sarum Limited Partnership	Joint venture	Property investment	50%	England
The Tesco Dorney Limited Partnership	Joint venture	Property investment	50%	England
The Tesco Arena Unit Trust	Joint venture	Property investment	50%	Jersey
Included in 'Other joint ventures and associates':
Tesco Mobile Limited	Joint venture	Telecommunications	50%	England
Tesco Underwriting Limited	Joint venture	Insurance	49.9%	England
Booker India Private Limited	Joint Venture	Retail	49%	India
Trent Hypermarket Private Limited	Joint venture	Retail	50%	India

The accounting period end dates of the joint ventures and associates consolidated in these financial statements range from 31 December 2020 to 27 February 2021. The accounting period end dates of the joint ventures differ from those of the Group for commercial reasons and depend upon the requirements of the joint venture partner as well as those of the Group. The accounting period end dates of the associates are different from those of the Group as they depend upon the requirements of the parent companies of those entities.

There are no significant restrictions on the ability of joint ventures and associates to transfer funds to the parents, other than those imposed by the Companies Act 2006 or equivalent local regulations, and for Tesco Underwriting Limited, regulatory capital requirements.

Prior to the Group's sale of its 20% share in Gain Land Limited (Gain Land) on 28 February 2020, management applied judgement in determining that Gain Land was an associate of the Group. The Group had significant influence by virtue of holding 20% equity interest which presumed significant influence per IAS 28, together with having a contractual right to appoint two out of 10 directors, while taking into account that the remaining 80% interest was held by one other party.

The UK property joint ventures involve the Group partnering with third parties in carrying out some property investments in order to enhance returns from property and access funding, while reducing risks associated with sole ownership. These property investments generally cover shopping centres and standalone stores. The Group enters into leases for some or all of the properties held in the joint ventures. These leases provide the Group with some rights over alterations and adjacent land developments. Some leases also provide the Group with options to purchase the other joint venturers' equity stakes at a future point in time. In some cases the Group has the ability to substitute properties in the joint ventures with alternative properties of similar value, subject to strict eligibility criteria. In other cases, the Group carries out property management activities for third-party rentals of shopping centre units. The property investment activities are carried out in separate entities, usually partnerships or limited liability companies. The Group has assessed its ability to direct the relevant activities of these entities and any impact on Group returns and concluded that the entities qualify as joint ventures since decisions regarding them require the unanimous consent of both equity holders. This assessment included not only rights within the joint venture agreements, but also any rights within other contractual arrangements between the Group and the entities.The Group made a number of judgements in arriving at this determination, the key ones being:
- Since the provisions of the joint venture agreements require the relevant decisions impacting investor returns to be either unanimously agreed by both joint venturers at the same time, or in some cases to be agreed sequentially by each venturer at different stages, there is joint decision-making within the joint venture;
- Since the Group's leases are priced at fair value, and any rights embedded in the leases are consistent with market practice, they do not provide the Group with additional control over the joint ventures nor do they infer an obligation by the Group to fund the settlement of liabilities of the joint ventures;
- Any options to purchase the other joint venturers' equity stakes are priced at market value, and only exercisable at future dates, hence they do not provide control to the Group at the current time;
- Where the Group has a right to substitute properties in the joint ventures, the rights are strictly limited and are at fair value, hence do not provide control to the Group; and
- Where the Group carries out property management activities for third-party rentals in shopping centres, these additional activities are controlled through joint venture agreements or lease agreements, and do not provide the Group with additional powers over the joint venture.

Notes to the Group financial statements

Note 14 Group entities continued

Summarised financial information for joint ventures and associates

The summarised financial information below reflects the amounts presented in the financial statements of the relevant joint ventures and associates, and not the Group's share of those amounts. These amounts have been adjusted to conform to the Group's accounting policies where required.

The summarised financial information for UK property joint ventures has been aggregated in order to provide useful information to users without excessive detail, since these entities have similar characteristics and risk profiles largely based on their nature of activities and geographic market.

UK property joint ventures

	Gain Land Limited(d)
	2021	2020	2021	2020
	��m	��m	��m	��m
Summarised balance sheet
Non-current assets(a)	2,916	3,242	-	-
Current assets (excluding cash and cash equivalents)	50	101	-	-
Cash and cash equivalents	27	28	-	-
Current liabilities(b)	(420)	(487)	-	-
Non-current liabilities(b)	(3,229)	(3,621)	-	-
Net assets/(liabilities)	(656)	(737)	-	-
Summarised income statement
Revenue	250	258	-	8,551
Profit/(loss) after tax	-	-	-	(95)

Reconciliation to carrying amounts:
Opening balance	-	-	-	263
Foreign currency translation	-	-	-	(4)
Share of profits/(losses)(c)	14	12	-	(19)
Dividends received from joint ventures and associates	(14)	(12)	-	-
Disposals(d)	-	-	-	(240)
Closing balance	-	-	-	-
Group's share in ownership	50%	50%	-	-
Group's share of net assets/(liabilities)	(328)	(369)	-	-
Goodwill	-	-	-	-
Deferred property profits offset against carrying amounts	(60)	(61)	-	-
Cumulative unrecognised losses(c)	205	205	-	-
Cumulative unrecognised hedge reserves(c)	183	225	-	-
Carrying amount	-	-	-	-

(a) The non-current asset balances of UK property joint ventures are reflected at historical depreciated cost to conform to the Group's accounting policies. The aggregate fair values in the financial statements of the UK property joint ventures are ��3,939m (2020: ��4,338m).
(b) The current and non-current liabilities of UK property joint ventures largely comprise loan balances of ��3,235m (2020: ��3,616m) and derivative swap balances of ��363m (2020: ��452m) entered into to hedge the cash flow variability exposures of the joint ventures.
(c) The share of profit for the year for UK property joint ventures related to ��14m dividends received from joint ventures with ��nil carrying amounts. ��2m of profit and ��12m of decrease in the fair values of derivatives arising from these entities have been included in cumulative unrecognised losses and cumulative unrecognised hedge reserves respectively.
(d) The Group completed the sale of its 20% investment in Gain Land Limited on 28 February 2020 for a consideration of ��277m. As at 27 February 2021, the Group has ��101m (2020: ��106m) loans to UK property joint ventures.

Other joint ventures and associates

The Group also has interests in a number of individually immaterial joint ventures and associates excluding UK property joint ventures.

	Joint ventures	Associates
	2021	2020	2021	2020
	��m	��m	��m	��m
Aggregate carrying amount of individually immaterial joint ventures and associates	168	230	10	77
Group's share of profits/(losses) for the year*	1	2	11	(3)

• Comparatives have been restated to present Thailand, Malaysia and Poland as discontinued operations. Refer to Note 7 for further details.

Note 15 Impairment of non-current assets

Impairment losses and reversals

An impairment of ��295m was recognised on the goodwill associated with Tesco Bank (2020: ��nil). This impairment arises due to an increase in the cost of equity used to discount cash flows and a reduction in cash flows arising from the economic impact of the pandemic. No other goodwill impairment losses were recognised by the Group (2020: ��nil).

The table below summarises the Group's pre-tax impairment losses and reversals on other non-current assets and investments in joint ventures and associates, with the former aggregated by segment due to the large number of individually immaterial store cash-generating units. This includes any losses recognised immediately prior to classifying an asset or disposal group as held for sale but excludes all impairments post classification as held for sale.

Impairment losses and reversals comparatives have been re-presented in order to show the Group's Poland, Thailand and Malaysia businesses as discontinued operations. There were no impairment losses or reversals in the year (2020: ��nil) with respect to other non-current assets and investments in joint ventures and associates in Tesco Bank.

52 weeks ended 27 February 2021

	UK & ROI	Central Europe	Total continuing operations	Discontinued operations	Total(a)
	Impairment loss ��m	Impairment reversal ��m	Impairment loss ��m	Impairment reversal ��m	Impairment loss ��m
Group balance sheet
Other intangible assets	(32)	9	(2)	7	(34)
Property, plant and equipment	(371)	497	(23)	38	(394)
Right of use assets	(209)	229	(16)	1	(225)
Investment property	(2)	2	-	-	(2)
Other non-current assets	(614)	737	(41)	46	(655)
Investments in joint ventures and associates	-	-	-	-	-
Total impairment (loss)/reversal	(614)	737	(41)	46	(655)
Group income statement
Cost of sales - underlying	(2)	-	-	-	(2)
Cost of sales - exceptional	(564)	683	(41)	46	(605)
Administrative expenses - underlying	(48)	54	-	-	(48)
Administrative expenses - exceptional	-	-	-	-	-
Total impairment (loss)/ reversal from continuing operations	(614)	737	(41)	46	(655)
Discontinued operations - underlying	-	-	-	-	-
Discontinued operations - exceptional	-	-	-	-	-
Total impairment (loss)/reversal	(614)	737	(41)	46	(655)

(a) Of the ��85m other non-current assets net impairment reversal for the Group (2020: ��302m loss), a net reversal of ��81m (2020: ��302m loss) has been classified within exceptional items, of which a net reversal of ��119m (2020: ��251m loss) related to the UK & ROI, a net reversal of ��5m (2020: ��28m reversal) related to Central Europe and a net loss of ��43m (2020: ��79m loss) related to discontinued operations.

53 weeks ended 29 February 2020

	UK & ROI	Central Europe	Total continuing operations	Discontinued operations	Total(a)(b)
	Impairment loss ��m	Impairment reversal ��m	Impairment loss ��m	Impairment reversal ��m	Impairment loss ��m
Group balance sheet
Other intangible assets	(27)	36	-	-	(27)
Property, plant and equipment	(428)	272	(54)	67	(482)
Right of use assets	(242)	142	(2)	18	(244)
Investment property	(5)	-	-	2	(5)
Other non-current assets	(702)	450	(56)	87	(758)
Investments in joint ventures and associates	(47)	-	-	-	(47)
Total impairment (loss)/reversal	(749)	450	(56)	87	(805)
Group income statement
Cost of sales - underlying	-	-	(5)	8	(5)
Cost of sales - exceptional	(658)	407	(51)	75	(709)
Administrative expenses - underlying	(44)	43	-	-	(44)
Administrative expenses - exceptional	(47)	-	-	4	(47)
Total impairment (loss)/ reversal from continuing operations	(749)	450	(56)	87	(805)
Discontinued operations - underlying	-	-	-	-	-
Discontinued operations - exceptional	-	-	-	-	-
Total impairment (loss)/reversal	(749)	450	(56)	87	(805)

(a) Refer to previous table for footnote.
(b) Comparatives have been re-presented to present Thailand, Malaysia and Poland as discontinued operations. Refer to Note 7 for further details.

The net impairment reversal in UK & ROI includes an impairment loss of ��32m in the UK in respect of the Group obtaining control of The Tesco Property (No. 2) Limited Partnership (2020: ��287m impairment loss in the UK & ROI in respect of the Group obtaining control of The Tesco Atrato Limited Partnership). Refer to Note 33 for further details.# Impairment of non-current assets

Immediately preceding their recognition as held for sale in H1 2020/21, an impairment review was carried out on the Group's Poland, Malaysia and Thailand operations. There were no significant changes in relation to the Malaysia and Thailand operations between the 2020 year end and reclassification as held for sale, and expected proceeds exceeded the carrying value so no impairment was required. The Poland disposal involves both a corporate sale and the separate sale of the remaining property assets. Expected proceeds for the corporate sale exceeded the carrying value so no impairment was required. The recoverable amount of the remaining property assets is based on fair value less costs of disposal on an asset by asset basis, such that some assets are impaired while others have an impairment reversal. This results in a net impairment charge of ��43m, recognised in discontinued operations - exceptional. See Note 7 for further details. The remaining Other non-current assets impairment losses and reversals for the Group largely reflect normal fluctuations expected from store-level performance, property fair values and changes in discount rates, as well as any specific store closures.

Net carrying value of non-current assets

The net carrying values of Other non-current assets and recoverable amounts of impaired Other non-current assets for which an impairment loss has been recognised or reversed have been aggregated by segment due to the large number of individually immaterial store cash-generating units. The amounts below exclude assets or disposal groups classified as held for sale.

At 27 February 2021

	UK & ROI ��m	Central Europe ��m	Tesco Bank ��m	Total ��m
Net carrying value
Other intangible assets	959	32	131	1,122
Property, plant and equipment	15,379	1,767	65	17,211
Right of use assets	5,571	368	12	5,951
Investment property	18	1	-	19
Other non-current assets	21,927	2,168	208	24,303
Goodwill(a)	3,791	-	480	4,271
Investments in joint ventures and associates(b)	84	1	93	178
Net carrying value of non-current assets	25,802	2,169	781	28,752
Recoverable amount of impaired Other non-current assets for which an impairment loss has been recognised or reversed, supported by:
Value in use	2,555	152	-	2,707
Fair value less costs of disposal(c)	1,400	122	-	1,522
	3,955	274	-	4,229

At 29 February 2020 (restated(d))

	UK & ROI ��m	Central Europe ��m	Tesco Bank ��m	Total continuing operations ��m	Discontinued operations ��m	Total ��m
Net carrying value
Other intangible assets	1,055	25	139	1,219	19	1,238
Property, plant and equipment	14,612	1,824	61	16,497	2,737	19,234
Right of use assets	5,719	392	14	6,125	749	6,874
Investment property	23	2	-	25	1	26
Other non-current assets	21,409	2,243	214	23,866	3,506	27,372
Goodwill(a)	3,796	-	775	4,571	269	4,840
Investments in joint ventures and associates(b)	70	1	87	158	149	307
Net carrying value of non-current assets	25,275	2,244	1,076	28,595	3,924	32,519
Recoverable amount of impaired Other non-current assets for which an impairment loss has been recognised or reversed, supported by:
Value in use	3,448	178	-	3,626	239	3,865
Fair value less costs of disposal(c)	2,105	126	-	2,231	352	2,583
	5,553	304	-	5,857	591	6,448

(a) Goodwill of ��4,271m (2020: ��4,840m) consists of UK ��3,789m (2020: ��3,793m), ROI ��2m (2020: ��3m) and Tesco Bank ��480m (2020: ��775m) included within continuing operations and ��nil (2020: Thailand ��193m and Malaysia ��76m) in discontinued operations.
(b) The carrying value of the Group's investments include: Trent Hypermarket Private Limited ��53m (2020: ��59m) and Tesco Underwriting Limited ��93m (2020: ��87m).
(c) Due to the individual nature of each property, fair values are classified as Level 3 within the fair value hierarchy.
(d) Refer to Note 1 for further details regarding the prior year restatement.

Notes to the Group financial statements

Note 15 Impairment of non-current assets continued

Impairment methodology

Cash-generating units

The Group treats each store as a separate cash-generating unit for impairment testing of other intangible assets, property, plant and equipment, right of use assets and investment property. Refer to Note 1 for further details. The Group allocates goodwill to groups of cash-generating units, where each country represents a group of cash-generating units for the Group's retail operations, as this represents the lowest level at which goodwill is monitored by management. Tesco Bank represents a separate cash-generating unit. The recoverable amount of each store cash-generating unit is the higher of its value in use and its fair value less costs of disposal. The recoverable amount of a group of cash-generating units to which goodwill has been allocated is determined based on value in use calculations. Head office and central assets such as distribution centres and associated costs are allocated to store cash-generating units based on level of use, estimated with reference to sales. Urban fulfilment centres and associated costs that are part of a store are included in the store cash- generating unit. Standalone customer fulfilment centres and associated costs are each treated as a separate cash-generating unit from the current financial year due to the evolution of the online channel that these centres support, rather than being allocated to the stores in their vicinity.

Value in use

Retail

Estimates for value in use calculations include discount rates, long-term growth rates, expected changes to future cash flows, including volumes and prices, and the probabilities assigned to cash flow scenarios. Estimates are based on past experience and expectations of future changes in the market, including the prevailing economic climate and global economy, competitor activity, market dynamics, changing customer behaviours, structural challenges facing retail and the resilience afforded by the Group's operational scale. Cash flow projections are based on the Group's three-year internal forecasts, the results of which are reviewed by the Board. The forecasts are extrapolated to five years based on management's expectations, and beyond five years based on estimated long-term average growth rates. Long-term growth rates for the Retail business are based on inflation forecasts by recognised bodies. In the current year, the Group applies an expected cash flow approach by probability-weighting different cash flow scenarios. The greatest probability weighting is applied to the cash flows derived from the three-year internal forecasts. Additional scenarios take account of the risks presented by Brexit, COVID-19, a macro-economic downturn and climate change consistent with the viability statement scenarios (see 'Longer-term viability statement' in the Strategic Report) as well as an upside scenario. Management estimates discount rates using pre-tax rates that reflect the market assessment as at the balance sheet date of the time value of money and the risks specific to the cash-generating units. The pre-tax discount rates are derived from the Group's post-tax weighted average cost of capital, as adjusted for the specific risks relating to each geographical region. Risk-free rates are based on government bond rates in each geographical region and equity risk premia are based on forecasts by recognised bodies. In the current year the risks associated with Brexit and COVID-19 are reflected in the probability-weighted cash flow scenarios, and hence the discount rate is no longer adjusted for these risks.

Tesco Bank goodwill

Tesco Bank value in use is calculated by discounting equity cash flows, defined as the excess above the regulatory requirement. Tesco Bank applies an expected cash flow approach, using the internal three-year forecasts, approved by the Board, as well as stressed scenarios in line with those used to measure expected credit losses (refer to Note 25) to form a probability-weighted cash flow. The long-term growth rate is based on inflation and GDP growth forecasts by recognised bodies. The discount rate is the cost of equity of Tesco Bank. Risk-free rates and equity risk premia are derived from recognised bodies.

Fair value less costs of disposal

Fair values of owned properties are determined with regard to the market rent for the stores or for alternative uses with investment yields appropriate to reflect the physical characteristics of the property, location, infrastructure, redevelopment potential and other factors. In some cases, fair values include residual valuations where stores may be viable for redevelopment. Fair values of leased properties are determined with regard to the discounted market rent for the property over the remaining period of the lease, reflecting the condition and location of the property and the local rental market, adjusted for a suitable void period. Fair values of the Group's properties were determined with the assistance of independent professional valuers where appropriate. Costs of disposal are estimated based on past experience in each geographical region.

Investments in joint ventures and associates

The recoverable values of investments in joint ventures and associates are estimated taking into account forecast cash flows, equity valuations of comparable entities and/or recent transactions for comparable businesses.

Notes to the Group financial statements

Note 15 Impairment of non-current assets continued

Key assumptions and sensitivity

Key assumptions

For value in use calculations, the key assumptions to which the recoverable amounts are most sensitive are discount rates, long-term growth rates, the impact on cash generated from operations from year one sales growth (incorporating sales and costs, as well as volumes and prices) and probabilities assigned to cash flow scenarios. For fair value less costs of disposal calculations, the key assumption is property fair values.The discount rates and long-term growth rates for each group of cash-generating units to which goodwill has been allocated are:

	UK	ROI	Tesco Bank
2021 %	2020 %	2021 %	2020 %
Pre-tax discount rates	5.9	8.0	5.4
Post-tax discount rates	4.8	6.6	4.7
Long-term growth rates	1.9	2.0	1.9

The discount rates and long-term growth rates for the Group's portfolio of store cash-generating units, aggregated by segment due to the large number of individually immaterial store cash-generating units, are:

	UK & ROI	Central Europe
2021 %	2020 %	2021 %
Pre-tax discount rates	5.4 - 5.9	8.0 - 8.1
Post-tax discount rates	4.7 - 4.8	6.6 - 7.1
Long-term growth rates	1.9	1.9 - 2.0

Sensitivity

The Group has carried out sensitivity analyses on the reasonably possible changes in key assumptions in the impairment tests for (a) each group of cash-generating units to which goodwill has been allocated and (b) for its portfolio of store cash-generating units.

(a) With the exception of Tesco Bank, which has been impaired in the current year, neither a reasonably possible one percentage point increase in discount rates, a one percentage point decrease in year one sales growth nor a one percentage point decrease in long-term growth rates would indicate impairment (or further impairment), in any group of cash-generating units to which goodwill has been allocated.

The table below summarises the reasonably possible changes in key assumptions to which Tesco Bank goodwill is most sensitive and their impact on impairment in the current year:

Key assumption	Reasonably possible change	Impact on impairment 2021 ��m
Cost of equity	Increase of 1.0%pt	Increase (203)
Annual equity cash flows	Decrease of 5.0%	Increase (107)
Long-term growth rates	Decrease of 0.5%pt	Increase (27)

(b) While there is not a significant risk of an adjustment to the carrying amount of any one store cash-generating unit that would be material to the Group as a whole in the next financial year, the table below summarises the reasonably possible changes in each key assumption and its impact on the impairment of the Group's entire portfolio of store cash-generating units, presented in aggregate due to the large number of individually immaterial store cash-generating units:

Key assumption	Reasonably possible change	Impact on impairment 2021 ��m	Impact on impairment 2020 ��m
Post-tax discount rates	Increase of 1.0%pt for each geographic region	(438)	(482)
	Decrease of 1.0%pt for each geographic region	397	485
Year one sales growth	Increase of 1.0%pt for each geographic region	(55)	(61)
	Decrease of 1.0%pt for each geographic region	56	61
Long-term growth rates	Increase of 1.0%pt for each geographic region	(304)	(445)
	Decrease of 1.0%pt for each geographic region	308	410
Property fair values	Increase of 5.0% for each geographic region	(81)	(105)
	Decrease of 5.0% for each geographic region	80	105

The probability applied to each cash flow scenario in the current year differs by country, depending on the expected likelihood of each scenario occurring in each country. The base case represents the cash flows derived from the three-year internal forecasts and is assigned a weighted average probability of 60%. The impairment is not highly sensitive to the upside and climate change scenarios, assigned 5% and 4% weighted average probabilities respectively.

The table below sets out the weighted average probability assigned to each of the remaining scenarios, to which the impairment is most sensitive, and shows the impact on impairment of a reasonably possible change in probability for each scenario, where the corresponding opposite change in probability is applied to the base case.

Scenario	Weighted average probability	Reasonably possible change	Impact on impairment 2021 ��m
Brexit	11%	Increase of 5.0%pt for each geographic region	(59)
		Decrease of 5.0%pt for each geographic region	60
COVID-19	10%	Increase of 5.0%pt for each geographic region	(28)
		Decrease of 5.0%pt for each geographic region	29
Macro-economic downturn	10%	Increase of 5.0%pt for each geographic region	(80)
		Decrease of 5.0%pt for each geographic region	81

Notes to the Group financial statements

Note 16 Investments in debt and equity instruments

Financial assets at fair value through other comprehensive income

	2021 ��m	2020 ��m
Investments in debt instruments(a)	-	1,058
Investments in equity instruments	14	10
Total financial assets at fair value through other comprehensive income	14	1,068
Of which:
Current	3	20
Non-current	11	866
	14	1,068

Investment securities at amortised cost

	2021 ��m	2020 ��m
Investment securities at amortised cost(a)	928	-
Expected credit loss allowance(b)	(1)	-
	927	-
Of which:
Current	175	-
Non-current	752	-
	927	-

(a) Refer to Note 1 for more information regarding the change in business model.
(b) Refer to Note 25 for allowance for expected credit losses disclosures.

On 1 March 2020, following a change in business model, the Group's ��1,058m portfolio of debt investments measured at fair value through other comprehensive income was reclassified to investment securities at amortised cost (see Note 1) and the ��3m cumulative loss relating to these assets, previously recognised in other comprehensive income, was adjusted against the carrying value of the assets. See Note 24 for the fair value of these assets as at 27 February 2021. A fair value gain of ��8m would have been recognised in other comprehensive income in the current year had the financial assets not been reclassified.

Note 17 Inventories

	2021 ��m	2020 ��m
Goods held for resale	2,066	2,429
Development properties	3	4
	2,069	2,433

Goods held for resale are net of commercial income. Refer to Note 22.

Cost of inventories from continuing operations recognised as an expense for the 52 weeks ended 27 February 2021 was ��42,482m (53 weeks ended 29 February 2020: ��42,782m). Inventory losses and provisions recognised as an expense for the 52 weeks ended 27 February 2021 were ��1,052m (53 weeks ended 29 February 2020: ��1,121m).

Note 18 Trade and other receivables

	2021 ��m	2020 ��m
Trade receivables	424	495
Prepayments	207	192
Accrued income(a)	210	262
Other receivables	430	439
Amounts owed by joint ventures and associates (Note 31)(b)	162	174
Total trade and other receivables	1,433	1,562
Of which:
Current	1,263	1,396
Non-current	170	166
	1,433	1,562

(a) Accrued income includes contract assets of ��52m (2020: ��60m) primarily related to insurance renewal income. The expected credit loss was immaterial as at 27 February 2021 (2020: immaterial).
(b) Expected credit losses on amounts owed by joint ventures and associates are not material.

Trade receivables include commercial income. Refer to Note 22. Trade receivables are generally non-interest-bearing. Credit terms vary by country and the nature of the debt, ranging from seven to 60 days.

Notes to the Group financial statements

Note 18 Trade and other receivables continued

The tables below present the ageing of receivables and related allowances for expected credit losses:

At 27 February 2021

	Not past due ��m	Up to six months past due ��m	Six to 12 months past due ��m	Greater than 12 months past due ��m	Total ��m
Trade receivables	403	54	3	11	471
Other receivables	413	15	5	19	452
Trade and other receivables	816	69	8	30	923

Allowance for expected credit losses:

	At the beginning of the year (7)	Transfer to disposal group held for sale -	Increase in allowance, net of recoveries, charged to the Group income statement (14)	Amounts written off -	At the end of the year (22)
	(9)	1	(4)	1	(11)
	(8)	1	-	1	(6)
	(30)	4	(6)	2	(30)
Total	(54)	6	(24)	4	(69)

At 29 February 2020

	Not past due ��m	Up to six months past due ��m	Six to 12 months past due ��m	Greater than 12 months past due ��m	Total ��m
Trade receivables	438	70	6	15	529
Other receivables	431	7	4	17	459
Trade and other receivables	869	77	10	32	988

Allowance for expected credit losses:

	At the beginning of the year (5)	Foreign currency translation -	Increase in allowance, net of recoveries, charged to the Group income statement (2)	Amounts written off -	At the end of the year (7)
	(11)	1	-	1	(9)
	(14)	-	4	2	(8)
	(29)	-	(3)	2	(30)
Total	(59)	1	(1)	5	(54)

Note 19 Loans and advances to customers and banks

Tesco Bank has loans and advances to customers and banks, as follows:

	2021 ��m	2020 ��m
Loans and advances to customers	6,402	8,451
Loans and advances to banks	-	-
	6,402	8,451
Of which:
Current	3,093	4,280
Non-current	3,309	4,171
	6,402	8,451

The maturity of these loans and advances is as follows:

	2021 ��m	2020 ��m
Repayable on demand or at short notice	3	4
Within three months	3,354	4,543
Greater than three months but less than one year	94	86
Greater than one year but less than five years	2,922	3,322
After five years	654	984
	7,027	8,939
Expected credit loss allowance for loans and advances to customers and banks	(625)	(488)
	6,402	8,451

At 27 February 2021, ��3.0bn (2020: ��3.5bn) of the credit card portfolio had its beneficial interest assigned to a securitisation structured entity, Delamare Cards Receivables Trustee Limited, for use as collateral in securitisation transactions. The total encumbered portion of this portfolio is ��nil (2020: ��0.8bn).

At 27 February 2021, Delamare Cards MTN Issuer PLC had ��1.8bn (2020: ��2.0bn) notes in issue in relation to securitisation transactions, of which ��nil (2020: ��0.6bn) was externally issued. The Group owned ��1.5bn (2020: ��1.4bn) class A credit card-backed notes and ��0.3bn (2020: ��0.2bn) class D credit card-backed notes. All of the ��1.5bn (2020: ��1.2bn) class A retained Credit Card backed notes are held within a single collateral pool.

Fair value hedge adjustments amounting to ��6.7m (2020: ��9.7m) are in respect of fixed rate loans.# Notes to the Group financial statements

Note 20 Cash and cash equivalents and short-term investments

Cash and cash equivalents

	2021 ��m	2020* ��m
Cash at bank and in hand	2,495	3,980
Short-term deposits	15	157
Cash and cash equivalents in the Group balance sheet	2,510	4,137
Bank overdrafts	(532)	(1,106)
Cash and cash equivalents in the Group cash flow statement	1,978	3,031

• Refer to Note 1 for further details regarding the prior year restatement in relation to notional cash pooling arrangements.

Short-term investments

	2021 ��m	2020 ��m
Money market funds	1,011	1,076

Cash and cash equivalents includes ��101m (2020: ��35m) of restricted amounts mainly relating to the Group's pension schemes and employee benefit trusts.

Note 21 Trade and other payables

	2021 ��m	2020 ��m
Trade payables	5,131	5,579
Other taxation and social security	369	477
Other payables	1,653	1,793
Amounts payable to joint ventures and associates (Note 31)	23	26
Accruals	956	841
Contract liabilities	376	376
Total trade and other payables	8,508	9,092
Of which: Current	8,399	8,922
Non-current	109	170
	8,508	9,092

Trade and other payables are net of commercial income. Refer to Note 22. Contract liabilities represent consideration received for performance obligations not yet satisfied, predominantly in relation to Clubcard points. The majority of the revenue deferred at the current financial year end will be recognised in the following financial year. Trade payables include ��572m (2020: ��393m) that suppliers have chosen to early-fund under supplier financing arrangements. Refer to Note 1. Amounts in trade payables that are overdue for payment to the provider are immaterial.

Note 22 Commercial income

Below are the commercial income balances included within inventories and trade and other receivables, or netted against trade and other payables. Amounts received in advance of income being earned are included in accruals.

	2021 ��m	2020 ��m
Current assets
Inventories	(24)	(55)
Trade and other receivables
Trade/other receivables	90	138
Accrued income	125	157
Current liabilities
Trade and other payables
Trade payables	170	292
Accruals	(2)	(3)

Note 23 Borrowings

Borrowings are classified as current and non-current based on their scheduled redemption date, and not their maturity date. Repayments of principal amounts are classified as current if the repayment is scheduled to be made within one year of the balance sheet date.

	Par value	Maturity	2021 ��m	2020(k) ��m
Bank loans and overdrafts(a)			-	559
2.125% MTN ���296m		Nov 2020	-	255
1m USD LIBOR + 0.70% Tesco Bank Bond $350m		Nov 2020	-	273
5% Tesco Bank Retail Bond ��200m		Nov 2020	-	202
6.125% MTN ��417m		Feb 2022	417	416
LIBOR + 0.53% Tesco Bank Bond ��300m		Oct 2022	-	299
5% MTN(b) ��71m		Mar 2023	79	103
1.375% MTN ���750m		Oct 2023	662	660
2.5% MTN(b) ���473m		Jul 2024	415	653
2.5% MTN ��400m		May 2025	417	418
3.5% Tesco Bank Senior MREL Notes(h) ��250m		Jul 2025	251	250
3.322% LPI MTN(i) ��354m		Nov 2025	364	358
0.875% MTN ���750m		May 2026	649	640
5.5457% Secured Bond(c)(d) ��289m		Feb 2029	275	303
6.067% Secured Bond(c) ��200m		Feb 2029	193	192
LIBOR + 1.2% Secured Bond(c) ��50m		Feb 2029	48	36
0.375% MTN ���750m		Jul 2029	625	-
6% MTN(b) ��38m		Dec 2029	45	58
2.75% MTN ��450m		Apr 2030	441	-
LIBOR + 1.17% Secured Bond (f)(l) ��187m		Jan 2032	184	-
LIBOR + 1.17% Secured Bond (f) ��108m		Jan 2032	100	-
5.5% MTN(b) ��67m		Jan 2033	80	133
1.982% RPI MTN(j) ��294m		Mar 2036	302	297
6.15% USD Bond(b) $355m		Nov 2037	333	555
6.0517% Secured Bond(e)(g) ��458m		Oct 2039	592	616
4.875% MTN(b) ��14m		Mar 2042	14	20
5.125% MTN(b) ���235m		Apr 2047	209	316
5.2% MTN(b) ��14m		Mar 2057	14	29
			7,268	8,224
Of which: Current			1,080	2,219
Non-current			6,188	6,005
			7,268	8,224

(a) Bank loans and overdrafts includes ��532m (2020: ��1,106m) of bank overdrafts. ��525m (2020: ��979m) is held under a notional pooling arrangement which does not meet the criteria to be presented net of cash on the balance sheet. Refer to Note 20.
(b) During the year, the Group undertook a tender for outstanding bonds and as a result the following notional amounts were repaid early, 5% MTN Mar 2023 ��22m, 2.5% MTN Jul 2024 ���277m, 6% MTN Dec 2029 ��10m, 5.5% MTN Jan 2033 ��42m, 6.15% USD Bond Nov 2037 $170m, 4.875% MTN Mar 2042 ��6m, 5.125% MTN Apr 2047 ���121m and 5.2% MTN Mar 2057 ��16m.
(c) The bonds are secured by a charge over the property, plant and equipment held within The Tesco Property Limited Partnership, a 100% owned subsidiary of Tesco PLC. The carrying amounts of assets pledged as security for secured bonds is ��817m (29 February 2020: ��794m).
(d) This is an amortising bond which matures in Feb 2029. ��26m (29 February 2020: ��22m) is the principal repayment due within the next 12 months. The remainder is payable in quarterly instalments until maturity in Feb 2029.
(e) These bonds is secured by a charge over the property, plant and equipment held within The Tesco Atrato Limited Partnership, a 100% owned subsidiary of Tesco PLC. The carrying amounts of assets pledged as security for secured bonds is ��837m (29 February 2020 ��612m).
(f) These bonds are secured by a charge over the property, plant and equipment held within The Tesco Property No. 2 Limited Partnership, a 100% owned subsidiary of Tesco PLC. The carrying amounts of assets pledged as security for secured bonds is ��445m.
(g) This is an amortising bond which matures in October 2039. ��14m is the principal repayment due within the next 12 months. The remainder is payable in quarterly instalments until maturity in Oct 2039.
(h) These notes are Tesco Bank MREL compliant senior debt and were issued on 25 July 2019. The scheduled redemption date is July 2024.
(i) The 3.322% Limited Price Inflation (LPI) MTN is redeemable at par, indexed for increases in the RPI over the life of the MTN. The maximum indexation of the principal in any one year is 5%, with a minimum of 0%.
(j) The 1.982% RPI MTN is redeemable at par, indexed for increases in the RPI over the life of the MTN.
(k) Refer to Note 1 for further details regarding the prior year restatement.
(l) This is an amortising bond which matures in January 2032 ��9m is the principal repayment due within the next 12 months. The remainder is payable in quarterly instalments until maturity in Jan 2032.

Note 24 Financial instruments

The Group recognises the following financial instruments on its balance sheet. The Group's exposure to the risks associated with its financial assets and liabilities is discussed in Note 25.

At 27 February 2021

	Notes	At amortised cost ��m	At fair value through profit or loss ��m	At fair value through other comprehensive income ��m	Total ��m
Financial assets
Cash and cash equivalents	20	2,496	14	-	2,510
Short-term investments	20	1,011	-	-	1,011
Trade receivables	18	424	-	-	424
Other receivables	18	430	-	-	430
Joint ventures and associates loan receivables	31	122	-	-	122
Loans and advances to customers - Tesco Bank	19	6,402	-	-	6,402
Investment securities at amortised cost	16	927	-	-	927
Financial assets at fair value through other comprehensive income	16	-	-	14	14
Derivative financial instruments:
Interest rate swaps		-	42	-	42
Cross-currency swaps		-	298	-	298
Index-linked swaps		-	1,080	-	1,080
Forward contracts		-	42	-	42
		11,812	1,476	14	13,302
Financial liabilities
Trade payables	21	(5,131)	-	-	(5,131)
Other payables	21	(1,653)	-	-	(1,653)
Borrowings	23	(7,268)	-	-	(7,268)
Customer deposits - Tesco Bank	26	(5,738)	-	-	(5,738)
Deposits from banks - Tesco Bank	26	(600)	-	-	(600)
Lease liabilities	12	(8,402)	-	-	(8,402)
Derivative financial instruments:
Interest rate swaps		-	(162)	-	(162)
Cross-currency swaps		-	(38)	-	(38)
Index-linked swaps		-	(729)	-	(729)
Forward contracts		-	(78)	-	(78)
		(28,792)	(1,007)	-	(29,799)

At 29 February 2020 (restated)*

	Notes	At amortised costs ��m	At fair value through profit or loss ��m	At fair value through other comprehensive income ��m	Total ��m
Financial assets
Cash and cash equivalents	20	4,111	26	-	4,137
Short-term investments	20	1,076	-	-	1,076
Trade receivables	18	495	-	-	495
Other receivables	18	439	-	-	439
Joint ventures and associates loan receivables	31	127	-	-	127
Loans and advances to customers - Tesco Bank	19	8,451	-	-	8,451
Investment securities at amortised cost	16	-	-	-	-
Financial assets at fair value through other comprehensive income	16	-	-	1,068	1,068
Derivative financial instruments:
Interest rate swaps		-	47	-	47
Cross-currency swaps		-	497	-	497
Index-linked swaps		-	541	-	541
Forward contracts		-	61	-	61
		14,699	1,172	1,068	16,939
Financial liabilities
Trade payables	21	(5,579)	-	-	(5,579)
Other payables	21	(1,793)	-	-	(1,793)
Borrowings	23	(8,224)	-	-	(8,224)
Customer deposits - Tesco Bank	26	(7,707)	-	-	(7,707)
Deposits from banks - Tesco Bank	26	(500)	-	-	(500)
Lease liabilities	12	(9,566)	-	-	(9,566)
Derivative financial instruments:
Interest rate swaps		-	(70)	-	(70)
Cross-currency swaps		-	-	-	-
Index-linked swaps		-	(816)	-	(816)
Forward contracts		-	(62)	-	(62)
		(33,369)	(948)	-	(34,317)

• Refer to Note 1 for further details regarding the prior year restatement.

The fair values are determined by reference to prices available from the markets on which the instruments are traded, where they are available. Where market prices are not available, the fair value is calculated by discounting expected future cash flows at prevailing interest rates. The fair value of assets measured at amortised cost is shown below. The expected maturity of financial assets and liabilities is not considered to be materially different to their current and non-current classification.# Fair value of financial assets and liabilities measured at amortised cost

The fair value of financial assets and liabilities measured at amortised cost is shown below. The table excludes cash and cash equivalents, short-term investments, trade receivables/payables, and other receivables/payables where the carrying values approximate fair value.

	2021	2020 (restated(a))
	Carrying value ��m	Fair value ��m
Financial assets measured at amortised cost
Loans and advances to customers - Tesco Bank (Level 3)	6,402	6,618
Investment securities at amortised cost (Level 1 and 2)	927	932
Joint ventures and associates loan receivables(b) (Level 2)	122	153
Financial liabilities measured at amortised cost
Borrowings Amortised cost (Level 1 and 2)	(4,711)	(5,761)
Bonds in fair value hedge relationships (Level 1)	(2,557)	(2,658)
Customer deposits - Tesco Bank (Level 3)	(5,738)	(5,744)
Deposits from banks - Tesco Bank (Level 2)	(600)	(600)

(a) Refer to Note 1 for further details regarding the prior year restatement.
(b) Joint ventures and associates loan receivables carrying amounts of ��122m (2020: ��127m) are presented in the Group balance sheet net of deferred profits of ��38m (2020: ��54m) historically arising from the sale of property assets to joint ventures.

Fair value measurement by level of fair value hierarchy

The following table presents the Group's financial assets and liabilities that are measured at fair value, by level of fair value hierarchy:

• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and
• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

At 27 February 2021

	Level 1 ��m	Level 2 ��m	Level 3 ��m	Total ��m
Assets
Financial assets at fair value through other comprehensive income	-	3	11	14
Cash and cash equivalents at fair value through profit or loss	-	14	-	14
Derivative financial instruments:
Interest rate swaps	-	42	-	42
Cross-currency swaps	-	298	-	298
Index-linked swaps	-	1,080	-	1,080
Forward contracts	-	42	-	42
Total assets	-	1,479	11	1,490
Liabilities
Derivative financial instruments:
Interest rate swaps	-	(162)	-	(162)
Cross-currency swaps	-	(38)	-	(38)
Index-linked swaps	-	(729)	-	(729)
Forward contracts	-	(78)	-	(78)
Total liabilities	-	(1,007)	-	(1,007)
Net assets/(liabilities)	-	472	11	483

At 29 February 2020

	Level 1 ��m	Level 2 ��m	Level 3 ��m	Total ��m
Assets
Financial assets at fair value through other comprehensive income	1,058	-	10	1,068
Cash and cash equivalents at fair value through profit or loss	-	26	-	26
Derivative financial instruments:
Interest rate swaps	-	47	-	47
Cross-currency swaps	-	497	-	497
Index-linked swaps	-	541	-	541
Forward contracts	-	61	-	61
Total assets	1,058	1,172	10	2,240
Liabilities
Derivative financial instruments:
Interest rate swaps	-	(70)	-	(70)
Index-linked swaps	-	(816)	-	(816)
Forward contracts	-	(62)	-	(62)
Total liabilities	-	(948)	-	(948)
Net assets/(liabilities)	1,058	224	10	1,292

The following table presents the changes in Level 3 instruments:

	2021 ��m	2020 ��m
At the beginning of the year	10	(1)
Gains/(losses) recognised in the Group statement of comprehensive income/(loss)	3	1
Disposal of financial instrument at fair value through profit or loss	(4)	6
Addition of financial asset at fair value through other comprehensive income	2	4
At the end of the year	11	10

During the financial year, there were no transfers (2020: no transfers) between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements (2020: no transfers).

Offsetting of financial assets and liabilities

The following tables show those financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements.

Related amounts not offset in the Group balance sheet

At 27 February 2021

	Gross amounts of recognised financial assets/ (liabilities) ��m	Gross amounts of financial assets/ (liabilities) offset in the Group balance sheet ��m	Net amounts presented in the Group balance sheet ��m	Financial instruments ��m	Collateral ��m	Net amount ��m
Financial assets
Derivative financial instruments	1,462	-	1,462	(234)	-	1,228
Trade receivables	520	(96)	424	-	-	424
Total assets	1,982	(96)	1,886	(234)	-	1,652
Financial liabilities
Derivative financial instruments	(1,007)	-	(1,007)	234	42	(731)
Trade payables	(5,227)	96	(5,131)	-	-	(5,131)
Total liabilities	(6,234)	96	(6,138)	234	42	(5,862)

At 29 February 2020 (restated(a))

	Gross amounts of recognised financial assets/ (liabilities) ��m	Gross amounts of financial assets/ (liabilities) offset in the Group balance sheet ��m	Net amounts presented in the Group balance sheet ��m	Financial instruments ��m	Collateral ��m	Net amount ��m
Financial assets
Derivative financial instruments	1,146	-	1,146	(168)	-	978
Trade receivables	735	(240)	495	-	-	495
Total assets	1,881	(240)	1,641	(168)	-	1,473
Financial liabilities
Derivative financial instruments	(948)	-	(948)	168	45	(735)
Trade payables	(5,819)	240	(5,579)	-	-	(5,579)
Total liabilities	(6,767)	240	(6,527)	168	45	(6,314)

(a) Refer to Note 1 for further details regarding the prior year restatement.

For the financial assets and liabilities subject to enforceable master netting arrangements above, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis. However, each party to the master netting agreement or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party.

Note 25 Financial risk management

The Group's financial risk management is carried out under policies approved and authority delegated by the Board of Directors, including parameters for risk management across the Group. The financial risk management in relation to Retail is carried out by a central treasury department. Tesco Bank has a separate formal structure for reporting, monitoring and managing its financial risks appropriate to the nature of its business as a regulated financial institution. The main financial risks faced by the Group, including Retail and Tesco Bank, and the management of these risks are set out below and include market risk (foreign exchange, interest rate, inflation and commodity prices), credit risk, liquidity risk, capital risk and insurance risk. Additional information on the management of the financial risks relating to Tesco Bank is also set out below.

(a) Market risk

The Group is exposed to various elements of market risk, which include foreign exchange risk, interest rate risk, commodity price risk and inflation risk.

Foreign exchange risk

The Group is exposed to foreign exchange risk principally via:

• transactional exposure that arises from the cost of future purchases of goods, where those purchases are denominated in a currency other than the functional currency of the purchasing company;
• net investment exposure that arises from changes in the value of net investments denominated in currencies other than Pounds Sterling;
• loans to and from subsidiaries in currencies other than in the entity's functional currency; and
• debt issued in a currency other than Pound Sterling.

The foreign exchange risk for each of the above is managed via:

• Transactional exposure - forward foreign currency contracts or purchased currency options, which are designated as cash flow hedges. The Group's policy is to hedge currency exposure that could significantly impact the Group income statement with a minimum (20%) and maximum (80%) hedge level of forecast uncommitted exposure within at least the next 12 months.
• Net Investment exposure - foreign currency derivatives and borrowings in matching currencies, which are formally designated as net investment hedges. The Group's policy is to hedge a part of its investments in international subsidiaries.
• Intercompany loan hedging - the use of foreign currency derivatives and borrowings in matching currencies. The Group's policy is that 100% of the foreign exchange risk is hedged. These are not formally designated as accounting hedges as gains and losses will naturally offset in the income statement.
• Foreign currency debt - cross-currency swaps which swap the non-sterling debt back into a net sterling exposure. The Group's policy is to swap foreign currency debt back to Pound Sterling, unless there are appropriate matching foreign currency assets.

Interest rate risk

The Group is exposed to interest rate risk principally via:

• debt issued at variable interest rates, as well as cash deposits and short-term investments, giving rise to cash flow risk; and
• debt issued at fixed interest rates, giving rise to fair value risk.

The interest rate risk for each of the above is managed via:

• The issuance of debt at variable and floating interest rates as well as forward rate agreements, interest rate swaps, and caps and floors, which may be used to achieve the desired mix of fixed and floating rate debt. Hedging relationships are formally designated as either fair value or cash flow hedges. The Group's policy is to target fixing a minimum of 50% of interest costs for senior unsecured debt excluding Tesco Bank.At 27 February 2021, the percentage of interest-bearing debt at fixed rates was 67% (2020: 68%). The weighted average rate of interest paid on senior unsecured debt this financial year, excluding joint ventures and associates, was 3.07% (2020: 3.30%). The Group has RPI-linked debt where the principal is indexed to increases in the RPI. RPI debt is treated as floating rate debt. The Group also has LPI-linked debt, where the principal is indexed to RPI, with an annual maximum increase of 5% and a minimum of 0%. LPI debt is treated as fixed-rate debt. RPI-linked debt and LPI-linked debt are hedged for the effects of inflation until maturity. During 2021 and 2020, Group net debt was managed using derivative instruments to hedge interest rate risk.

	2021 Fixed ��m	2021 Floating ��m	2021 Total ��m	2020 (restated*) Fixed ��m	2020 (restated*) Floating ��m	2020 (restated*) Total ��m
Cash and cash equivalents	-	2,510	2,510	-	4,137	4,137
Loans and advances to customers - Tesco Bank	-	-	-	4,370	4,081	8,451
Investment securities at amortised cost	502	425	927	-	-	-
Short-term investments	-	1,011	1,011	-	1,076	1,076
Financial assets at fair value through other comprehensive income	14	-	14	659	409	1,068
Joint ventures and associates loan receivables	101	21	122	106	21	127
Lease liabilities	(8,402)	-	(8,402)	(9,566)	-	(9,566)
Bank and other borrowings	(6,102)	(1,166)	(7,268)	(6,260)	(1,964)	(8,224)
Customer deposits - Tesco Bank	(5,738)	-	(5,738)	(3,164)	(4,543)	(7,707)
Deposits from banks - Tesco Bank	-	(600)	(600)	(500)	-	(500)
Derivative effect:
Interest rate swaps	(1,206)	1,206	-	(1,092)	1,092	-
Cross-currency swaps	(905)	905	-	410	(410)	-
Index-linked swaps	(299)	299	-	(294)	294	-
Total	(15,633)	4,611	(11,022)	(15,331)	4,193	(11,138)

• Refer to Note 1 for further details regarding the prior year restatement.

Commodity price risk

The Group is exposed to commodity price risk via:
- changes in commodity prices largely relating to diesel for own use.

The commodity price risk is managed via:
- forward derivative contracts which are designated as cash flow hedges. These are used to hedge future purchases of diesel for own use which are forecast to occur within a 12-month period. The Group Policy is to hedge a minimum of 50% of the forecast uncommitted exposure within the next 12 months.

Inflation risk

The Group is exposed to inflation risk in relation to its financial assets and liabilities via:
- Indexed linked debt, were the principal is indexed to increase / decrease in line with the RPI or LPI.
- Lease liabilities where rent payments are indexed to increases / decreases in inflation indexes such as RPI.

The inflation risk is managed via:
- Indexed-linked debt
- Indexed-linked swaps, which are used to hedge RPI-linked and LPI-linked debt for the effect of inflation until maturity.
- Indexed linked lease liabilities
- Indexed linked swaps, which are used to hedge inflation linked rent payments for the effect of inflation until maturity of the lease.

Hedge accounting of market risks

Derivatives are used to hedge exposure to market risks, some of which are economic hedges and others are formally designated hedging instruments with hedge accounting applied. The main sources of hedge ineffectiveness are the effect of the counterparties' and the Group's own credit risk on the fair value of derivatives.

Notes to the Group financial statements
Note 25 Financial risk management continued

Fair value hedges

The Group maintains interest rate and cross-currency swap contracts as fair value hedges of the interest rate and currency risk on fixed-rate debt issued by the Group and investment securities held by the Group. Derivative contracts hedging fixed rate debt issued by the Group receive a fixed-rate of interest and pay a variable interest rate. Derivative contracts held by the Group receive a floating rate of interest and pay a fixed interest rate to hedge investment securities where the Group receives a fixed rate of interest. There is an economic relationship between the hedged item and the hedging instrument as the terms of the swap contracts match the terms of the fixed-rate borrowings, including notional amount, maturity, payment and rate set dates. The Group has established a hedge ratio of 1:1 for the hedging relationship as the underlying risk of the swap contract is identical to the hedged item.

Cash flow hedges

The Group is exposed to foreign currency risk arising from purchases of goods for resale in currencies other than the functional currency of the purchasing entity. Foreign currency forwards are utilised to hedge this risk and are formally designated as cash flow hedges. Under the Group's hedging policy, the critical terms of the forward contracts must align with the hedged items. The foreign currency forwards are denominated in the same currency as the highly probable future sales and purchases, which are expected to occur within a maximum 24-month period, and the hedging relationship is determined to be 1:1. The Group also uses forward contracts to hedge the price of certain commodities, these mainly relate to forward contracts to hedge future purchases of diesel for own use, which are forecast to occur within a 12-month period. These are denominated in the same currency and volume as the forecast purchases and the hedging relationship is determined to be 1:1. The Group also uses index-linked swaps to hedge cash flows on index-linked debt and interest rate swaps to hedge interest cash flows on debt.

Net investment hedging

The Group uses Euro-denominated borrowings to hedge the exposure of a portion of its net investments in overseas operations which have a Euro functional currency, against changes in value due to changes in foreign exchange rates. The hedged risk in the net investment hedge is the risk of a weakening Euro against Pound Sterling that will result in a reduction in the carrying amount of the Group's Euro net investments. To assess hedge effectiveness, the Group determines the economic relationship between the hedging instrument and the hedged item by comparing changes in the carrying amount of the debt that is attributable to a change in the spot rate with changes in the investment in foreign operations due to movements in the spot rate. The Group has established a hedge ratio of 1:1, as the underlying risk of the hedging instrument is identical to the hedged risk component.

The details of the hedging instruments and movements in cumulative losses on net investment hedges in other comprehensive income are set out below:

	Nominal amount of the hedged item ��m	Nominal amount of the hedging instrument ��m	Movement on continuing hedges ��m	Movement on discontinued hedges ��m
At 23 February 2019	1,281	1,281	(42)	(976)
Change in value for calculating ineffectiveness	9	9	48	(89)
At 29 February 2020	1,290	1,290	6	(1,065)
Change in value for calculating ineffectiveness	10	10	(10)	-
Recycled to Group income statement	-	-	-	57
At 27 February 2021	1,300	1,300	(4)	(1,008)

Net investment hedge ineffectiveness was ��nil (2020: ��nil) during the year. During the current financial year, the Group disposed of its Asian business resulting in a recycle to the income statement from the translation reserve of ��57m (2020: ��nil) relating to net investment hedging. During the current financial year, currency movements decreased the net value, after the effects of hedging, of the Group's overseas assets by ��68m (2020: decrease by ��68m). The Group also ensures that each subsidiary is appropriately hedged in respect of its non-functional currency assets.

Financial instruments not qualifying for hedge accounting

The Group's policy does not permit use of derivatives for trading purposes. However, some derivatives do not qualify for hedge accounting, or are specifically not designated as a hedge where gains and losses on the hedging instrument and the hedged item naturally offset in the Group income statement. These instruments include index-linked swaps, interest rate swaps, cross-currency swaps and forward foreign currency contracts.

Notes to the Group financial statements
Note 25 Financial risk management continued

IBOR reform

In the prior year, the Group early adopted the 'Interest Rate Benchmark Reform Phase 1' amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. This allowed the Group to continue hedge accounting for its benchmark interest rate exposures during the period of uncertainty from interest rate benchmark reforms. In the current year, the Group has early adopted the 'Interest Rate Benchmark Reform Phase 2' amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 and has applied this to hedging relationships where no uncertainty remains as IBOR based benchmarks have been replaced by risk-free benchmarks for a number of hedging relationships. Both Phase 1 and Phase 2 are relevant to the Group because it applies hedge accounting to its interest rate benchmark exposures and modifications in response to the reform have been made to some but not all of the Group's derivative and non-derivative financial instruments. Where new hedging arrangements have been entered into during the year these have been set up utilising risk-free rates. During the year the Group transitioned some of its exposures from IBOR based to risk free rate indices. These included interest rate swaps and floating Inter-Company lending which were transitioned to Sterling Overnight Index Average (SONIA) based indices. None of the Group's current IBOR linked contracts include adequate and robust fall-back provisions for cessation of the referenced benchmark interest rate. The Group continues to monitor the market and the output from various industry groups managing the transition to new benchmark interest rates, and will look to implement fall-back language for different instruments and IBORs when appropriate.# Notes to the Group financial statements

Note 25 Financial risk management continued

However, it does include the foreign exchange sensitivity resulting from local entity non-functional currency financial instruments. The sensitivity analysis has been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives portfolio, and the proportion of financial instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 27 February 2021. It should be noted that the sensitivity analysis reflects the impact on income and equity due to financial instruments held at the balance sheet date. It does not reflect any change in sales or costs that may result from changing interest or exchange rates. The following assumptions were made in calculating the sensitivity analysis:

• the sensitivity of interest payable to movements in interest rates is calculated on net floating rate exposures on debt, deposits and derivative instruments with no sensitivity assumed for RPI-linked borrowings, which have been swapped to fixed rates;
• changes in the carrying value of derivative financial instruments designated as fair value hedges from movements in interest rates or foreign exchange rates have an immaterial effect on the Group income statement and equity due to compensating adjustments in the carrying value of debt;
• changes in the carrying value of financial instruments designated as net investment hedges from movements in foreign exchange rates are recorded directly in the Group statement of comprehensive income/(loss);
• all other changes in the carrying value of derivative financial instruments designated as hedging instruments are fully effective with no impact on the Group income statement; and
• the floating leg of any swap or any floating rate debt is treated as not having any interest rate already set, therefore a change in interest rates affects a full 12-month period for the interest payable portion of the sensitivity calculations.

Using the above assumptions, the following table shows the quantitative effect on the Group income statement and Group statement of changes in equity that would result, at the balance sheet date, from changes in interest rates, inflation rates and currency exchange rates that are reasonably possible for major currencies where there have recently been significant movements:

	2021 Income gain/(loss) ��m	2021 Equity gain/(loss) ��m	2020 Income gain/(loss) ��m	2020 Equity gain/(loss) ��m
1% increase in interest rates (2020: 1%)	(31)	31	39	(42)
10% appreciation of the Euro (2020: 10%)	(5)	(96)	1	(117)
10% appreciation of the US Dollar (2020: 10%)	3	97	5	78
25 basis points parallel upward shift in the forward inflation curve (2020: 25 basis points)	116	-	86	-

A decrease in interest rates, depreciation of foreign currencies and downward shift in the forward inflation curve would have the opposite effect to the impact in the table above. The impact on the Group income statement resulting from changes in foreign exchange rates against GBP in relation to financial instruments (excluding those arising on consolidation) are minimal as Group policy dictates that all material income statement foreign exchange exposures are hedged. During the current and prior financial year, the Group entered into a number of derivative index-linked contracts with external counterparties, to economically hedge a proportion of the Group's exposure to index-linked lease liabilities with its joint ventures. These are specifically not designated as accounting hedges but are economic hedges. However, the gains and losses on the hedging instrument and hedged item do not naturally offset in the Group income statement. This mismatch arises due to different accounting outcomes of IFRS 9 and IFRS 16 which results in a timing difference. The impact on the Group statement of comprehensive income/(loss) from changing exchange rates results from the revaluation of financial liabilities used as net investment hedges. The impact on the Group statement of comprehensive income/(loss) will largely be offset by the revaluation in equity of the hedged assets in the Group statement of changes in equity.

(b) Credit risk

Credit risk represents the risk that a counterparty will not meet its obligations leading to a financial loss for the Group. Credit risk arises from Cash and cash equivalents, Short-term investments, Trade receivables, Other receivables, Joint ventures and associates loan receivables, Loans and advances to customers - Tesco Bank, Loans and advances to banks - Tesco Bank, Investment securities at amortised cost, Financial assets at fair value through other comprehensive income, and Derivative financial instruments. For financial assets other than Trade receivables, Other receivables, Joint ventures and associates loan receivables, and Loans and advances to customers - Tesco Bank, the Group holds positions with an approved list of investment-grade rated counterparties and monitors the exposure, credit rating, outlook and credit default swap levels of these counterparties on a regular basis. Counterparty credit limits are reviewed on an annual basis and may be updated throughout the financial year. The limits are set to minimise the concentration of risk and are set taking into account the type and value of the specific financial asset. For Trade receivables, Other receivables, Joint ventures and associates loan receivables, and Loans and advances to customers - Tesco Bank, the Group's credit risk is managed with various mitigating controls including credit checks, credit insurance and master netting agreements. Due to the nature of the Retail and Tesco Bank businesses, there is little concentration of risk due to the large number of customers which are spread across wide geographical areas.

Maximum exposure to credit risk

The maximum exposure to credit risk at the end of the reporting period reflects the carrying amount of each class of financial assets, including loan commitments which are not recognised on the balance sheet. Joint ventures and associates loan receivables in the table below are gross of deferred profits historically arising from the sale of property assets to joint ventures (see Note 31). The Group's maximum exposure to credit risk is ��26.0bn (2020: ��28.9bn). The net counterparty exposure under derivative contracts is ��1.2bn (2020: ��1.0bn). The Group's maximum gross exposure to credit risk is analysed below by class of financial instrument, including for financial instruments that are not subject to ECL i.e. derivative financial instruments and cash balances with central banks:

	2021 ��m	2020(a) ��m
Cash and cash equivalents(b)	2,510	4,137
Short-term investments	1,011	1,076
Trade receivables	424	495
Other receivables	430	439
Joint venture and associate loan receivables	160	181
Loans and advances to customers - Tesco Bank	6,402	8,451
Investment securities at amortised cost	927	-
Financial assets at fair value through other comprehensive income	14	1,068
Derivative financial instruments:
- Interest rate swaps	42	47
- Cross-currency swaps	298	497
- Index-linked swaps	1,080	541
- Forward contracts	42	61
Off balance sheet:
- Loan commitments	12,668	11,872
Maximum exposure to credit risk	26,008	28,865

(a) Refer to Note 1 for further details regarding the prior year restatement.
(b) Cash balances with central banks of ��1.6bn (2020: ��2.6bn) are included within Cash and cash equivalents.

Counterparty credit rating

The table below provides detail of financial assets by long term credit rating of investment-grade rated counterparties:

	2021				Total	2020				Total
	AAA	AA	A	BBB		AAA	AA	A	BBB
Money market funds	955	-	56	-	1,011	1,076	-	-	-	1,076
Investment securities at amortised cost	560	65	302	-	927	-	-	-	-	-
Investment securities at fair value through other comprehensive income	-	5	-	-	5	525	248	274	14	1,061
Derivatives financial assets
- Interest rate swaps	-	9	27	6	42	-	8	39	-	47
- Cross currency swaps	-	-	211	87	298	-	-	287	210	497
- Index Linked swaps	-	-	613	467	1,080	-	-	95	446	541
- Forward contracts	-	1	27	14	42	-	9	35	17	61

The low credit risk exemption has been applied to cash and cash equivalents, short-term investments, financial assets at fair value through OCI, financial assets at amortised cost and investment securities as these are held with counterparties with investment-grade ratings (BBB or above) or are short term in nature. The expected credit loss is immaterial.

Expected credit losses

For trade receivables, contract assets and lease receivables the Group applies the simplified approach with lifetime ECLs recognised from initial recognition of the receivables. For loans and advances to customers, short-term investments, investment securities at amortised cost, debt instruments at fair value through other comprehensive income and loan receivables from joint venture and associates, the three-stage model for impairment has been applied. The expected lifetime of a financial asset is generally the contractual term. The Group's financial assets are written off when the balance is known not to be recoverable or the Group is time barred from recovering a balance under local legislation. The expected credit losses for Retail are immaterial. For details on the expected credit losses relating to Tesco Bank see below. Gross loans to related parties of ��160m (2020: ��181m) are presented net of loss allowances of ��nil (2020: ��2m) and deferred profits of ��38m (2020: ��54m) on the Group balance sheet. The ECL is determined by multiplying together the probability of default (PD), exposure at default (EAD) and the loss given default (LGD) for the relevant time period and for each specific loan and by discounting back to the balance sheet date.# (c) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities. The Group finances its liquidity position and its operations by a combination of retained profits, disposals of assets, debt capital market issuance, commercial paper, bank borrowings and leases. The policy is to maintain a prudent level of cash together with sufficient committed bank facilities to meet liquidity needs as they arise, to maintain a smooth debt profile and maturing senior unsecured debt will not exceed €1.5bn in any 12-month period. The Group retains access to capital markets so that maturing debt may be refinanced as it falls due and the Group is investment grade rating with all three major credit rating agencies.

Rating agency	Short term rating	Long term rating	Outlook	Short term rating	Long term rating	Outlook
Fitch	F3	BBB-	Stable	F3	BBB-	Stable
Moody's	P-3	Baa3	Stable	P-3	Baa3	Stable
Standard & Poor's	A-3	BBB-	Stable	A-3	BBB-	Stable

The Group has a €15.0bn Euro Medium Term Note programme, of which €4bn was in issue at 27 February 2021 (2020: €4.0bn), plus €0.3bn equivalent of USD-denominated notes issued under 144A documentation (2020: €0.4bn). Liquidity risk is continuously monitored by short-term and long-term cash flow forecasts. During the year, the Group accessed the capital markets twice issuing €450m (maturing in 2030) and €750m (maturing in 2029). The €750m issuance was the Group's first sustainability linked bond. The bond includes a coupon step up of 25 bps for the final three coupon payments, if science-based carbon reduction targets of 60% are not achieved compared to a 2015/16 baseline.

Borrowing facilities

The Group has the following undrawn committed facilities available at 27 February 2021, in respect of which all conditions precedent had been met as at that date:

	2021 €m	2020 €m
Expiring in less than one year	38	38
Expiring between one and two years	-	3,000
Expiring in more than two years	2,500	-
Total	2,538	3,038

During the year, a new three-year multicurrency €2.5bn revolving facility was established, replacing the existing €3bn committed facilities. The new facility is linked to three ESG targets and includes the use of risk-free rates rather than LIBOR. The undrawn committed facilities include €nil (2020: €0.4bn) of bilateral facilities and a €2.5bn (2020: €2.6bn) syndicated revolving credit facility. All facilities incur commitment fees at market rates and would provide funding at floating rates. There were no withdraws from the facilities during the year.

Notes to the Group financial statements
Note 25 Financial risk management continued

For liquidity risk relating to Tesco Bank, refer to the separate section on Tesco Bank financial risk factors on page 89. The following is an analysis of the undiscounted contractual cash flows payable under financial liabilities and derivative liabilities taking into account contractual terms that provide the counterparty a choice of when (the earliest date) an amount is repaid by the Group. The potential cash outflow is considered acceptable as it is offset by financial assets. The undiscounted cash flows will differ from both the carrying values and fair values. Floating-rate interest and inflation is estimated using the prevailing rate at the balance sheet date. Cash flows in foreign currencies are translated using spot rates at the balance sheet date.

At 27 February 2021

	Due within 1 year €m	Due between 1 and 2 years €m	Due between 2 and 3 years €m	Due between 3 and 4 years €m	Due between 4 and 5 years €m	Due beyond 5 years €m
Non-derivative financial liabilities
Bank and other borrowings	(1,002)	(53)	(779)	(724)	(888)	(3,844)
Interest payments on borrowings	(199)	(172)	(170)	(151)	(134)	(905)
Customer deposits - Tesco Bank	(4,924)	(488)	(253)	(114)	(24)	-
Deposits from banks - Tesco Bank	(500)	-	(100)	-	-	-
Lease liabilities	(969)	(939)	(912)	(867)	(841)	(7,999)
Trade payables	(5,131)	-	-	-	-	-
Other payables	(1,543)	(23)	(3)	(1)	-	(83)
Derivative financial liabilities
Net settled derivative contracts - receipts	69	51	32	26	4	19
Net settled derivative contracts - payments	(88)	(533)	(217)	(186)	(23)	(78)
Gross settled derivative contracts - receipts	2	2	2	1	1	2
Gross settled derivative contracts - payments	(7)	(8)	(10)	(11)	(12)	(61)
Total on balance sheet	(14,292)	(2,163)	(2,410)	(2,027)	(1,917)	(12,949)
Off balance sheet
Contractual lending commitments	(12,668)	-	-	-	-	-
Total	(26,960)	(2,163)	(2,410)	(2,027)	(1,917)	(12,949)

At 29 February 2020 (restated)*

	Due within 1 year €m	Due between 1 and 2 years €m	Due between 2 and 3 years €m	Due between 3 and 4 years €m	Due between 4 and 5 years €m	Due beyond 5 years €m
Non-derivative financial liabilities
Bank and other borrowings	(2,120)	(467)	(53)	(795)	(956)	(3,776)
Interest payments on borrowings	(227)	(208)	(181)	(179)	(159)	(1,237)
Customer deposits - Tesco Bank	(6,426)	(797)	(233)	(187)	(115)	-
Deposits from banks - Tesco Bank	(3)	(1)	(501)	-	-	-
Lease liabilities	(1,081)	(1,018)	(996)	(993)	(951)	(9,584)
Trade payables	(5,409)	-	-	-	-	-
Other payables	(1,623)	(22)	(18)	(2)	(1)	(127)
Derivative financial liabilities
Net settled derivative contracts - receipts	10	11	467	116	-	25
Net settled derivative contracts - payments	(717)	(42)	(470)	(148)	(160)	(18)
Gross settled derivative contracts - receipts	2,534	-	-	-	-	-
Gross settled derivative contracts - payments	(2,585)	-	-	-	-	-
Total on balance sheet	(17,647)	(2,544)	(1,985)	(2,188)	(2,342)	(14,717)
Off balance sheet
Contractual lending commitments	(11,872)	-	-	-	-	-
Total	(29,519)	(2,544)	(1,985)	(2,188)	(2,342)	(14,717)

• Refer to Note 1 for further details regarding the prior year restatement.

The Group is not subject to covenants in relation to its facilities and borrowings. There is an element of seasonality in the Group's operations, however the overall impact on liquidity is not considered significant. The Group cash flow statement includes net (investment in) / proceeds from sale of financial assets at fair value through other comprehensive income and amortised cost of €116m inflow (2020: €6m outflow) within cash flows generated from/(used in) investing activities. The gross cash flows are €201m inflow (2020: €774m inflow) and €85m outflow (2020: €780m outflow). The Group cash flow statement includes net cash flows from derivative financial instruments of €580m outflow (2020: €17m outflow) within cash flows generated from/(used in) financing activities. The gross cash flows are €2,276m outflow (2020: €346m outflow) and €1,696m inflow (2020: €329m inflow).

(d) Capital risk

The Group's objectives when managing capital (defined as net debt plus equity) are to safeguard the Group's ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders, while protecting and strengthening the Group balance sheet through the appropriate balance of debt and equity funding. The Group manages its capital structure and makes adjustments to it, in light of changes to economic conditions and the strategic objectives of the Group. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, buy back shares and cancel them, or issue new shares. The Group raises finance in the public debt markets and borrows centrally and locally from financial institutions, using a variety of capital market instruments and borrowing facilities to meet the requirements of each local business. In line with the Group's objectives, during the current financial year, the Group issued a €450m bond maturing in 2030 and undertook a liability management exercise by combining an issuance of €750m bond maturing in 2029 with a debt buyback, the latter resulting in notionals of €0.6bn bought back across eight bonds. Refer to Note 32 for the value of the Group's net debt (€12.0bn; 2020: €12.3bn), and the Group statement of changes in equity for the value of the Group's equity (€12.3bn; 2020: €13.4bn).

(e) Insurance risk

The Group is exposed to the risk of being inadequately protected from liabilities arising from unforeseen events. The Group purchased assets, earnings and combined liability protection from the open insurance market for higher value losses only. The risk not transferred to the insurance market is retained within the Group with some cover being provided by the Group's captive insurance company, ELH Insurance Limited in Guernsey, which covers assets, earnings and combined liability.

Tesco Bank

Information on the management of the financial risks relating to Tesco Bank, which is additional to the information provided for the Group overall, is set out below.

Interest rate risk

Interest rate risk arises mainly where assets and liabilities in Tesco Bank's banking activities have different repricing dates and from unexpected changes to the yield curve. Tesco Bank is exposed to interest rate risk through dealings with retail customers as well as through lending to and borrowing from the wholesale market. Tesco Bank has established limits for risk appetite and stress tests are performed using sensitivity to fluctuations in underlying interest rates in order to monitor this risk. Tesco Bank also use the Capital at Risk (CaR) approach which assesses the sensitivity (value change) of a reduction in the Bank's capital to movements in interest rates. The scenarios considered include both parallel and non-parallel movements of the yield curve and have been designed to assess impacts across a suitable range of severe but plausible movements in interest rates. Interest rate risk is primarily managed using interest rate swaps as the main hedging instrument.# Liquidity risk

Liquidity risk is the risk that Tesco Bank has insufficient liquidity resources to meet its obligations as they fall due. Funding risk is the risk that Tesco Bank does not have sufficiently stable and diverse sources of funding. Tesco Bank operates within a Liquidity Risk Management Policy Framework (LRMP) to ensure that sufficient funds are available at all times to meet demands from depositors, to fund agreed advances, to meet other commitments as and when they fall due, and to ensure risk appetite is met. Liquidity and funding risks are assessed through the Individual Liquidity Adequacy Assessment Process (ILAAP) on at least an annual basis. Formal limits are set within the LRMP to maintain liquidity risk exposures within the Liquidity Risk Appetite set by Tesco Bank's Board of Directors and key liquidity measures are monitored on a regular basis. Tesco Bank maintains a conservative liquidity and funding profile to confirm that it is able to meet its financial obligations under normal, and stressed, market conditions.

Credit risk

Credit risk is the risk that a retail customer or counterparty to a wholesale transaction will fail to meet its obligations in accordance with contractually agreed terms and Tesco Bank will incur losses as a result. Credit risk principally arises from the Bank's retail lending activities but also from the placement of surplus funds with other banks and money market funds, investments in transferable securities and interest rate and foreign exchange derivatives. In addition, credit risk arises from contractual arrangements with third parties where payments and commissions are due to the Bank for short periods of time. To minimise the potential exposure to bad debts that are outside risk appetite, processes, systems and limits have been established that cover the end-to-end retail credit risk customer life cycle. These include credit scoring, affordability, credit policies and guides, and monitoring and reporting. The Bank is also exposed to wholesale credit risk primarily through its treasury activities. Controls and risk mitigants include daily monitoring of exposures, investing in counterparties with investment grade ratings, restricting the amount that can be invested with one counterparty and credit-rating mitigation techniques. Assessment of the expected credit loss (ECL) on loans and advances to customers has taken into account a range of macroeconomic scenarios.

Notes to the Group financial statements

Note 25 Financial risk management continued

Maximum exposure to credit risk

The table below presents Tesco Bank's maximum exposure to credit risk i.e. total gross exposure, by stages and by class of financial instruments. For financial assets, the balances are based on gross carrying amounts. For loan commitments, the amounts represent the amounts for which Tesco Bank is contractually committed:

	Stage 1 ��m	Stage 2 ��m	Stage 3 ��m	Total ��m	Not past due ��m	<30 days past due ��m	>30 days past due ��m	Total ��m
27 February 2021
Loans and advances to customers	5,749	981	25	25	1,031	242		7,022
Investment securities at FVOCI(a)	5	-	-	-	-	-		5
Investment securities at amortised cost	928	-	-	-	-	-		928
Loan commitments - Loans and advances to customers(b)	12,379	283	2	-	285	4		12,668
Total gross exposure	19,061	1,264	27	25	1,316	246		20,623
Loss allowance
Loans and advances to customers(b)	131	314	11	16	341	153		625
Investment securities at FVOCI	-	-	-	-	-	-		-
Investment securities at amortised cost	1	-	-	-	-	-		1
Total loss allowance	132	314	11	16	341	153		626
Net Exposure
Loans and advances to customers	5,618	667	14	9	690	89		6,397
Investment securities at FVOCI	5	-	-	-	-	-		5
Investment securities at amortised cost	927	-	-	-	-	-		927
Total net exposure	6,550	667	14	9	690	89		7,329
Coverage
Loans and advances to customers	2%	32%	44%	64%	33%	63%		9%

(a) On 1 March 2020 the Group's portfolio of debt investment securities measured at FVOCI was reclassified to amortised cost following a change in business model.
(b) The loss allowance in respect of loan commitments is included within the total loss allowance for loans and advance to customers as above to the extent that it is below the gross carrying amount of loans and advances to customers. Where the loss allowance exceeds the gross carrying amount, any excess is included within the provisions.

	Stage 1 ��m	Stage 2 ��m	Stage 3 ��m	Total ��m	Not past due ��m	<30 days past due ��m	>30 days past due ��m	Total ��m
29 February 2020
Loans and advances to customers	7,688	869	52	32	953	289		8,930
Investment securities at FVOCI(a)	1,061	-	-	-	-	-		1,061
Investment securities at amortised cost	-	-	-	-	-	-		-
Loan commitments - Loans and advances to customers(b)	11,755	116	-	-	116	1		11,872
Total gross exposure	20,504	985	52	32	1,069	290		21,863
Loss allowance
Loans and advances to customers(b)	83	178	21	20	219	186		488
Investment securities at FVOCI	-	-	-	-	-	-		-
Investment securities at amortised cost	-	-	-	-	-	-		-
Total loss allowance	83	178	21	20	219	186		488
Net Exposure
Loans and advances to customers	7,605	691	31	12	734	103		8,442
Investment securities at FVOCI	1,061	-	-	-	-	-		1,061
Investment securities at amortised cost	-	-	-	-	-	-		-
Total net exposure	8,666	691	31	12	734	103		9,503
Coverage
Loans and advances to customers	1%	20%	40%	63%	23%	64%		5%

(a)-(b) Refer to previous table for footnotes.

Expected credit losses (ECL)

The ECL is determined by multiplying together the probability of default (PD), exposure at default (EAD) and loss given default (LGD) for the relevant time period and for each asset category and by discounting back to the balance sheet date. The ECL calculation and the measurement of significant deterioration in credit risk both incorporate forward-looking information using a range of macroeconomic scenarios, with key variables being the Bank of England base rate, unemployment rate, house price index and gross domestic product. The key economic variables are based on historical patterns observed over a range of economic cycles.

Notes to the Group financial statements

Note 25 Financial risk management continued

The tables below present the reconciliations of ECL allowances on loans and advances to customers.

	Stage 1 ��m	Stage 2 ��m	Stage 3 ��m	Total ��m
2021
27 February 2021
Gross exposure	5,749	1,031	242	7,022
Loan commitments	12,379	285	4	12,668
Total exposure	18,128	1,316	246	19,690
Allowance for expected credit losses
At 29 February 2020	(83)	(219)	(186)	(488)
Transfers:
Transfers from stage 1 to stage 2	20	(20)	-	-
Transfers from stage 2 to stage 1	(9)	9	-	-
Transfers to stage 3	2	42	(44)	-
Transfers from stage 3	(2)	(2)	4	-
Movements recognised in the Group income statement:
Net remeasurement following transfer of stage	6	(36)	(72)	(102)
New financial assets originated	(25)	(5)	(2)	(32)
Financial assets derecognised during the current financial year	8	9	3	20
Changes in risk parameters and other movements	(56)	(134)	(83)	(273)
Other movements:
Write-offs and asset disposals	-	3	227	230
Transfers to provisions for liabilities and charges	8	12	-	20
Reclassification of mortgage book balances to fair value through profit or loss	-	-	-	-
At 27 February 2021	(131)	(341)	(153)	(625)
Reconciliation to Group balance sheet
Gross exposure	5,749	1,031	242	7,022
Allowance for expected credit losses	(131)	(341)	(153)	(625)
	5,618	690	89	6,397
Fair value adjustment	5
Carrying value at 27 February 2021	6,402
2020
29 February 2020
Gross exposure	7,688	953	289	8,930
Loan commitments	11,755	116	1	11,872
Total exposure	19,443	1,069	290	20,802
Allowance for expected credit losses
At 23 February 2019	(84)	(229)	(172)	(485)
Transfers:
Transfers from stage 1 to stage 2	11	(11)	-	-
Transfers from stage 2 to stage 1	(64)	64	-	-
Transfers to stage 3	3	50	(53)	-
Transfers from stage 3	(2)	(2)	4	-
Movements recognised in the Group income statement:
Net remeasurement following transfer of stage	38	(23)	(93)	(78)
New financial assets originated	(27)	(21)	(10)	(58)
Financial assets derecognised during the current financial year	9	12	3	24
Changes in risk parameters and other movements	32	(63)	(60)	(91)
Other movements:
Write-offs and asset disposals	-	3	195	198
Transfers to provisions for liabilities and charges	-	-	-	-
Reclassification of mortgage book balances to fair value through profit or loss	1	1	-	2
At 29 February 2020	(83)	(219)	(186)	(488)
Reconciliation to Group balance sheet
Gross exposure	7,688	953	289	8,930
Allowance for expected credit losses	(83)	(219)	(186)	(488)
	7,605	734	103	8,442
Fair value adjustment	9
Carrying value at 29 February 2020	8,451

The Bank defines four classifications of credit quality for all credit exposures: high, satisfactory, low and below standard. Credit exposures are segmented according to the probability of default (PD), with credit impaired reflecting a PD of 100%.

Notes to the Group financial statements

Note 25 Financial risk management continued

	12-month PD %	Stage 1 ��m	Stage 2 ��m	Stage 3 ��m	Total ��m
At 27 February 2021
Loans and advances to customers:
High quality	���3.02	5,314	445	-	5,759
Satisfactory quality	>3.03 - 11.10	392	389	-	781
Low quality and below standard	���11.11	43	197	-	240
Credit impaired	100	-	-	242	242
		5,749	1,031	242	7,022
	12-month PD	Stage 1	Stage 2	Stage 3	Total
At 29 February 2020	%	��m	��m	��m	��m
Loans and advances to customers:
High quality	���3.02	6,609	37	-	6,646
Satisfactory quality	>3.03 - 11.10	1,037	485	-	1,522
Low quality and below standard	���11.11	42	431	-	473
Credit impaired	100	-	-	289	289
		7,688	953	289	8,930

Default

An account is deemed to have defaulted when the Tesco Bank considers that a customer is in significant financial difficulty and that the customer meets certain quantitative and qualitative criteria regarding their ability to make contractual payments when due.# Notes to the Group financial statements

Note 27 Provisions

Property provisions ��m	Restructuring provisions ��m	Other provisions ��m	Total ��m
At 29 February 2020	156	64	72
Foreign currency translation	-	3	(6)
Acquired through business combinations	5	-	-
Reclassifications	-	(3)	38
Amount released in the year	(24)	(29)	-
Amount provided in the year	49	31	105
Amount utilised in the year	(4)	(60)	(25)
Transfer to disposal group classified as held for sale	(51)	(6)	(11)
Unwinding of discount	1	-	-
At 27 February 2021	132	-	173

The balances are analysed as follows:

	2021 ��m	2020 ��m
Current	186	155
Non-current	119	137
Total	305	292

Property provisions

Property provisions comprise onerous property provisions, including non-lease contracts related to unprofitable stores and vacant properties, remediation works, dilapidations provisions and asset retirement obligation provisions. Property provisions related to leased properties are expected to be utilised prior to the end of the leases. Refer to Note 12 for a maturity analysis of the Group's contractual undiscounted lease payments.

Restructuring provisions

Of the ��2m net charge (��31m charge, ��(29)m release) recognised in the year, ��2m (2020: ��43m) has been classified as an exceptional item within discontinued operations, and ��nil (2020: ��108m charge) has been classified within exceptional items as 'Net restructuring and redundancy costs' within continuing operations, of which ��nil (2020: ��95m) related to UK & ROI and ��nil (2020: ��13m) related to Tesco Bank. Refer to Notes 4 and 7 for further details. The restructuring provisions were fully utilised in the financial year to 27 February 2021.

Other provisions

Other provisions include a ��88m (2020: ��nil) provision relating to claims from Homeplus (Korea) purchasers. Refer to Note 7 for further details. Additional provisions included in other provisions are individually immaterial. The majority of provisions are expected to be utilised in the next financial year.

Note 28 Share-based payments

The Group income statement charge for the financial year recognised in respect of share-based payments is ��69m (2020: ��129m), which is made up of share option schemes and share bonus payments. Of this amount, ��60m (2020: ��113m) will be settled in equity and ��9m (2020: ��16m) in cash representing National Insurance contributions.

Share option schemes

The Company had nine share option schemes in operation during the financial year, all of which are equity-settled schemes:

i. The Savings-related Share Option Scheme (1981) permits the grant to colleagues of options in respect of ordinary shares linked to a building society/bank save-as-you-earn contract for a term of three or five years with contributions from colleagues of an amount between ��5 and ��500 per four-weekly period. Options are capable of being exercised at the end of the three or five-year period at a subscription price of not less than 80% of the average of the middle-market quotations of an ordinary share over the three dealing days immediately preceding the offer date.

ii. The Irish Savings-related Share Option Scheme (2000) permits the grant to ROI colleagues of options in respect of ordinary shares linked to a building society/bank save-as-you-earn contract for a term of three or five years with contributions from colleagues of an amount between ���12 and ���500 per four-weekly period. Options are capable of being exercised at the end of the three or five-year period at a subscription price of not less than 80% of the average of the middle-market quotations of an ordinary share over the three dealing days immediately preceding the offer date.

iii. The Executive Incentive Plan (2004) permitted the grant of options in respect of Ordinary shares to selected senior executives. Options are normally exercisable between three and 10 years from the date of grant for nil consideration. No further options will be granted under this scheme.

iv. The Executive Incentive Plan (2014) permits the grant of options in respect of Ordinary shares to selected senior executives as a proportion of annual bonus following the completion of a required service period and is dependent on the achievement of corporate performance and individual targets. Options are normally exercisable between three and 10 years from the date of grant for nil consideration. Full details of this plan can be found in the Directors' remuneration report.

v. The Performance Share Plan (2011) permits the grant of options in respect of Ordinary shares to selected executives. Options are normally exercisable between the vesting date(s) set at grant and 10 years from the date of grant for nil consideration. The vesting of options will normally be conditional upon the achievement of specified performance targets over a three-year period and/or continuous employment.

vi. The Group Bonus Plan permits the grant of options in respect of Ordinary shares to selected senior executives as a proportion of annual bonus following the completion of a required service period and is dependent on the achievement of corporate performance and individual targets. Options are normally exercisable between three and 10 years from the date of grant for nil consideration. No further options will be granted under this scheme.

vii. The Long Term Incentive Plan (2015) permits the grant of options in respect of Ordinary shares to selected executives. Options are normally exercisable between the vesting date(s) set at grant and 10 years from the date of grant for nil consideration. The vesting of options will normally be conditional upon the achievement of specified performance targets over a three-year period and/or continuous employment.

viii. The Booker Group PLC Savings Related Share Option Plan (2008) (Booker SAYE) permitted the grant to Booker colleagues of options in respect of ordinary shares in Booker Group PLC (Booker Shares) linked to a building society/bank save-as-you-earn contract for a term of three years with contributions from Booker colleagues of an amount between ��5 and ��500 per four-weekly period. Following completion of the acquisition of Booker Group PLC by Tesco PLC, Booker colleagues elected to roll over their existing options over Booker Shares under the Booker SAYE into equivalent options over ordinary shares in Tesco PLC (Tesco Shares). The options over Tesco Shares are capable of being exercised at the end of the three-year period at a subscription price equivalent to not less than 80% of the average of the middle-market quotations of a Booker Share over the three dealing days immediately preceding the offer date.

ix. The Booker Group PLC Performance Share Plan (2008) (Booker PSP) permitted the grant of options in respect of Booker Shares to selected Booker senior colleagues (Booker PSP Options). Under the Booker PSP, tax approved Company Share Option Plan options (Booker CSOP Options) were also granted to selected Booker senior colleagues. Following completion of the acquisition of Booker Group PLC by Tesco PLC, Booker senior colleagues elected to roll over their existing Booker PSP and Booker CSOP Options over Booker Shares into equivalent options over Tesco Shares. Booker PSP Options are normally exercisable between the third anniversary of the original date of grant and 10 years from the date of grant for nil consideration. The vesting of options is normally conditional upon the achievement of specified performance targets over a three year period and continuous employment. Conditional on the vesting of the relevant Booker PSP Options, Booker CSOP Options are normally exercisable between the third anniversary of the original date of grant and 10 years from the date of grant at a subscription price equivalent to the market value of the Booker Shares at the time of grant.

The following tables reconcile the number of share options outstanding and the weighted average exercise price (WAEP):

For the 52 weeks ended 27 February 2021

	Savings-related Share Option Scheme	Irish Savings-related Share Option Scheme	Nil cost Share Option Scheme(a)	Booker Group PLC Savings Related Share Option Plan	Booker Group PLC Performance Share Plan	Scheme Other Schemes
	Options	WAEP	Options	WAEP	Options	WAEP
Outstanding at 29 Feb 2020	215,812,094	175.06	6,855,613	185.35	18,455,841	-
Granted	60,005,859	198.00	2,800,186	198.00	516,622	-
Forfeited	(18,268,028)	197.73	(808,107)	194.80	(3,675,500)	-
Exercised	(91,142,849)	151.29	(1,261,423)	153.20	(8,079,580)	-
Outstanding at 27 Feb 2021	166,407,076	193.86	7,586,269	194.35	7,217,383	-
Exercise price range (pence)	150.00 to 219.00		150.00 to 219.00		-
Weighted average remaining contractual life (years)(b)	2.86		2.78		5.18
Exercisable at 27 Feb 2021	4,780,919	151.11	108,223	151.00	7,217,383
Exercise price range (pence)	150.00 to 219.00		150.00 to 219.00
Weighted average remaining contractual life (years)(b)	0.42		0.42		5.18

(a) The special dividend and associated share consolidation had a neutral impact to the number of options.
(b) Contractual life represents the period from award to the scheme end date. Certain schemes may be exercised later than vesting date at the discretion of the individual.

Share options were exercised on a regular basis throughout the financial year. The average share price during the 52 weeks ended 27 February 2021 was 227.07p (2020: 237.69p).# Share-based payments

For the 53 weeks ended 29 February 2020

Scheme	Options Outstanding at 23 February 2019	WAEP	Options Outstanding at 29 February 2020	WAEP
Savings-related Share Option Scheme	215,591,248	168.04	215,812,094	175.06
Irish Savings-related Share Option Scheme	6,470,978	175.06	6,855,613	185.35
Nil cost Share Option Scheme	25,377,129	-	18,455,841	-
Booker Group PLC Savings Related Share Option Plan	9,827,705	145.36	5,100,149	151.21
Booker Group PLC Performance Share Plan Scheme	11,222,347	-	4,976,236	-
Other Schemes*	12,379,637	-	-	-

Scheme	Granted	WAEP	Forfeited	WAEP	Exercised	WAEP
Savings-related Share Option Scheme	44,387,158	219.00	(23,512,462)	200.62	(20,653,850)	167.18
Irish Savings-related Share Option Scheme	1,977,339	219.00	(1,062,090)	187.69	(530,614)	180.60
Nil cost Share Option Scheme	537,271	-	(5,502,793)	-	(1,955,766)	-
Booker Group PLC Savings Related Share Option Plan	-	-	(766,057)	147.40	(3,961,499)	137.46
Booker Group PLC Performance Share Plan Scheme	-	-	(2,870,980)	-	(3,375,131)	-
Other Schemes*	-	-	(12,379,637)	-	-	-

Exercise price range (pence)
* Savings-related Share Option Scheme: 150.00 to 322.00
* Irish Savings-related Share Option Scheme: 150.00 to 219.00
* Booker Group PLC Savings Related Share Option Plan: 137.13 to 152.78

Weighted average remaining contractual life (years)
* Savings-related Share Option Scheme: 2.09
* Irish Savings-related Share Option Scheme: 2.55
* Nil cost Share Option Scheme: 6.39
* Booker Group PLC Savings Related Share Option Plan: 1.32
* Booker Group PLC Performance Share Plan Scheme: 0.51

Exercisable at 29 February 2020
* Savings-related Share Option Scheme: 2,948,571 (189.92)
* Irish Savings-related Share Option Scheme: 243,886 (190.00)
* Nil cost Share Option Scheme: 9,359,089
* Booker Group PLC Savings Related Share Option Plan: 523,817 (137.45)
* Booker Group PLC Performance Share Plan Scheme: 977,437

Exercise price range (pence)
* Savings-related Share Option Scheme: 150.00 to 322.00
* Irish Savings-related Share Option Scheme: 190.00
* Booker Group PLC Savings Related Share Option Plan: 137.45

Weighted average remaining contractual life (years)
* Savings-related Share Option Scheme: 0.41
* Irish Savings-related Share Option Scheme: 0.42
* Nil cost Share Option Scheme: 5.60
* Booker Group PLC Savings Related Share Option Plan: 0.42

• Other Schemes includes Approved Share Option Scheme (Approved), Unapproved Share Option Scheme (Unapproved), and International Executive Share Option Scheme (International). The WAEP for all other schemes at 29 February 2020 was 338.40p and all options were forfeited during the year.

Notes to the Group financial statements

Note 28 Share-based payments continued

The fair value of savings related share options schemes are estimated at the date of grant using the Black-Scholes option pricing model. The following table gives the assumptions applied to the options granted in the respective periods shown. No assumption has been made to incorporate the effects of expected early exercise.

Assumption	2021 SAYE	2020 SAYE
Expected dividend yield (%)	4.90-5.05%	3.70-4.28%
Expected volatility (%)	23.00-25.60%	22.60-28.09%
Risk-free interest rate (%)	0.15-0.26%	0.81-0.84%
Expected life of option (years)	3 or 5	3 or 5
Weighted average fair value of options granted (pence)	27.13	38.56
Probability of forfeiture (%)	6-10%	7-10%
Share price (pence)	219.60	243.00
Weighted average exercise price (pence)	198.00	219.00

Volatility is a measure of the amount by which a price is expected to fluctuate during a period. The measure of volatility used in the Group's option pricing models is the annualised standard deviation of the continuously compounded rates of return on the share over a period of time. In estimating the future volatility of the Company's share price, the Board considers the historical volatility of the share price over the most recent period that is generally commensurate with the expected term of the option, taking into account the remaining contractual life of the option.

Share bonus and incentive schemes

Selected executives participate in the Group Bonus Plan, a performance-related bonus scheme. The amount paid to colleagues is based on a percentage of salary and is paid partly in cash and partly in shares. Bonuses are awarded to selected executives who have completed a required service period and depend on the achievement of corporate and individual performance targets.

Selected executives participate in the Performance Share Plan (2011) and the Long Term Incentive Plan (2015). Awards made under these plans will normally vest on the vesting date(s) set on the date of the award for nil consideration. Vesting will normally be conditional on the achievement of specified performance targets over a three-year performance period and/or continuous employment.

The Executive Directors participate in short-term bonus and long-term incentive schemes designed to align their interests with those of shareholders. Full details of these schemes can be found in the Directors' remuneration report.

The fair value of shares awarded under these schemes is their market value on the date of award. Expected dividends are not incorporated into the fair value.

The number and weighted average fair value (WAFV) of share bonuses and share incentives awarded were:

Scheme	2021 Number	WAFV of shares pence	2020 Number	WAFV of shares pence
Group Bonus Plan	11,496,310	237.80	39,136,637	233.77
Performance Share Plan	15,502,105	246.70	25,024,909	221.72

Note 29 Post-employment benefits

Pensions

The Group operates a variety of post-employment benefit arrangements, covering both funded and unfunded defined benefit schemes and defined contribution schemes.

Defined contribution

Defined contribution schemes are open to all Tesco employees in the UK. Under the Group's defined contribution pension schemes, employees of the Group pay contributions to an independently administered fund, into which the Group also pays contributions based upon a fixed percentage of the employee's contributions. The Group has no further payment obligations once its contributions have been paid. Contributions paid for defined contribution schemes in continuing operations of £347m (2020: £329m) have been recognised in the Group income statement. This includes £132m (2020: £116m) of salaries paid as pension contributions.

Defined benefit schemes

The Group has a defined benefit pension deficit of £1,222m (2020: £3,085m), comprising a number of schemes. The most significant of these are for the Group's employees in the UK, which are closed to future accrual, and ROI. The defined benefit pension deficit in the UK represents 86% of the Group deficit (2020: 92%).

Guaranteed minimum pension

During the year, a further high court judgement was handed down regarding the Lloyd's Banking Group's defined benefit pension schemes, which affects many schemes in the UK, including the Group's UK schemes. This ruling requires pension schemes to also consider the impact of guaranteed minimum pensions (GMPs) equalisation on individual transfer payments made since May 1990. In consultation with independent actuaries, the Group recognised the financial effect of this as a one-off £7m exceptional past service cost in the current year. This is presented as an exceptional item in the income statement (Note 4).

United Kingdom

The principal plan within the Group is the Tesco PLC Pension Scheme (the Scheme), the assets of which are held as a segregated fund and administered by the Trustee. The Scheme is established under trust law and has a corporate trustee (the Trustee) that is required to run the Scheme in accordance with the Scheme's Trust Deed and Rules and to comply with all relevant legislation. Responsibility for governance of the Scheme lies with the Trustee. The Trustee is a company whose directors comprise:
1. representatives of the Group; and
2. representatives of the Scheme participants, in accordance with its articles of association and UK pension law.

Scheme funding

The Group considers two measures of the pension deficit. The accounting position is shown on the Group balance sheet. The funding position, calculated at the triennial actuarial assessment, is used to agree contributions made to the schemes. The two measures will vary because they are for different purposes, and are calculated at different dates and in different ways. The key calculation difference is that the funding position considers the expected returns of scheme assets when calculating the liability, whereas the accounting position calculated under IAS 19 discounts liabilities based on corporate bond yields.

The most recent completed triennial actuarial assessment of the Scheme was performed as at 31 December 2019 using the projected unit credit method. After the £2.5bn contribution in relation to the Group's sale of its operations in Thailand and Malaysia, the funding position was a surplus of £570m. The market value of the Scheme's assets was £18,492m and these assets represented 103% of the benefits that had accrued to members, after allowing for expected increases in pensions in payment. Subsequent to this triennial actuarial assessment it was agreed that no further pension deficit contributions would be required, with contributions being assessed at the next triennial review. The £2.5bn contribution has significantly reduced the prospect of having to make further pension deficit contributions in the future. The Group will continue to pay £25m per annum to meet expenses of the Scheme, including the Pension Protection Fund levy. Additionally, as part of the triennial review it was agreed that the market value of assets held as security in favour of the Scheme would increase to at least £775m (2020: £575m).

The most recent Booker Pension Scheme triennial valuation showed a funding deficit of £103m at 31 March 2019, with agreed contributions of £15m per annum until the end of 2028. No contributions were required for the Budgens or Londis schemes.

IFRIC 14

The Group is not required to recognise any additional liabilities in relation to funding plans, or limit the recognition of any surpluses, as any future economic benefits will be available to the Group by way of future refunds or reductions to future contributions.

Maturity profile of obligations

The estimated duration of the Scheme obligations is an indicator of the weighted average term of benefit payments after discounting. For the Scheme this is 23 years. Around 40% of the undiscounted benefits are due to be paid beyond 30 years' time, with the last payments expected to be over 80 years from now.# Notes to the Group financial statements

Note 29 Post-employment benefits continued

The liabilities held by the Scheme are broken down as follows:

Deferred members	78
Current pensioners	22

Risks

The Group bears a number of risks in relation to the Scheme, which are described below:

| Risk | Description of risk The table below shows a breakdown of the combined investments held by the Group's schemes:

	2021				2020
	Quoted ��m	Unquoted ��m	Total ��m	%	Quoted ��m	Unquoted ��m	Total ��m	%
Equities
UK	89	-	89	1	255	-	255	2
Europe	889	-	889	4	746	-	746	4
Rest of the world	4,502	-	4,502	22	4,347	-	4,347	25
	5,480	-	5,480	27	5,348	-	5,348	31
Bonds
Government	1,377	-	1,377	6	750	-	750	4
Corporates - investment grade	3,334	-	3,334	17	1,362	-	1,362	8
Corporates - non-investment grade	197	-	197	1	2	-	2	-
	4,908	-	4,908	24	2,114	-	2,114	12
Property
UK	78	1,041	1,119	6	44	1,036	1,080	6
Rest of the world	6	440	446	2	7	475	482	3
	84	1,481	1,565	8	51	1,511	1,562	9
Alternative assets
Hedge funds	1	312	313	2	2	304	306	2
Private equity	-	1,020	1,020	5	-	881	881	5
Other	210	1,288	1,498	7	225	1,043	1,268	7
	211	2,620	2,831	14	227	2,228	2,455	14
LDI portfolio	3,241	(493)	2,748	14	4,580	444	5,024	29
Cash	2,550	-	2,550	13	922	-	922	5
Total fair value of plan assets	16,474	3,608	20,082	100	13,242	4,183	17,425	100

Quoted assets are those with a quoted price in an active market. Unquoted assets are valued in accordance with IFRS13, using the most appropriate level within the fair value hierarchy based on the specifics of the asset class, and in line with industry standard guidelines, including the RICS methodology for property and the IPEV guidelines for Private Equity. The LDI portfolio consists of assets, including gilts and index-linked gilts, of the value of £8,425m (2020: £8,115m) and associated repurchase agreements and swaps of £(5,677)m (2020: £(3,091)m). Other alternative assets include infrastructure and private credit investments. Other derivatives are included in the asset category to which they relate, reflecting the underlying nature and exposure of the derivative. The plan assets include £222m (2020: £209m) relating to property used by the Group. Group property with net carrying value of £826m (2020:£478m) (Note 11) and a value to the Scheme of at least £775m (2020: £575m) is held as security in favour of the Scheme.

Notes to the Group financial statements

Note 29 Post-employment benefits continued

Movement in the Group pension deficit during the financial year

Including all movements of discontinued operations up to classification as held for sale(a)

	Fair value of plan assets	Defined benefit obligation	Net defined benefit surplus/(deficit)
	2021 ��m	2020 ��m	2021 ��m
Opening balance	17,425	15,054	(20,510)
Current service cost	-	-	(41)
Past service cost	-	-	(7)
Finance income/(cost)	341	409	(384)
Included in the Group income statement	341	409	(432)
Remeasurement gain/(loss):
Financial assumptions gain/(loss)	-	-	(1,193)
Demographic assumptions gain/(loss)	-	-	18
Experience gain/(loss)	-	-	354
Return on plan assets excluding finance income	(136)	2,158	-
Foreign currency translation	1	(3)	(4)
Included in the Group statement of comprehensive income/(loss)	(135)	2,155	(825)
Member contributions	2	2	(2)
Employer contributions	34	36	-
Additional employer contributions	2,836	262	-
Benefits paid	(421)	(493)	436
Classified as held for sale	-	-	29
Other movements	2,451	(193)	463
Closing balance	20,082	17,425	(21,304)
Deferred tax asset
Deficit in schemes at the end of the year, net of deferred tax

(a) Movements in the year include £nil relating to discontinued operations up to classification as held for sale. After classification as held for sale post-employment benefit obligations movements within discontinued operations included £(1)m within the Group income statement, £(6)m remeasurement loss in the Group statement of comprehensive income/(loss) and £2m in other movements.

(b) Movements in the prior year in relation to discontinued operations included £(8)m within the Group income statement, £(3)m in the Group statement of comprehensive income/(loss) and £1m in other movements

Note 30 Called-up share capital

	2021		2020
	Number of Ordinary shares	��m	Number of Ordinary shares	��m
Allotted, called-up and fully paid:
At the beginning of the year	9,793,496,561	490	9,793,496,561	490
Share consolidation (including shares issued(a))	(2,061,788,741)	-		-
At the end of the year	7,731,707,820	490	9,793,496,561	490

(a) To affect the share consolidation, 11 additional Ordinary shares were issued so that the total Ordinary shares is exactly divisible by 19. On 26 February 2021, the Group paid a special dividend of £4.9bn to shareholders in relation to the sale of its businesses in Thailand and Malaysia. In order to maintain the comparability of the Company's share price before and after the special dividend, a share consolidation was approved at the General Meeting held on 11 February 2021. Shareholders received 15 new Ordinary shares of 6 1/3 pence each for every existing 19 Ordinary shares of 5 pence each. No shares were issued during the current financial year in relation to share options. The Group has a share forfeiture programme following the completion of a tracing and notification exercise to any shareholders who have not had contact with the Company over the past 12 years, in accordance with the provisions set out in the Company's Articles of Association. Under the share forfeiture programme the shares and dividends associated with shares of untraced members are forfeited, with the resulting proceeds transferred to the Group to use for good causes in line with the Group's corporate responsibility strategy. For more information on how these proceeds have been spent, please see our Little Helps Plan Report (available at www.tescoplc.com/littlehelpsplan). During the current financial year, the Group received £nil (2020: £nil) proceeds from sale of untraced shares and £nil (2020: £nil) write-back of unclaimed dividends, which are reflected in share premium and retained earnings respectively. As at 27 February 2021, the Directors were authorised to purchase up to a maximum in aggregate of 773.2 million (2020: 979.3 million) Ordinary shares before the AGM 2021 on 25 June 2021. The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.

Own shares purchased

Own shares represent the shares of Tesco PLC that are held in Treasury or by the Employee Benefit Trust. Own shares are recorded at cost and are deducted from equity. The own shares held represents the cost of shares in Tesco PLC purchased from the market and held by the Tesco International Employee Benefit Trust to satisfy share awards under the Group's share scheme plans (refer to Note 28). The number of Ordinary shares held by the Tesco International Employee Benefit Trust at 27 February 2021 was 58.4 million (2020: 87.6 million). This represents 0.76% of called-up share capital at the end of the year (2020: 0.89%). No own shares held of Tesco PLC were cancelled during the financial years presented.

Note 31 Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures and associates are disclosed below:

Transactions	Joint venture 2021 ��m	Joint venture 2020 ��m	Associate 2021 ��m	Associate 2020 ��m
Sales to related parties	479	491	-	-
Purchases from related parties	87	100	10	12
Dividends received	18	29	8	13
Injection of equity funding	14	-	-	12

Sales to related parties consist of service/management fees and loan interest. Transactions between the Group and the Group's pension plans are disclosed in Note 29.

Balances	Joint ventures 2021 ��m	Joint ventures 2020 ��m	Associates 2021 ��m	Associates 2020 ��m
Amounts owed to related parties	23	26	-	-
Amounts owed by related parties	40	47	-	-
Lease liabilities payable to related parties	2,718	3,206	144	146
Loans to related parties (net of deferred profits)*	122	127	-	-

• Loans to related parties of £122m (2020: £127m) are presented net of deferred profits of £38m (2020: £54m), historically arising from the sale of property assets to joint ventures. Refer to Note 14 for further details. For loans to related parties, a 12-month expected credit loss (ECL) allowance is recorded on initial recognition. In the current and prior financial years, the ECL allowance was immaterial. A number of the Group's subsidiaries are members of one or more partnerships to whom the provisions of the Partnerships (Accounts) Regulations 2008 (Regulations) apply. The financial statements for those partnerships have been consolidated into these financial statements pursuant to Regulation 7 of the Regulations.

Transactions with key management personnel

Members of the Board of Directors and Executive Committee of Tesco PLC are deemed to be key management personnel. Cost of key management personnel compensation for the financial year was as follows:

	2021 ��m	2020 ��m
Salaries and short-term benefits	20	20
Pensions and cash in lieu of pensions	2	2
Share-based payments	20	16
Joining costs and loss of office costs	-	1
	42	39
Attributable to:
The Board of Directors (including Non-executive Directors)	14	10
Executive Committee (members not on the Board of Directors)	28	29
	42	39

During the year 6,403,309 (2020: 8,470,986) Performance Shares and 2,615,921 (2020: 1,539,924) bonus shares were granted to key management personnel under the Performance Share Plan and Deferred Bonus Plan 2019 respectively. Vesting will be conditional on the achievement of specified performance targets over a three-year performance period and/or continuous employment. The cost of these awards will be spread over the vesting period.# Notes to the Group financial statements

Note 32 Analysis of changes in net debt

Non-cash movements

	At 29 February 2020 ��m	Cash flows arising from financing activities ��m	Other cash flows ��m	Fair value gains/ (losses) ��m	Foreign exchange ��m	Interest income/ (charge) ��m	Acquisitions and disposals (a) ��m	Other ��m	Discontinued operations ��m	At 27 February 2021 ��m
Total Group
Bank and other borrowings, excluding overdrafts	(7,118)	716	223	(41)	(2)	(226)	(288)	-	-	(6,736)
Lease liabilities	(9,566)	621	488	-	-	(488)	977	(568)	134	(8,402)
Net derivative financial instruments	198	580	18	(203)	-	(20)	(118)	-	-	455
Arising from financing activities	(16,486)	1,917	729	(244)	(2)	(734)	571	(568)	134	(14,683)
Cash and cash equivalents in the Group balance sheet	4,137	-	(1,607)	-	8	-	-	-	(28)	2,510
Overdrafts(b)	(1,106)	-	539	-	-	-	-	-	35	(532)
Cash and cash equivalents (including overdrafts) in the Group cash flow statement	3,031	-	(1,068)	-	8	-	-	-	7	1,978
Short-term investments	1,076	-	(62)	-	(3)	-	-	-	-	1,011
Joint venture loans	127	-	2	-	2	(9)	-	-	-	122
Interest and other receivables	1	-	(12)	-	-	11	-	-	-	-
Net debt of the disposal group	-	-	-	-	-	-	-	-	(141)	(141)
Total Group	(12,251)	1,917	(411)	(244)	3	(721)	562	(568)	-	(11,713)
Tesco Bank
Bank and other borrowings, excluding overdrafts	(1,260)	774	4	(1)	-	(4)	-	-	-	(487)
Lease liabilities	(33)	3	2	-	-	(2)	-	-	-	(30)
Net derivative financial instruments	(45)	-	-	3	-	-	-	-	-	(42)
Arising from financing activities	(1,338)	777	6	2	-	(6)	-	-	-	(559)
Cash and cash equivalents in the Group balance sheet	1,364	-	(584)	-	-	-	-	-	-	780
Overdrafts(b)	-	-	-	-	-	-	-	-	-	-
Cash and cash equivalents (including overdrafts) in the Group cash flow statement	1,364	-	(584)	-	-	-	-	-	-	780
Joint ventures loans	21	-	-	-	-	-	-	-	-	21
Tesco Bank	47	777	(578)	2	-	(6)	-	-	-	242
Retail
Bank and other borrowings, excluding overdrafts	(5,858)	(58)	219	(40)	(2)	(222)	(288)	-	-	(6,249)
Lease liabilities	(9,533)	618	486	-	-	(486)	977	(568)	134	(8,372)
Net derivative financial instruments	243	580	18	(206)	-	(20)	(118)	-	-	497
Arising from financing activities	(15,148)	1,140	723	(246)	(2)	(728)	571	(568)	134	(14,124)
Cash and cash equivalents in the Group balance sheet	2,773	-	(1,023)	-	8	-	-	-	(28)	1,730
Overdrafts(b)	(1,106)	-	539	-	-	-	-	-	35	(532)
Cash and cash equivalents (including overdrafts) in the Group cash flow statement	1,667	-	(484)	-	8	-	-	-	7	1,198
Short-term investments	1,076	-	(62)	-	(3)	-	-	-	-	1,011
Joint ventures loans	106	-	2	-	2	(9)	-	-	-	101
Interest and other receivables	1	-	(12)	-	-	11	-	-	-	-
Net debt of the disposal group	-	-	-	-	-	-	-	-	(141)	(141)
Net debt	(12,298)	1,140	167	(246)	3	(715)	562	(568)	-	(11,955)

(a) Movements in Group net debt arising from the disposal of the Group's Thailand and Malaysia operations, the acquisition of The Tesco Property (No. 2) Limited Partnership and the acquisition of the trade and assets of Best Food Logistics. Refer to Notes 7 and 33 for further details.
(b) Overdraft balances are included within Bank and other borrowings in the Group balance sheet, and within Cash and cash equivalents in the Group cash flow statement. Refer to Note 20. Net debt excludes the net debt of Tesco Bank but includes that of discontinued operations. Balances and movements in respect of the total Group and Tesco Bank are presented to allow reconciliation between the Group balance sheet and the Group cash flow statement.

Non-cash movements continued

	At 23 February 2019 ��m	Cash flows arising from financing activities ��m	Other cash flows ��m	Fair value gains/ (losses) ��m	Foreign exchange ��m	Interest income/ (charge) ��m	Acquisition of joint venture(a) ��m	Other ��m	At 29 February 2020 ��m
Total Group
Bank and other borrowings, excluding overdrafts	(6,794)	484	255	(192)	2	(251)	(622)	-	(7,118)
Lease liabilities	(10,505)	634	541	-	1	(541)	455	(151)	(9,566)
Net derivative financial instruments	591	17	7	(208)	-	14	(223)	-	198
Arising from financing activities	(16,708)	1,135	803	(400)	3	(778)	(390)	(151)	(16,486)
Cash and cash equivalents in the Group balance sheet	4,227	-	(48)	-	(42)	-	-	-	4,137
Overdrafts(b)	(1,660)	-	554	-	-	-	-	-	(1,106)
Cash and cash equivalents (including overdrafts) in the Group cash flow statement	2,567	-	506	-	(42)	-	-	-	3,031
Short-term investments	390	-	687	-	(1)	-	-	-	1,076
Joint venture loans	133	-	(8)	-	-	2	-	-	127
Interest and other receivables	1	-	(18)	-	(1)	19	-	-	1
Total Group	(13,617)	1,135	1,970	(400)	(41)	(757)	(390)	(151)	(12,251)
Tesco Bank
Bank and other borrowings, excluding overdrafts	(1,421)	160	5	1	-	(5)	-	-	(1,260)
Lease liabilities	(35)	2	3	-	-	(3)	-	-	(33)
Net derivative financial instruments	(29)	-	-	(16)	-	-	-	-	(45)
Arising from financing activities	(1,485)	162	8	(15)	-	(8)	-	-	(1,338)
Cash and cash equivalents in the Group balance sheet	1,043	-	321	-	-	-	-	-	1,364
Overdrafts(b)	-	-	-	-	-	-	-	-	-
Cash and cash equivalents (including overdrafts) in the Group cash flow statement	1,043	-	321	-	-	-	-	-	1,364
Joint ventures loans	29	-	(8)	-	-	-	-	-	21
Tesco Bank	(413)	162	321	(15)	-	(8)	-	-	47
Retail
Bank and other borrowings, excluding overdrafts	(5,373)	324	250	(193)	2	(246)	(622)	-	(5,858)
Lease liabilities	(10,470)	632	538	-	1	(538)	455	(151)	(9,533)
Net derivative financial instruments	620	17	7	(192)	-	14	(223)	-	243
Arising from financing activities	(15,223)	973	795	(385)	3	(770)	(390)	(151)	(15,148)
Cash and cash equivalents in the Group balance sheet	3,184	-	(369)	-	(42)	-	-	-	2,773
Overdrafts(b)	(1,660)	-	554	-	-	-	-	-	(1,106)
Cash and cash equivalents (including overdrafts) in the Group cash flow statement	1,524	-	185	-	(42)	-	-	-	1,667
Short-term investments	390	-	687	-	(1)	-	-	-	1,076
Joint ventures loans	104	-	-	-	-	2	-	-	106
Interest and other receivables	1	-	(18)	-	(1)	19	-	-	1
Net debt	(13,204)	973	1,649	(385)	(41)	(749)	(390)	(151)	(12,298)

(a) Movements in Group net debt arising from the acquisition of The Tesco Atrato Limited Partnership.
(b) Overdraft balances are included within Bank and other borrowings in the Group balance sheet, and within Cash and cash equivalents in the Group cash flow statement. Refer to Note 20.

Note 32 Analysis of changes in net debt continued

Reconciliation of net cash flow to movement in Net debt

	2021 ��m	2020 ��m
Net increase/(decrease) in cash and cash equivalents including overdrafts	(1,068)	506
Elimination of Tesco Bank movement in cash and cash equivalents including overdrafts	584	(321)
Retail cash movement in other
Net increase/(decrease) in short-term investments	(62)	687
Net increase/(decrease) in joint venture loans	2	-
Net (increase)/decrease in borrowings and lease liabilities	560	956
Net cash flows from derivative financial instruments	580	17
Net interest paid on components of Net debt	711	777
Change in Net debt resulting from cash flow	1,307	2,622
Retail net interest charge on components of Net debt	(715)	(749)
Retail fair value and foreign exchange movements	(243)	(426)
Retail other non-cash movements	(568)	(151)
Acquisition of property joint venture (Note 33)	(161)	(390)
Acquisition of Best Food Logistics (Note 33)	(42)	-
Disposal of the Asia business (Note 7)	765	-
Increase)/ decrease in Net debt	343	906
Opening Net debt	(12,298)	(13,204)
Closing Net debt*	(11,955)	(12,298)

* Refer to page 130 for a reconciliation from Net debt (Retail net debt) shown above to the Group's 52-week alternative performance measure.

Note 33 Acquisitions

Acquisition of Best Food Logistics

On 7 March 2020, the Group acquired the trade and assets of Best Food Logistics (trading name of BFS Group Ltd), which has been accounted for as an acquisition of a business in accordance with IFRS 3 'Business Combinations'. Best Food Logistics provides a food supply chain and logistics services to national fast food and casual dining clients. The acquisition builds on the Group's expertise in wholesale operations in the UK market and will further enhance its foodservice offer to customers within procurement, warehousing and distribution solutions. The purchase consideration received by the Group of ��15m was fully satisfied by cash. There is no deferred or contingent consideration.

The fair value of the assets and liabilities recognised as a result of the acquisition of Best Food Logistics are as follows:

	��m
Acquired intangible assets	4
Property, plant and equipment	12
Right of use assets	41
Inventories	27
Trade and other receivables	77
Trade and other payables	(128)
Lease liabilities	(42)
Deferred tax liabilities	(2)
Provisions	(5)
Total assets and liabilities acquired	(16)
Goodwill	1
Purchase consideration received	(15)

The goodwill is primarily attributable to synergies. None of the goodwill is expected to be deductible for tax purposes. Acquired intangible assets comprise software of ��1m and customer relationships of ��3m, which are amortised over 3 years. The amortisation charge on the acquired intangibles is excluded from the Group's operating profit before exceptional items and amortisation of acquired intangibles. The fair value of acquired trade and other receivables is ��77m. The gross contractual amount for trade receivables due was ��78m, of which ��1m is expected to be uncollectable. Best Food Logistics contributed revenues of ��715m and net loss after tax of ��14m to the Group from 7 March 2020 to 27 February 2021. The ��14m loss includes ��1m of amortisation expense on acquired intangible assets.# Note 35 Tesco Bank capital resources

The following tables analyse the regulatory capital resources of Tesco Personal Finance PLC (TPF), being the regulated entity at the balance sheet date:

	2021 ��m	2020 ��m
Common equity tier 1 capital: Shareholders' funds and non-controlling interests, net of tier 1 regulatory adjustments	1,443	1,567
Tier 2 capital: Qualifying subordinated debt	235	235
Other interests	-	-
Total tier 2 regulatory adjustments	(21)	(21)
Total regulatory capital	1,657	1,781

On 27 June 2013, the final Capital Requirements Directive IV (CRD IV) rules were published in the Official Journal of the European Union. Following the publication of the CRD IV rules, the Prudential Regulation Authority (PRA) issued a policy statement on 19 December 2013 detailing how the rules will be enacted within the UK with corresponding timeframes for implementation. The CRD IV rules are currently being phased in. It is the Group's policy to maintain a strong capital base, to expand it as appropriate and to utilise it efficiently throughout its activities to optimise the return to shareholders while maintaining a prudent relationship between the capital base and the underlying risks of the business. In carrying out this policy, the Group has regard to the supervisory requirements of the PRA.

Note 36 Events after the reporting period

During the year, the Board approved plans to dispose of the Group's operations in Poland. The disposal of the Group's corporate business in Poland completed after the balance sheet date on 16 March 2021. Refer to Notes 1 and 7 for details of the Group's operations in Poland classified as held for sale at the balance sheet date.

Tesco PLC - Parent Company balance sheet

	Notes	27 February 2021 ��m	29 February 2020 ��m
Non-current assets
Investments	6	16,963	17,829
Receivables	7	259	1,043
Derivative financial instruments	10	1,536	1,167
		18,758	20,039
Current assets
Receivables	7	1,514	547
Cash in hand		96	249
		1,610	796
Current liabilities
Borrowings	9	(463)	(43)
Payables	8	(810)	(238)
		(1,273)	(281)
Net current assets/(liabilities)		337	515
Non-current liabilities
Borrowings	9	(1,415)	(2,285)
Payables	8	(1,293)	(82)
Derivative financial instruments	10	(630)	(735)
		(3,338)	(3,102)
Net assets		15,757	17,452
Equity
Share capital	13	490	490
Share premium		5,165	5,165
All other reserves		2,972	2,950
Retained earnings (including profit/(loss) for the financial year of ��4,250m (2020: ��(21)m)		7,130	8,847
Total equity		15,757	17,452

The notes on pages 111 to 116 form part of these financial statements.

Ken Murphy
Alan Stewart
Directors

The Parent Company financial statements on pages 109 to 116 were approved and authorised for issue by the Directors on 13 April 2021.

Tesco PLC
Registered number 00445790

Tesco PLC - Parent Company statement of changes in equity

	Share capital ��m	Share premium ��m	All other reserves Capital Redemption reserve ��m	Cost of hedging reserve ��m	Hedging reserve ��m	Own shares held ��m	Merger reserve ��m	Retained earnings ��m	Total equity ��m
At 29 February 2020	490	5,165	16	(19)	153	(250)	3,050	8,847	17,452
Profit/(loss) for the year	-	-	-	-	-	-	-	4,250	4,250
Other comprehensive income/(loss)	-	-	-	-	-	-	-	-	-
Gains/(losses) on cash flow hedges	-	-	-	20	(18)	-	-	-	2
Reclassified and reported in the Company income statement	-	-	-	-	(47)	-	-	-	(47)
Tax relating to components of other comprehensive income	-	-	-	(1)	6	-	-	-	5
Total other comprehensive income/(loss)	-	-	-	19	(59)	-	-	-	(40)
Total comprehensive income/(loss)	-	-	-	19	(59)	-	-	4,250	4,210
Transactions with owners	-	-	-	-	-	-	-	-	-
Purchase of own shares	-	-	-	-	-	(246)	-	-	(246)
Share-based payments	-	-	-	-	-	308	-	(75)	233
Dividends	-	-	-	-	-	-	-	(5,892)	(5,892)
Total transactions with owners	-	-	-	-	-	62	-	(5,967)	(5,905)
At 27 February 2021	490	5,165	16	-	94	(188)	3,050	7,130	15,757

	Share capital ��m	Share premium ��m	All other reserves Capital Redemption reserve ��m	Cost of hedging reserve ��m	Hedging reserve ��m	Own shares held ��m	Merger reserve ��m	Retained earnings ��m	Total equity ��m
At 23 February 2019	490	5,165	16	(13)	95	(179)	3,050	9,468	18,092
Profit/(loss) for the year	-	-	-	-	-	-	-	(21)	(21)
Other comprehensive income/(loss)	-	-	-	-	-	-	-	-	-
Gains/(losses) on cash flow hedges	-	-	-	(7)	92	-	-	-	85
Reclassified and reported in the Company income statement	-	-	-	-	(23)	-	-	-	(23)
Tax relating to components of other comprehensive income	-	-	-	1	(11)	-	-	-	(10)
Total other comprehensive income/(loss)	-	-	-	(6)	58	-	-	-	52
Total comprehensive income/(loss)	-	-	-	(6)	58	-	-	(21)	31
Transactions with owners	-	-	-	-	-	-	-	-	-
Purchase of own shares	-	-	-	-	-	(221)	-	-	(221)
Share-based payments	-	-	-	-	-	150	-	56	206
Dividends	-	-	-	-	-	-	-	(656)	(656)
Total transactions with owners	-	-	-	-	-	(71)	-	(600)	(671)
At 29 February 2020	490	5,165	16	(19)	153	(250)	3,050	8,847	17,452

The Company has considered the profits available for distribution to shareholders. At 27 February 2021, the Company had retained earnings of ��7.1bn, of which the unrealised profit elements are ��1.6bn of share-based payment reserves and ��0.7bn of dividends received from subsidiary undertakings not yet settled by qualifying consideration. After deducting the cost of its own shares held in trust of ��0.2bn, the Company had profits available for distribution of ��4.6bn.

The notes on pages 111 to 116 form part of these financial statements.

Notes to the Parent Company financial statements

Note 1 Authorisation of financial statements and statement of compliance with FRS 101

The Parent Company financial statements for the 52 weeks ended 27 February 2021 were approved by the Board of Directors on 13 April 2021 and the Company balance sheet was signed on the Board's behalf by Ken Murphy and Alan Stewart. These financial statements were prepared in accordance with Financial Reporting Standard 101, 'Reduced Disclosure Framework' (FRS 101). The Company meets the definition of a qualifying entity under FRS 100, 'Application of Financial Reporting Requirements' as issued by the Financial Reporting Council. The Company's financial statements are presented in Pounds Sterling, its functional currency, generally rounded to the nearest million. The principal accounting policies adopted by the Company are set out in Note 2. The financial statements have been prepared under the historical cost convention, except for certain financial instruments and share-based payments that have been measured at fair value.

Note 2 Accounting policies

Basis of preparation of financial statements

The Parent Company financial statements have been prepared in accordance with FRS 101 and the Companies Act 2006 (the Act). FRS 101 sets out a reduced disclosure framework for a 'qualifying entity' as defined in the standard which addresses the financial reporting requirements and disclosure exemptions in the individual financial statements of qualifying entities that otherwise apply the recognition, measurement and disclosure requirements of adopted IFRS. The financial year represents the 52 weeks to 27 February 2021 (prior financial year 53 weeks to 29 February 2020). As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to business combinations, financial instruments, capital management, presentation of comparative information in respect of certain assets, presentation of a cash flow statement, impairment of assets, share-based payments and related party transactions. Where required, equivalent disclosures are given in the consolidated financial statements of Tesco PLC. The Parent Company financial statements are prepared on a going concern basis as set out in Note 1 of the consolidated financial statements of Tesco PLC. The Directors have taken advantage of the exemption available under section 408 of the Companies Act 2006 and not presented an income statement or a statement of comprehensive income for the Company alone. A summary of the Company's significant accounting policies is set out below.

Investments in subsidiaries and joint ventures

Investments in subsidiaries and joint ventures are stated at cost less, where appropriate, provisions for impairment. The Company tests the investment balances for impairment annually or when there are indicators of impairment.

Foreign currencies

Transactions in foreign currencies are translated to the functional currency at the exchange rate on the date of the transaction. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated to the functional currency at the rates prevailing on the balance sheet date.

Share-based payments

The fair value of employee share option plans is calculated at the grant date using the Black-Scholes or Monte Carlo model. The resulting cost is charged to the Company income statement over the vesting period. The value of the charge is adjusted to reflect expected and actual levels of vesting. Where the Company awards shares or options to employees of subsidiary entities, this is treated as a capital contribution.

Own shares held

Own shares represent the shares of Tesco PLC that are held in Treasury or by the Employee Benefit Trust. The Company adopts a 'look-through' approach which, in substance, accounts for the trust as an extension of the Company. Own shares are recorded at cost and are deducted from equity.

Financial instruments

Financial assets and financial liabilities are recognised in the Company balance sheet when the Company becomes party to the contractual provisions of the instrument.

Receivables

Receivables are recognised initially at fair value, and subsequently at amortised cost using the effective interest rate method, less any expected credit losses.

Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.# Notes to the Parent Company financial statements continued

Note 2 Accounting policies continued

An equity instrument is any contract that gives a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs.

Interest-bearing borrowings

Interest-bearing bank loans and overdrafts are initially recognised at fair value and net of attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any differences between proceeds and redemption value being recognised in the Company income statement over the period of the borrowings on an effective interest basis.

Payables

Payables are recognised initially at fair value, and subsequently at amortised cost using the effective interest rate method.

Derivative financial instruments and hedge accounting

The Company uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing and investing activities. The Company does not hold or issue derivative financial instruments for trading purposes.

Derivative financial instruments are recognised and stated at fair value. Where derivatives do not qualify for hedge accounting, any gains or losses on remeasurement are immediately recognised in the Company income statement. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge relationship and the item being hedged.

In order to qualify for hedge accounting, the Company is required to document from inception, the relationship between the item being hedged and the hedging instrument. The Company is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument, which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is performed at each reporting date to ensure that the hedge remains highly effective.

Derivative financial instruments with maturity dates of more than one year from the reporting date are disclosed as non-current.

Fair value hedging

Derivative financial instruments are classified as fair value hedges when they hedge the Company's exposure to changes in the fair value of a recognised asset or liability. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Company income statement, together with any changes in the fair value of the hedged item that is attributable to the hedged risk. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item is amortised to the Company income statement over the remaining period to maturity.

Cash flow hedging

Derivative financial instruments are classified as cash flow hedges when they hedge the Company's exposure to variability in cash flows that are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted transaction.

The effective element of any gain or loss from remeasuring the derivative designated as the hedging instrument is recognised directly in the Company statement of comprehensive income and accumulated in the hedging reserve. Any cost of hedging, such as the change in fair value related to forward points and currency basis adjustment is separately accumulated in the cost of hedging reserve. The ineffective element is recognised immediately in the Company income statement.

The associated cumulative gain or loss is reclassified from other comprehensive income and recognised in the Company income statement in the same period or periods during which the hedged transaction affects the Company income statement. The classification of the effective portion when recognised in the Company income statement is the same as the classification of the hedged transaction.

Any element of the remeasurement criteria of the derivative instrument which does not meet the criteria for an effective hedge is recognised immediately in the Company income statement within finance income or costs.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in the Company statement of changes in equity until the forecasted transaction occurs or the original hedged item affects the Company income statement. If a forecast hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in the Company statement of changes in equity is reclassified to the Company income statement.

Pensions

The Company participates in defined benefit pension schemes. The Company cannot identify its share of the underlying assets and liabilities of the schemes. Accordingly, as permitted by IAS 19 'Employee benefits', the Company has accounted for the schemes as defined contribution schemes, with the schemes recognised in another Group company, Tesco Stores Limited, as per Group policy.

The Company also participates in a defined contribution scheme open to all UK employees. Payments to this scheme are recognised as an expense as they fall due.

Taxation

The tax expense included in the Company income statement consists of current and deferred tax. Current tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantively enacted by the balance sheet date. Tax expense is recognised in the Company income statement except to the extent that it relates to items recognised in the Company statement of comprehensive income or directly in the Company statement of changes in equity, in which case it is recognised in the Company statement of comprehensive income or directly in the Company statement of changes in equity, respectively.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised based on the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the Company income statement, except when it relates to items charged or credited directly to equity or other comprehensive income/(loss), in which case the deferred tax is also recognised in equity, or other comprehensive income/(loss), respectively.

Judgements and sources of estimation uncertainty

The preparation of the Company financial statements requires management to make judgements, estimates and assumptions in applying the Company's accounting policies to determine the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis, with revisions to accounting estimates applied prospectively. The preparation of the Company financial statements for the financial year did not require the exercise of any critical accounting judgements apart from those involving estimates discussed below.

Key sources of estimation uncertainty

The key assumptions about the future, and other key sources of estimation uncertainty at the reporting period end that may have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are:

Impairment of investment in Tesco Bank

The key source of estimation uncertainty is in relation to the Company's investment in Tesco Personal Finance Group PLC (Tesco Bank). The Company considers impairment of its investments in subsidiaries based on the value in use of the subsidiary. Value in use is calculated from cash flow projections based on the Group's three-year internal forecasts. The forecasts are extrapolated to five years based on management's expectations, and beyond five years based on estimated long-term growth rates. See Note 6.

New standards and amendments effective for the current financial year

• 'Definition of a business' amendment to IFRS 3, 'Business combinations' guidance has been applied when evaluating whether acquisitions in the period are asset acquisitions or business combinations.
• 'Interest rate benchmark reform' phase 2 amendments, which have been adopted early. Refer to Note 25 to the Group financial statements for the impact of IBOR Reform amendments on the Company.
• FRS 101 amendments 'UK exit from the European Union' have been early adopted.

Other standards and amendments

Refer to Note 1 to the Group financial statements.

Note 3 Auditor remuneration

Fees payable to the Company's auditor for the audit of the Company and Group financial statements are disclosed in Note 3 to the Group financial statements.

Note 4 Dividends

For details of dividends see Note 8 to the Group financial statements.

Note 5 Employment costs, including Directors' remuneration

Notes	2021 £m	2020 £m
Wages and salaries	17	16
Social security costs	2	2
Pension costs	12	1
Share-based payment expense	11	4
Total	24	27

The amounts above include recharges from other Group companies for Tesco PLC-related activities. The average number of employees (all Directors of the Company) during the financial year was 13 (2020: 13).# Subsidiary undertakings incorporated in the United Kingdom

Name of undertaking	Registered address	Class of share held	% held by Group	Name of undertaking	Registered address	Class of share held	% held by Group
Acklam Management Company Limited	1	Limited by Guarantee	-	Linnco Limited	8	��1.00 Ordinary	100
Alfred Preedy & Sons Limited	2	��1.00 Deferred	100	Londis (Holdings) Limited	8	��50.00 Ordinary	100
		��1.00 Ordinary	100	Londis Pension Trustees Limited	8	��1.00 Ordinary	100
Armitage Finance Unlimited	1	��0.90 Ordinary	100	Makro Holding Limited	8	��1.00 Ordinary	100
Bath Upper Bristol Road Management Company Limited	1	Limited by Guarantee	-	Makro Properties Limited	8	��1.00 Ordinary	100
Berry Lane Management Company Limited	1	Limited by Guarantee	-	Makro Self Service Wholesalers Limited	8	��1.00 Ordinary A	100
						��1.00 Ordinary B	100
BF Limited	8	��1.00 Ordinary	100	Maldon Finance Limited	1	��1.00 Ordinary	100
Bishop's Group Limited	8	��0.01 Ordinary	100
Booker Cash & Carry Limited	8	��1.00 Ordinary	100	US$1.00 A Preference			100
		US$1.00 A Preference	100			US$0.50 B Preference	100
		US$0.50 B Preference	100			US$0.25 C Preference	100
Booker Direct Limited	8	��0.01 Ordinary	100
Booker Group Limited	8	��0.00000000055625 Ordinary	100
Booker Limited	8	��1.00 Ordinary	100	Munster Road Management Company Limited	1	Limited by Guarantee	-
Booker Retail Partners (GB) Limited	8	��1.00 Ordinary	100	Murdoch Norton Limited	8	��0.05 Ordinary	100
Booker Retail Limited	8	��0.10 Ordinary	100	Oakwood Distribution Limited	1	��1.00 Ordinary	100
Booker Pension Trustees Limited	8	Limited by Guarantee	100	One Stop Community Stores Limited	2	��0.00001200004 Ordinary	100
Booker Wholesale Holdings Limited	8	��0.01 Ordinary A1	100	One Stop Convenience Stores Limited	2	��1.00 Ordinary	100
Booker Unapproved Scheme Trustees Ltd	8	Limited by Guarantee	-	One Stop Stores Limited���(a)	2	��1.00 Ordinary	100
Bourne End Residential Management Company Limited	1	Limited by Guarantee	-	One Stop Stores Trustee Services Limited	2	��1.00 Ordinary	100
Broughton Retail Park Nominee 1 Limited	1	��1.00 Ordinary	100	Orpington (Station Road) Limited	1	��1.00 Ordinary	100
Broughton Retail Park Nominee 2 Limited	1	��1.00 Ordinary	100	Oxford Fox and Hounds Management Company Limited	1	Limited by Guarantee	-
Broughton Retail Park Nominee 3 Limited	1	��1.00 Ordinary	100	Paper Chain (East Anglia) Limited	2	��1.00 Deferred	100
Broughton Retail Park Nominee 4 Limited	1	��1.00 Ordinary	100	US$0.001 Ordinary			100
Budgen Holdings Limited	8	��1.00 Ordinary	100	PTLL Limited	1	��1.00 Ordinary	100
Budgens Pension Trustees No.2 Limited	8	��1.00 Ordinary	100	Ritter-Courivaud Limited	8	��0.10 Ordinary	100
Budgens Property Investments Limited	8	��1.00 Ordinary	100	Seacroft Green Nominee 1 Limited	1	��1.00 Ordinary	100
Budgens Stores Limited	8	��1.00 Ordinary	100	Seacroft Green Nominee 2 Limited	1	��1.00 Ordinary	100
Buttoncable Limited	1	��1.00 Ordinary	100	Spen Hill Developments Limited	1	��1.00 Ordinary	100
Buttoncase Limited���	1	��1.00 Cumulative Redeemable Preference	100	Spen Hill Management Limited���(b)	1	��1.00 Ordinary	100
		��1.00 Ordinary	100	Spen Hill Properties (Holdings) plc���	1	��1.00 Ordinary	100
Canterbury Road Management Limited	1	Limited by Guarantee	-	Spen Hill Regeneration Limited	1	��1.00 Ordinary	100
Cardiff Cathays Terrace Management Company Limited	1	Limited by Guarantee	-	Spen Hill Residential No 1 Limited	1	��1.00 Ordinary	100
Comar Limited���	1	��1.00 Ordinary	100	Spen Hill Residential No 2 Limited	1	��1.00 Ordinary	100
Day And Nite Stores Limited	2	��1.00 Cumulative Convertible Participating Preferred Ordinary	100	Station House Welling Management Limited	1	Limited by Guarantee	-
		��1.00 Cumulative Redeemable Preference	100	Statusfloat Limited	1	��1.00 Ordinary	100
		��1.00 Ordinary	100	T & S Stores Limited���	2	��0.05 Ordinary	100
Dillons Newsagents Limited*	2	��0.25 Non-Voting Ordinary	100	Tapesilver Limited���	1	��1.00 Ordinary	100
dunnhumby International Limited	4	��1.00 Ordinary	100	Teesport (GP) Limited	1	��1.00 Ordinary	100
dunnhumby Limited	4	��3.59 Ordinary	100	Tesco (Overseas) Limited���	1	��1.00 Ordinary	100
dunnhumby Overseas Limited	4	��1.00 Ordinary	100	Tesco Aqua (3LP) Limited	1	��1.00 Ordinary	100
dunnhumby Trustees Limited	4	��1.00 Ordinary	100	Tesco Aqua (FinCo2) Limited	1	��1.00 Ordinary	100
Giant Bidco Limited	8	��1.00 Ordinary	100	Tesco Aqua (GP) Limited	1	��1.00 A Ordinary	100
						��1.00 B Ordinary	100
Giant Booker Limited	8	��0.25 Ordinary	100	Tesco Aqua (Nominee 1) Limited	1	��1.00 Ordinary	100
Giant Midco Limited	8	��1.00 Ordinary	100	Tesco Aqua (Nominee 2) Limited	1	��1.00 Ordinary	100
Highams Green Management Company Limited	1	Limited by Guarantee	-	Tesco Aqua (Nominee Holdco) Limited	1	��1.00 Ordinary	100
IRTH (15) Limited	8	��1.00 Ordinary	100	Tesco Atrato (1LP) Limited	1	��1.00 Ordinary	100
IRTH (19) Limited	8	US$0.000000052383172 Ordinary	100	Tesco Atrato (GP) Limited	1	��1.00 A Ordinary	100
						��1.00 B Ordinary	100
Launchgrain Limited���	1	��1.00 Ordinary	100	Tesco Atrato (Nominee 1) Limited	1	��1.00 Ordinary	100
				Tesco Atrato (Nominee 2) Limited	1	��1.00 Ordinary	100
				Tesco Atrato (Nominee Holdco) Limited	1	��1.00 Ordinary	100
Tesco Atrato Depot Propco Limited	1	��1.00 Ordinary	100	Tesco Property Finance 1 PLC	1	��1.00 Ordinary	100
				��0.25 Ordinary			100
Tesco Blue (3LP) Limited	1	��1.00 Ordinary	100	Tesco Property Holdings (No.2) Limited	1	��1.00 Ordinary	100
Tesco Blue (GP) Limited	1	��1.00 A Ordinary	100	Tesco Property Holdings Limited	1	��1.00 Ordinary	100
		��1.00 B Ordinary	100	Tesco Property Nominees (No.5) Limited	1	��1.00 Ordinary	100
Tesco Blue (Nominee 1) Limited	1	��1.00 Ordinary	100	Tesco Property Nominees (No.6) Limited	1	��1.00 Ordinary	100
Tesco Blue (Nominee 2) Limited	1	��1.00 Ordinary	100	Tesco Property Partner (GP) Limited���	1	��1.00 A Ordinary	100
Tesco Blue (Nominee Holdco) Limited	1	��1.00 Ordinary	100			��1.00 B Ordinary	100
Tesco Brislington Limited	1	��1.00 Ordinary	100	Tesco Property Partner (GP No.2) Limited		��1.00 A Ordinary	100
						��1.00 B Ordinary	100
Tesco Corporate Treasury Services PLC���	1	��1.00 Ordinary	100	Tesco Property Partner (No.1) Limited���	1	��1.00 Ordinary	100
Tesco Depot Propco Limited	1	��1.00 Ordinary	100	Tesco Property Partner (No.2) Limited���	1	��1.00 Ordinary	100
Tesco Distribution Holdings Limited	1	��1.00 Ordinary	100	Tesco Red (3LP) Limited	1	��1.00 Ordinary	100
Tesco Distribution Limited	1	��1.00 Ordinary	100	Tesco Red (GP) Limited	1	��1.00 Ordinary A	100
						��1.00 Ordinary B	100
Tesco Dorney (1LP) Limited	1	��1.00 Ordinary	100	Tesco Red (Nominee 1) Limited	1	��1.00 Ordinary	100
Tesco Employees' Share Scheme Trustees Limited���(c)	1	��1.00 Ordinary	100	Tesco Red (Nominee 2) Limited	1	��1.00 Ordinary	100
Tesco Family Dining Limited	1	��1.00 Ordinary	100	Tesco Red (Nominee Holdco) Limited	1	��1.00 Ordinary	100
Tesco Food Sourcing Limited	1	��1.00 Ordinary	100	Tesco Sarum (1LP) Limited	1	��1.00 Ordinary	100
Tesco Freetime Limited	1	��1.00 Ordinary	100	Tesco Seacroft Limited	1	��1.00 Ordinary	100
Tesco Fuchsia (3LP) Limited	1	��1.00 Ordinary	100	Tesco Secretaries Limited	1	��1.00 Ordinary	100
Tesco Gateshead Property Limited	1	��1.00 Ordinary	100	Tesco Services Limited	1	��1.00 Ordinary	100
Tesco Holdings Limited���	1	��0.10 Ordinary	100	Tesco Stores Limited	1	��1.00 A Preference	100
		��1.00 Preference	100			��1.00 B Preference	100
						��1.00 Ordinary	100
Tesco International Services Limited���	1	��1.00 Ordinary	100	Tesco TLB Finance Limited	1	��1.00 Ordinary	100
Tesco Lagoon GP Limited	5	��1.00 Ordinary	100	Tesco TLB Properties Limited	1	��1.00 A Ordinary	100
						��1.00 B Ordinary	100
Tesco Maintenance Limited	1	��1.00 Ordinary	100	The Big Food Group Limited	8	��0.10 Ordinary	100
Tesco Mobile Communications Limited���	1	��1.00 Ordinary	100	The Teesport Limited Partnership	1	Limited Partnership	100
Tesco Mobile Services Limited	1	��1.00 Ordinary	100	The Tesco Aqua Limited Partnership	1	Limited Partnership	100
Tesco Navona (1LP) Limited	1	��1.00 Ordinary	100	The Tesco Atrato Limited Partnership	1	Limited Partnership	100
Tesco Navona (GP) Limited	1	��1.00 Ordinary A	100	The Tesco Blue Limited Partnership	1	Limited Partnership	100
		��1.00 Ordinary B	100	The Tesco Navona Limited Partnership	1	Limited Partnership	100
Tesco Navona (Nominee 1) Limited	1	��1.00 Ordinary	100	The Tesco Passaic Limited Partnership	1	Limited Partnership	100
Tesco Navona (Nominee 2) Limited	1	��1.00 Ordinary	100	The Tesco Property Limited Partnership	1	Limited Partnership	100
Tesco Navona (Nominee Holdco) Limited	1	��1.00 Ordinary	100	The Tesco Property (No.2) Limited Partnership	17	Limited Partnership	100
Tesco Navona PL Propco Limited	1	��1.00 Ordinary	100	The Tesco Red Limited Partnership	1	Limited Partnership	100
Tesco Overseas Investments Limited���	1	��1.00 Ordinary	100	TPI Fund Managers Limited	1	��1.00 Ordinary	100
Tesco Passaic (1LP) Limited	1	��1.00 Ordinary	100	TPT Holdco No.1 Limited	1	��1.00 Ordinary	100
Tesco Passaic (GP) Limited	1	��1.00 Ordinary A	100	Weymouth Avenue (Dorchester) Limited	1	��1.00 Ordinary	100
		��1.00 Ordinary B	100
Tesco Passaic (Nominee 1) Limited	1	��1.00 Ordinary	100
Tesco Passaic (Nominee 2) Limited	1	��1.00 Ordinary	100
Tesco Passaic (Nominee Holdco) Limited	1	��1.00 Ordinary	100
Tesco Passaic PL Propco Limited	1	��1.00 Ordinary	100
Tesco PEG Limited	1	��0.01 Ordinary	100
Tesco PENL Limited	1	��1.00 Ordinary	100
Tesco Pension Investment Limited(d)	1	��1.00 Ordinary	100
Tesco Pension Trustees Limited���	1	��1.00 Ordinary	100
Tesco Personal Finance Group PLC���	6	��0.10 A Ordinary	100
		��0.10 B Ordinary	100
		��0.10 C Ordinary	100
Tesco Personal Finance PLC	6	��0.10 Ordinary	100
Tesco Property (Nominees) (No.1) Limited	11	��1.00 Ordinary	100
Tesco Property (Nominees) (No.2) Limited	11	��1.00 Ordinary	100

Related undertakings of the Tesco Group continued

Subsidiary undertakings incorporated in the United Kingdom continued

Name of undertaking	Registered address	Class of share held	% held by Group	Name of undertaking	Registered address	Class of share held	% held by Group
Tesco Atrato Depot Propco Limited	1	��1.00 Ordinary	100	Tesco Property Finance 1 PLC	1	��1.00 Ordinary	100
						��0.25 Ordinary	100
Tesco Blue (3LP) Limited	1	��1.00 Ordinary	100	Tesco Property Holdings (No.2) Limited	1	��1.00 Ordinary	100
Tesco Blue (GP) Limited	1	��1.00 A Ordinary	100	Tesco Property Holdings Limited	1	��1.00 Ordinary	100
		��1.00 B Ordinary	100	Tesco Property Nominees (No.5) Limited	1	��1.00 Ordinary	100
Tesco Blue (Nominee 1) Limited	1	��1.00 Ordinary	100	Tesco Property Nominees (No.6) Limited	1	��1.00 Ordinary	100
Tesco Blue (Nominee 2) Limited	1	��1.00 Ordinary	100	Tesco Property Partner (GP) Limited���	1	��1.00 A Ordinary	100
Tesco Blue (Nominee Holdco) Limited	1	��1.00 Ordinary	100			��1.00 B Ordinary	100
Tesco Brislington Limited	1	��1.00 Ordinary	100	Tesco Property Partner (GP No.2) Limited		��1.00 A Ordinary	100
						��1.00 B Ordinary	100
Tesco Corporate Treasury Services PLC���	1	��1.00 Ordinary	100	Tesco Property Partner (No.1) Limited���	1	��1.00 Ordinary	100
Tesco Depot Propco Limited	1	��1.00 Ordinary	100	Tesco Property Partner (No.2) Limited���	1	��1.00 Ordinary	100
Tesco Distribution Holdings Limited	1	��1.00 Ordinary	100	Tesco Red (3LP) Limited	1	��1.00 Ordinary	100
Tesco Distribution Limited	1	��1.00 Ordinary	100	Tesco Red (GP) Limited	1	��1.00 Ordinary A	100
						��1.00 Ordinary B	100
Tesco Dorney (1LP) Limited	1	��1.00 Ordinary	100	Tesco Red (Nominee 1) Limited	1	��1.00 Ordinary	100
Tesco Employees' Share Scheme Trustees Limited���(c)	1	��1.00 Ordinary	100	Tesco Red (Nominee 2) Limited	1	��1.00 Ordinary	100
Tesco Family Dining Limited	1	��1.00 Ordinary	100	Tesco Red (Nominee Holdco) Limited	1	��1.00 Ordinary	100
Tesco Food Sourcing Limited	1	��1.00 Ordinary	100	Tesco Sarum (1LP) Limited	1	��1.00 Ordinary	100
Tesco Freetime Limited	1	��1.00 Ordinary	100	Tesco Seacroft Limited	1	��1.00 Ordinary	100
Tesco Fuchsia (3LP) Limited	1	��1.00 Ordinary	100	Tesco Secretaries Limited	1	��1.00 Ordinary	100
Tesco Gateshead Property Limited	1	��1.00 Ordinary	100	Tesco Services Limited	1	��1.00 Ordinary	100
Tesco Holdings Limited���	1	��0.10 Ordinary	100	Tesco Stores Limited	1	��1.00 A Preference	100
		��1.00 Preference	100			��1.00 B Preference	100
						��1.00 Ordinary	100
Tesco International Services Limited���	1	��1.00 Ordinary	100	Tesco TLB Finance Limited	1	��1.00 Ordinary	100
Tesco Lagoon GP Limited	5	��1.00 Ordinary	100	Tesco TLB Properties Limited	1	��1.00 A Ordinary	100
						��1.00 B Ordinary	100
Tesco Maintenance Limited	1	��1.00 Ordinary	100	The Big Food Group Limited	8	��0.10 Ordinary	100
Tesco Mobile Communications Limited���	1	��1.00 Ordinary	100	The Teesport Limited Partnership	1	Limited Partnership	100
Tesco Mobile Services Limited	1	��1.00 Ordinary	100	The Tesco Aqua Limited Partnership	1	Limited Partnership	100
Tesco Navona (1LP) Limited	1	��1.00 Ordinary	100	The Tesco Atrato Limited Partnership	1	Limited Partnership	100
Tesco Navona (GP) Limited	1	��1.00 Ordinary A	100	The Tesco Blue Limited Partnership	1	Limited Partnership	100
		��1.00 Ordinary B	100	The Tesco Navona Limited Partnership	1	Limited Partnership	100
Tesco Navona (Nominee 1) Limited	1	��1.00 Ordinary	100	The Tesco Passaic Limited Partnership	1	Limited Partnership	100
Tesco Navona (Nominee 2) Limited	1	��1.00 Ordinary	100	The Tesco Property Limited Partnership	1	Limited Partnership	100
Tesco Navona (Nominee Holdco) Limited	1	��1.00 Ordinary	100	The Tesco Property (No.2) Limited Partnership	17	Limited Partnership	100
Tesco Navona PL Propco Limited	1	��1.00 Ordinary	100	The Tesco Red Limited Partnership	1	Limited Partnership	100
Tesco Overseas Investments Limited���	1	��1.00 Ordinary	100	TPI Fund Managers Limited	1	��1.00 Ordinary	100
Tesco Passaic (1LP) Limited	1	��1.00 Ordinary	100	TPT Holdco No.1 Limited	1	��1.00 Ordinary	100
Tesco Passaic (GP) Limited	1	��1.00 Ordinary A	100	Weymouth Avenue (Dorchester) Limited	1	��1.00 Ordinary	100
		��1.00 Ordinary B	100
Tesco Passaic (Nominee 1) Limited	1	��1.00 Ordinary	100
Tesco Passaic (Nominee 2) Limited	1	��1.00 Ordinary	100
Tesco Passaic (Nominee Holdco) Limited	1	��1.00 Ordinary	100
Tesco Passaic PL Propco Limited	1	��1.00 Ordinary	100
Tesco PEG Limited	1	��0.01 Ordinary	100
Tesco PENL Limited	1	��1.00 Ordinary	100
Tesco Pension Investment Limited(d)	1	��1.00 Ordinary	100
Tesco Pension Trustees Limited���	1	��1.00 Ordinary	100
Tesco Personal Finance Group PLC���	6	��0.10 A Ordinary	100
		��0.10 B Ordinary	100
		��0.10 C Ordinary	100
Tesco Personal Finance PLC	6	��0.10 Ordinary	100
Tesco Property (Nominees) (No.1) Limited	11	��1.00 Ordinary	100
Tesco Property (Nominees) (No.2) Limited	11	��1.00 Ordinary	100

Tesco Property (Nominees) Limited 11 ��1.00 Ordinary 100

Tesco Property Finance 1 Holdco Limited 1 ��1.00 Ordinary 100

Related undertakings of the Tesco Group continued

International subsidiary undertakings

Name of undertaking	Registered address	Class of share held	% held by Group	Name of undertaking	Registered address	Class of share held	% held by Group
Agate Jewel sp. z.o.o.(e)	75	PLN 50	Ordinary 100	Let��any Development land 2 s.r.o.	16	CZK 100,000	Ordinary 100
Arena (Jersey) Management Limited���	33	��1.00	Ordinary 100	Monread Developments Limited	24	���0.001	Ordinary 100
Amethyst Jewel sp. z o.o.	75	PLN 50	Ordinary 100	Nabola Development Limited	24	���1.25	A Ordinary 100
Cheshunt Holdings Guernsey Limited���	27	��1.00	Ordinary 100	��1.25	B Ordinary 100	Chirac Limited	24
Onyx Jewel sp. Z.o.o.(e)	75	PLN 50	Ordinary 100	Cirrus Finance (2009) Limited	24	��1,000	A Ordinary 100
Opal Jewel sp. z.o.o.	75	PLN 50	Ordinary 100	��1.00	Ordinary 100	Orpingford Unlimited Company	24
Clondalkin Properties Limited	24	���1.25	Ordinary 100	Parijude Limited	45	��1.00	Ordinary 100
Commercial Investments Limited	24	���1.25	Ordinary 100	Pharaway Properties Limited	24	���1.00	Ordinary 100
Coral Jewel sp. z.o.o.(e)	75	PLN 50	Ordinary 100	Pearl Jewel sp. z o.o.	75	PLN 50	Ordinary 100
Crest Ostrava a.s	16	CZK 100,000	Ordinary 100	R.J.D. Holdings Unlimited Company	24	���1.269738	Ordinary 100
Diamond Jewel sp. z o.o.	75	PLN 50	Ordinary 100	Ruby Jewel sp. z.o.o.(e)	24	PLN 50	Ordinary 100
dunnhumby (Korea) Limited	66	KRW 5,000	Ordinary 100	Sapphire Jewel sp. z.o.o.(e)	75	PLN 50	Ordinary 100
dunnhumby (Malaysia) Sdn Bhd	84	RM 1.00	Ordinary 100	Shopping Mall Chrudim s.r.o.(i)	7	CZK 100,000	Ordinary 100
dunnhumby (Thailand) Limited	73	THB 1,000,000	Ordinary 100	Shopping Mall Eden s.r.o.(i)	7	CZK 100,000	Ordinary 100
dunnhumby Advertising (Shanghai) Co., Ltd	23	���130,000 Registered Capital	100	Shopping Mall Karlovy Vary s.r.o(i)	7	CZK 100,000	Ordinary 100
dunnhumby Australia PTY Limited	65	AUD 100	Ordinary 100	Shopping Mall Opava s.r.o.(i)	7	CZK 100,000	Ordinary 100
dunnhumby Brasil Consultora Ltda	77	BRL$1.00	Ordinary 100	Shopping Mall Ostrava s.r.o. (i)	7	CZK 100,000	Ordinary 100
dunnhumby Canada Limited	59	CA$1.00	Ordinary 100	Sociomantic Labs Internet Hizmetleri Limited ��ireketi	51	TRY 25.00	Ordinary 100
dunnhumby Chile SpA	48	CLP 500,000	Ordinary 100	Tesco (Polska) Sp. z o.o.(g)	42	PLN 500.00	Ordinary 100
dunnhumby Colombia S.A.S.	74	COP 2,000	Type A 100	Tesco Akad��mia K��pz��si ��s Fejleszt��si Kor��tolt Felel��ss��g�� T��rsas��g	32	HUF 1.00	Business Share 100
		COP 41.00	Type B 100	Tesco Bengaluru Private Limited	41	INR 10.00	Ordinary 100
		COP 1.00	Type C 100	Tesco Capital No. 1 Limited���	28	��0.50	A Ordinary 100
dunnhumby Computer Information Technology and Consultancy Services LLC	18	TL 25.00	Ordinary 100	��0.50	B Ordinary 100
dunnhumby Consulting Services India Private Limited	60	INR 10.00	Ordinary 100	��0.01	Preference - dunnhumby Czech s.r.o.	16	CZK 200,000
Guaranteed Cumulative Fixed Rate Preference	100	��0.01	Preferred Ordinary 100	dunnhumby Denmark lvS	57	DKK 1.00	Ordinary 100
dunnhumby Finland Oy	30	100	Kovellinum Oy	100	��1.00	Ordinary 100
dunnhumby France SAS	61	���2.00	Ordinary 100	Tesco Chile Sourcing Limitada	22	CLP 1.00	Ordinary 100
dunnhumby Germany GmbH	14	���1.00	Ordinary 100	US$1.00	Ordinary 100
dunnhumby Hungary Kft	32	Registered capital HUF 3,000,000	100	Tesco Digital Ventures Pte Ltd	49	SGD 1.00	Ordinary 100
dunnhumby Inc.	35	No par value -	Tesco Dystrybucja Sp. z o.o.(g)	42	PLN 50.00	Ordinary 100
dunnhumby Information Technology Consulting (Shanghai) Company Limited	62	Registered capital US$140,000	100	Tesco Franchise Stores ��R s.r.o.	16	CZK 2,000,000	Ordinary 100
dunnhumby Ireland Limited	67	���1.00	Ordinary 100	Tesco Franchise Stores SR s.r.o.	68	���1.00	Ordinary 100
dunnhumby IT Services India Private Limited	36	INR 10.00	Ordinary 100	Tesco-Global Stores Privately Held Company Limited	32	HUF 10.00	Common 100
dunnhumby Italia Srl.	37	���1.00	Ordinary 100	Tesco Holdings B.V.	40	���1.00	Ordinary 100
dunnhumby Japan K.K	38	JPY 10,000	Ordinary 100	Tesco International Clothing Brand s.r.o.	58	���1.00	Ordinary 100
dunnhumby Mexico S. de R.L. de C.V.	69	MXN 2,970	Ordinary A 100	Tesco International Franchising s.r.o.	58	���1.00	Ordinary 100
		. MXN 30.00	Ordinary B 100	Tesco International Sourcing Limited	20	HKD 10.00	Ordinary 100
dunnhumby Netherlands B.V.	70	���1.00	Ordinary 100	Tesco Ireland Holdings Limited	24	���1.25	Ordinary 100
dunnhumby New Zealand	64	NZD 100.00	Ordinary 100	Tesco Ireland Limited	24	���1.25	Ordinary 100
dunnhumby Poland Sp. z o.o.	42	PLN 50,000	Ordinary 100	Tesco Ireland Pension Trustees Limited	24	���1.25	Ordinary 100
dunnhumby Russia LLC	79	RUB 1.00	Ordinary 100	Tesco Joint Buying Service (Shanghai) Co., Limited	76	US$1.00	Ordinary 100
dunnhumby Singapore Pte Ltd	19	SGD 1.00	Ordinary 100	Tesco Mobile Ireland Limited	24	���1.00	Ordinary 100
dunnhumby SARL	61	���100.00	Ordinary 100	Tesco Property (No. 1) Limited	28	��1.00	Ordinary 100
dunnhumby Servi��os de Promo����o Digital Ltda	77	R$1.00	Ordinary 100	Tesco Sourcing India Private Limited	80	INR 10.00	Ordinary 100
dunnhumby Slovakia s.r.o.	58	No shares in issue -	Tesco Stores ��R a.s.	16	CZK 250	Ordinary 100
dunnhumby Sp. z o.o.	47	PLN 50.00	Ordinary 100	Tesco Stores SR, a.s.	58	���33,193.92	Ordinary 100
dunnhumby Spain S.L	50	���1.00	Ordinary 100	Tesco Technology and Services Europe SP . Z.O.O.	75	PLN 50	Ordinary 100
dunnhumby South Africa (Pty) Ltd	43	No par value	Ordinary 100	Tesco Trustee Company of Ireland Limited���	24	���1.25	Ordinary 100
dunnhumby Ventures LLC	44	- -	TESCO ��zleti ��s Technol��giai Szolg��ltat��sok Z��rtk��ruen M��k��d�� R��szv��nyt��rsas��g	25	HUF 1,000.00	100
Edson Investments Limited	24	���2.00	Ordinary 100	Thundridge Unlimited	24	���1.00	Ordinary 100
Edson Properties Limited	24	���1.00	Ordinary 100	Topaz Jewel sp. z o.o.	75	PLN 50	Ordinary 100
ELH Insurance Limited	71	��1.00	Ordinary 100	Victoria BB Sp. z o.o.	42	PLN 800.00	Ordinary 100
Emerald Jewel sp. z o.o.	75	PLN 50	Ordinary 100	Wanze Properties (Dundalk) Limited	24	���1.00	Ordinary 100
Epicier Limited	46	��1.00	Ordinary 100	WSC Properties Limited	24	���0.0000005	Ordinary 100
Genesis sp. z o.o.(g)	42	PLN 500.00	Ordinary 100	Jasper Sp. z o.o.(g)	42	PLN 100.00	Ordinary 100

Related undertakings of the Tesco Group continued

Subsidiary undertakings in liquidation

The following subsidiary undertakings were incorporated in the United Kingdom

Name of undertaking	Registered address	Class of share held	% held by Group	Name of undertaking	Registered address	Class of share held	% held by Group
Adminstore Limited	9	��0.01	A Ordinary 100	Tesco Dorney (Nominee Holdco) Limited	1	��1.00	Ordinary 100
		��0.01	B Ordinary 100	Tesco Jade (GP) Limited	29	��1.00	A Ordinary 30
		��0.01	C Ordinary 100	��1.00	B Ordinary 30
Cheshunt Finance Unlimited	9	��0.000000001	Ordinary 100	Tesco Mobile Limited*	1	��0.10	A Ordinary 100
Cheshunt Overseas LLP	3	Limited Liability Partnership 100	��0.90	B Ordinary 100
dunnhumby Advertising Limited	9	��0.001	Ordinary 100	Tesco Property (Sparta Nominees) Limited	1	��1.00	Ordinary 100
dunnhumby Holding Limited	4	��1.00	Ordinary 100	Tesco Property (Nominees) (No.3) Limited	1	��1.00	Ordinary 100
Europa Foods Limited	9	��0.000000176	Ordinary 100	Tesco Property (Nominees) (No.4) Limited	1	��1.00	Ordinary 100
Fresh Food Trader Limited	9	��1.00	Ordinary 50	Tesco Property Partner (GP No.2) Limited	1	��1.00	A Ordinary 100
		��1.00	Preference 100	Tesco Sarum (GP) Limited*	1	��1.00	A Ordinary 10
J.Smylie & Sons (IOM) Limited	72	��1.00	Ordinary 100	Tesco Sarum (Nominee 1) Limited	1	��1.00	Ordinary 100
KSS Retail Limited	9	��0.000000851	100	Tesco Sarum (Nominee 2) Limited	1	��1.00	Ordinary 100
M & W Limited	9	��0.0000000582261	100	Tesco Sarum (Nominee Holdco) Limited	1	��1.00	Ordinary 100
Motorcause Limited	9	��1.00	Ordinary 100	Tesco Underwriting Limited	31	��1.00	Ordinary 49.9
Reefknot Technology Limited	9	��1.00	Ordinary 100	The Tesco Coral Limited Partnership	1	Limited Partnership 50
Stewarts Supermarkets Limited���	9	��1.00	Ordinary 100	The Tesco Dorney Limited Partnership	1	Limited Partnership 50
Tesco Aqua (FinCo1) Limited	9	��1.00	Ordinary 100	The Tesco Property (No.2) Limited Partnership	17	Limited Partnership 50
Tesco Blue (FinCo2) Limited	9	��1.00	Ordinary 100	The Tesco Sarum Limited Partnership	1	Limited Partnership 50
Tesco FFC Limited	9	��0.01	Ordinary 100	Tesco International Internet Retailing Limited	9	��0.0000013543	100
Tesco Overseas ULC	9	��0.00000025	A Ordinary 100			��0.00000025	B Ordinary 100
		��0.00000025	C Ordinary 100			��0.00000025	D Ordinary 100
		��0.00000025	E Ordinary 100			��0.00000025	F Ordinary 100
		��0.00000025	G Ordinary 100			��0.00000025	H Ordinary 100
		��0.00000025	J Ordinary 100			��0.00000025	K Ordinary 100
		��0.00000025	L Ordinary 100			��0.00000025	M Ordinary 100
		��0.00000025	N Ordinary 100			��0.00000025	O Ordinary 100

The following associated undertakings were incorporated outside of the United Kingdom

Name of undertaking	Registered address	Class of share held	% held by Group
Arena Unit Trust	33	-	50
Booker India Limited	54	INR 1.00	Ordinary 49
Booker Satnam Wholesale Limited	54	INR 1.00	Ordinary 49
China Wisdom dunnhumby Limited	53	RMB 264,000	Ordinary 50
China Wisdom dunnhumby (Shanghai) Limited	63	RMB 264,000,000 Registered Capital	50
dunnhumby Mitsui Bussan Customer Science Co., Ltd	55	JPY 1,000	Ordinary 50
dunnhumby Norge A.S.	56	NOK 1,000	Ordinary 50
Merrion Shopping Centre Limited	24	���0.012697	Ordinary 51.9
Tesco Mobile ��R s.r.o.	16	CZK 100,000	Ordinary 50
Tesco Mobile Slovakia s.r.o.

The following subsidiary undertakings were incorporated outside of the United Kingdom

Name of undertaking	Registered address	Class of share held	% held by Group	Nature of business
Avantil Services Company Limited	39	£1.00 Ordinary	100
Booker Cyprus Limited	21	£1.00 Ordinary	100
China Property Holdings (HK) Limited	20	HKD 1.00 Ordinary	100
Saneyia Limited	21	£1.00 Ordinary	100
Sociomantic Labs Private Limited	78	INR 10.00 Ordinary	100
Tesco Global Employment Company Limited	34	THB 100.00 Ordinary	100
Tesco Capital No.2 Limited	9	£0.01 Floating Rate Redeemable Preference	100
Tesco Vin Plus S.A.	52	£1.60 Ordinary	100
Trent Hypermarket Private Limited	26	INR 10.00 Equity	50
Delamare Cards Holdco Limited	47			Securitisation entity
Delamare Cards MTN Issuer plc	47			Securitisation entity
Delamare Cards Receivables Trustee Limited	47			Securitisation entity
Delamare Cards Funding 1 Limited	47			Securitisation entity
Delamare Cards Funding 2 Limited	47			Securitisation entity
Delamare Finance PLC	11			Securitisation entity
Delamare Group Holdings Limited	11			Securitisation entity

• Undertaking where other share classes are held by a third party
• Interest held directly by Tesco PLC
  (a) 95% held by Tesco PLC
  (b) 66.6% held by Tesco PLC
  (c) 50% held by Tesco PLC
  (d) Shares held by Tesco Pension Trustees Limited (TPTL), the corporate trustee of the Tesco PLC Pension Scheme (the Scheme). On behalf of the Scheme, TPTL holds a 50% shareholding in three property joint ventures with Tesco, and is the sole shareholder of Tesco Pension (Jade) Limited and Tesco Pension Investment Limited
  (e) Placed into liquidation on 01/03/2021
  (f) Interest sold on 02/03/2021
  (g) Sold on 16/03/2021
  (h) Dissolved on 21/03/2021
  (i) Incorporated on 06/04/2021

Associated undertakings

The following associated undertakings were incorporated in the United Kingdom

Name of undertaking	Registered address	Class of share held	% held by Group
Broadfields Management Limited	12	£0.10 Ordinary	35.3
Clarepharm Limited(f)	13	£0.10 Ordinary	26.5
Shire Park Limited	15	£1.00 Ordinary	48.57
Tesco Coral (GP) Limited*	1	£1.00 A Ordinary	100
Tesco Coral (Nominee) Limited	1	£1.00 Ordinary	100
Tesco Dorney (GP) Limited*	1	£1.00 A Ordinary	100
Tesco Dorney (Nominee 1) Limited	1	£1.00 Ordinary	100
Tesco Dorney (Nominee 2) Limited	1	£1.00 Ordinary	100

Registered office addresses

1. Tesco House, Shire Park, Kestrel Way, Welwyn Garden City, AL7 1GA, United Kingdom
2. Apex Road, Brownhills, Walsall, West Midlands, WS8 7HU, United Kingdom
3. KPMG LLP, 15 Canada Square, London, E14 5GL, United Kingdom
4. 184 Shepherds Bush Road, London, W6 7NL, United Kingdom
5. C/O Morton Fraser LLP, 5th Floor, Quartermile Two, 2 Lister Square, Edinburgh, Scotland, EH3 9GL, United Kingdom
6. 2 South Gyle Crescent, Edinburgh, EH12 9FQ, United Kingdom
7. Vřovická 1527/68b, Vřovice, 100 00 Prague 10, Czech Republic
8. Equity House, Irthlingborough Road, Wellingborough, Northamptonshire, NN8 1LT, United Kingdom
9. Ernst & Young LLP, 1 More London Place, London, SE1 2AF, United Kingdom
10. Suite 13.03, 13th Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
11. 1 Bartholomew Lane, London, England, EC2N 2AX
12. 2 Paris Parklands, Railton Road, Guildford, Surrey, GU2 9JX
13. Thompson Jenner, 28 Alexandra Terrace, Exmouth, Devon, EX8 1BD
14. Ritterstraße 6, 10969 Berlin, Germany
15. Riverside House, 3 Place Farm, Wheathampstead, St. Albans, England, AL4 8SB
16. 1527/68b, Vrsovicka, Praha 10, City of Prague, 100 00, Czech Republic
17. PO Box 87 22 Grenville Street, St Helier, Jersey
18. Yeni Havaalani Caddesi, No. 40 Cigli, Izmir, 35610 Turkey
19. 50 Raffles Place, #19-00 Singapore Land Tower, Singapore 048623
20. 31st Floor AIA Kowloon Tower Landmark East, 100 How Ming Street, Kowloon, Hong Kong
21. 5 Esperidon Street, 4th floor, 2001 Strovolos, Nicosia, Cyprus
22. Avenida Santa María 5888, Piso 2 Zona A, Oficina 4, Vitacura, Santiago, 7660268, Chile
23. Eco City Centro, 901-12 office, 9 / F 1788 West Nanjing Road, Jingan District, Shanghai, China
24. Gresham House, Marine Road, Dun Laoghaire, Co. Dublin, Ireland
25. ll38, Budapest, Váci út, 187, Hungary
26. Taj Building, 2nd Floor, 210, Dr D.N. Road, Fort, Mumbai, 400001, India
27. PO Box 25, Regency Court, Glategny Esplanade, St. Peter Port, Guernsey, GY1 3AP
28. Level 1, IFC1 Esplanade, St Helier, Jersey, JE2 3BX
29. 20 Churchill Place, Canary Wharf, London, E14 5HJ
30. c/o RSM Finland Oy, Ratamestarinkatu 7 B, 00520, Helsinki, Finland
31. Ageas House Hampshire Corporate Park, Templars Way, Eastleigh, Hampshire, SO53 3YA
32. H-2040 Budaörs, Kinizsi, út 1-3, Hungary
33. 47 Esplanade, St Helier, Jersey, JE1 0BD
34. 629/1 Nawamintr Road, Nuanchan, Buengkoom, Bangkok, 10230, Thailand
35. c/o The Corporation Trust Company, 1209 Orange Street, Corporation Trust Center, Wilmington, DE 19801, USA
36. S-22 Greater Kailash, Part 1, Lower Ground Floor, New Delhi 110048, India
37. Carrera 48 no. 32B sur - 139, Envigado, Italy
38. 9th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo, Japan
39. 38/39 Fitzwilliam Square, Dublin 2, Ireland
40. Willemsparkweg 150 hs, 1071 HS, Amsterdam, The Netherlands, Netherlands
41. 81 & 82, EPIP Area, Whitefield, Bangalore, 560066, India
42. 56 Kapelenka St, 30-347, Krakow, Poland
43. 3rd Floor, 54 Melrose Boulevard, Melrose Arch, Gauteng, 2196, South Africa
44. c/o FBT Ohio, Inc.,3300 Great American Tower, 301 East Fourth Street, Cincinnati, OH 45202, USA
45. Windward 1, Regatta Office Park, PO Box 897, Grand Cayman KY1 - 1103, Cayman Islands
46. Beauport House, L'Avenue de la Commune, Jersey, JE3 7BY
47. 6th Floor, 125 London Wall, London, England EC2Y 5A
48. Av. El Golf 40, 7th floor, Las Condes, Santiago de Chile, Chile
49. 163 Tras Street, #03-01, Lian Huat Building, Singapore, 079024, Singapore
50. Paseo de General Martinez Campos, Campos n 9 1 izquierda, 28010 Madrid, Spain
51. Istiklal Caddesi Beyoglu Is Merkezi No: 187/5 Galatasaray, Istanbul, Turkey
52. Centre de Commerces et de, Loisirs, Cite Europe, 62231 Coquelles, France
53. Suite 1106-8, 11/F., Tai Yau Building, No 181 Johnston Road, Wanchai, Hong Kong
54. Unit 607, 6th floor, Trade Centre, Bandra Kurla Complex, Bandra East, Mumbai, 400051, Maharashtra, India
55. 1-2-3 Marunouchi, Chiyoda-ku, Tokyo, Japan
56. Rosenkrantzgate 16, Oslo, O160, Norway
57. c/o TMF Denmark A/S, Købmagergade 60, 1. tv., 1150 København K, Denmark
58. Cesta na Senec 2, Bratislava, 821 04, Slovakia
59. 1400-340 Albert St, Ottawa ON K1R 0A5, Canada
60. 4th Fl, Tower B, Paras Twin Towers, DLF Golf Course Road, Sector 54, Gurgaon, Haryana-HR, 122002, India
61. 48 rue Cambon, 75001, Paris, France
62. Room 1001, Enterprise Development Tower, No. 398, Jiangsu Road Changning District, Shanghai 200050, People's Republic of China
63. Room 501-4, No.398 Jiangsu Road, Shanghai, People's Republic of China
64. RSM New Zealand, Level 2, 60 Highbrook Drive, Auckland, 2013, New Zealand
65. Level 21, 55 Collins Street, Melbourne, VIC 3000, Australia
66. 10 Gukjegeumyung-ro, Yeongdeungpo-gu, Seoul, Korea (07326)
67. Floor 3, 2 Harbour Square, Crofton Road, Dun Laoghaire, Dublin, Ireland
68. Veterná 7310/40, 917 01 Trnava, The Slovak Republic, Slovakia
69. Av President Masarik No. 111, Piso 1, Colina Polance V Seccion Delegacion Miguel Hidalgo, C.P. 11560, Mexico
70. Regus Amsterdam Sloterdijk Teleport Towers, Kingsfordweg 151, 1043 GR Amsterdam
71. Dorey Court, Admiral Park, St. Peter Port, GY1 4AT, Guernsey
72. PO Box 237, Peregrine House, Peel Road, Douglas, Isle of Man, IM99 1SU
73. No. 319 Chamchuri Square Building, 16th Fl, Unit 01, Phayathi Road Pathumwan sub District, Bangkok 10330, Thailand
74. Calle 32 b sur #48-100, Envigado, Antioquia, Colombia
75. ul. Połczyńska 121/125, 01-377 Warsaw, Poland
76. Unit 01, 02, 06, 07, 08, 09, Floor 17, No. 610 Xujiahui Road, Huangpu District, Shanghai, People's Republic of China
77. Av.Brigadeiro Luis Antônio, 3530, 5 Andar, 01402-001 São Paulo, Brazil
78. c/o Vaish Associates, 106, Peninsula Centre, Dr. S. S. Rao Road, Parel Mumbai - 400012, Maharashtra, India
79. 125047, Moscow, 1st Tverskaya-Yamskaya Street, 23, building 1, floor 5, premise V, room 5
80. 5th Floor, Unit 401, Tower B, The Millenia, No. 1&2 Murphy Road Ulsoor, Bangalore, 560 008, India
81. Einsteinova 24, Bratislava 851 01, Slovakia

Supplementary information (unaudited)

Total sales performance at actual rates (exc. VAT, exc. fuel) for continuing operations(a)

	1Q 2020/21	2Q 2020/21	3Q 2020/21	4Q 2020/21	1H 2020/21	2H 2020/21	FY 2020/21
UK & ROI	9.4%	7.8%	8.7%	9.4%	8.6%	9.1%	8.8%
UK	9.1%	6.3%	7.2%	9.3%	7.7%	8.3%	8.0%
ROI	23.0%	9.6%	15.3%	19.8%	16.3%	17.5%	16.9%
Booker	6.1%	15.7%	15.1%	5.9%	11.0%	10.6%	10.5%
Central Europe	0.8%	(8.9)%	(0.7)%	0.8%	(4.3)%	0.1%	(2.1)%
Tesco Bank	(26.5)%	(35.9)%	(28.5)%	(33.6)%	(31.4)%	(31.0)%	(31.2)%
Group	7.9%	5.4%	7.2%	7.9%	6.6%	7.5%	7.1%

Total sales performance at constant rates (exc. VAT, exc. fuel) for continuing operations(a)

	1Q 2020/21	2Q 2020/21	3Q 2020/21	4Q 2020/21	1H 2020/21	2H 2020/21	FY 2020/21
UK & ROI	9.2%	7.8%	8.5%	9.1%	8.5%	8.8%	8.6%
UK	9.1%	6.3%	7.2%	9.3%	7.7%	8.3%	8.0%
ROI	19.7%	9.4%	11.7%	14.0%	14.5%	12.9%	13.7%
Booker	6.1%	15.7%	15.1%	5.9%	11.0%	10.6%	10.5%
Central Europe	3.3%	(5.7)%	0.7%	(0.5)%	(1.5)%	0.1%	(0.6)%
Tesco Bank	(26.5)%	(35.9)%	(28.5)%	(33.6)%	(31.4)%	(31.0)%	(31.2)%
Group	8.0%	5.6%	7.1%	7.5%	6.8%	7.3%	7.0%

(a) In order to ensure the best comparability year-on-year, sales growth in 2H is reported as sales for 26 weeks ending 27 February 2021 against sales for 26 weeks ending 29 February 2020. Like-for-like sales performance (exc. VAT, exc.## Supplementary Information (Unaudited)

Group space summary

Actual Group space - store numbers(a)

	2019/20 year end	Openings	Closures/ disposals	Net gain/ (reduction)(b)	2020/21 year end	Repurposing/ extensions(c)
Large	796	1	(2)	(1)	795	-
Convenience	1,920	20	(2)	18	1,938	-
Dotcom only	6	-	-	-	6	-
Total Tesco	2,722	21	(4)	17	2,739	-
One Stop(d)	697	8	-	-	8	705
Booker	196	(2)	(2)	-	194	-
Jack's	12	-	-	-	12	-
UK(d)	3,627	29	(6)	23	3,650	-
ROI	150	1	-	1	151	-
UK & ROI(d)	3,777	30	(6)	24	3,801	1
Czech Republic(d)	186	1	(4)	(3)	183	(1)
Hungary	202	-	(1)	(1)	201	-
Slovakia(d)	150	3	-	3	153	(3)
Central Europe(d)	538	4	(5)	(1)	537	(4)
Group(d)	4,315	34	(11)	23	4,338	(3)
UK (One Stop)	191	35	(19)	16	207	-
Czech Republic	107	20	(4)	16	123	-
Slovakia	-	5	-	5	5	-
Franchise stores	298	60	(23)	37	335	-

Actual Group space - '000 sq. ft.(a)

	2019/20 year end	Openings	Closures/ disposals	Repurposing/ extensions(c)	Net gain/ (reduction)(b)	2020/21 year end
Large	31,336	20	(17)	-	3	31,339
Convenience	5,204	44	(4)	-	40	5,244
Dotcom only	716	-	-	-	-	716
Total Tesco	37,256	64	(21)	-	43	37,299
One Stop(d)(e)	1,139	15	-	(4)	11	1,150
Booker	8,376	-	(92)	-	(92)	8,284
Jack's	119	-	-	-	-	119
UK(d)	46,890	79	(113)	(4)	(38)	46,852
ROI	3,274	56	-	5	61	3,335
UK & ROI(d)	50,164	135	(113)	1	23	50,187
Czech Republic(d)	4,289	14	(19)	(18)	(23)	4,266
Hungary	6,000	-	(3)	-	(3)	5,997
Slovakia(d)	3,180	16	-	(45)	(29)	3,151
Central Europe(d)	13,469	30	(22)	(63)	(55)	13,414
Group(d)	63,633	165	(135)	(62)	(32)	63,601
UK (One Stop)	237	44	(25)	-	19	256
Czech Republic	101	19	(2)	-	17	118
Slovakia	-	5	-	-	5	5
Franchise stores	338	68	(27)	-	41	379

• (a) Continuing operations.
• (b) The net gain/(reduction) reflects the number of store openings less the number of store closures/disposals.
• (c) Repurposing of retail selling space.
• (d) Excludes franchise stores.
• (e) Prior year restatement included within repurposing/extensions

Group space forecast to 26 February 2022 - '000 sq. ft.(a)

	2020/21 year end	Openings	Closures/ disposals	Repurposing/ extensions	Net gain/ (reduction)	2021/22 year end
Large	31,339	56	-	-	56	31,395
Convenience	5,244	92	(7)	-	85	5,329
Dotcom only	716	-	-	-	-	716
Total Tesco	37,299	148	(7)	-	141	37,440
One Stop(b)	1,150	-	-	-	-	1,150
Booker	8,284	-	-	-	-	8,284
Jack's	119	12	-	-	12	131
UK(b)	46,852	160	(7)	-	153	47,005
ROI	3,335	-	-	29	29	3,364
UK & ROI(b)	50,187	160	(7)	29	182	50,369
Czech Republic(b)	4,266	86	-	(41)	45	4,311
Hungary	5,997	-	(15)	(151)	(166)	5,831
Slovakia	3,151	57	-	(6)	51	3,202
Central Europe(b)	13,414	143	(15)	(198)	(70)	13,344
Group(b)	63,601	303	(22)	(169)	112	63,713
UK (One Stop)	256	-	-	-	-	256
Czech Republic	118	29	-	-	29	147
Slovakia	5	16	-	-	16	21
Franchise stores	379	45	-	-	45	424

• (a) Continuing operations.
• (b) Excludes franchise stores.

Tesco Bank income statement

2021(a)

	��m
Revenue
Interest receivable and similar income	542
Fees and commissions receivable	193
	733
Direct costs
Interest payable	(83)
Fees and commissions payable	(17)
	(100)
Gross profit	635
Other expenses
Staff costs	(176)
Premises and equipment	(75)
Other administrative expenses	(142)
Depreciation and amortisation	(57)
Impairment loss on financial assets	(360)
Operating profit before exceptional items	(175)
Exceptional items(b)	(295)
Operating profit	(470)
Net finance costs: movements on derivatives and hedge accounting	(2)
Net finance costs: interest	(7)
Share of profit/(loss) of joint venture	16
Profit for the year	(463)

2020(a)

	��m
Revenue
Interest receivable and similar income	733
Fees and commissions receivable	335
	1,068
Direct costs
Interest payable	(166)
Fees and commissions payable	(25)
	(191)
Gross profit	877
Other expenses
Staff costs	(164)
Premises and equipment	(72)
Other administrative expenses	(191)
Depreciation and amortisation	(78)
Impairment loss on financial assets	(179)
Operating profit before exceptional items	193
Exceptional items(b)	(119)
Operating profit	74
Net finance costs: movements on derivatives and hedge accounting	(11)
Net finance costs: interest	23
Share of profit/(loss) of joint venture	10
Profit for the year	96

• (a) These results are for the 12 months ended 27 February 2021 and the previous period represents the 12 months ended 29 February 2020.
• (b) Exceptional items in 2021 comprise of a goodwill impairment charge of ��(295)m (2020: PPI provision charge ��(45)m, restructuring costs ��(13)m, accelerated amortisation and costs related to the sale of the mortgage book and PCA ��(61)m).

Glossary - Alternative performance measures

Introduction

In the reporting of financial information, the Directors have adopted various APMs. These measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry. APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.

Purpose

The Directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Group. APMs are also used to enhance the comparability of information between reporting periods and geographical units (such as like-for-like sales), by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid users in understanding the Group's performance. Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes. Some of the Group's IFRS measures are translated at constant exchange rates. Constant exchange rates are the average actual periodic exchange rates for the previous financial period and are used to eliminate the effects of exchange rate fluctuations in assessing performance. Actual exchange rates are the average actual periodic exchange rates for that financial period.

Changes to APMs

The Directors and management have redefined Free cash flow and Retail free cash flow to be from continuing operations. Redefining Free cash flow and Retail free cash flow to exclude the cash flows of the Group's discontinued operations ensures consistency with the Group's Retail operating cash flow APM, and is a more appropriate measure of the ongoing cash generation of the Group.

The Directors and management have added Retail sales as a new APM, which is defined as Group sales excluding Tesco Bank sales and sales made at petrol filling stations. This metric is used to demonstrate the underlying performance in the Group's core Retail businesses and removes the volatilities associated with the movement in fuel prices.

The Directors and management have added Diluted earnings per share from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments (adjusted for share consolidation) as a new APM. This is defined as profit after tax before exceptional items and amortisation of acquired intangibles from continuing operations, net pension finance costs and fair value remeasurements attributable to owners of the parent divided by the weighted average number of ordinary shares in issue during the financial period adjusted for the effects of potentially dilutive share options and to reflect the full impact of the share consolidation as if it had taken place at the start of the previous financial year. This metric is used to demonstrate the underlying earnings per share of the Group's continuing operations, and removes any distortion from the sale of our businesses in Thailand and Malaysia as the earnings from discontinued operations are excluded, but the weighted average share base used in the statutory IAS 33 denominator does not yet reflect the full impact of the share consolidation and special dividend. To aid comparability, this new APM, which is presented on a basis other than in accordance with IAS 33 includes the full impact of the share consolidation as if it had taken place at the start of the previous financial year.

| APM 'fuel) for continuing operations 1Q 2Q 3Q 4Q 1H 2H FY 2020/21 2020/21 2020/21 2020/21 2020/21 2020/21 2020/21 UK & ROI 8.2% 6.2% 6.1% 6.9% 7.2% 6.5% 6.8% UK 8.7% 6.4% 6.7% 8.8% 7.6% 7.8% 7.7% ROI 20.5% 10.6% 11.8% 13.3% 15.5% 12.6% 14.0% Booker 0.6% 3.7% 0.1% (8.3)% 2.2% (4.0)% (0.8)% Central Europe 3.9% (5.3)% 0.9% (0.6)% (0.9)% 0.1% (0.4)% Tesco Bank n/a n/a n/a n/a n/a n/a n/a Group 7.9% 5.2% 5.7% 6.3% 6.5% 6.0% 6.3% Country detail - Retail Revenue (exc. VAT, inc. fuel) Local currency Average exchange Closing exchange (m) ��m rate rate UK 43,750 43,750 1.0 1.0 ROI 2,998 2,684 1.1 1.2 Booker 6,736 6,736 1.0 1.0 Czech Republic 41,339 1,391 29.7 30.2 Hungary 545,409 1,376 396.4 417.9 Slovakia 1,357 1,215 1.1 1.2 UK sales area by size of store 27 February 2021 29 February 2020 Store size (sq. ft.) No. of stores Million sq. ft. % of total sq. ft. No. of stores Million sq. ft. % of total sq. ft. 0-3,000 2,534 5.5 14.2% 2,508 5.4 14.0% 3,001-20,000 282 3.0 7.8% 284 3.0 7.8% 20,001-40,000 285 8.2 21.2% 284 8.2 21.3% 40,001-60,000 182 8.8 22.8% 182 8.8 22.9% 60,001-80,000 120 8.4 21.8% 120 8.4 21.8% 80,001-100,000 45 3.7 9.6% 45 3.7 9.6% Over 100,000 8 1.0 2.6% 8 1.0 2.6% Total* 3,456 38.6 100.0% 3,431 38.5 100.0% * Excludes Booker and franchise stores. Supplementary information (unaudited) continued Group space summary Actual Group space - store numbers(a) 2019/20 year end Openings Closures/ disposals Net gain/ (reduction)(b) 2020/21 year end Repurposing/ extensions(c) Large 796 1 (2) (1) 795 - Convenience 1,920 20 (2) 18 1,938 - Dotcom only 6 - - - 6 - Total Tesco 2,722 21 (4) 17 2,739 - One Stop(d) 697 8 - - - 8 705 - Booker 196 (2) (2) 194 - Jack's 12 - - 12 - UK(d) 3,627 29 (6) 23 3,650 - 1 ROI 150 1 - 1 151 UK & ROI(d) 3,777 30 (6) 24 3,801 1 Czech Republic(d) 186 1 (4) (3) 183 (1) Hungary 202 - (1) (1) 201 - Slovakiad) 150 3 - 3 153 (3) Central Europe(d) 538 4 (5) (1) 537 (4) Group(d) 4,315 34 (11) 23 4,338 (3) UK (One Stop) 191 35 (19) 16 207 - Czech Republic 107 20 (4) 16 123 - Slovakia - 5 - 5 5 - Franchise stores 298 60 (23) 37 335 - Actual Group space - '000 sq. ft.(a) 2019/20 year end Openings Closures/ disposals Repurposing/ extensions(c) Net gain/ (reduction)(b) 2020/21 year end Large 31,336 20 (17) - 3 31,339 Convenience 5,204 44 (4) - 40 5,244 Dotcom only 716 - - - - 716 Total Tesco 37,256 64 (21) - 43 37,299 One Stop(d)(e) 1,139 15 - (4) 11 1,150 Booker 8,376 - (92) - (92) 8,284 Jack's 119 - - - - 119 UK(d) 46,890 79 (113) (4) (38) 46,852 ROI 3,274 56 - 5 61 3,335 UK & ROI(d) 50,164 135 (113) 1 23 50,187 Czech Republic(d) 4,289 14 (19) (18) (23) 4,266 Hungary 6,000 - (3) - (3) 5,997 Slovakia(d) 3,180 16 - (45) (29) 3,151 Central Europe(d) 13,469 30 (22) (63) (55) 13,414 Group(d) 63,633 165 (135) (62) (32) 63,601 UK (One Stop) 237 44 (25) - 19 256 Czech Republic 101 19 (2) - 17 118 Slovakia - 5 - - 5 5 Franchise stores 338 68 (27) - 41 379 (a) Continuing operations. (b) The net gain/(reduction) reflects the number of store openings less the number of store closures/disposals. (c) Repurposing of retail selling space. (d) Excludes franchise stores. (e) Prior year restatement included within repurposing/extensions Supplementary information (unaudited) continued Group space forecast to 26 February 2022 - '000 sq. ft.(a) 2020/21 year end Openings Closures/ disposals Repurposing/ extensions Net gain/ (reduction) 2021/22 year end Large 31,339 56 - - 56 31,395 Convenience 5,244 92 (7) - 85 5,329 Dotcom only 716 - - - - 716 Total Tesco 37,299 148 (7) - 141 37,440 One Stop(b) 1,150 - - - - 1,150 Booker 8,284 - - - - 8,284 Jack's 119 12 - - 12 131 UK(b) 46,852 160 (7) - 153 47,005 ROI 3,335 - - 29 29 3,364 UK & ROI(b) 50,187 160 (7) 29 182 50,369 Czech Republic(b) 4,266 86 - (41) 45 4,311 Hungary 5,997 - (15) (151) (166) 5,831 Slovakia 3,151 57 - (6) 51 3,202 Central Europe(b) 13,414 143 (15) (198) (70) 13,344 Group(b) 63,601 303 (22) (169) 112 63,713 UK (One Stop) 256 - - - - 256 Czech Republic 118 29 - - 29 147 Slovakia 5 16 - - 16 21 Franchise stores 379 45 - - 45 424 (a) Continuing operations. (b) Excludes franchise stores. Tesco Bank income statement 2021(a) ��m 2020(a) ��m Revenue Interest receivable and similar income Fees and commissions receivable 542 193 733 335 735 1,068 Direct costs Interest payable (83) (166) Fees and commissions payable (17) (25) (100) (191) Gross profit 635 877 Other expenses Staff costs (176) (164) Premises and equipment (75) (72) Other administrative expenses (142) (191) Depreciation and amortisation (57) (78) Impairment loss on financial assets (360) (179) Operating profit before exceptional items (175) 193 Exceptional items(b) (295) (119) Operating profit (470) 74 Net finance costs: movements on derivatives and hedge accounting (2) (11) Net finance costs: interest (7) 23 Share of profit/(loss) of joint venture 16 10 Profit for the year (463) 96 (a) These results are for the 12 months ended 27 February 2021 and the previous period represents the 12 months ended 29 February 2020. (b) Exceptional items in 2021 comprise of a goodwill impairment charge of ��(295)m (2020: PPI provision charge ��(45)m, restructuring costs ��(13)m, accelerated amortisation and costs related to the sale of the mortgage book and PCA ��(61)m). Glossary - Alternative performance measures Introduction In the reporting of financial information, the Directors have adopted various APMs. These measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry. APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements. Purpose The Directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Group. APMs are also used to enhance the comparability of information between reporting periods and geographical units (such as like-for-like sales), by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid users in understanding the Group's performance. Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes. Some of the Group's IFRS measures are translated at constant exchange rates. Constant exchange rates are the average actual periodic exchange rates for the previous financial period and are used to eliminate the effects of exchange rate fluctuations in assessing performance. Actual exchange rates are the average actual periodic exchange rates for that financial period. Changes to APMs The Directors and management have redefined Free cash flow and Retail free cash flow to be from continuing operations. Redefining Free cash flow and Retail free cash flow to exclude the cash flows of the Group's discontinued operations ensures consistency with the Group's Retail operating cash flow APM, and is a more appropriate measure of the ongoing cash generation of the Group. The Directors and management have added Retail sales as a new APM, which is defined as Group sales excluding Tesco Bank sales and sales made at petrol filling stations. This metric is used to demonstrate the underlying performance in the Group's core Retail businesses and removes the volatilities associated with the movement in fuel prices. The Directors and management have added Diluted earnings per share from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments (adjusted for share consolidation) as a new APM. This is defined as profit after tax before exceptional items and amortisation of acquired intangibles from continuing operations, net pension finance costs and fair value remeasurements attributable to owners of the parent divided by the weighted average number of ordinary shares in issue during the financial period adjusted for the effects of potentially dilutive share options and to reflect the full impact of the share consolidation as if it had taken place at the start of the previous financial year. This metric is used to demonstrate the underlying earnings per share of the Group's continuing operations, and removes any distortion from the sale of our businesses in Thailand and Malaysia as the earnings from discontinued operations are excluded, but the weighted average share base used in the statutory IAS 33 denominator does not yet reflect the full impact of the share consolidation and special dividend. To aid comparability, this new APM, which is presented on a basis other than in accordance with IAS 33 includes the full impact of the share consolidation as if it had taken place at the start of the previous financial year. APM Closest equivalent IFRS measure Adjustments to reconcile to IFRS measure Definition and purpose Income Statement Revenue measures Group sales Revenue - Exclude sales made at petrol filling stations - Excludes the impact of sales made at petrol filling stations to demonstrate the Group's underlying performance in the core retail and financial services businesses by removing the volatilities associated with the movement in fuel prices. This is a key management incentive metric. Growth in sales No direct equivalent - Consistent with accounting policy - Growth in sales is a ratio that measures year-on-year movement in Group sales for continuing operations for 52 weeks. It shows the annual rate of increase in the Group's sales and is considered a good indicator of how rapidly the Group's core business is growing. Like-for-like No direct equivalent - Consistent with accounting policy - 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 (but excludes prior year sales of stores closed during the year) at constant foreign exchange rates. | APM Closest equivalent IFRS measure | Adjustments to reconcile to IFRS measure | Definition and purpose |
| :--- '2019/20 year end | Openings | Closures/ disposals | Repurposing/ extensions(c) | Net gain/ (reduction)(b) | 2020/21 year end |
| :--- # Glossary - Alternative performance measures continued

APM

| Closest equivalent IFRS measure

It is a widely used indicator of a retailer's current trading performance and is important when comparing growth between retailers that have different profiles of expansion, disposals and closures.

• Retail sales
  • Revenue
  • Exclude Tesco Bank sales
  • Exclude sales made at petrol filling stations
  • Group sales excluding Tesco Bank sales to demonstrate the Group's underlying performance in the core Retail businesses.
• Profit measures
  • Operating profit before exceptional items and amortisation of acquired intangibles
  • Operating profit*
    • Exceptional items
    • Amortisation of acquired intangibles
• Operating profit before exceptional items and amortisation of acquired intangibles is the headline measure of the Group's performance, and is based on operating profit from continuing operations before the impact of exceptional items and amortisation of intangible assets acquired in business combinations.
• Exceptional items relate to certain cost or incomes that derive from events or transactions that fall within the normal activities of the Group but which, individually or, if of similar type, in aggregate, are excluded by virtue of their size and nature in order to reflect management's view of the underlying performance of the Group.
  * This is a key management incentive metric.
  * * Operating profit is presented on the Group income statement. It is not defined per IFRS, however, is a generally accepted profit measure.

| APM # Glossary - Alternative performance measures continued

APM Closest equivalent IFRS measure Adjustments to reconcile to IFRS measure Definition and purpose

Cash flow measures

• Retail operating cash flow
  • Closest equivalent IFRS measure: Cash generated from operating activities
  • Adjustments to reconcile to IFRS measure: Tesco Bank operating cash flow, Discontinued operations

• Definition and purpose: Retail operating cash flow is the cash generated from continuing operations, excluding the effects of Tesco Bank's cash flows. It is a measure of the cash generation and working capital efficiency of the Retail business, recognising that Tesco Bank is run and regulated independently from the Retail operations. This is a key management incentive metric.

• Free cash flow

  • Closest equivalent IFRS measure: Cash generated from operating activities
• Adjustments to reconcile to IFRS measure: Net cash generated from/ (used in) investing activities, and the market purchase of shares issued in relation to share schemes, Repayment of obligations under leases, Investing cash flows that increase/decrease items within Group net debt, Cash flows from major corporate acquisitions and disposals

• Definition and purpose: Free cash flow includes all cash flows from continuing operations from operating and investing activities, the market purchase of shares net of proceeds from shares issued in relation to share schemes, and repayment of obligations under leases. The following items are excluded: investing cash flows that increase/decrease items within Group net debt, and cash flows from major corporate acquisitions and disposals. This measure reflects the cash available to shareholders.

• Retail free cash flow

  • Closest equivalent IFRS measure: Cash generated from operating activities
• Adjustments to reconcile to IFRS measure: Tesco Bank operating cash flow, Retail cash generated from/ (used in) investing activities, and the market purchase of shares issued in relation to share schemes, Repayment of obligations under leases, Investing cash flows that increase/decrease items within Net debt, Cash flows from major corporate acquisitions and disposals
• Definition and purpose: Retail free cash flow includes all cash flows from continuing operations from operating and investing activities for the Retail business, the market purchase of shares net of proceeds from shares issued in relation to share schemes, and the repayment of obligations under leases. The following items are excluded: investing cash flows that increase/decrease items within Net debt, and cash flows from major corporate acquisitions and disposals. This measure reflects the cash available to shareholders. This is a key management incentive metric.

Balance sheet measures

• Net debt

• Definition and purpose: Borrowings less cash and related hedges. Net debt from Tesco Bank. Net debt excludes the net debt of Tesco Bank but includes that of the discontinued operations to reflect the net debt obligations of the Retail business. Net debt comprises bank and other borrowings, lease liabilities, net derivative financial instruments, joint venture loans and other receivables and net interest receivables/payables, offset by cash and cash equivalents and short-term investments. It is a useful measure of the progress in generating cash and strengthening of the Group's balance sheet position and is a measure widely used by credit rating agencies.

• Total indebtedness

• Definition and purpose: Borrowings less cash and related hedges. Consistent with accounting policy. Total indebtedness is the net debt plus the IAS 19 deficit in the pension schemes (net of associated deferred tax) to provide an overall view of the Group's obligations. It is an important measure of the long-term obligations of the Group and is a measure widely used by credit rating agencies.

• Total indebtedness ratio

• Definition and purpose: Total indebtedness divided by the rolling 12-month Retail EBITDA. It is a measure of the Group's ability to meet its payment obligations and is widely used by analysts and credit rating agencies.

• Fixed charge cover

• Definition and purpose: The rolling 12-month Retail EBITDA divided by the sum of net finance costs (excluding net pension finance costs, finance charges payable on lease liabilities, exceptional items, capitalised interest and fair value remeasurements) and all lease liability payments from continuing operations. It is a measure of the Group's ability to meet its payment obligations and is widely used by analysts and credit rating agencies.

As detailed in the basis of consolidation, refer to Note 1, for the UK & ROI, the prior year results are for the 53 weeks ended 29 February 2020. For all other operations, the prior year results are for the calendar year ended 29 February 2020. In order to provide comparability with the current year results for the 52 weeks ended 27 February 2021, the tables below present the Group's prior year statutory results on a 53-week basis to 29 February 2020, adjusted to remove the results of week 53 for the UK & ROI to also separately present the APMs on a 52-week basis to 22 February 2020. In determining the week 53 adjustment for the UK & ROI, revenue, sales and cost of goods sold represent the actual trading performance in that week, with overhead expenses allocated proportionally to week 53 based on the reported results for the 53 weeks to 29 February 2020. No week 53 adjustments are required with respect to the Group's operations in Central Europe, Asia or Tesco Bank, which report on a calendar year basis. The prior year results on a 53-week basis to 29 February 2020 and APMs on a 52-week basis to 22 February 2020 have been restated to present Thailand, Malaysia and Poland as discontinued operations. See Note 7 for further details.

Glossary - Alternative performance measures continued

APMs: Reconciliation of income statement measures

UK & ROI

Notes	APM 2021 £m	2020 As reported on a 53-week basis £m	Exclude week 53 £m	APM 2020 52-week basis £m
Continuing operations
Group sales	2	48,848	45,752	(843)
Revenue	2	53,170	52,898	(983)
Operating profit before exceptional items and amortisation of acquired intangibles	2	1,866	2,202	(46)
Operating margin	2	3.5%	4.2%	-
Growth in sales at actual rates		8.8%	2.0%	(1.9)%
Growth in sales at constant rates		8.6%	2.1%	(1.9)%

Total Group

Notes	APM 2021 £m	2020 As reported on a 53-week basis £m	Exclude week 53 £m	APM 2020 52-week basis £m
Continuing operations
Group sales	2	53,445	50,788	(843)
Revenue	2	57,887	58,091	(983)
Operating profit before exceptional items and amortisation of acquired intangibles	2	1,815	2,571	(46)
Operating margin	2	3.1%	4.4%	-
Growth in sales at actual rates		7.1%	1.4%	(1.8)%
Growth in sales at constant rates		7.0%	1.7%	(1.8)%

Notes	APM 2021	2020 As reported on a 53-week basis	Exclude week 53	APM 2020 52-week basis
Operating profit before exceptional items and amortisation of acquired intangibles (��m)	2	1,815	2,571	(46)
Share of post-tax profits/(losses) of joint ventures and associates before exceptional items and amortisation of acquired intangibles (��m)	2	26	-	-
Net finance costs before exceptional items and amortisation of acquired intangibles (��m)	5	(937)	(1,019)	27
Profit before tax from continuing operations before exceptional items and amortisation of acquired intangibles (��m)		904	1,552	(19)
Add: Net pension finance costs (��m)	5	43	71	-
Add: Fair value remeasurements of financial instruments (��m)	5	214	246	(18)
Profit before tax from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments (��m)		1,161	1,869	(37)
Total income tax credit/(charge) before exceptional items, net pension finance costs and fair value remeasurements of financial instruments (��m)	9	(249)	(400)	7
Effective tax rate before exceptional items, net pension finance costs and fair value remeasurements of financial instruments (%)		21.4%	21.4%	0.1%
Profit before tax from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments attributable to the owners of the parent (��m)	9	1,168	1,869	(37)
Taxation on profit from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments attributable to the owners of the parent (��m)	9	(249)	(400)	7
Profit after tax from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments attributable to the owners of the parent (��m)	9	919	1,469	(30)
Basic weighted average number of shares (millions)	9	9,629	9,716	-
Basic earnings per share from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments (pence)

Notes	APM 2021	2020 As reported on a 53-week basis	Exclude week 53	APM 2020 52-week basis
Weighted average number of diluted shares
Diluted weighted average number of shares (millions)	9,656	9,783	-	9,783
Adjustment to reflect the post-consolidation share base as if it had been in place from the start of the previous financial year (millions)	(1,956)	(2,045)	-	(2,045)
Adjusted diluted weighted average number of shares (adjusted for share consolidation) (millions)	7,700	7,738	-	7,738
Diluted earnings per share from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements (pence)	9.52	15.02	(0.31)	14.71
Adjustment to reflect the post-consolidation share base as if it had been in place from the start of the previous financial year (pence)	2.42	3.96	(0.07)	3.89
Diluted earnings per share from continuing operations before exceptional items and amortisation of acquired intangibles, net pension finance costs and fair value remeasurements (adjusted for share consolidation) (pence)	11.94	18.98	(0.38)	18.60

Retail EBITDA

Notes	APM 2021 ��m	2020 As reported on a 53-week basis ��m	Exclude week 53 ��m	APM 2020 52-week basis ��m
Operating profit/(loss) from continuing operations before exceptional items and amortisation of acquired intangibles	2 1,815	2,571	(46)	2,525
Add/(less): Tesco Bank operating loss/(profit) before exceptional items	2 175	(193)	-	(193)
Retail operating profit/(loss) from continuing operations before exceptional items and amortisation of acquired intangibles	2 1,990	2,378	(46)	2,332
Add: Depreciation and amortisation (excluding amortisation of acquired intangibles)	2 1,671	1,730	(29)	1,701
Less: Tesco Bank depreciation and amortisation	2 (57)	(141)	-	(141)
Retail EBITDA		3,604	3,967	(75)

APMs: Reconciliation of balance sheet measures

Total indebtedness ratio

Notes	APM 2021	2020 As reported on a 53-week basis	Exclude week 53	APM 2020 52-week basis
Net debt (��m) (a)(b)	32 11,955	12,298	(197)	12,101
Add: Defined benefit pension deficit, net of deferred tax (��m)(a)	29 1,004	2,573	-	2,573
Total indebtedness (��m)(a)		12,959	14,871	(197)
Retail EBITDA (��m)		3,604	3,967	(75)
Total indebtedness ratio		3.6	3.7	0.1

(a) Net debt, Total indebtedness and the defined benefit pension deficit, net of deferred tax on a 52-week basis are as at 22 February 2020.
(b) Free cash outflow in week 53 of ��197m has been deducted from Net debt as at 29 February 2020 to determine the Group's 52-week Total indebtedness ratio.

Glossary - Alternative performance measures continued

Fixed charge cover

Notes	APM 2021	2020 As reported on a 53-week basis	Exclude week 53	APM 2020 52-week basis
Net finance cost (��m)	5 937	1,170	(27)	1,143
Less: Net pension finance cost (��m)	5 (43)	(71)		(71)
Less: Exceptional fair value remeasurement on restructuring derivative financial instruments (��m)	5 -	(180)	-	(180)
Add: Exceptional gain on Tesco Bank mortgage book disposal (��m)	5 -	29	-	29
Add: Fair value remeasurements on financial instruments (��m)	5 (214)	(246)	18	(228)
Total finance costs before exceptional items, net pension finance costs and fair value remeasurements on financial instruments (��m)		680	702	(9)
Add: Capitalised interest (��m)	5 -	-	-	-
Less: Finance charges payable on lease liabilities (��m)	5 (446)	(486)	6	(480)
Net finance cost, excluding net pension finance costs, exceptional items, capitalised interest, fair value remeasurements of financial instruments and finance charges payable on lease liabilities (��m)		234	216	(3)
Add: Retail total lease liability payments (��m)	12 1,104	1,170	-	1,170
Less: Retail discontinued operations total lease liability payments (��m)		(99)	(122)	-
		1,239	1,264	(3)
Retail EBITDA (��m)		3,604	3,967	(75)
Fixed charge cover		2.9	3.1	-

APMs: Reconciliation of cash flow measures

Notes	APM 2021 ��m	2020 As reported on a 53-week basis ��m	Exclude week 53 ��m	APM 2020 52-week basis ��m
Retail cash flows generated from operations excluding working capital	2 723	3,633	(63)	3,570
Retail (increase)/decrease in working capital	2 439	(53)	240	187
Retail operating cash flow	2 1,162	3,580	177	3,757
Retail interest and corporation tax paid(a)	2 (841)	(958)	27	(931)
Retail cash generated from/(used in) operating activities	2 321	2,622	204	2,826
Retail cash generated from/(used in) investing activities	2 6,890	(1,102)	(7)	(1,109)
Retail own shares purchased	2 (66)	(149)	-	(149)
Retail repayments of obligations under leases	2 (561)	(565)	-	(565)
Less: Retail cash inflow from major disposal(b)	2 (5,337)	-	-	-
Less: Retail increase/(decrease) in loans to joint ventures and associates	2	2	-	-
Less: Retail net investments in/(proceeds from sale of) short-term investments	2 (62)	687	-	687
Retail free cash flow	2 1,187	1,493	197	1,690
Tesco Bank free cash flow	2 192	476	-	476
Free cash flow		1,379	1,969	197

(a) Retail interest paid in week 53 amounted to ��27m.
(b) Retail cash flow from major disposal of ��5,337m principally comprises the ��7.8bn proceeds on disposal of the Group's Asia operations, excluding cash disposed and intercompany loan repayments, less the ��2.5bn additional pension contribution. Refer to Notes 4 and 7 for further details.

Other

Capital expenditure (Capex)
The additions to property, plant and equipment, investment property and intangible assets (excluding assets acquired under business combinations).

Capital employed
Net assets plus net debt plus dividend creditor less net assets of the disposal group and non-current assets classified as held for sale.

CPI
CPI refers to consumer price index.

Enterprise Value
This is calculated as market capitalisation plus net debt.

EURIBOR
Euro Interbank Offered Rate.

ESG
Environmental, social and governance.

FTE
FTE refers to full-time equivalents.

LIBOR
London Inter-Bank Offered Rate.

LPI
LPI refers to limited price inflation.

Market capitalisation
The total value of all Tesco shares calculated as total number of shares multiplied by the closing share price at year end.

MTN
MTN refers to medium term note.

MREL
Minimum requirements for own funds and eligible liabilities (European Banking Authority).

Net promoter score (NPS)
This is a loyalty measure based on a single question requiring a score between 0-10. The NPS is calculated by subtracting the percentage of detractors (scoring 0-6) from the percentage of promoters (scoring 9-10). This generates a figure between -100 and 100 which is the NPS.

Return on capital employed (ROCE)
Return divided by the average of opening and closing capital employed.

Return
Profit before exceptional items and interest, after tax (applied at effective rate of tax).

RPI
RPI refers to the retail price index.

SONIA
Sterling Overnight Index Average.

Total shareholder return
The notional annualised return from a share, measured as the percentage change in the share price, plus the dividends paid with the gross dividends, reinvested in Tesco shares. This is measured over both a one and five-year period.

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