REG - Tesco PLC - Interim Results 2025/26
Thu 07:00
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RNS Number : 7259B Tesco PLC 02 October 2025
Interim Results 2025/26
CONTINUED INVESTMENT IN value, quality and service DRIVING STRONG MARKET SHARE
GAINS.
Performance highlights ( H1 25/26 H1 24/25 Change at actual rates Change at constant rates
) (on a continuing operations basis)(1,2)
Group sales (exc. VAT, exc. fuel)(2) £33,051m £31,463m 5.1% 5.1%
Group adjusted operating profit(2) £1,674m £1,649m 1.5% 1.6%
Free cash flow(2) £1,298m £1,261m 2.9%
Net debt(3) £(9,884)m £(9,522)m (3.8)%
Adjusted diluted EPS(2) 15.43p 14.45p 6.8%
Dividend per share 4.80p 4.25p 12.9%
Statutory measures (on a continuing operations basis)(1)
Revenue (exc. VAT, inc. fuel) £36,036m £34,773m 3.6%
Operating profit £1,603m £1,612m (0.6)%
Profit before tax £1,305m £1,392m (6.3)%
Diluted EPS 14.22p 14.62p (2.7)%
Statutory measures (including discontinued operations)(1)
Profit after tax £950m £1,051m (9.6)%
Diluted EPS 14.22p 15.03p (5.4)%
Ken Murphy, Chief Executive:
"I am pleased with our first half performance, which builds on already strong
momentum. Our market share gains in the UK are a particular highlight and
reflect the decisive action we took at the start of the year to further invest
in value, quality and service. The extension of our savings programme is
helping offset new operating cost inflation, including increased National
Insurance and other regulatory costs. Sales have grown across all our
businesses, with customer satisfaction scores improving once again.
The steps we have taken to keep prices down for customers have improved our
price position relative to the market. We have continued to enhance quality
across all our ranges, including Finest, which is now in its third year of
double-digit sales growth. Our summer ranges also benefited from over 470 new
products and we continued to deliver market-leading availability. The opening
of our new semi-automated distribution centre in Aylesford will further
support our core fresh food offer.
We are also continuing to invest in our long-term growth, leveraging
technology to drive more personalised engagement through Clubcard and deeper
retail media reach across channels and suppliers. Our online business is going
from strength-to-strength, enhanced by the recent launch of F&F online and
continued growth in Whoosh, our rapid delivery service.
Competitive intensity remains high, and with continued pressure on household
budgets, we remain committed to ensuring customers get the best possible value
by shopping at Tesco. As we continue to invest, we are creating sustainable
value for all our stakeholders. Our colleagues are central to everything we
do, and I would like to thank them all for the role they have each played in
delivering for our customers."
Strong trading performance with operating profit growth and continued cash
generation
· Group LFL(4) sales up +4.3%, with growth across all markets: UK +4.9%, ROI
+4.8%, Booker +1.7%, CE +3.4%
· Group adjusted operating profit(2) up +1.6% at constant rates to £1,674m:
· UK & ROI up +2.1% to £1,468m with volume-driven market share gains, good
weather and Save to Invest progress offsetting investment in our customer
offer and operating cost inflation (incl. National Insurance increase and new
packaging levy)
· Booker up +0.6% to £162m with a good weather tailwind and Save to Invest
progress offsetting industry-wide operating cost pressures; Booker is now
reported as a separate operating segment (see page 4)
· Central Europe down (11.2)% to £44m reflecting targeted price investments to
counter competitive pressures as well as lower rental income following the
sale of mall properties in H2 24/25
· Adjusted diluted EPS(2) up +6.8% to 15.43p, driven by higher Group adjusted
operating profit and the benefit of our ongoing share buyback programme
· Statutory operating profit of £1,603m, down (0.6)% reflecting restructuring
and Bank separation adjusting items; statutory diluted EPS of 14.22p, down
(2.7)%, which also reflects non-cash fair value remeasurements of financial
instruments
· Free cash flow(2) of £1,298m, up +2.9%, reflecting working capital inflows
due to strong sales, and continued capital discipline
· Net debt(3) at £(9,884)m versus £(9,454)m at year end which included the
full proceeds from the disposal of the Group's Banking operations, which have
been partially returned in the half; Net debt/EBITDA stable at 2.0 times
Footnotes can be found at the bottom of page 4.
Increasing customer satisfaction contributing to further UK market share gains
· UK market share up +77bps YoY to 28.4%, having now gained share for 28
consecutive four-week periods; ROI up +11bps YoY at 23.7%, consolidating three
years of consistent market share gains
· Overall brand perception up +96bps YoY; with continued gains in satisfaction
(+263bps), value (+89bps) and quality (+13bps); outperforming the competitor
average on all six measures as tracked by YouGov
· Improved price position against the market, notably on the products most
frequently purchased by customers
· Delivered market-leading availability and highest net promoter score in six
years
· Awarded first place in the Advantage supplier survey for tenth year; overall
supplier satisfaction of 88%, up +1ppt YoY
· Introduced additional financial incentives totalling c.£10m for over 400 UK
farmers across our sustainable farming groups to achieve environmental and
animal welfare goals
· Insurance and Money Services adjusted operating profit of £100m, up £6m YoY,
with new partnership income and strong cost control helping to offset £42m of
non-recurring benefits recognised in the prior year
Continued range innovation with investments in distribution capacity and new
AI capabilities
· Over 470 new products launched and a further 560 products improved across our
own-brand ranges; Finest sales up +16%, with over 300 new and improved
products
· Opened new semi-automated fresh food distribution centre in Aylesford; signed
agreement to develop a new distribution centre at DP World London Gateway,
which we expect to open in 2029
· Continued development of AI capability across our business, including
improvements to in-house tools which find the most efficient journey for every
Tesco lorry and delivery van, removing around 100,000 miles per week
Expanding the reach and breadth of our market leading online offer
· UK online sales up +11.4%, driven by growth in orders per week, with market
share up +112bps YoY to 36.9%; ROI online sales up +18.8%, supported by the
launch of same day delivery last year
· Tesco Whoosh rapid delivery service sales up +59%, with further growth in
active customers and basket sizes, and the service now covering over 70% of UK
households; Tesco Whoosh recently launched in ROI
· Further build-out of digital ecosystem with recent launch of F&F online,
helping more customers access our enhanced range of stylish and affordable
clothing, complementing Tesco Marketplace
Enhancing personalised engagement through Clubcard and expanding the Tesco
Media and Insight platform
· Over 13m customers are now receiving even more timely and relevant offers,
product recommendations and recipe ideas, supported by our new partnership
with Adobe
· Targeted digital coupons offered to 10m customers; continuing trial of Your
Clubcard Prices
· Growth in advertisers using Tesco Media and Insight Platform; particularly
significant growth for smaller advertisers who are building their brands
through tailored product offerings; over 1,400 screens added to stores and One
Stop trial underway
· Retail media product launches included video advertising on the Tesco app and
Express store wraps; shortlisted for eight MediaWeek awards and winner of
'Retail Media Network of the Year' at Retail MediaX Awards
CAPITAL RETURN PROGRAMME.
Since the commencement of our £1.45bn share buyback programme on 10 April
2025 and up until market close on 1 October 2025, we have bought back £891m
worth of our ordinary shares. The balance will be completed by April 2026.
Since launching our programme in October 2021, we have bought back a total of
£3.7bn worth of ordinary shares.
OUTLOOK.
In April, we noted an increase in the competitive intensity of the UK market
and provided guidance that allowed us to take decisive action and invest in
every aspect of our customer shopping trip.
Competitive intensity remains elevated. However, in the first half, a
better-than-expected customer response to our actions and the benefit of an
extended period of good weather have helped offset the cost of our
investments.
We are committed to doing everything we can to keep prices down and deliver
great quality, service and availability for our customers, and are making good
progress towards our c.£500m Save to Invest target, helping to mitigate the
impact of increased cost inflation.
We now expect FY 25/26 Group adjusted operating profit between £2.9bn and
£3.1bn, an increase from the previous range of between £2.7bn and £3.0bn.
We continue to expect free cash flow within our medium-term guidance range of
£1.4bn to £1.8bn.
FY 25/26 is a 53-week financial year, but for comparability we will also
report our key financial metrics on a 52-week basis. All financial guidance
is provided on a 52-week basis.
STRATEGIC PRIORITIES.
Our strategic priorities ensure that we focus on offering great value, quality
and convenience whilst rewarding loyalty. Through our colleagues, reach and
supplier relationships, we are well-placed to serve our customers wherever,
whenever and however they need us. Our strategy puts customers at the heart of
everything we do, and guides us to deliver top-line growth, grow profit and
generate cash and, in doing so, deliver for all our stakeholders.
1) Magnetic Value for Customers - Re-defining value to become the customer's
favourite
· Providing great value to customers through Aldi Price Match on >600 lines,
Low Everyday Prices on c.1,000 lines and c.10,000 Clubcard Prices deals each
week; Clubcard Prices save customers up to £375 off their annual grocery bill
· In the UK, we have reduced the price of 6,500 products year-on-year, with an
average reduction of around 9%
· 'That's True Value' campaign inspiring customers with recipe tips and helping
them better manage the cost of a weekly shop
· Summer ranges benefited from product innovations including a new and improved
sushi offering, enhanced Finest BBQ range and exciting launches such as Finest
Gelato and iced coffee concentrates; won Free From 'Retailer of the Year' 2025
· Supporting customers to make healthy choices through new five-a-day fruit and
vegetable campaign, with c.2.5m customers invited to earn personalised
rewards; expanded Stronger Starts Fruit & Veg programme to 500 schools
· Booker customer satisfaction increased year-on-year, with over 600 prices
locked over the summer and new catering ranges launched with support from our
Group product development teams
· Central Europe NPS improvements across all three countries as customers
responded well to our price investments
· Tesco Mobile named 'Best Mobile Network for Customer Service' at USwitch
Telecoms Awards for a fourth consecutive year
2) I Love my Tesco Clubcard - Creating a competitive advantage through our
powerful digital capability
· Clubcard penetration remains high in all markets: UK 84%, ROI 87%, Central
Europe 87%, with over 24m Clubcard households in the UK; increase in Reward
Partner customer awareness and satisfaction
· Clubcard Challenges now in its tenth round, with growing customer and supplier
engagement
· Trialling use of Clubcard analytics to anticipate and remind customers when
they may be running low on household products
· Celebrating 30 Years of Clubcard with exclusive offers, including £100 gift
cards with selected Tesco Mobile deals and cinema tickets for just £2.50 in
Clubcard vouchers
· New partnership with Pod, enabling customers to collect Clubcard points on EV
charging at Tesco stores
3) Easily the Most Convenient - Serving customers wherever, whenever and
however they want to be served
· Opened 38 stores across the Group including 5 large stores and 33 convenience
stores: 32 total store openings in the UK, 3 in ROI and 3 in Central Europe
· Expansion in UK grocery home shopping capacity including over 130 new delivery
vans; Delivery Saver subscribers at 788k, up +9.3% year-on-year
· Tesco Whoosh expanded to over 1,600 stores across the UK including over 180
large stores giving customers access to an even wider range of products; over
600,000 products now available on Tesco Marketplace
· Tesco app and Scan as you Shop devices now able to provide customers with live
stock levels, highlight in-store offers and help them navigate their shopping
list in aisle order
· Grew our online reach in Central Europe, with sales up +19.1%; service rolled
out to nine more stores
· Added 275 net new retail partners across Booker's symbol brands of Premier,
Londis, Budgens and Family Shopper
4) Save to Invest - Significant opportunities to simplify, become more
productive and reduce costs
· On track to deliver c.£500m Save to Invest target for FY 25/26, helping
offset new cost inflation, including increased National Insurance
contributions (FY c.£235m) and the new Extended Producer Responsibility (EPR)
packaging levy (FY c.£90m)
· Continued progress across all areas, including goods & services not for
resale, operations, property and central overheads
· Further rollout of convertible tills that can be used by colleagues or for
self-service, giving greater flexibility
· Optimising in-store routines in Express stores by better aligning delivery
schedules with staffing levels
· Re-configuring store catchments for grocery home shopping allowing for a
higher number of deliveries per hour
· Remote monitoring of store equipment including refrigeration to identify early
maintenance opportunities to improve reliability and reduce energy costs
GROUP REVIEW OF PERFORMANCE.
On a continuing operations basis(1)
26 weeks ended 23 August 2025(2) H1 25/26 H1 24/25 Change at Change at
actual rates constant rates
Sales (exc. VAT, exc. fuel)(2) £33,051m £31,463m 5.1% 5.1%
Fuel £2,985m £3,310m (9.8)% (9.8)%
Revenue (exc. VAT, inc. fuel) £36,036m £34,773m 3.6% 3.7%
Group adjusted operating profit(2) £1,674m £1,649m 1.5% 1.6%
Adjusting items £(71)m £(37)m
Statutory operating profit £1,603m £1,612m (0.6)%
Net finance costs £(297)m £(218)m
Joint ventures and associates £(1)m £(2)m
Statutory profit before tax £1,305m £1,392m (6.3)%
Taxation £(355)m £(370)m
Statutory profit after tax £950m £1,022m (7.0)%
Adjusted diluted EPS(2) 15.43p 14.45p 6.8%
Statutory diluted EPS 14.22p 14.62p (2.7)%
Interim dividend per share 4.80p 4.25p 12.9%
Net debt(3)( ) £(9,884)m £(9,522)m (3.8)%
Free cash flow(2) £1,298m £1,261m 2.9%
Capex(5) £667m £530m 25.8%
Sales(2) increased by 5.1% at constant rates, with growth across all operating
segments. Group sales volumes continued to grow, supported by further
investments in the customer offer, particularly in response to an increase in
competitive intensity in the UK. Revenue increased by 3.7% at constant rates,
including a (9.8)% decline in fuel sales, primarily driven by lower fuel
retail prices year-on-year.
Group adjusted operating profit(2) increased by 1.6% at constant rates, with
the growth in sales volumes and our Save to Invest programme offsetting
operating cost inflation and allowing us to put even more investment in our
customer offer across value, quality and service. Insurance and Money Services
performed well, driven by income from the new partnership with Barclays and
strong cost control. Group adjusted operating profit margin was down (10)bps
reflecting investments in the customer offer.
Statutory operating profit decreased by (0.6)% year-on-year, as the growth in
adjusted operating profit was offset by an increase in restructuring and
property adjusting items, including the fair value remeasurement of certain
residential properties transferred to assets held for sale, and separation
costs related to the disposal of the Group's Banking operations. The prior
year included adjusting income relating to gains on disposal of surplus
properties.
Net finance costs increased by £(79)m year-on-year, largely due to
mark-to-market movements on certain derivative financial instruments, with
adjusted net finance costs broadly flat year-on-year. The reduced tax charge
reflects the decrease in statutory profits, driven by adjusting items.
Adjusted diluted EPS(2) grew by 6.8%, driven by higher adjusted operating
profit and the continued benefit from a reduction in share count due to our
ongoing share buyback programme. We have announced an interim dividend of
4.80 pence per ordinary share, in line with our policy to pay 35% of the prior
full-year dividend.
We generated £1,298m of free cash flow(2), including a £408m working capital
inflow. Net debt, which at year end included c.£700m from the sale of the
Group's Banking operations, increased by £(430)m, reflecting the progress
made during the first half in returning the proceeds through share buybacks.
The net debt/EBITDA ratio was 2.0 times at the end of the first half.
Further commentary on these metrics can be found below and a full income
statement can be found on page 15.
Operating segment presentation - UK & ROI and Booker
Following changes to the Group Executive Committee during the period, Booker,
which was previously reported as part of the UK & ROI operating segment,
now meets the definition of an operating segment in its own right, as set out
in IFRS 8 'Operating Segments'. These results are therefore presented on this
basis. For comparative purposes and on an equivalent basis, FY 24/25 UK &
ROI adjusted operating profit was £2,726m and Booker adjusted operating
profit was £290m. There have been no other changes to operating segments
since the year end. Further details are included in Note 2 on page 21.
Footnotes:
1. In line with FY 24/25, the performance of the Banking
operations in the prior year is presented as a discontinued operation. The
Insurance and Money Services business (IMS) is presented on a continuing
operations basis and therefore within the headline performance measures. There
are no discontinued operations in the current period.
2. The Group has defined and outlined the purpose of its
alternative performance measures, including its performance highlights, in the
Glossary starting on page 38.
3. Net debt includes Insurance and Money Services, with the
prior year reported on a consistent basis. The impact on H1 24/25 is to reduce
Net debt by £154m. Further information on Net debt can be found in Note 19,
starting on page 35.
4. Like-for-like (LFL) sales growth is a measure of growth
in Group sales from stores that have been open for at least a year and online
sales (at constant exchange rates, excluding VAT and fuel). LFL excludes
revenue from dunnhumby, Insurance and Money Services and mall rental income as
this revenue is not directly linked to the sale of goods.
5. Capex excludes additions arising from business
combinations, property buybacks (typically stores) and other store purchases
and their associated refit costs. Refer to page 43 for further details.
Segmental review of performance:
Sales performance:
(exc. VAT, exc. fuel)(2,4)
On a continuing operations basis(1) Sales (£m) LFL sales Total sales change at actual rates Total sales change at constant rates
change(4)
- UK 24,670 4.9% 5.6% 5.6%
- ROI 1,541 4.8% 6.4% 6.5%
UK & ROI 26,211 4.9% 5.6% 5.6%
Booker 4,734 1.7% 2.4% 2.4%
Central Europe 2,106 3.4% 4.4% 5.0%
Sales 33,051 4.3% 5.1% 5.1%
Further information on sales performance is included in the appendices
starting on page 47.
Adjusted operating profit(2) performance:
Profit
(£m)
On a continuing operations basis(1) Change at actual rates Change at constant rates Margin % Margin % change
at actual rates
at actual rates
UK & ROI 1,468 2.0% 2.1% 5.0% (9) bps
Booker 162 0.6% 0.6% 3.4% (6) bps
Central Europe 44 (10.0)% (11.2)% 2.0% (30) bps
Group 1,674 1.5% 1.6% 4.6% (10) bps
Further information on operating profit performance is included in Note 2
starting on page 21.
UK & ROI OVERVIEW:
In the UK & ROI, like-for-like sales increased by 4.9%. We continued to
deliver volume growth in both markets, with continued market share and
switching gains in the UK in the half, and ROI gaining share year-on-year
consolidating three years of market share outperformance. The strong
performance in the UK reflects a positive reaction to our targeted price
investments in response to increased competitive intensity, with both markets
also benefiting from warmer weather.
UK & ROI adjusted operating profit was £1,468m, up 2.1% at constant
rates. Profit growth in the segment was driven by the strong trading
performance and ongoing Save to Invest delivery more than offsetting
investments in the customer offer and ongoing cost inflation, including
increased National Insurance contributions and the new Extended Producer
Responsibility (EPR) levy. Insurance and Money Services adjusted operating
profit increased from £94m to £100m reflecting income from the new
partnership with Barclays, which together with strong cost control, helped to
offset £42m of non-recurring benefits recognised in the prior year.
UK - A continued focus on value, quality and service driving further volume
and market share growth:
Like-for-like sales grew 4.9%, with growth across all channels. Overall market
share grew by +77bps year-on-year to 28.4%, with market outperformance across
large, convenience and online. We have now delivered 28 consecutive four-week
periods of market share gains and 31 consecutive four-week periods of
switching gains. Overall brand perception outperformed the market, with strong
year-on-year growth in satisfaction (+263bps) and value (+89bps), and a
further improvement in quality (+13bps).
Food like-for-like sales grew by 5.7%, with a strong volume performance from
fresh food, driven by ongoing range development, focused on product quality
and innovation. We launched over 470 new products and improved a further 560.
Finest sales continued to grow strongly, with sales up 16% year-on-year and
33% over two years.
We remain committed to ensuring customers get the best value for money by
shopping at Tesco and have maintained our strong price positioning relative to
the market, reducing the price of over 6,500 products versus last year, with
an average reduction of around 9%.
Clothing saw strong like-for-like sales growth of 7.8%, as customers responded
well to our Spring / Summer ranges, particularly in womenswear and
childrenswear, with volumes also supported by good weather. The recent launch
of F&F online has allowed more of our customers to access a much fuller
range of clothing and complements our broader Tesco Marketplace proposition
which now includes over 600,000 products.
Home like-for-like sales declined by (2.1)%, which includes a (5.2)ppts drag
from the transition to our partnership with The Entertainer, which completed
in the second half last year. The partnership, which offers customers an even
better range of toys in our stores, means we no longer recognise toy sales,
and instead earn commission income. Excluding this impact, Home like-for-like
sales grew by 3.1% with the F&F home lifestyle range continuing to perform
strongly post-launch in the second half of last year.
Like-for-like sales grew across both our large and convenience store formats
with our net promoter score showing improvement in the half across all
measures, with the greatest improvement across reputation and quality. Large
store like-for-like sales grew by 4.5%, as we maintained our market-leading
availability and customers responded well to our investments in the customer
offer and shopping experience. Convenience like-for-like sales, which include
sales from our One Stop stores, grew by 1.4%. Within this, Tesco Express
like-for-like sales were up 1.8%, including a particularly strong performance
in fresh food volumes.
Online sales grew by 11.4%, driven primarily by volume growth, including a
c.2ppts contribution from Tesco Whoosh, our rapid delivery service. Overall
average orders per week grew 12.1% year-on-year as we introduced over 70,000
additional weekly delivery slots and rolled out further improvements to our
website and substitution algorithms. The number of Delivery Saver subscribers
increased by 9.3% to 788,000. Tesco Whoosh generated double-digit growth, with
growth across both basket sizes and number of active customers.
Online performance H1 25/26 YoY change
Sales inc. VAT £3.7bn 11.4%
Orders per week 1.45m 12.1%
Basket size £111 2.8%
(excluding Whoosh, Marketplace and F&F online)
Online % of UK total sales 14.0% 0.7ppts
ROI - New store openings complement like-for-like volume growth, driven by
Food:
Like-for-like sales grew by 4.8%, with volume growth driven by the continued
roll out of our 'fresh first' store refresh programme and helped by warmer
weather year-on-year. Total sales grew by 6.5% at constant rates, including a
1.3ppt contribution from three new stores in the half and the full year effect
of prior year store openings.
Food like-for-like sales grew by 5.1%, with fresh food like-for-like sales up
6.3% as we continued to invest in product quality and innovation across the
range. These investments helped support a five-point improvement in our net
promoter score, with quality perception up +3ppts year-on-year.
Like-for-like sales grew across all channels. Online sales performed strongly
with growth of 18.8%, supported by the launch of same day delivery last year.
Non-food like-for-like sales declined by (1.8)%, which includes a (3.8)ppts
impact from the transition to the partnership with The Entertainer. Excluding
toys, non-food sales grew by 2.0% supported by volume growth in clothing.
Overall market share grew by +11bps year-on-year to 23.7%, consolidating three
years of consistent market share gains.
BOOKER OVERVIEW - Strong growth across core retail and catering offsetting
ongoing tobacco industry decline:
Sales LFL
£m
Core retail 1,725 4.1%
Core catering* 1,461 5.7%
Tobacco 810 (8.8)%
Best Food Logistics 738 1.3%
Total Booker 4,734 1.7%
*Includes sales to small businesses and sales from Venus Wine and Spirit
Merchants PLC, which was acquired in June 2024 and is included in LFL growth
from June 2025.
Overall like-for-like sales grew by 1.7%, with strong growth in core retail
and catering offset by the continuing decline in the tobacco market. Best Food
Logistics grew by 1.3% despite ongoing weakness in parts of the fast-food
market it serves.
Core retail like-for-like sales increased by 4.1% year-on-year, driven by a
strong growth in our symbol brands (Premier, Londis, Budgens and Family
Shopper), with a further 275 net new retail partners acquired in the half.
Booker retail customer satisfaction levels continued to improve, with gains
year-on-year.
Core catering like-for-like sales increased by 5.7%, with volume growth
supported by good weather. We continue to be competitive on price and have
seen continued improvements in customer satisfaction levels, with gains
year-on-year.
We continue to make good progress in integrating Venus, a specialist wine and
spirit merchant which we acquired in June last year, extending its coverage
with the addition of new fulfilment space within our network.
Booker delivered adjusted operating profit of £162m, up +0.6% year-on-year. A
strong trading performance across core retail and catering, supported by
favourable weather and savings generated through our Save to Invest programme,
helped to offset significant operating cost inflation, including the new EPR
levy.
CENTRAL EUROPE OVERVIEW - Sales growth amid challenging regulatory and
competitive pressures:
Like-for-like sales grew by 3.4%, with growth across all countries. Food
like-for-like sales grew by 4.0% year-on-year, with fresh food like-for-like
sales up 7.0%. Our targeted price investments have enabled us to remain
competitive across all markets and contributed to an improvement in our
customer net promoter scores.
Non-food like-for-like sales were down (0.8)%, impacted by subdued consumer
confidence and poor weather, with volumes lower across both home and clothing.
Central Europe adjusted operating profit was £44m, a decrease of £(5)m
year-on-year. The decline reflects a reduction in mall income following the
sale of mall properties in H2 24/25, increased competition, particularly in
Slovakia, and ongoing regulatory pressure. This has been partially offset by
the ongoing success of our Save to Invest initiatives.
Adjusting items:
H1 25/26 H1 24/25
£m £m
Amortisation of acquired intangible assets (38) (38)
Separation costs related to disposal of Banking operations (13) (3)
Restructuring and property (costs) / income (20) 4
Total adjusting items included within operating profit (71) (37)
Net finance (costs) / income (34) 51
Tax credit / (charge) 24 (2)
Total adjusting items included within profit after tax from continuing (81) 12
operations
Adjusting items included within discontinued operations - (41)
Total adjusting items including discontinued operations (81) (29)
Adjusting items are excluded from our adjusted operating profit performance by
virtue of their size and nature, to provide a helpful perspective of the
year-on-year performance of our ongoing business. Total adjusting items in
statutory operating profit from continuing operations resulted in a net charge
of £(71)m, compared to a net charge of £(37)m in the prior period.
We continue to present amortisation of acquired intangible assets, principally
relating to the merger with Booker, as an adjusting item. The amortisation of
acquired intangible assets was £(38)m, in line with the prior year.
We incurred £(13)m (H1 24/25: £(3)m) in separation costs relating to the
disposal of our Banking operations.
Restructuring and property costs relate to our Save to Invest programme and
rationalisation of property assets in the UK and Central Europe, including the
fair value remeasurement of certain residential properties transferred to
assets held for sale. The prior year included adjusting income relating to
gains on disposal of surplus properties.
Adjusting items in net finance (costs) / income and tax are set out below.
Adjusting items included within discontinued operations in the prior year
primarily related to fair value remeasurement of assets of the disposal group,
associated with the sale of our Banking operations to Barclays in November
2024.
Further detail on adjusting items can be found in Note 4, starting on page
23.
Net finance costs:
On a continuing operations basis H1 25/26 H1 24/25
£m £m
Net interest costs (67) (77)
Net finance expenses from insurance contracts (6) (6)
Finance charges payable on lease liabilities (190) (186)
Adjusted net finance costs (263) (269)
Fair value remeasurements of financial instruments (26) 66
Net pension finance costs (8) (15)
Adjusting items in net finance (costs) / income (34) 51
Net finance costs (297) (218)
Adjusted net finance costs of £263m are broadly flat year-on-year, reflecting
the impact of refinancing partially offset by lower interest income. Within
adjusting items, the £(26)m net cost for fair value remeasurements of
financial instruments principally relates to the change in the fair value of
index-linked swaps associated with certain rental payments. The cost reflects
a decrease in long term UK inflation expectations since the start of the
period. In the prior year, inflation expectations had increased, and hence the
derivative fair value increased.
Net pension costs decreased by £7m, driven by a reduction in the opening
position of the defined benefit pension plan deficit.
Further detail on finance income and costs can be found in Note 5 on page 24,
as well as further detail on the adjusting items in Note 4, starting on page
23.
Group tax:
On a continuing operations basis H1 25/26 H1 24/25
£m £m
Tax on adjusted profit (379) (368)
Tax on adjusting items 24 (2)
Tax on profit (355) (370)
Tax on adjusted Group profit was £(379)m, slightly higher than last year
reflecting an increase in adjusted Group profit, with the adjusted effective
tax rate broadly flat at 26.9% (H1 24/25: 26.7%). The adjusted effective tax
rate is higher than the UK statutory rate of 25%, primarily due to the
depreciation of assets which do not qualify for tax relief. We continue to
expect our adjusted effective tax rate to be around 27% in the current year.
The current year £24m adjusting credit in tax primarily relates to the tax
effect of amortisation of acquired intangible assets, fair value
remeasurements on derivative financial instruments and separation costs
associated with the disposal last year of the Group's Banking operations.
Earnings per share:
On a continuing operations basis H1 25/26 H1 24/25 YoY change
Adjusted diluted EPS 15.43p 14.45p 6.8%
Statutory diluted EPS 14.22p 14.62p (2.7)%
Statutory basic EPS 14.38p 14.76p (2.6)%
On a total basis, including discontinued operations
Statutory diluted EPS 14.22p 15.03p (5.4)%
Statutory basic EPS 14.38p 15.18p (5.3)%
Adjusted diluted EPS was 15.43p, 6.8% higher year-on-year, primarily driven by
a reduction in the number of shares in issue from our ongoing share buyback
programme and growth in adjusted operating profit.
Statutory diluted EPS was 14.22p, (2.7)% lower year-on-year, driven by
adjusting items, including the impact of fair value remeasurements of certain
financial instruments.
Dividend:
The interim dividend has been set at 4.80 pence per ordinary share, in line
with our policy of setting the interim dividend at 35% of the prior full year
dividend.
The interim dividend will be paid on 21 November 2025 to shareholders who are
on the register of members at close of business on 10 October 2025 (the Record
Date). Shareholders may elect to reinvest their dividend in the Dividend
Reinvestment Plan (DRIP). The last date for receipt of DRIP elections and
revocations will be 31 October 2025.
Summary of Net debt:
Aug-25 Feb-25 Movement
£m £m £m
Net debt before lease liabilities (2,093) (1,738) (355)
Lease liabilities (7,791) (7,716) (75)
Net debt (9,884) (9,454) (430)
Net debt / EBITDA 2.0x 2.0x
Net debt was £(9,884)m, an increase of £(430)m from year end. The year end
Net debt position included c.£700m from the sale of the Group's Banking
operations, ahead of returning the proceeds to shareholders. We generated free
cash flow of £1,298m in the half, which was more than offset by cash outflows
relating to total share buybacks of £(773)m and the payment of last year's
final dividend of £(627)m. Lease liabilities increased by £(75)m driven by
rent reviews and new store openings.
We had strong levels of liquidity at the end of the first half, including
£3.4bn of cash and highly liquid short-term deposits and money market
investments. In addition, our £2.5bn committed revolving credit facility
remained undrawn and is in place until at least the end of October 2027.
Our Net debt to EBITDA ratio was 2.0 times at the end of the first half, below
our target range of 2.8 to 2.3 times.
Fixed charge cover was 4.3 times at the end of the first half versus 4.2 times
at the end of FY 24/25.
Defined benefit pension schemes:
Aug-25 Feb-25 Movement
£m £m £m
Defined benefit schemes in surplus 68 56 12
Defined benefit schemes in deficit (231) (307) 76
Deferred tax asset 51 71 (20)
Deficit in schemes at the end of the period (net of deferred tax) (112) (180) 68
Net of tax, the net IAS 19 pension deficit has reduced from £(180)m to
£(112)m, principally reflecting the impact of higher discount rates and
updated demographic assumptions. The principal defined benefit pension plan
within the Group is the Tesco PLC Pension Scheme (the Scheme), a UK scheme
that has been closed to future accrual since 2015.
During H1, together with the Scheme trustee, we agreed the 31 March 2025
triennial funding valuation for the Scheme. This showed that the actuarial
position of the Scheme for funding purposes was in surplus, with a funding
level of 106% (versus 104% at 31 March 2022). As a result, it was agreed with
the Scheme trustee that no pension deficit contributions would be required
from the Group.
Further detail on post-employment benefits can be found in Note 17, starting
on page 32.
Summary free cash flow:
The following table reconciles Group adjusted operating profit to free cash
flow. Further details are included in Note 2, starting on page 21.
On a continuing operations basis H1 25/26 H1 24/25 Movement
£m
£m
£m
Group adjusted operating profit 1,674 1,649 25
Less IMS adjusted operating profit (100) (94) (6)
Retail adjusted operating profit 1,574 1,555 19
Add back: Depreciation and amortisation 866 819 47
Other reconciling items 3 22 (19)
Pensions (17) (14) (3)
Decrease in working capital 408 169 239
Cash generated from operations before adjusting items 2,834 2,551 283
Cash capex (716) (594) (122)
Net interest (269) (245) (24)
- Interest related to Net debt before lease liabilities (76) (58) (18)
- Interest related to lease liabilities (193) (187) (6)
Tax paid (226) (176) (50)
Dividends received 52 2 50
Repayment of capital element of obligations under leases (314) (294) (20)
Own shares purchased for share schemes (63) 17 (80)
Free cash flow 1,298 1,261 37
Memo (not included in free cash flow definition):
- Net acquisitions and disposals (11) (50) 39
- Property buybacks, store purchases and disposal proceeds (11) (14) 3
- Cash impact of adjusting items (71) (52) (19)
We delivered free cash flow of £1,298m, with cash generated from operations
improving by £283m year-on-year driven by growth in operating profit and
working capital inflows. Free cash flow was £37m higher than last year, with
the increase in cash generated from operations partly offset by the earlier
phasing of capital expenditure and own shares purchased for employee share
schemes.
The working capital inflow of £408m largely reflects trade seasonality, with
the year-on-year improvement driven by our strong sales performance (leading
to higher trade balances) and a new c.£90m payable from the EPR levy, the
majority of which will be settled in the second half.
Net interest paid was £(24)m higher year-on-year, principally due to the
timing of bond coupons and associated derivatives, lower rates on cash
deposits and higher lease interest.
Tax paid was £(50)m higher year-on-year, mainly driven by the end of
historical tax deductions and phasing of tax payments.
Dividends received were £50m higher, reflecting dividends received from
Insurance and Money Services in relation to the prior year.
Within the memo lines shown, the net £(11)m acquisitions and disposals
outflow primarily relates to settlement of deferred consideration on Booker's
acquisition of Venus Wine and Spirit Merchants PLC. The £(11)m net outflow
relating to property transactions relates to the buyback of three stores in
the UK, net of the sale of a number of residential units above our stores. The
cash impact of adjusting items of £(71)m relates to Save to Invest
restructuring costs provided for at the end of the prior financial year,
separation costs relating to the disposal of the Group's Banking operations
last year and a property transaction in the UK.
Capital expenditure and space:
UK & ROI Booker Central Europe Group
H1 25/26 H1 24/25 H1 25/26 H1 24/25 H1 25/26 H1 24/25 H1 25/26 H1 24/25
Capex £607m £477m £23m £20m £37m £33m £667m £530m
Openings (k sq ft) 137 116 - - 15 44 152 160
Closures (k sq ft) (8) (35) (12) - (6) - (26) (35)
Repurposed (k sq ft) - - - - (30) (107) (30) (107)
Net space change (k sq ft) 129 81 (12) - (21) (63) 96 18
Space in the above table is defined as net space in store adjusted to
exclude checkouts, space behind checkouts, customer service desks and customer
toilets. The data above excludes space relating to franchise stores.
Capital expenditure shown in the table above reflects expenditure on ongoing
business activities across the Group, excluding property buybacks, and other
store purchases along with their associated refit costs.
Our capital expenditure in the first half was £667m, an increase of £137m
compared with last year, reflecting a more even shape to this year's
investments. We expect total capital expenditure this year of c.£1.5bn. This
includes the first phase of investment in our new distribution centre at DP
World London Gateway. The site is expected to open in 2029 and will leverage
the latest technology to enhance our supply chain and support future growth.
Statutory capital expenditure has seen an increase of £144m to £699m.
We continue to prioritise investments in high returning areas, including
automation in parts of our distribution network and developing our digital
platforms, in addition to continued investment to improve the customer
experience in our store estate.
In the first half, we opened a total of 38 stores across the Group and
refreshed a further 112 stores. In the UK, we opened one large store, 24 Tesco
Express stores and seven One Stop stores and in ROI we opened two new large
stores and one Tesco Express. In Central Europe, we opened two new large
stores and one new convenience store.
Further details of current space can be found in the appendices starting on
page 47.
Contacts.
Investor Relations: Chris Griffith 01707 940 900
Andrew Gwynn 01707 942 409
Media: Christine Heffernan 0330 6780 639
Teneo 0207 4203 143
This document is available at www.tescoplc.com/interims2526.
A webcast including a Q&A will be held today at 9.00am for investors and
analysts and will be available on our website at
www.tescoplc.com/interims2526. This will be available for playback after the
event. All presentation materials, including a transcript, will be made
available on our website.
We will release our Q3 & Christmas Trading Statement on 8 January 2026.
Sources.
· UK market share based on Worldpanel by Numerator Total Grocers Total Till Roll
for 12 weeks ended 7 September 2025.
· UK channels market share based on Worldpanel by Numerator Total Grocery for 12
weeks ended 7 September 2025.
· ROI market share based on Worldpanel by Numerator Total Take Home Grocery on
12-week rolling basis to 7 September 2025.
· Relative price positioning is based on our UK Price index, an internal measure
calculated using the retail selling price of each item on a per unit or unit
of measure basis. Competitor retail selling prices are collected weekly by a
third party. The price index includes price cut promotions and is weighted by
sales to reflect customer importance.
· Clubcard Prices saving of up to £375 is based on the top 25% of Tesco
Clubcard members and large stores sales between 24 August 2024 and 23 August
2025. Tesco Clubcard Price savings versus regular Tesco price.
· Customer satisfaction and Brand Perception based on YoY changes in YouGov
BrandIndex scores for 12 weeks ended 24 August 2025.
· Brand NPS is based on BASIS Global Brand Tracker for 13 weeks ended 23 August
2025. Responses to the question: "How likely is it that you would recommend
the following company to a friend or colleague as a place to shop?".
· Availability based on Multi channel tracker for 13 weeks ended 23 August 2025.
Responses to: "I Can Get What I Want".
· Number of new Booker retail partners is net of openings and closures,
including national accounts.
Additional Disclosures.
Principal Risks and Uncertainties.
The principal risks and uncertainties faced by the Group remain those as set
out on pages 40 to 47 of our Annual Report and Financial Statements 2025:
cyber security; data privacy; climate change; geopolitics and other global
events; technology; responsible sourcing; health and safety; product safety
and food integrity; people; macroeconomic exposures; customer, competition and
markets; regulatory and compliance; and security of supply.
Statement of Directors' Responsibilities.
The Directors are responsible for preparing the Interim Results for the
26-week period ended 23 August 2025 in accordance with applicable law,
regulations and accounting standards. Each of the Directors confirm that to
the best of their knowledge the condensed consolidated interim financial
statements have been prepared in accordance with IAS 34: 'Interim Financial
Reporting', as adopted by the European Union and that the interim management
report includes a true and fair review of the information required by DTR
4.2.7R and DTR 4.2.8R, namely:
· an indication of the important events that have occurred during
the first 26 weeks of the financial year and their impact on the condensed
consolidated interim financial statements, and a description of the principal
risks and uncertainties for the remainder of the financial year; and
· material related party transactions in the first 26 weeks of the
year and any material changes in the related party transactions described in
the last annual report.
The Directors of Tesco PLC are listed on pages 56 to 58 of the Tesco PLC
Annual Report and Financial Statements 2025.
A list of current directors is maintained on the Tesco PLC website at:
www.tescoplc.com (http://www.tescoplc.com) .
By order of the Board Directors
Gerry Murphy - Non-executive Chairman
Ken Murphy - Group Chief Executive
Imran Nawaz - Chief Financial Officer
Dame Carolyn Fairbairn*
Melissa Bethell*
Bertrand Bodson*
Thierry Garnier*
Stewart Gilliland*
Chris Kennedy*
Caroline Silver*
Karen Whitworth*
*Independent Non-executive Directors
1 October 2025
Disclaimer.
Certain statements made in this document are forward-looking statements. For
example, statements regarding future financial performance, market trends and
our product pipeline are forward-looking statements. Phrases such as "aim",
"plan", "intend", "should", "anticipate", "well-placed", "believe",
"estimate", "expect", "target", "consider" and similar expressions are
generally intended to identify forward-looking statements. Forward-looking
statements are based on current expectations and assumptions and are subject
to a number of known and unknown risks, uncertainties and other important
factors that could cause actual results or events to differ materially from
what is expressed or implied by those statements. Many factors may cause
actual results, performance or achievements of Tesco to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Important factors that could cause
actual results, performance or achievements of Tesco to differ materially from
the expectations of Tesco include, among other things, general business and
economic conditions globally, industry trends, competition, changes in
government and other regulation and policy, including in relation to the
environment, health and safety and taxation, labour relations and work
stoppages, interest rates and currency fluctuations, changes in its business
strategy, political and economic uncertainty, including as a result of global
pandemics. As such, undue reliance should not be placed on forward-looking
statements. Any forward-looking statement is based on information available to
Tesco as of the date of the statement. All written or oral forward-looking
statements attributable to Tesco are qualified by this caution. Other than in
accordance with legal and regulatory obligations, Tesco undertakes no
obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
Group income statement
26 weeks ended 26 weeks ended
23 August 2025
24 August 2024
Notes Before adjusting Adjusting Total Before adjusting Adjusting Total
£m
items
£m
items items
£m items
£m
(Note 4) (Note 4)
£m
£m
Continuing operations
Revenue from sale of goods and services 35,622 - 35,622 34,432 - 34,432
Insurance revenue* 414 - 414 341 - 341
Revenue 2,3 36,036 - 36,036 34,773 - 34,773
Cost of sales (32,811) (17) (32,828) (31,751) (5) (31,756)
Insurance service expenses* (371) - (371) (272) - (272)
Net expenses from reinsurance contracts held* (15) - (15) (30) - (30)
Gross profit/(loss) 2,839 (17) 2,822 2,720 (5) 2,715
Administrative expenses (1,165) (54) (1,219) (1,071) (32) (1,103)
Operating profit/(loss) 2 1,674 (71) 1,603 1,649 (37) 1,612
Share of post-tax profit/(loss) of joint ventures and associates (1) - (1) (2) - (2)
Finance income 5 117 - 117 132 - 132
Finance costs 5 (380) (34) (414) (401) 51 (350)
Profit/(loss) before tax from continuing operations 1,410 (105) 1,305 1,378 14 1,392
Taxation 6 (379) 24 (355) (368) (2) (370)
Profit/(loss) for the period from continuing operations 1,031 (81) 950 1,010 12 1,022
Discontinued operations
Profit/(loss) for the period from discontinued operations - - - 70 (41) 29
Profit/(loss) for the period 1,031 (81) 950 1,080 (29) 1,051
Attributable to:
Owners of the parent 1,031 (81) 950 1,080 (29) 1,051
Non-controlling interests - - - - - -
1,031 (81) 950 1,080 (29) 1,051
Earnings per share from continuing and discontinued operations
Basic 8 14.38p 15.18p
Diluted 8 14.22p 15.03p
Earnings per share from continuing operations
Basic 8 14.38p 14.76p
Diluted 8 14.22p 14.62p
* Insurance revenue, insurance service expenses and net expenses from
reinsurance contracts held relate to the motor and home insurance policies
underwritten by the Group's subsidiary, Tesco Underwriting Limited. Refer to
Note 1 of the Annual Report and Financial Statements 2025 for further details.
The notes on pages 20 to 37 form part of this condensed consolidated financial
information.
Group statement of comprehensive income/(loss)
Notes 26 weeks ended 23 August 2025 26 weeks ended
£m 24 August 2024
£m
Items that will not be reclassified to the Group income statement
Change in fair value of financial assets at fair value through other (1) -
comprehensive income
Remeasurements of defined benefit pension schemes 17 77 252
Net fair value gains/(losses) on inventory cash flow hedges (81) (33)
Tax on items that will not be reclassified (13) (59)
(18) 160
Items that may subsequently be reclassified to the Group income statement
Change in fair value of financial assets at fair value through other 5 13
comprehensive income
Currency translation differences:
Retranslation of net assets of overseas subsidiaries, joint ventures and 123 (31)
associates
Impact of net investment hedges (56) 9
Gains/(losses) on cash flow hedges:
Net fair value gains/(losses) 2 27
Reclassified and reported in the Group income statement (12) (36)
Finance income/(expenses) from insurance contracts issued (1) (3)
Finance income/(expenses) from reinsurance contracts held - 1
Tax on items that may be reclassified (2) -
59 (20)
Total other comprehensive income/(loss) for the period 41 140
Profit/(loss) for the period 950 1,051
Total comprehensive income/(loss) for the period 991 1,191
Attributable to:
Owners of the parent 992 1,191
Non-controlling interests (1) -
Total comprehensive income/(loss) for the period 991 1,191
Total comprehensive income/(loss) attributable to owners of the parent arising
from:
Continuing operations 992 1,162
Discontinued operations - 29
992 1,191
The notes on pages 20 to 37 form part of this condensed consolidated financial
information.
Group balance sheet
Notes 23 August 22 February 24 August
2025
£m 2025 2024
£m £m
Non-current assets
Goodwill and other intangible assets 5,097 5,087 5,116
Property, plant and equipment 9 17,349 17,262 17,136
Right of use assets 10 5,689 5,569 5,434
Investment property 24 24 23
Investments in joint ventures and associates 114 110 100
Other investments 998 934 817
Trade and other receivables 152 158 119
Reinsurance contract assets 15 133 124 122
Derivative financial instruments 610 663 789
Post-employment benefit surplus 17 68 56 42
Deferred tax assets 52 47 39
30,286 30,034 29,737
Current assets
Other investments 166 151 166
Inventories 3,038 2,768 2,964
Trade and other receivables 1,300 1,210 1,264
Derivative financial instruments 165 172 10
Current tax assets 7 27 10
Short-term investments 11 1,992 2,223 1,912
Cash and cash equivalents 11 2,434 2,255 3,310
9,102 8,806 9,636
Non-current assets classified as held for sale and assets of the disposal 13 123 50 8,185
group
9,225 8,856 17,821
Current liabilities
Trade and other payables (11,465) (10,364) (10,884)
Borrowings 14 (2,262) (1,861) (1,516)
Lease liabilities 10 (641) (618) (607)
Provisions (246) (300) (259)
Insurance contract liabilities 15 (724) (652) (584)
Deposits from central bank - - (582)
Derivative financial instruments (53) (12) (51)
Current tax liabilities (54) (13) (24)
(15,445) (13,820) (14,507)
Liabilities of the disposal group classified as held for sale 13 - - (7,512)
Net current liabilities (6,220) (4,964) (4,198)
Non-current liabilities
Trade and other payables (34) (40) (47)
Borrowings 14 (4,914) (5,089) (5,580)
Lease liabilities 10 (7,150) (7,098) (6,935)
Provisions (165) (166) (172)
Deposits from central bank - - (175)
Derivative financial instruments (181) (205) (210)
Post-employment benefit deficit 17 (231) (307) (426)
Deferred tax liabilities (586) (503) (415)
(13,261) (13,408) (13,960)
Net assets 10,805 11,662 11,579
Equity
Share capital 18 413 426 433
Share premium 5,165 5,165 5,165
Other reserves 18 2,807 3,140 3,002
Retained earnings 2,425 2,935 2,985
Equity attributable to owners of the parent 10,810 11,666 11,585
Non-controlling interests (5) (4) (6)
Total equity 10,805 11,662 11,579
The notes on pages 20 to 37 form part of this condensed consolidated financial
information.
These unaudited condensed consolidated interim financial statements for the 26
weeks ended 23 August 2025 were approved by the Board on 1 October 2025.
Group statement of changes in equity
Share Share Other reserves Retained earnings Total Non-controlling interests Total
capital
premium
£m
£m
equity
£m
£m (Note 18) £m
£m
£m
Notes
At 22 February 2025 426 5,165 3,140 2,935 11,666 (4) 11,662
Profit/(loss) for the period - - - 950 950 - 950
Other comprehensive income/(loss)
Retranslation of net assets of overseas subsidiaries, joint ventures and - - 123 - 123 - 123
associates
Impact of net investment hedges - - (56) - (56) - (56)
Change in fair value of financial assets at fair value through other - - - 4 4 - 4
comprehensive income
Remeasurements of defined benefit pension schemes 17 - - - 77 77 - 77
Gains/(losses) on cash flow hedges - - (79) - (79) - (79)
Cash flow hedges reclassified and reported in the Group income statement - - (11) - (11) (1) (12)
Finance income/(expenses) from insurance contracts issued - - (1) - (1) - (1)
Tax relating to components of other comprehensive income - - 8 (23) (15) - (15)
Total other comprehensive income/(loss) - - (16) 58 42 (1) 41
Total comprehensive income/(loss) - - (16) 1,008 992 (1) 991
Inventory cash flow hedge movements
(Gains)/losses transferred to the cost of inventory - - 42 - 42 - 42
Total inventory cash flow hedge movements - - 42 - 42 - 42
Transactions with owners
Own shares purchased for cancellation 18 - - (1,200) - (1,200) - (1,200)
Own shares cancelled 18 (13) - 786 (773) - - -
Own shares purchased for share schemes 18 - - (160) - (160) - (160)
Share-based payments - - 171 (73) 98 - 98
Dividends 7 - - - (628) (628) - (628)
Transfer from other reserves to retained earnings - - 44 (44) - - -
Total transactions with owners (13) - (359) (1,518) (1,890) - (1,890)
At 23 August 2025 413 5,165 2,807 2,425 10,810 (5) 10,805
Notes Share Share Other reserves Retained earnings Total Non-controlling interests Total
capital
premium
£m
£m
equity
£m
£m (Note 18) £m
£m
£m
At 24 February 2024 445 5,165 3,131 2,930 11,671 (6) 11,665
Profit/(loss) for the period - - - 1,051 1,051 - 1,051
Other comprehensive income/(loss)
Retranslation of net assets of overseas subsidiaries, joint ventures and - - (31) - (31) - (31)
associates
Impact of net investment hedges - - 9 - 9 - 9
Change in fair value of financial assets at fair value through other - - - 13 13 - 13
comprehensive income
Remeasurements of defined benefit pension schemes 17 - - - 252 252 - 252
Gains/(losses) on cash flow hedges - - (6) - (6) - (6)
Cash flow hedges reclassified and reported in the Group income statement - - (36) - (36) - (36)
Finance income/(expenses) from insurance contracts issued - - (3) - (3) - (3)
Finance income/(expenses) from reinsurance contracts held - - 1 - 1 - 1
Tax relating to components of other comprehensive income - - 5 (64) (59) - (59)
Total other comprehensive income/(loss) - - (61) 201 140 - 140
Total comprehensive income/(loss) - - (61) 1,252 1,191 - 1,191
Inventory cash flow hedge movements
(Gains)/losses transferred to the cost of inventory - - 9 - 9 - 9
Total inventory cash flow hedge movements - - 9 - 9 - 9
Transactions with owners
Own shares purchased for cancellation 18 - - (746) - (746) - (746)
Own shares cancelled 18 (12) - 587 (575) - - -
Own shares purchased for share schemes 18 - - (101) - (101) - (101)
Share-based payments - - 183 (46) 137 - 137
Dividends 7 - - - (576) (576) - (576)
Total transactions with owners (12) - (77) (1,197) (1,286) - (1,286)
At 24 August 2024 433 5,165 3,002 2,985 11,585 (6) 11,579
The notes on pages 20 to 37 form part of this condensed consolidated financial
information.
Group cash flow statement
Notes 26 weeks ended 23 August 2025 26 weeks ended 24 August 2024
£m £m
Cash flows generated from/(used in) operating activities
Operating profit/(loss) of continuing operations 1,603 1,612
Operating profit/(loss) of discontinued operations - 40
Depreciation and amortisation 915 866
(Profit)/loss arising on sale of property, plant and equipment, investment (1) (3)
property, intangible assets and assets classified as held for sale
Net impairment loss/(reversal) on property, plant and equipment, right of use 9 -
assets, intangible assets and investment property
Net remeasurement loss on non-current assets held for sale - 44
Defined benefit pension scheme payments 17 (17) (14)
Share-based payments 1 19
Fair value movements included in operating profit/(loss) - 10
(Increase)/decrease in inventories (250) (328)
(Increase)/decrease in trade and other receivables and reinsurance assets (72) (20)
Increase/(decrease) in trade and other payables and insurance liabilities 760 549
Increase/(decrease) in provisions (58) (52)
Increase/(decrease) in deposits from central bank - (151)
(Increase)/decrease in working capital of the Banking operations disposal - 41
group
(Increase)/decrease in working capital((a)) 380 39
Cash generated from/(used in) operations 2,890 2,613
Interest paid((b)) (385) (390)
Corporation tax paid (230) (181)
Net cash generated from/(used in) operating activities 2,275 2,042
Cash flows generated from/(used in) investing activities
Proceeds from sale of property, plant and equipment, investment property, 32 16
intangible assets and assets classified as held for sale
Purchase of property, plant and equipment and investment property (600) (480)
Purchase of intangible assets (151) (141)
Acquisition of subsidiaries, net of cash acquired (9) (46)
Proceeds from sale of joint ventures and associates 1 -
Investments in joint ventures and associates (5) (6)
Dividends received from joint ventures and associates 2 2
Cash inflows from maturing short-term investments - deposits((c)) 683 942
Cash outflows on investing in short-term investments - deposits((c)) (833) (781)
(Investments in)/proceeds from other short-term investments((c)) 381 55
Proceeds from sale of other investments((b)) 91 893
Purchase of other investments (167) (91)
Interest received 120 136
Net cash generated from/(used in) investing activities (455) 499
Cash flows generated from/(used in) financing activities
Own shares purchased for cancellation 18 (773) (575)
Own shares purchased for share schemes, net of cash received from employees 18 (63) 17
Repayment of capital element of obligations under leases((b)) (346) (296)
Cash outflows exceeding the incremental increase in assets in a property (11) (14)
buyback
Increase in borrowings 419 342
Repayment of borrowings((b)) (430) (587)
Cash inflows from derivative financial instruments((b)) 46 24
Cash outflows from derivative financial instruments((b)) (36) (25)
Dividends paid to equity owners 7 (627) (575)
Net cash generated from/(used in) financing activities (1,821) (1,689)
Net increase/(decrease) in cash and cash equivalents (1) 852
Cash and cash equivalents at the beginning of the period 1,399 1,874
Effect of foreign exchange rate changes 2 (8)
Cash and cash equivalents, including cash held in the disposal group, at the 1,400 2,718
end of the period
Less: Cash held in the disposal group - (381)
Cash and cash equivalents at the end of the period 11 1,400 2,337
(a) Comparative (increase)/decrease in working capital has been re-presented
to present increase/(decrease) in deposits from central bank and
increase/(decrease) in working capital of the Banking operations disposal
group separately following the sale of the Group's Banking operations in the
prior year. These were previously included in the subsection relating to Tesco
Bank. There is no impact on net cash generated from operating, investing, or
financing activities, and no impact on any APMs.
(b) Comparatives have been re-presented following the Group's change in
accounting policy for economic hedges. There is no impact on Net
increase/(decrease) in cash and cash equivalents, and no impact on any APMs.
See Note 20 for further details.
(c) Comparative decrease and increase in short-term investments have been
re-presented as cash inflows from maturing short-term investments - deposits,
cash outflows on investing in short-term investments - deposits and
(investments in)/proceeds from other short-term investments, in order to
provide additional information. There is no impact on net cash generated from
operating, investing or financing activities, and no impact on any APMs.
The notes on pages 20 to 37 form part of this condensed consolidated financial
information.
Note 1 Basis of preparation
These unaudited condensed consolidated interim financial statements have been
prepared in accordance with the Disclosure Guidance and Transparency Rules of
the UK Financial Conduct Authority, and with IAS 34 'Interim Financial
Reporting' under UK-adopted international accounting standards. Unless
otherwise stated (refer to Note 20), the accounting policies applied, and the
judgements, estimates and assumptions made in applying these policies, are
consistent with those used in preparing the Annual Report and Financial
Statements 2025. The financial period represents the 26 weeks ended 23 August
2025 (prior financial period 26 weeks ended 24 August 2024, prior financial
year 52 weeks ended 22 February 2025).
These condensed consolidated interim financial statements for the current
period and prior financial periods do not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. A copy of the statutory
accounts for the prior financial year has been filed with the Registrar of
Companies. The auditor's report on those accounts was not qualified, did not
include a reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
The Directors have, at the time of approving the condensed consolidated
interim financial statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future, which reflects a period of 18 months from the date of approval of the
condensed consolidated interim financial statements, and have concluded that
there are no material uncertainties relating to going concern. The Directors
have therefore continued to adopt the going concern basis in preparing the
condensed consolidated interim financial statements. Further information about
the Group's liquidity position is given in the Summary of Net debt section of
the Group review of performance.
Adoption of new IFRSs
Standards, interpretations and amendments effective in the current financial
period have not had a material impact on the condensed consolidated interim
financial statements.
The Group has not applied any other standards, interpretations or amendments
that have been issued but are not yet effective. The impact of the following
is under assessment:
- IFRS 18 'Presentation and disclosure in financial statements', which will
become effective in the consolidated Group financial statements for the
financial year ending 26 February 2028, subject to UK endorsement.
Other standards, interpretations and amendments issued but not yet effective
are not expected to have a material impact.
Alternative performance measures (APMs)
In the reporting of financial information, the Directors have adopted various
APMs. Refer to the Glossary for a full list of the Group's APMs, including
comprehensive definitions, their purpose, reconciliations to IFRS measures and
details of any changes to APMs.
Note 2 Segmental reporting
The Group's operating segments are determined based on the Group's
organisational structure and internal reporting to the Chief Operating
Decision Maker (CODM). The CODM has been determined to be the Group Chief
Executive, with support from the Executive Committee, as the function
primarily responsible for the allocation of resources to segments and
assessment of performance of the segments. The Group's operating segments are
the same as its reportable segments listed below.
Consistent with the Annual Report and Financial Statements 2025, as a result
of the disposal of the Group's Banking operations in that financial year, the
comparative segmental disclosures have been restated to include the Insurance
and Money Services business (previously part of the Tesco Bank segment) within
the UK & ROI segment. Additionally, following changes to the Group
Executive Committee and management reporting to the CODM within the period,
Booker is now a separate operating and reportable segment. The comparatives
have been restated accordingly.
The principal activities of the Group are presented in the following
reportable segments:
- UK & ROI - the United Kingdom and Republic of Ireland
- Booker
- Central Europe - Czech Republic, Hungary and Slovakia
The CODM uses Adjusted operating profit, as reviewed at periodic Executive
Committee meetings, as the key measure of the segments' results as it
reflects the segments' trading performance and aids comparability over time.
Adjusted operating profit is a consistent measure within the Group as defined
within the Glossary. Refer to Note 4 for adjusting items.
Income statement
The segment results and the reconciliation of the segment measures to the
respective statutory items included in the Group income statement are as
follows:
26 weeks ended 23 August 2025 Notes UK & ROI Booker Central Total at Foreign exchange Total at actual
At constant exchange rates
£m
£m
Europe
constant
£m
£m
exchange
exchange
£m
£m
Revenue 3 29,116 4,734 2,150 36,000 36 36,036
Less: Fuel sales (2,916) - (68) (2,984) (1) (2,985)
Sales 26,200 4,734 2,082 33,016 35 33,051
Adjusted operating profit 1,469 162 44 1,675 (1) 1,674
Adjusting items 4 (26) (39) (6) (71) - (71)
Operating profit 1,443 123 38 1,604 (1) 1,603
Adjusted operating margin 5.0% 3.4% 2.0% 4.7% 4.6%
26 weeks ended 23 August 2025 Notes UK & ROI Central Total
At actual exchange rates
£m
Europe
£m
Booker
£m
£m
Revenue 3 29,127 4,734 2,175 36,036
Less: Fuel sales (2,916) - (69) (2,985)
Sales 26,211 4,734 2,106 33,051
Adjusted operating profit 1,468 162 44 1,674
Adjusting items 4 (26) (39) (6) (71)
Operating profit 1,442 123 38 1,603
Adjusted operating margin 5.0% 3.4% 2.0% 4.6%
Share of post-tax profit/(loss) of joint ventures and associates (1)
Finance income 5 117
Finance costs 5 (414)
Profit before tax 1,305
Note 2 Segmental reporting continued
26 weeks ended 24 August 2024 Notes UK & ROI Booker Central Total
At actual exchange rates
£m
Europe
£m
(restated*)
£m
£m
Revenue 3 28,045 4,623 2,105 34,773
Less: Fuel sales (3,232) - (78) (3,310)
Sales 24,813 4,623 2,027 31,463
Adjusted operating profit 1,439 161 49 1,649
Adjusting items 4 1 (38) - (37)
Operating profit 1,440 123 49 1,612
Adjusted operating margin 5.1% 3.5% 2.3% 4.7%
Share of post-tax profit/(loss) of joint ventures and associates (2)
Finance income 5 132
Finance costs 5 (350)
Profit before tax 1,392
* Comparatives have been restated to reflect the reclassification of
Insurance and Money Services from the former Tesco Bank segment to the UK
& ROI segment, and the reclassification of the Booker business to its own
segment.
Included within the UK & ROI segment is £563m of revenue and sales (26
weeks ended 24 August 2024: £519m), £100m of adjusted operating profit (26
weeks ended 24 August 2024: £94m), £(13)m of adjusting items (26 weeks ended
24 August 2024: £(4)m) and £87m of operating profit (26 weeks ended 24
August 2024: £90m) related to the Insurance and Money Services business.
Other segment information
The tables below show the Group's total capital expenditure, depreciation and
amortisation for continuing operations:
26 weeks ended 23 August 2025 UK & ROI Central Total
£m
Europe
Booker
£m £m
£m
Capital expenditure (including acquisitions through business combinations):
Property, plant and equipment((a)) 492 23 32 547
Goodwill and other intangible assets((b)) 151 - 4 155
Depreciation and amortisation:
Property, plant and equipment (414) (25) (41) (480)
Right of use assets (217) (45) (25) (287)
Other intangible assets (104) (39) (5) (148)
(a) Includes £nil (26 weeks ended 24 August 2024: £1m) of property, plant
and equipment acquired through business combinations.
(b) Includes £3m (26 weeks ended 24 August 2024: £56m) of goodwill and
other intangible assets acquired through business combinations.
As a result of the separation of the UK & ROI and Booker operating
segments, the £3.7bn goodwill previously allocated to the UK group of
cash-generating units including Booker has been allocated to the UK (£3.3bn)
and Booker (£0.4bn) businesses based on their relative values, as required by
IAS 36. The goodwill and associated other non-current asset balances have been
reviewed for any indicators of impairment. No indicators were observed and
both the UK and Booker had significant headroom.
26 weeks ended 24 August 2024 UK & ROI Central Total
Europe
(restated((c))) Booker
£m £m
£m
£m
Capital expenditure (including acquisitions through business combinations):
Property, plant and equipment((a)) 371 24 28 423
Goodwill and other intangible assets((b)) 129 56 4 189
Depreciation and amortisation:
Property, plant and equipment (392) (25) (42) (459)
Right of use assets (206) (40) (23) (269)
Other intangible assets (95) (38) (5) (138)
(a)-(b) Refer to previous table for footnotes.
(c) Comparatives have been restated to reflect the reclassification of
Insurance and Money Services from the former Tesco Bank segment to the UK
& ROI segment, and the reclassification of the Booker business to its own
segment.
Note 3 Revenue
Continuing operations Notes 26 weeks 26 weeks
2025
£m 2024
£m
UK 27,586 26,596
ROI 1,541 1,449
UK & ROI 2 29,127 28,045
Booker 2 4,734 4,623
Hungary 744 705
Czech Republic 733 710
Slovakia 698 690
Central Europe 2 2,175 2,105
Total Group 2 36,036 34,773
Note 4 Adjusting items
Group income statement
26 weeks ended 23 August 2025
Profit/(loss) for the period included the following adjusting items:
Cost of sales Administrative expenses Total adjusting items included within operating profit Finance income/ Taxation
£m
£m
£m
£m
(costs)
£m Total adjusting items
£m
Property transactions((a)) (10) - (10) - 1 (9)
Net impairment (loss)/reversal of non-current assets((b)) - (9) (9) - - (9)
Restructuring((c)) 1 (2) (1) - - (1)
Amortisation of acquired intangible assets((d)) - (38) (38) - 10 (28)
Separation programme costs related to disposal of Banking operations((e)) (8) (5) (13) - 3 (10)
Net pension finance income/(costs)((f)) - - - (8) 2 (6)
Fair value remeasurements of financial instruments((f)) - - - (26) 8 (18)
Total adjusting items (17) (54) (71) (34) 24 (81)
(a) Includes costs associated with a distribution simplification programme
in Central Europe. The prior period predominantly related to the disposal of
surplus properties.
(b) Refer to Note 9 for further details on net impairment (loss)/reversal of
non-current assets.
(c) Provisions relating to operational restructuring changes announced as
part of 'Save to Invest', a multi-year programme which commenced in June 2022.
The total cost of the programme recognised as adjusting since its start date
is £(276)m (26 weeks ended 24 August 2024: £(235)m). Future cost savings
will not be reported within adjusting items.
(d) Amortisation of acquired intangibles relates to assets acquired through
business combinations and does not reflect the Group's ongoing trading
performance.
(e) Separation programme costs incurred in the continuing Group in relation
to the disposal of the Group's Banking operations in the prior year.
(f) Net pension finance costs and fair value remeasurements of financial
instruments are included within adjusting items, as they can fluctuate
significantly due to external market factors that are outside management's
control. Refer to Note 5 for details of finance income and costs and Note 17
for details of pension schemes.
26 weeks ended 24 August 2024
Profit/(loss) for the period included the following adjusting items:
Cost of sales Administrative expenses Total adjusting items included within operating profit Finance income/ (costs) Taxation Adjusting items included within discontinued operations
£m
£m
£m
£m
£m
£m
Total adjusting items
£m
Property transactions - 7 7 - (1) - 6
Restructuring (3) - (3) - 1 - (2)
Amortisation of acquired intangible assets - (38) (38) - 9 - (29)
Separation programme costs related to disposal of Banking operations (2) (1) (3) - 1 - (2)
Net pension finance income/(costs) - - - (15) 4 - (11)
Fair value remeasurements of financial instruments - - - 66 (16) - 50
Total adjusting items from continuing operations (5) (32) (37) 51 (2) - 12
Adjusting items relating to discontinued operations - - - - - (41) (41)
Total adjusting items (5) (32) (37) 51 (2) (41) (29)
Note 4 Adjusting items continued
Group cash flow statement
The table below shows the impact of adjusting items on the Group cash flow
statement:
Cash flows from Cash flows from Cash flows from
operating activities
investing activities
financing activities
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
2025
2024
2025
2024
2025
2024
£m
£m
£m
£m
£m
£m
Property transactions((a)) (10) - 30 15 (31) -
Restructuring((b)) (30) (52) - - - -
Separation programme costs related to disposal of Banking operations((c)) (12) - - - - -
Total adjusting items (52) (52) 30 15 (31) -
(a) Property transactions include £30m proceeds from the sale of 17 sites
and the leaseback of nine associated stores in the UK and a £(31)m premium
related to a significant transaction in the UK, which due to their size and
nature, are treated as adjusting. The prior period related to the sale of
stores in Poland not included in the sale of the corporate business and the
sale of other surplus property.
(b) Cash outflows relating to operational restructuring changes as part of
the multi-year 'Save to Invest' programme, which commenced in June 2022.
(c) Separation programme costs incurred in the continuing Group in relation
to the disposal of the Group's Banking operations in the prior year.
Note 5 Finance income and costs
Continuing operations Notes 26 weeks 26 weeks
2025
2024
£m
£m
Finance income
Interest income on:
Bank balances 49 55
Short-term investments 56 65
Loans to joint ventures and associates 4 4
Other investments 6 6
Net investment in leases 1 1
Finance income on reinsurance contracts held 1 1
Total finance income 117 132
Finance costs
GBP MTNs and loans (91) (102)
EUR MTNs (37) (46)
USD bonds (7) (9)
Interest expense on lease liabilities* (190) (186)
Finance expense on insurance contracts issued (7) (7)
Interest expense on bank overdrafts (43) (46)
Undrawn committed facility fee (2) (2)
Unwind of discount on provisions (3) (3)
Total finance costs before adjusting items (380) (401)
Fair value remeasurements of financial instruments (26) 66
Net pension finance income/(costs) 17 (8) (15)
Total finance costs (414) (350)
Net finance costs (297) (218)
* Interest expense on lease liabilities is presented net of £5m of
hedging impact (26 weeks ended 24 August 2024: £nil).
Note 6 Taxation
Recognised in the Group income statement
26 weeks 26 weeks
2025
£m 2024
£m
Current tax charge
UK corporation tax 257 256
Overseas tax 36 39
293 295
Deferred tax charge
Origination and reversal of temporary differences 62 75
62 75
Total income tax charge 355 370
Analysed as:
Tax charge/(credit) on adjusted profit 379 368
Tax charge/(credit) on adjusting items (24) 2
Total income tax charge 355 370
Effective tax rate 27.2% 26.6%
Adjusted effective tax rate 26.9% 26.7%
The tax charge in the Group income statement is based on management's best
estimate of the full year effective tax rates by geographical unit applied to
half year profits, which is then adjusted for tax on adjusting items arising
in the period to 23 August 2025. The appropriate statutory rate of corporation
tax has been applied to the adjusting items, based on the geographical unit of
that item. Refer to Note 4 for further details.
Note 7 Dividends
26 weeks ended 23 August 2025 26 weeks ended 24 August 2024
Pence/share £m Pence/share £m
Paid prior financial year final dividend* 9.45 628 8.25 576
(Increase)/decrease in unclaimed dividends - (1) - (1)
Dividends paid in the financial period 627 575
Interim dividend declared for the current period 4.80 314 4.25 291
* Excludes £5m prior financial year dividend waived (26 weeks ended 24
August 2024: £5m).
The interim dividend was approved by the Board of Directors on 1 October 2025.
It will be paid on 21 November 2025 to shareholders who are on the Register of
members at close of business on 10 October 2025.
A dividend reinvestment plan (DRIP) is available to shareholders who would
prefer to invest their dividends in the shares of the Company. For those
shareholders electing to receive the DRIP, the last date for receipt of a new
election is 31 October 2025.
Note 8 Earnings/(losses) per share and diluted earnings/(losses) per share
26 weeks ended 23 August 2025 26 weeks ended 24 August 2024
Basic Dilutive share options and awards Diluted Basic Dilutive share options and awards Diluted
Profit/(loss) (£m)
Continuing operations 950 - 950 1,022 - 1,022
Discontinued operations - - - 29 - 29
Total 950 - 950 1,051 - 1,051
Weighted average number of shares (millions) 6,606 74 6,680 6,922 70 6,992
Earnings/(losses) per share (pence)
Continuing operations 14.38 (0.16) 14.22 14.76 (0.14) 14.62
Discontinued operations - - - 0.42 (0.01) 0.41
Total 14.38 (0.16) 14.22 15.18 (0.15) 15.03
Note 8 Earnings/(losses) per share and diluted earnings/(losses) per share
continued
APM: Adjusted diluted earnings/(losses) per share
Continuing operations Notes 26 weeks 26 weeks
2025
2024
Profit before tax (£m) 1,305 1,392
Exclude: Adjusting items (£m) 4 105 (14)
Adjusted profit before tax (£m) 1,410 1,378
Adjusted profit before tax attributable to the owners of the parent (£m) 1,410 1,378
Taxation on adjusted profit before tax attributable to the owners of the 6 (379) (368)
parent (£m)
Adjusted profit after tax attributable to the owners of the parent (£m) 1,031 1,010
Basic weighted average number of shares (millions) 6,606 6,922
Adjusted basic earnings per share (pence) 15.61 14.59
Diluted weighted average number of shares (millions) 6,680 6,992
Adjusted diluted earnings per share APM (pence) 15.43 14.45
Note 9 Property, plant and equipment
23 August 2025 24 August 2024
Land and Other((a)) Total Land and Other((a)) Total
buildings
£m
buildings
£m
£m £m
£m £m
Net carrying value
Opening balance 14,759 2,503 17,262 14,997 2,224 17,221
Foreign currency translation 117 23 140 (15) (4) (19)
Additions((b)) 183 364 547 158 264 422
Acquired through business combinations - - - - 1 1
Reclassification - - - 3 (2) 1
Transfers (to)/from assets classified as held for sale((c)) (91) (2) (93) (18) - (18)
Disposals (14) (4) (18) (11) (2) (13)
Depreciation charge for the period (231) (249) (480) (230) (229) (459)
Impairment losses (7) (2) (9) - - -
Closing balance 14,716 2,633 17,349 14,884 2,252 17,136
Construction in progress included above((d)) 175 365 540 114 247 361
(a) Other assets consist of fixtures and fittings with a net carrying value
of £2,015m (22 February 2025: £1,874m, 24 August 2024: £1,713m), office and
store equipment with a net carrying value of £258m (22 February 2025: £269m,
24 August 2024: £235m) and motor vehicles with a net carrying value of £360m
(22 February 2025: £360m, 24 August 2024: £304m).
(b) Includes £35m (22 February 2025: £199m, 24 August 2024: £25m)
relating to store buybacks, direct store purchases and refits associated with
both direct store purchases and business combinations.
(c) Refer to Note 13.
(d) Construction in progress does not include land.
Commitments for capital expenditure contracted for, but not incurred, at 23
August 2025 were £577m (22 February 2025: £191m, 24 August 2024: £358m)
principally relating to store development and multi-year distribution
investment.
Impairment of non-current assets
The Group recognised an impairment charge of £9m (26 weeks ended 24 August
2024: £nil) immediately prior to classifying specific non-trading sites as
held for sale (refer to Note 13), impairing these sites to fair value less
cost to sell. The methodology to calculate the fair value is unchanged from
that described in Note 15 of the Annual Report and Financial Statements 2025.
At each reporting date, the Group reviews the carrying amounts of its freehold
and leasehold non-current asset store estate to determine whether there is any
indication of impairment loss or impairment reversal. The Group has concluded
there were no such indicators during the 26 weeks ended 23 August 2025 (26
weeks ended 24 August 2024: £nil).
Note 10 Leases
Group as lessee
Right of use assets
23 August 2025 24 August 2024
Land and Other Total Land and Other Total
buildings
£m
£m
buildings
£m
£m
£m
£m
Net carrying value
Opening balance 5,431 138 5,569 5,365 113 5,478
Additions (including sale and leaseback transactions) 112 51 163 87 31 118
Acquired through business combinations - - - 5 - 5
Depreciation charge for the period (263) (24) (287) (251) (18) (269)
Other movements* 244 - 244 102 - 102
Closing balance 5,524 165 5,689 5,308 126 5,434
* Other movements include lease terminations, modifications and
reassessments, foreign exchange, reclassifications between asset classes and
entering into finance subleases.
Lease liabilities
The following table shows the discounted lease liabilities included in the
Group balance sheet and the contractual undiscounted lease payments:
23 August 22 February 24 August
2025 2025 2024
£m
£m
£m
Current 641 618 607
Non-current 7,150 7,098 6,935
Total lease liabilities 7,791 7,716 7,542
Total undiscounted lease payments 10,950 10,876 10,570
A reconciliation of the Group's opening to closing lease liabilities balance
is presented in Note 19.
Note 11 Cash and cash equivalents and short-term investments
Cash and cash equivalents
23 August 22 February 24 August
2025 2025 2024
£m
£m
£m
Cash at bank and on hand 2,345 2,190 3,223
Short-term deposits 89 65 87
Cash and cash equivalents in the Group balance sheet* 2,434 2,255 3,310
Bank overdrafts (1,034) (856) (973)
Cash and cash equivalents in the Group cash flow statement 1,400 1,399 2,337
* At 24 August 2024 the balance included £757m which was used in
October 2024 to settle deposits from the Bank of England's Term Funding Scheme
with additional incentives for small and medium-sized enterprises (TFSME), as
was disclosed in the Glossary - APMs: Reconciliation of cash flow measures in
the Annual Report and Financial Statements 2025.
Short-term investments
23 August 22 February 24 August
2025 2025 2024
£m
£m
£m
Money market funds, deposits and similar instruments 1,992 2,223 1,912
Cash and cash equivalents include £27m (22 February 2025: £26m, 24 August
2024: £28m) of restricted amounts mainly relating to unclaimed dividends, the
Group's pension schemes and employee benefit trust.
Note 12 Commercial income
Below are the commercial income balances included within inventories and trade
and other receivables, or netted against trade and other payables.
23 August 22 February 24 August
2025 2025 2024
£m
£m
£m
Current assets
Inventories (15) (14) (12)
Trade and other receivables
Trade/other receivables 93 110 81
Accrued income 126 142 114
Current liabilities
Trade payables 135 173 108
Note 13 Assets classified as held for sale
The following table presents a breakdown of non-current assets classified as
held for sale and the assets and liabilities of the Banking operations
disposal group in the prior period.
23 August 22 February 2025 24 August
2025 2024
Other((a)) Other((a)) Banking operations Other((a)) Total
£m
£m
£m £m £m
Assets of the disposal group((b)) - - 8,084 - 8,084
Non-current assets classified as held for sale((c)) 123 50 - 101 101
Total non-current assets classified as held for sale and assets of the 123 50 8,084 101 8,185
disposal group
Liabilities of the disposal group((b)) - - (7,512) - (7,512)
Total non-current assets classified as held for sale and net assets of the 123 50 572 101 673
disposal group
(a) Other non-current assets classified as held for sale consist of
properties in the UK (22 February 2025: UK, 24 August 2024: UK and Central
Europe) due to be sold within one year. Due to the individual nature of each
property, fair values are classified as Level 3 within the fair value
hierarchy.
(b) Refer to Note 8 of the Annual Report and Financial Statements 2025 for
details relating to the Group's disposal of Banking operations in that year.
(c) The movement in the period principally relates to a reclassification of
£96m of properties from property, plant and equipment for a number of sites
expected to be sold within one year, partially offset by £19m of disposals.
Note 14 Borrowings
Borrowings are classified as current and non-current based on their scheduled
repayment 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. In the 26 weeks ended 23 August 2025, the
Group made principal repayments of £400m relating to a GBP MTN which matured
in May 2025 and principal repayments on amortising secured debt of £30m. A
new €500m bond was issued in April 2025, maturing in May 2032. This bond is
designated as a net investment hedge.
In the 26 weeks ended 24 August 2024, the Group made principal repayments of
€473m relating to a Euro MTN which matured in July 2024, a €50m partial
repayment on the Euro 2047 MTN and principal repayments on amortising secured
debt of £27m. Tesco Bank repaid Senior MREL Notes of £146m. In addition, the
Group issued a £350m bond, maturing in May 2034.
Current
23 August 22 February 24 August
2025 2025 2024
£m
£m
£m
Bank loans and overdrafts 1,059 882 998
Borrowings 1,203 979 518
2,262 1,861 1,516
Non-current
23 August 22 February 24 August
2025 2025 2024
£m
£m
£m
Borrowings 4,914 5,089 5,580
Borrowing facilities
The Group has a £2.5bn syndicated revolving credit facility available at 23
August 2025 expiring in more than two years (22 February 2025: £2.5bn, 24
August 2024: £2.5bn and, prior to the Banking operations disposal, Tesco Bank
had a £200m committed repurchase facility). The revolving credit facility was
undrawn at those dates. All conditions precedent had been met at those dates.
It incurs commitment fees at market rates and would provide funding at
floating rates, both linked to three ESG targets.
Note 15 Insurance
Balances disclosed in this note relate to the Group's subsidiary, Tesco
Underwriting Limited (TU), part of the UK & ROI segment.
Insurance contract liabilities and reinsurance contract assets
The breakdown of portfolios and groups of insurance contracts issued, and
reinsurance contracts held is set out in the table below:
At 23 August 2025 At 22 February 2025 At 24 August 2024
Insurance contract liabilities Reinsurance contracts held Net (liabilities)/ Insurance contract liabilities Reinsurance contracts held Net (liabilities)/ Insurance contract liabilities((a)) Reinsurance contracts held((b)) Net (liabilities)/
£m £m assets £m £m assets £m £m assets((b))
£m £m £m
(Liabilities)/assets for remaining coverage (276) 185 (91) (270) 181 (89) (258) 173 (85)
(Liabilities)/assets for incurred claims (448) (52) (500) (382) (57) (439) (326) (51) (377)
(724) 133 (591) (652) 124 (528) (584) 122 (462)
Contracts measured under PAA (582) 80 (502) (510) 71 (439) (440) 68 (372)
Contracts not measured under PAA((c)) (142) 53 (89) (142) 53 (89) (144) 54 (90)
(724) 133 (591) (652) 124 (528) (584) 122 (462)
(a) Comparatives have been re-presented to reclassify £(68)m from
Liabilities for remaining coverage (LRC) to Liabilities for incurred claims
(LIC).
(b) Comparatives have been re-presented due to the reclassification of quota
share funds withheld of £447m relating to services received from Assets for
remaining coverage (ARC) to Assets for incurred claims (AIC).
(c) Contracts not measured under the premium allocation approach (PAA) are
measured using the general measurement model (GMM).
Measurement components of insurance contract liabilities and reinsurance
contract assets are set out in the table below. The estimate of the present
value of future cash flows is adjusted for events since the actuarial
valuation:
At 23 August 2025 At 22 February 2025 At 24 August 2024
Present value of future cash flows Present value of future cash flows Present value of future cash flows
£m Risk adjustment £m Risk adjustment £m Risk adjustment
£m £m £m
CSM* Total CSM* Total CSM* Total
£m £m £m £m £m £m
Insurance contract liabilities (625) (28) (71) (724) (557) (24) (71) (652) (495) (18) (71) (584)
Reinsurance contract assets 90 9 34 133 83 7 34 124 89 6 27 122
Net (liabilities)/assets (535) (19) (37) (591) (474) (17) (37) (528) (406) (12) (44) (462)
* Contractual service margin.
Note 16 Financial instruments
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 table excludes cash and cash equivalents, short-term investments, trade
receivables and payables, other receivables and payables, and accruals where
the carrying values approximate fair value. The levels in the table refer to
the fair value measurement hierarchy.
23 August 2025 22 February 2025 24 August 2024
Level Carrying Fair Carrying Fair Carrying Fair
value
value((a))
value
value((a))
value
value((a))
£m
£m
£m
£m
£m
£m
Financial assets measured at amortised cost
Investment securities at amortised cost((b)) 1 and 2 194 198 196 201 197 209
Joint ventures and associates loan receivables 2 97 107 97 105 96 107
Financial liabilities measured at amortised cost
Borrowings
Amortised cost 1 (5,506) (5,260) (4,916) (4,651) (5,079) (4,871)
Bonds in fair value hedge relationships 1 (1,670) (1,723) (2,034) (2,088) (2,017) (2,067)
(a) Refer to the fair value measurement section below for details on Level 2
methodology.
(b) These are principally Level 1 instruments.
Fair value measurement by level of fair value hierarchy
The following tables present 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).
There have been no changes to the fair value methodology as disclosed in Note
26 of the Annual Report and Financial Statements 2025.
At 23 August 2025 Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
Assets
Investments at fair value through other comprehensive income 953 - 17 970
Short-term investments at fair value through profit or loss 1,082 - - 1,082
Cash and cash equivalents at fair value through profit or loss - 61 - 61
Derivative financial instruments:
Interest rate swaps - - 15 15
Cross-currency swaps - - 124 124
Index-linked swaps - - 620 620
Foreign currency forward contracts - 16 - 16
Total assets 2,035 77 776 2,888
Liabilities
Derivative financial instruments:
Interest rate swaps - - (77) (77)
Cross-currency swaps - - (99) (99)
Foreign currency forward contracts - (54) - (54)
Commodity derivatives - (4) - (4)
Total liabilities - (58) (176) (234)
Net assets 2,035 19 600 2,654
Note 16 Financial instruments continued
At 22 February 2025 Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
Assets
Investments at fair value through other comprehensive income 855 - 19 874
Short-term investments at fair value through profit or loss 1,386 - - 1,386
Cash and cash equivalents at fair value through profit or loss - 61 - 61
Other investments at fair value through profit or loss - - 15 15
Derivative financial instruments:
Interest rate swaps - - 24 24
Cross-currency swaps - - 138 138
Index-linked swaps - - 646 646
Foreign currency forward contracts - 27 - 27
Total assets 2,241 88 842 3,171
Liabilities
Derivative financial instruments:
Interest rate swaps - - (74) (74)
Cross-currency swaps - - (130) (130)
Foreign currency forward contracts - (11) - (11)
Commodity derivatives - (2) - (2)
Total liabilities - (13) (204) (217)
Net assets 2,241 75 638 2,954
At 24 August 2024 Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
Assets
Investments at fair value through other comprehensive income 751 - 19 770
Short-term investments at fair value through profit or loss 949 - - 949
Cash and cash equivalents at fair value through profit or loss - 63 - 63
Other investments at fair value through profit or loss - - 16 16
Derivative financial instruments:
Interest rate swaps - - 11 11
Cross-currency swaps - - 141 141
Index-linked swaps - - 636 636
Foreign currency forward contracts - 11 - 11
Total assets 1,700 74 823 2,597
Liabilities
Derivative financial instruments:
Interest rate swaps - - (88) (88)
Cross-currency swaps - - (130) (130)
Foreign currency forward contracts - (38) - (38)
Commodity derivatives - (5) - (5)
Total liabilities - (43) (218) (261)
Net assets 1,700 31 605 2,336
During the period, there were no transfers (26 weeks ended 24 August 2024: no
transfers) between Level 1 and Level 2 fair value measurements.
Level 3 instruments
The following table presents the changes in Level 3 instruments:
26 weeks ended 26 weeks ended
23 August 2025 24 August 2024
Uncollateralised derivatives Unlisted Uncollateralised derivatives Unlisted
£m
£m
investments investments
£m
£m
At the beginning of the period 604 34 545 37
Gains/(losses) recognised in finance costs((a)) (22) - 36 (1)
Gains/(losses) recognised in other comprehensive income not reclassified to - (1) - -
the income statement
Gains/(losses) recognised in other comprehensive income that may subsequently - - 26 -
be reclassified to the income statement
Disposals - (16) - -
Settlements 1 - (37) -
Transfer of assets from Level 3((b)) - - - (1)
At the end of the period 583 17 570 35
(a) Net unrealised gains/(losses) of £5m (26 weeks ended 24 August 2024:
£69m) are attributable to those assets and liabilities held at the end of the
period and have been recognised in finance costs in the Group income
statement.
(b) There were £nil transfers from Level 3 to Level 2 (26 weeks ended 24
August 2024: £nil) and £nil transfers from Level 3 to Level 1 (26 weeks
ended 24 August 2024: £(1)m). There were £nil transfers (26 weeks ended 24
August 2024: £nil) to Level 3 from Level 2 and £nil (26 weeks ended 24
August 2024: £nil) to Level 3 from Level 1.
Note 17 Post-employment benefits
Pensions
The Group operates several post-employment benefit arrangements, covering both
funded and unfunded defined benefit schemes and defined contribution schemes.
The principal defined benefit pension plan within the Group is the Tesco PLC
Pension Scheme (the Scheme), a UK scheme that has been closed to future
accrual since 2015. The latest triennial actuarial pension funding valuation
for the Scheme as at 31 March 2025 showed a funding level under the Technical
Provisions basis of 106% (31 March 2022: 104%). During the period, and
following this triennial valuation, it was agreed with the Scheme Trustee that
no pension deficit contributions would be required from the Company.
In June 2025 the UK Government announced that it intends to introduce
legislation to deal with issues arising from the Virgin Media vs NTL Pension
Trustees judgement. From the work performed to date, management's view
continues to be that no material adjustments to the financial statements are
needed as a result of this judgement - see Note 29 of the Annual Report and
Financial Statements 2025 for further details.
IFRIC 14
For schemes in an accounting surplus position, these surpluses are recognised
on the balance sheet in line with IFRIC 14, as the Group has an unconditional
legal right to any future economic benefits by way of future refunds following
a gradual settlement.
Movement in the Group pension surplus/(deficit) during the financial period
Net defined benefit surplus/(deficit)
23 August 2025 22 February 2025 24 August 2024
£m
£m
£m
Opening balance (248) (631) (631)
Administration costs (9) (17) (9)
Finance income/(cost) (8) (32) (15)
Included in the Group income statement (17) (49) (24)
Remeasurement gain/(loss):
Financial assumptions gain/(loss) 725 981 (74)
Demographic assumptions gain/(loss) 129 17 (7)
Experience gain/(loss) (80) (62) (62)
Return on plan assets excluding finance income (696) (550) 395
Foreign currency translation 2 (1) -
Included in the Group statement of comprehensive income/(loss) 80 385 252
Employer contributions 9 17 9
Additional employer contributions 13 23 12
Benefits paid 4 7 2
Other movements 26 47 23
Closing balance (159) (248) (380)
Withholding tax on surplus((a)) (4) (3) (4)
Closing balance, net of withholding tax (163) (251) (384)
Consisting of:
Schemes in deficit (231) (307) (426)
Schemes in surplus((b)) 68 56 42
Deferred tax asset/(liability)((c)) 51 71 102
Surplus/(deficit) in schemes at the end of the period, net of deferred tax (112) (180) (282)
(a) The movement in the period is recognised through other comprehensive
income in remeasurements of defined benefit pension schemes.
(b) Schemes in surplus in the UK are presented on the balance sheet net of a
25% (22 February 2025 and 24 August 2024: 25%) withholding tax.
(c) Including £(7)m deferred tax liability relating to the ROI scheme in
surplus where no withholding tax is applicable (22 February 2025: £(6)m, 24
August 2024: £(4)m).
Note 17 Post-employment benefits continued
Scheme principal assumptions
The principal assumptions, on a weighted average basis, used by external
actuaries to value the defined benefit obligation of the Scheme were as
follows:
23 August 22 February 24 August
2025 2025 2024
%
%
%
Discount rate((a)) 6.0 5.7 5.1
Price inflation 2.8 3.0 2.9
Rate of increase in deferred pensions((b)) 2.4 2.6 2.5
Rate of increase in pensions in payment((b))
Benefits accrued before 1 June 2012 2.7 2.9 2.8
Benefits accrued after 1 June 2012 2.4 2.6 2.5
(a) The discount rate for the Scheme is determined by reference to market
yields of high-quality corporate bonds of suitable currency and term to the
Scheme cash flows and extrapolated based on the trend observable in corporate
bond yields.
(b) In excess of any guaranteed minimum pension (GMP) element.
Sensitivity analysis of significant actuarial assumptions
The sensitivity of significant assumptions upon the Scheme defined benefit
obligation is detailed below:
23 August 2025 24 August 2024
Financial assumptions - Increase/(decrease) in UK defined benefit obligation Discount rate Inflation rate Discount rate Inflation rate
£m
£m
£m
£m
Impact of 0.1% increase of the assumption (138) 127 (182) 170
Impact of 0.1% decrease of the assumption 148 (127) 195 (158)
Impact of 1.0% increase of the assumption (1,302) 1,312 (1,690) 1,763
Impact of 1.0% decrease of the assumption 1,609 (1,132) 2,152 (1,484)
The sensitivities reflect the range of recent assumption movements and
illustrate that the financial assumption sensitivities do not move in a linear
fashion. Movements in the defined benefit obligation from discount rate and
inflation rate changes may be partially offset by movements in assets.
Note 18 Share capital and other reserves
Share capital
26 weeks ended 52 weeks ended
23 August 2025 22 February 2025
Ordinary shares of 6⅓p each Ordinary shares of 6⅓p each
Number £m Number £m
Allotted, called-up and fully paid:
At the beginning of the financial period 6,736,841,762 426 7,038,930,440 445
Shares cancelled (199,836,693) (13) (302,088,678) (19)
At the end of the financial period 6,537,005,069 413 6,736,841,762 426
No shares were issued during the current or prior financial period in relation
to share options or bonus awards. 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.
Other reserves
The tables below set out the movements in other reserves:
Capital redemption reserve Hedging Translation Own Merger Insurance finance reserve Total
£m
reserve
reserve
shares
£m
£m
held* reserve( £m £m
£m ) £m
At 22 February 2025 80 49 186 (280) 3,090 15 3,140
Other comprehensive income/(loss)
Retranslation of net assets of overseas subsidiaries, joint ventures and - - 123 - - - 123
associates
Impact of net investment hedges - - (56) - - - (56)
Gains/(losses) on cash flow hedges - (79) - - - - (79)
Cash flow hedges reclassified and reported in the Group income statement - (11) - - - - (11)
Finance income/(expenses) from insurance contracts issued - - - - - (1) (1)
Tax relating to components of other comprehensive income - 8 - - - - 8
Total other comprehensive income/(loss) - (82) 67 - - (1) (16)
Inventory cash flow hedge movements
(Gains)/losses transferred to the cost of inventory - 42 - - - - 42
Total inventory cash flow hedge movements - 42 - - - - 42
Transactions with owners
Own shares purchased for cancellation - - - (1,200) - - (1,200)
Own shares cancelled 13 - - 773 - - 786
Own shares purchased for share schemes - - - (160) - - (160)
Share-based payments - - - 171 - - 171
Transfer from own shares held to retained earnings - - - 44 - - 44
Total transactions with owners 13 - - (372) - - (359)
At 23 August 2025 93 9 253 (652) 3,090 14 2,807
* Includes 29.7 million shares held by the Tesco International Employee
Benefit Trust (22 February 2025: 37.1 million, 24 August 2024: 39.9 million).
Capital redemption reserve Hedging Translation Own Merger Insurance finance reserve Total
£m
reserve
reserve
shares
£m
£m
held* reserve( £m £m
£m ) £m
At 24 February 2024 61 75 206 (315) 3,090 14 3,131
Other comprehensive income/(loss)
Retranslation of net assets of overseas subsidiaries, joint ventures and - - (31) - - - (31)
associates
Impact of net investment hedges - - 9 - - - 9
Gains/(losses) on cash flow hedges - (6) - - - - (6)
Cash flow hedges reclassified and reported in the Group income statement - (36) - - - - (36)
Finance income/(expenses) from insurance contracts issued - - - - - (3) (3)
Finance income/(expenses) from reinsurance contracts held - - - - - 1 1
Tax relating to components of other comprehensive income - 5 - - - - 5
Total other comprehensive income/(loss) - (37) (22) - - (2) (61)
Inventory cash flow hedge movements
(Gains)/losses transferred to the cost of inventory - 9 - - - - 9
Total inventory cash flow hedge movements - 9 - - - - 9
Transactions with owners
Own shares purchased for cancellation - - - (746) - - (746)
Own shares cancelled 12 - - 575 - - 587
Own shares purchased for share schemes - - - (101) - - (101)
Share-based payments - - - 183 - - 183
Total transactions with owners 12 - - (89) - - (77)
At 24 August 2024 73 47 184 (404) 3,090 12 3,002
Refer to previous table for footnote.
Note 18 Share capital and other reserves continued
Own shares held
The table below presents the reconciliation of own shares purchased for
cancellation between the Group statement of changes in equity and the Group
cash flow statement:
23 August 24 August
2025 2024
Own shares purchased for cancellation £m £m
Included in the Group statement of changes in equity (1,200) (746)
Outstanding amount recognised as financial liabilities((a)) 427 171
Included in the Group cash flow statement((b)) (773) (575)
(a) Shares to be delivered under a share repurchase agreement with an external
bank, included in other payables.
(b) 199.8 million (24 August 2024: 182.2 million) shares purchased at an
average price of £3.87 per share (24 August 2024: £3.16).
199.8 million (26 weeks ended 24 August 2024: 182.2 million) shares,
representing 3.1% of the called-up share capital as at 23 August 2025 (24
August 2024: 2.7%) were cancelled and charged to retained earnings. Total
consideration was £773m (24 August 2024: £575m), including stamp duty of
£4m (24 August 2024: £3m).
The table below presents the reconciliation of own shares purchased for share
schemes between the Group statement of changes in equity and the Group cash
flow statement:
23 August 24 August
2025 2024
Own shares purchased for share schemes £m £m
Included in the Group statement of changes in equity (160) (101)
Shares withheld to settle employee tax 49 54
Cash received from employees exercising SAYE options 48 64
Included in the Group cash flow statement (63) 17
Note 19 Analysis of changes in Net debt
The Group's Net debt APM is defined in the Glossary.
23 August 2025 22 February 2025 24 August 2024
£m £m £m
Borrowings, excluding overdrafts (6,142) (6,094) (6,123)
Lease liabilities (7,791) (7,716) (7,542)
Net financing derivatives 585 602 567
Share purchase obligations (427) - (171)
Liabilities from financing activities (13,775) (13,208) (13,269)
Cash and cash equivalents in the balance sheet 2,434 2,255 3,310
Overdrafts((a)) (1,034) (856) (973)
Cash and cash equivalents (including overdrafts) in the cash flow statement 1,400 1,399 2,337
Short-term investments 1,992 2,223 1,912
Joint venture loans 97 97 96
Interest and other receivables 19 19 17
Net operating and investing derivatives (44) 16 (29)
Exclude: Share purchase obligations 427 - 171
Exclude: Cash and cash equivalents held to settle deposits from central - - (757)
bank((b))
Net debt APM((c)) (9,884) (9,454) (9,522)
(a) Overdraft balances are included within borrowings in the Group balance
sheet, and within cash and cash equivalents in the Group cash flow statement.
Refer to Note 11.
(b) Net debt at 24 August 2024 is presented excluding the temporary benefit
of cash proceeds from the disposal of an investment portfolio in that period
by Insurance and Money Services. This was used in October 2024 to settle
deposits from the Bank of England's Term Funding Scheme with additional
incentives for small and medium-sized enterprises (TFSME), as was disclosed in
the Glossary - APMs: Reconciliation of cash flow measures in the Annual Report
and Financial Statements 2025. The TFSME deposits were not included in Net
debt.
(c) As disclosed in the Annual Report and Financial Statements 2025,
following the disposal of the Group's Banking operations in that year, Net
debt is now presented on a Group continuing operations basis including
Insurance and Money Services, rather than on a Retail basis including Retail
discontinued operations. The comparative for the 26 weeks ended 24 August 2024
has been restated.
Note 19 Analysis of changes in Net debt continued
The tables below set out the movements in liabilities arising from financing
activities:
Borrowings, excluding overdrafts Lease liabilities Net financing derivative financial instruments((a)) Share purchase obligations((b)) Liabilities from Group financing activities((b))
£m £m £m £m £m
At 22 February 2025 (6,094) (7,716) 602 - (13,208)
Cash flows arising from financing activities((c)) 11 348 (12) 773 1,120
Cash flows arising from operating activities:
Interest paid((c)) 141 191 3 - 335
Non-cash movements:
Fair value gains/(losses) (24) - 19 - (5)
Foreign exchange (71) (46) - - (117)
Interest income/(charge) (105) (195) (27) - (327)
Lease additions, terminations, modifications and reassessments - (373) - - (373)
Share purchase agreements - - - (1,200) (1,200)
At 23 August 2025 (6,142) (7,791) 585 (427) (13,775)
(a) Net financing derivatives comprise those derivatives which hedge the
Group's exposures in respect of lease liabilities and borrowings. Net
operating and investing derivatives of £(44)m (26 weeks ended 24 August 2024:
£(29)m), which form part of the Group's Net debt APM, are not included in
liabilities from Group financing activities.
(b) Share purchase obligations form part of the liabilities arising from the
Group's financing activities, but do not form part of Net debt. Cash flows
arising from financing activities exclude £48m (26 weeks ended 24 August
2024: £64m) cash received from employees exercising SAYE options.
(c) Cash flows arising from financing activities and Interest paid for Lease
liabilities and Net financing derivative financial instruments are presented
gross. In the Group cash flow statement, these amounts are presented net.
Borrowings, excluding overdrafts Lease liabilities Net financing derivative financial instruments((a)) Share purchase obligations((b)) Liabilities from Group financing activities((b))
£m £m £m £m £m
At 24 February 2024 (6,407) (7,622) 544 - (13,485)
Cash flows arising from financing activities((c)(d)) 280 296 (35) 575 1,116
Cash flows arising from operating activities:
Interest paid((c)(d)(e)) 142 186 15 - 343
Non-cash movements:
Fair value gains/(losses) (59) - 93 - 34
Foreign exchange 29 4 - - 33
Interest income/(charge)((e)) (108) (186) (50) - (344)
Acquisitions and disposals - (5) - - (5)
Lease additions, terminations, modifications and reassessments - (215) - - (215)
Share purchase agreements - - - (746) (746)
At 24 August 2024 (6,123) (7,542) 567 (171) (13,269)
(a)-(c) Refer to previous table for footnotes.
(d) Following the Group's change in presentation of economic hedges in the
Group cash flow statement, Cash flows arising from financing activities and
Interest paid within Net financing derivative financial instruments have been
re-presented by £1m each. See Note 20 for full details.
(e) Interest paid and Interest income/(charge) have been re-presented to
exclude interest on overdrafts.
Note 20 Change in accounting policy
Presentation of economic hedges in the Group cash flow statement
The Group now classifies economic hedges in the same cash flow statement
category as the underlying risk or hedged item and presents the related
derivative cash flow movements net with the cash flows from the underlying
risk being hedged. This simplification in presentation is consistent with the
existing presentation of derivatives in formal hedge accounting relationships
and is considered reliable and more relevant because the Group manages its
risk exposure in cash flow terms on a net, after-hedging basis, regardless of
whether the derivatives are in a formal hedge accounting relationship or not.
The Group previously presented such economic hedges on a gross basis in the
investing and financing sections, separately to the cash flows from the
underlying risk being hedged.
To the extent that any derivative cash flows do not have an associated risk
cash flow, such as for financing activities across the Group related to the
management of foreign exchange on intercompany loans or foreign currency
funding needs, these derivative cash flows will continue to be presented on a
gross basis in the financing section.
The comparatives for the period ended 24 August 2024 have been re-presented as
follows:
As reported
£m Adjustment Re-presented
£m £m
Interest paid (389) (1) (390)
Cash flows generated from/(used in) investing activities 2,043 (1) 2,042
Proceeds from sale of other investments 866 27 893
Investing cash inflows from derivative financial instruments 27 (27) -
Net cash generated from/(used in) investing activities 499 - 499
Repayment of capital element of obligations under leases (297) 1 (296)
Repayment of borrowings (622) 35 (587)
Financing cash inflows from derivative financial instruments 438 (414) 24
Financing cash outflows from derivative financial instruments (404) 379 (25)
Net cash generated from/(used in) financing activities (1,690) 1 (1,689)
Net increase/(decrease) in cash and cash equivalents 852 - 852
Free cash flow 1,261 - 1,261
Note 21 Contingent liabilities
There have been no material changes to the contingent liabilities of the Group
in the period.
In relation to the Equal Pay Claims, details of which are reported in Note 33
of the Annual Report and Financial Statements 2025, the employment tribunal
hearing of the material factor defences originally expected to commence in
September 2025 is now due to commence in March 2026.
Note 22 Events after the reporting period
There were no material events after the reporting period requiring disclosure.
Glossary - Alternative performance measures
Introduction
In the reporting of financial information, the Directors have adopted various
Alternative performance measures (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
measures.
Purpose
The Directors believe that these APMs assist in providing additional useful
information on the trends, performance and position of the Group. APMs aid
comparability between geographical units or provide measures that are widely
used across the industry. They also aid comparability between reporting
periods; adjusting for certain costs or incomes that derive from events or
transactions that fall within the normal activities of the Group but which, by
virtue of their size or nature, are adjusted, can provide a helpful
alternative perspective on year-on-year trends, performance and position that
aids comparability over time.
The alternative view presented by these APMs is consistent with how management
views the business, and how it is reported internally to the Board and
Executive Committee for performance analysis, planning, reporting,
decision-making and incentive-setting purposes.
Further information on the Group's adjusting items, which is a critical
accounting judgement, can be found in Note 4.
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.
All income statement measures are presented on a continuing operations basis.
Changes to APMs
There were no changes to APMs in the 26 weeks ended 23 August 2025.
Consistent with the APM changes set out in the Annual Report and Financial
Statements 2025, comparatives for the following APMs have been re-presented:
- Net debt has been refined to include the continuing Insurance and Money
Services business and exclude all discontinued operations. This reflects the
Group's segmental reporting structure (refer to Note 2) and ensures that all
continuing operations are included in the APM. Comparatives have been
restated.
- The Group no longer makes the distinction between Retail and Tesco Bank
since the disposal of the Group's Banking operations in the 52 weeks ended 22
February 2025. Accordingly, Retail free cash flow is now called Free cash
flow. Free cash flow does not include cash generated directly by the Insurance
and Money Services business but does include any ordinary cash dividends this
business pays to Tesco PLC.
- Free cash flow and Capex have been refined to also exclude refit costs
directly associated with store purchases (including those acquired through
business combinations). Such costs are a necessary and directly attributable
cost of such acquisitions. The impact is immaterial to both the current and
prior periods.
Group APMs
APM Closest equivalent IFRS measure Adjustments to reconcile to IFRS measure Definition and purpose
Income statement
Revenue measures
Sales Revenue Fuel sales - Excludes the impact of fuel sales made at petrol filling stations.
This removes volatilities outside of the control of management, associated
with the movement in fuel prices.
- This measure is presented on a country, segmental and Group
continuing operations basis.
- This is a key management incentive metric.
Growth in sales No direct equivalent Ratio N/A - Growth in sales is a ratio that measures year-on-year movement in
Group Sales for continuing operations for 26 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.
- This measure is presented at both actual and constant foreign
exchange rates.
Like-for-like (LFL) sales growth No direct equivalent Ratio N/A - LFL sales growth 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.
- It excludes revenue from dunnhumby, Insurance and Money Services and
mall rental income as this revenue is not directly linked to the sale of
goods.
- 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.
Profit measures
Adjusted operating profit Operating Adjusting items((b)) - Adjusted operating profit is the headline measure of the Group's
profit from continuing operations((a)) performance, based on operating profit from continuing operations before the
impact of adjusting items.
- Amortisation of acquired intangibles is included within adjusting
items because it relates to business combinations and does not reflect the
Group's ongoing trading performance (related revenue and other costs from
acquisitions are not adjusted).
- This measure is presented on a segmental and Group continuing
operations basis.
- This is a key management incentive metric.
Adjusted net Net finance costs Adjusting items((b)) - Adjusting items within net finance costs include net pension finance
finance costs
income/(costs) and fair value remeasurements on financial instruments. Net
pension finance income/(costs) are impacted by corporate bond yields, which
can fluctuate significantly and are reset each year based on external market
factors that are outside management's control. Fair value remeasurements are
impacted by changes to credit risk and various market indices, applying to
financial instruments resulting from liability management exercises, which can
fluctuate significantly outside of management's control. This measure helps to
provide an alternative view of year-on-year trends in the Group's net finance
costs.
Adjusted profit before tax Profit before Adjusting items((b)) - This measure is the summation of the impact of all adjusting items
tax on profit before tax. Refer to the APM Purpose section of the Glossary.
Adjusted operating margin No direct equivalent Ratio N/A - Adjusted operating margin is calculated as Adjusted operating profit
divided by revenue. Progression in Adjusted operating margin is an important
indicator of the Group's operating efficiency.
Adjusted diluted earnings per share Diluted Adjusting items((b)) - This metric shows the adjusted profit after tax from continuing
earnings per share from continuing operations operations 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 dilutive share options.
EBITDA (earnings before adjusting items, interest, tax, depreciation and Operating Adjusting items((b)) - This measure is widely used by analysts, investors and other users of
amortisation)
profit from continuing operations((a))
the accounts to evaluate comparable profitability of companies, as it excludes
Depreciation and amortisation the impact of differing capital structures and tax positions, variations in
tangible asset portfolios, and differences in identification and recognition
of intangible assets. It is used to derive the Net debt/EBITDA ratio, and
Fixed charge cover APMs.
Tax measures
Adjusted effective tax rate Effective tax rate Adjusting items((b)) - Adjusted effective tax rate is calculated as total income tax
credit/(charge) excluding the tax impact of adjusting items, divided by
Adjusted profit before tax. This APM provides an indication of the ongoing tax
rate across the Group.
(a) Operating profit is presented on the Group income statement and is a
generally accepted profit measure.
(b) Refer to Note 4 and the APM Purpose section of the Glossary for further
information on adjusting items.
APM Closest equivalent IFRS measure Adjustments to reconcile to IFRS measure
Definition and purpose
Balance sheet measures
Net debt No direct equivalent N/A - Net debt excludes the net debt of discontinued operations to reflect
the net debt obligations of the continuing business.
- Net debt comprises borrowings, lease liabilities and net derivative
financial instruments, offset by cash and cash equivalents, short-term
investments, joint venture loans, and interest and other receivables.
- It is a useful measure of the progress in generating cash and
strengthening of the Group's balance sheet position.
Net debt/EBITDA ratio No direct equivalent Ratio N/A - Net debt/EBITDA ratio is calculated as Net debt divided by the
rolling 12-month EBITDA. It is a measure of the Group's ability to meet its
payment obligations, showing how long it would take the Group to repay its
current Net debt if both Net debt and EBITDA remained constant. It is widely
used by analysts and credit rating agencies.
Fixed charge cover No direct equivalent Ratio N/A - Fixed charge cover is calculated as the rolling 12-month EBITDA
divided by the sum of net finance costs (excluding net pension finance costs,
finance charges payable on lease liabilities, capitalised interest and fair
value remeasurements on financial instruments) 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.
Capex Property, plant and equipment, intangible asset, and investment property Additions relating to property buybacks and store purchases - Capex excludes additions arising from business combinations,
additions, excluding those from business combinations
buybacks of properties (typically stores), purchases of store properties,
Additions relating to decommissioning provisions and similar items refits associated with business combinations and purchases of store
properties, as well as additions relating to decommissioning provisions and
similar items.
- Property buybacks and purchases of store properties are variable in
timing, with the number and value of transactions dependent on opportunities
that arise within any given financial year. Excluding property buybacks and
store property purchases therefore gives an alternative view of trends in
capital expenditure in the Group's ongoing trading operations.
- Additions relating to decommissioning provisions and similar items
are adjusted because they do not result in near-term cash outflows.
Return on capital employed (ROCE) No direct equivalent Ratio N/A - ROCE is Adjusted operating profit divided by the average of opening
and closing capital employed from continuing operations.
- Capital employed from continuing operations is defined as net assets
of the Group excluding: the pension deficit/surplus; net assets of the
disposal group and non-current assets classified as held for sale; current and
deferred tax balances and an adjustment to remove the impact of deferred tax
liabilities recorded against identified assets acquired in business
combinations; and Net debt.
- This metric represents the profit generated as a proportion of the
total average capital that the business has utilised in the period.
- Management believes this is a useful measure to assess performance.
Cash flow measures
Free cash flow No direct equivalent N/A - Free cash flow includes the following cash flows (excluding
Insurance and Money Services and adjusting cash flows):
- Continuing cash flows from operating activities of the
business.
- Investing cash flows relating to: the purchase of
property, plant and equipment (excluding property buybacks and store purchases
and refits associated with both store purchases and business combinations) and
investment property; the purchase of intangible assets; dividends received
from Insurance and Money Services (excluding special dividends); dividends
received from joint ventures and associates; and interest received.
- Financing cash flows relating to: market purchase of
shares net of proceeds from shares issued in relation to share schemes; and
repayment of obligations under leases.
- Directors and management believe this provides a view of free cash
flow generated by the Group's trading operations, excluding Insurance and
Money Services, that is more predictable and comparable over time, and
reflects the cash available to shareholders. Insurance and Money Services is
excluded because free cash flow is not a common metric within this industry.
- This is a key management incentive metric.
APMs: Reconciliation of income statement measures
As the incomes and expenses included in debt APMs are calculated using a
rolling 12-month period, the amounts for the 12 months to 23 August 2025 are
not disclosed in the notes to the condensed consolidated interim financial
statements for the current financial period.
Sales
A reconciliation from revenue to Sales is provided in Note 2.
Growth in sales and Like-for-like (LFL) sales growth
Continuing operations Notes 26 weeks ended 23 August 2025 26 weeks ended 24 August 2024
Revenue - current period (£m) 2,3 36,036 34,773
Revenue - prior period (£m) 34,773 33,801
Revenue growth 3.6% 2.9%
Include: Central Europe comparable days adjustment 0.1% -
Exclude: Fuel impact 1.4% 0.6%
Growth in sales at actual rate 5.1% 3.5%
Exclude: Foreign exchange - 0.5%
Growth in sales at constant rate 5.1% 4.0%
Exclude: Revenue from dunnhumby, Insurance and Money Services, and mall rental (0.3)% (0.6)%
income((a))
Exclude: Underlying net new space impact (0.3)% (0.5)%
Exclude: Impact of retail partnerships reclassification((b)) (0.2)% -
Like-for-like sales growth 4.3% 2.9%
a) From the start of the current financial year, mall rental income was
reclassified from cost of sales to revenue. The prior period revenue has not
been restated as amounts were immaterial. This has no impact on Like-for-like
(LFL) sales growth because mall rental income is excluded in both periods.
b) From the start of the current financial year, certain retail
partnerships income was reclassified from cost of sales to revenue. The prior
period revenue has not been restated as amounts were immaterial. Growth in
retail partnerships income has been excluded in the year of change to ensure a
like-for-like comparison and will be included in future reporting periods.
Adjusted operating profit and EBITDA
Continuing operations 52 weeks ended 23 August 2025 52 weeks ended 22 February 2025
£m £m
Operating profit 2,702 2,711
Exclude: Adjusting items 451 417
Adjusted operating profit 3,153 3,128
Include: Depreciation and amortisation before adjusting items 1,744 1,697
EBITDA 4,897 4,825
Adjusted profit before tax
A reconciliation of Adjusted profit before tax is provided in the Group income
statement.
Adjusted operating margin
A reconciliation of Adjusted operating margin is provided in Note 2.
Adjusted diluted earnings per share
A reconciliation of Adjusted diluted earnings per share is provided in Note 8.
Adjusted effective tax rate
Adjusted effective tax rate is provided in Note 6.
APMs: Reconciliation of balance sheet measures
Net debt
A reconciliation of Net debt is provided in Note 19.
Reconciliation from Free cash flow to Net debt
Notes 23 August 2025 24 August 2024
(restated((a)))
£m
£m
Opening Net debt 19 (9,454) (9,684)
Free cash flow 1,298 1,261
Other cash movements:
Own shares purchased for cancellation (773) (575)
Dividends paid to equity owners (627) (575)
Adjusting items included in operating cash flow activities (52) (52)
Repayments of capital element of obligations under leases 346 295
Interest paid on lease liabilities 193 187
Net other interest paid/(received) 72 66
Proceeds from sale of property, plant and equipment, investment property, 32 16
intangible assets and assets held for sale
Cash outflows attributable to property buybacks and store purchases (43) (30)
Proceeds from/(purchase of) other investments (76) 802
Cash and cash equivalents held to settle deposits from central bank((b)) 19 - (757)
Other cash movements 10 (27)
Non-cash movements in Net debt:
Fair value movements (68) 4
Foreign exchange movements (69) 21
Net interest charge (59) (72)
Non-cash movements in lease liabilities (614) (397)
Non-cash movement arising from acquisitions and disposals - (5)
Closing Net debt 19 (9,884) (9,522)
(a) As disclosed in the Annual Report and Financial Statements 2025,
following the disposal of the Group's Banking operations in that year, Net
debt is now presented on a Group continuing operations basis including
Insurance and Money Services, rather than on a Retail basis including Retail
discontinued operations. Comparatives have been restated. In addition,
comparatives been re-presented where applicable following the Group's change
in accounting policy for economic hedges. There is no impact on Net debt. See
Note 20 for further details.
(b) Net debt at 24 August 2024 is presented excluding the temporary benefit
of cash proceeds from the disposal of an investment portfolio in that period
by Insurance and Money Services. This was used in October 2024 to settle
deposits from the Bank of England's Term Funding Scheme with additional
incentives for small and medium-sized enterprises (TFSME), as was disclosed in
the Glossary - APMs: Reconciliation of cash flow measures in the Annual Report
and Financial Statements 2025. The TFSME deposits were not included in Net
debt.
Net debt/EBITDA ratio
Notes 23 August 2025 22 February 2025
£m £m
Net debt 19 9,884 9,454
EBITDA 4,897 4,825
Net debt/EBITDA ratio 2.0 2.0
Adjusted net finance costs and Fixed charge cover
52 weeks ended 52 weeks ended
23 August 2025 22 February 2025
£m £m
Net finance costs 571 492
Exclude: Net pension finance income/(costs) (25) (32)
Exclude: Fair value remeasurements of financial instruments (16) 76
Adjusted net finance costs 530 536
Exclude: Interest expense on lease liabilities* (386) (377)
Adjusted net finance costs, excluding interest expense on lease liabilities 144 159
Include: Total lease liability payments 1,006 980
Exclude: Discontinued operations total lease liability payments (1) (3)
1,149 1,136
EBITDA 4,897 4,825
Fixed charge cover (ratio) 4.3 4.2
* Interest expense on lease liabilities is presented gross of £12m
hedging impact (22 February 2025: £7m).
APMs: Reconciliation of balance sheet measures continued
Capex
Notes 23 August 2025 24 August 2024
£m £m
Property, plant and equipment additions* 9 547 422
Goodwill and other intangible asset additions* 152 133
Exclude: Additions from property buybacks (27) (22)
Exclude: Additions from store purchases and associated refits (6) (3)
Exclude: Additions from refits associated with business combinations (2) -
Exclude: Additions relating to decommissioning provisions and similar items 3 -
Capex 667 530
* Excluding amounts acquired through business combinations.
Return on capital employed (ROCE)
Notes 52 weeks ended 23 August 2025 52 weeks ended 22 February 2025
£m £m
Adjusted operating profit 3,153 3,128
Capital employed from continuing operations:
Net assets 10,805 11,662
Exclude: Pension deficit/(surplus) gross of deferred tax 17 163 251
Exclude: Non-current assets classified as held for sale 13 (123) (50)
Exclude: Net current tax (asset)/liability 47 (14)
Exclude: Deferred tax assets (52) (47)
Exclude: Deferred tax liabilities 586 503
Exclude: Adjustment to remove the impact of deferred tax liabilities recorded (133) (133)
against identified assets acquired in business combinations
Exclude: Net debt 19 9,884 9,454
Capital employed 21,177 21,626
Average capital employed 20,744 21,475
Return on capital employed (ROCE) 15.2% 14.6%
APMs: Reconciliation of cash flow measures
Free cash flow
Continuing operations excluding Insurance and Money Services Insurance and Money Services Tesco Group
26 weeks ended 23 August 2025 Before adjusting items Adjusting items Total Total Total
£m
£m
£m £m £m
Operating profit/(loss) 1,574 (58) 1,516 87 1,603
Depreciation and amortisation 866 40 906 9 915
Net impairment loss/(reversal) on property, plant and equipment, right of use - 9 9 - 9
assets, intangible assets and investment property
Defined benefit pension scheme payments (17) - (17) - (17)
Share-based payments 2 - 2 (1) 1
Other reconciling items((a)) 1 (2) (1) - (1)
Cash generated from/(used in) operations excluding working capital 2,426 (11) 2,415 95 2,510
(Increase)/decrease in working capital 408 (29) 379 1 380
Cash generated from/(used in) operations 2,834 (40) 2,794 96 2,890
Interest paid (385) - (385) - (385)
Corporation tax paid (226) - (226) (4) (230)
Net cash generated from/(used in) operating activities 2,223 (40) 2,183 92 2,275
Include the following cash flows generated from/(used in) investing
activities:
Purchase of property, plant and equipment and investment property((b)) (567) - (567) (1) (568)
Purchase of intangible assets (149) - (149) (2) (151)
Ordinary dividends received from Insurance and Money Services 50 - 50 (50) -
Dividends received from joint ventures and associates 2 - 2 - 2
Interest received 116 - 116 4 120
Include the following cash flows generated from/(used in) financing
activities:
Own shares purchased for share schemes, net of cash received from employees (63) - (63) - (63)
Repayment of capital element of obligations under leases (314) (31) (345) (1) (346)
Free cash flow 1,298
(a) Other reconciling items consist of individually immaterial items,
primarily relating to (profit)/loss arising on sale of property, plant and
equipment, investment property, intangible assets, assets classified as held
for sale and early termination of leases. Refer to the Group cash flow
statement.
(b) Total purchase of property, plant and equipment and investment property
in the Group cash flow statement of £(600)m (26 weeks ended 24 August 2024:
£(480)m), excluding £(32)m (26 weeks ended 24 August 2024: £(16)m) of store
buybacks, direct store purchases and refits associated with both direct store
purchases and business combinations.
APMs: Reconciliation of cash flow measures continued
Free cash flow
Continuing operations excluding Insurance and Money Services Insurance and Money Services Discontinued Tesco Group
operations
26 weeks ended 24 August 2024 Before adjusting items Adjusting items Total Total Total Total
£m
£m
£m £m £m £m
Operating profit/(loss) 1,555 (33) 1,522 90 40 1,652
Depreciation and amortisation 819 38 857 9 - 866
Net remeasurement (gain)/loss on non-current assets held for sale - - - - 44 44
Defined benefit pension scheme payments (14) - (14) - - (14)
Share-based payments 19 - 19 (2) 2 19
Fair value movements included in operating profit/(loss) - - - (3) 13 10
Other reconciling items((a)) 3 (10) (7) 4 - (3)
Cash generated from/(used in) operations excluding working capital 2,382 (5) 2,377 98 99 2,574
(Increase)/decrease in working capital 169 (47) 122 (124) 41 39
Cash generated from/(used in) operations 2,551 (52) 2,499 (26) 140 2,613
Interest paid((c)) (381) - (381) (8) (1) (390)
Corporation tax paid (176) - (176) (5) - (181)
Net cash generated from/(used in) operating activities 1,994 (52) 1,942 (39) 139 2,042
Include the following cash flows generated from/(used in) investing
activities:
Purchase of property, plant and equipment and investment property((b)) (464) - (464) - - (464)
Purchase of intangible assets (130) - (130) (5) (6) (141)
Dividends received from joint ventures and associates 2 - 2 - - 2
Interest received 136 - 136 - - 136
Include the following cash flows generated from/(used in) financing
activities:
Own shares purchased for share schemes, net of cash received from employees 17 - 17 - - 17
Repayment of capital element of obligations under leases((c)) (294) - (294) (1) (1) (296)
Free cash flow 1,261
(a)-(b) Refer to previous table for footnotes.
(c) As a result of the Group's change in presentation of economic hedges in
the Group cash flow statement, comparatives for Interest paid and Repayment of
capital element of obligations under leases have been re-presented. There is
no impact on the Free cash flow APM. See Note 20 for full details.
Glossary - Other
ESG
Environmental, social and governance.
MREL
Minimum requirements for own funds and eligible liabilities (European Banking
Authority).
MTN
Medium term note.
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.
Independent review report to Tesco PLC
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the 26 weeks ended 23
August 2025 which comprises the Group income statement, the Group statement of
comprehensive income/(loss), the Group balance sheet, the Group statement of
changes in equity, the Group cash flow statement and related notes 1 to 22
(pages 20 to 37).
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the 26 weeks ended 23 August 2025 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, England
1 October 2025
Appendices
Appendix 1
One-year like-for-like sales performance (exc. VAT, exc. fuel)
Like-for-like sales
H1 H2 FY Q1 Q2 HY
2024/25
2025/26
2025/26
2025/26
2024/25 2024/25
UK & ROI* 4.1% 4.1% 4.1% 5.1% 4.6% 4.9%
UK 4.0% 4.1% 4.0% 5.1% 4.6% 4.9%
ROI 4.7% 4.4% 4.6% 5.5% 4.0% 4.8%
Booker (1.9)% (1.6)% (1.8)% 2.0% 1.3% 1.7%
Central Europe 0.6% 3.8% 2.2% 4.1% 2.9% 3.4%
Like-for-like sales growth 2.9% 3.2% 3.1% 4.6% 4.0% 4.3%
* The 2024/25 UK & ROI figures have been restated to exclude Booker.
Refer to Note 2.
Appendix 2
Growth in sales (exc. VAT, exc. fuel)
Actual rates Constant rates
H1 H2 FY H1 H1 H2 FY H1
2024/25
2024/25
2024/25 2024/25 2025/26 2024/25 2024/25 2025/26
UK & ROI* 5.3% 4.6% 5.0% 5.6% 5.4% 4.8% 5.1% 5.6%
UK 5.4% 4.8% 5.1% 5.6% 5.4% 4.8% 5.1% 5.6%
ROI 3.6% 2.2% 2.9% 6.4% 5.6% 5.6% 5.6% 6.5%
Booker (1.7)% (0.3)% (1.0)% 2.4% (1.7)% (0.3)% (1.0)% 2.4%
Central Europe (4.2)% (1.9)% (3.0)% 4.4% 0.9% 4.0% 2.5% 5.0%
Growth in sales 3.5% 3.5% 3.5% 5.1% 4.0% 4.1% 4.0% 5.1%
* The 2024/25 UK & ROI figures have been restated to exclude Booker.
Refer to Note 2.
Country level revenue detail is provided in Note 3.
Appendix 3
UK sales area by size of store
23 August 2025 22 February 2025
Store size (sq. ft.) No. of stores Million sq. ft. % of total No. of stores Million sq. ft. % of total
sq. ft. sq. ft.
0-3,000 2,743 6.0 15.5% 2,716 5.9 15.4%
3,001-20,000 282 3.0 7.8% 281 3.0 7.7%
20,001-40,000 302 9.0 23.2% 302 9.0 23.3%
40,001-60,000 192 9.7 25.1% 192 9.7 25.2%
60,001-80,000 111 7.6 19.6% 111 7.6 19.6%
80,001-100,000 31 2.7 7.0% 31 2.7 7.0%
Over 100,000 6 0.7 1.8% 6 0.7 1.8%
Total* 3,667 38.7 100.0% 3,639 38.6 100.0%
* Excludes Booker and franchise stores.
Appendix 4
Actual Group space - store numbers
2024/25 Openings Closures/ Net gain/ As at 23 Repurposing/
year end
disposals
(reduction)((a)) August 2025 extensions((b))
Large 809 1 - 1 810 -
Convenience 2,094 24 (1) 23 2,117 -
Dotcom only 6 - - - 6 -
UK excluding One Stop 2,909 25 (1) 24 2,933 -
One Stop((c)) 730 7 (3) 4 734 -
UK((c)(d)) 3,639 32 (4) 28 3,667 -
ROI 182 3 - 3 185 -
UK & ROI((c)(d)) 3,821 35 (4) 31 3,852 -
Booker 190 - (1) (1) 189 -
Czech Republic((c)) 184 - (1) (1) 183 3
Hungary 198 1 (1) - 198 2
Slovakia((c)) 179 2 - 2 181 4
Central Europe((c)) 561 3 (2) 1 562 9
Group excluding franchise stores((c)) 4,572 38 (7) 31 4,603 9
UK (One Stop) 354 23 (10) 13 367 -
Czech Republic 114 1 (1) - 114 -
Franchise stores 468 24 (11) 13 481 -
Total Group 5,040 62 (18) 44 5,084 9
(a) The net gain/(reduction) reflects the number of store openings less the
number of store closures/disposals and, for sq. ft. tables, adjustments for
repurposing/extensions.
(b) Repurposing of retail selling space.
(c) Excludes franchise stores.
(d) The 2024/25 figures have been restated to exclude Booker. Refer to Note
2.
Actual Group space - '000 sq. ft.
2024/25 Openings Closures/ Repurposing/ Net gain/ As at 23
year end
disposals
extensions(b) (reduction)((a)) August 2025
Large 31,092 15 - - 15 31,107
Convenience 5,615 70 (3) - 67 5,682
Dotcom only 716 - - - - 716
UK excluding One Stop 37,423 85 (3) - 82 37,505
One Stop((c)) 1,205 13 (5) - 8 1,213
UK((c)(d)) 38,628 98 (8) - 90 38,718
ROI 3,572 39 - - 39 3,611
UK & ROI((c)(d)) 42,200 137 (8) - 129 42,329
Booker((e)) 7,653 - (12) - (12) 7,641
Czech Republic((c)) 4,085 - (3) (17) (20) 4,065
Hungary 5,316 3 (3) - - 5,316
Slovakia((c)) 3,179 12 - (13) (1) 3,178
Central Europe((c)) 12,580 15 (6) (30) (21) 12,559
Group excluding franchise stores((c)(e)) 62,433 152 (26) (30) 96 62,529
UK (One Stop) 509 32 (12) - 20 529
Czech Republic 103 1 (1) - - 103
Franchise stores 612 33 (13) - 20 632
Total Group((e)) 63,045 185 (39) (30) 116 63,161
(a)-(d) Refer to previous table for footnotes.
(e) The 2024/25 figures have been re-presented for sales area remeasurements.
Group space forecast to 28 February 2026 - '000 sq. ft
As at 23 August 2025 Openings Closures/ disposals Repurposing/ Net gain/ 2025/26
year end
extensions((b)) (reduction)((a))
Large 31,107 65 - 8 73 31,180
Convenience 5,682 123 (21) 3 105 5,787
Dotcom only 716 - - - - 716
UK excluding One Stop 37,505 188 (21) 11 178 37,683
One Stop((c)) 1,213 2 (60) - (58) 1,155
UK((c)(d)) 38,718 190 (81) 11 120 38,838
ROI 3,611 55 - 3 58 3,669
UK & ROI((c)(d)) 42,329 245 (81) 14 178 42,507
Booker 7,641 - - - - 7,641
Czech Republic((c)) 4,065 20 - - 20 4,085
Hungary 5,316 11 - (17) (6) 5,310
Slovakia((c)) 3,178 14 - 1 15 3,193
Central Europe((c)) 12,559 45 - (16) 29 12,588
Group excluding franchise stores((c)) 62,529 290 (81) (2) 207 62,736
UK (One Stop) 529 72 (5) - 67 596
Czech Republic 103 - - - - 103
Franchise stores 632 72 (5) - 67 699
Total Group 63,161 362 (86) (2) 274 63,435
Refer to previous table for footnotes.
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