Fully diluted earnings per share (excluding Wm Low integration costs and net loss on disposal of properties) rose by 6.9% to 20.1p. The Board has proposed a final dividend of 5.9p to take the total net dividend for the year to 8.6p per share. This represents an increase of 11% over last year and leaves dividend cover at 2.3 times. The trend of dividends and earnings is shown in Chart 3.

Shareholders' funds rose by £355m to £3,104m - £203m from retained profits and £217m from new shares issued, principally in connection with the acquisition of Wm Low, being offset by £65m goodwill written off on acquisitions.

Return on shareholders' funds increased to 20.3% as a result of our strong trading performance and reductions in the capital cost of new stores. Costs are expected to fall further for stores opening in the next three years, reflecting lower land acquisition costs being negotiated. If new stores continue to achieve their sales projections, corporate returns are therefore targeted to improve from the current level. Our strategy of opening smaller supermarkets and Metro stores also means that new stores are now having less effect on the sales of existing stores. This should have a positive effect on returns.

At the end of the year, the Tesco share price was 252p compared with 223.5p at the start of the year. During this period, the highest price was 255p, the lowest 202p, and the shares outperformed the FTSE-100 index by 21.8%.