This has been a year of significant progress for Tesco.
We have continued to grow the business profitably in the UK, in trading conditions which have been challenging for the industry. Tightened consumer spending and low inflation have meant that we have had to work even harder to drive sales ahead of the sector and manage our costs to ensure that good sales growth has delivered good profits growth. We have achieved this by remaining focused on our customers, through the drive and determination of our people and by investing in our other strategic assets, like our stores.

We have also grown the business further internationally.
Four years ago we became the leader in a market of 59 million people – the UK. We now operate in eight countries with a combined population of nearly 250 million, providing a large base for additional sales and profit growth in the future.

In my review last year, I introduced the core purpose of the Tesco business: 'continually increasing value for customers, to earn their lifetime loyalty'. This remains the focus of everything we do, in improving the shopping experience, running our operations better for customers, simpler for staff and cheaper for Tesco, enabling us to grow profits and dividends for shareholders and to reward our people for a job well done. The remainder of this year's Annual Review looks at the progress we have made on these objectives.

In the rest of my review, I will focus on our three key strategic assets: our customers, our people and our stores.

Our customers
We now serve over two million customers every day and are constantly striving to improve the shopping trip for them. In the UK, Clubcard remains important for all our 10 million members and, during the year, customers received over £260m-worth in vouchers and product-specific coupons. Clubcard has also been successfully launched in our Irish stores.

We have continued to give customers lower prices. Having reduced prices last summer, we launched a further price initiative 'We've Cut Our Prices Again' in February 1999. Together, these represent a full year investment of around £100m. This is consistent with our long-term strategy of creating greater value for customers.

We have again invested in service through employing further staff at our checkouts, opening more service counters and extending store trading hours.

Improving product choice for our customers has been another significant area of development this year. We have made shopping more convenient for customers by extending our food and non-food ranges. We have brought many branded products into our stores this year, such as Fujitsu PCs, Vodafone mobile phones and Levi jeans, to meet the demands from our customers.

Our people
We now employ over 200,000 people world-wide. Our people are key to delivering our strategy, and their achievements this year have been significant. We are committed to developing our staff and 10,000 are on development programmes, enhancing their skills and providing Tesco with managers for the future.

It is good to see that over 70,000 of our staff are now shareholders and 106,000 are eligible for profit sharing this year, increasing their personal wealth as the company moves forward.

Our stores
We now have 821 stores world-wide and over 21 million sq ft of selling space in eight countries. Within the UK we opened 25 new stores this year in a number of different formats, including Extras, Superstores, Metros and Expresses. We also improved existing stores including 18 major refits and 18 extensions. A further 26 stores will open next year. In Ireland, the rebranding of stores to Tesco continues to help drive strong trading. We opened six hypermarkets in Central Europe this year along with our first new opening in Thailand. These stores show good growth and we plan to open a further 14 hypermarkets in the year ahead. Our international store development will result in 30% of our selling space located overseas by the end of the new financial year.

Competition Commission
On 8 April 1999, the Director General of Fair Trading announced the referral of the grocery industry to the Competition Commission. The reference followed an inconclusive eight month inquiry by the Office of Fair Trading. We have not allowed this to affect our business.

We have welcomed this inquiry. We believe the Competition Commission will confirm that we are highly competitive and we do not expect them to reach any conclusion that might prevent us from continuing to deliver value for both our customers and our shareholders. Tesco is the UK's leading food retailer because customers like what we do.

Looking ahead
Tesco has never been in better shape. Our core UK business has proven to be strong and has responded well to challenging conditions. We are developing our business here to grow, in food, non-food and financial services. Overseas we are developing our business to provide a strong base for further growth.