Notes to financial statement.


Note 1 Segmental analysis of turnover, profit and net assets

The group's operations of food retailing and associated activities are carried out in the United Kingdom, France and Hungary. Continental European operations' results are for the year ended 31 December 1994.


				1995				1994
				------------------------------- -------------------------------
				Turnover	Profit	 Assets	Turnover	Profit	Assets
				m		m	m	m		m	m
				------------------------------- -------------------------------
Continuing operations
Tesco				9,410		589
Wm Low				245		11
				--------------------		
				9,655		600		
Wm Low integration costs	-		(39)
				--------------------	
Food retailing - 
United Kingdom			9,655		561	4,040	8,347		513	3,409
Food retailing - 
Rest of Europe			446		17	104	253		8	76
				------------------------------ ---------------------------------
				10,101				8,600
				------				-----
Operating profit				578				521
Net loss on disposal
of properties					(5)				(93)
Net interest (payable)
/receivable					(22)				7
					       -----	        		-----
Profit on ordinary 
activities before taxation			551				435
				               -----				-----		

Capital employed					4,144				3,485
Net borrowings (note 16)				(1,040)				(736)

							-------				-------
Net assets						3,104				2,749
							-------				-------

The analysis of capital employed by geographical area is calculated on net assets excluding net borrowings. Inter-segmental turnover between the geographical areas of business is not material. Turnover is disclosed by origin. There is no material difference in turnover by destination.
Note 2-Analysis of continuing operations
						1995					1994
		-------------------------------------   -------------------------------------
		Continuing	Acquisitions	Total	Continuing	Acquisitions	Total
		operations				operations		
		m		m		m	m		m		m
		--------------------------------------  -------------------------------------
Turnover	9,840		261		10,101	8,347		253		8,600
Cost of sales	9,025		273		9,298	7,640		238		7,878
		--------------------------------------  -------------------------------------

Gross profit	815		(12)		803	707		15		722
	
Administration 
expenses	185		15		200	171		7		178
Employee
profit sharing	25		-		25	23		-		23

		-------------------------------------  -------------------------------------
Operating 
profit		605		(27)		578	513		8		521
		-------------------------------------  -------------------------------------

Cost of sales includes warehouse and transportation costs and all store operating costs. 

The operating results of subsidiaries acquired during the year are analysed as 
follows:
									1995
									m
									----				
Operating profit of subsidiaries acquired during the year		12
Integration costs							(39)
									----
									(27)
									----	

Integration costs totalling 39m incurred in order to reorganise, restructure and integrate
 the operations of Wm Low comprise relaunch costs 9m, redundancy costs 9m, asset write
 downs 9m and other integration costs of 12m.

Note 3-Employee profit sharing This represents the amount allocated to the trustees of the profit sharing scheme and is based on the United Kingdom profit after interest before net loss on disposal of properties and taxation.


Note 4-Profit on ordinary activities before taxation

										1995	1994
Profit on ordinary activities is stated after charging the following:		m	m
										------------
Depreciation and amortisation							247	213
Operating lease costs								96	81
Auditors' remuneration (a)							-	-
Employment costs (note 5a)							1,001	861
Net loss on disposal of properties (b)						5	93
a) Auditors' remuneration amounted to 0.4m (1994 - 0.4m). The auditors also received 0.5m (1994 - 0.9m) in respect of non-audit services of which 0.2m (1994 - 0.4m) related to overseas operations. b) Net loss on disposal of properties has been arrived at after the offset of profits of 20m (1994 - 15m).


Note 5-Employment costs

										1995	1994
a) Employment costs during the year						m	m
										------------
Wages and salaries								899	770
Social security costs								64	56
Other pension costs (note 24)							38	35
										------------
										1,001	861
										------------
b) Number of persons employed
The average number of employees per week during the year was: UK 108,113 
(1994 - 90,926), Europe 3,346 (1994 - 2,413) and the average number of full-time
equivalents was: UK 68,552 (1994 - 60,199), Europe 2,915 (1994 - 2,175).

c) Directors' emoluments
Aggregate emoluments of the directors of the parent company were as follows:
										1995	1994
										000	000
										--------------	
Directors' emoluments								3,483	3,523
Performance related incentives (d)
- short term bonuses								860	418
- long term bonuses								573	348
Pension contributions
(including - 169,000 in respect of the Chairman (1994 - 151,000))		788	758
										--------------	
										5,704	5,047
										--------------

The emoluments, excluding pension contributions, of the Chairman, who
 was also the highest paid director, are analysed as follows:
										1995	1994
										000	000
										------------
Emoluments									678	635
Performance related incentives (d)
- short term bonuses								200	87
- long term bonuses								134	72
										------------
										1,012	794
										------------

Directors' aggregate emoluments, excluding pension contributions but including, where appropriate, payments under the performance related incentive scheme, fall within the following scales: Number of directors ------------------- 1995 1994 ------------------- From 05,001 to 10,000 1 - From 10,001 to 15,000 2+ 1 From 25,001 to 30,000 2 4 From 30,001 to 35,000 1 - From 35,001 to 40,000 1 1 From 70,001 to 75,000 1 - From 75,001 to 80,000 1 - From 230,001 to 235,000 - 1 From 245,001 to 250,000 1 - From 290,001 to 295,000 - 1+ From 295,001 to 300,000 - 1+ From 310,001 to 315,000 - 1+ From 335,001 to 340,000 - 1+ From 355,001 to 360,000 - 1+ From 435,001 to 440,000 - 1+ From 450,001 to 455,000 1+ - From 455,001 to 460,000 - 1+ From 480,001 to 485,000 2+ - From 565,001 to 570,000 1+ - From 575,001 to 580,000 1+ - From 610,001 to 615,000 - 1+ From 775,001 to 780,000 1+ - From 790,001 to 795,000 - 1+ From 1,010,001 to 1,015,000 1+ -

+Includes performance related incentives under the executive incentive scheme (see (d) below). Details of share options granted to directors are given in note 22.

d) Executive incentive scheme The executive incentive scheme was introduced in March 1993 and also includes the directors of the company's principal trading subsidiary, Tesco Stores Limited.

Short term share bonuses are awarded annually based on improvements in earnings per share and on the achievement of strategic corporate goals. The maximum short term bonus payable is 25% of salary which is augmented by a further 12% if the participants elect for the Trustees of the scheme to retain the fully paid ordinary shares awarded for a minimum period of two years conditional upon continuous service with the company.

Long term share bonuses are awarded annually based on improvements in earnings per share, achievement of strategic corporate goals and comparative performance against peer companies. The maximum long term bonus is 25% of salary. Shares awarded have to be held for a period of four years conditional upon continuous service with the company.


Note 6-Interest
										1995	1994
										m	m
										------------
Interest receivable and similar income on 
money market investments and deposits (c) (d)					64	54
										------------
Deduct interest payable on:
Short term bank loans and overdrafts repayable within 5 years			(48)	(33)
Finance charges payable on finance leases					(6)	(7)
9% Convertible capital bond 2005						(18)	(18)
4% Unsecured deep discount loan stock 2006 (a)					(7)	(7)
E.C.S.C. loans 1996-1999							(4)	(4)
10 3/8% Bonds 2002								(21)	(21)
1/8% Deep discount bond 2012 (b)						(7)	(7)
8 3/4% Bonds 2003								(17)	(2)
Interest capitalised								42	52
										------------
										(86)	(47)
										------------
										(22)	7
										------------	

a) Interest payable on the 4% unsecured deep discount loan stock 2006 includes 2m
(1994 - 2m) of discount amortisation.
b) Interest payable on the 1/8% deep discount bond 2012 includes 7m (1994 - 7m)
of discount amortisation.
c) Included within interest receivable is an amount of 4m (1994 - 2m) representing 
The increase in value during the period of the call option against the Tesco PLC 10K%
bonds 2002 (see note 13).
d) At the year end the company held interest rate swaps with a notional principal
amount off 495m (1994 - 410m). 
The substance of these agreements is to swap certain of the group's fixed rate 
borrowings into floating rate borrowings. 
The floating rates are reset every six months with reference to London Inter-Bank 
Offered Rates (LIBOR).
Swap agreements generated net income, included within net interest receivable, 
as follows:
										1995	1994
										m	m
										-------------
Net cash income									8	10
Amortisation of prior year gains (note 14)					5	2
										-------------
										13	12
										-------------

The swap agreements outstanding at the year end will continue to generate net income (including the amortisation of prior year gains) provided six month LIBOR is broadly less than 8.3% over the next three years and 8.6% over the following four years.


Note 7-Taxation
										1995	1994
										m	m
										-----------
United Kingdom taxation:
--Corporation tax at 33.0% (1994 - 33.0%)					177	127
--Prior year items								(10)	(8)
--Deferred taxation								(1)	15
										-----------
										166	134	
Overseas taxes									4	2
										-----------					
										170	136


Note 8-Dividends
										1995	1994
										m	m
										-----------
Declared interim	- 2.70p per share (1994 - 2.45p)			55	48
Proposed final		- 5.90p per share (1994 - 5.30p)			122	104
										-----------
										177	152
										-----------



Note 9-Earnings per share and fully diluted earnings per share

a)-Earnings per share and fully diluted earnings per share excluding integration costs and net loss on disposal of properties have been calculated in addition to the disclosures required by SSAP3 as amended by FRS3 since, in the opinion of the directors, this will allow shareholders to identify the results of the trading operations of the business.

b)-The calculation of earnings per share, including and excluding integration costs and net loss on disposal of properties, is based on the profit on ordinary activities after taxation and after minority interests divided by the weighted average number of ordinary shares in issue during the year of 2,009m (1994 - 1,960m).

c)-The calculation of fully diluted earnings per share, including and excluding integration costs and net loss on disposal of properties, is based on the profit on ordinary activities after taxation and after adding:

i)-the savings of interest net of corporation tax on the 9% convertible bonds assuming that they were converted in full into ordinary shares on the first day of the financial year.

ii)-the interest income net of corporation tax which would have arisen had all the various ordinary share options granted under the company+s various schemes been exercised on the first day of the financial year, or at the date granted if later, and the proceeds invested in 2 1/2% Consolidated Stock on that day.

The amount so derived has been divided by the number of ordinary shares in issue at the beginning of the year together with the weighted average number of ordinary shares assumed to have been issued as indicated above.


Note 10-Tangible fixed assets
						Total		Plant		Total
						land and	equipment
						buildings	fixtures &
								fittings and
								vehicles	
Cost						m		m		m
						------------------------------------------
At 26 February 1994				4,170		1,270		5,440
Currency translation				3		2		5
Additions at cost (a)				554		217		771
Purchase of subsidiary undertakings		263		59		322
						------------------------------------------
						4,990		1,548		6,538
Deduct disposals				27		30		57
						------------------------------------------
At 25 February 1995				4,963		1,518		6,481
						------------------------------------------



Depreciation and amortisation

At 26 February 1994				282		717		999
Currency translation				1		1		2
Charge for period				99		148		247
Purchase of subsidiary undertakings		18		32		50
						------------------------------------------
						400		898		1,298
Deduct disposals				3		18		21
						------------------------------------------
At 25 February 1995				397		880		1,277
						------------------------------------------



Net book value (b) (d)						
At 25 February 1995				4,566		638		5,204
At 26 February 1994				3,888		553		4,441


Capital work in progress included above (c)
At 25 February 1995				91		21		112
At 26 February 1994				179		21		200


Notes
a) Includes 29m (1994 - 35m) in respect of interest
capitalised net of tax relief of 13m (1994 - 17m) principally
relating to land and building assets.

b) Net book value includes capitalised interest, net of tax
relief, at 25 February 1995 of 254m (1994 - 236m).

Plant, equipment, fixtures and fittings and vehicles subject to
finance leases included in net book value is:

						Cost		Depreciation	Net book
										value
						m		m		m
						------------------------------------------
At 26 February 1994 				179		96		83
Movement in the period				19		21		(2)
						------------------------------------------
At 25 February 1995				198		117		81
						------------------------------------------

c) Capital work in progress does not include land.
d) The net book value of land and buildings comprises:

									1995		1994
									m		m
									---------------------
Freehold								3,852		3,313
Long leasehold - 50 years or more					522		474
Short leasehold - less than 50 years					192		101
									---------------------
At 25 February 1995							4,566		3,888
									---------------------


Note 11-Fixed asset investments
									Group		Company
								--------------- ---------------					
								1995	1994	1995	1994
								m	m	m	m
								--------------- ---------------
Subsidiary undertakings - shares at cost,
-less amounts written off (a)					-	-	449	192
Loans to group undertakings					-	-	3,000	2,750
Associated undertakings - at cost less provisions (b)		5	5	5	5
Other investments						1	-	-	-
								--------------- ---------------
								6	5	3,454	2,947
								--------------- ---------------


a) The company's principal operating subsidiary undertakings are:

					Business		Share of	Country of
					equity 			capital		incorporation
					--------------------------------------------------------------
Tesco Stores Limited			Food retail		100%		Registered in England
Tesco Property Holdings Limited		Property investment	100%		Registered in England
Tesco Insurance Limited			Insurance		100%		Guernsey
Tesco Stores Hong Kong Limited		Purchasing		100%		Hong Kong
Tesco Capital Limited			Finance			100%*		Jersey
Spen Hill Properties Limited		Property development	100%		Registered in England		
Ets. Catteau S.A.			Food retail		100%		France
Global T.H.				Food retail		57%		Hungary
Wm Low Supermarkets Limited		Food retail		100%		Registered in Scotland



All subsidiary undertakings operate in their country of
incorporation, apart from Tesco Capital Limited which is
controlled and managed in the United Kingdom.

Subsidiary undertakings marked * are owned directly by Tesco PLC.

b) The group has one associated undertaking, Shopping Centres
Limited, in which the group owns 50% of the allotted ordinary
and preference share capital (1994 - 50%). The main activity of
the company is property investment and it operates and is
registered in England.

The net borrowings of the associated undertaking, as at 25
February 1995, were as follows:							1995	1994
										m	m
										--------------
Cash and deposits								24	21
Term bank loan - repayable 1999							(48)	(48)
Debenture stock - repayable 2001						(33)	(32)
Other loans (10m from group undertakings)					(20)	(20)
										---------------
										(77)	(79)
										---------------



There is no recourse to group companies in respect of the
borrowings of the associated undertaking, apart from 2m

(1994 - 2m) which has been guaranteed by Tesco PLC (note 27).



Note 12-Debtors
							Group		Company
							------------- --------------		
							1995	1994	1995	1994
							m	m	m	m
							------------- --------------
Amounts owed by group undertakings			-	-	239	154
Prepayments and accrued income				34	35	245	210
Advance corporation tax recoverable			4	2	4	2
Other debtors						66	56	-	-
							------------- --------------
							104	93	488	366
							------------- --------------

Debtors falling due after one year included above:	4	2	4	2
							------------- --------------



Note 13-Investments
							Group		Company
							------------- --------------
							1995	1994	1995	1994
							m	m	m	m
							------------- --------------
Money market deposits (a)				128	86	98	67
Bonds and certificates of deposit
-(market value 3m, 1994 - 13m)				3	13	3	13
							------------- --------------
Money market investments and deposits			131	99	101	80
Own shares (b)						4	-	4	-
							------------- --------------
							135	99	105	80
							------------- --------------


a) Included within money market deposits is a call option amounting to 60m (1994 - 56m) which was purchased on normal commercial terms and which gives the company the right to acquire 100m of the Tesco PLC 10 3/8% bonds 2002.

It is exercisable at certain dates up to 28 January 2002 at an exercise price that is linked to the net present value of the remaining interest payable on these bonds. Accordingly, the exercise price reduces during the period up to 28 January 2002 resulting in an increase in the value of the call option. This increase in value is reflected in the carrying amount of the asset and is credited to interest receivable in the profit and loss account on an actuarial basis.

b) The company operates an employee share ownership plan whereby an employee trust acquires shares in the company for the benefit of group employees.


Note 14-Creditors - amounts falling due within one year
				 				Group		Company
								-------------- -------------
								1995	1994	1995	1994
								m	m	m	m
								-------------- -------------
Amounts owed to group undertakings				-	-	295	345
Bank loans and overdrafts (a)					298	8	878	505
Finance leases (note 19)					29	22	-	-
Trade creditors							723	593	-	-
Corporation tax (b)						171	118	36	3
Other taxation and social security				68	57	1	1
Other creditors							255	215	12	29
Accruals and deferred income (c)				115	119	9	4
Proposed final dividend						122	104	122	104
								-------------- ------------
								1,781	1,236	1,353	991
								-------------- ------------


a) Bank deposits at subsidiary undertakings of 614m (1994 - 505m) have been offset against borrowings in the parent company under a legal right of set-off.

b) The corporation tax liability represents the charge for the year after deducting tax relief for capitalised interest and advance corporation tax recoverable.

c) A prior year realised gain of 45m on terminated interest rate swaps is being spread over the life of replacement swaps entered into at the same time for similar periods. Accruals and deferred income include 5m (1994 - 5m) attributable to these realised gains with 33m (1994 - 38m) being included in creditors - amounts falling due after more than one year (note 15).


Note 15-Creditors - amounts falling due after more than one year

								Group           Company
								-------------- -------------
								1995    1994    1995    1994
								m      m      m      m
								-------------- -------------
4% Unsecured deep discount loan stock 2006 (a)         		75      73      75      73
Finance leases (note 19)                                        76      41      -       -
10 3/8% Bonds 2002 (b)                                     	200     200     200     200
1/8 % Deep discount bond 2012 (c)                               50      50      70      63
8 3/4% Bonds 2003 (d)                                  		200     200     200     200
E.C.S.C. loans 1996 - 1999 (e)                          	82      79      8       5
Other loans                                                     5       9       -       -
								-------------- -------------
								688     652     553     541
Amounts owed to group undertakings                      	-       -       200     200
Accruals and deferred income (note 14 (c))                      33      38      -       -
								-------------- -------------
								721     690     753     741
Convertible capital bond (note 17)                              200     200     -       -
								-------------- -------------
								921     890     753     741
								-------------- -------------



a) The 4% unsecured deep discount loan stock is redeemable at a par value of 125m in 2006.
b) The 10 3/8% bonds are redeemable at a par value of 200m in 2002.
c) The 1/8% deep discount bond is redeemable at a par value of 429m in 2012. The redemption value as at 25 February 1995 is 70m (1994 - 63m) against which a deposit balance with the same bank of 20m (1994 - 13m) has been offset under a legal right of set-off. To the extent that the outstanding balance on the bond exceeds 50m a subsidiary undertaking has agreed to continue to make these deposits. The bond will therefore never provide more than 50m of funding.
d) The 8 3/4% bonds are redeemable at a par value of 200m in 2003.
e) E.C.S.C. refers to the European Coal and Steel Community.


Note 16-Net borrowings
		 	         	         		Group		Company
								-------------- -------------	
								1995    1994    1995    1994
								m      m      m      m
								-------------- -------------
Due within one year
Bank and other loans                                            298     8       878     505
Finance leases                                                  29      22      -       -

Due within one to two years
Bank and other loans                                            74      -       -       -
Finance leases                                                  17      17      -       -

Due within two to five years
Bank and other loans                                            8       79      8       5
Finance leases                                                  50      16      -       -

Due wholly or in part by instalments after five years
Finance leases                                                  9       8       -       -

Due otherwise than by instalments after five years
Bank and other loans                                            530     532     545     536

Convertible capital bond                                        200     200     -       -
								-------------- -------------

Gross borrowings                                                1,215   882     1,431   1,046

Deduct:
Cash at bank and in hand                                       	44      47      -       -
Money market investments and deposits				131     99      101     80
								-------------- -------------
Net borrowings        	          				1,040   736     1,330   966
								-------------- -------------	


Note 17-Convertible capital bond

In July 1990 the group issued 200m of 9% convertible capital bonds. The convertible capital bonds are convertible into fully paid 9% exchangeable redeemable preference shares due 2005 in Tesco Capital Limited which are guaranteed on a subordinated basis by, and are exchangeable for fully paid ordinary shares in, Tesco PLC at an exchange price of 2.51 per ordinary share (after adjustment to take account of the 1991 rights issue).


Note 18-Provisions for liabilities and charges
							Amount provided		Potential amount
									     for deferred tax on
								           all timing differences
							----------------- -----------------------	
							1995    1994            1995    1994
							m      m              m      m
							----------------- -----------------------
Deferred taxation - group
Excess capital allowances over depreciation             19      19              233     137
Capital gains deferred by rollover relief               -       -               12      22
Short term timing differences                           74      75              74      75
							----------------- -----------------------
							93      94              319     234
							----------------- -----------------------


Deferred taxation balances in Tesco PLC relate to short term timing differences. Where possible taxation on capital gains has been or will be deferred by rollover relief under the provisions of the Taxes Acts.


Note 19-Leasing commitments

a) Finance leases

The future minimum finance lease payments to which the group was committed at 25 February 1995 and which have been guaranteed by Tesco PLC are:

                                                                  		m
										----
Gross rental obligations                                                        138
Deduct finance charges allocated to future periods                              33
										----
										105
										----

										1995    1994
										m      m
										-------------
Net amounts payable are:                                                
Within one year                                                         	29      22
Between one and five years                                                      67      33
After five years                                                                9       8
										-------------
										105     63
										-------------


b) Operating leases

Group commitments during the year to 24 February 1996 in terms
of lease agreements expiring are as follows:


									1995    1994
									m      m
									------------
Within one year                               		                1       1
Between one and five years                                              8       6
Beyond five years                                                       91      82
									100     89
									------------



Note 20-Called up share capital

Authorised: 135,500,000 (1994 -135,500,000)      		Ordinary shares of 5p each
								----------------------------
Allotted, issued and fully paid:                                Number          	m
								----------------------------
Issued at 26 February 1994                                      1,964,565,717           98
Acquisition of Wm Low & Company PLC                     	72,965,971              4
Scrip dividend election                                 	5,203,073               -
Share options exercised                                		15,509,446              1
								----------------------------
Issued at 25 February 1995                                      2,058,244,207           103
								----------------------------

The company issued 72,965,971 ordinary shares at a market value of 247 1/2p on 2 September 1994 in partial consideration for the purchase of Wm Low & Company PLC (note 29).

Between 25 February 1995 and 10 April 1995, options on 219,905 ordinary shares and 690,629 ordinary shares have been exercised under the terms of the savings-related share option scheme (1981) and the executive share option scheme (1984) respectively.

As at 25 February 1995 the directors were authorised to purchase up to a maximum in aggregate of 205,824,420 ordinary shares.


Note 21-Share options

a) Company schemes

The company had three principal share option schemes in operation during the year:

i) The savings-related share option scheme (1981) permits the grant to employees of options in respect of ordinary shares linked to a building society/bank save-as-you-earn contract for a term of five years with contributions from employees of an amount between 10 and Z250 per month. Options are capable of being exercised at the end of the five year period at a subscription price not less than 80% of the middle market quotation of an ordinary share immediately prior to the date of grant.

ii) The executive share option scheme (1984) permitted the grant of options in respect of ordinary shares to selected executives. The scheme expired after ten years on 9 November 1994. Options were generally exercisable between three and ten years from the date of grant at a subscription price determined by the Board but not less than the middle market quotation within the period of 30 days prior to the date of grant. Some options have been granted at a discount of 15% of the standard option price but the option holder may only take advantage of that discount if, in accordance with investor protection ABI guidelines, certain targets related to earnings per share are achieved.

iii) The executive share option scheme (1994) was adopted on 17 October 1994. The principal difference between the new scheme and the previous scheme is that the exercise of options will normally be conditional upon the achievement of a specified performance target related to the annual percentage growth in earnings per share over any three year period. There will be no discounted options granted under the new scheme. To date there have not been any options granted to relevant executives.

The company has granted outstanding options in connection with the two schemes as follows:

Savings-related share option scheme (1981)


Date of grant                                   Number of               Shares          Subscription
						executives and          under option    price 
						employees               25.02.95        (pence)
-----------------------------------------------------------------------------------------------
03.11.89                                        367                     467,375 	154.3
01.06.90                                        4,066                   5,092,240       152.3
24.05.91                                        5,859                   4,826,668       220.0
24.10.91                                        6,756                   7,370,995       204.0
29.10.92                                        9,879                   12,897,110      174.0
22.10.93                                        12,170                  13,646,275      161.0
26.10.94                                        17,685                  17,574,005      185.0


Executive share option scheme (1984)
Date of grant					Number of	Shares		Subscription
						executives	under option	price
								25.02.95	(pence)
---------------------------------------------------------------------------------------------
02.08.85                                        5               18,036          79.2
16.12.85                                        1               7,729           95.4
21.07.86                                        2               69,561          122.8
06.07.87                                        113             1,026,055       177.9
03.06.88                                        2               47,086          143.6
02.06.89                                        3               90,392          165.0
01.11.89                                        1,101           4,903,682       192.1
29.05.90                                        10              290,163 	190.2
22.10.90                                        4               108,281 	214.5
17.05.91                                        61              2,411,831       274.0
22.10.91                                        3               30,000          254.0
29.05.92                                        690             9,925,522       277.0
29.10.92                                        10              621,705 	217.0
27.05.93                                        20              975,297 	217.0
11.10.93                                        4               190,164 	210.0
10.06.94                                        597             5,885,312       210.0
12.08.94                                        1               157,124 	243.0
29.09.94                                        1               883,250 	232.0

The subscription price and number of shares have been adjusted as a result of the rights issue in 1991 and the capitalisation issue in 1987 as appropriate.


Note 22-Directors' interests Executive share options exercised by directors in the financial year

		Number of shares at exercise price (pence)                      Value realised
		------------------------------------------			--------------

										Price at  1995    1994
										exercise                
				177.9   143.6   165.0   192.1   190.2   TOTAL   (pence)	 000   000
-----------------------------------------------------------------------------   ------- -------------    
Sir Ian MacLaurin      		101,257 153,423 181,859 309,037 63,095  808,671 233.5   474	-
Mr V W Benjamin 		22,563  55,792  48,495  -       -       126,850 227.0   88      -
Mr A D Malpas  			78,796  167,275 121,239 211,868 52,579  631,757 233.5   388     -
Mr T P Leahy   			23,468  37,855  38,252  97,744  18,307  215,626 243.5   143     -
Mr R S Ager    			17,443  10,096  11,753  94,785  43,886  177,963 248.0   111     -
Mr D E Reid    			38,274  147,751 72,744  145,593 63,095  467,457 248.0   359     -

Date of grant                 	060787 	030688 	020689 	011189 	290590

The value realised from shares acquired on exercise is the difference between the fair market value at exercise and the exercise price of the options. Each individual director exercised all their options on the same day. None of the other directors exercised share options under the executive scheme during the year or in the previous year although Mr T J R Mason and Mrs L James exercised options in the previous year before they were appointed to the Board.


Share options held by directors and not exercised at 25 February 1995
Executive share option scheme (1984)    Number of shares at exercise price (pence)
-------------------------------------------------------------------------------------------------------
			177.9   192.1   190.2   214.5   274.0   217.0+  217.0+  210.0*+	243.0*+	232.0*+	TOTAL
------------------------------------------------------------------------------------------------------- ---------
Sir Ian MacLaurin       -       -       -       -       307,231 -       27,650  701,040 -       -       1,035,921
Mr V W Benjamin 	-       124,780 42,063  -       108,036 -       -       -       -       -       274,879
Mr A D Malpas   	-       -       -       -       239,622 -       20,277  538,778 -       -       798,677
Mr T P Leahy   		-       -       -       -       50,433  82,949  68,203  139,048 157,124 -       497,757
Mr R S Ager   	 	-       -       -       -       61,870  92,165  68,204  100,952 -       142,446 465,637
Mr J Gildersleeve	-       -       42,064  -       163,532 -       14,747  320,911 -       14,656  555,910
Mrs L James   		5,151   -       -       6,036   54,722  -       29,340  62,018  -       57,084  214,351
Mr T J R Mason  	-       -       -       -       115,079 -       -       38,619  -       17,333  171,031
Mr D E Reid     	-       -       -       -       167,891 -       14,746  15,238  -       344,818 542,693
Mr J M Wemms   		22,878  78,006  52,579  -       110,479 102,641 36,866  116,191 -       -       519,640

Date exercisable	060790  011192  290593  221093  170594  291095  270596 	270596  100697  120897  290997


Date of expiry 7 years from date exercisable

*Options granted in the year

+One quarter of the options granted at 217p, 210p, 243p and 232p may be exercised at 185p, 179p, 207p and 198p respectively, except in the case of Sir Ian MacLaurin, providing targets related to growth in earnings per share are achieved in accordance with ABI guidelines. If the targets are not met the option holders retain the right to exercise the option at the higher price.

Savings-related share option scheme (1981)      Number of shares 		Value realised 
------------------------------------------------------------------------------  --------------
			As at   Granted Exercised       As at   Exercise price  1995    1994
		      26 Feb 94                       25 Feb 95       (pence) 	000    000
--------------------------------------------------------------- --------------  -------------- 
Sir Ian MacLaurin       10,916  3,729   4,666   	9,979   174.0 - 185.0   4       -
Mr V W Benjamin 	10,675  5,594   6,999   	9,270   185.0 - 204.0   6       -
Mr A D Malpas   	10,916  3,729   4,666   	9,979   174.0 - 185.0   4       -
Mr T P Leahy    	10,766  5,594   7,090   	9,270   185.0 - 204.0   7       -
Mr R S Ager     	10,294  1,864   -       	12,158  154.3 - 204.0   -       4
Mr J Gildersleeve       10,916  3,729   4,666   	9,979   174.0 - 185.0   4       -
Mrs L James     	10,575  3,729   4,757   	9,547   161.0 - 204.0   4       2
Mr T J R Mason  	11,083  3,729   4,666   	10,146  152.3 - 185.0   4       -
Baroness O'Cathain      9,191   -       -       	9,191   000.0 - 204.0   -       -       
Mr D E Reid     	10,175  1,864   2,333   	9,706   174.0 - 204.0   2       -       
Mr J M Wemms    	10,766  5,594   7,090   	9,270   185.0 - 204.0   6       -

The savings-related share option scheme subscription price was 185p and the option matures in February 2000.

Between 25 February 1995 and 10 April 1995 there have been no changes in the number of share options held by the directors.

The disclosable interests of the directors, including family interests, were as follows:



				25 February 1995       		 26 February 1994
				--------------------------	--------------------------
				Ordinary	Options 	Ordinary 	Options
				shares          to acquire      shares          to acquire
						ordinary                        ordinary
						shares                          shares
----------------------------------------------------------      --------------------------
Beneficial
Sir Ian MacLaurin               273,969 	1,045,900       188,864 	1,154,468
Mr V W Benjamin                 130,807 	284,149 	114,883 	412,404
Mr J A Gardiner                 17,775  	-               17,342          -
Mr A D Malpas                   192,661 	808,656 	125,814 	902,572
Mr T P Leahy                    103,375 	507,027 	92,024          427,977
Mr R S Ager                     63,324          477,795 	30,626          410,496
Mr J Gildersleeve               74,641          565,889 	29,024          231,259
Mrs L James                     30,545          223,898 	14,018          105,824
Dr M G Jones                    2,097           -               2,023           -
Mr T J R Mason                  29,669          181,177 	12,004          126,162
Baroness O'Cathain              4,197           9,191           4,048           9,191
Mr G F Pimlott                  7,776           -               7,500           -
Mr D E Reid                     144,676 	552,399 	81,591          660,269
Mr J M Wemms                    53,276          28,910          35,074          414,215

Non-beneficial
Sir Ian MacLaurin               93,075          -               93,075          -
In addition the directors are beneficiaries of the Tesco Employee Trust which held 1,500,000 ordinary shares at 25 February 1995.

Options to acquire ordinary shares shown above comprise options under the executive share option scheme (1984) and the savings-related share option scheme (1981) (note 21).

Between 25 February 1995 and 10 April 1995 there have been no changes in the number of shares held by the directors.

Share bonuses awarded to directors under the executive incentive scheme (note 5(d)) are included in the directors+ interests shown above. The shares on allocation are held in trust and released to directors after two years, in the case of short term share bonuses or four years for long term share bonuses, both conditional on continuous service with the company.


Note 23-Reserves

								Group           Company
								------------	------------
								1995    1994    1995    1994
								------------	------------
a) Share premium account                                        m      m      m      m
At 26 February 1994                                             940     924     940     924
Acquisition of Wm Low & Company PLC                     	177     -       177     -
Premium on issue of shares less costs                           24      8       24      8
Scrip dividend election                                	 	11      8       11      8
								------------	------------
At 25 February 1995                                             1,152   940     1,152   940
								------------	------------

b) Other reserves
At 25 February 1995 and 26 February 1994                        40      40      -       -
								------------	------------

Other reserves comprise a merger reserve arising on the
acquisition of Hillards plc in 1987.

								Group           Company
								-------------	-------------
								1995    1994    1995    1994
								m      m      m      m
								-------------	-------------
c) Profit and loss account
At 26 February 1994                                             1,671   1,632   557     513
Goodwill arising on acquisition of subsidiary
undertakings    						(65)    (108)   -       -
Gain on foreign currency translation                            -       1       -       -
Retained profit for the financial year                          203     146     50      44
								-------------	-------------
At 25 February 1995                                             1,809   1,671   607     557
								-------------	-------------

In accordance with section 230 of the Companies Act 1985 a profit and loss account for Tesco PLC, whose result for the year is shown above, has not been presented in these accounts.

The cumulative goodwill written off against the reserves of the group as at 25 February 1995 amounted to 367m (1994 - 302m).


Note 24-Pension commitments

The group operates a defined benefit pension scheme for full-time employees, the assets of which are held as a segregated fund, administered by trustees.

The pension cost relating to the scheme is assessed in accordance with the advice of an independent qualified actuary using the projected unit method. The latest actuarial assessment of this scheme was at 5 April 1993. The assumptions which have the most significant effects on the results of the valuation are those relating to the rate of return on investments and the rate of increase in salaries and pensions. It was assumed that the investment return would be 9% per annum with dividend growth of 4 1/2% per annum, that salary increases would average 6 1/2% per annum and that pensions would increase at the rate of 4% per annum.

At the date of the latest actuarial valuation, the market value of the scheme's assets was 480m and the actuarial value of these assets represented 111% of the benefits that had accrued to members, after allowing for expected future increases in earnings.

Benefit improvements to members have been agreed with the trustees which have resulted in an increased company cost. This increasing ongoing cost has been offset by the amortisation of the surplus as a level percentage of pay over nine years.

The pension cost of this scheme to the group was 29m (1994 - 28m).

The group also operates a defined contribution pension scheme for part-time employees which was introduced on 6 April 1988. The assets of the scheme are held separately from those of the group, being invested with an insurance company. The pension cost represents contributions payable by the group to the insurance company and amounted to 8m (1994 - 6m). There were no material amounts outstanding to the insurance company at the year end.

Following the European Court judgement in relation to part-time pension rights, the group is not expected to have any material liability in relation to part-time employees' pensions.

The group also operates defined contribution schemes in France. The contributions payable under these schemes of 1m (1994 - 1m) have been fully expensed against profits in the current year.


Note 25-Post-retirement benefits other than pensions

The company operates a scheme offering post-retirement healthcare benefits. The cost of providing for these benefits has been accounted for on a basis similar to that used for defined benefit pension schemes.

The liability as at 27 February 1993 of 8m, which was determined in accordance with the advice of qualified actuaries, is being spread forward over the service lives of relevant employees. A provision of 2m (1994 - 1m) is being carried in the balance sheet reflecting:

										1995    1994
										m      m
										------------
At 26 February 1994                                                             1       -
Charge to profit and loss account                                               1       1
Cash payments made                                                              -       -
										------------	
										2       1
										------------

It is expected that payments will be tax deductible, at the
company's tax rate, when made.


Note 26-Capital commitments

At 25 February 1995:
a) There were commitments for capital expenditure of approximately 223m (1994 - 395m).
b) Capital expenditure authorised by the Board, but not contracted for, amounted to 248m (1994 - 328m).


Note 27-Contingent liabilities

Certain bank loans and overdraft facilities of associated undertakings have been guaranteed by Tesco PLC. At 25 February 1995, the amounts outstanding on these facilities were 2m (1994 - 2m).


Note 28-Reconciliation of operating profit to net cash inflow from operating activities

  				                                                1995    1994
										m      m
										------------
Operating profit                                                                578     521
Depreciation and amortisation                                           	247     213
Increase in stock                                                               (105)   (16)
Increase in debtors                                                             (3)     (11)
Increase in trade creditors                                                     111     31
Increase in other creditors                                                     50      80
Miscellaneous items                                                             (6)     3
										------------
Net cash inflow from operating activities                                       872     821
										------------


Note 29-Acquisitions

The company acquired a controlling interest in the Hungarian food retailer Global TH ('Global') on 28 June 1994.

On 2 September 1994 the company also acquired the UK food retailer Wm Low & Company PLC ('Wm Low'). Wm Low results from this date until 25 February 1995 have been consolidated within the group profit and loss account. In the year ended 2 September 1994 the Wm Low group made a profit after taxation of 15m (1993 - 17m).

During the year the group also acquired the remaining ordinary share capital of Ets. Catteau S.A. ('Catteau') for a consideration of 9m, increasing its holding from 95% to 100%.

All of the group's acquisitions have been accounted for using acquisition accounting.

The acquisitions of Global, Wm Low and the remaining share capital of Catteau have been consolidated into the Tesco group balance sheet as follows:

					Balance sheet at acquisition
					----------------------------    
					Wm Low  	Other  	Fair value      Fair value
								adjustments     balance sheet
					m              m      m		m
					---------------------   -----------	------------
Fixed assets                            240             5       27              272
Working capital                 	(13)            1       (2)             (14)
Taxation                                (2)             -       -               (2)
Net short term borrowings               (51)            19      -               (32)
Minority interest                       -               (8)     -               (8)
					--------------------	------------	------------
Shareholders' funds                     74              17      25      	216
					--------------------	------------
Goodwill                                                                        65
										------------	
Total purchase consideration                                                    281
										------------

The purchase consideration for Wm Low includes 181m that was settled by the issue of ordinary shares in Tesco PLC.

The remaining consideration for Wm Low and other acquisitions was settled by cash of 100m.

The net outflow of cash and cash equivalents for the purchase of subsidiary undertakings comprises:


										m
										----
Cash consideration                                                              100
Cash at bank and in hand acquired                                               (26)
Bank overdrafts of acquired subsidiary undertakings                             58
										----
										132
										----

Fair values at acquisition, total purchase consideration and
goodwill are analysed as follows:


						Fair value      Total purchase          Goodwill
						balance sheet   consideration   
						m              m                      m
						-------------	--------------	     -----------
Wm Low                                  	199             257                     58
Global                                          14              15                      1
Catteau                                 	3               9                       6
						-------------   --------------	     -----------	
						216             281                     65
						-------------   --------------	     -----------


Fair value adjustments

All fair value adjustments relate to the acquisition of Wm
Low.              		                                         m
									------
Revaluation (a)                                                        	27
Accounting policy alignment                                           	(1)
Other                                                                	(1)
									-----	
								     	25
									-----

a) The principal adjustment relates to the revaluation of the property portfolio totalling 30m following advice from independent chartered surveyors.

There were no provisions for reorganisation or restructuring made in the accounts of Wm Low in the year ended 2 September 1994.


Note 30-Analysis of changes in financing during the year

							Share capital           Net other
							(including              borrowings
							premium)                and finance                                                                     lease
										obligations
							m                      m
							-----------------------------------
At 26 February 1994                                     1,038                   792
Cash inflow from financing                              25                      72
Shares issued to acquire subsidiary undertaking    	181                     -
Scrip dividend election         	                11                      -
							-----------------------------------
At 25 February 1995                                     1,255                   864
							-----------------------------------

Note 31-Analysis of the balances of cash and cash equivalents as shown in the balance sheet

						                                1995    1994
										m      m
										----------


Cash at bank and in hand                                                        44      47
Money market investments and deposits                                   	131     99
Bank loans and overdrafts                                                       (298)   (8)
										------------	
										(123)   138
Less: Deposits exceeding three months to maturity when acquired			(53)	(82)
										------------
										(176)   56
										------------


Note 32-Analysis of changes in cash and cash equivalents during the year
										1995	1994	
										m      m
										------------
At 26 February 1994                                                             56      60
Net cash outflow                                                                (232)   (4)
										------------
At 25 February 1995 (note 31)                                           	(176)   56
										------------	

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