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Corporate Governance

Directors' Report on Corporate Governance

Tesco PLC is committed to the highest standards of corporate governance as we recognise that strong governance is crucial in helping the business to deliver its strategy, generating shareholder value and safeguarding our shareholders’ long-term interests.

Below Board level, the company fosters a strong culture of good governance, including maintaining high ethical standards and strong personal integrity. This is formalised in the Group Code of Business Conduct which sets out our expectations of employees clearly. All businesses within the Group are required to monitor their compliance with the Group governance framework and this information is reviewed at Board level.

Compliance with the Combined Code
The Combined Code on Corporate Governance sets out guidance in the form of principles and provisions on how companies should be directed and controlled to follow good governance practice. The Financial Services Authority (FSA) requires companies listed in the UK to disclose, in relation to Section 1 of the Combined Code, how they have applied the principles and whether they have complied with its provisions throughout the financial year. Where the provisions have not been complied with companies must provide an explanation for this.

The Board considers that Tesco PLC complied in full with the Combined Code principles of Corporate Governance and Code of Best Practice for the whole of the year ended 27 February 2010, with the exception of provision A.3.2, in respect of which the company was not in compliance for part of the year. Provision A.3.2 requires that at least half of the Board, excluding the Chairman, should comprise Non-executive Directors determined by the Board to be independent. The Board recognises the importance of a balanced board with an appropriate level of independence. Due to unexpected changes to the Board in the previous year, with the resignation of Carolyn McCall and Mervyn Davies as Non-executive Directors, the Board was not in balance at the beginning of the year. At that stage, Ken Hanna’s impending appointment to the Board had already been announced, and he joined the Board with effect from 1 April 2009, at which point the Board became balanced and once again fully compliant with provision A.3.2.

Further information on the Combined Code provisions can be found at www.frc.org.uk.

Full details of our latest Corporate Governance report can be found in the Annual Report and Financial Statements

Share Price

412.20p

Updated 02/09/2010 : 16:49

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