Promoción

The Committee’s Terms of Reference can be found at www.tescoplc.com. The Committee Chairman, Ken Hanna, and Gareth Bullock, a member of the Committee, both have recent and relevant financial experience. The key responsibilities of the Committee are to:

• consider the appointment of the external auditors, their reports to the Committee and their independence, including an assessment of their appropriateness to conduct any non-audit work;

• review the financial statements and announcements relating to the financial performance of the Company;

• review the internal audit programme and ensure that the Internal Audit function is adequately resourced and has appropriate standing within the Company;

• discuss with the external auditors the nature and scope of the audit; • review, and challenge where necessary, the actions and judgements

of management, in relation to the interim and annual financial statements before submission to the Board;

• formally review the effectiveness of the external and internal audit processes;

• consider management’s response to any major External or Internal Audit recommendations;

• review the Company’s plans for business continuity;

• review the Company’s plans for the prevention and detection of fraud, bribery and corruption; and

• report to the Board on how it has discharged its responsibilities. During the year the Committee received update reports from a number of businesses, including the Bank and from Internal Audit on its work, including findings from its internal audit programme. The Committee also considered a variety of matters including the Group Finance Risk Register, the arrangements for IT governance and business continuity, the Grocery Supply Chain Compliance Code and Whistleblowing arrangements.

In relation to the financial statements the Committee: reviewed and recommended approval of the quarterly, and half-yearly results and annual financial statements; conducted impairment reviews; reviewed and recommended dividend levels; reviewed corporate governance disclosures; and monitored the statutory audit.

The Committee continually assesses the need for training and the annual agenda provides substantial time for technical updates which are generally provided by external experts. During the year training was provided on: UK Financial Reporting Council’s guidance of listed companies; developments in corporate governance; the outputs from the Financial Reporting Review Panel; and regulatory updates including: the Competition Commission’s issues statement; the European Commission’s proposals for audit reform; IASB updates on reporting; direct and indirect tax; pensions; capital markets; sustainability; assurance and remuneration. Training is also provided on an ongoing basis to meet the specific needs of individual committee members.

Audit Committee attendance

Number of possible meetings attended Actual meetings attended Members

Ken Hanna (Chairman since 5 October 2012) 5 5

Gareth Bullock 5 5

Patrick Cescau 5 4

Past members

Ken Hydon (Chairman until 5 October 2012) 3 3

Introduction from the Committee Chairman

Our business operates in an increasingly challenging environment, particularly with regard to economic, reputational, political and regulatory factors. Consequently we have seen a trend towards increasing risks in the business. The role of the Audit Committee is now more important than ever in reviewing the effectiveness of the Group’s internal controls, providing assurance on the Group risk management processes and assessing and acting upon information received by external auditors and Internal Audit. We keep the current risk management and internal controls framework under review, to ensure that it adapts to the changing environment and remains as robust as it can be.

Ken Hanna Audit Committee Chairman

R VI EW B U S IN E S S R EVI EW P E RF O RM A N C E RE V IE W G O V E R NAN C E FI NAN C IAL S TA T EM EN

PricewaterhouseCoopers LLP (‘PwC’) has served as the Company’s auditors since 1983. The partner engaged on the audit is changed regularly. The services provided by PwC have been reviewed periodically and the Audit Committee is satisfied that they remain appropriately independent and are best placed to conduct the Company’s audit for 2013/14. The Committee therefore recommended PwC be reappointed as the Company’s auditors.

It is essential for the Committee to be able to have an honest and open relationship with both its external and internal auditors. This relationship is developed and maintained through regular private meetings with both PwC and the Head of Internal Audit. Further information on the role of the external auditors and our Non-audit Service Policy can be found on page 43.

The Committee assessed the effectiveness of the external audit process by means of a detailed questionnaire completed by key stakeholders including the Board, the Executive Committee, members of senior management and Internal Audit. The questionnaire assesses the external audit in the following areas: qualification; expertise and resources; operational effectiveness; independence and leadership. The results are rated against an ideal standard and compared to prior years to assess the consistency of performance.

The effectiveness of the Internal Audit function was assessed by means of a detailed questionnaire completed by key stakeholders including members of senior management and the external auditors. The assessment covers the Internal Audit function’s understanding of its role and responsibility, its charter, the quality of its communications, its performance and the skills and experience of the function. The Committee carried out a review of its effectiveness during the year, by the Committee Chairman conducting interviews with key stakeholders and the use of a questionnaire. The Committee concluded that it continued to be effective and has sufficient resources to carry out its duties.

Corporate Responsibility Committee responsibilities

The Corporate Responsibility Committee was established in 2012 to ensure that the Board maintains an adequate focus on corporate responsibility in its widest sense. The Committee’s Terms of Reference are available at www.tescoplc.com.

The key responsibilities of the Committee are to:

• define the Group’s corporate and social obligations as a responsible corporate citizen and oversee its conduct in the context of those obligations;

• approve a strategy for discharging the Group’s corporate and social responsibilities in such a way as to command respect and confidence; • identify and monitor those external developments which are likely to have a significant influence on the Group’s reputation and/or its ability to conduct its business appropriately as a good corporate citizen and review how best to protect that reputation or that ability;

• oversee the creation of appropriate policies and supporting measures; • monitor the Group’s engagement with external stakeholders and

other interested parties; and

• ensure that appropriate communications policies are in place and working effectively to build and protect the Group’s reputation both internally and externally.

During the year we introduced a new Core Purpose: We make what matters better, together. Millions of customers come to us for the food and products they need for their lives. What matters to them is that we make the little things better, providing millions of great value products, safely and conveniently every day. Today, we have hundreds of thousands of colleagues, tens of thousands of suppliers and distributors, and we are significant in thousands of communities around the world. We have also articulated a new Value to help us achieve our Core Purpose: We use our scale for good. Our scale gives us an opportunity to make a positive difference to some of the biggest challenges facing the world. The Committee spent time during the year considering reputational research and giving thought to where we are most relevant and where we have an authentic contribution to make. The output was establishing our three big ambitions:

• to create new opportunities for millions of young people around the world;

• to help and encourage our colleagues and customers to live healthier lives and through this help to tackle the global obesity crisis; and • to lead in reducing food waste globally.

The Committee has regularly been updated on the work in these areas and discussed the proposed approach to developing targets to measure progress against these ambitions.

Further information is available in our Tesco and Society Report 2013, which is available on our website at www.tescoplc.com.