Tesco’s preliminary results reveal more good progress with the recovery that has been engineered and delivered through Dave Lewis.

Collectively, there were a lot more ticks than crosses on the scorecard for the last financial year, reflecting good thinking and patient execution.

In particular, it is pleasing to see volume growth and positive like-for-like sales for the full financial year in the UK and Ireland, something that has been markedly missing for more than half a decade.

It is progress that yielded welcome positive operational gearing too, manifested in higher UK margins, admittedly from a rebased level.

Also pleasing was the aggregate performance from the group’s international operations – it was this division that delivered the small beat to our profit expectations even with headwinds in Poland and depressed market conditions in Thailand.

A good year

All aggregate progress, including pleasure on the company’s behalf with volume progress in Ireland, fed through into better cashflow and much needed lower indebtedness.

Indeed, debt fell by £1.4bn year-on-year, £500m ahead of our expectations despite buying in the leases of 16 supermarkets in the UK, with a further seven having been bought in since the year-end.

While this is so, Tesco remains highly leveraged, to use some jargon. Its pension deficit is £5.5bn and outstanding operating leases amount to about £7.5bn. There remains much more to do.

So, a decent year of progress for Tesco.

Booker deal risk

And then there is the proposed Booker merger.

Dave Lewis was probably a little bit more forthright and resilient on Tesco’s performance and prospects than he may otherwise have been in light of the proposed Booker deal.

That deal has not got off to the best of starts, losing the respected Richard Cousins as Tesco senior independent director, seeing high profile international investors call for a volte-face, and many longstanding Booker shareholders are seemingly unimpressed by the proposal and have sold out.

The proposed Booker deal now moves to the UK Competition and Markets Authority (CMA), a distinctive organisation if there ever was.

What quite comes out of the CMA… whichever Lord one prays to only knows. We believe that there is regulatory risk surrounding the deal but time will tell.

In the meantime against a mellowing market backdrop both Booker and Tesco need to keep their eyes on the day job.

Otherwise, convincing investors to agree with their plans will be even more difficult than it is at present.

There is pressure not to disappoint, therefore, and more pressure to deliver good news too.