Terry Leahy has overseen an international expansion

Tesco also announced that it is creating 21,000 new jobs worldwide.

Nine thousand of those jobs will be in the UK, where it plans to open 55 new stores and 30 new express shops.

Chief executive Terry Leahy said the group was successful because "we look after customers and we look after staff".

Complaints upheld

The supermarket chain has been competing heavily on price and has invested �280m in its price campaigns over the last year.

But as Tesco was trumpeting the success of its pricing policy, the company was ticked off by the Advertising Standards Authority (ASA) for claims made in some of its advertisements.

The ASA upheld two complaints from the rival supermarket Safeway about a national press advert and leaflet.

The ASA said Tesco's claim that "no other supermarket is more committed to cutting prices" could not be substantiated.

The authority also ordered Tesco to stop saying independent research had shown it to be 14% cheaper than Safeway.

The ASA said the way the figures were calculated in the research meant Tesco prices would actually be less than 14% cheaper.

Tesco said it was disappointed by the ruling.

Health and beauty

The 14.1% rise in pre-tax profits at the supermarket chain was accompanied by a 12.7% rise in group sales to �15.77bn.

The company said it has increased sales of non-food goods, particularly health and beauty, and home entertainment, which has helped to boost profits as non-food items are more profitable than food.

The international business also helped to boost profits.

Tesco now describes itself as an international group, as it operates in nine countries and has 65,000 staff overseas.

The company said Korea has the potential to become a significant engine of growth for the group.

Pensions boost

The company also used its annual results to make its policy on pensions clear.

It said that in stark contrast to many other employers, in the last year it had moved 59,000 employees from a defined contribution pension scheme to a defined benefits scheme.

With a defined contribution scheme, the employee bears the risk of their pension fund performing poorly.

But under a defined benefits scheme the employer bears the risk, as a member of staff is guaranteed a pension equal to a certain proportion of their final salary.

A new accounting standard, known as FRS17 has forced companies to include detailed figures for their pension schemes with their results, and as a result many firms have switched to defined contribution schemes.

But Terry Leahy said the company could afford to keep its scheme going, and saw it as a good way of attracting staff.