Tesco who is buying and who is crying

Consumerist

Glen_Clark wrote: »

Its become clear that insiders must have known that accounts were being manipulated to make profits look bigger than they were, . . .

What involvement have Tesco's auditors had in all this, I wonder. Aren't they supposed to protect shareholders from fraudulent books?

Thrugelmir

Consumerist wrote: »

What involvement have Tesco's auditors had in all this, I wonder. Aren't they supposed to protect shareholders from fraudulent books?

Auditors only spot check. Tesco's is a large complex organisation.

SunReader

Seems like Tescos have locked themselves into a failing business model, just as the online revolution has changed high street spending patterns, this gigantic company has little flexibility other than to close / sell off unprofitable stores. One recent new build store has been 'mothballed' even before opening... And that is just the uk side of their business.

Interesting insider info from their unofficial staff website, seems like blagging the figures has been company policy for years now. The question being how bad things really are?


http://www.verylittlehelps.com/index.php?topic=14084.90

bowlhead99

Minrich wrote: »

Glen_Clark wrote: »

Just googled it (which I should have done before posting ) and seen there was 3 new Tesco shares issued per one old Tesco share on 6 July 1998 https://uk.finance.yahoo.com/q/ks?s=TSCO.L

Can you explain why they would do that ?

The stated reason at the time from their trading statement a few months earlier was, "in order to bring the issued share capital of the Company more into line with its operating assets". The shares only have a 5p nominal value so at 600p per share most of it was share premium and retained earnings. That is still the case when you issue two new ones for every existing share, but the share price drops to 200p as there are now 3x as many shares in issue so it's not quite as extreme.

Basically, capitalising some of the reserves improves the capital base (although not massively as the share capital only went up from £100m to £300m and this is a multi billion pound company). But it also makes the shares more accessible to retail investors and more liquid, because they're individually cheaper:

If I had £300 of shares before the bonus issue, it was only 50 shares at £6 each, but afterwards it's 150 shares at £2 each so I have more flexibility when buying and selling. For example if I wanted to deal in £100 of shares I would previously have had to just buy or sell 16 shares for £96. After the bonus issue I can buy or sell 50 shares for exactly £100.

Glen_Clark

Consumerist wrote: »

What involvement have Tesco's auditors had in all this, I wonder. Aren't they supposed to protect shareholders from fraudulent books?

The interim accounts in question are not audited, only the annual accounts.
The last annual accounts were in May when the auditors left a note that these supplier payments in question should be 'a subject of focus.'
But the finance director Laurie Mc Ilwee left and although still being handsomely paid on a retainer, was apparently told not to come in to the office by the now ousted boss Philip Clark. So there was no Finance Director, only the ousted Clark and the current Chairman Sir Richard Broadbent, to oversee these misleading interim accounts.
(Which is adding to the debate over whether Sir Richard Broadbent should still be Chairman.)

Glen_Clark

bowlhead99 wrote: »

The stated reason at the time from their trading statement a few months earlier was, "in order to bring the issued share capital of the Company more into line with its operating assets". The shares only have a 5p nominal value so at 600p per share most of it was share premium and retained earnings. That is still the case when you issue two new ones for every existing share, but the share price drops to 200p as there are now 3x as many shares in issue so it's not quite as extreme.

Basically, capitalising some of the reserves improves the capital base (although not massively as the share capital only went up from £100m to £300m and this is a multi billion pound company). But it also makes the shares more accessible to retail investors and more liquid, because they're individually cheaper:

If I had £300 of shares before the bonus issue, it was only 50 shares at £6 each, but afterwards it's 150 shares at £2 each so I have more flexibility when buying and selling. For example if I wanted to deal in £100 of shares I would previously have had to just buy or sell 16 shares for £96. After the bonus issue I can buy or sell 50 shares for exactly £100.

Its a nice little earner for the fee chargers as well

marathonic

Getting very interesting at under £1.80 today. Even assuming the overall annual dividend is cut by 75%, that brings the yield back up over 2% again.

Sainsburys and Wm Morrisons have dropped significantly today too - makes them very tempting when you look at book value per share.

garf155

marathonic wrote: »

Sainsburys and Wm Morrisons have dropped significantly today too - makes them very tempting when you look at book value per share.

Morrisons went ex-dividend today so bound to drop anyway regardless of what's happening in the sector. Think Sainsbury's news has just heaped more misery on the sector as a whole though.

Glen_Clark

marathonic wrote: »

book value

But what does that mean?
In a depressed market could they really sell these supermarkets for their 'book value'?
How much money would they lose before they tried to exit them?
Some have sold premises and leased them back to fund their ill fated expansion. So could they be committed to leasing loss making premises for years ahead?

Glen_Clark

On a more positive note maybe they could sub let part of their big supermarkets to franchises that don't compete directly with them, bringing in rent, and more customers