The Lemon Fool

Tesco PLC is hosting a briefing for analysts and investors at 9.00am UK time today relating to the introduction of IFRS 16, the new financial reporting standard on accounting for leases. Tesco will explain the nature of the standard and the associated changes to the presentation of the Tesco financial statements and performance measures using its most recently reported 1H 2018/19 results.

The standard has no economic impact on the Group. It has no effect on how the business is run, nor on cash flows for the Group. It does however have a significant impact on the way the assets, liabilities and the income statement of the Group are presented, as well as the classification of cash flows relating to lease contracts.

IFRS 16 is effective for all accounting periods beginning on or after 1 January 2019. As such, Tesco's first reported accounting period under IFRS 16 will be the 2019/20 financial year, which runs from 24 February 2019 to 29 February 2020. As previously indicated, the Group intends to adopt the standard fully retrospectively.

idpickering wrote:

Tesco PLC is hosting a briefing for analysts and investors at 9.00am UK time today relating to the introduction of IFRS 16, the new financial reporting standard on accounting for leases. Tesco will explain the nature of the standard and the associated changes to the presentation of the Tesco financial statements and performance measures using its most recently reported 1H 2018/19 results.

The standard has no economic impact on the Group. It has no effect on how the business is run, nor on cash flows for the Group. It does however have a significant impact on the way the assets, liabilities and the income statement of the Group are presented, as well as the classification of cash flows relating to lease contracts.

IFRS 16 is effective for all accounting periods beginning on or after 1 January 2019. As such, Tesco's first reported accounting period under IFRS 16 will be the 2019/20 financial year, which runs from 24 February 2019 to 29 February 2020. As previously indicated, the Group intends to adopt the standard fully retrospectively.

https://www.investegate.co.uk/tesco-plc ... 00031912Q/

Investment ideas don’t get much more boring than the UK’s largest supermarket, Tesco (LSE: TSCO).

Boring can be good in the stock market, but we all need a bit of excitement. So today I’m going to look at Tesco and at a much smaller retailer that I think could be a long-term winner.

Big and well run

The efforts being made by Sainsbury’s and Asda to merge their operations tell you something about the advantage of being big in groceries.

However, Tesco is already roughly the same size as its two rivals combined. This means that chief executive Dave Lewis doesn’t need to worry about trying to push through complex merger deals, despite regulatory opposition.

Mr Lewis has been able to focus on two areas — operational excellence and finding other routes to growth. In my view he’s accomplished both of these feats. He’s made improvements to the group’s business practices to treat suppliers more fairly, and improved the performance of its supermarkets.

Alongside this, Mr Lewis has acquired fast-growing food wholesaler Booker, which has given the group a sizeable share of the convenience store and restaurant foodservice markets.

•Group sales2 £56.9bn, +11.5% ◦UK & ROI LFL sales8 +2.9% incl. Tesco UK +1.7% and Booker +11.1%
◦Central Europe LFL sales8 (2.3)%: fewer trading days and less general merchandise
◦Asia LFL sales8 (6.2)%: improvement to (3.0)% in 4Q

•Group operating profit4 £2,206m, +34.0% ◦UK & ROI £1,537m, +45.1%; incl. £196m Booker (last year: £185m9) and £79m synergies
◦Central Europe £186m, +56.3%: significant cost reductions and improved profit mix
◦Asia £286m, (4.3)%: supplier negotiations concluded and significant restructuring complete
◦Bank £197m, +16.6%: strong banking performance and one-off contract renewal benefit10

•Group operating margin4 3.45%; 2H operating margin4 3.96% (3.79% excl. Booker)
•Retail operating cash flow6 £2.5bn: c.£(490)m working capital timing impact year-on-year
•Retail free cashflow of £906m: impacted y-o-y by working capital timing, higher tax and market purchases of shares
•Net debt6,7 £(2.9)bn: increased by £(238)m after £(766)m Booker cash consideration
•Final dividend 4.10p, giving FY dividend of 5.77p – now expect to reach c.2.0x EPS cover11 in 2019/20
•Statutory revenue +11.2% to £63.9bn; operating profit +17.1% to £2,153m; profit before tax +28.8% to £1,674m

Tesco Bank has today announced that it has ceased new mortgage lending and is actively exploring options to sell its existing mortgage portfolio, including the complete transfer of related balances and ongoing administration of relevant accounts. The Bank, which has offered mortgages since 2012, currently serves over 23,000 customers with total lending balances of £3.7bn.

Alaric wrote:It seems to have been announced some months ago, but Tesco are cutting back on the services offered in their larger stores.

In particular, they are closing the meat, deli and fish counters in (some of?) their stores from Sundays to Tuesdays. It makes them a less attractive destination for a regular weekly shop if your preferred day is Sunday, Monday or Tuesday. You may not use these counters, but a knock on effect that the pre packaged equivalents are more likely to have run out when the over the counter offering is missing.

Dave Lewis, Chief Executive:

"We have had a strong start to the year, growing ahead of the UK market on both a volume and value basis. Our customer offer is more competitive than ever, with a wider choice of our 'Exclusively at Tesco' products now available in more stores, helping to drive more than 10% sales growth across the range.

Following a particularly good Easter, our '100 Years of Great Value' event in May proved very popular with more than 1.5 million customers benefiting from discounted Clubcard Prices."

Tesco Personal Finance Plc. ('Tesco Bank') today confirmed the sale of its mortgage portfolio to Lloyds Banking Group for a cash consideration of c. £3.8bn. Tesco Bank has over 23,000 mortgage customers.

roland500 wrote:Looks to me to be a good deal for both parties.