OxBowBusiness

The BBC says that M&S has turned in Profits of £745 million ... WRONG!

SOMETHING REALLY ODD IS GOING ON.

I followed all of the links in the M&S Web site and they have led me a merry dance. Very peculiar too that there seems to be a profit figure of £745 million both this year and last ... they have yet to update their annual reports area though so my analysis of their profits will change and I will report back more fully later once their information comes on line.

I've got it! I think the UK has just been duped by the first IFRS v FRS report.

Here is the text of an email I have just sent to Declan Curry at the BBC since he and I exchanged a few words over M&S yesterday:

My big problem with M&S is that they restated their P&L account and time didn't allow me to say why yesterday but I have just spent a few minutes looking at their latest results again and think you might do so too.

If you take the ARA from last year, eg, turnover was stated to be £7,942.3 million after exceptionals and including discontinued operations. Yesterday they showed sales of £7,490.5 million for the same period ... Restated. Then everyone got carried away and said that on the basis of sales of £7,490.5 for 2005 and sales of £7,797.7 million for 2006, there has been an x% increase ...

Hasn't everyone failed to read the small print?

From the ARA 2005: 1 ACCOUNTING POLICIES Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards in the United Kingdom.

From yesterday's UNAUDITED statements contained in their Press Release: Note 1 General information and basis of preparation The results comprise those of Marks and Spencer Group pic and its subsidiaries for the 52 week year ended 1 April 2006 and have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU, and those parts of the Companies Act 1985 applicable to those companies under IFRS. The summary of results does not constitute the full financial statements within the meaning of s240 of the Companies Act 1985.

Haven't we all been mislead by something that could wreak havoc everywhere this year as IFRS based statements come pouring out of PLCs? In this case my guess is that when the FRS based statements come out of M&S they will tell a completely different story.

Any thoughts you'd like to share?

I wonder if this will turn into a scandal and I really can't wait for the FRS based figures now.


Duncan Williamson

posted by Duncan Williamson @ 7:21 AM