MFRD HND Business
Assignment Title:
Managing Financial Resource and Decision Making
Task 1: Public Company Financing LO 1, LO 2
The financial statements are given as pages 15-18
In this case study the large public company that has been chosen is called Tesco Plc. which is a UK retail chain that has over 6, 784 stores in the UK and 12 other markets and over 500 000 employees.
Group sales for the year were £70.9 billion, an increase of 0.3% at actual exchange rates. Full-year trading profit for Tesco’s continuing operations declined (6.0) % to £3.3 billion. This was driven by a decline in UK profits and challenges overseas; specifically, the regulatory impact in South Korea, political disruption in Thailand and continuing challenging conditions in Central Europe. Underlying profit before tax1, which excludes the contribution from property-related items, declined (6.9) % to £3.1 billion. Underlying diluted earnings per share was 32.05 pence.
During the year, Tesco concluded their strategic review in the United States with the sale of the substantive part of Fresh & Easy’s operating business to Yucaipa. Tesco also announced a partnership with China Resources Enterprise Ltd. (CRE), which when completed will give Tesco a 20% ownership stake in the largest food retail business in China. Both of those operations are therefore shown as discontinued.
Reflecting the challenging trading conditions and rapidly changing environments, Tesco has also announced a number of one-off charges. £(801) million2 of these are in continuing operations. These include:
A non-cash impairment of £(734) million to the carrying values of some stores in the Europe segment.
An additional £(63) million provision for payment protection insurance and other customer redress at the Bank.
Tesco’s statutory profit before tax for the year was £2.3 billion. Despite these charges and a lower contribution from profits and losses on property-related items, Group profit before tax increased by 9.8%, primarily
Managing Financial Resource and Decision Making
Task 1: Public Company Financing LO 1, LO 2
The financial statements are given as pages 15-18
In this case study the large public company that has been chosen is called Tesco Plc. which is a UK retail chain that has over 6, 784 stores in the UK and 12 other markets and over 500 000 employees.
Group sales for the year were £70.9 billion, an increase of 0.3% at actual exchange rates. Full-year trading profit for Tesco’s continuing operations declined (6.0) % to £3.3 billion. This was driven by a decline in UK profits and challenges overseas; specifically, the regulatory impact in South Korea, political disruption in Thailand and continuing challenging conditions in Central Europe. Underlying profit before tax1, which excludes the contribution from property-related items, declined (6.9) % to £3.1 billion. Underlying diluted earnings per share was 32.05 pence.
During the year, Tesco concluded their strategic review in the United States with the sale of the substantive part of Fresh & Easy’s operating business to Yucaipa. Tesco also announced a partnership with China Resources Enterprise Ltd. (CRE), which when completed will give Tesco a 20% ownership stake in the largest food retail business in China. Both of those operations are therefore shown as discontinued.
Reflecting the challenging trading conditions and rapidly changing environments, Tesco has also announced a number of one-off charges. £(801) million2 of these are in continuing operations. These include:
A non-cash impairment of £(734) million to the carrying values of some stores in the Europe segment.
An additional £(63) million provision for payment protection insurance and other customer redress at the Bank.
Tesco’s statutory profit before tax for the year was £2.3 billion. Despite these charges and a lower contribution from profits and losses on property-related items, Group profit before tax increased by 9.8%, primarily
References: Sources http://www.financialanalyst.org/Enyi%20Research%20Paper.htm http://www.miniwebtool.com/ebit-calculator/ http://www.accountingtools.com/questions-and-answers/what-is-the-accounting-rate-of-return.html http://www.tescoplc.com http://www.tescoplc.com/index.asp?pageid=546 http://www.investopedia.com/terms/c/cashflow.asp http://www.knowthis.com/pricing-decisions/factors-affecting-pricing-decision