According to the Sunday Times none of the shareholders would issue a public statement, but one did say he would seek an explanation from Tesco.
The shareholders were reacting to claims by ABN Amro analysts that Tesco’s earnings per share would have been 10% lower if it had kept its accounting policies unchanged from 1997.
In a published research note to Tesco’s annual accounts for 2001, ABN Amro claimed the manner in which Tesco depreciated its assets was ‘far more serious’ than it first suspected.
This ecchoed the comments of other analysts who questioned how depreciation charges had remained unchanged for several years despite substantial investments in store fixtures and fittings.
Andre Fowler of Merrill Lynch told the Sunday Timesgrowth at Tesco might have been overstated by 3% in 2000 and 2% in 1999.
In its annual accounts Tesco said changes made to fixed asset depreciation included increasing land amortisation from 25 years to 40 years and the provision of additional depreciation where a decision has been made to replace a store.
But, the company said: ‘Net effect of these changes has not materially impacted the results for the year.’
In April, Tesco reported profits of more than £1bn on sales of £22.8bn, an increase before tax of 12%.
Adjusted diluted earnings per share (excluding the net loss on disposal of fixed assets, integration costs and goodwill amortisation) increased by 11.1% to 11.31p from 10.18p in 2000.
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