I was interested to discover recently that M&S the crown jewel of high street retailers admitted to making potentially disastrous financial reporting errors in its latest financial statements.
I believe this admission is a positive sign, we all know the fiasco that determined the financial fate of Tesco that led to the 50% demise of its share price and sacking of its entire board. Even when the pundits proclaimed it to be a bargain our valuation had it way overpriced. Today we are vindicated on that call. Anyhow..
Apparently a spokesman for M&S commenting on their latest trading statements said clerical errors occurred which have been corrected.
There were two numbers incorrectly stated in the original trading statement. Group sales reported originally as an increase +1.3% was corrected to a decline of -0.4% and constant currency basis originally reported as up +0.2% was corrected to a decline of -0.9%. All the other numbers were said to be correct.
We believe that financial reporting corrections are important and should be disclosed ASAP to the markets. We also believe that the reality is many firms leave it too late to come forward, for a number of reasons.
This has led to the rise in activist attacks on CEOs and CFOs and in our view such investor activism is still a very necessary part of a balanced financial market. Today we see far too many large companies attempting to obfuscate their results.
This has led to the loss of many a pensioners life savings and is not to be tolerated in a fair capital market that is increasingly opening its doors to the most vulnerable in our society.
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