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Mon 22nd Sep 2014 - Tesco – we’ve overstated first half profits by £250m
Tesco – we’ve overstated first half profits by £250m: Tesco has added to its woes this morning by telling the market that it has overstated profits by £250m in its first six months. The company said: “During its final preparations for the forthcoming interim results, Tesco has identified an overstatement of its expected profit for the half year, principally due to the accelerated recognition of commercial income and delayed accrual of costs. On the basis of preliminary investigations into the UK food business, the Board believes that the guidance issued on 29 August 2014 for the Group profits for the six months to 23 August 2014 was overstated by an estimated £250m. Some of this impact includes in-year timing differences. Work is ongoing to establish the extent of these issues and what impact they will have on the full year. The Board has asked Deloitte to undertake an independent and comprehensive review of these issues, working closely with Freshfields, the Group’s external legal advisers. We will provide a further update at our interim results, which will now be announced on the 23 October 2014.” Chief executive Dave Lewis said: “We have uncovered a serious issue and have responded accordingly. The Chairman and I have acted quickly to establish a comprehensive independent investigation. The Board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.”

Domino’s Pizza Poland reports seventh consecutive quarter of double-digit sales growth: Domino’s Pizza Poland has reported its seven consecutive quarters of double digit like-for-like sales growth. The company said it is “proving the model with a core of consistently profitable stores”. It is now extending sub-franchising and accelerating store roll out into new cities in 2015. DP Poland has the exclusive right to develop, operate and to sub-franchise Domino’s Pizza stores in Poland. It currently has 18 corporate stores operating in Warsaw and Krakow and one sub-franchised store operating in Warsaw. July and August saw like-for-like sales up 38% and 43% respectively. Like-for-like store Ebitda has improved by 61%. It is in advanced discussions to sell and sub-franchise a number of corporate stores in Warsaw. It reported 58,672 Facebook likes as at 30 June 2014, compared to 30,426 as at 30 June 2013. Peter Shaw, chief executive of DP Poland, said: “The seventh consecutive quarter of double digit like-for-like sales growth and more stores moving into profit further prove the model for Domino’s Pizza in Poland. We can see the beginning of that virtuous circle of growing store numbers and reducing food costs that has been central to the success model in Domino’s Pizza markets around the world. The opportunity now is to open stores in new cities and expand our sub-franchised store base, hand in hand with building brand profile, driving sales and reducing food costs.”

REIT buys Edinburgh hotel and pub subject to a ‘no’ vote on independence: Redefine International, the income focused UK Real Estate Investment Trust, has bought the Doubletree by Hilton Hotel in Edinburgh’s city centre for £25.27 million representing a net initial yield of approximately 6.9%. The deal was conditional on Scotland voting ‘no’ to independence. The hotel has 138 bedrooms and includes the separate title of The Chanter public house, located on the ground and basement floors of the property. The hotel will be let to Redefine Hotel Management Limited, a wholly owned subsidiary of Redefine BDL Hotel Group Limited, in which Redefine International has a 25.28% stake. Mike Watters, chief executive of Redefine International, said: “The transaction was structured on a conditional basis subject to a no vote in the Scottish referendum. Now that the uncertainty surrounding this has been removed we are very pleased to have secured this opportunistic investment in the city of Edinburgh which complements our existing hotel portfolio and plays well to the management skills of Redefine BDL.”

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