Tesco is one of the worlds leading international retailers. Since the company first the trading name of Tesco, in the mid 1920s, the group has expanded into different formats, different markets and different sectors. The UKs leading retailer Tesco was floated on the stock exchange in 1947 and in 1995 took over rival Sainsburys position as the UK number one. The principal activity of the group is food retailing, with over 2,000 stores worldwide. Tesco has a long term strategy for growth, based on four key parts: growth in the Core UK business, to expand by growing internationally, to be as strong in non-food as in food and to follow customers into new retailing services. The company launched a home shopping service in 2000, allowing customers to order their shopping online. Tesco is now expanding its convenience stores and overseas into areas such as Taiwan, Malaysia, Poland, the US and Ireland.

Upper graph = 12 month share price with 6 month moving average
Lower graph = 12 month volume (red line = volume average).

So everything 'property wise' is already 'correctly' already in the share price. There are no hidden surprises to the negative - or to the positive.

You tell me? :-)) You cannot believe the news that has been put out by Tesco in the last few weeks. It will be very interesting to see what the City Regulators unearth.
They in my view are going to need to siphon some of the property value to start any form of turn round.

What businesses will Tesco sell after ruling out a rights issue to raise cash?


by Lynsey Barber

October 23, 2014, 4:34pm

Harris and Holle could be one part of Tesco to go (Source: Getty)

Tesco may be in dire straits, but a rights issue was ruled out by chief executive Dave Lewis this afternoon. Rather, the team will look “to extract value” from the business, most likely by selling off some of its non-core business assets.

The supermarket sells much more than just groceries after embarking upon a rapid diversification programme. However, now in troubled times, these once-sound investments may be heading for the checkout, hopefully not with a discount sticker.

With the prospect of disposals making their way towards the checkout, which ones are likely to be bagged up?





Blinkbox

Blinkbox, the digital service for video and music streaming and book downloads, is already rumoured to be one of the assets up for grabs.

Tesco picked up the startup in 2011 for an undisclosed sum and the service has been steadily integrated with the retailer’s move into digital, with founder and chief Michael Comish even becoming Tesco’s digital director.

Customers who buy DVDs in store are able to stream the movie through Blinkbox at no extra cost, and the Clubcard loyalty scheme was introduced to the service so users can pick up points.

As the world moves online, the buy was forward thinking. One of the only positives from Tesco’s results today was an 11 per cent growth in online sales, signalling where future growth may lie. However, with competitors such as Netflix and Amazon, the service is currently loss-making.

Giraffe

Giraffe, the restaurant which attracts pushchairs from far and wide, was snapped up by Tesco for £48.6m last year. The plan was to introduce the chain into stores to make the weekly shop more of an experience.

However, the cause of Tesco’s - and the rest of the supermarkets’- profit problems is a drastic change in shopping habits. Customers are moving away from the traditional large weekly shop and towards multiple, smaller trips to the supermarket throughout the week. Tesco shoppers are heading to its smaller town and city Express and Metro stores, rather than the out of town megastores. In those, there is hardly room for people sometimes, let alone a Giraffe.

Harris + Hoole

Another food-focused buy, cute coffee shop Harris + Hoole received Tesco backing in 2013, amounting to a 49 per cent stake.

The same Giraffe strategy has already stumbled with the cafe, though. The chain had to close six of its 40 stores earlier this year and has faced mounting questions about whether Tesco will continue to back it in the current climate.

Dunnhumby

One of Tesco’s biggest successes, this time under former boss Sir Terry Leahy, the company invented the Tesco Clubcard and basically the entire loyalty scheme concept now beloved by retailers.

Tesco originally invested in the firm in 2001, upping its stake and then taking full control, and Dunnhumby now acts as a marketing services agency to many other global brands

Analysts estimate the value of the firm at nearly £1.5bn, making it by far one of the most valuable assets when it comes to selling, but it is also a money maker for the supermarket.

Asia

Back when things were good under Leahy, Asia looked like a good bet, now it’s not quite so lucrative. It’s still estimated to be worth around £7bn across various stores and malls in the region, however, but that could be a nice figure to pay into the bank in addition to cutting the costs of doing business abroad- it's already selling off the private jets the top brass previously used to travel there.

Dobbies garden centre

This may be an unfamiliar one south of the border. Dobbies is a string of Scottish garden centres which Leahy bought up in 2007. Then valued at £155m, it's now estimated to be worth £88m to the supermarket, far from the billions the supermarket is in need of and could find elsewhere. It's not pennies down the back of the sofa either though, and by selling it the supermarket would be trimming back on less lucrative non-core assets

there may be a very welcome silver lining if tesco has to abandon some or even many of its town-centre-wrecking hypermarkets
i for one would be delighted and it just may bring about a revival of "proper" food shops - butchers, bakers, greengrocers, delis and even fishmongers - in towns across the country ..... anyway, it's a nice pipedream

Sharecast -

Dave Lewis, Tesco's boss, has indicated that a third of the retailer's hypermarkets are failing, the Sunday Times said. Lewis told investors two-thirds of the giant Extra stores were "to die for", suggesting the remainder were underperforming. Clayton Dubilier & Rice, the private equity firm advised by Tesco's former boss Terry Leahy, is at an early stage in mulling an approach for Tesco's £2bn Dunnhumby data business, which was behind the success of its Clubcard loyalty programme.

Tesco dishes out £4m in share options to two most senior bosses - days after posting 91% fall in half-year profits

By City & Finance Reporter for the Daily Mail

Published: 22:09, 27 October 2014 | Updated: 08:35, 28 October 2014

Bonanza: The embattled grocer has given golden hellos to new chief executive Dave Lewis and finance director Alan Stewart

Bonanza: The embattled grocer has given golden hellos to new chief executive Dave Lewis and finance director Alan Stewart

Tesco has dished out more than £4m of share options to its two most senior bosses just days after posting a 91 per cent fall in half-year profits.

The embattled grocer, which has seen its shares fall more than 53 per cent over the past 12 months, gave the golden hellos to new chief executive Dave Lewis and finance director Alan Stewart.

The rationale for the awards was to compensate the pair for potential windfalls they may have received if they had stayed on with their previous employers.

Lewis, who came from Unilever, is due three tranches of shares which vest in 2015, 2016 and 2017.

Together the 1.6m shares are worth £2.7m calculated using yesterday’s closing price of 169.1p, down 0.35p. Stewart, who worked for Marks & Spencer before, will get 881.956 shares worth £1.4m.

However these amounts may increase dependent on dividends paid by their previous employers.

Stewart is also due more money linked to the bonus of Marks and Spencer. But Tesco said: ‘It is not possible to make this award at the current time as the level of the M&S bonus payout is not yet known
‘The directors were granted nil-cost options over ordinary shares in respect of the buy-out of awards forfeited on leaving their previous employment.’

Golden hellos are controversial with some corporate governance watchdogs who feel incentive schemes are not intended to be transferable.

Tesco attempted to head off concerns saying: ‘The remuneration committee believes that these awards fairly reflect the awards the directors forfeited on leaving their previous employment in terms of value and timescale of vesting.’

Bought a bottle of Cote de Rhone Villages at Lidl today £5 , lovely jumbly nice and dry

Not sure that selling "non-Core businesses" is the answer, although the cash will be welcome, er for hole-plugging. BUT once sold they're gone ( Where have I heard that before?), so this is no LT fix for TSCO woes.
-Indeed one might suggest that ( Selling-off) will be the cause of greater problems in the years to follow.
Also, without the Tesco-link I wonder that these peripheral businesses will be worth
anything like as much as the Bosses think.
- I bought this stock at £4+ = Ooops!
Any news of the Auditors?
Chains dragging?

A supermarket is offering shoppers "free erections" after a sign was wrongly translated into Welsh.

The sign on a cash machine at the Tesco store should read "arian am ddim" which means free money.

But the supermarket blundered by saying "codiad am ddim", meaning free erections.

The error was seen by Ceredig Davies, a Welsh speaking Aberystwyth councillor, who said: "There were a few titters in the town so I went down to have a look myself.

"Ten out of ten to Tesco for considering the Welsh language.

"But perhaps they should have had it checked by an actual Welsh speaker before putting the signs on the machines.

"People get their Welsh translations wrong from time to time but this one is hilarious."

Managers at the Tesco Express store in the university town took the sign down on Tuesday and were investigating the mistake.

But shoppers believe the supermarket used Google to translate rather than asking their staff.

The Telegraph

@doodlebug4,sounds like some one made a right 'cock up' with that Welsh sign :o)

Share price firming this morning then?!

Short Viagra :0)

You need to be patient with that one chris and wait for it to go down.

Tesco Faces Criminal Probe Over Profits Crisis
The Serious Fraud Office is likely to confirm a formal inquiry into the chain's accounting crisis within days, Sky News learns.
13:30, UK,
Wednesday 29 October 2014
By Mark Kleinman, City Editor

The Serious Fraud Office (SFO) is poised to launch a formal criminal probe into the accounting crisis at Tesco that led the UK's biggest retailer to overstate profits by £263m.

Sky News has learnt that the agency could confirm as soon as this week that it is opening an inquiry, adding to separate investigations by the City regulator and the accounting watchdog.

The SFO is understood to have notified Tesco of its intention to formally investigate the issue in recent days, and is expected to trigger a stock exchange announcement by the supermarket giant.

The move is not entirely unexpected, but the news that the SFO is to undertake a formal probe will add to the sense of crisis at Tesco.

The company, which has lost more than half its value during the last year, has been hit by unprecedented boardroom turmoil, with the chairman, Sir Richard Broadbent, planning to quit next year.

Tesco UK managing director Chris Bush.
UK MD Chris Bush is among eight executives asked to stand aside by the firm

Eight executives, including the UK managing director Chris Bush, have been asked to stand aside pending the outcome of the investigations into the accounting mis-statement, which relates to payments from major suppliers.

Deloitte, the accountancy firm, and Freshfields, Tesco's legal adviser, undertook a preliminary probe, which was handed to the retailer's board last week.

That report has been handed to the Financial Conduct Authority (FCA), with which Tesco said earlier this month it is co-operating.

Dave Lewis, the new Tesco chief executive, last week unveiled a fall in half-year profits of more than 90% as the company battles to recapture market share lost to discounters such as Aldi and Lidl.

Tesco has also been deserted by some of its leading shareholders, including the US-based Harris Associates and Warren Buffett’s Berkshire Hathaway, amid concern over its strategy and the state of its balance sheet.

The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each in order to head off the prospect of lenders calling in existing loans.

The Daily Telegraph reported on Wednesday that major consumer goods companies which supply Tesco have asked auditors to scrutinise their dealings with the retailer.

The SFO, which has powers to prosecute companies as well as individuals, has been pursuing high-profile cases against Barclays, GlaxoSmithKline and Rolls-Royce, among others.

The SFO and Tesco both refused to comment.

RNS

RNS Number : 6164V
Tesco PLC
29 October 2014
News release…
Wednesday 29th October 2014

REGULATORY UPDATE

Tesco confirms that it has been notified by the Serious Fraud Office (SFO) that it has commenced an investigation into accounting practices at the company. Tesco has been cooperating fully with the SFO and will continue to do so. Tesco has been notified by the Financial Conduct Authority that, in light of the SFO investigation, its investigation will be discontinued.

Contacts:

Investors: Tesco Investor Relations 01992 644 800

Media: Tesco Media Relations 01992 644 645

Brunswick 0207 404 5959

From FT.com
Last updated: October 29, 2014 3:21 pm

Serious Fraud Office launches Tesco accounts probe
Caroline Binham and Scheherazade Daneshkhu in London

The UK’s Serious Fraud Office has launched a criminal investigation into alleged accounting irregularities at Tesco, adding to scrutiny weighing on the supermarket chain whose market value has halved since the beginning of the year.

Britain's largest retailer said in a statement that it was co-operating fully with the SFO’s probe.

The Financial Conduct Authority, the City watchdog, was already investigating allegations that the supermarket overstated its profits by £263m, but has now dropped its inquiry given the SFO’s decision to intervene.

The SFO’s stance shifted from as recently as last week, when it said merely that it was monitoring the situation closely. The FCA has broadly the same criminal powers as the SFO to investigate false and misleading statements, raising questions over the SFO’s last-minute intervention.

“It is highly unusual for the FCA to drop an investigation where it had previously decided to start one,” said Tim Aron, a former FCA official at Arnold & Porter. “It may also be very unfair to the target firm or individual concerned,” and could lead to a legal challenge, he added.

Tesco last week raised its estimate of the profits exaggeration from £250m and said that the overstatement had gone on for longer than previously thought.

The scandal has already cost the group’s chairman his job. Sir Richard Broadbent said last week that he would step down – and the supermarket has suspended eight senior managers while investigations are under way. Sir Richard’s exit pushed Tesco’s shares to an 11-year low of 171p.

Tesco has been in turmoil since July when poor trading led to the ousting of former chief executive Philip Clarke.

The grocer announced a month ago that a £1.1bn forecast of pre-tax profit had been overstated and called in accountants Deloitte and lawyers Freshfields Bruckhaus Deringer to investigate. Findings made by the advisers were recently handed over to the FCA.

The accounting discrepancy arose from the way Tesco recognised income from suppliers. Some £118m of the shortfall related to the first half of this year, with £70m related to last year and some £75m to previous years, Tesco said last week.

“While not entirely unexpected, this is not good news,” said Rickin Thakrar, an analyst at Espírito Santo. “It adds to the pressure and to the string of issues for the new management. It’s hard to see how they can focus on the daily trade of selling vegetables with all this going on.”

The SFO is under new threat from closure under plans floated by the home secretary. Its director, David Green, has said those proposals are not sensible and come as the agency is taking on its most demanding workload.

”Given Green’s stated ambitions for the SFO, it is no surprise that he has trumped the FCA in this instance,” said David Kirk, the FCA’s former chief criminal counsel, now a lawyer at McGuire Woods. “The SFO will see Tesco as exactly the kind of high-profile City misconduct case that Mr Green has repeatedly said that his office should take on.”

The accounting regulator, the Financial Reporting Council, is weighing whether to launch its own probe.

Tesco’s shares shrugged off the news, and closed 2 per cent higher at 173.08p

Tesco's bullying tactics: Supplier tells Mail of harsh treatment by powerhouse
By RUPERT STEINER FOR THE DAILY MAIL

PUBLISHED: 01:03, 22 October 2014 | UPDATED: 01:03, 22 October 2014

Tom Salmon was on holiday in Tenerife when the crisis engulfing Tesco begun to unfold. The former managing director of Hedon Salads, one of the grocer’s key producers of aubergines, tomatoes, cucumbers and peppers, started having flashbacks.

Details that Britain’s biggest retailer had inflated profits by £250m, suspended staff, and launched an investigation into the way it conducts its business with suppliers, even made it over to the volcanic Spanish island.

Salmon, pictured, had experienced first-hand the relationship between the grocer and some of its suppliers that is being examined in an internal probe.



Most of the supermarkets, along with Tesco, strike similar arrangements with their suppliers.

Salmon hopes that by exposing some of the practices of the previous Tesco management, it will help the grocer start with a clean sheet when it updates on the progress of its investigation tomorrow.

His story comes with some qualifications: Salmon left the firm three years ago so his experiences are historic.

However, they reflect a time when the highly regarded former chief executive Sir Terry Leahy was at the helm.

It is also important to know that Hedon Salads collapsed into administration in 2012.

There is no suggestion that this was as a result of any of its dealings with Tesco. It supplied a number of retailers.

Hedon was the prominent supplier of fresh salad to Tesco, owning large glasshouses.

‘My company has supplied all the major retailers and I have over 40 years’ experience in the ways that they work,’ Salmon said.

‘I thought my story may help in some way explain what suppliers have gone through and give a slightly different perspective on the demise of Tesco.’

From 2002 he says Tesco started to change the way it did business and the supplier became more responsible for the prescribed profit margin that Tesco’s buyers had to achieve.

He said that over the years Tesco introduced extra charges to the supplier.

‘As time went by these charges became more onerous, first it was to pay for new quality ideas’, he said. ‘They charged for new a label system, they charged for the introduction of new technology and they took the same line every time.

‘If you want to supply Tesco you have to pay. As the years went by the charges became more unreasonable, the buyer’s profit margin was down and he or she was not going to make their bonus.

‘What were we as a supplier prepared to pay at the start of next season before the buyer would even consider us as a supplier?’

For decades, big suppliers such as Kellogg’s, Coke and Gillette have paid supermarkets to help fund promotions to shift more of their goods. This can mean they contribute to advertising campaigns on television and in newspapers, or they might fund a special display in shops.

Sometimes, when items are discounted, say from £9 to £5, it is the suppliers that pay the £4 difference. On top of this, suppliers also pay supermarkets fees to place their items in the best positions on the shelves.

At the delayed interim results on Thursday new chief executive Dave Lewis will reveal the early results of an internal investigation. It is likely to show a small group of executives struck deals with some suppliers to bring forward the payment of contributions to flatter the earnings of a particular quarter, while pushing costs into a future quarter.

But apart from this ‘inappropriate behaviour’ it may also show a culture where earnings are generated from opaque and arbitrary side deals which appear to have been integral to the financial model.

Salmon says: ‘My company also had to face a wave of supplementary charges.

‘We had to buy all our packing from a stated supplier from which Tesco took a roll [a cut] off the top. The worst case was in 2010 when the weather in Southern Spain was so bad that salad produce was very short.

‘We could not supply aubergines for two weeks and the result was Tesco fined us £45,000 for loss of profit.

‘We declined the fine and said we would not pay, they promptly took the money from our account that they owed us.

‘At the end of 2011 I retired, but I felt that the Tesco bubble was starting to burst. Suppliers could not go on supplying like this.

‘It had become impossible to service Tesco with all these add-on costs and demands.’

A Tesco spokesman said: ‘We did not have the opportunity to examine and respond to these complaints in detail. We value our relationships with suppliers. They are fundamental to the service we offer our customers and we are committed to ensuring that those relationships are based on mutual benefit.’

The reality is that most of the grocers strike similar deals with suppliers. Lewis will reveal tomorrow whether the firm went beyond what most would deem to be normal.

COMMENTS

The comments below have not been moderated.

Old Chap, Caribbean, Grenada, 1 week ago
Wow - an interesting article about corporate bullying at it's worst. Tesco's needed this correction, to get rid of the old stale and greedy bosses and their tactics, and establish a new start. I trust that a new slimmer, smarter and more honest company emerges from this debacle, and look forward to it.

Retired Oldie, London, 1 week ago
As a supplier to Tesco in Poland I can confirm all their practices set out in the article. We supplied baby and children's clothes. The buyer chose the products and then told us how many of each article we had to supply. We once warned a buyer that in our view a product chosen would not sell in the quantities she required. When we were proved correct all Tesco did was to tell us to take them back!. In the end we told Tesco that we would no longer sell any of our products to them. Other suppliers we knew who also supplied Tesco had the same experiences. These practices are not exclusive to Tesco. It is right across the board with Makro Cash & Carry, Auchan, Real, to name but a few all following the same practices

Ratcatcher, Westminster Sewers, 1 week ago
Perhaps you would prefer the French model. Suppliers there formed co-operatives and tell the supermarkets what they will pay. The result? Poor quality food, meat that costs 45£ for a small joint of 2nd quality beef. Bread that is usually sold stale. Milk that may or may not arrive in the supermarkets 5 days after Christmas. Thank your lucky stars you have Tesco, Sainsbury and the others, because Lidl and Aldi are also too expensive by British standards ,in France. If you had to pay French Aldi and Lidl prices the majority of Brits would have a heart attack.

Rich, Swansea, 1 week ago
In fairness, i shopped at the co-op yesterday. First time in years as I find them expensive. However, so many discounts. I'll go there again.

robert, kent, United Kingdom, 1 week ago
I am no fan of Tesco's but this is very slanted reporting. Very cursory examination of this supplier shows that its problems lay elsewhere and as your article reports its failure was nothing to do with Tesco. As a consumer I expect a supermarket to deliver goods at best quality and best price. Suppliers to supermarkets have enjoyed substantial growth of business through the good times (indeed some produce businesses have been successfully built solely on the back of "tied" supply contracts with supermarkets) and should expect to be "squeezed" just as consumers and supermarkets are in this new economic environment.

Maya Az, york, United Kingdom, 1 week ago
I agree with you.As a supplier Tesco have forced many british companies to shut down !!!

Maya Az, york, United Kingdom, 1 week ago
Tesco have ripped off british suppliers thats truth.Tescos downfall Article is bag on for its money !!!

Adam1, sheffield, United Kingdom, 1 week ago
The media have definately got the daggers out for the big supermarkets and Tesco seem to be in the firing line constantly. Aldi and Lidl are pretty poor in comparison but all they get is praise and free advertising.

Russell, colchester, United Kingdom, 1 week ago
The suppliers have only one problem an that's themselves .........What they should do is organize themselves form a consortium and blacklist supermarkets that don't stick to honest trading it's their produce and it's them that should dictate terms simply by withholding their goods fresh produce is the life blood of supermarkets and the threat of empty shelves will soon bring them to their senses.

INVESTMENT EXTRA: Bargain hunters are itching to pile into Tesco shares - but has the stock bottomed out?
By RUPERT STEINER FOR THE DAILY MAIL
PUBLISHED: 21:55, 31 October 2014 | UPDATED: 16:05, 1 November 2014

At Tesco, it is not just bread and milk that are going on the cheap. Shares in Britain’s biggest retailer have fallen faster than the acceleration on Phil Clarke’s Ferrari.

The former chief executive had presided over an avalanche of bad news, halving the retailer’s market value to £14bn over the past year.

A string of profit warnings, the inflation of its profits by £263m, and the suspension of eight executives pending the results of a Serious Fraud Office investigation, have all contrived to send the shares falling from more than 300p to 173.6p in six months.



But it needn’t be bad news for everyone. Bargain hunters looking to cash in on the woes of the troubled grocer are itching to pile into the stock when it bottoms out.

But the big question is: has it reached its low?

Clarke’s replacement, Dave Lewis, did his best to ‘kitchen sink’ the business last week, announcing as much bad news as possible and posting a 91 per cent fall in half-year pre-tax profits. But the gamble is whether there are more skeletons to come, the potential impact of the fraud inquiry, and macro issues affecting the industry as a whole.

The key point is, despite all the doom and gloom, Tesco is no Woolworths or HMV. It is not on its last legs, still makes a profit some retailers would kill for, and the sum of its parts are worth more than the whole. Its business in Thailand would have a £4bn price tag if it was sold to bolster the balance sheet. Eastern Europe has a value of £2.2bn, Tesco Bank £2bn and the Dunnhumby unit, which runs Tesco’s Clubcard loyalty scheme that crunches customer data, £2bn.

It arguably is top of the list of disposals, having proven useless at helping Tesco spot changing shopper habits.

Either Clarke and his team failed to interpret the data that showed a shift away from large hypermarkets to smaller convenience stores or the quality of the data captured is just plain poor. But investors willing to ride out the storm over the longer term will benefit from an eventual uplift.

Dave McCarthy, an analyst at HSBC, said: ‘Tesco has been going wrong for six years or more, and it could take as long to put things right as it took to go wrong.

‘We think Tesco could emerge as the long-term winner among the quoted sector and should be able to take the fight to the discounters.’

Look back to the length of time Sainsbury’s took to recover back in 2004, and prior to that in the 1970s when Tesco was last in trouble and Lord MacLaurin improved its fortunes. We are talking as long as eight years. For those short-term opportunists it is a different story – steer clear of Tesco, there is more pain to come.

First, the SFO investigation could rumble on for years, distracting management and affecting morale. As it is, eight senior managers have been suspended, so the executives drafted in to take their place are all inexperienced in their roles, along with Lewis, who has been in position for seven weeks. Then there are the unknown legal costs involved with the alleged fraud, potential fines and law suits.

Besides Tesco-specific issues, short-term investors will also need to bear in mind there are macro issues affecting the whole sector.

Discounters Aldi and Lidl have sparked a price war so profit margins are being squeezed, and even strong players such as Sainsbury’s are suffering. Hard up consumers are spending less and shopping habits have changed – marking a shift to smaller convenience stores and online shopping.

This is the point where financial metrics would show when Tesco is on the mend.

But with a retailer as accessible as Tesco, the best measure is to swap an investor’s hat for that of a consumer and walk inside a store.

Trevor Green, head of UK institutional funds for Aviva Investors, says: ‘My advice is: in six months’ time, go inside a store and see if there is a noticeable difference.

‘If there is, and this is borne out by an increase in market share, invest.’

Tesco suppliers launch internal health-checks on figures in wake of financial scandal engulfing supermarket
By RUPERT STEINER FOR THE DAILY MAIL
PUBLISHED: 01:03, 29 October 2014 | UPDATED: 08:14, 29 October 2014

Several of Tesco’s biggest suppliers have launched internal audits to ensure their figures have not been distorted as part of the financial scandal engulfing Britain’s biggest retailer.

Magnum Ice Cream maker Unilever, Nurofen owner Reckitt Benckiser and Procter & Gamble, which makes Pampers nappies, have all started separate inquiries.

They want to verify their own accounts are accurate and their income and costs relate to correct periods after Tesco pulled forward payments from suppliers and pushed back bills to inflate its profits by £263m.

Troubled times: Tesco is being investigated by City watchdog, the Financial Conduct Authority, over allegations it cooked the books



Troubled times: Tesco is being investigated by City watchdog, the Financial Conduct Authority, over allegations it cooked the books

The retailer is being investigated by City watchdog, the Financial Conduct Authority, over allegations it cooked the books.

The Serious Fraud Office is also watching the situation closely and Tesco has suspended eight senior executives.

Unilever insisted it was conducting due diligence rather than an audit: ‘We are doing due diligence checks, as you’d rightly expect us to whenever there are external circumstances such as these.’

The Anglo-Dutch firm is one of Tesco’s biggest suppliers, making items as diverse as Marmite, Lipton Tea and Persil. It did not say when it expected the checks to be complete.

Healthcare and cleaning firm Reckitt Benckiser – which is Tesco’s eighth biggest supplier – is less exposed because the accounting crisis is thought to centre around food.

The Durex-to-Cillit Bang maker has been checking whether it has been ‘comfortable with its accounting’ and said: ‘As you would expect we have done our due diligence.’

Daz detergent and Fairy Liquid maker Procter & Gamble also confirmed it has embarked on a similar review.

The unprecedented steps taken by Tesco’s biggest suppliers have been sparked by how the grocer books profits in its accounts.

For decades, big suppliers have paid supermarkets to help fund promotions to shift more of their goods.

This can mean they contribute to advertising campaigns on television and in newspapers, or they might fund a special display in shops.

Sometimes, when items are discounted, say from £9 to £5, it is the suppliers that pay the £4 difference. On top of this, suppliers also pay supermarkets fees to place their items in the best positions on the shelves.

Supermarkets also contribute to the promotions, so there is a transfer of funds backwards and forwards between supplier and grocer.

IAS (International Accounting Standard) 18 spells out rules on when firms are allowed to book a profit on these deals with suppliers.

Tesco (up 0.7p to 169.8p) appears to have bought more time making its figures look better than they were by including supplier contributions that depended on it hitting sales targets that had not been met.

The allegation is that it persuaded suppliers to make these contributions even though they had not been triggered, in exchange for future benefits such as cash back in the future.

The concern is that in order for Tesco to have inflated its profits, even temporarily, the flip side is there will be a black hole wherever the sums came from. It is not known which suppliers are implicated. Unilever, Reckitt Benckiser and Procter & Gamble have been quick to perform internal health checks, but there is no suggestion that they are involved in any wrongdoing.

Other big suppliers including Coca-Cola, Kellogg’s and Dairy Milk-maker Mondelez refused to comment.