Severn Trent Water "It's all perfectly legal"

[denso13]

Now If Denso Ltd buys shares in Denso-wife of 2bn then you have 2Bn of fake value.

Precisely. It's an accounting trick to benefit Severn Trent on paper only.

 

[carmanmemoranda]

you think it will be paid? with what?

That's exactly the point isn't it.

Ask 7 water

 

[motorbiking]

Precisely. It's an accounting trick to benefit Severn Trent on paper only.

Is there evidence of the debt being over valued as an asset and under valued as a liability?

 

[JohnD]

Is there evidence of the debt being over valued as an asset and under valued as a liability?

Are you attempting to disprove Denso's statement that

"It's an accounting trick to benefit Severn Trent on paper only."

 

[motorbiking]

Are you attempting to disprove Denso's statement that

"It's an accounting trick to benefit Severn Trent on paper only."

You really do struggle with question marks.

Are you asking a question?

 

[JohnD]

You really do struggle with question marks.

Are you asking a question?

What do you think?

"Are you attempting to disprove Denso's statement"

 

[motorbiking]

What I think is this:

You need to read the BBC article quite carefully. According to 7trent, they were trying to build value in the assets of future revenue. There is nothing wrong with that, the "order book" is secure. Panorama argue, that its a deliberate inflation of profits in order to pay inflated dividends. Except they don't actually say that and the debt is balanced at TopCo. This would also be an allegation of criminal wrong doing and that could result in legal action.

So we are left with why did they do it... maybe this maybe that...

I suspect they are capitalising profits, to legitimately avoid tax but can't very well say that.

 

[denso13]

Is there evidence of the debt being over valued as an asset and under valued as a liability?

No idea.

Why would a parent company buy shares in a shell company, with no assets or cash, for £3b? A company they previously agreed to buy for £2.

A retired auditor told the programme: "This is as near to an unreal transaction as you can get - that has just been made up and put into the accounts to make the accounts look better.
"I think it misleads the reader to think that the net assets of Severn Trent Water Limited are higher than they are and that the company is in a much healthier position than it really is. So I think the balance sheet, the financial statements, are misleading."

 

[JohnD]

Precisely. It's an accounting trick to benefit Severn Trent on paper only.

Yes.

I don't anybody seriously denies that.

 

[motorbiking]

No idea.

Why would a parent company buy shares in a shell company, with no assets or cash, for £3b? A company they previously agreed to buy for £2.

A retired auditor told the programme: "This is as near to an unreal transaction as you can get - that has just been made up and put into the accounts to make the accounts look better.
"I think it misleads the reader to think that the net assets of Severn Trent Water Limited are higher than they are and that the company is in a much healthier position than it really is. So I think the balance sheet, the financial statements, are misleading."

The value of a company is more than just the assets - liabilities. If you have a strong future revenue stream. You can bank it today in the way every company does - shares.

 

[denso13]

I prefer the auditor's assessment.

 

[motorbiking]

You understand that the retired auditor's ex-employer and the company who signed off the books are one and the same?

 

[denso13]

Don't think so? I thought it was Deloitte and PwC.

 

[motorbiking]

Well I wasn't going to name them.

He's ex PWC and they are the new auditors.

 

[denso13]

So not one and the same.