MARC HASENFUSS: Burning down the Steinhoff house
While it’s noble to remain inside the burning building, the big question lingers: who allowed certain executives to play unsupervised with matches?
Jebb McIntosh, CEO of perennially profitable vehicle retailer Combined Motor Holdings (CMH), is hardly mellowing with age. In recent years, his commentary accompanying the firm’s financial results has become increasingly sharp around political and economic issues. In CMH’s latest set of results, McIntosh lashes out at ever-changing number-crunching rules, raising concerns around "the disturbing impact which some accounting principles can have on the economic realities of business". Specifically, he raises the ridiculous way in which the company has to account for its numerous property leases: an accounting principle requires the rental charge to the income statement to be equal for each period of a long-term lease. As he succinctly notes, no allowance is made for the fact that lease payments are adjusted annually to recognise the effect of inflation and high interest rates on property values and required returns. While the degree of distortion is negligible in major economies where ...
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