When I [Editor Steve] began looking at the role of equity capital in companies, I started out feeling sympathy for company directors, like those of Tunstall, which run businesses saddled with large debts. However, I have learned a few things along the way and my sympathy has evaporated somewhat.
I’ve also concluded that I understand very little about the magical world of company finance, but I’ll do my best to explain how I came to this conclusion after looking through two sets of Tunstall accounts for October 2008-September 2009 which recently become publicly available. [Note for US readers – although Tunstall is privately owned, its accounts are in the public domain.]
The first set of accounts, for Tunstall UK, gives a rosy picture. Profits of £28.7million before tax on turnover of £86.4million. However, Tunstall UK is just one part of the UK-based Tunstall Group, which made the astonishing — to me — loss of £84.1million on a worldwide turnover of £141.7million.
How was this loss achieved? And — this is where my accountancy friends tell me my lack of company finance understanding kicks in — how come a company in this position can still be a going concern? (more…)
Most Recent Comments