TVR scorches to £11m loss...
Discussion
Taken from Autowired.com...no wonder they're making chamges..
TVR scorches to £11m loss
RUSSIAN-OWNED sports car maker, TVR, scorched to a re-tax loss of £11.m in 2004.
The previous year it recorded a loss of £997,000.
The company was purchased by Nikolai Smolenski in July last year.
An investigation into the value of stocks, stated in the 2003 and previous year's accounts, resulted in material adjustments being made to stock values and other balance sheet items of around £8m.
The company's accounts state that 'the loss for the year is mainly the result of the inherited accounts with a particular emphasis on stock'.
Grant Thornton, which was appointed auditor on Oct 14, qualified the accounts.
Turnover at the Blackpool firm was down by 22% to £16.7m but continuing funding will be available to support the company's future growth said the company.
TVR scorches to £11m loss
RUSSIAN-OWNED sports car maker, TVR, scorched to a re-tax loss of £11.m in 2004.
The previous year it recorded a loss of £997,000.
The company was purchased by Nikolai Smolenski in July last year.
An investigation into the value of stocks, stated in the 2003 and previous year's accounts, resulted in material adjustments being made to stock values and other balance sheet items of around £8m.
The company's accounts state that 'the loss for the year is mainly the result of the inherited accounts with a particular emphasis on stock'.
Grant Thornton, which was appointed auditor on Oct 14, qualified the accounts.
Turnover at the Blackpool firm was down by 22% to £16.7m but continuing funding will be available to support the company's future growth said the company.
I don't know why everyone is sounding so shocked.
I read it as 22% decrease in turnover due to stopping manufacture for 6 months to address quality issues. This probably also explains the "missing" £3m.
£8m stock written off. That's probably the chocolate finger-followers and other sub-standard parts that the company had when NS bought it.
It's the current year's accounts that you should really be interested in if you want to assess the health of TVR.
I read it as 22% decrease in turnover due to stopping manufacture for 6 months to address quality issues. This probably also explains the "missing" £3m.
£8m stock written off. That's probably the chocolate finger-followers and other sub-standard parts that the company had when NS bought it.
It's the current year's accounts that you should really be interested in if you want to assess the health of TVR.
tvr-er said:
Taken from Autowired.com...
An investigation into the value of stocks, stated in the 2003 and previous year's accounts, resulted in material adjustments being made to stock values and other balance sheet items of around £8m.
The company's accounts state that 'the loss for the year is mainly the result of the inherited accounts with a particular emphasis on stock'.
Dont get confused and think that the whole £8mill was written off the the profit and loss account, this is just not so.
Unless you know the value of the 'stock' which is one item that would be written off to the P&L, you will never truley know what the company was making before this adjustment.
I would hazzard a guess that the other movements were such items as pensions and revaluation of buliding and equipment under the impairement review. Mosts of these would be balance sheet movements, but just to different parts of the balance sheet, not P&L and not reflecting the trading Loss of nearly £1mill
Mr F
Another thought is that different owners would want to achieve different things from the accounts.
PW probably new he wanted out beofre any economic slowdown left his pension dented and so the accountants would have worked on a different basis.
Young NS may prefer to take the hit now and change things to suit the way that he wants to run the biz going forward.
PW probably new he wanted out beofre any economic slowdown left his pension dented and so the accountants would have worked on a different basis.
Young NS may prefer to take the hit now and change things to suit the way that he wants to run the biz going forward.
My first asumption was that because the sale was so quick, there was no time to assess true stock value so an assumption was made, it was his gamble if he took it. Basically, when you think about it, when they build a show car prototype like the Griffith/Tuscan they did in yellow all those years ago, that has to have a stock value, the labour, materials all that stuff, even its £25k, it gets written off. Add those up for the cars that didn't make it, it soons adds up over the years.
Its not bad press, there was a point at the end of the Telegraph article which said the funding wouldn't stop any future growth or development which is excellent news. Exciting times ahead i'd say.
Its not bad press, there was a point at the end of the Telegraph article which said the funding wouldn't stop any future growth or development which is excellent news. Exciting times ahead i'd say.
Makes me smile.
The stock was valued at £8mill and now isn't worth that. In my trade we call it accounting differences. You call it creative accountancy to inflate the balance sheet.
When buying a company the first thing you do is check the stock and its valuation/method of valuation along with its future cash flows. I would say the company was worth X and the value paid probably excluded the stock because of inconsistences/need to write the old or worthless stock off.
NS has the money to up TVRs game plan and with what looks like a broad brush he has swept out the old and is starting a fresh which can only be good news.
Good lad I say
The stock was valued at £8mill and now isn't worth that. In my trade we call it accounting differences. You call it creative accountancy to inflate the balance sheet.
When buying a company the first thing you do is check the stock and its valuation/method of valuation along with its future cash flows. I would say the company was worth X and the value paid probably excluded the stock because of inconsistences/need to write the old or worthless stock off.
NS has the money to up TVRs game plan and with what looks like a broad brush he has swept out the old and is starting a fresh which can only be good news.
Good lad I say
sammi said:An accounting adjustment like this doesn't give us any way of judging whether or not NS mis-valued the assets when he purchased them. Book value and economic value are only just on nodding terms. If you think you're about to make a profit it is very handy to create a paper "loss" so that you make a nice fat operating profit, nice fat return on capital employed, yet pay no tax. I've forgotten how many tax years you can carry a loss forward ... three or four, maybe?? (Accountants??)
[quote=DodgeyRog]"My first asumption was that because the sale was so quick, there was no time to assess true stock value so an assumption was made..."
Think this is closer to the truth. A bit of a lack of due diligence to the tune of £8 million !
ATG said:
[quote=DodgeyRog]"My first asumption was that because the sale was so quick, there was no time to assess true stock value so an assumption was made..."
Think this is closer to the truth. A bit of a lack of due diligence to the tune of £8 million !
An accounting adjustment like this doesn't give us any way of judging whether or not NS mis-valued the assets when he purchased them. Book value and economic value are only just on nodding terms. If you think you're about to make a profit it is very handy to create a paper "loss" so that you make a nice fat operating profit, nice fat return on capital employed, yet pay no tax. I've forgotten how many tax years you can carry a loss forward ... three or four, maybe?? (Accountants??)
I think you read too much into a situation that was quite simply "old stock" woefully overvalued !
Size Nine Elm said:
Sounds like the due diligence may not quite have been up to scratch... like writing off £8m from the books.
Wonder if there's any clawback from PW?
What I was told (from someone close to the factory, but it is second hand so maybe not absolute gospel) there was no due dilligence. There were one (or two?) other possible interested parties who were doing a due dilligence check at the time, and had NS done the same he would have been beaten to the deal assuming one of the others already in the frame made an offer. I understand he skipped the checks just to get in there first and make the deal.
WB
Gassing Station | General TVR Stuff & Gossip | Top of Page | What's New | My Stuff