Financial Statement

As you may have read in a previous post here the company I work for was sold by Glen Group to Maxima at the beginning of the year.

As I had shares in Eclectic, these were transferred into Glen Group shares. Unfortunately, as the purchase was a cash deal, I did not get Maxima shares but am left with Glen shares. As such I still get copies of the annual financial statement. Imagine my surprise to read on the front page.

Eclectic was the biggest company in the group and sat at the heart of the business in terms of turnover and profit. However, Eclectic performed below expectations, particularly in the second half, and when the opportuity arose we elected to dispose of Eclectic and inGroup and completed the sale in early January 2008.

Nothing “too” bad there.

It then continues with:

In the first half, Eclectic reported a strong operating profit of £191k. This was after an investment of £76k incurred in that period to develop Oracle and Microsoft consultancy practices. In the second half Eclectic experienced an operating loss of £116k making the full year operating profit a most dissapointing £75k. Although part of this was caused by an increasing investment in the new practices which resulted in further costs of £136k in the second half, the result was significantly below expectations resulting in your Board immediately having to consider the future of this business.

The disquiet begins!

However, then we start to get into the financial nitty gritty:

Operating Profit 12 Months £
Eclectic 75,030
InGroup 6,337
Glen Communication (681,888)
Pinnacle Group 41,302
Glen Group (567,475)

What a shocking profit turned in by Eclectic, I’m no accountant but does that not make Eclectic the most profitable part of the business?

This is explained away by:

The result has been coloured by the investment made to develop Oracle and Microsoft practices during the year which totalled £212,467, without the generation of any corresponding material income. With these development costs excluded, Eclectic would have delivered a profit of £287,497.

To put these practices into context:

Oracle – Emerging business partner of the year award goes to ….. Eclectic

Microsoft – Produces 36 customer references, becomes gold certified partner and small business specialist …. Eclectic

Make your own mind up !

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