PracticeAccounting FirmsTenon forecasts profits gloom

Tenon forecasts profits gloom

Doubts were this week raised that Tenon, the UK's largest accountancy consolidator group, may not reach meet its expected £1m profits expectation, just weeks after issuing a profits warning.

Last month, the group issued a statement suggesting profits for 2001 will be between £500,000 and £1m against an expected £6m, when its first full-year results are released next month.

It is not clear whether the revised figure includes any amortisation. If not, profits could be reduced.

Gary Romain, Accounting Standards Board project director, said the issue of amortising goodwill can affect the bottom line, depending on the amount in question.

He said: ‘It is difficult to judge, but if a company is amortising goodwill over a short space of time, it can have a serious impact on results over that period.’

Prior to the group entering a closed period, Tenon financial director, Jonathan Freedman, told Accountancy Age: ‘We are amortising goodwill over varying rates from two to three years up to periods of 20 years.’

The practice was criticised by Charter Group chief executive Phil Shohet.

He said: ‘The depreciation method should be the same across the board, except in exceptional circumstances. It is imprudent to use this method.’

However, defiant Tenon chief executive Ian Buckley has repeatedly stated: ‘We always maintained that 2001 would be a year of coming together and 2002 will be the year of delivery.’

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