Llangollen Railway

I'm not sure that ("their heap of rust is worth big ££££ and thinking they can cash in") was meant as 'people get into these things with the sole/primary aim of making a ton of money' (which I agree would be most unfortunate), I think it was like more meant as 'owners of coaches will all be thinking that their thing is worth a lot more that they thought it was (which was close to nothing), and rather than have it sit in a corner, taking up space, and continuing to evolve into a pile of rust, they'll be thinking 'ho, that's actually worth something, let me pass it on to someone who's clearly quite interested in it - given the amount they're willing to pay - and thus will actually do something with it, unlike me; and I'll get some money I can use - win-win for all parties involved''.

This happens a fair amount in the vintage computer field, which I'm quite active in: there are some non-enthusiasts who try and flog things they've found for a lot more than the going rate ('value' for all these things being a somewhat nebulous concept, past 'what someone will pay'), caring only about making a quick profit; but there are also long-established collectors who picked things up back when they almost couldn't be given away, and are now very happy to find out that they can now be sold for considerable amounts - to people who will care for them. Win-win again, I've been happy to be on the buying side of some of those deals. Some long-time collectors, who were used to being given stuff for free, are unhappy about that - which I can understand - but I look on the bright side: it does mean major pieces of history are less likely to be scrapped - which, sadly, does still happen.

Noel

 

They can think what they want, that will entirely depend on a buyer matching their price, basic supply and demand is how prices are determined.

 

I wonder if the person now trying to sell ex IOW tube cars in derelict condition for £32k on E bay has been getting ideas from the Llangollen auction!

 

Plus proceeds from the Spa Valley coach sale and the Trust purchase of track etc.

Interesting to compare the value of the sale proceeds with the book values at 31.12.19

Leasehold property £181k
Track and rolling stock £133k
Fixtures and fittings £173k

Net asset book value £499k

Patrick

 

I wonder if we might see some railways update the book value of their coaching stock fleets as a result of this?

 

Yes that does sound incredibly low. £133k for track and rolling stock. Even if the track were only valued for a nominal amount, they were valuing Mk1s at around £10k each

 

The values quoted are I assume written down values ie purchase price less cumulative depreciation.

This is standard accounting practice.

Marking to market is not normal for assets not held for resale.

 

Indeed standard accounting practice. The problem here is deducting depreciation when in fact the assets have significantly appreciated in value.

 

I'm old enough to remember the days of current cost accounting, fortunately those days are well behind us. However, yes the directors of a company should know the approximate replacement costs of a company's assets. But we are getting well off topic now.

 

Right; it does make it more difficult to get a true picture of the overall financial picture, though.

Which does make me wonder if the bank and/or PLC would have called in the receivers if the accurate value of the physical assets had been known?

Noel

 

Agreed, although is there much of a market with prices freely available for such items. (Yes slightly arguing against myself in post 1648).

What I'm not clear on is how much the company was insolvent by - and whether the figure of £350k quoted is accurate and includes the probable settlement value of the various claims by the Patriot society etc.

 

That's my understanding and the money realised in the auction is AIUI less than £600k so not enough to cover the deficit.

 

I’ve seen a few decent condition Mk1s and Mk2s being sold over the past few years with prices of around £30k mentioned. So there are precedents.

 

£350k net debt reported at administration.

If net book assets were circa £500k then I've assumed that gives total creditors of something like £850k, including the crystallised £250k engineering liabilities that triggered administration. Were that to be the case then raising ~ £500k net through sales would go first to administration costs and secured/preferential creditors (e.g. Nat West, HMRC) with hopefully something in the £ to filter through to unsecured creditors.

All these numbers are as reported at different dates, so could be out by a margin.

Patrick

 

As a general comment I'd observe that there is a saying in accountancy : "A company should keep three sets of books. One for the taxman showing the least profit, one for the bank showing the best profit, and the real set.
There is a lot of sense in that as too often the owners/managers of a company lose sight of the real value (or lack of it) of their organisation and make decisions based on, not false but, misleading information.

To address the second point : one of the problems with specialised assets of this nature is that it can be very difficult to establish value when sales are few and far between. In this particular case everybody seems surprised at the values raised which suggests that even "the real set" would not have reflected the actual amounts achieved.