Llangollen Railway

I did rather get the impression in the autumn that the penny dropped that maybe she hadn't been doing so quite as well as they directors were entitled to expect - especially with hindsight, postings from the autumn suggest things were in a pretty dire state, and that this week's announcement shows how little room for deterioration in the plc's situation there was.

 

As far as I understand the operating company is going under. The rolling stock, and infrastructure are not owned by this organisation, maybe some workshop equipment is but that can be bought from the liquidator for a pittance, if not already 'sold to one of the other entities to raise funds' for peppercorn amounts.

 

There has been much talk about the impact of the failure of the engineering business and subsequent perusal by affected groups on the demise of the PLC. Whatever your view on the reasoning for the failure of those contracts, whether that be a unsatisfactory standard of work in some areas or poor project management, I think it should be said (in a purely personal capacity) that none of those on the 'other side' of the claims wanted Llangollen to fail. It wasn't in the interest of any party for the PLC to collapse; the SRPS had not pursed the PLC in the courts and had been working constructively with the new Board of Directors to try and arrive at an amicable solution for both parties as recently as last week.

At the end of the day we are all preservationists and give our time to the sector because it is something we love. The PLC's collapse hasn't brought anybody any pleasure; many of my colleagues had previously enjoyed several trips to Llangollen both accompanying 'Morayshire' and for general days out. I genuinely hope that I'm able to take a trip on the train through the rather spectacular looking Welsh scenery at some point in the near future!

I must reiterate the above comments are said in a purely personal capacity and do not necessarily represent the views of the SRPS.

 

Can you please then answer why the plc lists track amongst its assets? Thanks.

 

This is all excellent in theory, but you do understand it will raise the price for the work? What you describe (in essence "work completed before payment") moves the cashflow position significantly. That has to be paid for ... in a higher price to the consumer.

I'm the CEO of an engineering business - I have this trade off conversation with potential customers all the time...

It's a harsh fact, but the majority of small businesses that fail in the UK do so because of cashflow, not because of losses. In other words, they have to stope because they have no cash in the bank, even though they are owed money.

 

Anyone who is in this game and doesn't consider locomotive repair and overhaul services to be risky should not be in the game!

An overhaul is a long term, labour intensive, activity on an illiquid asset. Done by volunteers over a long period is totally different to doing it as a commercial business. As a business with overheads, having so much tied up in a small number of long projects is always going to be giving the owners sleepless nights. Until you get to a scale (guessing - 10 concurrent overhauls?) where you can start to spread the risk. There is a reason why commercial overhauls are generally done faster. It's not just because the people are working 8 hrs-day; its to get the required throughput to cover the overheads.

 

Sad times

 

A small section of the track was paid for by the plc. Happy now ?

Bob.

 

Thank you - I imagine the auditors may well be on the receiving end of a ' please explain letter ' from the FRS.

 

Any reputable outfit will be trading on 30 day terms, I don't get what you are trying to say.

Contractor: month ending Jan 31st:

Loco Thomas No. 1.

100 steel stays have been fitted to your boiler, we have metalled and machined 4 off eccentric sheaves.

Customer visits near the turn of the month, you'd be expecting an invoice then anyway and it's good practice to be visiting atleast monthly if got a long drawn out overhaul underway with a contractor. Oh yes, 100 stays fitted, check and measure eccentric sheaves are machined to required dimensions, treasurer pays within 24 to 48 hours, these days likely electronically, so well within payment terms. A group I am involved with is often praised for prompt payment which is often much appreciated, it's not difficult. It may be that you receive a number of invoices per month, but if visiting atleast monthly non will be going overdue.

Some items take months and obviously stage payments are likely to be requested, hypothetically it would be wise on the part of the customer to spot an issue at stage one or stage two rather than be handing over money on receipt of an invoice to later discover during a site visit that an incorrect machining operation at stage one has rendered the item unusable having paid up to stage six for arguments sake. This is also of benefit to the contractor who now hasn't got a scrap item they have spent many hours working on which the customer will now understandably want some sort of recompense for.

I've never had issue with any contractor following the above principles, quite the opposite infact.

Mike

 

Given that the receivers have a duty to raise as much cash they can by selling property belonging to the PLC, and given that much of that property is worth more as part of an operational railway than as scrap, it would seem best for the trust to buy as much as possible, with an appeal for funds if necessary.

What is the receivers' responsibility if there is a prospect of raising £X at short notice or £X+Y pounds a bit later?

Edit: deleted an extraneous word.

 

Bob, there must have been a lot going on behind the scenes by you and others to secure the business. Hopefully you can find a way through, lots of people are wanting the Llangollen to succeed. Ideally that goodwill needs to translate as financial and practical help for the Trust!

 

The new board, which I hurriedly had to co-opt last October, has done a huge amount of work to try to rescue the plc, but unfortunately the task was too great. A lot of hard work has been put in, especially by those tasked with sorting out the admin side.
The same people will now be concentrating on making the future operation of the Trust their priority and I have no doubt that they will achieve that.
In the meantime please give us two to three weeks to sort things out and hopefully we will be able to offer some good news.

Bob.

 

Having been involved in winding up a company. I seem to recall my rather straight talking accountants comments that 'I've never met a reciever who wasn't bent, all they're interested in is ensuring there's enough cash to pay their fees'

 

This is sound advice and I agree with it. It is something I endeavour to do with all my contracts. However, there is a 'but' to it. Either as a volunteer or paid professional there are always calls on my time and that time has to be managed and priorities decided upon. Boilermakers unlimited rightly want paying when the contract says and will not be happy if they have to wait until it is convenient for you to visit. It is not too bad if they are just down the road but if they are a couple of hundred miles away, that is a whole day or maybe more gone from your busy schedule to look at a few stays fitted or some welding done. I have recently had discussions with someone about prospective contractors for a major engineering job and I put emphasis on distance over the ability of the contractor to undertake the work, especially as some of the firms were the best paert of 300 miles away from them. I've been in the engineering game long enough to know that even the best known firms will pull a fast one from time to time and, if being able to pay regular visits is not going to be practical because of distance or whatever, then you should think twice about using them. Admittedly, though, in our cottage industry it may not be possible. I do wonder how often the SRPS nipped down to Llangollen to see how the job was going? Was it monthly, because that would have been some commitment unless they had a chopper at their disposal.

 

To an extent that’s fair enough since nobody would do it for nothing. It is the bank’s responsibility to appoint a competent receiver who will achieve the maximum return for them (I.e. the bank who have risked their own money by giving the loan in the first place) in return for a reasonable fee.

 

Indeed so. There is a tremendous depth of support for the Railway and I am sure that an appeal by the Trust offering clarity of purpose would be extremely well supported. As a shareholder, donor and life member I wait in anticipation.

 

I am not surprised that you've not had issues with contractors if that is how you operate. They must bloody love you. Most outfits settle invoices at 29 3/4 days at best, and will leave it longer if they can get away with it.
ChuffChuff's observation of small businesses being victims of cashflow matches my own. Slow payers tie up your working money until you get to a point where you can't fund further work.

 

Good luck