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S&D Railway Trust and Washford Eviction Notice

Discussion in 'Heritage Railways & Centres in the UK' started by Andy Norman, Feb 24, 2020.

  1. Bayard

    Bayard Well-Known Member

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    I'm thinking he is Rip Van Winkle writing under a pseudonym and he's just woken up having gone to sleep in the eighteenth century.
     
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  2. Monkey Magic

    Monkey Magic Part of the furniture

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    Can anyone remember who wrote the ‘cuckoo in the nest’ statement?

    I think it would be very difficult for there to be confidence in the HRA because of the close links.

    I suggest that the best way forward would be for the HRA to identify a suitable independent arbiter so that all parties can have confidence in the process and it’s transparency.

    I might be being a bit stupid here, but wouldn’t an expert in tenancy law be best placed?
     
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  3. 35B

    35B Resident of Nat Pres

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    If correct - and it seems logical - then the discussion on this point provides an interesting illustration of how trust has been eroded by the way in which the plc management appear to have operated. I wonder if trust will eventually prove to be the greatest casualty here.
     
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  4. D7076

    D7076 Member

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    It's all explained in the accounts .The 31/12/17 provision for 53808 was restated .In the period to 31/3/19 the provision for 44422 was removed as the contract ended,and a further £43k of provision provided for 53808.No other locos owned by others on a use and overhaul contract .If you assume constant wear and tear,a 10 year boiler life and say a £430,000 overhaul cost then the provision should increase by £43k a year then be reduced during overhaul so back to £0 provision on reentering traffic.Of course work could be undertaken during the 10 years to reduce the expected cost such as a retyre or new tender tank for example .
     
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  5. Monkey Magic

    Monkey Magic Part of the furniture

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    I was reading the independent report into the WRSA and the report kept on hammering home two things - lack of trust and the lack of transparency.

    Plus ça change, plus c’est la même chose
     
  6. twr12

    twr12 Member

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    Whoever the independent arbiter is, a number of people posting on WSR matters have wallied themselves!
     
  7. Matt78

    Matt78 Well-Known Member

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    not necessarily. Professional mediators do not need to be lawyers although some are. It’s more important as a mediator to have people skills and ability to see opposing sides of an argument and powers of persuasion. A successful mediation would inevitably involve compromises on both sides, what those compromises might be at this stage is anyone’s guess.
     
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  8. Bayard

    Bayard Well-Known Member

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    I am not an accountant, so forgive me if I have got the wrong end of the stick, but, as I understand it, a provision in the accounts is a future expenditure the company knows it will have to make and the figure in the accounts goes on the expenditure side of the profit and loss account. So, if the company reduced the provision for the overhaul of 53808 by £287,302, then that figure will come out as an extra £287,302 on the profit side in the accounts. Now it may be that No 53808 was found that year to be in a lot better condition than it was previously thought, however, was not the larger provision for the overhaul part of the thumping loss that the company made one year and was not the reduction part of the amazing profit it made the following year? Who decided to allow £405K for the overhaul in the first place, bearing in mind that 53808 is half way through its ticket? Or have I got this wrong, because, on the face of it, this looks very much like the sort of accounting sleight of hand that potential investors in stocks and shares are warned to look out for?
    Incidentally, it seems from the posts above that the £287,302 figure is entirely a provision for 53808's overhaul and other locos have their own provisions. Also, if the company was able to rid itself of the provision for 44422's overhaul along with 44422 itself without incurring any expenditure, that would also explain where some of the last year's profit came from.
     
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  9. D7076

    D7076 Member

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    In 2017 accounts there was a debtor and a liability for loco overhaul-on the basis the company was obliged to overhaul 53808 and 44422 and then have future benefit for that overhaul. I thought 4f was on a 25 year lease(so overhaul and use for next 10 years),but 7f was use for 10 years then overhaul(so WSR would not have the benefit after overhaul without a new agreement)-in which case why the asset?),but I could be wrong on those contract lengths.
    As the figure is both an asset and a liability it does not affect profit or loss. Think of it as I lend you £100 so you have £100 asset(cash) and £100 liability(owe me),you then give me £50 back so you have £50 cash and £50 liability-however your profit/loss is £0.

    Moving on to 2019 the 53808 2017 provision was deemed £287302 too high and so the 2017 asset and liability figures were both restated and reduced by £287302,so affecting neither 2017 profit or 2019 loss.
    Within 2019's loss however is an increased 53808 provision of £46663 (again an asset and a liability so no effect on loss) and a reduction in 44422 provisions of £81400 as lease terminated).At 31/3/19 the 53808 overhaul provision was £118,537 for a loco 4 years? through its boiler certificate which suggests to me a £250k overhaul cost is envisaged after 10 years.
     
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  10. Bayard

    Bayard Well-Known Member

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    Thanks for that. It still seems odd that the provision for the overhaul of 53808 should be reduced by so much, effectively from circa £800K to circa £250K. As far as I know the agreement with 53808 is that the Plc gets a newly-overhauled loco at the start of the ten years and returns it newly overhauled at the end of the agreement, so all the benefit to the Plc is before the overhaul. They are now saying they can't afford the overhaul, so they get the asset without the liability.
     
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  11. nanstallon

    nanstallon Well-Known Member

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    Spiv economics.
     
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  12. D7076

    D7076 Member

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    If that's the case and say £43k a year provision then would expect £43k a year cost and increase in provision but no corresponding debtor,so £430,000 provision whilst loco used released against the overhaul cost after use.
     
  13. jumper

    jumper New Member

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    For accounting purposes, provisions and depreciation are not 'cash items' as such. They are there to demonstrate (if used properly) how profitable, or not, the business is, year by year. For example your business makes a profit of £40,000 on your day to day activities. However, you purchased a computer system for £10,000 which you expect to have to replace after 5 years. Hence you have depreciation of £2,000 per annum to write down the worth to Nil at the end of 5 years.

    You also have a steam locomotive which you estimate will cost £400,000 to overhaul after (hopefully) 10 years. So you make a provision of £40,000 per annum to allow for this.

    So you have to deduct the depreciation and provision from your (day to day) profit and instead of a surplus of £40,000 you actually made a loss of £2,000.

    Of course the depreciation and provision turn into 'cash items' when you have to replace the computer system and overhaul your locomotive. Whether you can do this depends on whether you have enough retained profit (cash) in the preceding years. If you haven't .....
     
  14. ross

    ross Well-Known Member

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    You are right. I am sure there is a sound, considered and justifiable business reason behind this strategic decision that was taken by an independent, intelligent management committee. Positive
     
  15. Matt37401

    Matt37401 Part of the furniture

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    You know what, with an attitude like that why should I give a damn about what goes on at the Dean Forest?
     
  16. Piggy

    Piggy New Member

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    Not so, especially when one party is judged to be primarily at fault.
     
    Last edited: May 5, 2020
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  17. D7076

    D7076 Member

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    But in this case with a long term debt contraing the long term liability for 53808 there is,in reality ,no cost provision in the accounts on the assumption the PLC will get full benefit of the future cost .
    Per SDRT 31/12/18 accounts the lease for 53808 expires 30/4/30.
     
    Last edited: May 5, 2020
  18. jma1009

    jma1009 Well-Known Member

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    I think myself the path to mediation is fraught.

    Never been a fan of it myself.

    The WSR PLC board think they can get this done for free by their friends at the HRA, but this will not be the case, and they have misinterpreted the clause in the lease they mention in the 'Joint Statement'.

    I wonder if the 'Emergency Appeal' funds donated to the WSR PLC will be used to pay the not inconsiderable costs required up front by the HRA for it's appointed "arbitrator professional" over all this? And also it's legal costs in preparing the case for arbitration/mediation?

    I have toyed with the idea the WSR PLC might dump some of it's PW stuff currently at Dunster at Stogumber...

    Wouldn't that be a good idea?!

    Cheers,

    Julian
     
    Last edited: May 5, 2020
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  19. Monkey Magic

    Monkey Magic Part of the furniture

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    That makes sense. Thanks for the explanation. Would it not make sense then to go to a professional arbitration organisation similar to ACAS rather than using the HRA?
     
  20. Matt78

    Matt78 Well-Known Member

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    It is fairly standard in the heritage rail industry to have a clause in contracts advocating the use of the HRA as a “mediator” in the event of a dispute. If either party had a concern about using the HRA directly then the parties could agree a different appointment.

    Also worth noting that the parties can chose to have their legal representatives present as part of the process.

    @jma1009 - meditation isn’t everyone’s cup of tea but the costs of mediation pale in comparison to the costs of a contested hearing in court (especially for the “loser”) which has been a stated concern on here so for that reason alone it’s worth giving a try. There was a second complaint that correspondence wasn’t being answered (this has been stated by both sides) so again, having the parties sit around a table (or at lest be in attendance at the same venue with the mediator taking to both and moving back and forth) can also be seen as a good thing.
     
    Last edited: May 5, 2020

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