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Llangollen Railway

Discussion in 'Heritage Railways & Centres in the UK' started by 14xx Lover, Jan 4, 2010.

  1. jnc

    jnc Part of the furniture

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    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
     
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  2. GWR4707

    GWR4707 Resident of Nat Pres

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    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.
     
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  3. Alan Kebby

    Alan Kebby Member

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    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!
     
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  4. D1039

    D1039 Well-Known Member

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    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
     
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  5. flying scotsman123

    flying scotsman123 Nat Pres stalwart

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

    Alan Kebby Member

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    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
     
  7. simon

    simon Part of the furniture

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    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.
     
  8. Alan Kebby

    Alan Kebby Member

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

    simon Part of the furniture

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    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.
     
  10. Pete Thornhill

    Pete Thornhill Part of the furniture Staff Member Administrator Moderator Friend

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    But have they or have people took a once in a lifetime opportunity?

    Certainly the auction situation we just had is unique in the heritage railway world, makes you wonder if people bid more on that basis.

    However, that said, the GWSR want £15k for the ex IR steam heat van which is basically ex service and requires work. Based on that, £30k ish plus for a runner sounds about right. It would be interesting to see the book values placed on stock by the various railways. I understand depreciation but if the value is too low to start with....
     
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  11. jnc

    jnc Part of the furniture

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    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
     
  12. simon

    simon Part of the furniture

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    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.
     
  13. Pete Thornhill

    Pete Thornhill Part of the furniture Staff Member Administrator Moderator Friend

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    Pretty sure it was £350k total with £250k for the engineering problems.
     
  14. simon

    simon Part of the furniture

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

    Alan Kebby Member

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    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.
     
  16. Sidmouth

    Sidmouth Part of the furniture Staff Member Moderator

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    Equally though inflating book values would not resolve the fundamental problems of mounting debts alongside the customers seeking redress for the engineering side

    from other posts a dysfunctional board , maybe imbued with too much self interest creating the foundation for the scenario which unfolded .

    The question though given the value raised , the managed sale of selected vehicles and equipment may have allowed enough of the debt to be settled to allow the railway to have continued without the nuclear option of administration and the costs that the process will have incurred
     
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  17. Pete Thornhill

    Pete Thornhill Part of the furniture Staff Member Administrator Moderator Friend

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    No, I meant £250k of engineering debts but a total of £350k so £100k other debts, that was how I had read it anyway.
     
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  18. The Saggin' Dragon

    The Saggin' Dragon Part of the furniture Staff Member Moderator

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    Hmmm ...
     
  19. D1039

    D1039 Well-Known Member

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    £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
     
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  20. The Dainton Banker

    The Dainton Banker Well-Known Member

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    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.
     
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