Fairline Boats purchased

[DougH]

If anyone who runs a company and supplies registered companies or self employed persons and wishes to safeguard themselves I suggest they they insure their Debtors Ledger with an insurer such as Euler Hermes UK.

You insure the whole of your sales, both safe and doubtful , and pay a yearly premium.

The insurer is requested by you to set a credit limit to the level that you think necessary and you trade within the set payment periods you agree up to that level.

In the event of protracted debt or bankruptcy they pay out between 75-90% after deduction of vat to you and they have the debt assigned to them so that they can pursue payment.

Yes there is a cost but even very large companies have these policies but small organisations are reticent to entertain them.

Many small organisations tend to trade with unstable large companies for quite scary amounts of money and sometimes only have 2 or 3 customers.

 

[jfm]

I'm amazed the Serious Fraud Office don't look at this. BC would have made a significant loss had the company been wound up at the end of their tenure as presumably it was insolvent? By reeling in a 3rd party, creating a secured charge and then calling in administrators, they clearly moved themselves ahead of the genuine creditors - i.e. employees / small businesses that could least stand the loss. Sadly, similar happens all too often in the insolvency world. Whatever role WB played - either knowingly or unknowingly, BC's part in it stinks - much like CityLink.

That is a zillion miles from being correct. I don't have the energy to write a long post as to why and I rather think you wouldn't believe me! Im kinda surprised though by the daily mail style of wanting to believe in a scandal rather than seeking the truth.

 

[rbcoomer]

That is a zillion miles from being correct. I don't have the energy to write a long post as to why and I rather think you wouldn't believe me! Im kinda surprised though by the daily mail style of wanting to believe in a scandal rather than seeking the truth.

You've had the benefit of knowing the people closer to the original business, so if you say that's not the case then I'll happily take your word for it As an outsider looking in however (and knowing first hand what does go on), I'm sure you'll see where the suspicion arises. In most of those I witnessed, the staff and day-to-day management had little or no idea of the true state of affairs until too late. I'm afraid I have a lot of empathy with the workforce and suppliers, but little with either BC or WB...

 

[Deleted User YDKXO]

If anyone who runs a company and supplies registered companies or self employed persons and wishes to safeguard themselves I suggest they they insure their Debtors Ledger with an insurer such as Euler Hermes UK.

I don't know the terms of this company's credit insurance policy but when I've looked at credit insurance in the past, the problem is that the policy will only usually cover invoices to companies with impeccable credit ratings. In other words the policy will cover invoices to customers for which you are extremely unlikely to need insurance and not cover those customers for whom you probably do need insurance. In other words, it's possible that Fairline's credit status would have precluded insurance cover

 

[MapisM]

As an outsider looking in however (and knowing first hand what does go on), I'm sure you'll see where the suspicion arises.

Not only it's very easy to understand where your suspicion arises, but we already discussed that in the previous thread about BC/WB deal.
In fact, I already smelled the very same rat back in those days, as I tried to summarize in this post, among others.

Jfm now says that this theory is "zillion miles from being correct", and if he doesn't want (or can't) disclose the reasons why, fairenuff.

But J, I think it's unfair to answer to rbcoomer (and in turn to myself, having raised the very same point before) along these lines:
"I rather think you wouldn't believe me! Im kinda surprised though by the daily mail style of wanting to believe in a scandal rather than seeking the truth."
In fact, neither myself nor rbcoomer are envisaging this because we are pen pushers aiming at selling more daily wail copies.
Both of us (if I understood correctly what he wrote) have first hand experience with this sort of legal scams.
And based on what has been discussed here so far, the whole BC/WB transaction smells as one of them for good.

Mind, I'm not saying that there isn't another raison d'être behind that deal - I never did. What I'm saying is that:
a) the official one (BC that sells to WB trusting their plans for resurrecting FL and in turn paying the deferred consideration) is so much beyond a joke that it's not even funny;
b) for all we know as of today, the raison d'être summarised by rbcoomer in his post #316 still stands as the only logical one, and labelling it as scandalistic doesn't change this fact.

 

[MapisM]

I don't know the terms of this company's credit insurance policy but when I've looked at credit insurance in the past, the problem is that the policy will only usually cover invoices to companies with impeccable credit ratings. In other words the policy will cover invoices to customers for which you are extremely unlikely to need insurance and not cover those customers for whom you probably do need insurance. In other words, it's possible that Fairline's credit status would have precluded insurance cover

Seconded 100%.
Can't remember if I already mentioned this to you, but in the company of which I eventually became CEO, during my years as CFO we evaluated several credit insurance proposals, from different companies.
In fact, credit control was a rather critical issue, with 1k+ active customers, to the point of justifying one person in finance dept dealing full time with that.
But we always came to your conclusion. :encouragement:

 

[Bigplumbs]

My dear old dad who is sadly no longer with us said to me that at the end of the day your honour is far more important than money. I think far to many people do not understand this sentiment these days

 

[DougH]

I don't know the terms of this company's credit insurance policy but when I've looked at credit insurance in the past, the problem is that the policy will only usually cover invoices to companies with impeccable credit ratings. In other words the policy will cover invoices to customers for which you are extremely unlikely to need insurance and not cover those customers for whom you probably do need insurance. In other words, it's possible that Fairline's credit status would have precluded insurance cover

"Impeccable Credit Rating' not true Mike and we have had such a policy with Euler since 1990.

The position of Fairline would have been on Euler's radar for a long time and I agree that they would have precluded credit cover. This is the time to get out of supplying the company surely.

Euler write hundreds of thousands of policies World wide and their unpublished knowledge on individual company's financial situation is legendary.

In fact it's distinctly possible that an underwriter visited the Company to attain accurate financial information to see if they could continue with granting cover.

For the last 15 years we have ceased using Credit Agencies such as Dun & Bradstreet etc as their information is too out of date. Eulers info is current and they still get it wrong on occassions.

I cringe when a potential supplier to our company asks for a bankers and 2 trade references, archaic or what.

 

[MapisM]

"Impeccable Credit Rating' not true Mike and we have had such a policy with Euler since 1990.

FWIW, not only Euler was one of the offers we considered, as per my previous post, but it was the only one which we actually tried for a couple of years, before eventually return to fully in-house credit handling.
And while they were probably better than others, I definitely can't agree on their "legendary" knowledge of true financial situations.
In fairness, I'm talking of a rather peculiar industry, extremely fragmented and with a huge number of very small companies.
But for us, the bottom line result was that quite often we decided to supply companies which Euler had written off, hence paying the insurance without having any coverage on a significant share of the turnover - arguably the one where the insurance would have been more worth having.

 

[DougH]

FWIW, not only Euler was one of the offers we considered, as per my previous post, but it was the only one which we actually tried for a couple of years, before eventually return to fully in-house credit handling.
And while they were probably better than others, I definitely can't agree on their "legendary" knowledge of true financial situations.
In fairness, I'm talking of a rather peculiar industry, extremely fragmented and with a huge number of very small companies.
But for us, the bottom line result was that quite often we decided to supply companies which Euler had written off, hence paying the insurance without having any coverage on a significant share of the turnover - arguably the one where the insurance would have been more worth having.

Not my experience MapisM.

We supply the building industry, mainly to the electrical and mechanical contractors. Our customer base ranges from Sole Traders consisting of one person only right up to the largest contractors in UK and the rest of Europe.

We always get cover on the small guy unless it is a new start up who has not filed any opening accounts (Very rare for them to do so). We then allot them a credit limit of £2500.00 until they have filed their first years accounts. Then Euler take on cover. But we are always advised if any 'adverse information" is filed by other policy holders. This is a polite term that generally means that they are overdue on making payments.

We trade with several companies in Italy and always have problems due to the late filing of accounts that is prevalent in Italian companies.

Companies House do not tolerate such behaviour.

 

[pks1702]

Not my experience MapisM.

We supply the building industry, mainly to the electrical and mechanical contractors. Our customer base ranges from Sole Traders consisting of one person only right up to the largest contractors in UK and the rest of Europe.

We always get cover on the small guy unless it is a new start up who has not filed any opening accounts (Very rare for them to do so). We then allot them a credit limit of £2500.00 until they have filed their first years accounts. Then Euler take on cover. But we are always advised if any 'adverse information" is filed by other policy holders. This is a polite term that generally means that they are overdue on making payments.

We trade with several companies in Italy and always have problems due to the late filing of accounts that is prevalent in Italian companies.

Companies House do not tolerate such behaviour.

Credit Insurance is useful but you clearly pay a charge for this, you pays your money and takes your choice. Larger business tend to build up a bad debt provision pot which is used to fund bad debts in such eventualities or a hybrid.

With our insurer (AMRO but syndicated I believe) you apply for a credit cover amount, they will review and confirm if this limit is approved, if not the limit they will insure. They constantly review financial information on the insured business and in the event of any adverse information (including the sector and perhaps not the actual business insured) can reduce or pull the credit overnight, this leaves you back in the position you first started but a guide that you probably need to review your trading relationship. In my experience it is no shock to businesses who have their credit pulled or reduced they know the reasons better than the credit insurers.

 

[Deleted User YDKXO]

a) the official one (BC that sells to WB trusting their plans for resurrecting FL and in turn paying the deferred consideration) is so much beyond a joke that it's not even funny;

Yup agree with you. This is the big unanswered question of the Fairline saga. BC are a lot cleverer than you or I (with respect) and if we immediately smelt a rat with WB, then they sure as hell realised what kind of buyer WB was. I don't for one moment think that BC believed this stuff about a mystery Arab investor so this begs the question why they sold Fairline to them given that, apparently, there were other trade buyers sniffing around. Anyway this is ancient history now and I guess we will never know

 

[petem]

Pete ,
Thx for the update -can I just pick up this -----in post 265 you said

"They are confident that their fresh start with facilities, a workforce and systems geared to produce 100 boats a year will put them back into profit. Having no debt,"

Where are we with these numbers ? that's 2 boats a week ish ?
How may boats recently -have rolled off per year ie - past 3 y rs

I realise T/O is meaningless its Profit and the ability to service the loan /overdraft or expect the directors -come backers to sub it going fwds .
its just seems an ambitious figure 100 boats from one name stacked against some funky Italian competition , from Ferretti group and Azimut et al .

For clarification, their break even point is less than 100 boats a year.

I don't know how many boats they've built in the pas 3 years but believe this to be in excess of 100. Obviously things are different now - in 2013 and 2014 they had Essex and 2015 was a messy year. Whilst I am up beat about the whole thing, ALL sales are hard won these days and the guys building the boats are going to work hard as there are far fewer of them. There's certainly no complacency.

 

[EME]

For clarification, their break even point is less than 100 boats a year.

I don't know how many boats they've built in the pas 3 years but believe this to be in excess of 100.

The actual numbers sold for last 5 years are ( all in public domain in the Administrators Report):
146/138/94/91/58 (2015 figure is 11 months not 12 ) ...

Some simple breakeven math on the numbers on page 2 will tell you the size of the challenge -- obviously not how to achieve it.

 

[Portofino]

That's what would worry me --the dropping sales trend -kinda ok ish around 2010 = modal line up holding it own .
But then on 94/91 to last 58 -shows modals are not appealing .
As said need a massive revamp updating of the line up + to make things easier smaller range initially .
This is going to need some v deep pockets or v patient Bank?
Reminds me of that kiddy game musical chairs in the village hall aged 7
20 kids ( buyers ) 20 chairs - (builders ) music stops -every body who wants a boat gets a boat -all rhe builders sell stock .
Remove a chair -20 go for 19 boats - builders laughing edging up prices .
But this time we have 15 kids (buyers less 25% ) and another 5 chairs -so 25 which leaves 10 empty ie overcapacity .
Something's got to give
New Fl are now trying to add more chairs to row hoping to entice perhaps 12 or 14 kids left .

There's overcapacity in the £500K to £2-3m market allready .

 

[EME]

Another way to look at that as that it was only infrastructural issues in 2013-2015 held sales back .. and 40-100 boats at that size on a global basis is ( if my numbers are correct) less than 1% of annual global production so nowhere near as dire a market as the chairs analogy suggests.

As to the market -- a few days at Miami Boat Show last couple of weeks suggests that the important US market is alive, well and kicking onwards and upwards.

 

[jimmy_the_builder]

Another way to look at that as that it was only infrastructural issues in 2013-2015 held sales back .. and 40-100 boats at that size on a global basis is ( if my numbers are correct) less than 1% of annual global production so nowhere near as dire a market as the chairs analogy suggests.

As to the market -- a few days at Miami Boat Show last couple of weeks suggests that the important US market is alive, well and kicking onwards and upwards.

How was the stone crab?

 

[EME]

How was the stone crab?

Excellent! .. MYAG and I ate yours ..

 

[MapisM]

Stone crabs? Now, that's a thread drift worth making, if I've ever seen one! :encouragement:
Otoh, Isn't it also the right season for the Alaskan King?
Then again, maybe not.
Considering that MYAG was with you, I'm pretty sure he wouldn't have missed that, if available....

 

[petem]

The actual numbers sold for last 5 years are ( all in public domain in the Administrators Report):
146/138/94/91/58 (2015 figure is 11 months not 12 ) ...

Some simple breakeven math on the numbers on page 2 will tell you the size of the challenge -- obviously not how to achieve it.

Thanks EME, I haven't had time to look at the administrators report yet.