Oyster Yachts gone into administration

The previous owners bought the company for £70m in 2008 and sold it for £15m in 2011. That doesn't sound desperately healthy. Looks more as if they have been in trouble for years. Order books are fine, but not if you are taking orders at less than cost ..
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Ignoring for a moment the change in value, where is the evidence that the company was not profitable EXCLUDING exceptional items?

As to the mark down in price I doubt there wasnt a luxury product which was marked down significantly in that period.

BTW nothing on file at Companies House yet where the notice must eventually be filed.
 
guardian said:
HTP investments websites not working/down................................mmm?
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That says more than anything about the Oyster situation.

Looking through the accounts for 2015 (http://www.quotenet.nl/content/download/213144/4120328/version/1/file/Oyster_2015_jv.pdf) and 2016 (http://www.quotenet.nl/content/download/213145/4120332/version/1/file/Oyster_2016_jaarverslag.pdf) there was no major changes to the business after buying new premises. The only thing I did notice was the change in where sales were made. Sales in the UK dropped and increased in Europe. The combination of Brexit worries and the drop in the Sterling to Euro could have had an effect as to the change - but the sales overall were similar.

The earlier mentioned article in Dutch can be read here as a translation.
https://translate.google.co.uk/tran...undert-onverwacht-failliet-210524&prev=search

Nothing I have read so far says that Oyster was shaky, but if the HTP Investments parent company was in trouble, then..............
 
1) The profit should be considered in terms of the capital tied up in the business, not the turnover. An underlying profit in the £1m ball park is not the worst return on a £15m company.
2) The reduction in company value from £70m to £15m might be in some small part related to now occupying leased premises in Southampton? Did Oyster used to have freehold premises in the mysterious East by any chance?

I am hopeful that what we are seeing is a cashflow failure of the parent company, and Oyster simply covering itself for the worst case in the short term.
 
guardian said:
Doesn't look good, just been reading one of my financial websites and HTP investments are deep in the **** regarding their own sources of finance, seems problems have come about since this 1000 point drop on the Dow Jones, gotta love private equity eh............?
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I suspect that's the root of the problem. Funds have dried-up at HTP.
 
Anyway, we can discuss all we like. In the end we do not know the facts, so all we can do is speculate uninformed. Although it is tempting, it is never a good thing to do really (I know, I am guilty too).

All I hope is that Oyster will stay in business. For the staff, the boat owners/buyers and the great brand it is.
 
2) The reduction in company value from £70m to £15m might be in some small part related to now occupying leased premises in Southampton? Did Oyster used to have freehold premises in the mysterious East by any chance?
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Not sure if you are as I have checked back on the accounts, but are you comparing Balance Sheet worth with what was paid? Of course if you are, a business is rarely worth the number on the Balance because the goodwill either negative or positive will need to be taken into account.
 
ip485 said:
...but are you comparing Balance Sheet worth with what was paid? Of course if you are, a business is rarely worth the number on the Balance because the goodwill either negative or positive will need to be taken into account.
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The accounting net assets +/- goodwill have little if anything to do with the price a company is sold for.
 
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Think the problem lies with HTP. Thought it a co-incidence when someone over at housepricecrash.co.uk in the 1000 point drop thread commented HTP can no longer obtain funding after someone asked about the health of Deutsche Bank.

Linky
 
The accounting net assets +/- goodwill have little if anything to do with the price a company is sold for.
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It may or may not depending which valuation method you adopt (or combination) but that wasnt my point, I was interested whether you were comparing the Balance Sheet with what was paid for the business as I didnt recall where the numbers you mention came from. I thought the first sounded like what the business was originally sold for, and the second related to the last published Balance Sheet? Apologies if I am wrong.

I understand that Goodwill might be a profit average calculation or it might be something very different.
 
bedouin said:
It's a private equity firm - I'm surprised they have a web site.
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They did have one, but it's been unavailable for about 18 months. I too am surprised they had a website, as HTP is a very private company, owned by 2 wealthy guys who only invest their own money and own businesses with about €1 billion total turnover. Oyster was very much small fry in their business, indeed I believe the only reason they bought it is because the major partner is a keen sailor and probably saw it as a hobby investment.
 
ip485 said:
I understand that Goodwill might be a profit average calculation or it might be something very different.
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"Goodwill" is a meaningless term except as in its definition. It is the difference between the book asset value and the purchase price. So just a calculated figure coming out of the decision of the buyer. It is not something that has an independent value. Sure you can use a rule of thumb such as Y* average profits but a buyer of this collection of assets will base his offer price on the returns he expects to get in the future. Given that he is almost certainly going to make substantial changes to the way the business operate, any connection between the offer price and any previous profits will be tenuous.
 
ip485 said:
Not sure if you are as I have checked back on the accounts, but are you comparing Balance Sheet worth with what was paid? Of course if you are, a business is rarely worth the number on the Balance because the goodwill either negative or positive will need to be taken into account.
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The balance sheet states the assets tied up in the business. I read that off Companies House.
The purchase price of the business is as reported, I am just speculating as to what was included in those 'headline' prices.

I'm not an accountant. It seems to me that putting a number on 'goodwill' is a trick to make things add up?
As in you buy a shop which is a £250k building with £50k of stock for £400k, the goodwill must be the £100k intangible thing that can appreciate or depreciate.
 
ip485 said:
It may or may not depending which valuation method you adopt (or combination) but that wasnt my point, I was interested whether you were comparing the Balance Sheet with what was paid for the business as I didnt recall where the numbers you mention came from. I thought the first sounded like what the business was originally sold for, and the second related to the last published Balance Sheet? Apologies if I am wrong.

I understand that Goodwill might be a profit average calculation or it might be something very different.
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Goodwill is largely an accounting matter, which influences solvency, etc., but as Tranona says has basically nothing to do with the price paid for a company and has no relevance commercially. Moreover, a firm's net asset value (NAV) is also of only secondary interest to investors.

Let's move across to the stock mkt to see this in action. The forum might look at Nestle's business, see that its NAV wasSFr60bn and think, let's buy it. But we couldn't, we'd need SFr240bn, for Nestle trades at 3.9x book value.

In the same way Amazon is currently trading at a whopping 24.4x book value. Conversely Deutsche Bank is only trading on 0.48x its book value and that's including goodwill.

Private companies aren't listed but a PE, or other buyer will similarly value prospective businesses using their own metrics and FWIW will typically add back goodwill and forget about it entirely.

As an aside, Carillion was loaded with goodwill which as we all know now was worth very little indeed. The firm was therefore de facto if not de jure insolvent, one of the reasons its ending was so nasty.
 
Part of our business ( and the one we would like to be doing all the time) is designing and building very high spec automotive "toys"
The bitter fact of it though is it a a cashflow killer, high value contracts incur huge materials and labour costs, and time slips in development. To keep our heads above water we have a wide portfolio of engineering, from handrails to movie props, and we make chassis and parts for a lot of other small companies.
If we had a fairy godmother outfit/venture capitalist/equity outfit who funded us we could do so well, go so far, take on the world... Until they pulled the plug when times were tough on the balance sheet and they got cold feet, or they decided to stick with the "best" of their portfolio and bin the rest, or they simply had troubles themselves.

It looks like that is pretty much what has happened here. No one will have the passion and willingness to motor through the tough times more than those who built and work in a business, and doubly so for a specialised one. As soon as that changes, so does everything else.
There is more to building dreams than the bottom line. If investors do not understand that they should not get involved.
Feeling for the staff, one of my daughters was until recently stepping out with one of them.
 
boatboat said:
“We are not in administration at the moment and we are not in liquidation,” starts Tydeman. “Yesterday, however, we did start a consultation with all staff about potential redundancy, because we do not have the means to pay them at the moment.
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Let’s hope some super rich boat owner and/or prospective boat owner comes along and acts as White Knight to inject some (substantial) capital. This is not impossible, but like buying a football club, would be done more for interest / status rather than financial return.

Looking at their accounts they don’t have much tangible assets underpinning the business. And whilst big boats can be profitable when all goes well, any business where it builds things which individually cost more than the average annual profit threshold (and the new boat launched at Boot was reported as costing around $5m) is always very exposed to market bumps - whether one cancelled order, one overseas buyer who can’t pay, or one which breaks up catastrophically and sinks in moderate sea conditions !
Cash flow will always be a huge risk with such “lumpy” sales.

And whilst they have a big provision in the accounts to settle for Polina Star, there was at end 2016 also a huge (£6-7m?) hoped for claim against the sub-contractor. Can’t immediately recall what legal jurisdiction the builder was in, but could be very optimistic to expect that back in any short time frame, if at all. (Not clear why this here if they did have product liability covered - and could be expensive the next premiums). If they had to pay out to the poor ex-Owner (and I would hope they do soon, 3 or more years on) without getting anything back that would blow a huge hole in the cash flow
 
pvb said:
The mention in the accounts of a £6.8 million claim against a subcontractor is intriguing, as Oyster owned all of their production facilities. Might the subcontractor be a yacht designer?
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They subcontract the grp moulding work.
 
lw395 said:
1) The profit should be considered in terms of the capital tied up in the business, not the turnover. An underlying profit in the £1m ball park is not the worst return on a £15m company.
2) The reduction in company value from £70m to £15m might be in some small part related to now occupying leased premises in Southampton? Did Oyster used to have freehold premises in the mysterious East by any chance?

I am hopeful that what we are seeing is a cashflow failure of the parent company, and Oyster simply covering itself for the worst case in the short term.
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They lease all their production premises, never had the freehold.
 
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