Discussion
LaurasOtherHalf said:
TheDeuce said:
If in a months time there is no new lending and also no buyer lining up, that's when I would start to worry. We're not at that point yet though.
If McLaren are one month away from needing either more finance against assets they don't control or being sold completely, I'd say the time to worry is right now.It's also plenty of time to arrange funding, assuming they have a trading plan that delivers sufficient confidence from an investor. And they don't need to sell completely at all, they just need to sell enough equity to maintain cashflow whilst they address the problems and stem the losses.
As for acquiring new borrowing instead of selling equity.. it seems very unlikely they can. Who would lend to an outfit that is rushing off to court to effectively remove security from people that have already lent to them
If it's not resolved in a months time, that would strongly suggest that all the eyes that have poured over their future trading plan have concluded it's a lost cause - that is why then would be the time to worry imo.
From the BBC article.
bbc said:
The documents add that McLaren's shareholders injected a further £291m into the business in March this year, which was intended to "provide the group with ample liquidity in order to fund its business plan". This is part of a total of £500m invested by shareholders into McLaren in the past 18 months.
McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
How do you spend £291M in three months?!McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
glazbagun said:
From the BBC article.
Yet to see the detail but I would imagine that it's a case of cashflow worsening by that amount in 3 months, as opposed to actively spending it.bbc said:
The documents add that McLaren's shareholders injected a further £291m into the business in March this year, which was intended to "provide the group with ample liquidity in order to fund its business plan". This is part of a total of £500m invested by shareholders into McLaren in the past 18 months.
McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
How do you spend £291M in three months?!McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
Could also/or be a loan final payment falling due in that period, with no immediate hope of a new loan to replace it.
We can't know. But I doubt very much that the electric bill, wage roll and purchase of materials alone add up £100m a month. I suspect part of that 'cost' has to be an expected financial event, such as a new credit facility, that failed to happen. And that would tie in with their current high court exploits
TheDeuce said:
glazbagun said:
From the BBC article.
Yet to see the detail but I would imagine that it's a case of cashflow worsening by that amount in 3 months, as opposed to actively spending it.bbc said:
The documents add that McLaren's shareholders injected a further £291m into the business in March this year, which was intended to "provide the group with ample liquidity in order to fund its business plan". This is part of a total of £500m invested by shareholders into McLaren in the past 18 months.
McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
How do you spend £291M in three months?!McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
Could also/or be a loan final payment falling due in that period, with no immediate hope of a new loan to replace it.
We can't know. But I doubt very much that the electric bill, wage roll and purchase of materials alone add up £100m a month. I suspect part of that 'cost' has to be an expected financial event, such as a new credit facility, that failed to happen. And that would tie in with their current high court exploits
BBC said:
McLaren applied for a £150m business continuity loan from the government earlier this year but was turned down because it did not meet the criteria.
Fairly shocking that McLaren of all people wouldn't qualify for an 80% guaranteed loan.TheDeuce said:
glazbagun said:
From the BBC article.
Yet to see the detail but I would imagine that it's a case of cashflow worsening by that amount in 3 months, as opposed to actively spending it.bbc said:
The documents add that McLaren's shareholders injected a further £291m into the business in March this year, which was intended to "provide the group with ample liquidity in order to fund its business plan". This is part of a total of £500m invested by shareholders into McLaren in the past 18 months.
McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
How do you spend £291M in three months?!McLaren says this has now been spent as a direct result of the effect on business of the coronavirus pandemic.
Could also/or be a loan final payment falling due in that period, with no immediate hope of a new loan to replace it.
We can't know. But I doubt very much that the electric bill, wage roll and purchase of materials alone add up £100m a month. I suspect part of that 'cost' has to be an expected financial event, such as a new credit facility, that failed to happen. And that would tie in with their current high court exploits
Unknown of course is what their cash position was like in March, but I'd imagine a lot of sponsors hadn't yet paid up, for instance...
TheDeuce said:
LaurasOtherHalf said:
TheDeuce said:
If in a months time there is no new lending and also no buyer lining up, that's when I would start to worry. We're not at that point yet though.
If McLaren are one month away from needing either more finance against assets they don't control or being sold completely, I'd say the time to worry is right now.It's also plenty of time to arrange funding, assuming they have a trading plan that delivers sufficient confidence from an investor. And they don't need to sell completely at all, they just need to sell enough equity to maintain cashflow whilst they address the problems and stem the losses.
As for acquiring new borrowing instead of selling equity.. it seems very unlikely they can. Who would lend to an outfit that is rushing off to court to effectively remove security from people that have already lent to them
If it's not resolved in a months time, that would strongly suggest that all the eyes that have poured over their future trading plan have concluded it's a lost cause - that is why then would be the time to worry imo.
Stopping the economy for 3-months has had dire consequences for everyone. Even Williams have finally accepted that their fate no longer lies in the hands of the family.
I think McLaren will do just fine. They have plenty of wealthy investors who will all want to protect their investments.
skwdenyer said:
A quick look at their accounts for y/e Dec 2018 shows a burn rate of at least as much as that every 3 months, even with extensive furloughing.
Unknown of course is what their cash position was like in March, but I'd imagine a lot of sponsors hadn't yet paid up, for instance...
Furloughing in 18?? Were they?Unknown of course is what their cash position was like in March, but I'd imagine a lot of sponsors hadn't yet paid up, for instance...
Yes, the sponsor payments follow the season as opposed to the accounting year, and an F1 team will generally start each season with a large amount of £££ cash and then burn through it quickly. There are staged payments made by sponsors throughout a season too. It's likely that most such payments from most sponsors haven't been paid as usual this year however - as the sport hasn't begun yet! That's a drop in the ocean for McLarens current situation but obviously isn't helpful for any team. The entire sport has to somehow get through this year with big chunks of sponsor income missing - even if a 'season' is technically achieved.
rdjohn said:
https://news.sky.com/story/coronavirus-governor-sa...
Stopping the economy for 3-months has had dire consequences for everyone. Even Williams have finally accepted that their fate no longer lies in the hands of the family.
I think McLaren will do just fine. They have plenty of wealthy investors who will all want to protect their investments.
And we're only at the start of learning how dire those consequences are. Lots of talk of 'things getting back to normal', but how normal? Next season will circuit stands be cut to 50% capacity by distance rules still being in place? How long will these expensive limitations affect F1 and all other parts of the economy in various ways?Stopping the economy for 3-months has had dire consequences for everyone. Even Williams have finally accepted that their fate no longer lies in the hands of the family.
I think McLaren will do just fine. They have plenty of wealthy investors who will all want to protect their investments.
Also a lot of companies that are already definitely screwed are probably yet to break silence as they work out exactly how screwed they actually are.
RonaldMcDonaldAteMyCat said:
How much of McLaren's cash burn is down to the F1 team versus the manufacture/applied technologies?
Must be mostly on the manufacturing side as the amount burnt exceeds their annual F1 budget already. Although 'burn rate' in F1 team terms isn't very useful, as they essentially seek to burn their entire budget each season.. as opposed to burn rate of a start up or expanding business, that would aim to burn money for a set period with the expectation of moving into profit later on. Most F1 teams don't aim to make a profit.I reckon this is a result of hiring Paul Walsh as chairman to sort out the business after the post-Dennis management.
Even 18-months ago with the launch of the Advanced Manufacturing Research Centre near Sheffield McLaren's board were publically stating that the Track25 business plan would require investment of £1.2bn in research and development to deliver 18 new cars or derivatives by the end of 2025. Now I'm sure that figure includes a lot of creative accounting with tax deduction & offset but surely they can never make enough cars from the automotive division to provide any positive return on investment.
Has there been any reports about Michal Latifi recently it's been 2 years since his £200M injection, or even on the new wind-tunnel?
Even 18-months ago with the launch of the Advanced Manufacturing Research Centre near Sheffield McLaren's board were publically stating that the Track25 business plan would require investment of £1.2bn in research and development to deliver 18 new cars or derivatives by the end of 2025. Now I'm sure that figure includes a lot of creative accounting with tax deduction & offset but surely they can never make enough cars from the automotive division to provide any positive return on investment.
Has there been any reports about Michal Latifi recently it's been 2 years since his £200M injection, or even on the new wind-tunnel?
Paul578 said:
I reckon this is a result of hiring Paul Walsh as chairman to sort out the business after the post-Dennis management.
Even 18-months ago with the launch of the Advanced Manufacturing Research Centre near Sheffield McLaren's board were publically stating that the Track25 business plan would require investment of £1.2bn in research and development to deliver 18 new cars or derivatives by the end of 2025. Now I'm sure that figure includes a lot of creative accounting with tax deduction & offset but surely they can never make enough cars from the automotive division to provide any positive return on investment.
Has there been any reports about Michal Latifi recently it's been 2 years since his £200M injection, or even on the new wind-tunnel?
That 1.2bn would represent approx 1000 cars a year at a value of around £150k each in order to break over, across the 6 year time period you refer to. Some sell for a lot more than that of course, and I'm sure there are other forms of revenue too.Even 18-months ago with the launch of the Advanced Manufacturing Research Centre near Sheffield McLaren's board were publically stating that the Track25 business plan would require investment of £1.2bn in research and development to deliver 18 new cars or derivatives by the end of 2025. Now I'm sure that figure includes a lot of creative accounting with tax deduction & offset but surely they can never make enough cars from the automotive division to provide any positive return on investment.
Has there been any reports about Michal Latifi recently it's been 2 years since his £200M injection, or even on the new wind-tunnel?
Is 1000+ cars a year realistic? Actually in 2017 they shifted 3300 units, then 2018 nearly 5000 units.. So the numbers involved, although huge, most likely do (or did..) stack up. The world has changed somewhat since of course.
The sheer scale of operation to put out so many hand built cars explains how they can lose vast amounts in a very short time perhaps.
TheDeuce said:
skwdenyer said:
A quick look at their accounts for y/e Dec 2018 shows a burn rate of at least as much as that every 3 months, even with extensive furloughing.
Unknown of course is what their cash position was like in March, but I'd imagine a lot of sponsors hadn't yet paid up, for instance...
Furloughing in 18?? Were they?Unknown of course is what their cash position was like in March, but I'd imagine a lot of sponsors hadn't yet paid up, for instance...
Yes, the sponsor payments follow the season as opposed to the accounting year, and an F1 team will generally start each season with a large amount of £££ cash and then burn through it quickly. There are staged payments made by sponsors throughout a season too. It's likely that most such payments from most sponsors haven't been paid as usual this year however - as the sport hasn't begun yet! That's a drop in the ocean for McLarens current situation but obviously isn't helpful for any team. The entire sport has to somehow get through this year with big chunks of sponsor income missing - even if a 'season' is technically achieved.
TheDeuce said:
That 1.2bn would represent approx 1000 cars a year at a value of around £150k each in order to break over, across the 6 year time period you refer to. Some sell for a lot more than that of course, and I'm sure there are other forms of revenue too.
Is 1000+ cars a year realistic? Actually in 2017 they shifted 3300 units, then 2018 nearly 5000 units.. So the numbers involved, although huge, most likely do (or did..) stack up. The world has changed somewhat since of course.
The sheer scale of operation to put out so many hand built cars explains how they can lose vast amounts in a very short time perhaps.
On top of development investment you have the actual costs of building the cars and running the business.Is 1000+ cars a year realistic? Actually in 2017 they shifted 3300 units, then 2018 nearly 5000 units.. So the numbers involved, although huge, most likely do (or did..) stack up. The world has changed somewhat since of course.
The sheer scale of operation to put out so many hand built cars explains how they can lose vast amounts in a very short time perhaps.
RonaldMcDonaldAteMyCat said:
TheDeuce said:
That 1.2bn would represent approx 1000 cars a year at a value of around £150k each in order to break over, across the 6 year time period you refer to. Some sell for a lot more than that of course, and I'm sure there are other forms of revenue too.
Is 1000+ cars a year realistic? Actually in 2017 they shifted 3300 units, then 2018 nearly 5000 units.. So the numbers involved, although huge, most likely do (or did..) stack up. The world has changed somewhat since of course.
The sheer scale of operation to put out so many hand built cars explains how they can lose vast amounts in a very short time perhaps.
On top of development investment you have the actual costs of building the cars and running the business.Is 1000+ cars a year realistic? Actually in 2017 they shifted 3300 units, then 2018 nearly 5000 units.. So the numbers involved, although huge, most likely do (or did..) stack up. The world has changed somewhat since of course.
The sheer scale of operation to put out so many hand built cars explains how they can lose vast amounts in a very short time perhaps.
Anyway, all we have is a few headline figures and the accounts - would need to actually see their internal business plan to judge if their choices in recent years were actually sensible or not.
If you want to read up on one massive challenge that all small volume sportscar firms such as McLaren (Hello Aston Martin too..) face, check this out: https://www.autocar.co.uk/car-news/industry/analys...
Towards the bottom you see the formula for calculating the fines, based on a BMW 1 series. The major car firms are trying to offset their average emissions by developing super clean affordable cars for the masses, which enables them to continue to sell performance monsters to the minority that want such a car. Hence tiny 3 cylinder engines and research in to new two stroke designs. You can see that is a problem for McLaren as their entire range is not green at all. So they have huge fines ramping up year on year for each car they sell.
One positive is that firms producing 1000 cars or less per year are exempt. That is why along with a reduction in staffing it's possible - likely even - that they will look to producing far fewer, but far more expensive cars. It's also essentially why supercars from any reasonable sized outfit (Ferrari etc) are getting so expensive, they have to factor in the fines whilst also researching crazy expensive new electric platforms in order to minimise the fines.
Fun time to be building sports cars..
TheDeuce said:
Of course, but given the volume and price tag of the cars they have been putting out the last couple of years, the £1.2bn R&D commitment doesn't seem entirely crazy, that was my point.
Anyway, all we have is a few headline figures and the accounts - would need to actually see their internal business plan to judge if their choices in recent years were actually sensible or not.
If you want to read up on one massive challenge that all small volume sportscar firms such as McLaren (Hello Aston Martin too..) face, check this out: https://www.autocar.co.uk/car-news/industry/analys...
Towards the bottom you see the formula for calculating the fines, based on a BMW 1 series. The major car firms are trying to offset their average emissions by developing super clean affordable cars for the masses, which enables them to continue to sell performance monsters to the minority that want such a car. Hence tiny 3 cylinder engines and research in to new two stroke designs. You can see that is a problem for McLaren as their entire range is not green at all. So they have huge fines ramping up year on year for each car they sell.
One positive is that firms producing 1000 cars or less per year are exempt. That is why along with a reduction in staffing it's possible - likely even - that they will look to producing far fewer, but far more expensive cars. It's also essentially why supercars from any reasonable sized outfit (Ferrari etc) are getting so expensive, they have to factor in the fines whilst also researching crazy expensive new electric platforms in order to minimise the fines.
Fun time to be building sports cars..
Is this not an EU thing and not a global thing ? Anyway, all we have is a few headline figures and the accounts - would need to actually see their internal business plan to judge if their choices in recent years were actually sensible or not.
If you want to read up on one massive challenge that all small volume sportscar firms such as McLaren (Hello Aston Martin too..) face, check this out: https://www.autocar.co.uk/car-news/industry/analys...
Towards the bottom you see the formula for calculating the fines, based on a BMW 1 series. The major car firms are trying to offset their average emissions by developing super clean affordable cars for the masses, which enables them to continue to sell performance monsters to the minority that want such a car. Hence tiny 3 cylinder engines and research in to new two stroke designs. You can see that is a problem for McLaren as their entire range is not green at all. So they have huge fines ramping up year on year for each car they sell.
One positive is that firms producing 1000 cars or less per year are exempt. That is why along with a reduction in staffing it's possible - likely even - that they will look to producing far fewer, but far more expensive cars. It's also essentially why supercars from any reasonable sized outfit (Ferrari etc) are getting so expensive, they have to factor in the fines whilst also researching crazy expensive new electric platforms in order to minimise the fines.
Fun time to be building sports cars..
How does it effect non EU manufacturers ?
Exige77 said:
Is this not an EU thing and not a global thing ?
How does it effect non EU manufacturers ?
It is an EU thing.. my understanding is we're still adopting the same rules in the UK by default, until such time as we make our own. Either way the UK is signed up to emissions targets so the car makers here, and elsewhere, will all get the same sort of financial pressure to not make the sort of cars that McLaren do.How does it effect non EU manufacturers ?
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