AML - Stock Market Listing

[JohnG1]

Zod said:

AMDBSVNick said:

RobDown said:

I could be wrong on this. But I have it in my head that AML only records the sale in its income statement when the order is confirmed, not at the deposit stage.

So if memory serves me correctly on that Valkyrie and some of the Zag sales shouldn't be in the figures (yet)

Edited to add: just checked the 2016 accounts, they book the sales normally when the car is ready to be dispatched to the Dealer

This is fantastic news then, Rob

I'm not an accountant, but I'd be amazed if you could recognise the full purchase price as revenue on receipt of a deposit.

Revenue reconfiguration. Always a nasty, knotty topic. Would be interesting to see the model that AML use.

I've heard of companies recognising revenue for a three year contract on day one, with signature on a contract. So it's not a "clean" or legalistic process...

[ds666]

JohnG1 said:

Revenue reconfiguration. Always a nasty, knotty topic. Would be interesting to see the model that AML use.

I've heard of companies recognising revenue for a three year contract on day one, with signature on a contract. So it's not a "clean" or legalistic process...

That wouldn’t be “prudent “.

[JohnG1]

ds666 said:

JohnG1 said:

Revenue reconfiguration. Always a nasty, knotty topic. Would be interesting to see the model that AML use.

I've heard of companies recognising revenue for a three year contract on day one, with signature on a contract. So it's not a "clean" or legalistic process...

That wouldn’t be “prudent “.

Toe-may-toe, toe-mah-toe...

While I agree, there's a lot of very imprudent revenue recognition models out there...

[RL17]

Not sure if its been up on here but CNBC video of AP from Beijing 6 days ago [edit also covers China market and EVs]

https://www.cnbc.com/video/2018/04/25/aston-martin...

Also just noticed RAFBF on GTE wing

Edited by RL17 on Sunday 29th April 19:41

[HBradley]

RL17]Not sure if its been up on here but CNBC video of AP from Beijing 6 days ago [edit also covers China market and EVs said:

https://www.cnbc.com/video/2018/04/25/aston-martin...

Also just noticed RAFBF on GTE wing

Yep, the RAF BF have been one of AMR/AML's supported charities for some years now.

[RL17]

Good to hear that, don't remember it being on last years livery

[Minglar]

Interesting read

https://www.bloomberg.com/view/articles/2018-05-24...

Best Regards

Minglar

[Jon39]

Minglar said:

Interesting read

https://www.bloomberg.com/view/articles/2018-05-24...

Best Regards

Minglar

Thank you for posting that Richard.
It is the first article I have read, which looks much deeper into the financial background.

I have talked here several times about the amount of AML pre flotation hype going on, possibly risking repeating myself. Numerous new models being spoken about (some of which are not due for many years), using words to exaggerate profitability (quarter-billion pound improvement in pre-tax profit), and issuing many more press releases than usual.

It has been noticed before, that creating a frenzy before an IPO does work, by getting a higher price for the seller, but even though investors might get sucked in initially, share prices eventually settle to a level reflecting future expected profitability (a recent example was AO World plc. Even the name hinted at global domination).

As I have previously mentioned, what is going on now is almost a mirror image of the Dr. Bez era at the time the DB9 and Vantage were launched. Even without knowing the accounting aspects described in the article, we all know there are two pairs of new core models, good initial sales and on both occasions the Company becomes profitable. It is becoming apparent to us though, that the DB9 sales, do appear to have been better than the DB11, which is a worry.

Dr. Palmer has been open when describing the SUV needing to financially support the sports cars, so I think if there is a Company flotation, then the new share buyers are effectively taking a single bet on one model range, the SUV.

An interesting point in the article, about the total amount of money being held as interest free deposits for the Valkyrie. Recently Andy Palmer was 'quoted' as saying AML may not make a profit on the Valkyrie project. I couldn't understand why that was said

[jonby]

Jon39 said:

Minglar said:

Interesting read

https://www.bloomberg.com/view/articles/2018-05-24...

Best Regards

Minglar

Thank you for posting that Richard.
It is the first article I have read, which looks much deeper into the financial background.

I have talked here several times about the amount of AML pre flotation hype going on, possibly risking repeating myself. Numerous new models being spoken about (some of which are not due for many years), using words to exaggerate profitability (quarter-billion pound improvement in pre-tax profit), and issuing many more press releases than usual.

It has been noticed before, that creating a frenzy before an IPO does work, by getting a higher price for the seller, but even though investors might get sucked in initially, share prices eventually settle to a level reflecting future expected profitability (a recent example was AO World plc. Even the name hinted at global domination).

As I have previously mentioned, what is going on now is almost a mirror image of the Dr. Bez era at the time the DB9 and Vantage were launched. Even without knowing the accounting aspects described in the article, we all know there are two pairs of new core models, good initial sales and on both occasions the Company becomes profitable. It is becoming apparent to us though, that the DB9 sales, do appear to have been better than the DB11, which is a worry.

Dr. Palmer has been open when describing the SUV needing to financially support the sports cars, so I think if there is a Company flotation, then the new share buyers are effectively taking a single bet on one model range, the SUV.

An interesting point in the article, about the total amount of money being held as interest free deposits for the Valkyrie. Recently Andy Palmer was 'quoted' as saying AML may not make a profit on the Valkyrie project. I couldn't understand why that was said

I don't quite get what you don't quite get ? He has said this before incidentally. Wouldn't surprise me at all if Valkrie was not made at a profit considering the high tech, R&D, lack of carryover from other models and most importantly, the fact they can't do the usual Aston thing and cut corners compared to what they had hoped to make, due to running out of money (Newey will put a stop to that happening). Remember V600 or Vanquish Zagato speedster each cost roughly half a Valkyrie, but will cost far less than 25% of the cost of a Valkyrie to make. Aston don't have a track record of producing competitive cars but on Valkyrie, they simply have to - the fallout if they don't would give them headaches for years plus again, Newey presumably won't let them

However there is the Halo effect of Valkyrie, both generally and in readiness for the mid engined 'affordable' model, which justifies the project.

Meanwhile they can't possibly do as many specials per annum as they have been at these production levels/prices (all the zagatos, vulcan, vantage pro, V600, etc) - it just gets greedy and buyers start to get fatigue - suspect they have already gone a step too far. Now is the perfect time to float

[Jon39]

jonby said:

I don't quite get what you don't quite get ? . . .

. . .Now is the perfect time to float.

First point Jonby.

Yes there is the halo effect, and researching new tech. for future use, but why would a commercial business embark on any big project, without an expectation of profit?
It has been suggested that the car might be priced at £3m.
I think it was also suggested that about 350 serious buyers were refused a car.
With such enormous unsatisfied demand, perhaps the car could have been £4m, or enough to produce a financial return.

What we do not know, and this possibility was suggested by a contributor on here, is are Red Bull really the real owners of the Valkyrie project?

Second point. Yes, you are right. Even before knowing new Vantage sales figures, the timing is looking good for the sellers.

I do have fears for AML being a plc later on (difficult economic cycles etc), but the sellers (private equity) don't normally want to remain owners of any business for too long, but whilst they are still owners, they of course are in the position to make decisions about selling.

( I had better not say anymore about this for a while - might get into trouble with other contributors! )

[jonby]

Jon39 said:

why would a commercial business embark on any big project, without an expectation of profit?
It has been suggested that the car might be priced at £3m.
I think it was also suggested that about 350 serious buyers were refused a car.
With such enormous unsatisfied demand, perhaps the car could have been £4m, or enough to produce a financial return.

What we do not know, and this possibility was suggested by a contributor on here, is are Red Bull really the real owners of the Valkyrie project?

Nobody embarks on a big project without expectation of a profit, however my guess would be that costs have risen since initial expectations. That's solely based on AP publicly declaring twice now that it wont be a profitable exercise in it's own right - I'm just using common sense as to the possible reasons why

Plenty of examples where Aston have cut corners part way through a project because it gets too expensive. But they can't do that with Valkyrie - it's too prestigious

Price is a little less than £3m

I'm sure they now wish they had agreed to produce more as they have so many people who want one, but they went so overboard at launch about there being a max of 150 road cars, doing it on video at the factory launch, they are stuffed - getting production numbers/pricing right on these ltd ed cars is an art - looking back, IMO GT12 should have been priced more highly, GT8 arguably priced at less than it was. Or they could have produced 50 more GT12s than they did. V600 doesn't appear to be selling (they even announced some were for sale with the launch). As I say, an art as much as a science

Having said all that, Aston are already charging 'overs' prices for some of their cars as the list price (as in the overs market). Mclaren knew that Senna would change hands at a huge premium, but didn't charge more than £750k. With cars like Zagato Vanquish and even Valkyrie, they are at the max of what can realistically be charged, so it's probably easier to play around with production numbers than price, but too late now

As for how it works commercially between red bull and aston, I have no clue, but I'm not sure that overly changes any of the above

Edited by jonby on Thursday 24th May 16:04

[RL17]

Valkyrie is a marketing and collaboration exercise and Newey/Red Bull involvement probably means costs may go up in search of perfection. Length/time of project in a period of relatively high inflation and fx and other fluctuations would make getting prices right on a mundane car a problem.

Low numbers etc mean all things to produce car split in only a few ways.

Thought Veyron first run heavily loss making and intended to be so.

Plus as a business AM might overall in the long run not be the best judges of making a profit.

[anonymous-user]

I think the SUV strategy is just not going to work for AM so I hope for their sake they dont put all their eggs in that basket. The world is moving on from the 4x4 obsession, Maserati’s and Bentleys new offerings have not done well. As Clarkson once said, if you want the best 4x4 buy a Range Rover (I had one, it broke down a lot but hey ho). Porsche SUV sales do well, but from my recollection it was not by design to build the financial success off the launch of the Cayenne, it was a surprise to them how successful the car was/is.

I dont doubt an IPO is being setup, but I think they will need to crack on quickly before the economic headwinds change direction. Investors will want their return, economies of scale will be sought to achieve maximum profits, and the soul of Aston Martin will be replaced with bean counters and process.

[AMVSVNick]

jonby said:

Meanwhile they can't possibly do as many specials per annum as they have been at these production levels/prices (all the zagatos, vulcan, vantage pro, V600, etc) - it just gets greedy and buyers start to get fatigue - suspect they have already gone a step too far. Now is the perfect time to float

This.

Be careful what you say though, AP blocked one of your Twitter mates for suggesting the same thing about “the specials”

[AstonV]

New Vantage has to be a home run , plus since they upped the price there is a lot of competition in that segment, or it's all moot.

The SUV could be a huge hit in the USA, but like mentioned above, going to be tough to beat the Range Rover which is no doubt half the cost of the Aston SUV.

Concentrating way too much on special editions and need to get back to building beautiful cars for profit.

[spyker138]

So it seems the DBX is the critical factor in the plan? - that will help ride the economic cycles and become the cash cow that funds R&D etc for the Sports cars. While it isn't the AML I'd like to see then obviously we all hope it works. It is very risky though:

1. They are late - the Luxury SUV market is becoming saturated and not sure whether the AM brand attributes really fit as well as others? Unless it's going to be positioned as more GT/Sports than Utility, More (Dubai) Desert than Jungle. Ditto Maserati. At least Lambo has the LM002 heritage.
2. the new factory is capital intensive and puts a lot more fixed cost round their necks.

With respect to all the specials then yes I think they are confusing too. I think the market shows (Porsche, Ferrari) that AML should more clearly differentiate their current lines into Sports (Vantage), GT (DB line) and Super GT (Vanquish) and reserve Q for custom trims and AMR for true racing editions of what they actually race (likely just Vantage line) - including supplying works AMR parts for privateers (money spinner for Porsche).

But hey, I'm not a marketing guru.

[JB65]

spyker138 said:

So it seems the DBX is the critical factor in the plan? - that will help ride the economic cycles and become the cash cow that funds R&D etc for the Sports cars. While it isn't the AML I'd like to see then obviously we all hope it works. It is very risky though:

1. They are late - the Luxury SUV market is becoming saturated and not sure whether the AM brand attributes really fit as well as others? Unless it's going to be positioned as more GT/Sports than Utility, More (Dubai) Desert than Jungle. Ditto Maserati. At least Lambo has the LM002 heritage.
2. the new factory is capital intensive and puts a lot more fixed cost round their necks.

With respect to all the specials then yes I think they are confusing too. I think the market shows (Porsche, Ferrari) that AML should more clearly differentiate their current lines into Sports (Vantage), GT (DB line) and Super GT (Vanquish) and reserve Q for custom trims and AMR for true racing editions of what they actually race (likely just Vantage line) - including supplying works AMR parts for privateers (money spinner for Porsche).

But hey, I'm not a marketing guru.

Agree. Besides, upfront investment for the development of a SUV would be unaffordable unless they go shopping for an OEM platform.

Edited by JB65 on Friday 25th May 21:18

[George29]

Jon39 said:

What we do not know, and this possibility was suggested by a contributor on here, is are Red Bull really the real owners of the Valkyrie project?

AML are funding it and building it, the design is a split responsibility.

[avinalarf]

I am a believer that less is more when it comes to marketing a product.
Get the core model right at the right price and it will sell.
If customers want extras,whether in performance or styling then they should be available if desired.

[Jon39]

Flotation getting closer ?

Appear to be hoping for a market valuation, similar to Severn Trent and Marks and Spencer, both of which have adjusted pre-tax profits of over £500 million.
Is that perhaps ambitious, when considering the huge 2017 development spend accounting arrangements?

https://news.sky.com/story/aston-martin-drives-pla...

Edited by Jon39 on Friday 22 June 21:58