Lotus in the post DB era

[Kimbers 1,794]

This got me scratching my head. I thought that Lotus had managed to secure 500 million in investment to fund the new cars?

 

Did they use this all up and then start borrowing? I doubt it.

 

 

 

 

To Answer your question: This is where the spin came in. The investment came from the banks and was borrowed. The Investment you are talking about never existed. Proton and DB Borrowed it and then when the money ran out couldn't pay the payments.

 

Hence DRB must have an agreement with the banks to keep trading and, I am sure, the banks will be happier under a more frugal and cost counting regime.

 

Gunter. Don't forget DRB didn't really get anything "rolling" until at least August Sept after they got costs under control. Whilst you won't see such a massive loss (especially with the cash coming in on Exige S) I suspect you will still see a loss. But on a positive note any improvement will be looked at favourably with the creditors as they will see that they have a better oppportunity of getting their loans back than if they tried closing the company.

[Günter 28]

So Kimbers please tell me, as you are a professional  ..do I see it wrong -is this news article based on the whole year *2012* [1.1.2012 to 31.12.2012]  ?

 

-or is the Lotus 'bussiness year' meant in the text going normally from *March 2011 to March 2012* ??

 

It is just as I wonder how much we will see the influence of the restart of the sales, and of course the Exige S/V6 Cup and the money from DRB. As the article only shows to be focussed 'on the still sinking ship'  ..know what I mean

[TBD 781]

Lotus would be just about the first company worldwide to publish number based on calander year 2012, so the number would have to be Lotus business year *March 2011 to March 2012*. Just goes to show how poor communication at DRB/Lotus is if this is still the press reference.

 

Obviously in the business year *March 2011 to March 2012* there was the shutdown as well as all accrued investment in the DB 5-car plan. DRB will very likely also have seized the opportunity to put in some major write-offs and obligations from that plan. The easiest way to demonstrate a successful turnaround is to make the last year look even worse.

[Bibs 11,167]

Same as the major banks during the crisis in the UK all of a sudden were suddenly losing billions each year! Creative accounting.

[peter_kirkham 0]

As TBD quite correctly points out, the first thing you do if you've got a bad year and a plausible reason to hide behind, is wipe the slate clean. Don't just have a loss, have a mega-loss. Get everything written off that needs to be. People will quickly forget the bad year, and the better years in the future will look better.

 

Also don't confuse profit and loss with cash flow. It is quite possible for P&L results to look bad whilst business is actually doing OK. For a year or two anyway. In the long run the P&L will catch up and should reflect whether the business is successful or not. You can hide away bad results for a short while, but you can't hide from your true results for ever!

[hedgerley 440]

I've just downloaded the accounts and they make interesting reading. Whilst Lotus Cars Limited did indeed make a loss of £115m, Group Lotus plc, of which Cars is a wholly owned subsidiary made a loss of £7.1m (against a profit of £445k in 2010/11). Key to this is the injection of shareholder funds and the continuing support of Proton, confirmation of which has allowed the accounts to be prepared "on an ongoing concern basis". Phew

 

However, this does not tell the whole story. For example, half the loss, £53.3m, is attributed to "an impairment charge on its intangible fixed assets, relating to certain product development costs". One assumes this is kicking DB's five model into touch?

 

It is also stated that "Lotus Cars will focus on maximising sales of its current Evora, Exige and Elise offerings which will be further enhanced by future variants to broaden and refresh the range and to meet a multitude of new legislative requirements". I can find no reference to new Esprit....

 

Of course, the accounts relate to the period up to 31 March 2012. A lot has happened since then as DRB exert more control. But they have on at least one occasion confirmed the Esprit remains in their plan albeit significantly delayed and I guess subject to the finances being sorted out. At the time of the Annual Report these were still in a bit of a mess and subject to "ongoing negotiations" between DRB, Proton and the bank consortia. The facility was £270m and the banks froze the unused £47m.

 

The covenant breached was the need to maintain positive shareholder funds. This was actually rectified by the capitalisation of inter-company debt amounting to £119.7m, restoring the covenant. So now we know. 

 

All very interesting. And thoroughly confusing.....

Edited January 14, 2013 by hedgerley

[TBD 781]

True, but but it clearly shows how irrelevant that press article was.

[richardvg 3]

I've just downloaded the accounts and they make interesting reading. Whilst Lotus Cars Limited did indeed make a loss of £115m, Group Lotus plc, of which Cars is a wholly owned subsidiary made a loss of £7.1m (against a profit of £445k in 2010/11). Key to this is the injection of shareholder funds and the continuing support of Proton, confirmation of which has allowed the accounts to be prepared "on an ongoing concern basis". Phew

 

However, this does not tell the whole story. For example, half the loss, £53.3m, is attributed to "an impairment charge on its intangible fixed assets, relating to certain product development costs". One assumes this is kicking DB's five model into touch?

 

It is also stated that "Lotus Cars will focus on maximising sales of its current Evora, Exige and Elise offerings which will be further enhanced by future variants to broaden and refresh the range and to meet a multitude of new legislative requirements". I can find no reference to new Esprit....

 

Of course, the accounts relate to the period up to 31 March 2012. A lot has happened since then as DRB exert more control. But they have on at least one occasion confirmed the Esprit remains in their plan albeit significantly delayed and I guess subject to the finances being sorted out. At the time of the Annual Report these were still in a bit of a mess and subject to "ongoing negotiations" between DRB, Proton and the bank consortia. The facility was £270m and the banks froze the unused £47m.

 

The covenant breached was the need to maintain positive shareholder funds. This was actually rectified by the capitalisation of inter-company debt amounting to £119.7m, restoring the covenant. So now we know. 

 

All very interesting. And thoroughly confusing.....

the loss was a calculated one in the growth of the range and business .It is regular course of growth and developement that this is anticipated.

The extra monies were not forthcoming and either way would reflect as a liability.

The more concerning issues are those of models and ranges.If Lotus choose to continue on this path ,even though the mew models (derivatives ) are really awesome , they might just as well become another Morgan .....stay with old cars .

There is no way they will have a hope of competing with the supercars of today if they dont develop.

Somehow I can't see the UK dealers splashing out on new showrooms....

Would you ?

[Bibs 11,167]

That whole 'new showroom' thing was buried, even while Bahar was still there. 

[Gus82 0]

There is in an interesting comment in the new Car out on Wednesday (Subscribers get it today). There is a big section celebrating Aston Martins centenary, which includes an interview with Ulrich Bez. He talks a lot about the benefits of independence but when discussing producing a smaller Aston Martin Boxster rival he says its a good idea but they would need a partner. The interviewer mentions Lotus and he replies "that they are always talking to lots of people", but doesn't deny it either.

 

Could be nothing of course but if Lotus is ditching the plan to move upmarket this could be a very attractive option. I doubt Aston would have the capacity to build such a car so Lotus could build both version and its in a region of the market where Lotus would definitely be excepted. 

[Stirling_Villeneuve 105]

Now THAT would be some good news for once...

 

...and Richard, no I wouldn't splash out on a nice swanky showroom right this minute! 

[B1 RMA 2]

There is in an interesting comment in the new Car out on Wednesday (Subscribers get it today). There is a big section celebrating Aston Martins centenary, which includes an interview with Ulrich Bez. He talks a lot about the benefits of independence but when discussing producing a smaller Aston Martin Boxster rival he says its a good idea but they would need a partner. The interviewer mentions Lotus and he replies "that they are always talking to lots of people", but doesn't deny it either.

 

Could be nothing of course but if Lotus is ditching the plan to move upmarket this could be a very attractive option. I doubt Aston would have the capacity to build such a car so Lotus could build both version and its in a region of the market where Lotus would definitely be excepted. 

Doesn't the Exige S cover that part of the market?

 

Myself I'd have thought it suicide to attempt a Boxster rival as Porsche do it so well.

[Stirling_Villeneuve 105]

They do Porsche so well, not Aston vs Lotus... that would be something very different.

[Günter 28]

True, but but it clearly shows how irrelevant that press article was.

..that's why I mentioned the actual 'bussiness-period' in question .

 

As for the AstonMartin thing, wasn't Aston Martin in big trouble too ..as for the amounts of this 'small town car' (the rebadged Toyota copy) there in the dealers 'used cars' parking lots ??

 

For me the various internet-pages for used cars, filled up with lots of those cars (intended to fullfill the fleet consuption calculation)  is a sighn of wasted money, or at least money that does not get into cash flow back into the company ..as noone seems to buy them ?   Wouldn't a rebadged Aston-Lotus have the same problem, as within the typical AstonMartin price range, none of the traditional customers would be interested into buying one of these ..

Edited January 15, 2013 by Günter

[Bibs 11,167]

http://paultan.org/2013/01/15/lotus-five-concept-cars-canned-brand-wont-be-sold/

[Kimbers 1,794]

My Engineer mate laughed when I asked him about the canning of the 5 new models. He said, "What 5 new models?". I mentioned the mock up's and he laughed and said "Well for 4 of them thats all there ever was. They were pipe dreams!"

 

Good news on not being sold which backs up other articles.

[Snoopy1969 276]

Maybe a naive question but: On what is the design department esp Donato Coco as "new entry" in the DB period working the whole day( esp Donato Coco is working for Lotus for more than 3 years now) ???

[NedaSay 836]

This brings us back to square one, 2009, prior to MJK resignation (removal) MJK would have brought the Esprit to market by now! And we'd have the Evora roadster too!

 

 

Bahar, you giant prick!!!

 

 

Effectively the 270M loan was for nothing. The company contracted a substantial debt for nothing at all!

Edited January 15, 2013 by NedaSay

[Bibs 11,167]

"The truth about cars" are less than optimistic...

 

http://www.thetruthaboutcars.com/2013/01/let-the-lotus-deathwatch-begin-or-shall-we-just-pull-the-plug/

[TBD 781]

Still, no news is....

 

no news

[obione 74]

Unfortunately…all rather predictable, and very sad...

[Stirling_Villeneuve 105]

That is the most depressing article I've read in a while, mainly because all that malarky about the Malaysian Government contracts adds up....

[Günter 28]

where are those 5 (4) models now -still in hethel ?

 

..as I can imagine that even for a pure 'design mokup' -there still is investment and hours of work in those designs, investments who could be sold to others (like a form of licece) -even knowing that in most terms 'design' is not clear licenced in car industry

 

So I would not wonder if we can se similar car disigns. Filled up with low tech internals in near future within cars ..named *great wall* or *Beijing star*   ..know what I mean ?

 

[NedaSay 836]

the intriguing thing in that Paultan article is that they mention a new Evora and Exige in 2016/2017 including a new platform.

 

He also divulged that we can expect replacements for the Exige and Evora by 2015 or 2016, with a newly-developed platform and engine at the heart of things. No confirmation about whether the platform will be a carry-over or evolution of that from the Paris cars.

 

 

"a newly-developped platform" VVA is pretty much brand new?!

An "engine at the heart of things" ?! They took that one out of DB's book!

"2015 or 2016"Are they just delaying things by another 3 years cause they are cash strapped!

 

No mention of an Elise replacement which I would consider the most urgent thing right now! Considering Exige V6 is barely out of the factory and Evora is not even 4 year into its cycle.

[Iconic Ride 267]

Two very interesting (and to some extent informative) articles, with a distinctly Malaysian tilt on the matter. It would seem that Malyasian politics has a significantly greater effect on the future of Lotus than one might at first suspect. And having read the entirety of the "home boy" blogger comments following each article, one comes away with a substantially altered viewpoint on the whole enigma that Lotus has become. Southeast Asia business practices are of an inscrutable nature, not easily lending itself to Western style analysis. Not sure what to think at this point.