NO PROFIT UP TO NOW THEN.....

The article (and thread title) appear to start off on a skewed premise for me; ignoring the actual situation.

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They seem to infer that Norton/TVS were expecting to make a profit in 23/24 “although future models could be a lifeline”?

It’s been widely publicised that TVS acknowledge, Norton will be loss making for a significant period until its current plans come to fruition and the company/market is further developed. Detailing future periods over which funding and a support for the marque will continue - including a 10 year support plan. They’re playing the long game - this ain’t their first rodeo.

The extent of the losses is a different matter. Are they at a level that TVS expected them to be at this juncture? We can only speculate. They are following up the initial 124+mil of investment with a similar figure for next year (from memory) - to include funding for EV development. My guess would be that the losses are in the ball park of expectation - could be wrong, often am!

Here’s hoping that they’ve been spending the R&D pennies well and we get some bangin’ new motorbikes to show for it - sooner rather than later🤞!
 
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The P&L report

Intangible assets 'Brand name and Trademarks' £15M plus £10M development costs giving £25M.

I can understand the £15M as they paid that for a dead company and the only real asset was the name Norton, no reason to write any of this off as of yet. But only £10M in development after 2 years of circa £30M losses which are mainly admin and employee costs seems odd. What have those employees been doing ?

They sold £3.8M worth of bikes and the cost of sales was £5.6M, so a 47% loss on each bike.

Also despite £92M of accrued losses on the balance sheet they have only banked £9.4M with HRMC to offset against future profits. So once they post £9.4M of profits they have to start paying Corp tax.

THE NORTON MOTORCYCLE CO. LIMITED filing history - Find and update company information - GOV.UK

THE NORTON MOTORCYCLE CO. LIMITED - Free company information from Companies House including registered office address, filing history, accounts, annual return, officers, charges, business activity
find-and-update.company-information.service.gov.uk find-and-update.company-information.service.gov.uk
 
kommando said:
The P&L report

Intangible assets 'Brand name and Trademarks' £15M plus £10M development costs giving £25M.

I can understand the £15M as they paid that for a dead company and the only real asset was the name Norton, no reason to write any of this off as of yet. But only £10M in development after 2 years of circa £30M losses which are mainly admin and employee costs seems odd. What have those employees been doing ?

They sold £3.8M worth of bikes and the cost of sales was £5.6M, so a 47% loss on each bike.

Also despite £92M of accrued losses on the balance sheet they have only banked £9.4M with HRMC to offset against future profits. So once they post £9.4M of profits they have to start paying Corp tax.

THE NORTON MOTORCYCLE CO. LIMITED filing history - Find and update company information - GOV.UK

THE NORTON MOTORCYCLE CO. LIMITED - Free company information from Companies House including registered office address, filing history, accounts, annual return, officers, charges, business activity
find-and-update.company-information.service.gov.uk find-and-update.company-information.service.gov.uk
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Yep they’re definitely running at a loss Kommando, as discussed. You’d have to think their main focus would be on the development of the new model lines, whilst continuing production. You’d also expect, I suppose, that a multinational company will be managing their finances as ‘creatively’ as possible, including tax.

A 47% loss on each bike sold. Given where Norton stands currently in their business development, what does that rather dire stat tell us? You’ve obviously got experience in this area, which is great for interpreting what is greek to most of us - given the limited number of V4’s purchased, roughly how many bikes do you believe have been sold to make up that £3.8M total?
 
Would the rest of the 92 mm losses gone off somewhere else and used for tax credits elsewhere?

Not an accountant but I have seen similar things in companies I have worked for. Depends how tax is ring-fenced. Between companies and countries.
 
johnm said:
Would the rest of the 92 mm losses gone off somewhere else and used for tax credits elsewhere?

Not an accountant but I have seen similar things in companies I have worked for. Depends how tax is ring-fenced. Between companies and countries.
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The origin of the funds can be seen in the shares section, and that is TVS currently at £109m. There are also loans outstanding of £26m.

Yes TVS will be expecting to milk the cow using devices such as royalty payments to transfer profits out before they are subjected to tax but to leave £80m off the table seems odd, that's £20m of extra tax

TVS itself is not a profitable company, it feeds itself from ongoing increased sales from acquisition giving it positive cashflow. As it must be liable for the £26m loan it's into Norton by £135m with not much as yet to show for it. If the cashflow stumbles the reaction of the share price on the Indian stock exchange will determine Norton's future.
 
kommando said:
The origin of the funds can be seen in the shares section, and that is TVS currently at £109m. There are also loans outstanding of £26m.

Yes TVS will be expecting to milk the cow using devices such as royalty payments to transfer profits out before they are subjected to tax but to leave £80m off the table seems odd, that's £20m of extra tax

TVS itself is not a profitable company, it feeds itself from ongoing increased sales from acquisition giving it positive cashflow. As it must be liable for the £26m loan it's into Norton by £135m with not much as yet to show for it. If the cashflow stumbles the reaction of the share price on the Indian stock exchange will determine Norton's future.
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I used to do NPV project economics for investment decisions. And probabilistic modelling of outcomes to estimate EMVs. Basically economics for engineers.

But when the tax guys got into it all reason went out the wind. There is no logic - only rules.

I do not understand all the implications of tax dealing. But can certainly see that places like Ireland are used to reduce tax in other countrys via "royalty " payments.
 
Similar here, assisted in acquisitions on the engineering and science side, picked up what I know from the accountants that I worked alongside. What I thought were dogs of companies to be given a wide berth were sometimes seen as diamonds for the oddest of reasons.
 
I often work in the PE space on the engineering and operational side of things. The way those guys look at the world is very different and it’s actually very educational to see how they view financial situations, problems and opportunities.
 
When compared to other lesser motorcycle manufacturers their model plans and numbers still don't add up. Considering the money the have lost in the last 4 years they will never see a profit form the Norton name. Aprilia for example, annual net profit of E92m and sales of two wheelers over 436,000. The £23m loan has it seems not been finally approved yet, and with nothing tangible to cover that sum that is one hell of a risk. The sales figure for bikes suggests that around 250 bikes were made for that period, with 8 dealers needing to shift bikes a year then they have fallen short it seems.
TVS motorcycle morphed out of being manufacturer to Suzuki, and despite them being a manufacturer of large numbers of two wheelers this is their 1st go at getting something off the ground like Norton. They truly need to stop and have a rethink and produce real plans and not pie in the sky dreams which their current plans are as per their recent press articles and interviews. Maybe they have two sets of plans, one for the press and one for themselves.
I like everyone else would like to see them succeed, but the current year on year losses and current plans of 7 - 8000 bikes a year are not going to to it.
 
Madnorton said:
When compared to other lesser motorcycle manufacturers their model plans and numbers still don't add up. Considering the money the have lost in the last 4 years they will never see a profit form the Norton name. Aprilia for example, annual net profit of E92m and sales of two wheelers over 436,000. The £23m loan has it seems not been finally approved yet, and with nothing tangible to cover that sum that is one hell of a risk. The sales figure for bikes suggests that around 250 bikes were made for that period, with 8 dealers needing to shift bikes a year then they have fallen short it seems.
TVS motorcycle morphed out of being manufacturer to Suzuki, and despite them being a manufacturer of large numbers of two wheelers this is their 1st go at getting something off the ground like Norton. They truly need to stop and have a rethink and produce real plans and not pie in the sky dreams which their current plans are as per their recent press articles and interviews. Maybe they have two sets of plans, one for the press and one for themselves.
I like everyone else would like to see them succeed, but the current year on year losses and current plans of 7 - 8000 bikes a year are not going to to it.
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Finally a bit of discussion - admittedly the Norton story is in information hiatus currently. Not sure we can easily compare where Norton is currently (in its business development) to Aprilia though Mn.

I always have trouble with definitive statements like “Considering the money they have lost in the last 4 years they will never see a profit from the Norton name” - when based on (at best) partial information, conjecture and personal opinion - which is welcome of course.

Can we just imagine for a moment that Norton is actually going to do what has been outlined, for the sake of a bit of balance - and again this includes conjecture and is certainly not ‘definitive’. What if we imagine that in 2-4-6 years (noting the long game inferred in TVS’s 10 year plan) the following is in play:

- Norton has introduced 3 or 4+ new ICE models, several variants within each and EV bike offerings. All are compliant and being shipped to the marketplace worldwide - TVS already does this.

- They actually do an excellent job - noting the quality system it appears is in place, the flair of recently hired design staff and lots of hard work that is no doubt going on in the background. As a consequence and with the Norton name, these bikes sell.

- TVS is badging smaller capacity Nortons in their Honsur facility, selling into their extensive domestic and international market, at volume - that’s their game.

- Let’s top off the conjecture with a news flash - ‘Norton goes racing again’!

Notwithstanding the thickness of those rose tinted glasses, what then? Does the statement “….they will never see a profit from the Norton name” stand up?
 
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