Who carries the can?

[Midnight]

https://narrowboatworld.com/14795-carts-commercial-failure

 

Of course there's no info to benchmark this against but it doesn't  look good to me. And it doesn't seem to impress the government either. 

[Bod]

C&RT Trustee's I expect, it is they who appoint the management to run the system.

 

Bod

[Allan(nb Albert)]

1 hour ago, Bod said:

C&RT Trustee's I expect, it is they who appoint the management to run the system.

 

Bod

The Trustees have a sub committee that dictates and oversees investment policy so are ultimately responsible.

 

However, in the past, some guidance was also provided by a 'Protector' jointly appointed by CRT/Defra so one might argue that goverment is ultimately responsible.

 

Whilst governing documents have yet to be altered, my understanding is that CRT/Defra have agreed that the role of 'Protector' is no longer needed.

 

[Arthur Marshall]

Charity donations are falling across the board and many charities are giving up. Years of "austerity" have meant people simply have less they can donate. Can't think whose economic policy that's been.

[Allan(nb Albert)]

12 minutes ago, Arthur Marshall said:

Charity donations are falling across the board and many charities are giving up. Years of "austerity" have meant people simply have less they can donate. Can't think whose economic policy that's been.

CRT is not immune with number of Friends in decline. Last I heard was the figure was under 26,000. 

[ditchcrawler]

31 minutes ago, Allan(nb Albert) said:

CRT is not immune with number of Friends in decline. Last I heard was the figure was under 26,000. 

I failed to become on when approached 3 weeks ago

[Allan(nb Albert)]

Was a time when chuggers were told not to continue a pitch when someone identified themselves as a boater.

 

That was because the director responsible thought boaters contributed enough through licence fees.

[IanD]

So let's get this right -- the article is slagging off CART for not achieving the returns on property investment that were predicted more than 10 years ago?

 

I wonder how many other investors have found exactly the same, given what has happened since then?

[Mad Harold]

If CRT are only getting a 3% return on their investments that is very poor.

I have just taken out a one year investment bond with Lloyds Bank at an interest rate of 5.45%.

[IanD]

19 minutes ago, Mad Harold said:

If CRT are only getting a 3% return on their investments that is very poor.

I have just taken out a one year investment bond with Lloyds Bank at an interest rate of 5.45%.

Yes, but what were your returns on (mainly commercial?) property investment over the last 10 years?

 

I'm not saying that CART have or haven't done badly on their property, but you have to compare apples to apples, not apples to durian... 😉

 

"Commercial property yields are higher than residential, with residential property currently offering a yield of 3.53% per annum. Commercial property returns are usually broken down by sector, with shopping centres producing a 7.5% yield, high street retail 6.75% an offices between 5-5.5%."

 

That last figure looks close to CART's return before expenses -- but note that these figures are for large commercial property funds, not directly managed ones like CART with much higher expenses.

Edited August 22, 2023 by IanD

[Mad Harold]

4 minutes ago, IanD said:

Yes, but what were your returns on (mainly commercial?) property investment over the last 10 years?

 

I'm not saying that CART have or haven't done badly on their property, but you have to compare apples to apples, not apples to durian... 😉

I don't have any property investments, but my daughter works in that field, she tells me that returns on property investments should be about 6% gross.

It's true that savings returns have been very poor, but property has largely held up.

What's durian by the way? My Collins dictionary doesn't list it.

[Hudds Lad]

2 minutes ago, Mad Harold said:

What's durian by the way? My Collins dictionary doesn't list it.

https://en.wikipedia.org/wiki/Durian

 

Stinky fruit

[IanD]

1 minute ago, Mad Harold said:

I don't have any property investments, but my daughter works in that field, she tells me that returns on property investments should be about 6% gross.

It's true that savings returns have been very poor, but property has largely held up.

What's durian by the way? My Collins dictionary doesn't list it.

 

I doubt that CART have much choice about what their property investments are, and it's likely that theirs are not the best (high-yielding) ones that impartial investors would choose -- but their 5% gross doesn't seem too far off the mark. certainly not enough to deserve the opprobrium that Narrowboat World heaped on them, who let's face it are not exactly known for their sympathetic attitude towards CART...

 

It's a fruit common in the Far East which smells so bad that some places ban it being carried on public transport, especially planes... 😉

[ditchcrawler]

2 hours ago, Mad Harold said:

If CRT are only getting a 3% return on their investments that is very poor.

I have just taken out a one year investment bond with Lloyds Bank at an interest rate of 5.45%.

You couldn't have done that last year this time

[LadyG]

5 hours ago, Allan(nb Albert) said:

CRT is not immune with number of Friends in decline. Last I heard was the figure was under 26,000. 

I think CRT tried to encourage friends by using paid⁵ chuggers to sign up friends, that was not a great success, but may have raised the profile.

It's not easy to ask people to contribute for something they see as paths and suchlike. Not the same as the National Trust.

[Hudds Lad]

7 minutes ago, LadyG said:

I think CRT tried to encourage friends by using paid⁵ chuggers to sign up friends, that was not a great success, but may have raised the profile.

It's not easy to ask people to contribute for something they see as paths and suchlike. Not the same as the National Trust.

I used to pass an over-enthusiastic chugger on the HNC when cycling, he tried to collar me a couple of times to the point I stopped going that way just to avoid him. It was often a relief to see him chatting to some dog walker or pram pusher just so i could pass unhindered. Some of the ones at Skipton could be a pain too.

Last one i dealt with was at Crick this year, he took no as an answer straight off the bat, but then just wanted to chat as it was his first day which was fair enough. Bumped into him a few weeks later at the top of Foxton locks and he didn't even try to sign me up. Nice chap, terrible salesman  

[Allan(nb Albert)]

4 hours ago, IanD said:

 

I doubt that CART have much choice about what their property investments are, and it's likely that theirs are not the best (high-yielding) ones that impartial investors would choose ... 

😉

This is, of course, nonsense in respect of CRT although somewhat true in regard to British Waterways.

 

As a public corporation, BW currently faced various constraints on its ability to operate commercially and to maximise the returns from investments. From the 2008 Status Options Review carried out by KPMG -

Quote

− an inability to borrow flexibly and commercially

− the requirement, contained within the Financial Memorandum with Defra, to show evidence of need for grant-in aid and not to hold it on deposit, implying a 
direction not to accumulate revenue profits over a period of a few years
− deficit funding without a long term basis for BW to plan and commit expenditure
− a relatively inflexible governance model
− an enforced non-controlling or non-majority position in JVs leading to potential value leakage

 

The report found that a change of status (from Public Corporation) would remove these impedements, allow greater commercial freedom leading to greater income. 

 

CRT has used this greater freedom to borrow £150m to increase the value of its portfolio, deal in propery that is not alongside its waterways and also diversify into non property assets.

 

Bearing in mind that it is increased commercial income that is supposedly the driver for reducing/eliminating goverment grant and also closing the funding gap, I would suggest it is right and proper to highlight a failure to deliver.

 

[Arthur Marshall]

23 minutes ago, Allan(nb Albert) said:

CRT has used this greater freedom to borrow £150m to increase the value of its portfolio, deal in propery that is not alongside its waterways and also diversify into non property assets.

 

Bearing in mind that it is increased commercial income that is supposedly the driver for reducing/eliminating goverment grant and also closing the funding gap, I would suggest it is right and proper to highlight a failure to deliver.

 

Seem to be modern good business practice. Borrow a lot of money, use half of it to pay consultants, employ new managers and the odd bonus, make a couple of misguided purchases that immediately lose money, give yourself a pay rise, then explain you'll have to make a few employees redundant and close down a bit of your business that actually serves your customers to save money.

Knowing of course that when you've failed again, there'll be another government or charity high paying job waiting for you ...

Edited August 22, 2023 by Arthur Marshall

[IanD]

29 minutes ago, Allan(nb Albert) said:

This is, of course, nonsense in respect of CRT although somewhat true in regard to British Waterways.

 

As a public corporation, BW currently faced various constraints on its ability to operate commercially and to maximise the returns from investments. From the 2008 Status Options Review carried out by KPMG -

The report found that a change of status (from Public Corporation) would remove these impedements, allow greater commercial freedom leading to greater income. 

 

CRT has used this greater freedom to borrow £150m to increase the value of its portfolio, deal in propery that is not alongside its waterways and also diversify into non property assets.

 

Bearing in mind that it is increased commercial income that is supposedly the driver for reducing/eliminating goverment grant and also closing the funding gap, I would suggest it is right and proper to highlight a failure to deliver.

 

 

Except that as far as I can see nobody has actually "highlighted a failure to deliver" compared to what other comparable institutions (similar size and portfolio) achieved over the same period.

 

Saying "they haven't delivered what was in the prospectus 10 years ago" is meaningless, because I think most people are aware that the financial assumptions made/projected when CART was set up were -- to say the least -- unrealistically optimistic.

 

The blame for this can be shared between a government keen to get the canals "off the books" and naive CART management who fell for their spiel and thought they could magically transform CART funding, in spite of having no real evidence that this was possible -- and as it turns out, it wasn't.

 

Having all these magic "commercial freedoms" to supposedly be able to close the funding gap sounds remarkably similar to another over-optimistic proposal dating back to 2016, that has also failed to deliver on what was promised -- because what was promised could never have been delivered in reality... 😞

 

And thinking that by borrowing money and investing it in property you could make money to fill a government funding gap is the same thing that has lead multiple local councils into disaster and bankruptcy, much more spectacularly than anything CART has done. Compared to this, making a 5% gross return on investment is pretty good, isn't it?

Edited August 22, 2023 by IanD

[Arthur Marshall]

Personally, I doubt that anyone in management ever gave a toss about whether income and investment projections were sensible or fairytales, they just looked at their salaries, bonus conditions, expense allowance and pension contributions and took the job.

Whether they had any interest in the canal system at all I rather doubt. Probably they now think it's rather nice and they can milk it for another year or two before moving on.

Anyone know what Allan Leighton is making a pig's ear of now?

[Allan(nb Albert)]

17 minutes ago, IanD said:

 

Except that as far as I can see nobody has actually "highlighted a failure to deliver" compared to what other comparable institutions (similar size and portfolio) achieved over the same period.

 

Saying "they haven't delivered what was in the prospectus 10 years ago" is meaningless, because I think most people are aware that the financial assumptions made/projected when CART was set up were -- to say the least -- unrealistically optimistic.

 

The blame for this can be shared between a government keen to get the canals "off the books" and naive CART management who fell for their spiel and thought they could magically transform CART funding, in spite of having no real evidence that this was possible -- and as it turns out, it wasn't.

 

Having all these magic "commercial freedoms" to supposedly be able to close the funding gap sounds remarkably similar to another over-optimistic proposal dating back to 2016, that has also failed to deliver on what was promised -- because what was promised could never have been delivered in reality... 😞

 

It is very simple. The projections were set as contribution (i.e. net income). They were not based on comparison with others. They have failed to deliver against projection.

[Paul C]

8 minutes ago, Allan(nb Albert) said:

It is very simple. The projections were set as contribution (i.e. net income). They were not based on comparison with others. They have failed to deliver against projection.

Yeah but it was a projection. What was the projection based on?

[Allan(nb Albert)]

17 minutes ago, Arthur Marshall said:

Personally, I doubt that anyone in management ever gave a toss about whether income and investment projections were sensible or fairytales, they just looked at their salaries, bonus conditions, expense allowance and pension contributions and took the job.

Whether they had any interest in the canal system at all I rather doubt. Probably they now think it's rather nice and they can milk it for another year or two before moving on.

Anyone know what Allan Leighton is making a pig's ear of now?

Leighton must bear a lot of responsibilty for the poor relationship between CRT and Defra. Not only did he fail to attend meetings as required by the grant agreement but was also embroiled in the falsification of the 2019/20 Annual Report.

[IanD]

15 minutes ago, Allan(nb Albert) said:

It is very simple. The projections were set as contribution (i.e. net income). They were not based on comparison with others. They have failed to deliver against projection.

 

<sigh> along with all the other companies and organisations who have failed to deliver on over-optimistic projections made many years ago, partly because of events in the world/EU/UK out of their control -- financial crash, wars, Brexit, Covid... -- that made this impossible.

 

You do know that all reputable "how well is this company/organisation doing?" comparisons compare their performance to their cohort?

 

For example, if I look at my pension fund and find that since the start of the Ukraine war it's dropped (for example) 5%, the measure of success is whether they've done better than all the other pension funds -- and if those have dropped (for example) 10%, mine has done well even though it's dropped in value.

 

Long-term projections are only meaningful if nothing changes in the business/financial world to screw them up, which has absolutely not been the case since CART was formed.

 

6 minutes ago, Paul C said:

Yeah but it was a projection. What was the projection based on?

 

Wishful thinking? Sunlit uplands, viewed through rose-tinted spectacles? Magic money trees?

Edited August 22, 2023 by IanD

[Allan(nb Albert)]

7 minutes ago, Paul C said:

Yeah but it was a projection. What was the projection based on?

The projections were based upon British Waterways’ business plan for the 
Comprehensive Spending Review period from 2011/12 to 2014/15, extrapolated out to 2026/27. They included the effects of the Defra funding agreement and 
projected increase due to charitable benefits.