News : LTI loses £3.9m in IT black hole

Carole Nash Classic Insurance Specialists

Andrew Elphick

LTI TX4 black cab

London Taxis International’s parent company Manganeze Bronze issued a rather worrying press release signalling the loss of nearly £4m. Or in simple layman’s terms very nearly 122 complete £31,995 TX4 ‘Style’ models. This accounting oversight seems to be the last thing the manufactures of London’s bespoke hire car need.

With the latest 15 year rolling licensing requirements set to pension off at least 4000 of the iconic FX4 Taxi by 2013, and the threat of London’s badge-holding Cabbies switching allegiance to rival Mercedes-Benz (or potential newcomer Nissan) are the cracks beginning to show at LTI?

Manganeze Bronze’s share price dipped heavily off the back of the statement to fall to a year low, (of two thirds of its year high figure) to close at 13.75p a share.

Parent Manganeze Bronze’s statement follows: ‘Further to its announcement of 19 July 2012, Manganese Bronze Holdings PLC (“the Group”) announces that it is delaying the release of its unaudited half-year results for the six months ended 30 June 2012 from 20 August due to the need to restate prior years’ financial results because of accounting errors that have come to light. The half-year results will be announced on or before 24 September 2012.

‘In August 2010 the Group introduced a new integrated IT system to help to manage the increasingly complex global supply chain and uploaded the closing general ledger balances from the previous IT system. Due to a combination of system and procedural errors, a number of transactions relating to 2010 and 2011 and some residual balances from the previous system were not properly processed through the new IT system.

‘This problem led to the over-statement of stock and under-statement of liabilities in the financial statements of previous years. The cumulative effect of these errors is an estimated £3.9m understatement of historical losses which go back over several years although the work to apportion the loss between previous years is not yet complete. In accordance with the provisions of IAS 8, the balance sheet at 31 December 2011 and the financial results for 2011 and prior years will have to be restated.

Trading in the first seven months of the year has been difficult and remains challenging with the Group continuing to trade at a loss. As announced on 17 May 2012, sales for the first half were lower than in the comparative period in 2011 and the Group currently expects to report net losses for the first half that are substantially higher than reported last year. The Group is expecting higher sales in the second half but does not know at this stage if results for the full year will be in accordance with market expectations.

‘As at 30 June 2012, the Group had £2.8m of headroom on its agreed banking facilities and continues to enjoy the ongoing support of its bankers and Geely’.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

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22 Comments

  1. I hope everything works out for them as their product is much better than those horrendous Mercedes Vans.

    I am happy to pay a premium for a premium service but those Mercs are driving me into the hands of the good minicabs such as Addison Lee

  2. How long before they shut down production in the UK? They already build them in China, and this looks like a prelude to them pulling the plug. The TX is not exactly a cheap and easy manufacture though, having seen a film on how they produce them it is quite amazing on how different they are made compared to your normal vehicle.

  3. Hope things do pick up for LTI. The TX4 carries on an air of modernity from the FX4 and is still an iconic feature of daily London life. Pity they are so expensive but presumably are still very good rugged workhorses?

  4. I wouldnt consider them expensive given its a purpose built hackney carraige,be cheaper still if its split between two people and grafting round the clock earning its keep.

  5. £4m is a drop in the ocean compared to the £700m most European manufacturers seem to be losing annually at the moment. Not sure this should be that much of a disaster.

  6. I have a 2011 and a 2010 cab both in MINT condition, but cannot get them into London because of The Lord Mayors decision to insist on Euro 5 only, if they have not already been in London. 4000 Fairways coming off soon, LTI in great trouble – shares suspended for Manganese bronze.
    There are many London Badge Holders who would like to buy a low mileage cab at an affordable price from an ‘out of towners’, but are NOT allowed to register it in London because of BORIS’ red tape. Well hear this, we haven’t got £32-£36k to buy a cab anymore with very poor residuals because of Boris and of course the engines which are blowing up !!

  7. There have always been competitors out there, Beardmores and the Metrocab for example. Is the Peugeot E7 London certified?

    You could sell your ex-London taxi to one of the regional cities (Manchester, Edinburgh, Belfast etc)

  8. Looks like the Bombardier fiasco all over again- this Government effectively handing over the market to foreign competitors for the sake of short term gain and at the expense of British jobs (and lord knows they are doing bugger all to stimulate the economy which would help create jobs).

    And whilst it is not unreasonable for Boris to insist on new cabs meeting Euro 5, I think the 10 year cut off is totally unreasonable- cabs, like buses, are purpose built for a very long service life in arduous conditions, and it would be greener for them to be run until they are no longer either economic, or could be sold on for service in quieter towns and cities, which would preserve their value.

    Its not only taxis, but other commercials- vans and lorries, that are affected by the requirement for Euro 5. In these desperately straitened times, where small businesses are hanging on by their fingertips, how the hell are they supposed to be able to afford Euro 5 commercials, and how are new traders supposed to find a way of starting out if they can’t do so by the traditional method of buying a beat up Transit ex British Gas or Royal Mail? They can’t get the money from the banks, since despite being rescued by the public purse, they are not prepared to lend to small businesses. There have been noises from Westminster about making such funds available to businesses from an alternative fund, but like everything that comes from there, the proof will be in the pudding as to whether that will be more than a politician’s guff- a soundbite made in order to appear proactive whilst maintaining the status quo.

  9. Well the Tories can’t get it into their empty heads, that the more people they have in work, and the more companies they have in this country, the more tax income they generate. The Mercs are just flimsy delivery vans with windows & seats bolted in the back, and are a compromise design, plus Mercedes’ legendary lack of quality and durability when it comes to commercials. It does make you angry, that the blonde windowlicking toff is wasting tens of millions on buses nobody wants (the Borismaster), but wont help out the cabbies, which lets face it, the FX/TX are part of London’s tourist attractions, just as much as the flippin Rotmaster is. I’m sorry, but this government should behave a lot like some places in the USA, and give massive tax incentives to buy ‘home grown’ products.

  10. @11, Yorkiebusdriver,

    Actually, in New York the situation is even worse. From 2013 the ‘official Yellow Cab’ will be the Nissan NV200 panelvan converted into a taxi. The other two vehicles that were considered were from Karsan, a Turkish company, and Ford, with the Transit Connect, also Turkish built. The Karsan was the only purpose-built option rather than being converted, as with the Ford and the Nissan. It looks like this http://wheels.blogs.nytimes.com/2011/02/02/karsans-taxi-introduces-itself-to-potential-passengers/

    The NV200 tested as a panel van was criticised for its poor ride from its small wheels. Not an ideal vehicle for New York streets then. The Transit Connect is pretty ancient technology having debuted in 2002 but only reached US shores in 2009. The Yank version has a 2 litre petrol engine and automatic transmission, the European one has a diesel with manual.

  11. I don’t entirely understand why people are saying that the problems at LTI are now Boris’s fault.
    They cocked up their accounting, and now they’ve got problems with parts from China not working properly, so their problems are largely self inflicted.

    Surely making people replace their old FX4s is a GOOD thing for LTI, as it will increase the market, and as Cabbies are meant to be jingoistic and nationalistic, most will continue to buy the LTI product IF it is good enough.

  12. @14, Mikey C,

    Not so much if it is good enough, but if they can afford it…

    I don’t think anyone is blaming the accounting errors at LTi on Boris.

  13. I noticed the shares suspension, currently sat at 10p. If anyone’s interested I snapped the new Nissan challenger at the Paris motor show, it does appear to have had some thought put into it and internal finish seemed good.

    It is my guess that Nissan have not shown their hand fully yet – would you if you were sitting on all that proven Leaf technology? Is the future induction loops on the capitals taxi ranks?

  14. @17
    TfL agree whether vehicles meet the standard, it would be illegal (and very unpopular with cabbies) if the rules were changed so that only the TX4 could be used, when they could but a rival Nissan that costs less and uses less fuel. If it turns out to be rubbish, then cabbies won’t buy it.

    The problem for LTI is that their small sales and lack of support from a major manufacturer make it very hard to develop the product. You can see similarities with LDV, especially as both used the same engine…

  15. LTI have only themselves to blame. They have produced an inferior vehicle for years. The go on forever I hear you say. That is complete rubbish, an urban myth. The trade have had no choice in what vehicle they could buy. Foolish local authorities can’t see past the turning circle requirement meaning many other vehicles are denied access to this trade. The writing has been on the wall for a long time. Face it LTI, it’s over and good riddance!

  16. @ 18 Ned Bongle:

    “The trade have had no choice in what vehicle they could buy. Foolish local authorities can’t see past the turning circle requirement meaning many other vehicles are denied access to this trade.”

    The trade in London already have a choice (or at least they did up until a week or two ago when LTI ceased to sell new Taxis!) and what is Foolish about a London Taxi having a 25′ turning circle?

    Interestingly, while the Vito can manage it, it can’t perform the trick in reverse gear and can only to it going forward at a maximum speed of just 5mph.

  17. @17 We run the vasn version of that Nissan at work and it’s horrible. Not only unreliable, but the side doors are too small to be of much use and I have no idea how a wheelchair would pass through it, let alone turn around once inside. And where are the 4th and 5th seats (or the 6th in the case of the Vito)?

  18. Actually, in fairness, this isn’t the version of the Nissan van that’s been developed for the London market, that’s this larger version complete with the 25′ turning circle:

    http://www.youtube.com/watch?v=iHW5KI6IIEM

    At least, unlike the Vito, it’s the real deal in that it should still work in reverse and won’t slow it to a crawl when it’s U turning on busy London roads and trying to wipe out oncoming motorcyclists in the process….

  19. Typical Ghuff about air quality in London. I had the privilege of driving my clean LPG car in London, which cost £12 for the day. I then sat sharing the air space with loads of dirty diesel taxis, lorries and buses. Why not use the money raised from the so called LEZ to subsidise new clean engines for existing London service vehicles.

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