SKYTREX - former ownership

[Obi-Jiff Kenobi]

Also, several of the plastic kit manufacturers, such as Italeri and Zvezda, have moved into wargame territory in a big way in recent years, providing easier to build models at cheaper prices than the traditional white-metal wargames makers.

[BrushType4]

HiWell there go my bottle kilms i wanted, I hope to be able to get them ,but by the look of this they will not be around!.Darren01

With luck you'll pick them up in the sale and save a small fortune!

 

I've looked through the catalogue today and I have my eye on a few items.

[RedgateModels]

Hi

Well there go my bottle kilms i wanted, I hope to be able to get them ,but by the look of this they will not be around!.

Darren01

If they are the ones I am thinking of David Wright of Dovedale Models produced the master for this, so might be able to help?

[Kenton]

 

I've just had a look at the website and there is a message from the administrators asking for customers to register their email address for a forthcoming clearance sale.

[cynic mode]

that can be added to the asset list and sold on

[/cynic mode]

 

Why not simply announce the details on the website?

 

I have always thought the products were somewhat over priced - but then for some reason I always thought this was a small business - how on earth did they generate those levels of debt?

[BrushType4]

I wouldn't be surprised if the 'debtors' are family members in one way or another. Certainly a regular supplier wouldn't have allowed such a debt.

[Pandora]

Reading the pdf file of the Accounts,  they include a notice regarding the Railway products,  the Directors refuse to amortise (depreciate?) the railway items, wre they expecting to sell more railway items on the back of a strengthening  O gauge market, ie Dapol terrier and 08 shunter?

[Linners]

Skytrex was heavily involved in the production and manufacture of war-gaming miniatures prior to their break through in O gauge products. They anounced earlier this year that they would be selling off the war gaming element, including their WW1 aircraft and napoleonic (or should I say Nelsonian) sailing ship ranges, to focus on their railway products. They also had several special buy weekends prior to discontinuing the military ranges where on-line purchases were given a 20% discount. Such a shame that the sale of these failed to help the company with their model railway business.The ships and aircraft can be bought from Red Eagle Miniatures, and the WW1 aircraft are in 1:144th scale which is quite close to N-gauge.

 

Linners

[81A Oldoak]

I wouldn't be surprised if the 'debtors' are family members in one way or another. Certainly a regular supplier wouldn't have allowed such a debt.

Debtors are not the problem, it's the creditors and I agree that they may well be family. This case emphasises the vital importance for suppliers to conduct a proper due diligence of their prospective counter-party. Never be shy to ask for the latest financial statements, even for a sole trader or unincorporated firm. Be cautious if they are shy about releasing the information and remember the iron rule that "cash rarely offends". I was talking to a rep of a very well-known manufacturer today and he said  they had been able to recover all unsold stock from Modelzone, but were disappointed by the loss of over 40 outlets, most of which attracted casual visitors who would not infrequently be attracted into or back to the hobby. 

[frobisher]

I can imagine that the wargaming side has been hit very heavily by the growth of more-and-more sophisticated computer games, such that no-one needs physical models to represent their forces anymore.

No more than train sims have hit the model railway hobby I would say. The bigger issue will always be competition within the field which is fierce. I'm not familiar with their range but I'd bet that if their focus was historical there was nothing that wasn't duplicated by at least three or four other manufacturers within the UK alone.

[BrushType4]

Debtors are not the problem, it's the creditors..

 

Must remember to engage brain

[greenglade]

just seen this thread.. very sad... I used to sell Skytrex products when I owned my own model shop over twenty years ago now... dealing with war-game items they were of the lower quality types available at the time. I'm not sure where these numbers of £2.8 million owed to creditors and £1.5 million assets stand?,, that's an awful lot of money for such a business which would mainly buy resins,RTV silicon's and white metals, perhaps some outstanding pattern commissions to pay for but £2.8 million worth?.. not in that type of business??.. there must be other hidden costs from somewhere. Also I don't understand this £1.5 million of assets and the fact that 99.8% is stock... how is that even possible.. how can you have that amount of monies worth sitting in stock in such a relatively small scale business... admittedly I am judging the business from what I knew 20 years ago but I doubt it has changed that much.. I do wish all the best to those concerned though...as I said it's very sad...

 

Pete

[cromptonnut]

Perhaps it's the fact that much of it is high value O gauge?

 

When you're looking at the price of items like £200 for a coach and £500 for a loco, it soon mounts up I guess.

[greenglade]

Perhaps it's the fact that much of it is high value O gauge?

 

When you're looking at the price of items like £200 for a coach and £500 for a loco, it soon mounts up I guess.

Still doesn't add up to me... there just isn't the business to hold that amount of stock... also they are the manufacturer not a retailer... so their profit margin will be far higher and thus on paper less should be owed to creditors... just doesn't make any sense to me... if the assets included property then I could accept it but in stock from a manufacturer?... they would have to be making items for many years without actually selling them... would be interesting to see a breakdown of what's what.... very strange??

[BrushType4]

There are items still in the range that have been out of production for many years so that would hold that they have stock that has simply not sold and has built up. Still it's a lot of stock and must take up quite a space too.

[daifly]

With 99.8% of the assets in stock holding, the first thing they should do is sell the stock! If there is a viable business at the end is another thing...

It's a shame, but I don't understand why they ploughed on in resin locomotives for example when the quality to cost they achieved was nowhere near it should have been in 7mm in this day and age.

I suspect that you may be confusing Administration and Receivership. Both are aimed at protecting the interests of creditors but stock liquidation is not an Administrator's tool of choice in the first instance. If anyone wants to know more, see:

http://www.realbusinessrescue.co.uk/articles/business-insolvency/administration-and-receivership

[BrushType4]

I suspect that you may be confusing Administration and Receivership. Both are aimed at protecting the interests of creditors but stock liquidation is not an Administrator's tool of choice in the first instance. If anyone wants to know more, see:http://www.realbusinessrescue.co.uk/articles/business-insolvency/administration-and-receivership

I'm not confused at all, but I believe in this case the administration is just a breathing space. This business failed and it failed a very long time ago. The creditors (that I suspect are family) have been either mislead on the true value of the stock or really they had too much invested and was just hoping that it would come right somehow.

 

It's a shame and we must remember that it is a distressing time for those involved and they may well be members on this forum.

[RedgateModels]

I have always thought the products were somewhat over priced

I have to agree with you Kenton, I have browsed their stand at many a show but never bought anything, always coming away with the impression of it all being overpriced or too basic. Hard to really put my finger on but there was just something unappealing about their products in my eyes.

[34theletterbetweenB&D]

... I'm not sure where these numbers of £2.8 million owed to creditors and £1.5 million assets stand?,, that's an awful lot of money for such a business which would mainly buy resins,RTV silicon's and white metals, perhaps some outstanding pattern commissions to pay for but £2.8 million worth?.. not in that type of business??.. there must be other hidden costs from somewhere. Also I don't understand this £1.5 million of assets and the fact that 99.8% is stock... how is that even possible.. how can you have that amount of monies worth sitting in stock in such a relatively small scale business...

It's quite easily done on a 'creeping' basis over a period of years or even decades. Seen other - typically 'family owned'  - businesses  go this way. Keep borrowing from family sources to tool up and manufacture the new products that are going to turn the business around, over multiple cycles. End up with a heap of family creditors looking for their money, and a heap of unsold product in the warehouse. So long as any external suppliers to the business get their money, this can be sustained for a fair while:  if there was plenty of cash in the bank among family members. When the cash runs out, crash landing.

 

The fall out and bad feelings from this type of event are the real tragedy, I cannot be the only person here who has met folk with a tale of how the family fortune got 'evaporated'?

[orcadian]

I have to agree with you Kenton, I have browsed their stand at many a show but never bought anything, always coming away with the impression of it all being too basic. 

 

I think the majority of 0 gauge British modellers would also have agreed with this part of Redgate Models statement from the starting days of Skytrex's adventure into the scene and onwards. But I seem to recall a magazine article/interview with the founder/proprietor around that time.  If I remember it correctly, his aim was to produce RTR models which had more or less enough detail to look about right when seen on the move at normal layout viewing distances and speeds (rather akin to the philosophy of the yacht pond ship modellers.

 

It may well have been around the time that Lima abandoned British 0 gauge RTR, but he'd found that ready-built stock (from kits) with full detail were just too expensive to attract an average 'bod' into 0 gauge - too dear for him, anyway, so he started making models with the level of detail and at a price which was acceptable to him.  At first, I think the box vans weren't too bad, but not good enough to divert the existing customers away from the 7mm plastic kit suppliers. Rapidly, there was no significant price differential between a Sktrex wagon RTR and a nice kit + wheels + couplings + paint + decals, and 0 gaugers were well-used to kit building and bashing!

 

Then a 'pretty coarse scale' diesel was produced (I forget which class, and some said they couldn't identify it anyway!) which got absolutely panned by the magazines and established 0 gauge stockists.  Perhaps that should have been the point at which to admit defeat and abandon the project, especially as, fairly shortly after this, Heljan announced their first 7mm British RTR diesel

 

Dapol's entry to the field of 7mm British RTR has a fairly similar aim in pricing, but with the intention of at least matching 4mm levels of detail. I am very sorry to see the Skytrex project collapse, possibly with very much 'co-lateral' damage to those who had been financially involved with it. I very much hope that it goes very, very much better for Dapol in 7mm, and also wish the same success for our Australian cricketers  friends in Ixion, and for our own Lionhearts!

 

Richard

[cromptonnut]

Conversely, a lot of O gauge modellers are/were happy with the Skytrex offerings, I have six of their box vans which to me look like box vans and were obtained from their stand at a show for less than the price of an equivalent kit plus of course the hassle of making it.  I think the days of 7mm modellers being "well-used to kit building and bashing" are rapidly diminishing - don't forget that for many years that was your only option as a 7mm modeller, now with an ever increasing range of rtr and basic kits to build in a wide variety of materials including some early attempts at 3D printing makes 7mm much more accessible to "the average modeller".

 

Up until recently before my circumstances changed I had intended to put a list together for their stand at the Reading show in December (like I did last year), although at the moment my O gauge modelling plans are on hold so I'm not really sure whether I will be going or not.  But if their stuff isn't available then I won't be getting it anyway.

 

It may be that "vocal groups" feel the Skytrex range is too coarse for them, but personally I had no concerns with their range and was rather looking forward to a big push in progress following the next suitable show visit.  The main reason I hadn't bought their diesels, coaches or DMU's is simply down to the problem that most O gauge modellers face - finding the right money at the right time.

[BrushType4]

Conversely, a lot of O gauge modellers are/were happy with the Skytrex offerings.

The 'lot' you speak of is clearly not enough, not even half enough. The market is small anyways and how many people have garden railways where quantity over quality is required? Much of the market has very little space for layouts and so quality is the main factor and most of those customers are happy to build things. That won't fundamentally change for a while in 7mm.

 

The market is changing though with RTR entering the market with the likes of Heljan, Dapol and others. This would have seen Skytrex have a natural increasing market share but the detail was never good enough at the price point. They continued to use an old technology that is expensive to do well. JLTRT will tell you that everyday of the week. Skytex may have been successful if it could have offered a better quality at a cheaper price, but unfortunately the Resin Technology wouldn't allow for that.

 

Plastic injection moulding may have been a natural progression, but that would have needed a bigger outlay and they probably didn't have the cash to do so. So it was do more with resin and hope.

 

As 3d printing gets better and cheaper, all the manufactures in all scales will see a difference. There are members on this forum that are producing excellent quality 3d. The technology is getting better and better each month. I don't see kits and RTR going away for a few years, but I can foresee a model supplier entering the market that is virtual and prints high quality kit/RTR to the exact customers specifications on demand.

 

Skytex is finished. The question is, who is next?

[Ruston]

Conversely, a lot of O gauge modellers are/were happy with the Skytrex offerings, I have six of their box vans which to me look like box vans and were obtained from their stand at a show for less than the price of an equivalent kit plus of course the hassle of making it. 

Less than the price of whose kits? The last time I saw these Skytrex things they wanted 50 quid a piece. I can buy a Slater's kit for under 40 quid and have the pleasure (not the hassle!) of building it to boot. Not only that but the Slater's kit will look far better and have more detail. I had considered buying some Skytrex vans but when I picked one up and examined it, it simply didn't cut it. I suppose they are alright for garden railways, where detail isn't that important.

 

I think the days of 7mm modellers being "well-used to kit building and bashing" are rapidly diminishing

What utter nonsense.

[ELTEL]

It's a shame and we must remember that it is a distressing time for those involved and they may well be members on this forum.

 

 

PLEASE LET'S US NOT FORGET THE ABOVE FACT

[Kenton]

I wonder if the accounts as presented to CH were ever audited. I also am perplexed at the quality of accounting and tax advice being offered. Remembering that the accounts submitted are not for current year I would have said something was amiss long ago. The stock levels I can understand to some extent as pointed out the prices are quite high - but stock should be on the books at cost not resale. That suggests either over optimistic stocking, poor margins and not especially good business model. With creditors at this level my first thought goes to similar tax cases I have dealt with. Suspicious director's loan account activity, or failure to allow for taxation - employee payroll, VAT, and Corporation Tax which usually means the same thing. The cash flow in this type of business should be pretty steady (assuming no over-stocking) debtors should be minimal or at least controllable. The only other potential problem would be external funding (eg called-in loans from a bank).

 

There can be other dramatic issues of course and the classic on it being misguided to go down the two share company route where one share is held by each of two "partners" (I've seen a fair number of these set up in the 70's-90's that collapsed completely as one partner dies/breaks up the "marriage" With no controlling share the company stagnates. Of course this is mere speculation in the case of this business. But all the red flags are there. My comment here is really as a warning to others who may have been tempted/persuaded down the route.

 

The one good thing is true is that these type of "creditor" issues are no insurmountable and reflect only on the business management and not on the business itself. If priced correctly it could still be a reasonable proposition especially if that stock has some real commercial value and buyers can still be found to pay cash for the product.

[switcher 1]

Kit building is definately a hassle, best avoided, if you just want to run a railway, rather than create a (display) model.

 

There will be more R.T.R. modellers very soon, because the uptake of the Ixion loco has proved a market.

 

When the Dapol offerings finally arrive, likely there will be a sudden surge of interest, not only from those in the know, but also those that just chance upon it.

 

The quality of Skytrex offerings didn't match the (kit builders ?) expectations, no doubt, I agree, they are not very 'detailed', but no doubt could be improved, the trouble was the pricing.