In this week's issue of MCN we've got a special investigation into Norton Motorcycles and their recent drop into administration.
Calls grow for public inquiry into Norton
Following new details about the Norton collapse and boss Stuart Garner’s failure this week to appear before The Pensions Ombudsman, calls are growing for a public investigation into the whole affair.
Norton Motorcycles went into administration last month leaving hundreds of customers and pension-savers potentially millions of pounds out of pocket, even after a series of high-profile Government-backed loans and grants, plus public endorsements by the likes of Theresa May, George Osbourne and Vince Cable.
This week, The Guardian published a report by administrators BDO that revealed Norton owns a fleet of luxury cars valued at just under £800,000 including six Aston Martins. It also revealed that, in the year up to March 2018, Garner had borrowed £160,000 from the company, a loan that appears to still be outstanding.
Now, the chair of parliament’s public accounts committee is calling for an official investigation into the Government’s funding of the company. Meg Hillier MP (Lab) accused officials of ‘blindly pouring’ millions of pounds into the ailing company and said she intends to write to the Government to ask for an enquiry into why Norton failed.
Following the company’s collapse, it came to light that over 200 innocent people had lost their pensions when, they, claim, they were misled into converting them into Norton shares. One, Carol Wicks, is owed more than £170,000.
MCN has also heard from Norton V4 SS buyers that their bikes had been stripped while back at the Norton factory undergoing warranty work. Those distraught owners had been sent pictures of their bikes by the administrators BDO.
Garner himself failed to appear in front of the Pensions Ombudsman in London on Thursday.
MCN’s last contact with Garner was on January 31 when he said he was “devastated” for everyone associated with the company and claimed that he had “personally lost everything”, blaming the company’s failure on “a growing tax burden and ongoing uncertainties over Brexit affecting many things like tariffs, exports and the availability of funding”.
The Pensions Ombudsman will now deliberate on the case and make a preliminary decision and then a final determination. This could take three months, but he could hold Stuart Garner personally responsible for the issues relating to the pension schemes.
Separately the Pensions Regulator will decide whether there is a criminal case to answer.
Norton Motorcycles faces collapse as the firm enters administration
First published 29/01/2020 by Richard Newland
Norton Motorcycles have been placed in administration as last-minute attempts to save the business appear to have failed to secure the backing needed to continue trading. The firm launched a share scheme in November with a view to raising the cash required to fulfil their order book, but the lure of a single investor saw the offer withdrawn while Norton attempted to construct a deal that could underpin the business’ critical cash-flow problems.
With echoes of the near-collapse of the business in 2012 when cash-flow issues very nearly sank the firm just four years after businessman Stuart Garner bought the rights back from American ownership under Kenny Dreer, it appears that the same problem has finally pushed the business past breaking point as Metro Bank appointed administrators BDO.
Investment in the development of the V4 SS and RR models, first unveiled in 2016, proved to be a hugely expensive undertaking for a brand starting from scratch in terms of superbike chassis, engine and electronics technology. But while the limited edition V4 SS sold out rapidly at the £44,000 asking price, forcing those not fast enough to plump for the lower spec V4 RR at £28,000, the cash-flow needed to set-up – and then buy parts from – the supply chain to build the models at the Donington Hall factory simply wasn’t there.
Despite already struggling to deliver the V4 model, Norton knew they had to invest in the next new model in the range – the more mass-market and affordable 650cc parallel-twin Atlas Nomad and Ranger, first revealed in 2017.
If successful, the Atlas would have given the firm the higher volume, lower cost model needed to deliver a consistent cash-flow for the business. But despite the final prototypes showing huge promise and the first bikes being available for customer test rides over recent weeks, it’s been too little, too late. The new 12,000sqft factory extension intended to house Atlas production isn’t finished and production hasn’t started.
Throughout the twelve-year history of the reborn brand, Norton targeted the Isle of Man TT with their improving series of SG race bikes, using a mix of Norton chassis development with Aprilia V4 power. Starting on the island in 2012, the aspirational racing programme was always intended to be the proving ground for the road-going V4 family and delivered the team a creditable best finish of 5th in the 2018 Senior in the hands of Josh Brookes. While their racing activity delivered the testing and data they needed to build the V4, the cost was also significant – and it’s believed Norton had no plans to race with a factory supported team at the 2020 event, while Peter Hickman and the Smiths Racing team announced last month that they would race a Norton Superlight.
MCN revealed just three weeks ago that Norton were facing a serious challenge from HMRC over £300,000 of unpaid taxes (more on that story below), while the firm asserted that much of this outstanding figure would be significantly reduced through outstanding research and development tax relief owed to the company. The courts had adjourned the case, the next hearing was scheduled for mid-February.
It’s understood that the senior Norton team were still negotiating with their anticipated foreign investor at the beginning of this week, but confirmation came today that Metro Bank had appointed administrators BDO.
Norton CEO, Stuart Garner, was unavailable for comment as the news broke – we’ll bring you more information as we have it.
Who are Norton? A potted history of a famous marque
Founded in 1898 by James Lansdowne Norton, the first Norton Motorcycle appeared in 1902, and a mere five years later famously took Rem Fowler to victory in the twin-cylinder class at the very first Isle of Man TT races. In 1907 Norton started production of their own engines.
Fast forward through two World Wars, and almost 100 TT victories, and the ignominious collapse of the British bike industry, and ownership eventually travelled across the pond for 15 years to Oregon-based Kenny Dreer, whose aspirations for rebirth saw him get close to launching a new Commando. But it wasn’t to be and in late 2008 Garner stepped in and brought Norton back to Britain.
Learning from the lessons of Dreer’s attempted brand reinvention, work started on re-engineering the Commando 961 prototype immediately. "This isn’t some kind of romanticised return for Norton," Garner told MCN back in 2008. "I am serious about this. I want it to be a proper bike firm producing niche motorcycles."
The Commando that emerged a year later and was delivered into the hands of expectant customers in 2010, was not without its problems. Garner’s commitment to setting up a largely UK supply chain also nearly sank the firm’s nascent return.
But with dogged determination, the problems were gradually ironed out, and the original Commando 961 was replaced by the far more resolved MkII in 2015, two years after the firm’s relocation to Donington Hall and Hastings House. Numerous limited-edition models followed using the 961 platform, rejuvenating old names with the Dominator and Domiracer, while special versions of the Commando (California, Street, Breitling) also followed.
The firm revealed the V4 SS and RR in 2016, with first bikes being delivered to owners in 2019. The 650cc parallel-twin Atlas Nomad and Ranger were revealed in 2018, with the model now almost production ready at the point of the business being placed in administration.
The global reach extends as far as Australia, Hong Kong, Jordan and the USA with Norton exporting around 80% of their new bikes, and production was claimed to be creeping towards 1000 units per annum.
Get more on the Norton Motorcycles financial issues back story below, as MCN covered events from breaking ground at their new factory, right up to today's news...
The Norton Motorcycles financial woes - a timeline
Norton Motorcycles in court over £300,000 in unpaid taxes
Norton gets cash injection from single investor
Fighting the funding hole at Norton
Norton looks for investment
Norton Breaks ground on factory extension
Norton Motorcycles in court over £300,000 in unpaid taxes
First published 9 January 2020 by Andy Calton
Representatives from Norton Motorcycles appeared at the Insolvency and Companies Court in London yesterday to contest a winding up petition regarding £300,000 of unpaid taxes.
Norton’s owner, Stuart Garner, says he is working with HM Revenue and Customs to resolve the matter, claiming the money owed is largely covered by outstanding research and development tax relief currently owed to the company.
Leicestershire Live have reported that the court heard how the Donington-based manufacturer originally owed around £600,000 – however, half of that figure has now been paid.
HMRC’s barrister told Judge Sebastian Prentis that because the company is making payments and the debt figure had reduced, they were seeking an adjournment, requesting 63 days for the outstanding amount to be settled.
Judge Prentis adjourned the hearing until February 12.
In late November 2019, Norton secured backing from an anonymous investor, having previously looked to raise £1m by setting aside 4-5% of the company’s worth for small investor stakes starting from as little as £50.
Speaking after the hearing yesterday, Garner told Leicestershire Live: "They have extended the time we have to pay and agreed the payment we have put to them.
"This was the formality of what we have agreed over the past few months and wraps around research and development tax credits which have been delayed.
"We have paid an element of the cash and the figure left is, in essence, the R&D balance.
"It has been frustrating that the tax credits have taken so long to come through. We have spent about £13 million in R&D in the last three-four years so it is frustrating that this has taken so long."
Funding secured! Norton gets cash injection from single investor
First published 21 November 2019
Norton have confirmed to MCN that they have secured the backing of a single investor and are no longer looking to sell smaller stakes of the company to raise capital. Full details and the identity of the investor will be revealed in the New Year.
The British manufacturer had previously sought to raise £1m by setting aside 4-5% of the company’s worth for small investor stakes starting from as little as £50. No money will be taken from the almost 5000 people who had registered their interest in becoming a stakeholder – and the registration page has now been removed.
Norton have been working at capacity to fulfil its orders on models like its flagship V4 SS and V4 RR superbikes, while simultaneously launching the more affordable Atlas Ranger and Nomad 650 scramblers.
And we’ve also seen limited-edition models like the carbon-framed, supercharged Superlight SS and Dominator Street announced.
Norton Head of Design, Simon Skinner said: "We are focusing hard on producing the V4s and the Atlas right now and are just starting to build the Superlights with delivery starting in the New Year. Superlight SS delivery is expected to start in the middle of next year."
Fighting the funding hole at Norton
First published 20 November 2019
While Norton are still battling to fulfil orders of current models, owner Stuart Garner is adamant that things are on track, and he has now appealed to the biking community to invest in Norton.
Garner said: "We are giving the people who understand Norton and motorcycles an opportunity to get involved. People can spend as little as £50 for a small stake in Norton.
"Having spoken to the big bankers, they just don’t get it. We are turning to our own people. We will set aside 4-5% of the business to help us raise around £1m of capital.
"We already have £1.5m from the Midlands Engine Fund and with community investment, we can move forwards. We have a full order book and the response has been brilliant so far. We’ve been here 10 years and we’re still growing and building amazing bikes."
Norton looks for investment
First published 30 August 2019
Norton are seeking £5m of investment to help fund the building of the new factory at their Donington Park site and to speed up production of its new Atlas range; the 650 Nomad and Ranger twins.
Garner added: "We are talking to banks, financial institutions and individuals in a bid to find one investor to take up this opportunity. It could mean that the investor owns some equity in the company or it could be a loan of some sort.
"If the deal does become an equity arrangement, it will be a minority holding as I am keen to retain control so that I can continue to drive Norton forwards. We are in talks with several interested parties already and hope to make an announcement soon. We have a full order book for the new Atlas, plans for more new models and the future is very bright."
Garner expects the new factory to be finished by the end of September with full production of the Atlas range moving into the new facility. Early Atlas models are being assembled on the current production line with deliveries planned to begin in October.
Norton are also still in full swing fulfilling orders of the V4 superbike. Garner explained: "Nearly all of the Norton V4SS (£44,000) orders have been completed and we are about to really ramp up production of the RR (£28,000). We are a little behind as this is a complicated machine to build, but we have now got our supply chain sorted and expect to turn things around pretty quickly now."
Norton Breaks ground on factory extension
First published 10 April 2019 by Richard Newland
Norton Motorcycles are building a huge addition to their existing factory in order to gear-up for production of their new range of affordable Atlas 650cc models.
The 12,000 square-foot extension to the firm’s existing base at Donington Hall will enable the Derbyshire bike builders to massively increase their production capabilities, moving much of the assembly line from their existing buildings into the bespoke production facility.
While V4 SS production is now moving at pace, the core of the new facility will be used to build the all-new Atlas Nomad (£9995) and Atlas Ranger (£11,995), which share a new 650cc parallel-twin engine, chassis and electronics package, but differ in styling. The pair are aimed at road riders who want to be able to duck down the odd greenlane at the weekend, with the taller Ranger being the more off-road focused of the duo.
"The manufacturing of parts, welding, CNC machining and paint-shop will remain in the Technical Academy building," Norton CEO Stuart Garner told MCN, "while assembly and stores will move into the new factory. There’ll also be a bench dyno and engine test cell which allows us to take an engine from design all the way through development and into a customer’s bike all in-house.
"The new factory allows us to increase our production capacity to 5000 units per year (4000 more than current – Ed) – and if we need more, we can join the two wings together. We’re planning to double production over the next couple of years and then again so that by 2023 we could be at that 5000-bike production figure."
Atlas prototypes are now undergoing full testing, while the race department are putting their efforts into getting the V4-derived Superlight 650 ready for the Lightweight TT. The Superlight will also be sold for road and race use, while Atlas 650 deliveries are expected to start this Summer.
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