Buy2LetCars increases to £25 million in funds; company hits road with misleading adverts

Buy2LetCars has released its accounts for December 2018.

The figures for Raedex Consortium Limited, the group holding company, show limited information as the company used small company exemptions and did not release a profit and loss statement, or have the accounts audited.

The figures are however clear that the overall company remains loss-making, with the profit and loss account falling from minus £9.3m to minus £14.1m. Net assets decreased from an already negative £2.3 million to minus £9.5 million.

According to a February 2019 Sun article, Raedex has a total turnover of £4.3 million (profit is not mentioned) and has raised £25 million in total from investors.

The Raedex Consortium accounts say that the directors consider it to be a going concern as it will continue to receive support from group undertakings.

Those group undertakings are listed as Buy 2 Let Cars and Rent 2 Own Cars, which in the same year to December 2018 made a profit of £305k and a loss of £599k respectively.

There is therefore a clear risk that Raedex’s group undertakings will not continue to provide sufficient funds to keep the company afloat.

There is another company, PayGo Cars Limited, which according to the Sun article sells Buy2LetCars’ cars after the three year investment term is up.

PayGo Cars Limited is however wholly owned by Buy2LetCars head Reginald Larry-Cole rather than being a subsidiary of Raedex.

Promotional activities

Buy2LetCars is currently on a tour of the UK promoting its investments in hotels up and down the country.

The Leeds leg of its tour was recently promoted in local paper Leeds Live. Despite being clearly an advertorial, the promotion is not marked as such and is described as a “special feature”.

The piece is a blatantly misleading financial promotion, containing no mention of the inherent risks of investing in a small company offering returns of 7 to 11% per year, and repeatedly exhorting investors to invest money currently on deposit.

If you’re tired of seeing your savings tied up in the bank earning low interest rates and are looking to invest your money wisely, Buy2LetCars are hosting a free seminar event in Leeds on Thursday October 24.

Inflation is eating into your hard-earned savings or capital by virtue of low interest rates and loss of buying power. Now is the time to find out how you can change the negative growth on your money and deliver proven returns of up to 11 per cent per annum.

Since our launch in 2012, Buy2LetCars has delivered the expected returns to 100 per cent of our clients with zero percent default.

Misleadingly comparing high-risk investments with FSCS-guaranteed savings accounts was singled out by the FCA as an example of bad practice after the collapse of London Capital & Finance.

On its website Buy2LetCars states that if an investor invests in one of its buy-to-let cars and Buy2LetCars was unable to repay the investor from leasing it (e.g. because the hirer stopped paying fees and Buy2LetCars could not find another end-user), it will make up any shortfall up to 85% of the investment.

Buy2LetCars goes beyond this in the LeedsLive promotion, saying that it has a 100% repayment record.

There are only two possibilities:

  • Either Buy2LetCars has, despite lending cars to people with poor credit, never failed to recover investors’ money from the people it lends cars to;
  • or it pools investors’ money in order to repay investors on those occasions where the end-user has failed to pay sufficient fees to allow it to repay the investor from their car alone.

The first is implausible, especially given the company’s ongoing losses reported in its accounts.

The second means that Buy2LetCars is running an unauthorised collective investment scheme.

Buy2LetCars has no authorisation from the Financial Conduct Authority to run a collective investment scheme, nor to issue financial promotions.

Holiday reading

For those looking for inspirational Christmas gifts, Buy2LetCars CEO Reginald Larry-Cole has released a memoir, Compassionate Capitalism – How I Turned 150 Nos into 1 YES, detailing his rags-to-riches story about how he went from being rejected by 150 venture capitalists to founding a £25m unauthorised collective investment scheme.

The self-published book is optimistically on sale for £25 (current Amazon bestseller ranking #981,479) but Larry-Cole is handing out free copies to the first 10 people who turn up to Buy2LetCars’ seminars.

Larry-Cole has also recently launched a penny-auctions gambling company called Lifestyle Bids.

Penny auctions are a form of lottery where players pay fees (£1.99 to £4.99 in Lifestyle Bids’ case) to place very low bids for expensive items. Only one player wins the item, with all other players losing the fees they paid to place the bids.

The winner therefore gets an expensive item for almost nothing (allowing the lottery to be promoted as “You could buy a luxury holiday for £3.74!”) but the cost of the item is covered by the fees paid by the losing players. This contrasts with a normal auction where fees are paid by the buyer and seller and the failed bidders lose nothing. Simple maths means that the majority of players will lose more in fees than they gain in won items.

In a traditional penny auction the highest bid wins, while Lifestyle Bids works in reverse, with the highest unique bid winning. (I.e. if five people bid 1p, one person bids 2p and one person bids 5p, the 2p player wins the item.) The underlying lottery mechanism is however identical.

Penny auctions are currently unregulated in the UK as the Gambling Commission can’t be bothered does not consider it gambling.

Lifestyle Bids does not appear to solicit investment (though it does pay 20% commission to affiliates who introduce players who place bids). Its 2018 accounts show net liabilities of £784k.

Larry-Cole’s concept of “compassionate capitalism” comprises a heavily loss-making unauthorised collective investment scheme and an unregulated lottery. Surely a political career can’t be far behind?

2 thoughts on “Buy2LetCars increases to £25 million in funds; company hits road with misleading adverts

  1. I love unaudited accounts. For the benefit of the uninitiated, the lack of audit means the reliability of these numbers is entirely dependent on the integrity and competence of the person drawing them up.

    Starting with the bottom line of £9.5 million in the red, I’d invite readers to consider – based on the economic factors in the article – how likely they think it is that Mr Larry-Cole would be able to repay the £542,384 he owes the company. If you’re sceptical about that, you could reasonably say it was £10 million in the red.

    You might also wonder how Rent 2 Own can be justified as being valued as a £10,000 asset given it itself is over £8 million in the red and losing over half a million a year.

    Buy 2 Let Cars is valued at its balance sheet total of nearly £2 million. But when you look at its (unaudited) accounts you see that number’s reliant on the repayability of £30 million (!) of debts from other group companies, a number that’s grown by £7 million in the last year alone; from the Raedex accounts, it seems they owe the bulk of that. Again, based on the overall picture they’ve seen in the above article, I wonder how realistic readers might consider that repayment assumption to be.

    Liked by 1 person

  2. Im surprised they have been trading for so long! Messy company corporate structure old Larry must really have some charisma in his seminars to get investors to buy

    Like

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