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Sarnia's Role at the Helm of the Superyacht Industry

Sarnia’s Bruce Maltwood, Director, and Dan Armsden, Yacht & Crew Technical Manager, recently gave a presentation to a select audience working in wealth management, family office and trust services in Guernsey.

They provided an insight into how Sarnia Yachts began and the lifecycle of yacht ownership. 

History: Yachting Industry and Sarnia Yachts

Sarnia Yachts was formed over 45 years ago, administering Guernsey companies for clients to allow them to fly the highly reputed and sought after Red Ensign flag for individuals who did not qualify in their own names.

The Red Ensign group includes a number of both EU and Non-EU registries including the UK, Cayman Islands, British Virgin Islands, Guernsey and Jersey.

From the early days of incorporating Guernsey companies and arranging Red Ensign flag registrations, we have evolved in line with the changing landscape both from a yachting perspective and also an economic one. Milestones such as the formation of the EU and the financial crisis were pivotal times in the history of the business.

In 2008, at the same time as the financial crisis, we underwent a management buyout which enabled us to evolve into the dynamic business we are today, being able to quickly adapt to changes within the industry.

Evolution: Yachting Industry and Sarnia Yachts

It is not just Sarnia that has grown and evolved over the years, the size and number of yachts on the water has also increased significantly.

Back in 1971 there were around 600 yachts worldwide of 24m in length or over. A 40m yacht with a crew of 6 was considered to be a very large yacht.

If we fast forward to today, there are more than 5,000 yachts afloat which are over 30m in length. This is due to the growth in popularity of yachts as a specialist asset class, so financial services businesses are more likely to come across one within a client’s wealth portfolio.

To provide a sense of perspective for the size of these yachts we are now seeing on the water, at the time of writing this article the largest yachts in the world are:

  • Dilbar (156m) which is the largest yacht by volume at just under 16,000 gross tonnes.
  • Azzam (180m) which is the largest yacht by length and just over 13,000 gross tonnes.

The range of services offered by Sarnia has grown enormously to now include support services for clients who already have a suitable owning structure in place, but require specialist assistance with the ongoing management of the owning company and yacht. Our support services include:

  • VAT Management
  • Yacht Importations
  • Crew Employment & Payroll
  • Crew Management
  • Yacht Registration
  • Yacht Expense Administration
  • Yacht Financial Reporting

At the time of writing this article we have 6 staff in our Malta office and 31 in our Guernsey office, some of whom have been with the company for over 25 years, which shows the depth of knowledge we can draw on.

Complexity

It is not just the yachts that have got bigger over time, the regulations and the parties involved in the various transactions have become more complex.

The yachting industry now employs over 150,000 people and injects tens of billions of pounds into economies worldwide.

Yachts generally fall into two categories, with differing levels of legislation applying to each:

  • Commercial Yachts - these yachts are subject to numerous maritime regulation and legislation, with VAT advantages for the client if managed correctly. The yacht must be made available for charter by 3rd parties. All guest use, including the client's use, must be by way of a formal charter agreement. Approximately 20% of the yachts we provide services to are registered as commercial.
  • Pleasure Yachts - these yachts are subject to far fewer regulations and legislation. Use of the yacht is strictly for the client and their family and friends, with no money changing hands for such use of the yacht. Approximately 80% of the yachts we provide services to are registered as pleasure.

Owner Experience and Our Role to Support

What drives clients to purchase a yacht? What are they looking to get out of it?

Generally, clients are looking for the unique experience of owning a yacht to escape day-to-day life and live the dream. The costs are secondary to the client if the service can be delivered and the painstaking paperwork taken away.

It is the ultimate holiday, with perfection expected, from the crew delivering first class service on board all the way through to the directors running the owning company.

Of course, the liability risk lies with the directors of the owning company, so it is crucial that everything is put in place correctly. If you have an investment portfolio, you also have an investment manager, so when we are talking about assets of this value, it is vital to have the expertise at hand to advise correctly.

This is a very specialised industry and Sarnia invest their expertise exclusively in this asset class.

To those professionals that were at the presentation it certainly provided an insight into the ownership and operation of yachts in today's world.

Sarnia are looking to provide further updates on specific areas of this industry and are always available to provide assistance to other professional advisors.