Williams improves on financial track
Williams' financial health is markedly different from that of other independent teams: the team has been able to generate positive EBITDA, even though its F1 operations remain loss-making.
As independent teams disappear one after another, Williams stands out as a notable exception. Indeed, the team manages to maintain a healthy financial situation and competes for the top positions, finishing two consecutive seasons in third place in the Constructors’ Championship.
The two elements are, of course, linked. Indeed, when Williams experienced a catastrophic 2013 season in terms of sports performance (9th place in the Constructors’ Championship), they implemented a drastic restructuring plan, as explained by Nick Rose, the chairman of the team’s board: In 2015, we finished third in the F1 Constructors’ Championship, just like in 2014. This is to be compared with a disappointing 9th place in 2013, which was the catalyst for a fundamental reform of Williams’ organization. Our significant improvement in performance on the track is the result of a carefully planned strategy of strategic investments in the key elements of our business. This investment plan had a negative impact on the 2014 accounts, which ended with a loss of 48 million euros.
However, the strong sporting performances of 2014 were reflected in the financial results of 2015, as payments made by the FOM always reward the results of the previous season. Similarly, podium finishes facilitate discussions with potential sponsors. Thus, brands like Hackett and British Telecom joined the Grove team during the past season.
Nevertheless, if the situation has improved, it is not yet balanced, as acknowledged by Alan Kinch, the financial director: « Even though our financial results have improved, we still need to do more to balance our income and expenses. This reflects the significant financial pressure that comes from competing at the highest level of motorsports. Our pre-tax losses for our Formula One division amounted to 3.8 million pounds sterling (4.7 million euros). »
But to present itself more positively in the eyes of financial markets, the team preferred to highlight the fact that it recorded a slightly positive EBITDA (€0.2 million), which is the result before taxes, depreciation, and amortization. This indicator thus allows for demonstrating the results of its operational functioning before all financial charges.
Thus, at the level of the entire group, which also includes the Advanced Engineering division, Williams Heritage, and the conference center at its headquarters, the net loss before taxes amounts to 14 million euros, while the EBITDA is “only” negative by 4 million euros.
As the income from the FOM is expected to rise again in 2016 (to reward the 2015 season), Williams’ accounts should therefore improve again in the current fiscal year. Especially since Williams managed its costs in 2015 as its total expenses decreased compared to the previous year.
In this context, Williams also announced the appointment of Brad Hollinger as a non-executive director. This appointment comes as no surprise since the American businessman made his fortune in private hospitals and is now the second largest shareholder of the group, with 15% of the group’s capital, replacing Toto Wolff: « I am honored to be appointed to the board of one of the most legendary teams in global motorsport. I have tremendous confidence in the potential of this company, both as a competitive Formula One team and a diversified Advanced Engineering business. That is why I have invested in Williams over the past two years. »
With the participation of www.racingbusiness.fr
