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Massive Financial Loss by Williams in the first half of 2019
Discussion started by Stuart L , 10 September, 2019 11:13
Massive Financial Loss by Williams in the first half of 2019
Stuart L 10 September, 2019 11:13
[www.williamsf1.com]

See this news link on the Williams corporate website.

Massive loss in the first half, with guidance it wont be so bad in the second half.

Tough times at Williams, you can see why they want to raise money from WAE.

I can see reasons why the Williams family might want to sell / need to sell.

Banking support wont be easy with such big losses

Re: Massive Financial Loss by Williams in the first half of 2019
AlanJones 10 September, 2019 11:50
Quote:
Stuart L
https://www.williamsf1.com/pages/corporate/news/2019/09/williams-reports-half-year-results
See this news link on the Williams corporate website.

Massive loss in the first half, with guidance it wont be so bad in the second half.

Tough times at Williams, you can see why they want to raise money from WAE.

I can see reasons why the Williams family might want to sell / need to sell.

Banking support wont be easy with such big losses

Much speculation




http://oi60.tinypic.com/24eyh6f.jpg

Re: Massive Financial Loss by Williams in the first half of 2019
Gunk 10 September, 2019 14:53
Really, It makes more sense to keep WAE and sell the team . . . future of combustion engine and all that. All the manufacturers are piling into Formula E. Williams could get a head start on the other teams if they wanted to stay in racing. And they have a good electronics team. I love F1, but right now I wouldn't invest in a dinosaur.

Re: Massive Financial Loss by Williams in the first half of 2019
Damon96 10 September, 2019 19:56
Can they sustain those loses in 2020, its a massive drop in revenue. I assume at some point well see the Paddy Lowe settlement in the accounts, they should be asking for his wages back.

Re: Massive Financial Loss by Williams in the first half of 2019
Stu69 10 September, 2019 21:47
At the moment it is a slow motion car crash! Investment needed! New solid money!!

Re: Massive Financial Loss by Williams in the first half of 2019
phatjack 10 September, 2019 21:49
At this rate I can't see a cost cap helping Williams out. The saving grace if there is one is that the Latiffi family from across the pond is well funded.

Re: Massive Financial Loss by Williams in the first half of 2019
Greg_OR 10 September, 2019 22:46
Quote:
Gunk
Really, It makes more sense to keep WAE and sell the team . . . future of combustion engine and all that. All the manufacturers are piling into Formula E. Williams could get a head start on the other teams if they wanted to stay in racing. And they have a good electronics team. I love F1, but right now I wouldn't invest in a dinosaur.
Head start? All big names are already there: Porsche, Audi, BMW, PSA, Jaguar, Nissan..., and Merc next year. So who you think can Williams outsmart? Stay in racing because of good electronics team?
Without evident proof of good organization all current problems will be taken with anywhere this team will go.
And my mantric question: hve anybody seen any signs of reorganisation, team/company improvement, signs of P. Head's consultancy...?

Re: Massive Financial Loss by Williams in the first half of 2019
Gunk 10 September, 2019 23:01
Quote:
phatjack
The saving grace if there is one is that the Latiffi family from across the pond is well funded.

Yes, they have money to burn. But they have given McLaren a giant wad. The demise of Markelov senior was a big blow to Claire . . . he had buckets of money before he ended up in the slammer. Mazepin has spare cash as well, but he wants to buy the team wholesale - otherwise no deal.

You can see why they love Robert . . . he could finish a Sunday race on Monday. it would be fine. He doesn't demand anything. It's getting much harder for Williams to deliver on a 20 - 30m sponsor deal.

Re: Massive Financial Loss by Williams in the first half of 2019
j-s 11 September, 2019 18:37
F1 is a ridiculous business. As long as Williams are more competent on the business side than they are on the technical side, there is hope. Otherwise... say goodbye to Team Willy.

Re: Massive Financial Loss by Williams in the first half of 2019
Greg_OR 11 September, 2019 23:26
Quote:
j-s
F1 is a ridiculous business. As long as Williams are more competent on the business side than they are on the technical side, there is hope. Otherwise... say goodbye to Team Willy.
Isn't it just opposite? technically clever FI atracted Strolls and survived, MCL is diffrent story but they recovered quite fast and with surprisingly good result.
F1 is technical business so you cant have good business and be technically wrong, except you aim to make most profit out of heritage/historic assets winking smiley

Re: Massive Financial Loss by Williams in the first half of 2019
AlanJones 12 September, 2019 06:13
I wonder if anyone bothered to take a close look on the numbers and can come up with a good opinion on this. Because the bullshite you guys exclaim is just horrendous and toe curling.
Maybe Ian did look at the numbers already.




http://oi60.tinypic.com/24eyh6f.jpg

Re: Massive Financial Loss by Williams in the first half of 2019
IanSmithISA 12 September, 2019 08:32
Good morning,

Quote:
AlanJones
... Maybe Ian did look at the numbers already.

Yes I did,

Over the last couple of years WGPE have reported full year revenue which is double the half year amount if you exclude one-off payments, land sale and "one-off partnership income" (Stroll departure fee?).

So that would give revenue of 92m for 2019 down from 122m (after removing the 8m) in 2018, that's a drop of 30m.

H1/H2 Spending
Costs in F1 are incurred (well paid, rather than necessarily incurred) more evenly over the year than might be expected and income is mostly received evenly over the year.

In 2018 H1 Revenue 61 and a 2m loss
In 2019 H1 Revenue 46 and a 20m loss

For all practical purposes the increase in the loss, 18m, is very close to the loss of revenue, 15m give or take a bit.

FY Result
For the full year 2018 Williams reported a 12m profit.
For the full year 2019 Williams would report a 14m loss if the spending profile was the same as 2018.

Remember that in 2018 there was a one off 8m payment, so 2m loss to 12m profit is a 14m change, but subtract the 8m and you get a 6m change.

Prize Money Loss
The prize money loss is less than might be expected as Wiliams get the fixed amount of $35 million and a $10 million classic team payment so it is down only the portion related to finishing position.

If you believe the Internet, then about 20m or less would be the loss in prize money.

Sponsorship
I couldn't work out what RokIT are paying as I never knew how much the Strolls were paying, if anything, so Kubica's money might be more or less and maybe the Rexona deal had performance clauses.
So a very wild guess is that the sponsorship is down by around 10m.

Payroll
In 2018 the payroll costs were 69m up from 63m but this is not broken down between WGPE and WAE. It is worth noting that the highest paid director received 4.4m this may be reducible if the loss would be as big as expected.

Debt
8.5 million - 4 payments of 0.5m every six months from October 2019 and the remaining 6.5m in October 2021
1 million - To be paid off by June 2020
10 million - Revolving Credit available until October 21 2021, currently this is fully used.
12 million - Overdraft facility, 7million expires in December 2019, the remaining 5 million to be renewed in June each year, about 6.8 million is currently used.

If you look at the Going Concern section of the 2019 interim report you find a suggestion that there may be an inadequate cash flow over the next 16 months and new borrowings may be needed. This depends upon new sponsorship and other expected income not arriving, whilst the need is not certain it is likely enough that is mentioned, which it usually isn't.

This may be of concern as the existing debt has unspecified cash flow covenants

Paddy Lowe
I couldn't find any reference to a severance payment for Paddy Lowe, if one had been made or was expected to be made I would have expected to see it noted, so it may be that the payment was small and just part of the normal payroll process.

WAE
It may be that there is some clever accounting going on with WAE and provision of services to WGPE, if there is then it is not mentioned. Revenue up to 31m from 21m and profit roughly unchanged at 2m.

Bye

Ian



Edited 1 time(s). Last edit at 12/09/2019 08:35 by IanSmithISA.

Re: Massive Financial Loss by Williams in the first half of 2019
Myvatn 12 September, 2019 10:13
Quote:
IanSmithISA
Good morning,
Quote:
AlanJones
... Maybe Ian did look at the numbers already.

[...]

If you look at the Going Concern section of the 2019 interim report you find a suggestion that there may be an inadequate cash flow over the next 16 months and new borrowings may be needed. This depends upon new sponsorship and other expected income not arriving, whilst the need is not certain it is likely enough that is mentioned, which it usually isn't.

This may be of concern as the existing debt has unspecified cash flow covenants

Ian

This does not sound good.

In any case, my impression is that the current F1 is just not sustainable for operations like Williams, unless the owner is willing to put a healthy amount of money into the team every year. The level of investment needed to make the team competitive is too high to be covered by the increase in prize money (as shown by 2014 and 2015, where the team lost money despite being high in the standings), but if you fall at the back you're pretty much doomed anyways.

Re: Massive Financial Loss by Williams in the first half of 2019
# 33 Max Crashstappen 12 September, 2019 13:08
Guys forget about money and Financial Loss blah blah blah, the bottom line is Williams came dead last in the WCC in 2018 and they are going to come dead last in the WCC in 2019.

Reality is that Williams once were a great top 3 team but now they are the lowest of low teams...Dead last!

Re: Massive Financial Loss by Williams in the first half of 2019
AlanJones 12 September, 2019 20:04
Quote:
IanSmithISA
Good morning,
Quote:
AlanJones
... Maybe Ian did look at the numbers already.

Yes I did,

Over the last couple of years WGPE have reported full year revenue which is double the half year amount if you exclude one-off payments, land sale and "one-off partnership income" (Stroll departure fee?).

So that would give revenue of 92m for 2019 down from 122m (after removing the 8m) in 2018, that's a drop of 30m.

H1/H2 Spending
Costs in F1 are incurred (well paid, rather than necessarily incurred) more evenly over the year than might be expected and income is mostly received evenly over the year.

In 2018 H1 Revenue 61 and a 2m loss
In 2019 H1 Revenue 46 and a 20m loss

For all practical purposes the increase in the loss, 18m, is very close to the loss of revenue, 15m give or take a bit.

FY Result
For the full year 2018 Williams reported a 12m profit.
For the full year 2019 Williams would report a 14m loss if the spending profile was the same as 2018.

Remember that in 2018 there was a one off 8m payment, so 2m loss to 12m profit is a 14m change, but subtract the 8m and you get a 6m change.

Prize Money Loss
The prize money loss is less than might be expected as Wiliams get the fixed amount of $35 million and a $10 million classic team payment so it is down only the portion related to finishing position.

If you believe the Internet, then about 20m or less would be the loss in prize money.

Sponsorship
I couldn't work out what RokIT are paying as I never knew how much the Strolls were paying, if anything, so Kubica's money might be more or less and maybe the Rexona deal had performance clauses.
So a very wild guess is that the sponsorship is down by around 10m.

Payroll
In 2018 the payroll costs were 69m up from 63m but this is not broken down between WGPE and WAE. It is worth noting that the highest paid director received 4.4m this may be reducible if the loss would be as big as expected.

Debt
8.5 million - 4 payments of 0.5m every six months from October 2019 and the remaining 6.5m in October 2021
1 million - To be paid off by June 2020
10 million - Revolving Credit available until October 21 2021, currently this is fully used.
12 million - Overdraft facility, 7million expires in December 2019, the remaining 5 million to be renewed in June each year, about 6.8 million is currently used.

If you look at the Going Concern section of the 2019 interim report you find a suggestion that there may be an inadequate cash flow over the next 16 months and new borrowings may be needed. This depends upon new sponsorship and other expected income not arriving, whilst the need is not certain it is likely enough that is mentioned, which it usually isn't.

This may be of concern as the existing debt has unspecified cash flow covenants

Paddy Lowe
I couldn't find any reference to a severance payment for Paddy Lowe, if one had been made or was expected to be made I would have expected to see it noted, so it may be that the payment was small and just part of the normal payroll process.

WAE
It may be that there is some clever accounting going on with WAE and provision of services to WGPE, if there is then it is not mentioned. Revenue up to 31m from 21m and profit roughly unchanged at 2m.

Bye

Ian

Thank you for sharing Ian! Doesn't sound too well if it's simplified.




http://oi60.tinypic.com/24eyh6f.jpg

Re: Massive Financial Loss by Williams in the first half of 2019
Stu69 13 September, 2019 21:02
They need new money and a better performance! BOTH!

Re: Massive Financial Loss by Williams in the first half of 2019
IanSmithISA 14 September, 2019 07:52
Good morning,

I suspect that Williams will wait until the 2021 Prize Money allocation is agreed before making any major decisions.

It is reported that there is $304m is Bernie Bonuses in 2019 and if you remove them all and

1) Split it equally that would be $30.4m for Williams or $20.4 more than they currently get.

2) Split it in the same proportions as current position based prize money then that would be $14.8m for Williams or $4.8 more than they currently get.

Under scenario 1 Williams may simply be able to reschedule the 6.5m and 10m over a few more years, this would be manageable even if the team continues to finish last.

Under scenario 2 Williams aren't much better off and if some of the Bernie Bonuses are retained then it may even mean that Williams would receive less then under the current scheme if they again finish last.

I suspect the in this case all reserves such as spare land will have to be sold, the trouble with this is that this might affect expansion of WAE and affect Williams; ability to borrow. Currently all of WGPH's assets are offered as security for their loans.

In the past these assets have included unused land which is an fairly easily realised asset, Williams did indeed sell land in 2017, raising 9m from the sale but incurring 1.7m in fees in doing so. Once all spare land is sold the value of the remaining assets as security is clearly much less as they may be hard or impossible to sell.

Under either scenario Williams may have enough money to survive, but how much more then survive? I would be worried that their car would just slowly drift back from state of the art in all areas, whilst recovering a big chunk of the current performance deficit may be more about ideas than cash, once done everyone else may moved on.

It is worth noting that
at the end of 2013 WGPH had an overdraft facility of 3.5m, a loan of 8m and a loan of $5m (yes, USD) and 15m in cash.
at the end of 2015 WGPH had an overdraft facility of 5m, loans of 24.8m and 10m of revolving credit and 0.8m in cash.
at the end of 2018 WGPH had an overdraft facility of 5m, loans of 11m and 10m of revolving credit and 9m in cash.

By the end of 2018 the debt repayment trend had started to look good.

By mid 2019 WGPH had an overdraft facility of 12m (6.8m used), loans of 10m and 10m of revolving credit and 4.5m in cash.

The 2019 interim report was the first one to report on how much of the revolving credit facility had been taken up.

Bye

Ian

Re: Massive Financial Loss by Williams in the first half of 2019
SydneyF1Fan 14 September, 2019 09:28
Nice analysis Ian.

I like it that Williams is a frugal company that relies on hard-earned sponsorship money, manages its cash flow, spends its resources wisely and has engineering competencies in other areas to support the business.

It also has (arguably) the best engine on the grid, long-term support from Merc/Toto and is starting to turn around its performance.

If they can crack some of their chassis/aero issues then they could easily find themselves back in the mid-field which would make a big difference to their ongoing financial security. I definitely wouldn't be writing them off at this stage.



http://i807.photobucket.com/albums/yy358/SydneyF1Fan/SydneyF1FanSignatureWinner-v3.gif

Re: Massive Financial Loss by Williams in the first half of 2019
IanSmithISA 15 September, 2019 07:30
Good morning,

Quote:
SydneyF1Fan
....and has engineering competencies in other areas to support the business....

WAE did report an increase in revenue of about 9m, up to 30m from 21m, these two are added together along with "Other" (Herritage, conference centre etc.) to get a group turnover.

I am a little cautious about this group figure though as it may be overstating the real turnover.

Imagine that Aston Martin paid WAE 10m for the Rapide E project, WAE then pays WGPE 8m for the use of facilities and personnel, group turnover is now 18m.

These type of transactions are not highlighted in the Group's accounts so we don't know how many and how much they might be.

Bye

Ian

Re: Massive Financial Loss by Williams in the first half of 2019
phatjack 15 September, 2019 11:51
Williams Golf clubs were a mistake. They don't live up to expectations.

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