No dividend from Formula One Administration
Posted 28 October 2005 - 04:25
The upshot is that over the past five years, a whopping $612 million has been stacked up in the profit & loss account of FOA. It’s doing a bit better than the teams who are lucky if they make a few million dollars profit!! Anyway, I have also printed below some figures from the past three years of the company so you can see how the money has been racked up.
For example, the last accounts show that its after-tax profit of $158,065,000 was retained and added to the $428,137,000 already in the reserve from the previous year. In addition to $25,907,000 (not shown on the figures), which the company made from exchange differences on retranslating net assets of a subsidiary, this gives a total of $612 million in FOA’s reserve. Since the last accounts were filed at the end of 2003, there could well be much more in there now. And that’s on top of the $248 million cash in the bank! It doesn't surprise me that the teams want more money!
Independent on Sunday
October 23, 2005
ECCLESTONE YIELDS TO BANKS OVER F1 PAYOUT
By Christian Sylt and Caroline Reid
The banks that have been at daggers drawn with the Formula One impresario Bernie Ecclestone for three years have finally secured the power to get some money back from their investment. The latest accounts show $ 460m (£260m) available to them, with $ 150m due to Bambino, Mr Ecclestone's family trust.
Bambino owns 25 per cent of SLEC, F1's ultimate holding company, with the remaining 75 per cent in the hands of three banks. One of these, Germany's Bayerische Landesbank, has in effect taken control of Formula One Administration (FOA), the company that runs the high-powered sport.
The bank was given clearance by the European Commission earlier this month to acquire control of Speed Investments, the vehicle holding its SLEC share, from the US banks Lehman Brothers and JPMorgan. And Gerhard Mann, previously head of Bayern's London office, has been installed as chief executive of Formula One Holdings (FOH), the parent company of FOA.
The banks have $ 1.6bn secured on the F1 business and now hope to get some of this back. Company documents show that FOA has not paid a dividend since it was incorporated in 1999. Since then, 75 per cent of its ultimate parent, SLEC Holdings, has been sold raising $ 2bn for Bambino.
Before Bambino began selling off stakes in SLEC, it had already lined its pockets in 1999 with a $ 1.4bn bond secured on the next decade of revenues from F1. The terms of the deal restricted FOA, which makes the bond repayments, from declaring dividends, and hence its profits began accumulating in the company's reserves.
However, a source close to FOA said it was always intended that the bond would be refinanced and the board would have had to vote on this. He added: 'One [of several] aspect[s] of the intended refinancing of the F1 bond was to allow for dividends to be paid out.'
This didn't happen during the brief period that two German media companies, EM.TV and Kirch, held majority stakes. But when Kirch went bust in 2002, its creditor banks " Bayern, Lehman and JPMorgan " seized its shares as security for the $ 1.6bn they had lent the company to buy into F1.
The banks won a High Court case against Bambino for control of FOH last year and then they sued it again in January for control of FOA. Bambino settled out of court. The banks said that, as a result, they had regained influence commensurate with their ownership and that 'the negative consequences caused by the breach of contract on the part of ... Bambino ... have been rectified'.
The banks obtained a court order to enforce this at the end of August and the decision to refinance the bond and declare a dividend is now in Bayern's hands. This could see Bambino receive some $ 150m, adding to the wealth of one of Europe's wealthiest families.
Formula One Administration
PROFIT AND LOSS ACCOUNT:
Date of Accounts 31/12/2003 31/12/2002 31/12/2001
Total sales 562,147,000 642,717,000 593,535,000
Cost of Sales 213,326,000 288,235,000 276,422,000
Gross Profit 348,821,000 354,482,000 317,113,000
Operating Profit 291,286,000 274,741,000 270,641,000
NonTrading Income 3,546,000 5,573,000 19,458,000
Interest Payable 79,884,000 99,049,000 109,607,000
Pretax Profit 214,948,000 181,265,000 180,492,000
Taxation 56,883,000 54,719,000 62,839,000
Profit After Tax 158,065,000 126,546,000 117,653,000
Retained Profits 158,065,000 126,546,000 117,653,000
Emp. Remuneration 17,613,000 21,275,000 18,024,000
Dir. Remuneration 4,089,000 1,294,000 1,272,000
Employee number 221 469 448
Tangible Assets 28,127,000 33,410,000 45,802,000
Intangible Assets 3,144,407,000 3,144,965,000 3,135,907,000
Tot. Fixed Assets 3,172,534,000 3,178,375,000 3,181,709,000
Stocks 53,000 0 16,000
Debtors 114,090,000 80,612,000 28,478,000
Cash 248,065,000 249,963,000 244,844,000
Misc. Current Assets 6,360,000 17,775,000 67,730,000
Other Cur. Assets 254,425,000 267,738,000 312,574,000
Total Cur. Assets 368,568,000 348,350,000 341,068,000
Fixed Assets 28,127,000 31,358,000 45,802,000
TOTAL ASSETS 3,541,102,000 3,526,725,000 3,522,777,000
Creditors 9,480,000 9,859,000 18,836,000
Misc. Current Liab. 317,721,000 239,550,000 249,277,000
Other Short Term Finance 85,000,000 73,547,000 67,978,000
Due to directors Current 0 327,000 78,000
Other Current Liabilities 232,721,000 166,003,000 181,299,000
Short Term Loans 85,000,000 73,547,000 67,978,000
Long Term Loans 631,132,000 874,732,000 1,008,972,000
Total Current Liabilities 327,201,000 249,409,000 268,113,000
Total Long Term Liab. 631,792,000 879,179,000 1,008,972,000
TOTAL LIABILITIES 958,993,000 1,128,588,000 1,277,085,000
Called Up Share Capital
& Sundry Reserves 1,970,000,000 1,970,000,000 1,970,002,000
Profit & Loss
Account Reserve 612,109,000 428,137,000 275,690,000
Shareholder Funds 2,582,109,000 2,398,137,000 2,245,692,000
Called Up Share Capital 1,970,000,000 1,970,000,000 1,970,002,000
NET ASSETS 3,213,901,000 3,277,316,000 3,254,664,000
Posted 28 October 2005 - 11:22
Employee number 221 469 448
I like these 2 lines - workforce halved in a year, directors pay trebled! Why did headcount reduce so much in one year? Is it tied to the collapse of F1 Digital Service?
Posted 28 October 2005 - 21:15
Posted 28 October 2005 - 21:16
Posted 28 October 2005 - 21:24
Posted 28 October 2005 - 21:33
Posted 28 October 2005 - 21:38
Seems like Bernie HAS NOT been lining his own pockets, but building the asset base of the company.. the banks nust be delighted with him!
Heh. It´s all relative. May I quote csylt:
The workforce was indeed cut due to the F1 Digital collapse. The best thing about the director's pay is that it all went to Bernie!! no joke - the other two guys received no emoluments from FOA according to the acounts.
Posted 28 October 2005 - 21:40
Posted 28 October 2005 - 21:47
Posted 28 October 2005 - 21:49
Posted 28 October 2005 - 21:57
Posted 29 October 2005 - 00:49
Without having got any money from FOA for three years and with $1.6 billion invested in it since 2001 who knows? But, make no mistake, SLEC's value is derived from a multiple of its earnings rather than cash in the bank/reserves. Its most valuable assets are the rights and these bring in the cash. Of course if key teams don't sign a new Concorde, this earning power will diminsh. That's their big worry irrespective of cash in the bank/reserves.
Yep. In case some folks find the financial statements somewhat difficult to interpret, it´s good to remember bank and reserves are two different things. Bank shows how much money - physically speaking, if you will - there is. Whereas anything on the Liabilities side of balance sheet shows how the Assets side of the balance sheet has been funded. The relationship between annual profit/reserves and cash reflects this; as we can see, profit after taxes goes to boost up the reserves, but the amount of cash has remained about the same for 3 years. So, where has the money gone, then? It has been invested (Assets) and used for paying back loans (Liabilities). That´s one of the differences between healthy vs unhealthy balance sheet - to which one of these two the revenue is used?
As you correctly point out in this case indeed the rights are the most valuable asset, since these are the main source of future revenue. The structure of Assets side clearly reflects this (intangible assets). It may be tangible assets have more value than the balance sheet shows, but with this kind of numbers it hardly makes much difference. Just imagine what happened if the rights suddenly lost their value
Posted 29 October 2005 - 03:17
Posted 29 October 2005 - 10:10
If we take the bond out of the equation, since it should be fully repaid soon and had a $400 million reserve covering default, that leaves $327 million of current liabilities and cash in the bank of $248 million.
Not to forget, the bond must be payed with something from the Assets side ;)
What is also interesting is that Bayern has written off a large portion of its shareholding (in 2002 the German Financial Services Authority demanded that it correct the shares' balance sheet value which was restated from $1bn to £650m) so it could still actually make a profit on paper if it manages to sell the shares for a decent sum...
That´s a big correction I have to say. It isn´t uncommon the value shown by balance sheet is smaller than the "real" value (eg tangible assets/depreciation), but laws indeed make it clear one should not overvalue assets.
Thanks for providing this information!
Posted 29 October 2005 - 18:49
Posted 30 October 2005 - 17:37
Originally posted by csylt
Spot on. But only on expiry of the deal in force which is end of 2010. Then the equally lovely 100-year deal begins. SLEC paid $313.7 million for 100 years - $3.1 million per year. In 2111 that'll be about the price of a newspaper!
Thanks for that, Christian.
Posted 01 November 2005 - 08:35
The French tax authorities wondered why a French organisation would willingly give away its income, particularly when the company it was going to had unknown ownership. In other words the French taxman was missing out on tax on the $102m. Who owned APM? The French tax authorities may well know. The trustee of Bambino was a director, as was Paddy McNally who is still listed as president of another APM company.
The following fixed fee deal was done with Bernie for the F1 rights in their entirety which upset the teams and ultimately led them to sign the Concorde on condition of getting stakes in an F1 float or sale (which they didn't get and two are going to trial in January with their lawyers over this). This is an abridged tale but wraps a few things up.
Posted 10 November 2005 - 19:08
Posted 10 November 2005 - 20:25
I wonder who owns the new APM? It'd be interesting enough to find out exactly what it does! In the meantime thanks again Spunout. C
Posted 12 November 2005 - 06:02
i think this is allright considering the teams probably make decent profits as well. what was that Williams figure being bandied bout some time ago?
Posted 13 November 2005 - 03:22