Williams Grand Prix Holdings PLC
(WGPH, Ticker: WGF1) today announces the Group’s financial results for the
year ended 31 December 2019.
Group revenue declined to £160.2m in 2019, from £176.5m in 2018 and EBITDA
deteriorated to a loss of £(13.0)m, compared to a profit of £12.9m in the
previous year. The results were driven by the Formula 1 operation’s poor
on-track performance, despite continued progress at Williams Advanced
Formula 1 revenue declined to £95.4m in 2019, from £130.7m in 2018 and
EBITDA was £(10.1)m last year, compared to £16.0m the previous year.
Williams Advanced Engineering revenue increased to £63.7m in 2019, from
£44.8m in 2018, with EBITDA up to £7.5m in 2019 from £5.1m in 2018.
“The financial results for 2019 reflect the recent decline in
competitiveness of the F1 operation and the consequent reduction in
commercial rights income” said Mike O’Driscoll, Chief Executive Officer.
“After four years of very solid performance in the FIA F1 Constructors’
Championship during which we claimed two third and two fifth place finishes,
we endured a couple of very difficult seasons. We have implemented a
significant restructuring over the last nine months and have strengthened
the technical leadership team.”
“The 2020 Formula 1 season has, of course, been disrupted due to the
COVID-19 pandemic, and this will have an impact on our commercial rights
income this year. The Team have also served notice to terminate its
relationship with its title partner, ROKiT, and major sponsor, ROK Drinks.
In common with many other businesses, we have taken extensive action to
mitigate, including a prolonged furlough period for much of our staff. As
this awful global crisis recedes, everyone at Williams Racing is looking
forward to the start of the new season.”
“There has been an enormous gap in earnings and expenditure between the
three largest teams and the rest of the grid for a number of years, but we
are confident that Liberty Media’s long-term vision and plans, including a
first-ever cost-cap for the sport, will deliver a more level playing field
for 2021 and beyond, on which all teams can compete more fairly.”
“Williams Advanced Engineering growth continued in 2019, and we decided to
bring external investment into the Group, through the sale of a majority
stake, on 31 December 2019. This will enable WAE to continue to deliver the
innovative solutions for which it is known and respected. Whilst we are no
longer a majority shareholder in WAE we hold a significant minority stake in
the business and remain a key partner for them through the provision of
technical and support services.”
New Strategic Direction
The 2018 and 2019 seasons proved very challenging for Williams with
disappointing performances in the FIA F1 Constructors’ Championship, after a
number of years of much stronger performance. As a result, revenue has been
under pressure, due to lower commercial income resulting from the Team’s
on-track performance, as well as a decline in sponsorship.
Success in Formula 1 over the last decade has been very heavily weighted in
favour of corporately-backed teams with comparatively large annual budgets.
The new commercial rights holder, Liberty Media, is introducing new
financial regulations from next year which, significantly, will include a
cost cap for the first time. In addition commercial income from the sport is
expected to be distributed more equitably than at present. The WGPH board
believes these changes will address the greatest inequity in the sport and
will allow all teams to compete on a more even basis. Formula 1 and the
Sport’s governing body, the FIA, are also introducing new technical
regulations for the 2022 season with the objective of ensuring much more
competitive and exciting racing in the future. To that end, and in light of
these challenges, WGPH has embarked upon a renewal programme setting out a
new strategic direction, to ensure it is well positioned to take advantage
of Formula 1’s new era which will begin in 2021.
• As a first stage in this process, WGPH divested a majority stake in
Williams Advanced Engineering in December 2019, providing renewed focus in
the F1 operations
• WGPH has implemented significant operational improvements and the
technical organisation has been comprehensively reorganised with new
leadership and talented designers joining the team
• WGPH has secured a long-term contract renewal for the supply of the
best-in-class Mercedes HPP-AMG power unit
Strategic Review and Formal Sale Process
As part of this new strategic direction, the WGPH board is undertaking a
review of all the various strategic options available to the Company.
Options being considered include, but are not limited to, raising new
capital for the business, a divestment of a minority stake in WGPH, or a
divestment of a majority stake in WGPH including a potential sale of the
whole Company. Whilst no decisions have been made regarding the optimal
outcome yet, to facilitate discussions with interested parties, the Company
announces the commencement of a "formal sale process" (as referred to in
Note 2 on Rule 2.6 of the Takeover Code).
The Board has appointed Allen & Co. and Lazard as joint financial advisers
to assist with the strategic review and formal sale process. Parties with a
potential interest in Williams should contact Allen & Co. or Lazard at the
contact details set out below.
Any interested party participating in the formal sale process will be
required to enter into a non-disclosure agreement with WGPH on terms
satisfactory to the WGPH board. The Company then intends to provide such
interested parties with certain information on the business, following which
interested parties will be invited to submit their proposals.
The Panel on Takeovers and Mergers has agreed that any discussions with
third parties may be conducted within the context of a formal sale process.
Accordingly it has granted a dispensation from the requirements of Rules
2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any party
participating in the formal sale process will not be required to be publicly
identified under Rules 2.4(a) or (b) and will not be subject to the 28 day
deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it
is participating in the formal sale process.
The Company is not in receipt of any approaches at the time of this
announcement and confirms that it is in preliminary discussions with a small
number of parties regarding a potential investment in the Company. There can
be no certainty that an offer will be made, nor as to the terms on which any
offer will be made. The WGPH board reserves the right to alter or terminate
the process at any time and if it does so it will make an announcement as
appropriate. The WGPH board also reserves the right to reject any approach
or terminate discussions with any interested party at any time.
Following this announcement, the Company is now considered to be in an
“offer period” as defined in the Takeover Code, and the dealing disclosure
requirements summarised below will apply. Further announcements regarding
timings and procedures for the formal sale process will be made as
While the Company has faced a number of challenges, Williams currently
remains funded and ready to resume racing when the calendar allows in 2020.
The WGPH board believes that the strategic review and formal sale process is
the right and prudent thing to do in order to take time to consider a full
range of options and put the Formula 1 team in the best possible position
for the future.