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Lola goes into administration RACECAR BUSINESS


ola Group, one of the last top level racecar manufacturers in the UK

and a lynchpin of the British motorsport industry, has gone into administration. The Huntington, Cambridgeshire-based concern broke the news in late May, stating that it had fallen foul of recent changes in the UK Government’s R and D tax credit scheme. But the company has been struggling over the past

few years in the wake of a high profile failure to secure a place on the F1 grid and the loss of the IndyCar contract to rival Dallara. Both Lola Cars International

and Lola Composites – which serves the defence, aerospace, communications, automotive, renewable energy and motorsport industries – will now be placed in administration while a buyer for the group is sought. A Lola statement said: ‘The latest economic downturn and

the decision of HMRC not to pay ongoing R and D tax credits has caused a serious cashflow problem for the businesses. It is with enormous regret that a decision has been taken to issue notices of intention to appoint an administrator to Lola Cars International Limited and Lola Composites Limited. This step allows the board to continue its discussions with possible investors and prospective purchasers with a view to securing the best outcome for the staff, creditors and customers of both businesses.’

The issue with the HMRC

revolves around a recent amendment to tax relief for companies involved in research and development. On the whole, these changes have been well received by industry, but one criticism has been that they only apply to large companies, and not small and medium-sized enterprises (SMEs). Lola, while certainly a

The future of 172 Lola employees hangs in the balance if a buyer is not found

big operator in the world of motorsport, is classed as an SME. The criteria as to whether a company is judged to be an SME includes whether it has fewer than 250 employees (Lola

employs 172) and if it has an annual turnover not exceeding €50m, or an annual balance sheet total not exceeding €43m. Lola Group Holdings’ last filed

accounts, dated 31 March 2011, shows it to have made a small profit of £200,000 on a turnover of £12.8m, which was a marked improvement on the 2010 loss of £1.3m. This was largely down to the Lola Cars International side of the business, the Lola Composites arm making a loss of £1,339,000. The company put the losses in

its composites division down to the recession and delays with a number of the contracts won by the company. As for the car side, Lola stated that although sales were down by 17 per cent, it had experienced growth in its ‘more traditional Le Mans business’. In 2009 Lola announced it

planned to file a Formula 1 entry, but withdrew after it failed to make the shortlist. It also lost out to Dallara in the competition to supply the latest generation of IndyCar in 2010. Should Lola not find a buyer, its possible demise will leave Radical as the last large-scale producer of racecars in the UK.

Formula 1 set for highly profitable future CAUGHT

Formula 1 is on course to make a whopping $325.7m profit this year, according to a respected industry monitor, while that figure could balloon to double the amount within the next five years. Formula Money, a business

research organisation that specialises in F1, has stated in its annual industry report that it has estimated the Formula One Group’s profits are expected to amount to around $325.7m in 2012. This is from a total revenue of around $2bn, giving the sport an estimated net profit margin of 16 per cent. This will be the first time the profit has exceeded the $300m mark. Formula 1 will make its

money from race sanction fees ($710m), sale of TV rights

($550m), sale of advertising at the circuits – it controls this for all the tracks other than Monaco – ($300m), sponsorship ($150m), the Paddock Club ($190m), plus a further $116m on other combined sources of revenue. Total costs are around $1.7bn. Long term, the future of F1

seems even rosier, according to Formula Money, with an increase in profits of over 50 per cent expected in 2016 – an estimated revenue of $3.3bn and net profit of $882.3m. Meanwhile, the flotation

of Formula 1 is expected to go ahead some time this summer (see Straight Talk, p7), and it’s believed it has now been approved by the board of Delta Topco – F1’s parent company. Indeed, Delta Topco

84 • July 2012

board member, Peter Brabeck- Letmathe, has gone on record as saying: ‘We intend to float in Singapore soon.’ Brabeck-Letmathe, the chairman of Nestlé and its former CEO, looks likely to become chairman of the floated F1 Group, while three teams are expected to have seats on the board: Ferrari, McLaren and Red Bull. However, it is beginning to look as if Mercedes might also secure a seat on the board, too. Mercedes has been resisting signing the new Concorde Agreement (the charter that governs Formula 1) but it’s now believed a deal may be done whereby it becomes the fourth team with a representative on the board, in return for signing the Agreement.

Penske Racing’s NASCAR Nationwide crew chiefs, Jeremy Bullins (no 22 car) and Chad Walter (no 12), have each been fined and placed on probation until the end of the year after their cars were found to be running with unapproved parts and aerodynamic modifications at the Talladega round of NASCAR’s second tier championship. The car chiefs for the offending teams – Thomas Clavette (no 22) and Raymond Fox (no 12) – were also placed on probation until December 31. FINE: $10,000 each

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