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Caterham trebles F1 profits

NEWS STORY
01/04/2014

Caterham drivers Kamui Kobayashi and Marcus Ericsson finished a lowly thirteenth and fourteenth in the team's home Grand Prix on Sunday but it still had reason to celebrate. Its latest accounts show a 117% boost in revenue which led to the team's net profits trebling to £4.8m according to an article in the Express{/} by Christian Sylt.

Its profits accelerated when the revenue of its UK arm increased 117% to £46.7m in 2012 outstripping the rise in its costs. The additional revenue is understood to have been driven by sponsorship from American conglomerate GE.

The UK division of the team, Caterham Sports, receives management fees from its parent in Malaysia which in turn gets income from sponsors. GE is its largest and pays an estimated $15m annually. Its first full year as a Caterham sponsor was 2012 when the team also signed a deal with aerospace firm Airbus.

The team's revenue was also fuelled with a £5.3m bank loan from Export-Import Bank of Malaysia which is secured on the company's assets including its factory. The money was put to good use as £1.7m was invested in plant and machinery with a further £6.6m spent on land and buildings.

Despite these positive results, the team doesn't have much to shout about on track. Since it joined F1 in 2010 its owners, who include Malaysian aviation entrepreneur Tony Fernandes, have invested an estimated $219.5m in it but it has not scored a single point. It means that they have put more money into F1, without success, than any other team owners in the history of the sport.

The news wasn't much better at the car company which lends its name to the team. A report in the Daily Mail last year revealed that in 2012 Caterham Cars burned up a £600,000 net loss as revenue reversed 6.4% to £18.2m.

The Dartford-based company raced into the red after making a £650,000 net profit in 2011. Its product range comprises 13 models of the two-seater Caterham Seven sports car which cost an average of £33,000. In 2012 its only new launch was the Supersport R and this partly contributed to the lack of growth.

"Trading conditions continued to be tough during the year," said Caterham's chief executive Graham Macdonald. "The group's main markets within the EU continued to be affected by on-going economic austerity measures and the traditional strong export market to Japan was slow to recover following that region's tsunami of 2011."

As the Daily Mail also reported, the company also had internal challenges as it had to pay £500,000 to two departing directors. It followed the appointment of motorsport writers Joe Saward and David Tremayne as non-executive directors at the end of 2011. They sit alongside Caterham's owners Malaysian businessmen Kamarudin Meranun and Fernandes who also has a majority stake in the Queens Park Rangers football team.

The net loss drove Caterham's shareholders' funds down from £3.3m to £2.7m and it remains to be seen if they have risen since then. In November 2012 it announced a partnership with Renault to develop a new road car to be built at the French manufacturer's Dieppe factory, which is 50/50 owned by the two marques.

Macdonald said that it "represents a major first milestone in the future long term aspirations of the group's shareholders to develop the group into a more mainstream globally focussed car manufacturer." However, last month it was reported that Renault has confirmed to union leaders in France that the joint sports car venture with Caterham will be axed from the beginning of April. The two brands continue to work together in F1 as Renault provides Caterham's engines. Time will tell if it ever scores a point.

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