Virgin Racing investment yields big loss for Lloyds
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Your support makes all the difference.Lloyds Banking Group has made a huge loss on its stake in the Virgin Racing Formula One team, according to the latest accounts of its parent company, Manor HoldCo.
The team – part-owned by Sir Richard Branson's Virgin Group – was driven to a £35.3m pre-tax loss in the 14 months to 31 December 2010 following a disastrous £17.6m investment in a computer-aided car design system. Unlike other F1 teams, its car was designed using just computer simulations, rather than being tested in a wind tunnel, and this strategy hasn't paid off.
Virgin Racing has failed to score a point since its first race and finished last in the standings in both 2010 and 2011.
Manor HoldCo's accounts were four months overdue and were lodged at the end of November just days after Companies House threatened to prosecute directors for failing to file.
They include Darryl Eales, the chief executive of Lloyds' private equity division, Lloyds Development Capital, and Andrei Cheglakov, an investor in the Russian sports car manufacturer Marussia.
The accounts paint a grim picture of the team's finances. Its turnover, mainly derived from sponsorship and prize money, came to £30.1m – about a fifth of the revenue of a top team such as McLaren. Costs totalled £63m, with the biggest single expense believed to be paying WR Technology, a company owned by the team's former technical director, Nick Wirth, for the computer simulation. Virgin fired Mr Wirth in June and the accounts state that "it is the intention of the group to move towards in house research and development projects in the future."
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