TIDMAML
RNS Number : 1726U
Aston Martin Lagonda Global Hld PLC
29 July 2022
29 July 2022
Aston Martin Lagonda Global Holdings plc
Interim results for the six months to 30 June 2022
-- Strong demand across the portfolio with GT/Sports sold out into 2023
-- H1 revenues increased 9% year-on-year, driven by record core ASPs
-- Supply chain and logistics disruptions affecting H1 volumes
and working capital, with impact expected to unwind in H2
-- FY 2022 guidance reaffirmed, with positive free cash flow(2) expected in H2
-- On track to deliver medium-term targets
-- Previously announced transformational capital raise of
GBP653m with strategic investment by the Public Investment Fund
-- Amendment to Strategic Cooperation Agreement with
Mercedes-Benz AG extends timeframe for tranche 2 share issuance
into 2024
GBPm H1 2022 H1 2021 % change Q2 2022 Q2 2021 % change
---------- -------- ---------- --------
Total wholesale
volumes(1) 2,676 2,901 (8%) 1,508 1,548 (3%)
Revenue 541.7 498.8 9% 309.0 274.4 13%
Adjusted EBITDA(2) 58.6 48.8 20% 34.2 28.1 22%
Adjusted operating
loss(2) (72.7) (36.0) (102%) (38.4) (20.7) (86%)
Operating loss (89.9) (38.0) (137%) (42.2) (22.7) (86%)
Loss before tax (285.4) (90.7) nm (173.8) (48.5) nm
Net debt(2) (1,266.4) (791.5) (1,266.4) (791.5)
-------------------- ---------- -------- --------- ---------- -------- ---------
(1) Number of vehicles including specials; (2) For definition of
alternative performance measures please see Appendix;
H1 2022 Financial highlights
-- Strong demand across product lines with GT/Sports cars fully
sold out into 2023 and DBX orders more than 40% higher
year-on-year
-- Wholesale volumes decreased by 8% year-on-year to 2,676 (H1
2021: 2,901) due to supply chain and logistics disruptions, most
notably impacting DBX deliveries in Q2. GT/Sports wholesales of
1,561 increased by 22% year-on-year (H1 2021: 1,280)
-- Revenue increased 9% year-on-year to GBP542m driven by:
- Strong pricing dynamics throughout the core portfolio, with
record core ASP in Q2 2022
-- ASP of GBP164k in H1 2022, up 9% vs GBP150k in H1 2021
-- ASP of GBP174k in Q2 2022, up 15% vs GBP151K in Q2 2021
- Aston Martin Valkyrie programme deliveries (27 vehicles
delivered, 38 assembled in H1 2022)
- Foreign exchange tailwinds
-- Gross profit increased by 31% year-on-year to GBP188m (H1
2021: GBP143m) and gross margin increased substantially
year-on-year to 35% (H1 2021: 29%) reflecting improved pricing and
mix, as well as efficiency benefits, partially offset by higher
manufacturing and logistics costs
-- Adjusted EBITDA increased 20% year-on-year to GBP59m (11%
margin) primarily driven by revenue growth and higher gross profit,
partially offset by higher operating expenses including
reinvestments into brand, marketing and new product launch
activities, as well as inflationary impact on general costs
-- Operating loss of GBP90m included a GBP47m year-on-year
increase in depreciation and amortisation
-- Loss before tax of GBP285m was driven by a GBP134m negative non-cash FX revaluation impact
-- H1 2022 free cash outflow of GBP234m included:
- Capital expenditure of GBP138m, primarily related to new model
development including the next-generation of front-engine sports
cars due to launch in 2023
- Net cash interest payments of GBP63m
- Working capital outflow of GBP67m driven by temporary supply
chain and logistics disruptions, most notably in Q2. These isolated
but impactful issues pushed planned deliveries towards the end of
the period, resulting in elevated receivables and more than 350
ordered vehicles awaiting final parts at the end of June, which in
combination had a cash impact of more than GBP80m
-- Cash balance of GBP156m (December 2021: GBP419m) impacted by
a combination of more than GBP125m of short-term factors. This
relates to the GBP46m repayment of the revolving credit facility,
and more than GBP80m from the elevated receivables and number of
vehicles held in stock, which are expected to be delivered in the
second half of the year
-- Net debt of GBP1,266m (December 2021: GBP892m) including
GBP134m impact of non-cash FX revaluation of US dollar-denominated
debt as the GBP weakened against the US dollar during the
period
-- Positive cash flow performance expected in early Q3, driven
by the partial unwind of the short-term working capital dynamics
referenced above
H1 2022 Operational Highlights: Taking off into a new era for
Aston Martin:
-- Retail customer demand continued to run ahead of wholesales in H1 2022
-- DBX707, the world's most powerful luxury SUV, launched to
significant customer and media excitement; DBX order intake more
than 40% higher year-on-year
-- New V12 Vantage announced, with all 333 units sold-out by
launch in March following unprecedented demand
-- Racing.Green., new ESG strategy, reiterating electrification plans;
- First PHEV deliveries in 2024 and first BEV targeted for
launch in 2025
- Fully electrified front-engine and SUV portfolio by 2030
-- Strengthened leadership team with appointments of
- Chief Executive Officer, Amedeo Felisa appointed to the Board
4 May 2022
- Chief Financial Officer, Doug Lafferty appointed to the Board
1 May 2022
- Chief Technology Officer, Roberto Fedeli appointed 1 June
2022
- Chief People Officer, Simon Smith appointed 11 April 2022
Lawrence Stroll, Executive Chairman commented:
"We have continued to make strong progress in our vision to
become the world's most desirable, ultra-luxury British performance
brand during the first six months of 2022, despite supply chain
challenges in Q2. The underlying fundamentals of Aston Martin have
never been stronger, with robust demand across our product range,
sports cars sold out into 2023 and DBX orders up by more than 40%
compared to 2021. In addition, we have aligned the business for its
future by assembling a very experienced team, led by Amedeo Felisa,
to fully realise our potential and deliver on the targets we have
set.
The first new models in the extraordinary pipeline of products
developed since I became Executive Chairman have also started to be
delivered. Our combination of new ultra-luxury, high performance
models commenced with DBX707 - the premier ultra-luxury performance
SUV on the market - and the highly-desirable V12 Vantage. They will
be followed by an entirely new generation of sports cars from 2023.
Importantly, all our new vehicles are aligned with a minimum 40%
contribution margin target, a significant increase from the past,
and a key driver of our medium-term targets. In addition,
production of the Aston Martin Valkyrie has continued to pick up
pace, and we are on track to meet our targeted full year
deliveries.
However, the first half of the year was not without its
challenges. Isolated but impactful supply chain shortages,
particularly in Q2, resulted in lower wholesales and significant
working capital headwinds. Specifically, we ended June with more
than 350 DBX707s that we had planned to deliver in Q2, still
awaiting final parts, consuming tens of millions in cash and
temporarily limiting our ability to meet the strong demand we
have.
We have now started to deliver these vehicles in July and expect
further improvements in the supply chain as we move through H2,
supporting the delivery of our full year targets. As a result of
the working capital build in H1 and our expected second half
performance, we now expect to generate positive free cashflow in
H2, resulting in a significantly higher cash balance at year
end.
Earlier this month we announced a GBP653 million equity capital
raise, which will also see the arrival of the Public Investment
Fund (PIF) as a new anchor shareholder with a 16.7 percent stake.
This will transform our balance sheet, significantly improve our
liquidity and cashflow profile, provide greater clarity on our
pathway to become sustainably free cash flow positive from 2024, as
well as creating significant shareholder value.
We continue to enjoy a long-term strategic relationship with
Mercedes Benz, evidenced by their further investment in the Company
and our planned deployment of their technologies, accessed via
tranche 1 of the Strategic Cooperation Agreement (or SCA), to
support all new product ranges in our medium-term plan.
Today, we are pleased to announce a mutually-agreed amendment to
the SCA, which extends the timeframe for the Company and Mercedes
to agree additional technology requests by 12 months, with the
corresponding tranche 2 share issuance related to the second basket
of Mercedes technologies to be accessed under the SCA, including
BEVs, to take place by July 2024. Importantly, the amendment does
not impact our access to the technologies, subject to reaching a
commercial agreement, or change the timeline for our first BEV,
which we continue to target for launch in 2025."
Amedeo Felisa, CEO, commented:
"Aston Martin is an iconic global brand in a unique position to
transcend ultra-luxury and high performance. The first phase of our
journey is complete, building strong foundations for our future
growth. Together with the extraordinary talent and teams we have
across the company, we must now ensure we execute on our
targets.
With the supply chain challenges that impacted our first half
performance expected to ease, we are now focused on accelerating
deliveries of the DBX707, continuing to ramp up Aston Martin
Valkyrie production, and transitioning to our next generation of
sports cars.
Leveraging my experiences, I see great potential to build on the
success of Project Horizon to optimise our operational
capabilities, reduce complexities and cost, which will drive
sustained improvements in profitability and cashflow generation. I
am pleased with the initial progress we have made so far and am
excited to lead Aston Martin as we enter this next phase of our
journey."
Outlook
We remain on track to achieving our medium-term targets of
c.10,000 wholesales, c.GBP2bn revenue and c.GBP500m adjusted EBITDA
by 2024/25.
For 2022, we continue to expect to deliver significant growth on
2021 with a c.8% increase in core volumes expected to deliver a
c.50% improvement in adjusted EBITDA from the core business. The
global operating environment remains uncertain, with the war in
Ukraine, intermittent COVID-19 lockdowns in China, continued supply
chain and logistics disruptions, and raw material cost inflation.
Our teams remain focused on minimising any impact on the Company's
financial performance.
For the second half of 2022, we expect strong year-on-year
wholesale volume growth, supported by easing supply chain dynamics,
robust demand, as well as the production ramp-up of the DBX707 and
the V12 Vantage, which both bring improved profitability compared
with prior models, aligned to our 40%+ contribution margin target.
In addition, price adjustments have been made across the portfolio,
reflecting the strong pricing power of the Aston Martin brand.
Aston Martin Valkyrie production continues to pick up pace. We
continue to expect 75-90 Aston Martin Valkyrie programme vehicles
to be shipped in 2022, with 38 vehicles already assembled in the
first half of the year.
In addition, we expect free cash flow to be positive in the
second half of 2022 as higher profitability and cash inflows from
more normalised working capital dynamics are expected to offset
cash interest payments and planned capital expenditures. This is
expected to support a year end cash balance in excess of GBP200m,
before the net proceeds from the proposed equity capital raise of
GBP653m. With up to half of the net proceeds from the proposed
equity capital raise expected to be used to repay debt, we continue
to expect a pro-forma cash balance of GBP500-GBP600m.
2022 guidance unchanged - updated to reflect prevailing exchange
rates:
-- Wholesales: growth to > 6,600 units
-- Adjusted EBITDA margin: c.350-450bps expansion
-- Capex and R&D: c.GBP300m
-- Depreciation and amortisation: c.GBP315m-GBP330m
Reflecting Aston Martin Valkyrie programme shipments and a full
year of accelerated depreciation of capitalised development costs
ahead of next generation GT/Sports vehicles in 2023
-- Interest costs [1] updated for FX movements (assuming
GBP1:$1.21, versus previous assumption of GBP1:$1.32):
-- c.GBP290m (P&L), GBP95m higher than previous guidance of
c.GBP195m largely driven by non-cash FX revaluation of
dollar-denominated debt in H1
-- c.GBP130m (cash), unchanged from previous guidance
All metrics and commentary in this announcement exclude
adjusting items unless stated otherwise and certain financial data
within this announcement have been rounded.
Enquiries
Investors and Analysts
Sherief Bakr Director of Investor Relations +44 (0) 7789
177547
sherief.bakr@astonmartin.com
Holly Grainger Deputy Head of Investor Relations +44 (0)7442
989551
holly.grainger@astonmartin.com
Media
Kevin Watters Director of Communications +44 (0)7764 386683
kevin.watters@astonmartin.com
Paul Garbett Head of Corporate & Brand Communications +44
(0)7501 380799
paul.garbett@astonmartin.com
Grace Barnie Corporate Communications Manager +44 (0)7880
903490
grace.barnie@astonmartin.com
Tulchan Communications
Harry Cameron and Simon Pilkington + 44 (0)20 7353 4200
-- Presentations from Amedeo Felisa, CEO and Doug Lafferty, CFO
are available on the corporate website from 07.00am BST and there
will be a call for investors and analysts today at 08:30am BST
-- The conference call can be accessed live via the corporate website https://www.astonmartinlagonda.com/investors/calendar
-- A replay facility will be available on the website later in the day
-- Interim Results for the nine months to 30 September 2022 will
be announced on 2 November 2022
No representations or warranties, express or implied, are made
as to, and no reliance should be placed on, the accuracy, fairness
or completeness of the information presented or contained in this
release. This release contains certain forward-looking statements,
which are based on current assumptions and estimates by the
management of Aston Martin Lagonda Global Holdings plc ("Aston
Martin Lagonda"). Past performance cannot be relied upon as a guide
to future performance and should not be taken as a representation
that trends or activities underlying past performance will continue
in the future. Such statements are subject to numerous risks and
uncertainties that could cause actual results to differ materially
from any expected future results in forward-looking statements.
These risks may include, for example, changes in the global
economic situation, and changes affecting individual markets and
exchange rates.
Aston Martin Lagonda provides no guarantee that future
development and future results achieved will correspond to the
forward-looking statements included here and accepts no liability
if they should fail to do so. Aston Martin Lagonda undertakes no
obligation to update these forward-looking statements and will not
publicly release any revisions that may be made to these
forward-looking statements, which may result from events or
circumstances arising after the date of this release.
This release is for informational purposes only and does not
constitute or form part of any invitation or inducement to engage
in investment activity, nor does it constitute an offer or
invitation to buy any securities, in any jurisdiction including the
United States, or a recommendation in respect of buying, holding or
selling any securities.
Nothing in this announcement should be interpreted as a term or
condition of the Rights Issue or Capital Raise. Any decision to
purchase, subscribe for, otherwise acquire, sell or otherwise
dispose of any nil paid rights, fully paid rights or new shares
must be made only on the basis of the information contained in the
prospectus related to the rights issue once published. Copies of
that prospectus will, following publication, be available on the
Company's website at www.astonmartinlagonda.com .
This announcement does not contain or constitute an offer for
sale or the solicitation of an offer to purchase securities in the
United States. The securities referred to herein have not been and
will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory
authority of any state or jurisdiction of the United States, and
may not be offered or sold in the United States absent registration
under the Securities Act or an available exemption from, or
transaction not subject to, the registration requirements of the
Securities Act. There will be no public offer of the securities in
the United States. None of the securities, this announcement or any
other document connected with the Rights Issue or Capital Raise has
been or will be approved or disapproved by the United States
Securities and Exchange Commission or by the securities commissions
of any state or other jurisdiction of the United States or any
other regulatory authority, and none of the foregoing authorities
or any securities commission has passed upon or endorsed the merits
of the offering of the securities or the accuracy or adequacy of
this announcement or any other document connected with the Rights
Issue or Capital Raise. Any representation to the contrary is a
criminal offence in the United States.
This announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer or
invitation to purchase or subscribe for, or any solicitation to
purchase or subscribe for, any securities or to take up any
entitlements to any securities in any jurisdiction. No offer or
invitation to purchase or subscribe for, or any solicitation to
purchase or subscribe for, any securities or to take up any
entitlements to any securities will be made in any jurisdiction in
which such an offer or solicitation is unlawful.
No securities have been nor will be registered under the
Securities Act or under any securities laws of any state or other
jurisdiction of the United States and may not be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered,
directly or indirectly, within the United States except pursuant to
an applicable exemption from or in a transaction not subject to the
registration requirements of the Securities Act and in compliance
with any applicable securities laws of any state or other
jurisdiction of the United States. There will be no public offer of
any securities in the United States.
FINANCIAL REVIEW
Sales and revenue analysis
Number of vehicles H1 2022 H1 2021 Change Q2 2022 Q2 2021 Change
-------- -------- -------- --------
Total wholesale 2,676 2,901 (8%) 1,508 1,548 (3%)
Core (excluding Specials) 2,644 2,881 (8%) 1,495 1,529 (2%)
By region:
UK 488 434 12% 224 162 38%
Americas 720 1,056 (32%) 359 625 (43%)
EMEA ex. UK 614 600 2% 343 316 9%
APAC 854 811 5% 582 445 31%
By model:
Sport 821 670 23% 440 358 23%
GT 740 610 21% 393 321 22%
SUV 1,083 1,595 (32%) 662 849 (22%)
Other - 6 (100%) - 1 (100%)
Specials 32 20 60% 13 19 (32%)
--------------------------- -------- -------- ------- -------- -------- -------
Note: Sport includes Vantage, GT includes DB11 and DBS, SUV
includes DBX and Other includes prior generation models
Despite strong demand, total wholesales declined by 8%
year-on-year in the first half of 2022 due to the continued
challenging operating environment, including disruptions to both
supply chain and logistics. Wholesales of 2,676 units included 32
Specials compared to 2,901 units and 20 Specials in the first half
of 2021. The second quarter of 2022 showed a significant
improvement over the prior quarter, with 29% sequential volume
growth, despite significant supply chain and logistics disruptions
and a full quarter of COVID-19 lockdowns in parts of China.
Our home market, the UK, saw the strongest year-on-year growth,
up 12% in the half, accelerating by 38% in the second quarter of
2022. The strong year-on-year growth, both in the first half and
second quarter of 2022, was primarily due to strong demand for
GT/Sports. Year-on-year growth in the Americas was
disproportionately impacted by the supply chain and logistics
disruptions experienced in the second quarter, particularly for the
DBX707. Year-on-year growth in APAC improved significantly in the
second quarter, following the transportation delays which affected
first quarter volumes.
Revenue by Category
GBPm H1 2022 H1 2021 Change
-------- --------
Sale of vehicles 499.6 458.5 9%
Sale of parts 32.9 32.2 2%
Servicing of vehicles 5.0 5.1 (2%)
Brand and motorsport 4.2 3.0 40%
Total 541.7 498.8 9%
-------- --------
First half revenues increased by 9% year-on-year to GBP542m (H1
2021: GBP499m), primarily driven by strong pricing and mix
dynamics, Aston Martin Valkyrie programme deliveries and foreign
exchange tailwinds. Revenues in the second quarter of 2022 also
showed a significant improvement over the prior quarter, with 33%
sequential revenue growth.
The strong year-on-year pricing dynamics enjoyed in the first
half of 2022 were supported by price increases implemented across
the range during late 2021 and early 2022, reflecting the strong
pricing power of the Aston Martin brand . In addition, lower
customer and retail financing support as well as improved residual
values in market contributed to a sequential improvement in core
ASP from GBP151k in Q1 to GBP174k in Q2 (H1 2022: GBP164k; H1 2021:
GBP150k) - a record level for Aston Martin. Total ASP of GBP186k in
H1 reflected 32 Specials in the half compared with 20 in the prior
year period (H1 2021: GBP156k).
Summary income statement and analysis
GBPm H1 2022 H1 2021 Q2 2022 Q2 2021
-------- --------
Revenue 541.7 498.8 309.0 274.4
Cost of sales (353.6) (355.5) (204.9) (194.4)
-------- -------- -------- --------
Gross profit 188.1 143.3 104.1 80.0
Gross margin % 34.7% 28.7% 33.7% 29.2%
Operating expenses(1) (260.8) (179.3) (142.5) (100.7)
of which depreciation & amortisation 131.3 84.8 72.6 48.8
-------- -------- -------- --------
Adjusted operating loss (2) (72.7) (36.0) (38.4) (20.7)
Adjusting operating items (17.2) (2.0) (3.8) (2.0)
-------- -------- -------- --------
Operating loss (89.9) (38.0) (42.2) (22.7)
Net financing expense (195.5) (52.7) (131.6) (25.8)
of which adjusting financing
income 24.4 14.0 13.6 8.6
-------- -------- -------- --------
Loss before tax (285.4) (90.7) (173.8) (48.5)
Taxation (4.4) 19.6 (4.0) 19.2
-------- -------- -------- --------
Loss for the period (289.8) (71.1) (177.8) (29.3)
Adjusted EBITDA (1,2) 58.6 48.8 34.2 28.1
Adjusted EBITDA margin 10.8% 9.8% 11.1% 10.2%
Adjusted loss before tax (1) (292.6) (102.7) (183.6) (55.1)
EPS (pence) (249.0) (63.3)
Adjusted EPS (pence) (2) (253.7) (85.3)
----------------------------------------------- -------- -------- -------- --------
1 Excludes adjusting items; 2 Alternative Performance Measures
are defined in Appendix
In the first half of 2022, gross profit of GBP188m increased by
GBP45m, or 31% year-on-year. This translated to a gross margin of
35%, a year-on-year expansion of 600 basis points. The strong gross
margin expansion was primarily driven by favourable pricing and mix
dynamics, and to a lesser extent, by FX benefits. The Company
continues to target a 40%+ contribution margin from its future
products, starting with the V12 Vantage and DBX707.
In the first half of 2022, adjusted EBITDA of GBP59m increased
by GBP10m, or 20% year-on-year. This translated to an adjusted
EBITDA margin of 10.8%, a year-on-year expansion of 100 basis
points.
Operating loss of GBP90m in the first half of 2022 compared to
GBP38m loss in the prior year period. The GBP52m year-on-year
change was primarily driven by:
- a GBP47m increase in depreciation and amortisation charges,
principally related to Aston Martin Valkyrie deliveries and
accelerated depreciation ahead of next generation GT/Sports
vehicles in 2023, and
- increased brand and product launch investments such as the
DBX707, V12 Vantage and Valhalla, as well as marketing initiatives
at events such as the Goodwood Festival of Speed
These factors were partially offset by:
- higher year-on-year gross margin as described above, and
- a GBP14m benefit to operating profit from exchange rate movements
Adjusting operating items of GBP17m in the first half of 2022
(H1 2021: GBP2m) predominantly related to the closure to future
accrual of the pension scheme disclosed at the Full Year 2021
results, as well as one-time expenses related to the change of CEO
and appointment of other new executives.
Net financing costs of GBP196m in the first half of 2022
increased significantly from GBP53m in the prior year period,
reflecting the revaluation of the US dollar-denominated Senior
Secured Notes giving a non-cash FX charge of GBP134m (H1 2021:
GBP9m benefit). The GBP24m adjusting finance credit was due to
movements in fair value of outstanding warrants (H1 2021: GBP14m
credit).
The loss before tax was GBP285m (H1 2021: GBP91m loss) and the
loss for the period was GBP290m (H1 2021: GBP71m), both impacted by
the revaluation of the US dollar-denominated Senior Secured
Notes.
The total effective tax rate for the period to 30 June 2022 was
-1.5% which is lower than the prior period due to no current period
deferred tax asset movements being recognised (such that the tax
charge related to the financial performance of the overseas
subsidiaries during the six month period, together with a small
increase in deferred tax liabilities attributable to distributable
profits in China) (H1 2021: 22%).
The total share count at 30 June 2022 was 116 million, giving an
adjusted EPS of (253.7)p (H1 2021: (85.3)p).
Cash flow and net debt
GBPm H1 2022 H1 2021 Q2 2022 Q2 2021
-------- --------
Cash (used in)/generated from operating
activities (33.1) 103.8 (76.3) 31.6
Cash used in investing activities
(excl. interest) (138.2) (91.0) (71.5) (43.4)
Net cash interest paid (62.5) (57.1) (60.6) (56.7)
-------- -------- --------
Free cash outflow (233.8) (44.3) (208.4) (68.5)
Cash (outflow)/inflow from financing
activities (excl. interest) (41.0) 62.4 (46.9) (2.0)
(Decrease) / increase in net cash (274.8) 18.1 (255.3) (70.5)
-------- --------
Effect of exchange rates on cash
and cash equivalents 12.1 (1.9) 7.7 0.7
----------------------------------------- -------- -------- -------- --------
Cash balance 156.2 505.6 156.2 505.6
----------------------------------------- -------- -------- -------- --------
Cash flow from operating activities was an outflow of GBP33m in
the first half of 2022 (H1 2021: GBP104m inflow). The year-on-year
change in cash flow from operating activities was primarily driven
by a working capital outflow of GBP67m (H1 2021: GBP62m inflow),
impacted by supply chain and logistics disruptions. The largest
driver was a GBP105m increase in inventories (H1 2021: GBP9m
decrease), reflecting a significant number of ordered vehicles
awaiting final parts at the end of June. In addition, there was a
GBP41m increase in receivables (H1 2021: GBP40m decrease) as supply
chain and logistics disruptions pushed planned deliveries towards
the end of the second quarter.
Demand for Specials remains strong with a GBP10m increase in the
deposit balance in the first half of 2022, as new deposits more
than offset the unwind from Specials delivered in the period.
Capital expenditure was GBP138m in the first half of 2022, an
increase of GBP47m year-on-year, with investment focused on the
future product pipeline, particularly, the next generation
GT/Sports vehicles, as well as development of the mid-engine PHEV
programme.
Free cash outflow of GBP234m in the first half of 2022 compared
to a GBP44m outflow in the first half of 2021, or a GBP190m
year-on-year change. This was primarily due to the significant
year-on-year movement in working capital related cash flows
detailed above, as well as the GBP47m year-on-year increase in
capital expenditure.
GBPm 30-June-22 31-Dec-21 30-June-21
----------- ----------
Loan notes (1,221.5) (1,074.9) (1,041.6)
Inventory financing (38.8) (19.7) (39.8)
Bank loans and overdrafts (62.3) (114.3) (118.0)
Lease liabilities (IFRS 16) (102.0) (103.4) (99.2)
Gross debt (1,424.6) (1,312.3) (1,298.6)
----------- ----------
Cash balance 156.2 418.9 505.6
Cash not available for short term
use 2.0 1.8 1.5
----------------------------------- ----------- ---------- -----------
Net debt (1,266.4) (891.6) (791.5)
----------------------------------- ----------- ---------- -----------
Cash at 30 June 2022 of GBP156m included a GBP46m repayment of
the revolving credit facility. Net debt was GBP1,266m, up from
GBP892m at 31 December 2021, including GBP134m impact of non-cash
FX revaluation of US dollar-denominated debt as the pound weakened
against the US dollar during the period.
Subsequent Events
Proposed New Equity Financing and Strategic Investment by the
Public Investment Fund ("PIF")
On 15 July 2022, the Company announced its intention to
undertake a proposed equity capital raise of GBP653 million (the
"Capital Raise") to meaningfully deleverage the balance sheet,
strengthen and accelerate its long-term growth. The Company
confirms the following plans for a linked primary issuance of
shares, subject to shareholder and regulatory approvals:
-- a proposed placing of approximately 23.3 million new ordinary
shares at a price of GBP3.35 per ordinary share in the capital of
the Company to PIF (the "Placing Shares") to raise approximately
GBP78.0 million, representing approximately 16.7% of the
post-placing share capital of the Company (the "Placing"); and
-- a subsequent underwritten rights issue to raise approximately
GBP575 million (the "Rights Issue"), including the irrevocable
agreements from PIF, Yew Tree Overseas Limited and Mercedes-Benz AG
to fully take up in full their respective entitlement shares.
The Company intends to use the net proceeds from the Capital
Raise for the following purposes:
-- up to half to repay existing debt, strengthening financial
resilience and improving the company's cash flow generation by
reducing its interest costs;
-- the balance to maintain a substantial liquidity cushion to
underpin and accelerate future capital expenditure, and to support
execution of its targets in what remains a challenging operating
environment, impacted by the war in Ukraine, COVID-19 lockdowns in
China, as well as continued supply chain and logistics
disruptions.
The Capital Raise has been in development for some time, and
follows a comprehensive Board review of the Company's optimal
capital structure and growth capital requirements over the
medium-term and beyond, as well as the debt reduction required in
order to achieve a net debt leverage ratio of c.1-1.5x by
2024/25.
The specific terms and conditions of the Capital Raise will be
announced by the Company in due course. The Company expects to
separately publish a circular in mid-August, which will contain
notice of the General Meeting of the Company required in connection
with the Capital Raise, which it is expected will take place in
early September and at which the Company will seek approval from
its shareholders. It is expected that a Prospectus, containing
further information on the Capital Raise will also be published in
early September, and in any event before the General Meeting, and
that completion of the Capital Raise will take place by the end of
September.
Further information can be found in the announcement made on 15
July 2022:
https://otp.tools.investis.com/clients/uk/astonmartin/rns/regulatory-story.aspx?cid=2424&newsid=1606351
Amendment to Strategic Cooperation Agreement with Mercedes-Benz
AG
On 28 July 2022, the Strategic Cooperation Agreement entered
into between Mercedes-Benz AG (MBAG) and the Company on 27 October
2020 ("SCA") was amended to extend the timeframe for the Company
and MBAG to agree additional technology requests by 12 months to 31
December 2023, with the corresponding tranche 2 share issuance to
take place by July of 2024.
APPICES
Dealerships
30 June-22 31 Dec-21 30 June-21
----------- ----------
UK 21 22 22
Americas 44 44 44
EMEA ex. UK 52 53 53
APAC 49 49 50
Total 166 168 169
----------- ----------
Number of countries 55 56 58
--------------------- ----------- ---------- -----------
Units
Wholesale Q1-22 Q1-21 Change Q2-22 Q2-21 Change H1-22 H1-21 Change
------ ------ ------- ------ ------ ------ ------
UK 264 272 (3%) 224 162 38% 488 434 12%
Americas 361 431 (16%) 359 625 (43%) 720 1,056 (32%)
EMEA ex.
UK 271 284 (5%) 343 316 9% 614 600 2%
APAC 272 366 (26%) 582 445 31% 854 811 5%
Total 1,168 1,353 (14%) 1,508 1,548 (3%) 2,676 2,901 (8%)
------ ------ ------- ------ ------ ------ ------
Wholesale Q1-22 Q1-21 Change Q2-22 Q2-21 Change H1-22 H1-21 Change
------ ------ ------- ------ ------ ------ ------
Sport 381 312 22% 440 358 23% 821 670 23%
GT 347 289 20% 393 321 22% 740 610 21%
SUV 421 746 (44%) 662 849 (22%) 1,083 1,595 (32%)
Other 0 5 (100%) 0 1 (100%) 0 6 (100%)
Specials 19 1 1,800% 13 19 (32%) 32 20 60%
Total 1,168 1,353 (14%) 1,508 1,548 (3%) 2,676 2,901 (8%)
------ ------ ------- ------ ------ ------ ------
Note: Sports includes Vantage, GT includes DB11 and DBS, Other
includes prior generation models such as Rapide AMR
Summary financials
GBPm Q1-22 Q1-21 Q2-22 Q2-21 H1-22 H1-21
-------- ------- -------
Total wholesale volumes(1) 1,168 1,353 1,508 1,548 2,676 2,901
Revenue 232.7 224.4 309.0 274.4 541.7 498.8
Gross profit 84.0 63.3 104.1 80.0 188.1 143.3
Gross margin 36.1% 28.2% 33.7% 29.2% 34.7% 28.7%
Adjusted EBITDA 24.4 20.7 34.2 28.1 58.6 48.8
Adjusted EBITDA margin 10.5% 9.2% 11.1% 10.2% 10.8% 9.8%
Adjusted operating
loss (34.3) (15.3) (38.4) (20.7) (72.7) (36.0)
Adjusted operating n.m. n.m. n.m. n.m. n.m. n.m.
margin
Adjusting operating
items (13.4) - (3.8) (2.0) (17.2) (2.0)
Adjusting financing
items 10.8 5.4 13.6 8.6 24.4 14.0
Operating loss (47.7) (15.3) (42.2) (22.7) (89.9) (38.0)
Loss before tax (111.6) (42.2) (173.8) (48.5) (285.4) (90.7)
-------- ------- -------- ------- -------- -------
Note: For definition of alternative performance measures please
see the Appendices and note 17 of the Interim Financial Statements;
(1) Number
of vehicles including specials
Summary cash flow statement
GBPm Q1-22 Q1-21 Q2-22 Q2-21 H1-22 H1-21
------- ------- -------- -------
Cash generated from/(used
in) operating activities 43.2 72.2 (76.3) 31.6 (33.1) 103.8
Cash used in investing
activities (excl. interest) (66.7) (47.6) (71.5) (43.4) (138.2) (91.0)
Net interest paid (1.9) (0.4) (60.6) (56.7) (62.5) (57.1)
------- ------- -------- ------- -------- -------
Free cash (outflow)/inflow (25.4) 24.2 (208.4) (68.5) (233.8) (44.3)
Cash inflow/(outflow)
from financing activities
(excl. interest) 5.9 64.4 (46.9) (2.0) (41.0) 62.4
------- ------- -------- ------- -------- -------
(Decrease)/increase
in net cash (19.5) 88.6 (255.3) (70.5) (274.8) 18.1
------- ------- -------- ------- -------- -------
Effect of exchange rates
on cash & cash equivalents 4.4 (2.6) 7.7 0.7 12.1 (1.9)
Cash balance 403.8 575.4 156.2 505.6 156.2 505.6
------- ------- -------- ------- -------- -------
Alternative Performance Measure
GBPm H1 2022 H1 2021
--------
Loss before tax (285.4) (90.7)
Adjusting operating expense 17.2 2.0
Adjusting finance (income) (24.4) (14.0)
Adjusted EBT (292.6) (102.7)
Adjusted finance (income) (1.2) (10.7)
Adjusted finance expense 221.1 77.4
Adjusted o perating loss (72.7) (36.0)
Reported depreciation 38.2 28.8
Reported amortisation 93.1 56.0
Adjusted EBITDA 58.6 48.8
--------
Alternative performance measures
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"). APMs
should be considered in addition to IFRS measurements. The
Directors believe that these APMs assist in providing useful
information on the underlying performance of the Group, enhance the
comparability of information between reporting periods, and are
used internally by the Directors to measure the Group's
performance.
-- Adjusted operating loss is loss from operating activities before adjusting items
-- Adjusted EBITDA removes depreciation, loss/(profit) on sale
of fixed assets and amortisation from adjusted operating loss
-- Adjusted operating margin is adjusted operating (loss)/profit divided by revenue
-- Adjusted EBITDA margin is adjusted EBITDA (as defined above) divided by revenue
-- Adjusted Earnings Per Share is loss after income tax before
adjusting items, divided by the weighted average number of ordinary
shares in issue during the reporting period
-- Net Debt is current and non-current borrowings in addition to
inventory financing arrangements, lease liabilities recognised
following the adoption of IFRS 16, less cash and cash equivalents
and cash held not available for short-term use
-- Free cashflow is represented by cash (outflow)/inflow from
operating activities plus the cash used in investing activities
(excluding interest received) plus interest paid in the year less
interest received.
Principal risks and uncertainties
The principal risks and uncertainties that could substantially
affect the Group's business and results were previously reported on
pages 40 to 42 of the 2021 Annual Report and Accounts. Our Board
and Management team have reassessed the risk environment as at 30
June 2022 to consider any significant changes to the Group's risk
assessment including any new and emerging risks and
opportunities.
There have not been any significant changes to the principal
risks previously disclosed within the 2021 Annual Report and
Accounts and the principal risks and uncertainties that the Group
faces for the second half of the year are consistent with those
previously reported as summarised below.
Strategic risks
Macroeconomic uncertainty and political instability: The Group
operates in the ultra-luxury segment (ULS) vehicle market and
accordingly its performance is linked to market conditions and
consumer demand in that market. Sales of ULS vehicles are affected
by general economic conditions and can be materially affected by
the economic cycle. Demand for luxury goods, including ULS
vehicles, is volatile and depends to a large extent on the general
economic, political, and social conditions in a given market.
Furthermore, economic slowdowns in the past have significantly
affected the automotive and related markets. Periods of
deteriorating general economic conditions may result in a
significant reduction in ULS vehicle sales, which may put downward
pressure on the Group's product and service prices and volumes, and
negatively affect profitability. These effects may have a more
pronounced effect on the Group's business, due to the relatively
small scale of its operations and its limited product range.
Political change has the potential to directly affect the Group
through the introduction of new laws (including tax and
environmental laws) or regulations or indirectly by altering
customer sentiment. Government policy in areas such as trade and
the environment also have the opportunity to impact the business
through the introduction of new barriers, for example in relation
to the trade between the United Kingdom and the European Union or
through changes in emissions legislation. Any future change in
government in both the United Kingdom and the Group's key markets
could have an impact on the Group due to changes in policy,
legislation, or regulatory interpretation.
In February 2022, Russia launched an invasion of Ukraine and in
response to this invasion, a large number of countries imposed
severe sanctions on Russia (including certain Russian entities and
individuals) and a large number of private companies have also
voluntarily ceased operating in, or doing business with, Russia.
Examples of such sanctions include a prohibition on doing business
with certain Russian companies, large financial institutions,
officials and oligarchs and a commitment by certain countries and
the European Union to remove selected Russian banks from the
Society for Worldwide Interbank Financial Telecommunications
(SWIFT), the electronic banking network that connects banks
globally. Many companies have also announced the cessation of their
Russian businesses and/or their unwillingness to retain interests
in Russian assets or to continue dealings with Russian or related
counterparties, even where such action is not required by current
sanction regimes. The scope and scale of such economic sanctions
and voluntary actions by companies remain subject to rapid and
unpredictable change and may have considerable negative impacts on
global macroeconomic conditions and on European economies and
counterparties. In particular, Russia's invasion of Ukraine has
impacted and is expected to continue to impact energy prices and
energy supply in Europe, which has significant dependence on
Russian natural gas and on crude oil. Moreover, existing concerns
about market volatility, rising commodity prices (such as metals),
disruptions to supply chains, high rates of inflation and the risk
of regional or global recessions or "stagflation" (i.e., recession
or reduced rates of economic growth coupled with high rates of
inflation) have been exacerbated by Russia's invasion of Ukraine.
As a result of these sanctions and conditions, the Group has paused
vehicle and parts shipments to Russia and the Ukraine, which
represented less than 1 per cent. of the Group's total wholesales
in the year ended 31 December 2021. None of the Group's Tier 1
suppliers are based in Russia or Ukraine. As at the date of this
document, the war in Ukraine continues. As the situation continues
to evolve, the Group is unable to predict the ultimate impacts that
the war and the resulting sanctions will have on the global
financial markets and economy more generally, but such impacts
could include those discussed in this risk. If the conflict is
prolonged, escalates or expands (including if additional countries
become involved), or if
additional economic sanctions or other measures are imposed, or
if volatility in commodity prices or disruptions to supply chains
worsen, regional and global macroeconomic conditions and financial
markets could be impacted more severely, which in turn could have a
more severe effect on the Group's business, financial condition,
results and the value of its assets.
Damage to our brand image (luxury and exclusivity) or
reputation: The Group's success depends on the preservation and
enhancement of our brand and reputation with ultra-luxury
consumers. Damage caused by any reason (e.g. poor customer
experience, poor design, quality issues, late delivery) could
significantly impact our ability to deliver planned volume growth.
We promote brand awareness and identity through our marketing
activity, leveraging the global reach of the Aston Martin Aramco
Cognizant Formula One(TM) Team. The successful rebalance of
GT/Sport supply to demand combined with our return to the 'build to
order' strategy is controlling supply to drive brand exclusivity.
Investment in new technology combined with delivery of our
three-pillar strategy will further enhance the appeal of the brand
and increase our customer base.
Technological advancement: To remain competitive the Group needs
to incorporate the latest technologies (e.g. electrification,
active safety, connected car, autonomous driving) into its products
and keep pace with the transition to electrified and lower emission
powertrains. Strategic agreements with key suppliers provide access
to technology that may otherwise be too costly to develop
internally.
Operational risks
Talent acquisition and retention: The Group's future success
depends substantially on the continued service and performance of
the members of its senior management team for running its daily
operations, as well as planning and executing its strategy. The
Group is also dependent on its ability to retain and replace its
design, engineering, and technical personnel so that the Group is
able to continue to produce vehicles that are competitive in terms
of performance, quality, and aesthetics. There is strong
competition worldwide for experienced senior management and
personnel with technical and industry expertise. If the Group loses
the services of its senior management or other key personnel, the
Group may have difficulty and incur additional costs in replacing
them. If the Group is unable to find suitable replacements in a
timely manner, its ability to realise its strategic objectives
could be impaired. In addition, the Group's ability to realise its
strategic objectives could also be impaired if the Group is unable
to recruit sufficient numbers of new personnel of the right calibre
and with the required skills and capabilities to support its
strategic objectives.
Programme delivery: Failure to deliver major programmes on time,
within budget and to the right technical specification could
jeopardise delivery of our strategy leading to adverse financial
and reputational consequences. The Group employs Project Management
teams to deliver significant programmes using our 'Mission'
programme delivery governance methodology. In 2021 we relocated
production for all sports cars (including Valkyrie and V12
Speedster) to the main production facility in Gaydon and assigned
dedicated project delivery teams to manage these programmes through
to completion.
Achieving financial and cost-reduction targets: The Group's
ability to successfully implement its strategy will depend on, at
least in part, its ability to achieve its financial targets as well
as to maintain capital expenditures without limiting its ability to
introduce new vehicles in line with changes in trends and advances
in technology. Market conditions and trends change over time and
may be particularly affected by macroeconomic factors, including
high rates of inflation, increasing interest rates, rising
commodity prices and the risk of regional or global recessions or
"stagflation" (i.e., recession or reduced rates of economic growth
coupled with high rates of inflation). In addition, the war in
Ukraine and the COVID-19 pandemic may provide challenges to the
Board's ability to implement its business plan or require it to
re-consider it or adopt new strategies. Major events with an impact
on the Group's business like the war in Ukraine and the COVID-19
pandemic, including further variants or "waves," may result in a
diversion of management attention and require the Group to focus on
preserving liquidity rather than implementing its business plan. An
inability to achieve these goals, or to achieve them only in part
or later than expected, could result in increased costs, damage to
the Aston Martin brand, decreased sales, elevated levels of Group
or dealer stocks and/or liquidity constraints, any of which could
have a material adverse effect on the Group's business, financial
condition and results of operations.
Cyber security and IT resilience: The increasing threat of
cyberattack presents risk to the availability, confidentiality and
integrity of information and IT-supported operating systems. A
cybersecurity breach could result in unplanned system outage,
impacting core operations and/or result in a major data loss
leading to reputational damage and financial loss. A robust
technology environment is critical to the Group's success and
operational resilience. The Group is investing in tools and
resources to enhance the control environment and reduce the risk of
core business operational disruption or major data loss. The phased
implementation of a new ERP system through 2022 will improve the
operational resilience of our IT environment.
Supply chain disruption: The Group's dependence on a limited
number of suppliers exposes the Group to the risk of increased
material costs due to suppliers' pricing power, limited
availability and disrupted delivery schedules, including as a
result of the effects of the COVID-19 pandemic and ongoing global
supply chain issues, and the risk of the quality of the products
produced by that supplier declining. If one or more of the Group's
suppliers becomes unable or unwilling to fulfil its delivery
obligations, or is unable to supply products of the requisite
quality for any reason (including favouring other purchasers due to
better pricing or volume, financial difficulties, damage to
production, transportation difficulties, labour disruption, supply
bottlenecks of raw materials and pre-products, natural disasters,
COVID-19 and other pandemics, the war in Ukraine and other wars,
terrorism or political unrest), there is a risk that the Group's
ability to produce vehicles or the quality of its vehicles could be
negatively affected, which could adversely affect demand for its
vehicles.
Compliance risks
Compliance with laws and regulations: The Group is subject to a
broad range of national and regional laws and regulations which
include vehicle emissions, fuel consumption, tariffs, safety and
certification, competition, health and safety, data protection,
corporate governance, employment, and taxation. Changes to laws and
regulations or a major compliance breach could have a material
impact on the business. As emissions regulations become
increasingly stringent the Group continues to invest in product
portfolio expansion to accelerate its transition towards
electrified powertrains and reduced emissions. The Group also
requires all employees to complete annual re-certification training
in its Standards of Corporate Conduct to promote good business
practice and compliance.
Climate Change risks
Climate change - There are a number of significant transition
and physical risks associated with the impact of climate change
which could significantly impact demand for the Group's vehicles,
or the Group's ability to sell vehicles within certain markets or
have financial consequences through potential increased carbon
pricing and taxes.
Transitioning to a lower-carbon economy poses the most
significant climate related risk with the Group being exposed
to:
-- Policy and legal risk: Capital and operating expenses required in order to comply with environmental laws and regulations can be significant. New policy actions and/or legislation changes relating to environmental matters, such as the implementation of carbon pricing mechanisms to reduce green house gas (GHG) emissions or the imposition of more stringent vehicle emissions regulations, could give rise to significant costs.
-- Technology risk: New technologies that support the transition
to a lower-carbon, energy-efficient economic system, including the
increasing demand for lower emission vehicles and electrified
powertrains, could have a significant impact on the Group. The
Group many be unable to develop lower capacity and fully electric
vehicles successfully, as quickly as its competitors or at a
reasonable cost.
-- Market risk: Customer preferences may change more quickly
than anticipated away from traditional internal combustion engines
(ICEs) towards alternative non-ICE powertrains (e.g. plug-in hybrid
electric vehicle, battery electric vehicles, Hydrogen, Synthetic
fuels). This could significantly affect demand for the Group's
products. Increasing consumer awareness around sustainability and
the resultant desire to buy products which use sustainable
materials may adversely impact demand for the Group's products.
-- Reputation risk: Customers and communities are increasingly
concerned with an organisation's contribution to or detraction from
the transition to a lower-carbon economy. If the Group does not
deliver on its net-zero goals, sustainability targets, the
production of hybrid and fully-electric models or does not
otherwise demonstrate its commitment to reducing its impact on
climate change, this could have a material adverse effect on the
Group.
Physical risks resulting from climate change can be event driven
(such as an extreme weather event) or longer-term shifts in climate
patterns (such as global warming). Increased frequency and severity
of extreme weather events could lead to damage to assets and/or
facilities or lead to production or supply chain disruption. In
each case, this could have a material adverse effect on the Group's
business, financial condition, and results of operations.
Financial risks
Liquidity: The Group's significant leverage and existing levels
of debt may make it difficult to obtain additional debt financing
should the need arise due to unforeseen economic shocks. Failure to
collect planned deposits could place additional stress on the
Group's liquidity. The Group's liquidity requirements arise
primarily from its need to fund capital expenditure for product
development, including the electrification of its product
portfolio, and to service debt. The Group is also subject to
foreign exchange risks and opportunities and manages its exposure
in accordance with the Group Hedging Policy.
Impairment of capitalised development costs: The Group's balance
sheet and income statement may be adversely impacted by an
impairment in the carrying value of capitalised development costs.
A significant reduction in vehicle lifecycle profitability could
result in the need to impair the capitalised development intangible
asset. Where potential impairment triggers are identified
management perform assessments to evaluate the recoverability of
capitalised development costs.
The risks and opportunities summarised above, linkage to the
Group's strategy, and additional mitigating actions taken in
respect of them, are explained and described in more detail on
pages 40 to 42 of the 2021 Annual Report and Accounts.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Adjusting Adjusting Adjusting
Notes Adjusted items* Total Adjusted items* Total Adjusted items* Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ------ --------- ---------- --------- --------- ---------- -------- --------- ---------- ---------
Revenue 2 541.7 - 541.7 498.8 - 498.8 1,095.3 - 1,095.3
Cost of sales (353.6) - (353.6) (355.5) - (355.5) (751.6) - (751.6)
--------- ---------- --------- --------- ---------- -------- --------- ---------- ---------
Gross profit 188.1 - 188.1 143.3 - 143.3 343.7 - 343.7
Selling and
distribution
expenses (51.9) - (51.9) (35.1) - (35.1) (84.8) - (84.8)
Administrative
expenses 3 (208.9) (17.2) (226.1) (144.2) (2.0) (146.2) (333.2) (2.2) (335.4)
--------- ---------- --------- --------- ---------- -------- --------- ---------- ---------
Operating loss (72.7) (17.2) (89.9) (36.0) (2.0) (38.0) (74.3) (2.2) (76.5)
3,
Finance income 4 1.2 24.4 25.6 10.7 14.0 24.7 2.3 34.1 36.4
Finance expense 5 (221.1) - (221.1) (77.4) - (77.4) (173.7) - (173.7)
--------- ---------- --------- --------- ---------- -------- --------- ---------- ---------
(Loss)/profit
before tax (292.6) 7.2 (285.4) (102.7) 12.0 (90.7) (245.7) 31.9 (213.8)
Income tax
(charge)/credit 6 (2.6) (1.8) (4.4) 6.3 13.3 19.6 16.2 8.3 24.5
--------- ---------- --------- --------- ---------- -------- --------- ---------- ---------
(Loss)/profit
for the period (295.2) 5.4 (289.8) (96.4) 25.3 (71.1) (229.5) 40.2 (189.3)
--------- ---------- --------- --------- ---------- -------- --------- ---------- ---------
(Loss)/profit for the period
attributable to:
Owners of the
group (290.0) (72.7) (191.6)
Non-controlling
interests 0.2 1.6 2.3
--------- -------- ---------
(289.8) (71.1) (189.3)
--------- -------- ---------
Other comprehensive
income
Items that will never be reclassified
to the Income Statement
Remeasurement of defined
benefit pension liability 6.1 2.4 3.8
Taxation on items that will never
be reclassified to the Income Statement (1.5) (0.6) (1.0)
Effect of change in rate of taxation - 6.8 6.0
Items that are or may be reclassified
to the Income Statement
Foreign exchange translation
differences 4.3 - 2.3
Fair value adjustment on cash flow
hedges (4.2) - (0.3)
Amounts recycled to the Income Statement
in respect of cash flow hedges (0.8) (2.1) (4.3)
Taxation on items that may be reclassified
to the Income Statement 1.3 0.5 1.2
Effect of change in rate of taxation - 0.1 -
--------- -------- ---------
Other comprehensive income for
the period, net of income tax 5.2 6.9 7.7
--------- -------- ---------
Total comprehensive loss for the
period (284.6) (64.2) (181.6)
--------- -------- ---------
Total comprehensive (loss)/income
for the period attributable to:
Owners of the
group (284.8) (65.8) (183.9)
Non-controlling
interests 0.2 1.6 2.3
--------- -------- ---------
(284.6) (64.2) (181.6)
--------- -------- ---------
Earnings per
ordinary share
Basic 7 (249.0p) (63.3p) (165.9p)
Diluted 7 (249.0p) (63.3p) (165.9p)
--------- -------- ---------
* Adjusting items are detailed in note 3.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Share Redemption Merger Capital Translation Hedge Retained Non-controlling Total
Capital Premium Reserve Reserve Reserve Reserve Reserve Earnings Interest Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
At 1 January 2022 11.6 1,123.4 9.3 143.9 6.6 2.7 6.7 (662.4) 18.6 660.4
Total
comprehensive
loss for the
period
(Loss)/profit for
the period - - - - - - - (290.0) 0.2 (289.8)
Other
comprehensive
income
Foreign currency
translation
differences - - - - - 4.3 - - - 4.3
Fair value
movement
- cash flow
hedges - - - - - - (4.2) - - (4.2)
Amounts recycled
to the Income
Statement
- cash flow
hedges - - - - - - (0.8) - - (0.8)
Remeasurement of
defined benefit
liability - - - - - - - 6.1 - 6.1
Taxation on other
comprehensive
income - - - - - - 1.3 (1.5) - (0.2)
Total other
comprehensive
income/(loss) - - - - - 4.3 (3.7) 4.6 - 5.2
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total
comprehensive
income/(loss)
for
the period - - - - - 4.3 (3.7) (285.4) 0.2 (284.6)
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Transactions with
owners, recorded
directly in
equity
Credit for the
period under
equity
settled
share-based
payments - - - - - - - 2.1 - 2.1
Tax on items
credited
to equity - - - - - - - (0.1) - (0.1)
Total
transactions
with owners - - - - - - - 2.0 - 2.0
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
At 30 June 2022 11.6 1,123.4 9.3 143.9 6.6 7.0 3.0 (945.8) 18.8 377.8
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Capital
Share Share Redemption Merger Capital Translation Hedge Retained Non-controlling Total
Capital Premium Reserve Reserve Reserve Reserve Reserve Earnings Interest Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
At 1 January 2021 11.5 1,108.2 9.3 144.0 6.6 0.4 10.9 (503.1) 16.3 804.1
Total
comprehensive
loss for the
period
(Loss)/profit for
the period - - - - - - - (72.7) 1.6 (71.1)
Other
comprehensive
income
Amounts recycled
to the Income
Statement
- cash flow
hedges - - - - - - (2.1) - - (2.1)
Remeasurement of
defined benefit
liability - - - - - - - 2.4 - 2.4
Effect of change
in rate of
taxation - - - - - - - 6.7 - 6.7
Taxation on other
comprehensive
income - - - - - - 0.5 (0.6) - (0.1)
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total other
comprehensive
(loss)/income - - - - - - (1.6) 8.5 - 6.9
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total
comprehensive
income/(loss)
for
the period - - - - - - (1.6) (64.2) 1.6 (64.2)
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Transactions with
owners, recorded
directly in
equity
Reclassification - 0.1 - (0.1) - - - - - -
Credit for the
period under
equity
settled
share-based
payments - - - - - - - 1.5 - 1.5
Effect of change
in rate of
taxation - - - - - - - 4.7 - 4.7
Tax on items
credited
to equity - - - - - - - 0.1 - 0.1
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total
transactions
with owners - 0.1 - (0.1) - - - 6.3 - 6.3
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
At 30 June 2021 11.5 1,108.3 9.3 143.9 6.6 0.4 9.3 (561.0) 17.9 746.2
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Capital
Share Share Redemption Merger Capital Translation Hedge Retained Non-controlling Total
Capital Premium Reserve Reserve Reserve Reserve Reserve Earnings Interest Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
At 1 January 2021 11.5 1,108.2 9.3 144.0 6.6 0.4 10.9 (503.1) 16.3 804.1
Total
comprehensive
loss for the year
(Loss)/profit for
the year - - - - - - - (191.6) 2.3 (189.3)
Other
comprehensive
income
Foreign currency
translation
differences - - - - - 2.3 - - - 2.3
Fair value
movement
- cash flow
hedges - - - - - - (0.3) - - (0.3)
Amounts recycled
to the Income
Statement
- cash flow
hedges - - - - - - (4.3) - - (4.3)
Remeasurement of
defined benefit
liability - - - - - - - 3.8 - 3.8
Effect of change
in rate of
taxation - - - - - - (0.8) 6.8 - 6.0
Tax on other
comprehensive
income - - - - - - 1.2 (1.0) - 0.2
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total other
comprehensive
income/(loss) - - - - - 2.3 (4.2) 9.6 - 7.7
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total
comprehensive
income/(loss)
for
the year - - - - - 2.3 (4.2) (182.0) 2.3 (181.6)
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Transactions with
owners, recorded
directly in
equity
Warrant options
exercised 0.1 15.1 - - - - - 14.8 - 30.0
Reclassification - 0.1 - (0.1) - - - - - -
Credit for the
year under
equity
settled
share-based
payments - - - - - - - 3.1 - 3.1
Effect of change
in rate of
taxation - - - - - - - 4.7 - 4.7
Tax on items
credited
to equity - - - - - - - 0.1 - 0.1
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
Total
transactions
with owners 0.1 15.2 - (0.1) - - - 22.7 - 37.9
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
At 31 December
2021 11.6 1,123.4 9.3 143.9 6.6 2.7 6.7 (662.4) 18.6 660.4
------------------ -------- -------- ----------- -------- -------- ------------ -------- --------- ---------------- --------
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at As at As at
30 June 30 June 31 December
Notes 2022 2021 2021
GBPm GBPm GBPm
------------------------------------- ------ --------- --------- -------------
Non-current assets
Intangible assets 1,392.6 1,362.0 1,384.1
Property, plant and equipment 352.6 381.3 355.5
Right-of-use assets 76.6 69.4 76.0
Trade and other receivables 2.3 0.7 2.1
Other financial assets - - 0.5
Deferred tax asset 6 157.3 143.7 156.4
--------- --------- -------------
1,981.4 1,957.1 1,974.6
Current assets
Inventories 307.6 202.4 196.8
Trade and other receivables 288.1 142.9 243.4
Income tax receivable 1.2 1.0 1.5
Other financial assets 11 9.2 8.1 7.3
9,
Cash and cash equivalents 10 156.2 505.6 418.9
--------- --------- -------------
762.3 860.0 867.9
--------- --------- -------------
Total assets 2,743.7 2,817.1 2,842.5
--------- --------- -------------
Current liabilities
Borrowings 62.3 118.0 114.3
Trade and other payables 842.8 609.1 721.0
Income tax payable 4.0 4.8 5.5
Other financial liabilities 15.4 69.9 34.8
Lease liabilities 7.4 10.8 9.7
Provisions 12 17.9 17.4 19.9
--------- --------- -------------
949.8 830.0 905.2
Non-current liabilities
Borrowings 11 1,221.5 1,041.6 1,074.9
Trade and other payables 9.2 6.0 9.8
Lease liabilities 94.6 88.4 93.7
Provisions 12 20.6 19.3 19.0
Employee benefits 13 68.8 85.4 78.7
Deferred tax liabilities 1.4 0.2 0.8
--------- --------- -------------
1,416.1 1,240.9 1,276.9
--------- --------- -------------
Total liabilities 2,365.9 2,070.9 2,182.1
--------- --------- -------------
Net assets 377.8 746.2 660.4
--------- --------- -------------
Capital and reserves
Share capital 14 11.6 11.5 11.6
Share premium 1,123.4 1,108.3 1,123.4
Merger reserve 143.9 143.9 143.9
Capital redemption reserve 9.3 9.3 9.3
Capital reserve 6.6 6.6 6.6
Translation reserve 7.0 0.4 2.7
Hedge reserve 3.0 9.3 6.7
Retained earnings (945.8) (561.0) (662.4)
--------- --------- -------------
Equity attributable to owners of
the group 359.0 728.3 641.8
Non-controlling interests 18.8 17.9 18.6
--------- --------- -------------
Total shareholders' equity 377.8 746.2 660.4
--------- --------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
Notes 2022 2021 2021
GBPm GBPm GBPm
Operating activities
Loss for the period (289.8) (71.1) (189.3)
Adjustments to reconcile loss for the period
to net cash inflow from operating activities
Tax charge/(credit) 6 4.4 (19.6) (24.5)
Net finance costs 195.5 52.7 137.3
Other non-cash movements 4.2 (3.1) (0.1)
Depreciation of property, plant and equipment 33.8 24.9 65.3
Depreciation of right-of-use assets 4.4 3.9 9.3
Amortisation of intangible assets 93.1 56.0 137.6
Difference between pension contributions
paid and amounts recognised in Income Statement (4.6) (5.4) (11.4)
(Increase)/decrease in inventories (104.6) 8.7 7.7
(Increase)/decrease in trade and other receivables (41.0) 40.1 (75.4)
Increase in trade and other payables 68.3 6.3 52.8
Increase in advances and customer deposits 10.4 7.0 70.7
Movement in provisions (1.8) (2.1) (0.2)
--------- --------- -------------
Cash (outflow)/inflow from operations (27.7) 98.3 179.8
(Increase)/decrease in cash held not available
for short-term use (0.2) 8.4 8.1
Income taxes paid (5.2) (2.9) (9.0)
--------- --------- -------------
Net cash (outflow)/inflow from operating
activities (33.1) 103.8 178.9
--------- --------- -------------
Cash flows from investing activities
Interest received 0.7 1.4 1.1
Increase in loan assets - (1.5) (1.4)
Decrease in loan assets - - 0.9
Payments to acquire property, plant and equipment (29.1) (24.7) (40.7)
Payments to acquire intangible assets (109.1) (64.8) (144.0)
--------- --------- -------------
Net cash used in investing activities (137.5) (89.6) (184.1)
--------- --------- -------------
Cash flows from financing activities
Interest paid (63.2) (58.5) (118.0)
Proceeds from issue of equity warrants - - 15.3
Principal element of lease payments 10 (6.4) (5.0) (9.9)
Repayment of existing borrowings 10 (52.3) (2.1) (37,3)
Proceeds from inventory repurchase arrangement 10 37.7 - 19.0
Repayment of inventory repurchase arrangement 10 (20.0) - (40.0)
New borrowings 10 - 77.0 108.5
Transaction fees on issuance of shares - (1.2) (1.3)
Transaction fees on financing activities - (6.3) (2.8)
--------- --------- -------------
Net cash (outflow)/inflow from financing
activities (104.2) 3.9 (66.5)
--------- --------- -------------
Net (decrease)/increase in cash and cash
equivalents (274.8) 18.1 71.7
Cash and cash equivalents at the beginning
of the period 418.9 489.4 489.4
Effect of exchange rates on cash and cash
equivalents 12.1 (1.9) 1.2
--------- --------- -------------
Cash and cash equivalents at the end of the
period 156.2 505.6 418.9
--------- --------- -------------
Notes to the Interim Condensed Financial Statements
1. Basis of preparation
The results for the 6 month period ended 30 June 2022 have been
reviewed by Ernst & Young LLP, the Group's auditor, and a copy
of their review report appears at the end of this interim report.
The financial information for the year ended 31 December 2021 does
not constitute statutory accounts as defined in section 435 of the
Companies Act 2006. The auditor's report on the statutory accounts
for the year ended 31 December 2021 was not qualified and did not
draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006. A copy of the statutory accounts for the year ended 31
December 2021 prepared in accordance with UK adopted international
accounting standards have been delivered to the Registrar of
Companies. The annual report for the year ended 31 December 2022
will be prepared in accordance with UK adopted international
accounting standards.
Aston Martin Lagonda Global Holdings plc (the "Company") is a
company incorporated and domiciled in the UK. The Consolidated
Interim Condensed Financial Statements of the Company as at the end
of the period ended 30 June 2022 comprise the Company and its
subsidiaries (together referred to as the 'Group').
Going Concern
The Group meets its day-to-day working capital requirements and
medium-term funding requirements through a mixture of $1,184.0m of
1st Lien notes at 10.5% which mature in November 2025, $335m of 2nd
Lien split coupon notes at 15% per annum (8.89% cash and 6.11% PIK)
which mature in November 2026, a revolving credit facility
(GBP90.6m) which matures August 2025, facilities to finance
inventory, a bilateral RCF agreement and a wholesale vehicle
financing facility. Under the revolving credit facility the Group
is required to comply with a leverage covenant tested quarterly
from June 2022 where required.
The directors have developed trading and cash flow forecasts
(that exclude the impact of the Capital Raise) for the period from
the date of approval of these Interim Condensed Financial
Statements through 31 March 2024 (the "going concern review
period"). These forecasts show that the Group has sufficient
financial resources to meet its obligations as they fall due and to
comply with covenants for the going concern review period. A longer
21 month period has been considered under this assessment compared
to a 16 month period used for the going concern assessment in the
consolidated financial statements for the year ended 31 December
2021.
The forecasts reflect the Group's strategy of rebalancing supply
and demand and the decisive actions taken to improve cost
efficiency, in alignment with the ultra-luxury performance-oriented
strategy. The forecasts include the costs of the Group's
environmental, social and governance ("ESG") commitments and make
assumptions in respect of future market conditions and, in
particular, wholesale volumes, average selling price, the launch of
new models, and future operating costs in light of recent
inflationary pressures. The nature of the Group's business is such
that there can be variation in the timing of cash flows around the
development and launch of new models. In addition, the availability
of funds provided through the vehicle wholesale finance facility
changes as the availability of credit insurance and sales volumes
vary, in total and seasonally. The forecasts take into account
these factors to the extent which the Group directors consider them
to represent their best estimate of the future based on the
information that is available to them at the time of approval of
these Interim Condensed Financial Statements.
The Group directors have considered a severe but plausible
downside scenario that includes considering the impact of a 25%
reduction in DBX volumes from forecast levels and operating costs
higher than the base plan.
The Group plans to make continued investment for growth in the
period and, accordingly, funds generated through operations are
expected to be reinvested in the business mainly through new model
development and other capital expenditure. To a certain extent such
expenditure is discretionary and, in the event of risks occurring
which could have a particularly severe effect on the Group, as
identified in the severe but plausible downside scenario, actions
such as constraining capital spending, working capital
improvements, reduction in marketing expenditure and the
continuation of strict and immediate expense control would be taken
to safeguard the Group's financial position.
In addition, the Group also considered the circumstances which
would be needed to exhaust the Group's liquidity over the
assessment period, a reverse stress test (before taking into
consideration the recently announced proposed Capital Raise). This
would indicate that total core vehicle sales (DBX and GT/Sports)
would need to reduce by more than 17% from forecast levels without
any of the above mitigations to result in having no liquidity. The
likelihood of management not taking substantial mitigating actions
over such a long period (such as reducing capital spending to
preserve liquidity) together with these circumstances occurring is
considered remote both in terms of the magnitude of the reduction
and occurrence over such a long period.
Additionally, the directors have considered the impact on the
going concern assessment of the proposed GBP653m Capital Raise
announced on 15 July 2022. If this Capital Raise is approved by
shareholders this will meaningfully deleverage the balance sheet
and provide a substantial additional liquidity cushion to underpin
and accelerate future capital expenditure.
Accordingly, after considering the forecasts, appropriate
sensitivities, current trading and available facilities, the
directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future and to comply with its financial covenants and, therefore,
the directors continue to adopt the going concern basis in
preparing the Interim Condensed Financial Statements.
Statement of compliance
These Interim Condensed Financial Statements have been prepared
in accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting" . They do not include all the
information required for full annual financial statements and
should be read in conjunction with the Consolidated Financial
Statements of the Group for the year ended 31 December 2021.
Significant accounting policies
These Interim Condensed Financial Statements have been prepared
applying the accounting policies and presentation that were applied
in the preparation of the Group's published Consolidated Financial
Statements for the year ended 31 December 2021. A number of new or
amended standards became applicable for the current reporting
period and that the Group did not have to change its accounting
policies or make retrospective adjustments as a result of adopting
these standards. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective. The significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2021.
2. Segmental information
Operating segments are defined as components of the Group about
which separate financial information is available and is evaluated
regularly by the chief operating decision-maker in assessing
performance. The Group has only one operating segment, the
automotive segment, and therefore no separate segmental report is
disclosed. The automotive segment includes all activities relating
to design, development, manufacture and marketing of vehicles
including consulting services; as well as the sale of parts,
servicing and automotive brand activities from which the Group
derives its revenues.
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Revenue GBPm GBPm GBPm
-------------------------------------- --------- --------- -------------
Analysis by category
Sale of vehicles 499.6 458.5 1,005.4
Sale of parts 32.9 32.2 65.5
Servicing of vehicles 5.0 5.1 10.6
Brands and motorsport 4.2 3.0 13.8
--------- --------- -------------
541.7 498.8 1,095.3
--------- --------- -------------
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Revenue GBPm GBPm GBPm
-------------------------------------- --------- --------- -------------
Analysis by geographic location
United Kingdom 98.6 89.9 231.3
The Americas 139.6 154.3 302.7
Rest of Europe, Middle East & Africa 138.9 106.8 233.8
Asia Pacific 164.6 147.8 327.5
--------- --------- -------------
541.7 498.8 1,095.3
--------- --------- -------------
3. Adjusting items
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
---------------------------------------------------- --------- --------- ------------------
ERP implementation costs(1) (1.2) (1.9) (4.0)
Defined Benefit pension scheme closure costs(2) (13.0) - -
Director settlement and incentive arrangements(3) (3.0) - -
Restructuring costs(4) - 0.5 2.4
Lease early exit costs(5) - (0.6) (0.6)
(17.2) (2.0) (2.2)
Adjusting finance income:
Gain on financial instruments recognised at
fair value through Income Statement(6) 24.4 14.0 34.1
Adjusting items before tax 7.2 12.0 31.9
Tax charge on adjusting items(7) (1.8) - (8.1)
Tax credit due to remeasurement of deferred tax
on previously classified adjusting items(7) - 13.3 16.4
--------- --------- ------------------
Adjusting items after tax 5.4 25.3 40.2
--------- --------- ------------------
1. In the 6 months ended 30 June 2022 the Group incurred further
implementation costs for a cloud-based Enterprise Resource Planning
(ERP) system for which the Group will not own any Intellectual
Property. GBP1.2m of costs have been incurred in the period under
the service contract and expensed to the Income Statement. The
project will be ongoing during 2022 for the remaining functions of
the Group following the successful migration of the finance
function in January 2022. Due to the infrequent recurrence of such
costs and the expected quantum during the implementation phase,
these have been separately presented as adjusting. The cash impact
of this item is a working capital outflow at the time of invoice
payment.
2. On the 31 January 2022, the Group closed its defined benefit
pension scheme to future accrual incurring a past service cost of
GBP2.8m. Under the terms of the closure agreement, employees were
granted cash payments both in the current year and the following
two financial years totalling GBP8.8m. These costs have been fully
accrued as at 30 June 2022. In addition, the affected the employees
were each granted 185 shares incurring a share-based payment charge
of GBP0.9m. The terms of the agreement provide the employees with a
minimum guaranteed value for these shares subject to their ongoing
employment with the Group. The Group will pay the employees a
further cash sum if the share price at 1 February 2024 does not
meet this value. The charge associated with this portion is GBP0.5m
in the 6 months ended 30 June 2022. Further costs are expected
under this guarantee until the liability crystalises in February
2024. The Group will continue to present these costs in adjusting
items due to their volatile nature and connection with the closure
of the pension scheme which is considered a non-recurring
event.
3. On 14 January 2022 it was announced that Doug Lafferty would
be joining the Group as Chief Financial Officer replacing Ken
Gregor who stepped down from the Board on 1 May 2022. On 4 May it
was announced that Tobias Moers would be stepping down as Chief
Executive Officer and Chief Technical Officer. Amedeo Felisa was
appointed as Chief Executive Officer and Roberto Fedeli was
appointed as Chief Technical Officer on the same day. Amounts due
as a result of these changes totalled GBP3.0m. Due to the quantum
of such costs incurred in the period, they have been separately
presented. The cash outflows associated with this expense are
expected to be incurred within a period of 12 months.
4. The Group launched a consultation process during 2020 to
reduce employee numbers reflecting lower than originally planned
production volumes. A revision to the estimated total costs took
place during 2021 resulting in GBP2.4m of the existing provision
being released to the Income Statement. The remaining provision has
been fully utilised as at 30 June 2022. There was no cash impact
associated with the GBP2.4m provision release.
5. In the year ended 31 December 2021 the Group continued to
rationalise its geographical footprint. The Group incurred GBP0.6m
of costs associated with surrendering a lease 30 months early. The
cash flow impact of these changes will be incurred during 2022 and
the first half of 2023.
6. During 2020 the Group issued second lien Senior Secured Notes
which included detachable warrants classified as a derivative
option liability. The movement in fair value of the warrants
between 31 December 2021 and 30 June 2022 resulted in a gain of
GBP24.4m being recognised in the Income Statement (6 months ended
30 June 2021: gain of GBP14.0m; 12 months ended 31 December 2021:
GBP34.1m). This item has no cash impact.
7. In the period to 30 June 2022 a total tax charge of GBP1.8m
has been recognised on Adjusting items (6 months ended 30 June
2021: GBP13.3m tax credit; 12 months ended 31 December 2021:
GBP8.3m tax credit). The effective tax rate on the Adjusting items
is primarily higher than the standard rate of corporation tax in
the UK of 19% due to deferred tax movements on Adjusting items
being measured at 25%.
4. Finance income
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
---------------------------------------------------- --------- --------- -------------
Bank deposit and other interest income 1.2 1.4 2.3
Foreign exchange gain on borrowings not designated - 9.3
as part of a hedging relationship -
--------- --------- -------------
Finance income before adjusting items 1.2 10.7 2.3
Adjusting finance income (note 3) 24.4 14.0 34.1
--------- --------- -------------
25.6 24.7 36.4
--------- --------- -------------
5. Finance expense
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
---------------------------------------------------- --------- --------- -------------
Bank loans, overdrafts and secured notes 80.4 72.4 151.3
Net interest expense on the net defined benefit
liability 0.7 0.7 1.3
Foreign exchange loss on borrowings not designated
as part of a hedging relationship 134.1 - 12.4
Interest on contract liabilities held 3.9 2.4 4.8
Interest on lease liabilities 2.0 1.9 3.9
Total finance expense 221.1 77.4 173.7
--------- --------- -------------
6. Income tax charge
The Group's total income tax charge for the period to 30 June
2022 is GBP4.4m (period ended 30 June 2021: GBP19.6m tax credit)
which represents an effective tax rate of
-1.5% (period ended 30 June 2021: 21.6%). The difference between
the total effective tax rate of -1.5% and the UK statutory rate of
19% is predominantly due to deferred tax balances not being
recognised on asset movements generated in the period to 30 June
2022. GBP108.9m of the GBP157.3m Deferred Tax asset relates to
unused tax losses. Deferred tax assets on unused tax losses have
been recognised to the extent that it is probable that sufficient
taxable profits will be generated to utilise these losses based
upon the current business plan.
7. Earnings per ordinary share
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
Continuing and total operations 2022 2021 2021
---------------------------------------------------- --------- --------- -------------
Basic earnings per ordinary share
Loss available for equity holders (GBPm) (290.0) (72.7) (191.6)
Basic weighted average number of ordinary shares
(million) 116.5 114.9 115.5
Basic earnings per ordinary share (pence) (249.0p) (63.3p) (165.9p)
Diluted earnings per ordinary share
Loss available for equity holders (GBPm) (290.0) (72.7) (191.6)
Diluted weighted average number of ordinary shares
(million)(1) 116.5 114.9 115.5
Diluted earnings per ordinary share (pence) (249.0p) (63.3p) (165.9p)
--------- --------- -------------
1 The impact of ordinary shares issued as part of the Long-term
incentive plans ("LTIP"), the potential number of ordinary shares
issued as part of the 2020 issue of share warrants, and the future
issue of shares for access to Mercedes-Benz AG technology have been
excluded from the weighted average number of diluted ordinary
shares as including them is anti-dilutive in arriving at diluted
earnings per share.
8. Research and Development expenditure
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
-------------------------------------------------- --------- --------- -------------
Total research and development expenditure 113.9 84.6 191.2
Capitalised research and development expenditure (106.1) (80.5) (178.2)
--------- --------- -------------
Research and development expenditure recognised
as an expense during the period 7.8 4.1 13.0
--------- --------- -------------
9. Net debt
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
----------------------------------------------- ---------- ---------- ------------
Cash and cash equivalents 156.2 505.6 418.9
Cash held not available for short-term use(1) 2.0 1.5 1.8
Bank loans and overdrafts(2) (62.3) (118.0) (114.3)
Inventory repurchase arrangements(3) (38.8) (39.8) (19.7)
Senior Secured Notes (1,221.5) (1,041.6) (1,074.9)
Lease liabilities (102.0) (99.2) (103.4)
(1,266.4) (791.5) (891.6)
---------- ---------- ------------
1. At 30 June 2022 GBP2.0m (30 June 2021: GBP1.5m; 31 December
2021: GBP1.8m) held in certain local bank accounts had been frozen
in relation to a number of local arbitration proceedings. The cash
held in these accounts did not meet the definition of cash and cash
equivalents and therefore was classified as an other financial
asset.
2. At 30 June 2022 GBP34.0m of the GBP90.6m revolving credit
facility was drawn down in cash (30 June 2021: GBP78.6m of GBP90.6m
facility, 31 December 2021: GBP80.0m of GBP90.6m facility). GBP6.6m
of the remaining facility has been utilised through the issuance of
letters of credit and guarantees (30 June 2021: GBP12.0m of the
remaining facility was utilised; 31 December 2021: GBP5.9m was
utilised). The loan is presented net of amortised transaction fees
of GBP1.7m (30 June 2021: GBP2.2m; 31 December 2021: GBP2.0m).
At 30 June 2022, the Group held a bilateral revolving credit
facility with HSBC Bank plc ("HSBC"), whereby Chinese renminbi with
an initial value of GBP31.9m were deposited in a restricted account
with HSBC in China in exchange for a GBP30.0m sterling overdraft
facility with HSBC in the United Kingdom. The restricted cash has
been revalued at 30 June 2022 to GBP33.6m (December 2021: GBP33.0m)
and is shown in the cash and cash equivalents value above. The cash
in China cannot be withdrawn whilst the loan remains in place. At
30 June 2021, the Group held a one-year back-to-back loan
arrangement with HSBC whereby Chinese renminbi to a value at the
time of GBP34.4m had been deposited in a restricted account with
HSBC in China in exchange for a sterling overdraft facility with
HSBC in the United Kingdom. The restricted cash was revalued at 30
June 2021 to GBP36.1m. The back-to-back loan was fully repaid in
2021.
In 2018 the Group entered into a fixed rate loan to finance the
construction of the paint shop at the new St Athan manufacturing
facility. The loan matured on 31 March 2022 and no balance is
outstanding. At 30 June 2021 the amount outstanding of GBP7.8m was
all classified as current; 31 December 2021 GBP6.3m current.
3. At 30 June 2022 a repurchase liability of GBP38.8m including
accrued interest of GBP1.1m was included within accruals and other
payables and Net Debt relating to parts for resale, service parts
and production stock which were sold in 2022 and subsequently
repurchased. Under the repurchase agreement, which has a repayment
date of December 2022, the Group will repay GBP40m gross of
indirect tax. As part of this arrangement legal title to the parts
was surrendered, however control remained with the Group. This
repurchase arrangement will be fully settled in 2022. As at 30 June
2021 a similar arrangement existed and had a carrying value of
GBP39.8m which included accrued interest of GBP1.9m. This
arrangement was fully settled during 2021. At 31 December 2021, a
similar arrangement existed with a carrying value of GBP19.7m
including accrued interest of GBP0.7m. This arrangement totalling
GBP20.0m was fully repaid in March 2022.
10. Movement in net debt
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------------------ --------------- -------- ------------
Movement in net debt
Net (decrease)/increase in cash and cash equivalents (262.7) 16.2 (70.5)
Add back cash flows in respect of other components
of net debt:
New borrowings - (77.0) (108.5)
Proceeds from inventory repurchase arrangement (37.7) - (19.0)
Movement in cash held not available for short-term
use 0.2 (8.4) (8.1)
Repayment of existing borrowings 52.3 2.1 37.3
Repayment of inventory repurchase arrangement 20.0 - 40.0
Lease liability payments 6.4 5.0 9.9
Transaction fees - 1.7 1.9
--------------- -------- ------------
Increase in net debt arising from cash flows (221.5) (60.4) (117.0)
Non-cash movements:
Foreign exchange (loss)/gain on secured loan (134.1) 9.3 (12.4)
Interest added to debt (9.7) (9.1) (13.4)
Unpaid transaction fees - 0.2 -
Borrowing fee amortisation (4.4) (2.7) (7.5)
Lease liability interest charge (2.0) (1.9) (3.9)
Lease modifications (2.8) (2.1) 0.4
New leases (1.4) (0.1) (11.5)
Exchange and other adjustments 1.1 2.0 0.4
--------------- -------- ------------
Increase in net debt (374.8) (64.8) (164.9)
Net debt at beginning of the year/period (891.6) (726.7) (726.7)
--------------- -------- ------------
Net debt at the end of the year/period (1,266.4) (791.5) (891.6)
--------------- -------- ------------
11. Financial Instruments
The following tables provide an analysis of financial
instruments grouped into Levels 1 to 3 based on the degree to which
the value is observable. There were no transfers between levels
during the current and comparative periods.
30 June 2022 30 June 2021 31 December 2021
Nominal Book Fair Nominal Book Fair Nominal Book Fair
Value Value Value Value Value Value Value Value Value
Included in assets GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Level 2
Forward foreign exchange
contracts - 2.1 2.1 - 0.7 0.7 - 0.6 0.6
Loan assets 1.4 1.4 1.4 1.5 1.4 1.4 2.1 2.1 2.1
Level 3
Other derivative contracts - 3.7 3.7 - 4.5 4.5 - 3.3 3.3
-------- -------- -------- -------- -------- -------- -------- -------- --------
1.4 7.2 7.2 1.5 6.6 6.6 2.1 6.0 6.0
-------- -------- -------- -------- -------- -------- -------- -------- --------
30 June 2022 30 June 2021 31 December 2021
Nominal Book Fair Nominal Book Fair Nominal Book Fair
Value Value Value Value Value Value Value Value Value
Included in liabilities GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Level 1
$1,184.0m 10.5% US Dollar
1(st) Lien Notes 976.3 957.7 896.9 857.4 833.6 958.3 874.2 852.5 959.4
$366.1m 15.0% US Dollar
2(nd) Lien Split Coupon
Notes* 301.9 263.8 272.6* 242.6 208.0 272.6 262.3* 222.4 302.3*
Level 2
Forward foreign exchange
contracts - 5.9 5.9 - 1.1 1.1 - 0.8 0.8
Derivative option over
own shares 48.1 6.6 6.6 63.3 65.9 65.9 48.1 31.0 31.0
1,326.3 1,234.0 1,182.0 1,163.3 1,108.6 1,297.9 1,184.6 1,106.7 1,293.5
-------- -------- -------- -------- -------- -------- -------- -------- --------
*The fair value of the second lien notes as at 30 June 2022
includes $9.8m, $10.5m and $10.8m of PIK notes issued in April
2021, November 2021 and April 2022 respectively. The 31 December
2021 comparative for nominal value and fair value has been updated
to include these issuances. The issued PIK already forms part of
the book value at each reporting period and no change has been made
to the presentation of these numbers.
Under IFRS 7, such assets and liabilities are classified by the
way in which their fair value is calculated. The interest bearing
loans and borrowings are considered to be level 1 liabilities.
Forward foreign exchange contracts are considered to be level 2
assets and liabilities. Derivative options are considered to be
level 2 liabilities.
IFRS 13 defines each level as follows:
-- level 1 assets and liabilities have inputs observable through quoted prices;
-- level 2 assets and liabilities have inputs observable, other
than quoted prices, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); or
-- level 3 assets and liabilities as those with inputs not based
on observable market data.
The forward currency contracts are carried at fair value based
on pricing models and discounted cash flow techniques derived from
assumptions provided by third party banks.
Loan assets comprise amounts advanced to Velocitas Designated
Activity Company ("Velocitas"), the special purpose vehicle which
provides the Group's wholesale financing funding. The Group acts as
a senior and subordinated lender to Velocitas providing 5% of all
funding into Velocitas in order to comply with securitisation
rules. Amounts advanced to Velocitas comprise a long-term
subordinated loan repayable at the end of the facility once all
financed dealer debt is settled and a short-term senior loan which
fluctuates on a monthly basis depending on the level of financed
dealer debt. The subordinated loan advanced in 2021 is a
mixed-currency loan of GBP0.5m sterling equivalent which remains
outstanding at 30 June 2022 (30 June 2021: GBP0.9m loan; 31
December 2021: GBP0.5m sterling equivalent mixed-currency loan). At
30 June 2022, the senior loan amounted to GBP0.9m (30 June 2021:
GBP0.5m; 31 December 2021: GBP1.6m). The Group also has an interest
in a Profit Participating Loan of GBP0.1m which is carried at fair
value of GBPnil and receives interest only in the event that
Velocitas has positive retained earnings at the end of the
facility. The senior and subordinated loans are both held at
amortised cost.
Other derivative contracts comprises warrant options and
non-option derivatives both of which entitle the Group to subscribe
for equity in AMR GP Limited. The warrant options have a carrying
value of GBP3.4m as at 30 June 2022 (30 June 2021: GBP3.9m; 31
December 2021: GBP3.1m). The fair value movement is recognised
within the Income Statement in administrative expenses. A
corresponding liability was recognised on inception of the
arrangement which represents an accrual for that element of future
sponsorship payments. If the option is exercised within the next
five years the liability is extinguished in the year of exercise.
If the option is not exercised the liability will be subject to the
renewal of the sponsorship agreement and may continue for the
following five years.
The fair value of the warrant equity option above has been
established by applying the proportion of equity represented by the
derivative to an assessment of the enterprise value of AMR GP
Limited, which is then adjusted to reflect marketability and
control commensurate with the size of the investment. The
enterprise value has been estimated using a blend of measures
including an income-based approach and a market-based approach. Due
to the size of the potential investment, as a proportion of the
equity of AMR GP Limited, there are no plausible sensitivities
which would give rise to a material variation in the carrying value
of the derivative.
There is a further embedded derivative in the agreement in
respect of an additional economic interest in the equity of AMR GP
Limited which has been assessed as having a carrying value of
GBPnil at inception. This derivative entitles the Group to
subscribe for further share capital in AMR GP Limited in the event
that the sponsorship agreement is extended for a further five year
period. The fair value of this derivative is GBP0.3m (30 June 2021:
GBP0.6m; 31 December 2021: GBP0.2m) and movement in this derivative
is recognised within the Income Statement in administrative
expenses. The movement in the value of this derivative has been
estimated using the same method as the warrant equity option
disclosed above. There is no corresponding liability recorded as it
is a non-option embedded derivative.
The First and Second Lien Senior Secured Notes are all valued at
amortised cost retranslated at the year-end foreign exchange rate.
The fair value of these Notes at the current and comparative period
ends are determined by reference to the quoted price on The
International Stock Exchange Authority in St. Peter Port, Guernsey.
The fair value and nominal value exclude the impact of transaction
costs.
The derivative option over own shares reflects the detachable
warrants issued alongside the second lien Senior Secured Notes
enabling the warrant holders to subscribe for a number of Ordinary
Shares in the Company. The fair value is calculated using a
binomial model and updated at each period end reflecting the latest
market conditions. The inputs used in the valuation model include
the quoted share price, market volatility, exercise ratio, and
risk-free rate. The fair value movement in the option for the
period ended 30 June 2022 was GBP24.4m (30 June 2021: GBP14.0m; 31
December 2021: GBP34.1m) and is recognised within the Income
Statement in interest income as an adjusting item.
12. Provisions
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
--------------------- -------- -------- ------------
Warranty provision 38.5 33.4 38.5
Restructuring costs - 3.3 0.4
-------- -------- ------------
38.5 36.7 38.9
-------- -------- ------------
Current 17.9 17.4 19.9
Non-current 20.6 19.3 19.0
-------- -------- ------------
38.5 36.7 38.9
-------- -------- ------------
In the year ended 31 December 2020, the Group launched a
consultation process to reduce employee numbers reflecting lower
than originally planned production volumes resulting in an
exceptional charge to the Income Statement in 2020. The final
restructuring costs were incurred in the first half of 2022 and the
remaining provision is now fully utilised.
13. Pension Scheme
The net liability for defined benefit obligations of GBP78.7m at
31 December 2021 has decreased to a net liability of GBP68.8m at 30
June 2022. The movement of GBP9.9m comprises an actuarial gain of
GBP6.1m in addition to an underlying charge to the Income Statement
of GBP1.5m less contributions of GBP8.1m. On 6 January 2022 the
Group announced to employees the closure of the defined benefit
scheme to future accrual effective 31 January 2022. A past service
cost of GBP2.8m, which forms part of the movement in the net
liability, plus other closure costs of GBP10.2m have been incurred
in the period and classed as adjusting (note 3).
14. Share capital
30 June 2022 30 June 2021 31 December
2021
Number GBPm Number GBPm Number GBPm
----------------- ------------ ----- ------------ ----- ------------ -----
Ordinary shares 116,459,513 11.6 114,933,587 11.5 116,459,513 11.6
------------ ----- ------------ ----- ------------ -----
Movement in Ordinary shares:
On 15 July 2021 945,131 ordinary shares in the Company were
issued to satisfy the redemption of 18,902,665 warrant options.
GBP9.5m of cash was received for the shares. On 22 July 2021
330,795 ordinary shares in the Company were issued to satisfy the
redemption of 6,615,932 warrant options. GBP3.3m of cash was
received for the shares. On 11 December 2021 250,000 ordinary
shares in the Company were issued to satisfy the redemption of
5,000,003 warrant options. GBP2.5m of cash was received for the
shares.
15. Related party transactions
Transactions during 2022
During the 6 months ended 30 June 2022, a net marketing expense
amounting to GBP9.2m of sponsorship has been incurred in the normal
course of business with AMR GP Limited, an entity indirectly
controlled by a member of the Group's Key Management Personnel. AMR
GP and its legal structure is separate to that of the Group and the
Group does not have control or significant influence over AMR GP or
its affiliates. In addition, AMR GP acquired a car from the Group
at a total cost of GBP0.7m. Less than GBP0.1m remains due from AMR
GP Limited at 30 June 2022 relating to these transactions. Under
the terms of the sponsorship agreement the Group is required to
provide one fleet vehicle to the two AMR GP racing drivers free of
charge. This arrangement is expected to continue for the life of
the contract and is not expected to materially affect the financial
position and performance of the Group. One of the racing drivers is
an immediate family member of one of the Group's Key Management
Personnel.
A separate immediate family member of one of the Group's Key
Management Personnel purchased a vehicle from a Group company for
GBP0.2m. GBPnil is outstanding at 30 June 2022.
During the 6 months ended 30 June 2022, a separate member of the
Group's Key Management Personnel & Non-Executive Director
placed a deposit of GBP1.5m with a Group company for the future
purchase of a vehicle.
During the 6 months ended 30 June 2022, a further separate
member of the Group's Key Management Personnel & Non-Executive
Director transacted with a Group company to undertake service work
on a car for a total cost of less than GBP0.1m. GBPnil was
outstanding at 30 June 2022.
Transactions during 2021
During the year ended 31 December 2021, a net marketing expense
amounting to GBP21.5m of sponsorship was incurred in the normal
course of business with AMR GP Limited, an entity indirectly
controlled by a member of the Group's Key Management Personnel. AMR
GP and its legal structure is separate to that of the Group and the
Group does not have control or significant influence over AMR GP or
its affiliates. All balances between the two parties relating to
2021 have been settled. Under the terms of the sponsorship
agreement the Group is required to provide one fleet vehicle to the
two AMR GP racing drivers free of charge. This arrangement is
expected to continue for the life of the contract and is not
expected to materially affect the financial position and
performance of the Group. One of the racing drivers is an immediate
family member of one of the Group's Key Management Personnel.
During the year ended 31 December 2021, marketing transactions
under the normal course of business amounting to less than GBP0.1m
have been undertaken with Falcon Racing Inc, an entity controlled
by a member of the Group's Key Management Personnel. GBPnil is
outstanding from Falcon Racing Inc at 30 June 2022. During the year
ended 31 December 2021, design services of less than GBP0.1m were
provided to Flair Investment Holdings Limited, an entity in which a
member of a Key Management Personnel has an indirect ownership
interest. GBPnil is outstanding from Flair Investment Holdings
Limited at 30 June 2022. During the year ended 31 December 2021, a
member of Key Management Personnel transacted with a Group company
to undertake restoration work on a historic car. GBP0.3m has been
received by the Group with GBP0.3m of works being completed in the
year. GBPnil is outstanding at 30 June 2022. A member of Key
Management Personnel acquired three vehicles from a Group company
during the period each priced at GBP0.2m. GBPnil is outstanding at
30 June 2022. A member of Key Management Personal acquired one
historic vehicle from a Group Company during the period priced at
GBP0.5m. GBPnil is outstanding at 30 June 2022. A member of Key
Management Personnel placed a deposit of GBP1.5m with a Group
company for the future purchase of a vehicle. An immediate family
member of one of the Group's Key Management Personnel placed a
deposit of less than GBP0.1m with a Group company for the future
purchase of a vehicle.
Terms and conditions of transactions with related parties
Sales and purchases between related parties are made at normal
market prices unless otherwise stated. Outstanding balances with
entities other than subsidiaries are unsecured, interest free and
cash settlement is expected within 60 days of invoice. Terms and
conditions for transactions with subsidiaries are the same, with
the exception that balances are placed on intercompany accounts.
The Group has not provided or benefited from any guarantees for any
related party receivables or payables.
16. Capital Commitments and Contingent liabilities
In the normal course of the Group's business, claims, disputes,
and legal proceedings involving customers, dealers, suppliers,
employees or others are pending or may be brought against Group
entities arising out of current or past operations. There is
presently a dispute between the Group and the other shareholders of
one of its subsidiary entities, which is ongoing and from which a
future obligation may arise. The Group believes there is no basis
for the dispute and is working to resolve the matters raised.
On 27 October 2020, the Group announced that it had entered into
an enhanced strategic cooperation arrangement (the "Strategic
Cooperation Agreement") with one of its existing shareholders,
Mercedes-Benz AG (MBAG). Under the Strategic Cooperation Agreement,
the Group has agreed, over the period of time between December 2020
and the first quarter of 2023 and in several tranches, to issue
458,942,744 ordinary shares of GBP0.009039687 each (22,947,138
ordinary shares of GBP0.10 each following the share consolidation)
to MBAG in exchange for access to certain technology and
intellectual property to be provided to the Group by MBAG in
several stages. The first tranche of 224,657,287 ordinary shares of
GBP0.009039687 each (11,232,864 ordinary shares of GBP0.10 each
following the share consolidation) was issued to MBAG on 7 December
2020. A total of 11,714,274 ordinary shares remain unissued at 30
June 2022.
17. Alternative performance measures
In the reporting of financial information, the directors have
adopted various Alternative Performance Measures ("APMs"). APMs
should be considered in addition to IFRS measurements. The
directors believe that these APMs assist in providing useful
information on the underlying performance of the Group, enhance the
comparability of information between reporting periods, and are
used internally by the directors to measure the Group's
performance.
The key APMs that the Group focuses on are as follows:
i) Adjusted EBT is the loss before tax and adjusting items as
shown in the Consolidated Income Statement.
ii) Adjusted EBIT is operating (loss)/profit before adjusting items.
iii) Adjusted EBITDA removes depreciation, loss on sale of fixed
assets and amortisation from adjusted EBIT.
iv) Adjusted operating margin is adjusted operating (loss)/profit divided by revenue.
v) Adjusted EBITDA margin is adjusted EBITDA (as defined above) divided by revenue.
vi) Adjusted Earnings Per Share is loss after tax before
adjusting items as shown in the Consolidated Income Statement,
divided by the weighted average number of ordinary shares in issue
during the reporting period.
vii) Net Debt is current and non-current borrowings in addition
to inventory repurchase arrangements and lease liabilities, less
cash and cash equivalents and cash held not available for
short-term use as shown in the Consolidated Statement of Financial
Position.
viii) Adjusted leverage is represented by the ratio of Net Debt
to the last twelve months ('LTM') Adjusted EBITDA.
ix) Free cashflow is represented by cash (outflow)/inflow from
operating activities plus the cash used in investing activities
(excluding interest received) plus interest paid in the year less
interest received.
Income Statement
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
-------------------------------- --------- --------- -------------
Loss before tax (285.4) (90.7) (213.8)
Adjusting operating expenses 17.2 2.0 2.2
Adjusting finance income (24.4) (14.0) (34.1)
--------- --------- -------------
Adjusted loss before tax (EBT) (292.6) (102.7) (245.7)
Adjusted finance income (1.2) (10.7) (2.3)
Adjusted finance expense 221.1 77.4 173.7
--------- --------- -------------
Adjusted operating loss (EBIT) (72.7) (36.0) (74.3)
Reported depreciation 38.2 28.8 74.6
Reported amortisation 93.1 56.0 137.6
Adjusted EBITDA 58.6 48.8 137.9
--------- --------- -------------
Earnings per share
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
-------------------------------------------------- --------- --------- -------------
Adjusted earnings per ordinary share
Loss available for equity holders (GBPm) (290.0) (72.7) (191.6)
Adjusting items
Adjusting items before tax (GBPm) (7.2) (12.0) (31.9)
Tax on adjusting items (GBPm) 1.8 (13.3) (8.3)
--------- --------- -------------
Adjusted loss (GBPm) (295.4) (98.0) (231.8)
Basic weighted average number of ordinary shares
(million) 116.5 114.9 115.5
Adjusted loss per ordinary share (pence) (253.7p) (85.3p) (200.8p)
--------- --------- -------------
Adjusted diluted earnings per ordinary share
Adjusted loss (GBPm) (295.4) (98.0) (231.8)
Diluted weighted average number of ordinary
shares (million) 116.5 114.9 115.5
Adjusted diluted loss per ordinary share (pence) (253.7p) (85.3p) (200.8p)
--------- --------- -------------
Net debt
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
-------------------------------------------------------- ---------- ---------- ------------
Opening cash and cash equivalents 418.9 489.4 489.4
Cash (outflow)/inflow from operating activities (33.1) 103.8 178.9
Cash outflow from investing activities (137.5) (89.6) (184.1)
Cash (outflow)/inflow from financing activities (104.2) 3.9 (66.5)
Effect of exchange rates on cash and cash equivalents 12.1 (1.9) 1.2
---------- ---------- ------------
Cash and cash equivalents at the end of the
period 156.2 505.6 418.9
Cash held not available for short-term use 2.0 1.5 1.8
Inventory repurchase arrangement (38.8) (39.8) (19.7)
Lease liabilities (102.0) (99.2) (103.4)
Borrowings (1,283.8) (1,159.6) (1,189.2)
---------- ---------- ------------
Net Debt (1,266.4) (791.5) (891.6)
Adjusted LTM EBITDA 147.7 67.7 137.9
Adjusted leverage (LTM) 8.6x 11.7x 6.5x
---------- ---------- ------------
Free Cashflow
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------------------ -------- -------- ------------
Net cash (outflow)/inflow from operating activities (33.1) 103.8 178.9
Net cash used in investing activities less interest
received (138.2) (91.0) (185.2)
Interest paid less interest received (62.5) (57.1) (116.9)
-------- -------- ------------
Free cashflow (233.8) (44.3) (123.2)
-------- -------- ------------
18. Post balance sheet events
On 15 July 2022 the Group announced a proposed equity capital
raise to meaningfully deleverage the balance sheet and strengthen
and accelerate its long-term growth. The proposed capital raise
comprises:
-- a proposed placing of approximately 23.3 million new ordinary
shares at a price of GBP3.35 per ordinary share in the capital of
the Company to Public Investment Fund (PIF) conditional upon the
subsequent underwritten rights issue, to raise approximately
GBP78.0 million representing approximately 16.7% of the
post-placing share capital of the Company; and
-- a subsequent underwritten rights issue to raise approximately GBP575 million.
On 28 July 2022, the Strategic Cooperation Agreement entered
into between Mercedes-Benz AG (MBAG) and the Company on 27 October
2020 ("SCA") was amended to extend the timeframe for the Company
and MBAG to agree additional technology requests by 12 months to 31
December 2023, with the corresponding tranche 2 share issuance to
take place by July of 2024.
RESPONSIBILITY STATEMENT
The Interim consolidated financial information has been prepared
in accordance UK adopted International Accounting Standard 34,
"Interim Financial Reporting". We confirm that to the best of our
knowledge that the Interim Management Report includes a fair review
of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Amedeo Felisa Doug Lafferty
Chief Executive Officer Chief Financial Officer
28 July 2022 28 July 2022
Independent review report to Aston Martin Lagonda Global
Holdings plc
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2022 which comprises the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Financial
Position, the Consolidated Statement of Cash Flows and notes 1 to
18. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2022 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Birmingham
28 July 2022
[1] Assuming current exchange rates prevail for FY22. Note:
interest payments are made in Q2 and Q4
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