REG - Aston Martin Lagonda - Half-year Report
29/07/2022 07:00
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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 £653m 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
£m 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 £542m driven by:
- Strong pricing dynamics throughout the core portfolio, with record core
ASP in Q2 2022
§ ASP of £164k in H1 2022, up 9% vs £150k in H1 2021
§ ASP of £174k in Q2 2022, up 15% vs £151K 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 £188m (H1 2021:
£143m) 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 £59m (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 £90m included a £47m year-on-year increase in
depreciation and amortisation
· Loss before tax of £285m was driven by a £134m negative
non-cash FX revaluation impact
· H1 2022 free cash outflow of £234m included:
- Capital expenditure of £138m, 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 £63m
- Working capital outflow of £67m 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 £80m
· Cash balance of £156m (December 2021: £419m) impacted by a
combination of more than £125m of short-term factors. This relates to the
£46m repayment of the revolving credit facility, and more than £80m 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 £1,266m (December 2021: £892m) including £134m
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 £653 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.£2bn revenue and c.£500m 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 £200m, before the net proceeds from the proposed equity capital
raise of £653m. 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 £500-£600m.
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.£300m
• Depreciation and amortisation: c.£315m-£330m
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 (#_ftn1) updated for FX movements
(assuming £1:$1.21, versus previous assumption of £1:$1.32):
· c.£290m (P&L), £95m higher than previous guidance of
c.£195m largely driven by non-cash FX revaluation of dollar-denominated debt
in H1
· c.£130m (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
(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 (http://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
£m 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 £542m (H1 2021: £499m),
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 £151k in Q1 to £174k in Q2 (H1 2022: £164k; H1 2021: £150k)
- a record level for Aston Martin. Total ASP of £186k in H1 reflected 32
Specials in the half compared with 20 in the prior year period (H1 2021:
£156k).
Summary income statement and analysis
£m 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 £188m increased by £45m, 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 £59m increased by £10m, 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 £90m in the first half of 2022 compared to £38m loss in
the prior year period. The £52m year-on-year change was primarily driven by:
- a £47m 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 £14m benefit to operating profit from exchange rate movements
Adjusting operating items of £17m in the first half of 2022 (H1 2021: £2m)
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 £196m in the first half of 2022 increased
significantly from £53m in the prior year period, reflecting the revaluation
of the US dollar-denominated Senior Secured Notes giving a non-cash FX charge
of £134m (H1 2021: £9m benefit). The £24m adjusting finance credit was due
to movements in fair value of outstanding warrants (H1 2021: £14m credit).
The loss before tax was £285m (H1 2021: £91m loss) and the loss for the
period was £290m (H1 2021: £71m), 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
£m 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 £33m in the first half
of 2022 (H1 2021: £104m inflow). The year-on-year change in cash flow from
operating activities was primarily driven by a working capital outflow of
£67m (H1 2021: £62m inflow), impacted by supply chain and logistics
disruptions. The largest driver was a £105m increase in inventories (H1 2021:
£9m decrease), reflecting a significant number of ordered vehicles awaiting
final parts at the end of June. In addition, there was a £41m increase in
receivables (H1 2021: £40m decrease) as supply chain and logistics
disruptions pushed planned deliveries towards the end of the second quarter.
Demand for Specials remains strong with a £10m 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 £138m in the first half of 2022, an increase of £47m
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 £234m in the first half of 2022 compared to a £44m
outflow in the first half of 2021, or a £190m 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 £47m year-on-year increase
in capital expenditure.
£m 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 £156m included a £46m repayment of the revolving
credit facility. Net debt was £1,266m, up from £892m at 31 December 2021,
including £134m 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 £653 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 £3.35 per ordinary share in the capital of the Company
to PIF (the "Placing Shares") to raise approximately £78.0 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
£575 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
(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.
APPENDICES
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
£m 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 margin n.m. n.m. n.m. n.m. n.m. n.m.
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
£m 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
£m 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 operating 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
Notes Adjusted Adjusting items* Total Adjusted Adjusting items* Total Adjusted Adjusting items* Total
£m £m £m £m £m £m £m £m £m
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)
Finance income 3, 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
Share Capital Share Premium Capital Redemption Merger Reserve Capital Reserve Translation Reserve Hedge Reserve Retained Earnings Non-controlling Interest Total Equity
Reserve
£m £m £m £m £m £m £m £m £m £m
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
Share Capital Share Premium Capital Redemption Merger Reserve Capital Reserve Translation Reserve Hedge Reserve Retained Earnings Non-controlling Interest Total Equity
Reserve
£m £m £m £m £m £m £m £m £m £m
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
Share Capital Share Premium Capital Redemption Reserve Merger Reserve Capital Reserve Translation Reserve Hedge Reserve Retained Earnings Non-controlling Interest Total Equity
£m £m £m £m £m £m £m £m £m £m
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
Notes As at As at As at
30 June 30 June 31 December 2021
2022 2021
£m £m £m
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
Cash and cash equivalents 9, 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
Notes 6 months ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
£m £m £m
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 (4.6) (5.4) (11.4)
Statement
(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 (£90.6m) 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 £653m 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 ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
Revenue £m £m £m
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 ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
Revenue £m £m £m
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 ended 6 months ended 12 months ended
30 June 30 June 31 December
2022 2021 2021
£m £m £m
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 24.4 14.0 34.1
Statement(6)
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 - 13.3 16.4
adjusting items(7)
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. £1.2m 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 £2.8m. Under the
terms of the closure agreement, employees were granted cash payments both in
the current year and the following two financial years totalling £8.8m. 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 £0.9m. 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 £0.5m 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 £3.0m. 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
£2.4m 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 £2.4m provision release.
5. In the year ended 31 December 2021 the Group continued to rationalise
its geographical footprint. The Group incurred £0.6m 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 £24.4m being recognised in the Income Statement (6
months ended 30 June 2021: gain of £14.0m; 12 months ended 31 December 2021:
£34.1m). This item has no cash impact.
7. In the period to 30 June 2022 a total tax charge of £1.8m has been
recognised on Adjusting items (6 months ended 30 June 2021: £13.3m tax
credit; 12 months ended 31 December 2021: £8.3m 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 ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
£m £m £m
Bank deposit and other interest income 1.2 1.4 2.3
Foreign exchange gain on borrowings not designated as part of a hedging - 9.3 -
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 ended 6 months ended 12 months ended
30 June 30 June 31 December
2022 2021 2021
£m £m £m
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 134.1 - 12.4
relationship
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 £4.4m
(period ended 30 June 2021: £19.6m 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. £108.9m of the £157.3m 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
Continuing and total operations 6 months ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
Basic earnings per ordinary share
Loss available for equity holders (£m) (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 (£m) (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 ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
£m £m £m
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 7.8 4.1 13.0
period
9. Net debt
30 June 30 June 31 December 2021
2022 2021
£m £m £m
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 £2.0m (30 June 2021: £1.5m; 31 December 2021: £1.8m)
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 £34.0m of the £90.6m revolving credit facility was drawn
down in cash (30 June 2021: £78.6m of £90.6m facility, 31 December 2021:
£80.0m of £90.6m facility). £6.6m of the remaining facility has been
utilised through the issuance of letters of credit and guarantees (30 June
2021: £12.0m of the remaining facility was utilised; 31 December 2021: £5.9m
was utilised). The loan is presented net of amortised transaction fees of
£1.7m (30 June 2021: £2.2m; 31 December 2021: £2.0m).
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
£31.9m were deposited in a restricted account with HSBC in China in exchange
for a £30.0m sterling overdraft facility with HSBC in the United Kingdom. The
restricted cash has been revalued at 30 June 2022 to £33.6m (December 2021:
£33.0m) 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 £34.4m 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 £36.1m. 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 £7.8m was all classified as current; 31 December 2021 £6.3m
current.
3. At 30 June 2022 a repurchase liability of £38.8m including accrued
interest of £1.1m 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
£40m 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 £39.8m which included
accrued interest of £1.9m. This arrangement was fully settled during 2021. At
31 December 2021, a similar arrangement existed with a carrying value of
£19.7m including accrued interest of £0.7m. This arrangement totalling
£20.0m was fully repaid in March 2022.
10. Movement in net debt
30 June 30 June 31 December 2021
2022 2021
£m £m £m
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 Value Book Value Fair Value Nominal Value Book Value Fair Value Nominal Value Book Value Fair Value
Included in assets £m £m £m £m £m £m £m £m £m
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 Value Book Value Fair Value Nominal Value Book Value Fair Value Nominal Value Book Value Fair Value
Included in liabilities £m £m £m £m £m £m £m £m £m
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 £0.5m sterling
equivalent which remains outstanding at 30 June 2022 (30 June 2021: £0.9m
loan; 31 December 2021: £0.5m sterling equivalent mixed-currency loan). At 30
June 2022, the senior loan amounted to £0.9m (30 June 2021: £0.5m; 31
December 2021: £1.6m). The Group also has an interest in a Profit
Participating Loan of £0.1m which is carried at fair value of £nil 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 £3.4m as at 30 June
2022 (30 June 2021: £3.9m; 31 December 2021: £3.1m). 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 £nil 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 £0.3m (30 June 2021: £0.6m; 31
December 2021: £0.2m) 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
£24.4m (30 June 2021: £14.0m; 31 December 2021: £34.1m) 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
£m £m £m
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 £78.7m at 31 December
2021 has decreased to a net liability of £68.8m at 30 June 2022. The movement
of £9.9m comprises an actuarial gain of £6.1m in addition to an underlying
charge to the Income Statement of £1.5m less contributions of £8.1m. 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 £2.8m, which forms part of the movement in the net liability, plus
other closure costs of £10.2m 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 £m Number £m Number £m
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. £9.5m 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. £3.3m 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.
£2.5m 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
£9.2m 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 £0.7m. Less than £0.1m 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 £0.2m. £nil 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 £1.5m
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 £0.1m. £nil was outstanding at 30 June 2022.
Transactions during 2021
During the year ended 31 December 2021, a net marketing expense amounting to
£21.5m 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 £0.1m have been undertaken
with Falcon Racing Inc, an entity controlled by a member of the Group's Key
Management Personnel. £nil is outstanding from Falcon Racing Inc at 30 June
2022. During the year ended 31 December 2021, design services of less than
£0.1m were provided to Flair Investment Holdings Limited, an entity in which
a member of a Key Management Personnel has an indirect ownership interest.
£nil 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. £0.3m has been received by the Group with £0.3m of works being
completed in the year. £nil 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 £0.2m. £nil 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 £0.5m. £nil is outstanding at 30 June 2022. A
member of Key Management Personnel placed a deposit of £1.5m 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
£0.1m 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 £0.009039687 each (22,947,138 ordinary shares
of £0.10 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 £0.009039687 each (11,232,864 ordinary shares of £0.10 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 ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
£m £m £m
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 ended 6 months ended 12 months ended
30 June 30 June 31 December 2021
2022 2021
£m £m £m
Adjusted earnings per ordinary share
Loss available for equity holders (£m) (290.0) (72.7) (191.6)
Adjusting items
Adjusting items before tax (£m) (7.2) (12.0) (31.9)
Tax on adjusting items (£m) 1.8 (13.3) (8.3)
Adjusted loss (£m) (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 (£m) (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 2021
2022 2021
£m £m £m
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 2021
2022 2021
£m £m £m
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 £3.35 per ordinary share in the capital of
the Company to Public Investment Fund (PIF) conditional upon the subsequent
underwritten rights issue, to raise approximately £78.0 million representing
approximately 16.7% of the post-placing share capital of the Company; and
· a subsequent underwritten rights issue to raise
approximately £575 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 (#_ftnref1) Assuming current exchange rates prevail for FY22. Note:
interest payments are made in Q2 and Q4
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