TIDMAML
RNS Number : 4204R
Aston Martin Lagonda Glob.Hldgs PLC
01 March 2023
1 March 2023
Aston Martin Lagonda Global Holdings plc
Preliminary results for the 12 months to 31 December 2022
- FY 2022 results in-line with prior outlook, with strong Q4
performance
- FY 2022 revenue growth of 26%, driven by record total ASP of
more than GBP200k
- Strong demand across the portfolio; c.80% of current range
GT/Sports sold out for 2023 ahead of upcoming launches; DBX order
book into Q3 2023
- Strong underlying year-on-year core gross margin progression,
aligned with ultra-luxury strategy
- Cash balance of GBP583m; net debt of GBP766m, despite GBP156m
negative FX impact
- 2023 Outlook: Wholesale volume growth to c.7,000, and up to
c.20% adjusted EBITDA margin
- On track to achieve 2024/25 financial targets
GBPm 31-Dec-22 31-Dec-21 % change Q4-22 Q4-21 % change
------------- ---------- -------- --------
Total wholesales(1) 6,412 6,178 4% 2,352 1,928 22%
Revenue 1,381.5 1,095.3 26% 524.3 358.9 46%
Gross Profit 450.7 343.7 31% 164.5 121.8 35%
Adjusted EBITDA(2) 190.2 137.9 38% 110.4 65.6 68%
Adjusted operating (loss)/profit
(2) (117.9) (74.3) (59%) 10.3 (9.2) n.m.
Operating (loss)/ profit (141.8) (76.5) (85%) 6.6 (8.3) n.m.
(Loss)/ Profit before
tax (495.0) (213.8) (132%) 16.3 (25.2) n.m.
Net debt(2) (765.5) (891.6) 14% (765.5) (891.6) 14%
------------------------------------- -------- ---------- --------- -------- -------- ---------
1. Number of vehicles including Specials; 2. For definition of
alternative performance measures please see Appendix
Financial Highlights
-- Continued strong demand across all product lines with c.80%
of current range of GT/Sports cars sold out for 2023 ahead of
upcoming launches and DBX order book into Q3 2023
-- Despite the impact of supply chain and logistics disruptions,
most notably in Q2 and Q3, wholesale volumes in 2022 grew in line
with revised range:
- Wholesale volumes increased by 4% year-on-year to 6,412 (2021:
6,178)
-- Volumes included more than 3,200 DBXs, driven by launch of
the DBX707 which represented more than 50% of overall DBX
volumes
- Q4 wholesale volumes of 2,352 increased by 22% year-on-year
(Q4 2021: 1,928)
-- Revenue increased by 26% year-on-year to GBP1.4bn and Q4
revenue increased by 46% year-on-year to GBP524m driven by:
- Strong pricing dynamics and favourable mix in the core
portfolio:
-- FY 2022 core ASP of GBP177k, up 18% from GBP150k in FY
2021
-- Q4 2022 core ASP of GBP184k, up 21% from GBP152k in Q4
2021
- 80 Aston Martin Valkyrie programme deliveries during 2022,
including 36 in Q4
- Foreign exchange tailwinds for ASPs due to GBP weakness versus
major currencies
-- Gross profit increased by 31% year-on-year to GBP451m (2021:
GBP344m) and gross margin increased to 33% (2021: 31%), reflecting
improved pricing and gross margin for core models, partially offset
by the impact of lower year-on-year gross margin within Specials.
In addition, year-on-year gross margin performance was impacted by
approximately GBP20 million of supply chain recovery costs incurred
in the second half of the year
-- Adjusted EBITDA increased by 38% year-on-year to GBP190m,
primarily driven by higher revenue and gross profit, partially
offset by higher operating expenses including reinvestments into
brand, marketing and new product launch activities, as well as
inflationary impacts on general costs
-- Operating loss of GBP142m included a GBP96m year-on-year
increase in depreciation and amortisation, primarily driven by
higher year-on-year Aston Martin Valkyrie programme deliveries and,
to a lesser extent, by accelerated amortisation of capitalised
development costs ahead of the next generation of sports car
launches
-- Loss before tax of GBP495m was materially impacted by a
GBP156m negative non-cash FX revaluation of US dollar-denominated
debt as the GBP weakened significantly against the US dollar during
the year
-- Net cash inflow from operating activities of GBP127m. Free
cash outflow [1] of GBP299m included:
- Capital expenditure of GBP287m, primarily related to new model
development including the next generation of sports cars
- Net cash interest payments of GBP139m
-- Positive free cash flow in Q4 of GBP37m, driven by strong
profitability and cash inflows from working capital following the
impact of supply chain and logistics disruptions, earlier in the
year
-- Successfully completed $200m debt tender in October 2022
-- Year-end cash of GBP583m (2021: GBP419m); Net debt of GBP766m
(2021: GBP892m), including a negative GBP156m impact of non-cash FX
revaluation of US dollar-denominated debt as the GBP weakened
significantly against the US dollar during the year
FY 2022 Operational Highlights
-- Product development and launches continue at pace, with
breath-taking new products focused on ultra-luxury, high
performance and driving intensity:
- The critically-acclaimed DBX707, the most powerful luxury SUV
on the market, unveiled in February 2022. DBX707 represented more
than 50% of total DBX deliveries in 2022
- The V12 Vantage Coupe, an iconic finale and the only time a
turbocharged V12 engine has ever been fitted in a Vantage. All 333
units were sold before the car's reveal in March, and deliveries
started in Q2 2022
- The V12 Vantage Roadster, fusing ultimate performance with
open-air thrills. All 249 units sold-out following unveil at Pebble
Beach, and deliveries started in Q4 2022
- The stunning, two-seater, coach-built DBR22, an
ultra-exclusive concept limited to 22 units. Crowned Best of Show
at the influential Chantilly Arts et Élégance Richard Mille, all
examples are sold, with deliveries expected to start in 2023
- Development upgrades to hybrid supercar Valhalla showcased to
customer acclaim at Pebble Beach; more than 50% of the 999 vehicles
already sold
New brand positioning and go-to-market strategy realising our
iconic brand's potential by elevating profile, increasing desire,
driving awareness, and raising customer demand
- Impactful new creative identity and Intensity. Driven. brand
positioning, supporting a >10% increase in sales leads, 10%
increase in web and configurator sessions, as well as heightened
brand desirability
- More than 60% of customers placing orders in 2022 were new to
the Aston Martin brand
- Bold campaigns & optimised content strategy, including the
introduction to new platforms such as TikTok, delivering a >70%
increase in social media views and improved engagement
- New model launches, enhanced data management and customer
targeting tools driving a c.60% increase in dealership test
drives
- Increasing brand salience and optimised digital user
experience supporting >60% increase in sales leads generated by
award-winning online configurator
- Aston Martin Aramco Cognizant Formula One(TM) Team continues
to connect the brand with engaged audience and raising
consideration in key markets, with Aston Martin's Formula One(R)
global fanbase surpassing 150 million in 2022. Research shows that
>95% of US customers feel Aston Martin's presence in F1(R) made
them more likely to consider the brand
- More than 70% of Vantage F1(R) Edition owners are new to the
Aston Martin brand, further demonstrating the positive impact that
Aston Martin's global presence in the sport is having on its brand
image and appeal to new customers
-- New leadership appointments and operational improvements to support future growth:
- New executive appointments and internal promotions, including
senior leaders in engineering, commercial, procurement, human
resources and operational teams
- Changes to the organisational structure, including new
operational improvements, tailored to enhance future product
launches and support long-term growth with a focus on enhancing
quality and driving overall efficiencies
- Cross-functional structure established for the engineering
organisation, to enhance development of the next generation of
high-performance and electrified vehicles covering areas such as
e-Powertrain, Software & Electronics Technology, Infotainment,
as well as Product & Component Development
- Re-shaped and enhanced supply chain strategy, focused on
building long-term partnerships, to improve resilience and
performance
-- Deepening the integration of sustainability into our business
and improving our sustainability performance through our Racing.
Green. strategy
- Working towards net-zero manufacturing facilities and a 30%
reduction in supply chain emissions by 2030 compared with 2020
levels
- In 2022 new targets were set to drive year-on-year
improvements in our sustainability performance including reducing
CO(2) emissions and energy intensity per car each year by 2.5%. In
2022 we reduced Scope 1 CO(2) emissions by 3.9% per car compared to
2021
- In our manufacturing facilities in Gaydon and St Athan we
continued our commitments to only use renewable electricity. By
2025 we aim to achieve zero single-use plastic packaging from our
manufacturing facilities and to reduce our water consumption by 15%
compared with 2019 levels
- In 2022 we also enhanced our gender diversity goals with a
target of 25% women in leadership positions by 2025, rising to 30%
by 2030
- In January 2023 we announced that we are increasing employment
at our Gaydon headquarters with the creation of more than 100 new
skilled jobs in our manufacturing factory to support the launch of
our next generation of sports cars
Lawrence Stroll, Aston Martin Lagonda Executive Chairman
commented:
"2022 saw Aston Martin continue to build on the strong
foundations that have been established during my three years as
Executive Chairman. While the last 12 months presented
industry-wide challenges, we look to the future with renewed
confidence in our ability to deliver on our vision, and the targets
we have set.
"Despite the operating environment, we ended the year with
significantly improved growth, margin enhancement and positive free
cash flow in Q4, exiting 2022 with the strongest order book in many
years.
"2022 marked the start of a thrilling new product line-up,
starting with the critically acclaimed DBX707 - the most powerful
luxury SUV in the world - combining ultra-luxury with high
performance and, crucially, with increased profitability. The
DBX707 was followed by V12 Vantage, the ultra-luxury DBR22 and, in
early January of this year, the DBS 770 Ultimate - all fully sold
out.
"The year saw us continue to strengthen our teams, led by
Amedeo, with a focus on innovation, execution and efficiency to
support our longer-term growth. Furthermore, we completed a
significant GBP654 million equity capital raise, which also saw the
Public Investment Fund become a new anchor shareholder. This
enabled us to take action to deleverage our balance sheet and our
target remains to become sustainably free cash flow positive from
2024.
"We have made the biggest investment in our iconic brand through
the launch of a bold new creative strategy and brand position that
aligns Aston Martin to our future ambitions. Our high-performance
DNA has been further amplified by our partnership with the Aston
Martin Aramco Cognizant Formula One (TM) team, driving growing
demand from a new generation of customers, with more than 60% new
to the brand.
"As I have said before, I knew it would take multiple years to
build Aston Martin into the world's most desirable ultra-luxury
British performance brand. With the heavy lifting behind us, we are
now poised to see the results of this transformation, starting in
2023. In addition to celebrating our 110(th) anniversary and our
exciting line up of Specials, it will also see the start of our
next generation of front-engine sports cars which will truly
reposition Aston Martin for the future.
"Over the last three years, I have consistently referenced our
target to deliver around GBP2bn of revenue and GBP500m of adjusted
EBITDA by 2024/25. I am extremely proud that given the strong
progress we have made to transform Aston Martin into a truly
ultra-luxury business, demonstrated by the trajectory of our ASP
and gross margin, we are on track to meet these financial targets,
but with significantly lower volumes than I originally envisaged.
In addition, I remain highly confident that we will achieve our
target to deliver 10,000 wholesales over the coming years, and with
it, significantly enhanced financial performance."
Amedeo Felisa, Aston Martin Lagonda Chief Executive Officer
commented:
"Having navigated a challenging operating environment throughout
2022, I am pleased with how we ended the year. We delivered in line
with expectations, took actions to address the short-term impacts
of supply chain issues, and continued to make progress in a number
of key areas that will support our ability to meet strong customer
demand and deliver our growth ambitions.
"A top priority has been to improve our execution capabilities,
leveraging my experience and the exceptional talent we have to
implement changes throughout the organisation. This has included
measures to address short-term issues, such as the supply chain
disruption on DBX707 deliveries, as well as more structural changes
to support future product launches, focused on innovation, quality
and overall efficiencies.
"We enter our 110(th) anniversary year ready to write a new
chapter in our proud history. Building on the strong product
momentum we created in 2022, this year will see us begin the
transformation to our game-changing, next generation of
front-engine sports cars. This transition is also expected to
deliver significant improvements in profitability in the second
half of the year, with all new models continuing to target a 40%+
gross margin.
"I also want to thank our people for what we have achieved. They
continue to demonstrate an unwavering commitment and passion for
our iconic company. At the start of 2023, we introduced a new set
of company values, grounded by the powerful principle that 'No one
builds an Aston Martin on their own'. Combined with our iconic
brand, the market opportunity, and our focus on consistently
executing our ultra-luxury strategy, I have great confidence in
Aston Martin delivering on our shared ambitions."
Outlook
We remain on our way to achieving our target of c.10,000
wholesales, aligned with our ultra-luxury strategy. In addition, we
are well on track to deliver our medium-term financial targets of
c.GBP2bn revenue and c.GBP500m adjusted EBITDA in 2024/25.
For 2023 we expect to deliver significant growth in
profitability compared to 2022, primarily driven by an increase in
volumes and higher gross margin in both Core and Special vehicles.
More specifically, we expect significant year-on-year growth and
positive free cash flow in the second half of the year.
For the first half of 2023, we expect our adjusted EBITDA and
free cash flow performance to be similar to the first half of 2022.
This is driven by expectations of strong year-on-year growth in DBX
volumes, commencing the transition of sports cars sales ahead of
new launches later in the year, as well as investments to support
our future growth.
Within the first half of 2023, we expect broadly similar free
cash flow outcomes between Q1 2023 and Q2 2023 driven by the
expected phasing of deliveries, capital expenditure and working
capital dynamics in Q1 2023, and the timing of cash interest
payments related to our Senior Secured Notes in Q2 2023.
The second half of 2023 is expected to see delivery of a number
of new products across the Core and Specials ranges, all with
improved profitability. In addition to the ramp up of the already
sold-out DBS 770 Ultimate, we expect deliveries of the first of our
next generation of sports cars to commence in Q3.
Within Specials, we plan to commence deliveries of the sold-out
Aston Martin Valkyrie Spider and the ultra-luxury DBR22 in the
second half of the year. Finally, and in conjunction with our
historic 110(th) anniversary, we plan to launch a new, strictly
limited, exclusive Aston Martin model, with deliveries commencing
in Q4.
We expect to increase investment in brand and new product launch
activities during the year. This will also allow us to continue to
elevate our ultra-luxury performance brand positioning and to
support the acceleration of our longer-term growth.
Although the operating environment remains volatile, including
ongoing inflationary pressures and pockets of supply chain
disruptions, our teams continue to work in partnership with our
suppliers to mitigate any impact on our performance in 2023.
Capital expenditure is expected to increase year-on-year,
primarily driven by:
- a rephasing of deferred spend from 2022,
- the impact of significantly higher year-on-year inflation,
- incremental investments related to the new, strictly limited,
exclusive Aston Martin model referenced above, which will
accelerate our growth in Q4 and into 2024
- increasing investments in our electrified portfolio, alongside
the final year of significant expenditure associated with our
Internal Combustion Engine (ICE) portfolio
We expect 2023 to be the peak year of capital expenditure, with
capital expenditure readjusting from next year to support both the
development and the delivery of our future product range, as well
as our target of becoming sustainably free cash flow positive from
2024.
2023 guidance:
-- Wholesales : year-on-year growth to c.7,000 units
-- Adjusted EBITDA margin : year-on-year expansion, up to c.20% adjusted EBITDA margin
-- Capex and R&D : c.GBP370m
-- Depreciation and amortisation : c.GBP350m-GBP370m
-- Interest costs : c.GBP120m (cash) assuming current exchange rates prevail for 2023
Enquiries
Investors and Analysts
Sherief Bakr Director of Investor Relations +44 (0)7789 177547
sherief.bakr@astonmartin.com
Holly Grainger Deputy Head of Investor +44 (0)7442 989551
Relations holly.grainger@astonmartin.com
Media
Kevin Watters Director of Communications +44 (0)7764 386683
kevin.watters@astonmartin.com
Paul Garbett Head of Corporate and Brand +44 (0)7501 380799
Communications paul.garbett@astonmartin.com
Grace Barnie Corporate Communications +44 (0)7880 903490
Manager grace.barnie@astonmartin.com
Tulchan Communications
Harry Cameron and Simon Pilkington +44 (0)20 73534200
-- Recorded presentations accompanying this release from
Lawrence Stroll, Amedeo Felisa and Doug Lafferty are available on
the corporate website from 07.00am GMT today; there will be a live
Q&A for investors and analysts at 08:30am GMT
-- Presentations and the Q&A can be accessed here:
www.astonmartinlagonda.com/investors/calendar
-- A replay facility will be available on the website later in the day
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.
BUSINESS REVIEW
2022 saw Aston Martin continue to execute in a number of key
areas on its journey to become the world's most desirable
ultra-luxury British performance brand. This included the
introduction of a new line of breath-taking products with strong
consumer desirability and enhanced profitability, establishing a
bold new creative identity for the Company's iconic brand,
significantly enhancing its in-house engineering and operational
expertise, as well as completing a strategic equity capital
raise.
In addition, the Company continued to strengthen its leadership
team with new executive appointments across the organisation and,
in conjunction with the 110(th) anniversary of Aston Martin in
2023, introduced new Company values grounded on the principle that
'No one builds an Aston Martin on their own'.
Despite a challenging operating environment throughout the year,
including supply chain and logistics disruptions which limited the
Company's ability to meet strong customer demand, as well as
inflationary pressures, it ended 2022 well positioned to deliver on
its medium-term financial targets.
Delivering thrilling new products
Building on the strong momentum from its new introductions in
2021, the Company accelerated the transformation of its portfolio
during 2022, combining ultra-luxury with high performance and
improved profitability.
In Q1 the DBX707, the most powerful luxury SUV on the market,
was unveiled. Building on the success of the DBX, Aston Martin's
first SUV, the DBX707 elevated the Company's positioning and
attractiveness to the pinnacle of the SUV segment. Deliveries of
the DBX707 commenced in Q2 to extensive media acclaim and strong
customer demand, and the DBX707 represented more than 50% of
overall DBX volumes in 2022.
This was quickly followed with the introduction of the new V12
Vantage Coupe in March, the final edition of an iconic bloodline,
which enjoyed unprecedented demand with all 333 units sold ahead of
its release.
At the Pebble Beach Concours d'Elegance, the Company introduced
two new models - the V12 Vantage Roadster and the ultra-exclusive
DBR22 - and shared the latest development updates to its hybrid
supercar, Valhalla. All 249 units of the V12 Vantage Roadster,
which combines the thrilling performance of the most powerful Aston
Martin Vantage ever made with the freedom and sensory stimulation
of roof-down driving, were sold out ahead of its unveiling. The
DBR22, a spectacular V12-engined two-seater coach-built design
concept, was declared Best of Show at the influential Chantilly
Arts et Élégance Richard Mille. Priced at GBP1.75m and with the
orderbook closed, deliveries are expected to start in 2023.
2023, Aston Martin's 110(th) anniversary, promises to be a
monumental year, as the Company prepares to unleash the start of
its highly anticipated next generation sports cars, which will
further enhance Aston Martin's focus on ultra-luxury,
high-performance and driving intensity. Ahead of this, and with
production of the current generation DBS nearing its end, the
Company introduced its most powerful production Aston Martin ever.
The limited-edition DBS 770 Ultimate launched in January 2023 in
both Coupe and Volante form. All 499 examples are sold out, with
deliveries scheduled to begin in Q3 2023.
Brand repositioning and new iconic wings logo
In July 2022, the Company launched a bold new creative brand
strategy and global marketing campaign to further accelerate its
growth amongst new audiences.
Celebrating the Company's position as makers of the most
exquisitely addictive performance cars and centred on the brand
idea Intensity. Driven. the creative identity builds on Aston
Martin's strong, established reputation for combining luxurious
craftsmanship and sophisticated design with high-octane emotion and
intense driving pleasure, as defined by breath-taking new models
such as DBX707, V12 Vantage and the uncompromising Aston Martin
Valkyrie.
The strategic repositioning is the largest investment in Aston
Martin's brand for more than a decade and strengthens its position
at the pinnacle of the performance ultra-luxury segment. It builds
on Aston Martin's growing appeal to a wider, affluent global
audience strategically targeted by the brand, whilst underpinning
its core values.
In addition to the new visual and verbal expression, the radical
redesign includes a contemporary update to the iconic wings,
created by the manufacturer's world-renowned design function in
collaboration with acclaimed British art director and graphic
designer Peter Saville.
-- 48.8 million online impressions generated for new Intensity. Driven. brand campaign
-- More than 1.1million website sessions throughout August 2022
- the busiest month of traffic since the brand's return to Formula
One (R) in March 2021
Enhancing innovation and operational capabilities to support
future growth
The Company continued to add key talent across the organisation,
with new executive management appointments as well as new senior
leaders in its engineering, commercial, procurement, human
resources and operational teams. In addition to the appointments of
Amedeo Felisa as the new Chief Executive Officer and Doug Lafferty
as the new Chief Financial Officer, the Company announced the
additions of Simon Smith as the new Chief People Officer and
Roberto Fedeli as the new Group Chief Technology Officer.
Aligned with the Company's plans to globalise its brand and
increase its share of key strategic markets, regional leadership
has also been reinforced with the appointment of new, experienced
regional presidents in the Americas, Asia and Europe.
A former CEO of Ferrari, Amedeo is one of the most highly
regarded leaders and engineering professionals in the
high-performance luxury sports car sector. In conjunction with
Amedeo's appointment in May, the Company implemented a number of
changes to its organisational structure, including new ways of
working, to enhance its operational capabilities - all aligned to
support future growth.
This included a new cross-functional structure for its
engineering organisation to enhance the development of its next
generation of high-performance vehicles, and expanding its in-house
engineering capabilities covering areas such as e-Powertrain,
Software and Electronics Technology, Infotainment, as well as
Product and Component Development.
Consistent with the Company's ongoing focus on operational
excellence, new initiatives and processes were implemented with key
functional capabilities strengthened. For example, a new supplier
strategy, focused on building long-term partnerships, was developed
over the course of the year to improve supply chain resilience and
performance. In addition, new processes were implemented to support
future product launches, with a focus on improving quality and
driving overall efficiencies.
Investing in people and their career development will continue
to shape Aston Martin's future. This includes supporting and
developing the next generation of British talent and skills. Over
the course of the year, the Company renewed its commitment to
making Aston Martin a great place to work, with a focus on
fostering a spirit of collaboration. At the start of 2023, the
Company introduced a new set of values, grounded by the principle
that 'No one builds an Aston Martin on their own'.
Equity capital raise, new anchor shareholder and Board
appointments
In July, the Company announced a GBP654m equity capital raise to
strengthen its financial position and enhance its pathway for
significant shareholder value creation. The equity capital raise,
successfully completed in September, has allowed the Company to
de-lever its balance sheet, and supports its target to become
sustainably free cash flow positive from 2024. In October, the
Company successfully completed a tender offer for a total
consideration of $200m relating to its outstanding Senior Secured
Notes.
In conjunction with the equity capital raise, the Public
Investment Fund (PIF) became a new anchor investor and the
Company's second largest shareholder. A Relationship Agreement was
entered into between the Company and PIF, whereby Ahmed Al-Subaey
and Scott Robertson were appointed to the Board as PIF's
representative Non-executive Directors with effect from 1 November
2023. The Company also appointed Sir Nigel Boardman as an
Independent Non-executive Director with effect from 1 October
2022.
Making sustainability central to everything we do
In 2022 the Company accelerated progress towards the goals in
its sustainability strategy Racing. Green' and its updated targets
now include:
-- Carbon Neutral manufacturing facilities
-- 100% use of renewable electricity in its manufacturing facilities
-- A new goal to achieve a 2.5% year-on-year reduction in CO(2)
emissions from its manufacturing facilities*
-- A new goal to reduce CO(2) emissions intensity and energy
consumption per car by 2.5% year on year*
-- Enhancing its gender diversity aspiration with a new target
of women in 25% of leadership positions by 2025 and in 30% of
leadership positions by 2030
-- A new target to improve biodiversity at its manufacturing facilities
*Scope 1 CO(2) emissions
Reducing CO(2) emissions from the Company's products,
manufacturing processes and wider supply chain remains a top
priority. Our first PHEV, the Valhalla, commences delivery in 2024,
followed by the first BEV which is targeted for launch in 2025 and
a fully electrified GT/Sport and SUV portfolio by 2030. Aston
Martin's company-wide EV Transformation Programme is equipping its
people, changing its processes, and reshaping the organisation for
a new electrified, lower carbon future. Sustainability is also
increasingly embedded throughout the vehicle design process, and
the Company is intensifying its focus on optimising the materials
used, as well as increasing its focus on the use of materials which
are low carbon, sustainably sourced and recycled.
The Company continues to implement projects which will help make
its manufacturing facilities net-zero by 2030 and work on reducing
CO(2) emissions from the supply chain is gaining momentum as the
Company aims for net-zero across its supply chain by 2039.
Successfully reducing emissions across the entire supply chain will
require strong collaboration, with all supply chain partners
playing their part.
With a focus going beyond climate change, the Company is working
collaboratively with suppliers to achieve the target of zero
single-use plastic packaging waste by 2025. Investment in water
saving technologies in 2022 will save 1 million litres of water
annually from staff facilities, as the Company strives to reduce
total water consumption by 15% by 2025, compared with 2019
levels.
No one builds an Aston Martin on their own. People are at the
heart of the success of the business and over the last year, the
Company has invested in a commitment to make Aston Martin a great
and inclusive place to work. This includes a new safety training
programme and further improvements to safety management systems as
the Company continues to strive for zero injuries and zero harm.
The last year has also seen further emphasis on increasing
diversity and championing inclusivity at Aston Martin. This
includes an enhanced target for women to be in 25% of leadership
positions by 2025 and 30% by 2030, compared with 15% currently.
During 2022 the Company welcomed new apprentices and graduate
trainees, strengthening the talent it continues to develop at every
level of the business.
All of the Company's work on sustainability is guided by its
support for the Ten Principles of the United Nations Global Compact
in the areas of Human Rights, Labour, Environment and
Anti-Corruption. It is also underpinned by a broad commitment to
delivering the highest standards, with strategic oversight provided
by the Board Sustainability Committee. Throughout 2022, the Company
maintained this commitment by continuing to focus on compliance
with its legal and regulatory obligations as well as embracing
sustainability best practices. Aston Martin's sustainability
strategy is helping to shape its transformation as it takes action
to turn aspirations into reality, making sustainability central to
everything it does. In some areas more will need to be done to
accelerate progress, but by continuing to intensify the focus on
delivery, the Company will achieve its ambition: to become a
world-leading sustainable ultra-luxury automotive business.
FINANCIAL REVIEW
Sales and revenue analysis
Number of vehicles FY-22 FY-21 % change Q4-22 Q4-21 % change
------ ------
Wholesale 6,412 6,178 4% 2,352 1,928 22%
Core (excluding Specials) 6,323 6,080 4% 2,313 1,886 23%
By region:
UK 1,110 1,109 0% 416 381 9%
Americas 1,980 1,984 0% 828 546 52%
EMEA (ex. UK) 1,508 1,270 19% 723 372 94%
APAC 1,814 1,815 0% 385 629 (39%)
By model:
Sports 1,833 1,479 24% 614 520 18%
GT 1,271 1,589 (20%) 306 546 (44%)
SUV 3,219 3,001 7% 1,393 815 71%
Other 0 11 n.m. 0 5 n.m.
Specials 89 98 (9%) 39 42 (7%)
--------------------------- ------ ------ --------- ------ ------ ---------
Note: Sports includes Vantage, GT includes DB11 and DBS, SUV
includes DBX and Other includes prior generation models
Despite a challenging and uncertain operating environment,
characterised by the war in Ukraine, supply chain and logistics
disruptions, inflationary pressures, as well as intermittent
COVID-19 lockdowns in China, total wholesales increased by 4%
year-on-year, driven by strong demand across the portfolio.
Total wholesales of 6,412 units included 89 Specials in 2022,
comprised of 80 Aston Martin Valkyrie programme vehicles and 9
other vehicles. This compared to 6,178 total wholesales, which
included 98 Specials, in 2021.
Given significant supply chain and logistics disruptions, most
notably in Q2 and Q3, which delayed the Company's ability to meet
customer demand, the fourth quarter represented the peak of volumes
for the year, as expected.
Total wholesales of 2,352 units in Q4 increased by 70% compared
to Q3 and by 22% year-on-year. The year-on-year growth in Q4
wholesales was primarily driven by significantly higher DBX
volumes, supported by strong customer demand and strong operational
execution, as the Company actively managed the supply chain and
logistics disruptions which had restricted its ability to meet
demand earlier in the year. This was partially offset by lower
year-on-year wholesales in China, following the strong growth
achieved in Q4 2021 and, to a lesser extent, by the COVID-19
lockdowns during the quarter.
Aligned with its ultra-luxury strategy, the Company continues to
operate a demand-led operating model. However, given the timing of
deliveries towards the end of Q4, total wholesale volumes were
temporarily ahead of retail volumes at the end of 2022. Many of
those vehicles were retailed in early Q1, and the Company expects
to see retails outpace wholesales in 2023.
Geographically, wholesale volumes remained well balanced across
all regions, reflecting the broad customer appeal of the Company's
product portfolio. In addition, supply chain disruptions throughout
the year, most notably in Q2 and Q3, impacted our geographic and
product mix, as well as our ability to meet strong customer
demand.
The Americas and APAC were the largest regions, collectively
representing approximately 60% of total volumes. Despite
geopolitical challenges, EMEA wholesales increased by 19%
year-on-year, driven by strong customer demand for the DBX707 and
higher year-on-year Sports volumes.
Revenue by Category
GBPm FY-22 FY-21 % change
-------- --------
Sale of vehicles 1,291.5 1,005.4 28%
Sale of parts 70.8 65.5 8%
Servicing of vehicles 9.3 10.6 (12%)
Brand and motorsport 9.9 13.8 (28%)
Total 1,381.5 1,095.3 26%
-------- --------
Revenues increased by 26% year-on-year to GBP1.4bn (2021:
GBP1.1bn), primarily due to strong wholesale average selling price
(ASP) growth and, to a lesser extent, due to higher wholesale
volumes. Total ASP of GBP201k (2021: GBP162k) - a record level for
Aston Martin - increased by 24% year-on-year, reflecting higher
Aston Martin Valkyrie deliveries (80 in 2022, compared to 10 in
2021) and higher core ASPs. Core ASP of GBP177k (2021: GBP150k)
increased by 18% year-on-year driven by strong pricing and mix
dynamics, as well as foreign exchange tailwinds.
Q4 revenues increased by 46% year-on-year to GBP524m (Q4 2021:
GBP359m), driven by strong ASP growth and higher wholesale volumes,
most notably DBX. Total Q4 ASP of GBP213k (Q4 2021: GBP175k)
increased by 22% year-on-year, reflecting higher Aston Martin
Valkyrie deliveries (36 in Q4 2022, compared to 10 in Q4 2021) and
higher core ASPs. Core Q4 ASP of GBP184k (Q4 2021: GBP152k)
increased by 21% year-on-year driven by strong pricing and mix
dynamics, as well as foreign exchange tailwinds.
Pricing dynamics were strong throughout 2022, aligned with the
Company's ultra-luxury strategy. This included price increases
implemented across the range during late 2021 and in the first half
of 2022, reflecting the strong pricing power of the Aston Martin
brand. ASPs also benefitted from favourable mix, as well as lower
incentive support.
Summary income statement and analysis
GBPm FY-22 FY-21 Q4-22 Q4-21
------------ ----------
Revenue 1,381.5 1,095.3 524.3 358.9
Cost of sales (930.8) (751.6) (359.8) (237.1)
Gross profit 450.7 343.7 164.5 121.8
Gross margin % 32.6% 31.4% 31.4% 33.9%
Operating expenses(1) (568.6) (418.0) (154.2) (131.0)
of which depreciation &
amortisation 308.1 212.2 100.1 74.8
Adjusted operating (loss)/
profit (2) (117.9) (74.3) 10.3 (9.2)
Adjusting operating items (23.9) (2.2) (3.7) 0.9
Operating (loss)/ profit (141.8) (76.5) 6.6 (8.3)
Net financing (expense)/income (353.2) (137.3) 9.7 (16.9)
of which adjusting financing
items (20.1) 34.1 (39.1) 21.2
(Loss)/profit before tax (495.0) (213.8) 16.3 (25.2)
Taxation (32.7) 24.5 (26.0) (7.5)
(Loss)/profit for the period (527.7) (189.3) (9.7) (32.7)
Adjusted EBITDA (1,2) 190.2 137.9 110.4 65.6
Adjusted EBITDA margin 13.8% 12.6% 21.1% 18.3%
Adjusted (loss)/profit
before tax (1) (451.0) (245.7) 59.1 (47.3)
EPS (pence) (124.5) (58.6)
Adjusted EPS (pence) (2) (114.1) (70.9)
----------------------------------- -------- ---------- ---------- ----------
1. Excludes adjusting items; 2. For definition of alternative
performance measures please see Appendix
In 2022, gross profit of GBP451m increased by GBP107m, or 31%,
year-on-year. This translated to a gross margin of 33%, a
year-on-year expansion of approximately 120 basis points. The gross
margin expansion was primarily due to higher year-on-year gross
margin within the core range of vehicles, supported by the
introduction of new products - most notably the V12 Vantage and
DBX707 - as well as foreign exchange tailwinds.
This was partially offset by lower year-on-year gross margin
within Specials driven by higher Aston Martin Valkyrie programme
deliveries related to Nebula Project AG during 2022. As disclosed
on 22 June 2021, the Company has filed for civil legal proceedings
against Nebula Project AG and criminal proceedings against its
board members, after it became aware that Nebula had taken deposits
from its customers and failed to pass them on to the Company. Aston
Martin has continued to work with its affected customers to ensure
they receive their Aston Martin Valkyrie vehicles despite Nebula's
actions.
In addition, year-on-year gross margin was negatively impacted
by higher supply chain and logistics costs, including approximately
GBP20m of incremental supply chain recovery costs in the second
half of the year.
Q4 gross profit of GBP165m increased by GBP43m, or 35%,
year-on-year. This translated to a gross margin of 31%, a decline
of approximately 250 basis points year-on-year, as lower gross
margin within Specials and higher manufacturing and logistics costs
were partially offset by higher year-on-year gross margin from the
core range of vehicles and, to a lesser extent, from higher overall
core volumes.
The Company continues to target a 40%+ gross margin from its
future products.
In 2022, adjusted EBITDA of GBP190m increased by GBP52m
year-on-year, or by 38%. This translated to an adjusted EBITDA
margin of 14%, an increase of approximately 120 basis points
compared to the prior year and within the revised guidance range of
approximately 100-300 basis points of year-on-year margin
expansion.
Q4 adjusted EBITDA of GBP110m increased by GBP45m year-on-year,
or by 68%. This translated to an adjusted EBITDA margin of 21%, an
increase of approximately 280 basis points compared to the prior
year period, driven by strong operating leverage.
The operating loss of GBP142m compared to a GBP77m loss in the
prior year. The GBP65m year-on-year change was primarily driven
by:
- A GBP96m increase in depreciation and amortisation charges,
principally related to Aston Martin Valkyrie deliveries and
accelerated depreciation ahead of the next generation of sports
cars starting in 2023
- Increased investment in brand and product launches such as the
DBX707, V12 Vantage and Valhalla, marketing initiatives at events
such as the Goodwood Festival of Speed and Pebble Beach
- Higher general costs, including inflationary pressures, to
support the Company's future growth
These factors were partially offset by:
- Higher year-on-year gross profit, as described above, which
included a GBP31m benefit to operating profit from exchange rate
movements
Adjusting operating items of GBP24m (2021: GBP2m) predominantly
related to the closure to future accrual of the pension scheme
disclosed at the Full Year 2021 results, ERP implementation costs,
as well as one-time expenses related to the change of CEO and
appointment of other new executives.
Net adjusted financing costs of GBP333m increased significantly
from GBP171m in the prior year, reflecting the revaluation of the
US dollar-denominated Senior Secured Notes giving a non-cash FX
charge of GBP156m (2021 included a GBP12m FX charge). The GBP20m
adjusting finance charge related to costs associated with the
equity capital raise and debt tender, partially offset by the fair
value movements of outstanding warrants (2021: GBP34m adjusting
finance credit).
The loss before tax was GBP495m (2021: GBP214m loss) and the
loss for the period was GBP528m (2021: GBP189m loss), both
significantly impacted by the revaluation of the US
dollar-denominated Senior Secured Notes.
The tax charge on the adjusted loss before tax was GBP33m. The
effective tax rate at (7.3)% differs from the 19% standard UK tax
rate mainly due to movements in unprovided deferred tax and
derecognition of deferred tax related to losses, accelerated
capital allowances and a restriction on the amount of interest that
can be deducted for tax purposes. Tax on adjusting items was nil as
a result of the unprovided deferred tax.
The total share count at 31 December 2022 was 699 million
following the placing of new ordinary shares to PIF, as well as the
4-for-1 rights issue completed in September 2022. The weighted
average number of shares in 2022 was 425 million. 28.8 million
shares in relation to the warrants remain outstanding and are
exercisable until December 2027.
The Company is embedding the first tranche of technology from
Mercedes-Benz AG into its product renewal and expansion pipeline.
There are currently no plans to issue additional shares to
Mercedes-Benz AG during 2023.
Cash flow and net debt
GBPm FY-22 FY-21 Q4-22 Q4-21
-------- --------
Cash generated from operating
activities 127.1 178.9 184.0 27.5
Cash used in investing activities
(excl. interest) (286.9) (185.2) (73.5) (49.0)
Net cash interest paid (139.0) (116.9) (73.7) (62.6)
-------------------------------------- -------- -------- -------- -------
Free Cash (outflow)/inflow (298.8) (123.2) 36.8 (84.1)
-------------------------------------- -------- -------- -------- -------
Cash inflow/(outflow) from financing
activities (excl. interest) 456.2 51.5 (210.5) 7.5
-------------------------------------- -------- -------- -------- -------
Increase/(decrease) in net cash 157.4 (71.7) (173.7) (76.6)
-------------------------------------- -------- -------- -------- -------
Effect of exchange rates on cash
and cash equivalents 7.0 1.2 (14.8) 0.3
-------------------------------------- -------- -------- -------- -------
Cash balance 583.3 418.9 583.3 418.9
-------------------------------------- -------- -------- -------- -------
Net cash inflow from operating activities was GBP127m (2021:
GBP179m). The year-on-year change in cash flow from operating
activities was primarily due to adverse movements in working
capital. Cash flow from operating activities in 2022 included a
GBP15m outflow related to movements in working capital, compared
with a GBP56m inflow in 2021. The largest movement in 2022 was a
GBP82m increase in trade and other payables, principally associated
with higher accruals related to future product rollout plans, which
was partially offset by a GBP78m increase in inventories, which was
significantly impacted by supply chain and logistics disruptions,
most notably in Q2 and Q3.
Demand for Specials remained strong throughout the year, with
deposit intake for Valhalla and the Aston Martin Valkyrie Spider.
However, this was offset by higher deliveries of Aston Martin
Valkyrie programme vehicles, resulting in a net GBP18m outflow from
deposits during the year.
As expected, the Company generated a significant improvement in
cash flow from operating activities in Q4, driven by a combination
of strong profitability and cash inflows from working capital. Cash
inflow from operating activities was GBP184m in Q4 (Q4 2021:
GBP28m).
Capital expenditure was GBP287m in 2022, an increase of GBP102m
year-on-year, with investment focused on the future product
pipeline, particularly the next generation of sports cars, as well
as development of the Company's electrification programme.
Free cash was a net outflow of GBP299m, compared to a GBP123m
outflow in 2021. This was primarily due to the year-on-year
increase in capital expenditure, as well as the changes in working
capital-related cashflows described above.
Cash inflow from financing (excluding interest) of GBP456m
(2021: GBP52m) included GBP654m of gross proceeds from the equity
capital raise, partially offset by a GBP187m net cash outflow
related to the $200m debt tender, which was completed in Q4.
Net cash inflow of GBP157m resulted in a closing cash balance of
GBP583m as at 31 December 2022 (31 December 2021: GBP419m). Net
debt of GBP766m, a GBP126m reduction from GBP892m at the end of
2021, included a GBP156m negative impact of non-cash FX revaluation
of US dollar-denominated debt as the pound weakened against the US
dollar during the year.
GBPm 31 Dec-22 31 Dec-21
----------
Loan Notes(1) (1,104.0) (1,074.9)
Inventory financing (38.2) (19.7)
Bank loans and overdrafts (107.1) (114.3)
Lease liabilities (IFRS 16) (99.8) (103.4)
----------------------------------- ---------- ----------
Gross debt (1,349.1) (1,312.3)
----------------------------------- ---------- ----------
Cash balance 583.3 418.9
Cash not available for short-term
use 0.3 1.8
----------------------------------- ---------- ----------
Net debt (765.5) (891.6)
----------------------------------- ---------- ----------
1 US$ notes of GBP1.1bn equivalent (First Lien of GBP935m at
10.5% interest maturing in November 2025; Second Lien of GBP169m at
15.0% split interest (8.9% cash; 6.1% PIK) with detachable warrants
maturing in November 2026). These instruments carry no-call options
of two years for the Second Lien and three years for the First
Lien.
APPICES
Dealerships
31 Dec-22 31 Dec-21
----------
UK 21 22
Americas 44 44
EMEA ex. UK 52 53
APAC 48 49
Total 165 168
----------
Number of countries 54 56
--------------------- ---------- ----------
Alternative Performance Measure
GBPm FY-22 FY-21
--------
Loss before tax (495.0) (213.8)
Adjusting operating expense 23.9 2.2
Adjusting finance income (12.5) (34.1)
Adjusting finance expense 32.6 -
Adjusted EBT (451.0) (245.7)
Adjusted finance income (3.0) (2.3)
Adjusted finance expense 336.1 173.7
Adjusted o perating loss (117.9) (74.3)
Reported depreciation 88.8 74.6
Reported amortisation 219.3 137.6
Adjusted EBITDA 190.2 137.9
--------
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 EBITDA margin is adjusted EBITDA (as defined above) divided by revenue
-- Adjusted EBT is the loss before tax and adjusting items as
shown in the Consolidated Income Statement
-- 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,
cash held not available for short-term use
-- Free cashflow is represented by cash (outflow)/inflow from
operating activities less the cash used in investing activities
(excluding interest received) plus interest paid in the year less
interest received.
Further details and definitions of adjusting items are contained
in note 5 of the Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2022
2022 2021
----------------------------- -------------------------------
Adjusting Adjusting
Adjusted items* Total Adjusted items* Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Revenue 3 1,381.5 - 1,381.5 1,095.3 - 1,095.3
Cost of sales (930.8) - (930.8) (751.6) - (751.6)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Gross profit 450.7 - 450.7 343.7 - 343.7
Selling and distribution expenses (113.0) - (113.0) (84.8) - (84.8)
Administrative and other operating
expenses (455.6) (23.9) (479.5) (333.2) (2.2) (335.4)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Operating loss 4 (117.9) (23.9) (141.8) (74.3) (2.2) (76.5)
Finance income 6 3.0 12.5 15.5 2.3 34.1 36.4
Finance expense 7 (336.1) (32.6) (368.7) (173.7) - (173.7)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Loss before tax (451.0) (44.0) (495.0) (245.7) 31.9 (213.8)
Income tax (charge)/credit 8 (32.7) - (32.7) 16.2 8.3 24.5
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Loss for the year (483.7) (44.0) (527.7) (229.5) 40.2 (189.3)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
(Loss)/profit attributable to:
Owners of the Group (528.6) (191.6)
Non-controlling interests 0.9 2.3
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
(527.7) (189.3)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Other comprehensive income
Items that will never be reclassified
to the Income Statement
Remeasurement of Defined Benefit
liability 6.8 3.8
Taxation on items that will never
be reclassified to the Income
Statement 8 (1.7) (1.0)
Effect of change in rate in taxation 8 - 6.0
Items that are or may be reclassified
to the Income Statement
Foreign currency translation
differences 3.8 2.3
Fair value adjustment - cash
flow hedges (6.1) (0.3)
Amounts reclassified to the Income
Statement - cash flow hedges 2.9 (4.3)
Taxation on items that may be
reclassified to the Income Statement 8 0.8 1.2
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Other comprehensive income for
the year, net of income tax 6.5 7.7
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Total comprehensive loss for
the year (521.2) (181.6)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Total comprehensive (loss)/income
for the year attributable to:
Owners of the Group (522.1) (183.9)
Non-controlling interests 0.9 2.3
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
(521.2) (181.6)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
Earnings per ordinary share Restated**
Basic loss per share 9 (124.5p) (58.6p)
Diluted loss per share 9 (124.5p) (58.6p)
-------------------------------------- ----- -------- --------- -------- -------- --------- ----------
All operations of the Group are continuing.
* Adjusting items are defined in note 2 with further detail shown in note 5.
** Earnings per ordinary share has been adjusted to reflect the
bonus element of the rights issue undertaken in September 2022. See
notes 9 and 12.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Share Merger redemption Capital Translation Hedge Retained Non-controlling Total
capital premium reserve reserve reserve reserve reserves earnings interest equity
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
At 1 January
2022 11.6 1,123.4 143.9 9.3 6.6 2.7 6.7 (662.4) 18.6 660.4
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
Total
comprehensive
loss for the
year
(Loss)/profit
for the year - - - - - - - (528.6) 0.9 (527.7)
Other
comprehensive
income
Foreign
currency
translation
differences - - - - - 3.8 - - - 3.8
Fair value
movement
- cash flow
hedges - - - - - - (6.1) - - (6.1)
Amounts
reclassified
to the Income
Statement -
cash
flow hedges - - - - - - 2.9 - - 2.9
Remeasurement
of Defined
Benefit
liability - - - - - - - 6.8 - 6.8
Tax on other
comprehensive
income (note
8) - - - - - - 0.8 (1.7) - (0.9)
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
Total other
comprehensive
income/(loss) - - - - - 3.8 (2.4) 5.1 - 6.5
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
Total
comprehensive
income/(loss)
for the year - - - - - 3.8 (2.4) (523.5) 0.9 (521.2)
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
Transactions
with owners,
recorded
directly
in equity
Issuance of new
shares (note
11) 58.3 574.0 - - - - - - - 632.3
Credit for the
year under
equity-settled
share-based
payments - - - - - - - 1.0 - 1.0
Tax on items - - - - - - - - - -
credited to
equity
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
Total
transactions
with owners 58.3 574.0 - - - - - 1.0 - 633.3
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
At 31 December
2022 69.9 1,697.4 143.9 9.3 6.6 6.5 4.3 (1,184.9) 19.5 772.5
--------------- ------- ------- ------- ---------- ------- ----------- -------- --------- --------------- -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
Capital
Share Share Merger redemption Capital Translation Hedge Retained Non-controlling Total
capital premium reserve reserve reserve reserve reserves earnings interest equity
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- ------- ------- ---------- ------- ----------- -------- -------- --------------- -------
At 1 January
2021 11.5 1,108.2 144.0 9.3 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
reclassified
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
(note 8) - - - - - - (0.8) 6.8 - 6.0
Tax on other
comprehensive
income (note
8) - - - - - - 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 (note
11) 0.1 15.1 - - - - - 14.8 - 30.0
Credit for the
year under
equity-settled
share-based
payments - - - - - - - 3.1 3.1
Effect of change
in rate of
taxation
(note 8) - - - - - - - 4.7 - 4.7
Tax on items
credited to
equity
(note 8) - - - - - - - 0.1 - 0.1
Reclassification
(note 11) - 0.1 (0.1) - - - - - - -
----------------- ------- ------- ------- ---------- ------- ----------- -------- -------- --------------- -------
Total
transactions
with owners 0.1 15.2 (0.1) - - - - 22.7 - 37.9
----------------- ------- ------- ------- ---------- ------- ----------- -------- -------- --------------- -------
At 31 December
2021 11.6 1,123.4 143.9 9.3 6.6 2.7 6.7 (662.4) 18.6 660.4
----------------- ------- ------- ------- ---------- ------- ----------- -------- -------- --------------- -------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
2022
31 December 31 December
2022 2021
Notes GBPm GBPm
------------------------------------------- ----- ----------- -----------
Non-current assets
Intangible assets 1,394.6 1,384.1
Property, plant and equipment 369.9 355.5
Right-of-use lease assets 74.4 76.0
Trade and other receivables 6.3 2.1
Other financial assets - 0.5
Deferred tax asset 8 133.7 156.4
------------------------------------------- ----- ----------- -----------
1,978.9 1,974.6
------------------------------------------- ----- ----------- -----------
Current assets
Inventories 286.2 196.8
Trade and other receivables 245.7 243.4
Income tax receivable 1.4 1.5
Other financial assets 8.8 7.3
Cash and cash equivalents 583.3 418.9
------------------------------------------- ----- ----------- -----------
1,125.4 867.9
------------------------------------------- ----- ----------- -----------
Total assets 3,104.3 2,842.5
------------------------------------------- ----- ----------- -----------
Current liabilities
Borrowings 107.1 114.3
Trade and other payables 876.3 721.0
Income tax payable 6.3 5.5
Other financial liabilities 26.2 34.8
Lease liabilities 7.4 9.7
Provisions 18.6 19.9
------------------------------------------- ----- ----------- -----------
1,041.9 905.2
------------------------------------------- ----- ----------- -----------
Non-current liabilities
Borrowings 1,104.0 1,074.9
Trade and other payables 9.1 9.8
Lease liabilities 92.4 93.7
Provisions 22.5 19.0
Employee benefits 61.2 78.7
Deferred tax liabilities 8 0.7 0.8
------------------------------------------- ----- ----------- -----------
1,289.9 1,276.9
------------------------------------------- ----- ----------- -----------
Total liabilities 2,331.8 2,182.1
------------------------------------------- ----- ----------- -----------
Net assets 772.5 660.4
------------------------------------------- ----- ----------- -----------
Capital and reserves
Share capital 11 69.9 11.6
Share premium 1,697.4 1,123.4
Merger reserve 143.9 143.9
Capital redemption reserve 9.3 9.3
Capital reserve 6.6 6.6
Translation reserve 6.5 2.7
Hedge reserves 4.3 6.7
Retained earnings (1,184.9) (662.4)
=========================================== ===== =========== ===========
Equity attributable to owners of the Group 753.0 641.8
Non-controlling interests 19.5 18.6
=========================================== ===== =========== ===========
Total shareholders' equity 772.5 660.4
------------------------------------------- ----- ----------- -----------
The Financial Statements were approved by the Board of Directors
on 28 February 2023 and were signed on its behalf by
AMEDEO FELISA DOUG LAFFERTY
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
COMPANY NUMBER: 11488166
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2022
2022 2021
Notes GBPm GBPm
------------------------------------------------------ ----- ------- -------
Operating activities
Loss for the year (527.7) (189.3)
Adjustments to reconcile loss for the year to net
cash inflow from operating activities
Tax charge/(credit) on operations 8 32.7 (24.5)
Net finance costs 353.2 137.3
Other non-cash movements (2.0) (0.1)
Depreciation and impairment of property, plant and
equipment 4 77.8 65.3
Depreciation and impairment of right-of-use lease
assets 4 11.0 9.3
Amortisation and impairment of intangible assets 4 219.3 137.6
Difference between pension contributions paid and
amounts recognised in Income Statement (12.1) (11.4)
(Increase)/decrease in inventories (78.4) 7.7
Increase in trade and other receivables (0.1) (75.4)
Increase in trade and other payables 81.5 52.8
(Decrease)/increase in advances and customer deposits (17.9) 70.7
Movement in provisions 0.7 (0.2)
(Increase)/decrease in other derivative contracts (2.3) 0.7
Other movements in deferred tax asset (3.5) (2.9)
====================================================== ===== ======= =======
Cash generated from operations 132.4 179.8
Decrease in cash held not available for short term
use 1.5 8.1
Income taxes paid 8 (6.8) (9.0)
====================================================== ===== ======= =======
Net cash inflow from operating activities 127.1 178.9
====================================================== ===== ======= =======
Cash flows from investing activities
Interest received 6 2.2 1.1
Increase in loan assets - (1.4)
Decrease in loan assets - 0.9
Payments to acquire property, plant and equipment (58.6) (40.7)
Payments to acquire intangible assets (228.3) (144.0)
====================================================== ===== ======= =======
Net cash used in investing activities (284.7) (184.1)
====================================================== ===== ======= =======
Cash flows from financing activities
Interest paid (141.2) (118.0)
Proceeds from equity share issue 653.9 -
Proceeds from issue of equity warrants - 15.3
Proceeds from financial instrument utilised as part
of refinancing transactions 4.2 -
Principal element of lease payments (10.0) (9.9)
Repayment of existing borrowings (172.7) (37.3)
Premium paid upon redemption of borrowings (14.3) -
Proceeds from inventory repurchase arrangement 75.7 19.0
Repayment of inventory repurchase arrangement (60.0) (40.0)
Proceeds from new borrowings - 108.5
Transaction fees paid on issuance of shares (18.7) (1.3)
Transaction fees paid on financing activities (1.9) (2.8)
====================================================== ===== ======= =======
Net cash inflow/(outflow) from financing activities 315.0 (66.5)
====================================================== ===== ======= =======
Net increase/(decrease) in cash and cash equivalents 157.4 (71.7)
Cash and cash equivalents at the beginning of the
year 418.9 489.4
Effect of exchange rates on cash and cash equivalents 7.0 1.2
====================================================== ===== ======= =======
Cash and cash equivalents at the end of the year 583.3 418.9
------------------------------------------------------ ----- ------- -------
notes to the financial statements for the year ended 31 december
2022
1 BASIS OF ACCOUNTING
Aston Martin Lagonda Global Holdings plc (the "Company") is a
company incorporated in England and Wales and domiciled in the UK.
The Group Financial Statements consolidate those of the Company and
its subsidiaries (together referred to as the "Group").
The Group Financial Statements have been prepared and approved
by the Directors in accordance with UK adopted international
accounting standards.
The Group Financial Statements have been prepared under the
historical cost convention except where the measurement of balances
at fair value is required as explained below. The Financial
Statements are prepared in millions to one decimal place, and in
sterling which is the Company's functional currency.
The financial information set out does not constitute the
Company's financial statements for the years ended 31 December 2022
or 2021 but is derived from those financial statements. Financial
statements for 2021 have been delivered to the registrar of
companies, and those for 2022 will be delivered in due course. The
auditors have reported on those accounts. Their reports for both
years ended 31 December 2022 and 31 December 2021 were not
qualified. Their reports did not contain a statement under Section
498(2) or (3) of the Companies Act 2006.
CLIMATE CHANGE
In preparing the Consolidated Financial Statements management
has considered the impact of climate change, particularly in the
context of the disclosures included in the Strategic Report this
year and the new sustainability goals including the stated net-zero
targets. Climate change is not expected to have a significant
impact on the Group's going concern assessment to June 2024 nor the
viability of the Group over the next five years following
consideration of the below points.
-- The Group has modelled various scenarios to take account of
the risks and opportunities identified with the impact of climate
change to assess the financial impact on its business plan and
viability.
-- The Group has a Strategic Cooperation Agreement with
Mercedes-Benz AG. The agreement provides the Company with access to
a wide range of world-class technologies for the next generation of
luxury vehicles which are planned to be launched through to
2027.
-- The Group is planning to leverage strategic long term
partnerships with vendors to develop EV powertrain technology with
significant capital expenditure planned to support the transition
to a fully electrified portfolio of Sport/GT cars and SUVs by
2030.
-- The Group continues to invest in onsite renewable energy
generation solutions for our facilities and the increased use of
sustainable materials within production and the required capital
investment is included in our five-year forecasts to enable us to
meet our target for net-zero manufacturing facilities by 2030.
-- The Group has a clear plan in place to deliver a transformed
product range to meet climate change regulations impacting the
automotive sector, launching a Plug-In Hybrid Electric Vehicle
("PHEV") by 2024 and targeting the launch of our first Battery
Electric Vehicle ("BEV") in 2025.
Consistent with the above, management have further considered
the impact of climate change on a number of key estimates within
the Financial Statements and has not found climate change to have a
material impact on conclusions reached. Climate change
considerations have been factored into impairment assessments of
the carrying value of non-current assets (such as capitalised
development cost intangible assets) through usage of a pre-tax
discount rate which reflects the individual nature and specific
risks relating to the business and the market in which the Group
operates. In addition the forecast cash flows used in both the
impairment assessments of the carrying value of non-current assets
and the assessment of the recoverability of deferred tax assets
reflect the current energy cost headwinds and future costs to
achieve net-zero manufacturing facilities by 2030 as well as the
forecast volumes for both existing and future car lines given
current order books and our assessment of changing customer
preferences.
GOING CONCERN
The Group meets its day-to-day working capital requirements and
medium term funding requirements through a mixture of $1,143.7m of
First Lien notes at 10.5% which mature in November 2025, $229.1m of
Second Lien split coupon notes at 15% per annum (8.89 % cash and
6.11% PIK) which mature in November 2026, a revolving credit
facility (GBP90.6m) which matures August 2025, facilities to
finance inventory, a bilateral RCF agreement and a wholesale
vehicle financing facility. Under the RCF the Group is required to
comply with a liquidity covenant until May 2022 and a leverage
covenant tested quarterly.
The Directors have developed trading and cash flow forecasts for
the period from the date of approval of these Financial Statements
through 30 June 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.
The forecasts reflect our ultra-luxury performance-oriented
strategy balancing supply and demand and the actions taken to
improve cost efficiency and gross margin. 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. 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 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 Financial Statements.
The Directors have considered a severe but plausible downside
scenario that includes considering the impact of a 25% reduction in
DBX volumes and a 8% reduction in sports volumes from forecast
levels, operating costs higher than the base plan, incremental
working capital requirements such as a reduced deposit inflows or
increased deposit outflows and the impact of the strengthening of
the sterling dollar exchange rate.
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, we also considered the circumstances which would be
needed to exhaust the Group's liquidity over the assessment period,
a reverse stress test. This would indicate that vehicle sales would
need to reduce by 35% from forecast levels without any of the above
mitigations to result in having no liquidity. The likelihood of
these circumstances occurring is considered remote both in terms of
the magnitude of the reduction and that, over such a long period,
management could take substantial mitigating actions, such as
reducing capital spending to preserve liquidity.
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 therefore the
Directors continue to adopt the going concern basis in preparing
the Financial Statements.
2 ACCOUNTING POLICIES
ADJUSTING ITEMS
An adjusting item is disclosed separately in the Consolidated
Statement of Comprehensive Income where the quantum, nature or
volatility of such items would otherwise distort the underlying
trading performance of the Group including where they are not
expected to repeat in future periods. The tax effect is also
included.
Details in respect of adjusting items recognised in the current
and prior year are set out in note 5 in the Financial
Statements.
3 SEGMENTAL REPORTING
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.
2022 2021
Revenue GBPm GBPm
---------------------- ------- -------
Analysis by category
Sale of vehicles 1,291.5 1,005.4
Sale of parts 70.8 65.5
Servicing of vehicles 9.3 10.6
Brands and motorsport 9.9 13.8
====================== ======= =======
1,381.5 1,095.3
---------------------- ------- -------
2022 2021
Revenue GBPm GBPm
--------------------------------------- ------- -------
Analysis by geographic location
United Kingdom 366.0 231.3
The Americas 401.8 302.7
Rest of Europe, Middle East and Africa 260.2 233.8
Asia Pacific 353.5 327.5
======================================= ======= =======
1,381.5 1,095.3
--------------------------------------- ------- -------
4 OPERATING LOSS
The Group's operating loss is stated after
charging/(crediting):
2022 2021
GBPm GBPm
----------------------------------------------------------------------------- ------ ------
Depreciation and impairment of property, plant and equipment 80.7 65.0
Depreciation released from/(absorbed into) inventory under
standard costing (2.9) 0.3
Depreciation and impairment of right-of-use lease assets 11.0 9.3
Amortisation and impairment of intangible assets 227.4 135.0
Amortisation released from/(absorbed into) inventory under
standard costing (8.1) 2.6
----------------------------------------------------------------------------- ------ ------
Depreciation, amortisation and impairment charges included
in administrative and other operating expenses 308.1 212.2
Increase in trade receivable loss allowance - administrative
and other operating expenses 0.6 3.1
Research and development expenditure tax credit (18.4) (16.6)
Net foreign currency differences 8.7 11.2
Cost of inventories recognised as an expense 798.0 641.4
Write-down of inventories to net realisable value 8.9 0.2
(Increase)/decrease in fair value of other derivative contracts (2.3) 0.7
Lease payments (gross of sub-lease receipts)
Plant, machinery and IT equipment* 0.7 0.3
Sub-lease receipts Land and buildings (0.6) (0.6)
Auditor's remuneration:
Audit of these Financial Statements 0.3 0.3
Audit of Financial Statements of subsidiaries
pursuant to legislation 0.4 0.3
Audit-related assurance 0.1 0.1
Services related to corporate finance transactions 0.2 0.1
Research and development expenditure recognised as an expense 14.1 13.0
----------------------------------------------------------------------------- ------ ------
* Election taken by the Group to not recognise right-of-use
lease assets and equivalent lease liabilities for short term and
low-value leases
2022 2021
GBPm GBPm
-------------------------------------------------------------- ------- -------
Total research and development expenditure 246.1 191.2
Capitalised research and development expenditure (232.0) (178.2)
-------------------------------------------------------------- ------- -------
Research and development expenditure recognised as an expense 14.1 13.0
-------------------------------------------------------------- ------- -------
5 ADJUSTING ITEMS
2022 2021
GBPm GBPm
---------------------------------------------------------------- ------ -----
Adjusting operating expenses:
ERP implementation costs(1) (6.9) (4.0)
Defined Benefit pension scheme closure costs(2) (13.5) -
Director settlement and incentive arrangements(3) (3.5) -
Restructuring costs(7) - 2.4
Lease early exit costs(8) - (0.6)
---------------------------------------------------------------- ------ -----
(23.9) (2.2)
---------------------------------------------------------------- ------ -----
Adjusting finance income:
Foreign exchange gain on financial instrument utilised
during refinance transactions(4) 4.1 -
Gain on financial instruments recognised at fair value
through Income Statement(5) 8.4 34.1
Adjusting finance expenses:
Premium paid on the early redemption of Senior Secured
Notes(4) (14.3) -
Write-off of capitalised borrowing fees upon early settlement
of Senior Secured Notes(4) (16.4) -
Professional fees incurred on refinancing expensed directly
to the Income Statement(4) (1.9) -
---------------------------------------------------------------- ------ -----
(20.1) 34.1
---------------------------------------------------------------- ------ -----
Total adjusting items before tax (44.0) 31.9
Tax (charge) on adjusting items(6) - (8.1)
Tax credit due to remeasurement of deferred tax on previously
classified adjusting items(6) - 16.4
---------------------------------------------------------------- ------ -----
Adjusting items after tax (44.0) 40.2
---------------------------------------------------------------- ------ -----
Summary of 2022 adjusting items
1. In the year ended 31 December 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. GBP6.9m of costs have been incurred in the period under
the service contract and expensed to the Income Statement during
the business readiness phase of the project. The project continues
to undergo a phased rollout during 2023 following the previous
migration of finance in 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 31 January 2022, the Group closed its Defined Benefit
Pension Scheme to future accrual incurring a past service cost of
GBP2.8m. Under the terms of the closure agreement, employees were
granted cash payments both in the current year and the following
two financial years totalling GBP8.8m. These costs have been fully
accrued. In addition, the affected the employees were each granted
185 shares incurring a share-based payment charge of GBP0.9m during
the year. 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 GBP1.0m
in the year ended 31 December 2022 and is being accounted for in
accordance with IFRS2 as a cash settled share-based payment scheme.
Further costs are expected in future periods under this guarantee
until the liability crystallises 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. The total
cost associated with these changes was GBP3.5m, of which GBP1.8m
represents joining incentives, GBP0.7m represents severance, and
GBP1.0m comprises social security and other costs. 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
from the appointment of each individual.
4. Following the successful equity raise in September 2022, the
Group paid down $40.3m of First Lien Senior Secured Notes ("SSNs)
and $143.8m of Second Lien SSNs. The early settlement of these
notes incurred a redemption premium of GBP14.3m and transaction
fees of GBP1.9m and resulted in the acceleration of capitalised
borrowing costs of GBP16.4m. The cash impact of the fees and
premium are incurred within the year ended 31 December 2022. The
acceleration of the borrowing costs is a non-cash item. In order to
facilitate the repayment of the SSNs the Group placed a forward
currency contract to purchase US dollars. Due to favourable
movements in the exchange rates, a gain of GBP4.1m was realised in
the Income Statement at the transaction date.
5. The Group issued Second Lien SSNs during the year ended 31
December 2020 which included detachable warrants classified as a
derivative option liability initially valued at GBP34.6m. The
movement in fair value of the liability in the year ended 31
December 2022 resulted in a gain of GBP8.4m (2021: GBP34.1m) being
recognised in the Income Statement. There is no cash impact of this
adjustment.
6. In 2022, nil tax has been recognised as an adjusting item
(2021: GBP8.3m credit) which is not in line with the standard rate
of income tax for the Group of 19% (2021: 19%).This is on the basis
that the adjusting items generate net deferred tax assets,
specifically unused tax losses and interest amounts disallowed
under the corporate interest restriction legislation, which have
not been recognised to the extent that sufficient taxable profits
are not forecast in the foreseeable future to which the unused tax
losses and interest amounts disallowed under the corporate interest
restriction legislation would be utilised. In 2021, a total tax
credit of GBP8.3m was recognised as an adjusting item. The
effective tax rate associated with the tax credit on adjusting
items in the prior period was not in line with the standard rate of
income tax for the Group at 19%. This was due to a GBP16.4m tax
credit attributable to deferred tax balances on items treated as
adjusting in previous years being re-measured at 25%.
Summary of 2021 adjusting items
7. During 2020 the Group provided GBP12.1m for restructuring
costs associated with a reduction in employee numbers to reflect
the lower than originally planned production volumes. In addition
to this, the Group incurred an additional GBP0.3m of phase one
restructuring costs in 2020. A revision to the estimated total
costs resulting from greater natural attrition resulted in GBP2.4m
of the existing provision being released to the Income Statement
during the year ended 31 December 2021. The cash impact of the
restructuring cost is realised in line with the movement in the
provision. The credit to the Consolidated Income Statement in 2021
had no cash impact.
8. In the year ended 31 December 2021 the Group continued to
rationalise its geographical footprint. The Group incurred GBP0.6m
of costs associated with surrendering a lease 30 months early.
These costs have been disclosed consistently with prior periods.
The rationalisation of the geographical footprint is now complete.
The associated cash outflow related to this adjustment will be
realised during 2022 and 2023 in line with the exit agreement.
6 FINANCE INCOME
2022 2021
GBPm GBPm
------------------------------------------------------- ----- -----
Bank deposit and other interest income 3.0 2.3
------------------------------------------------------- ----- -----
Finance income before adjusting items 3.0 2.3
Adjusting finance income items:
Foreign exchange gain on financial instrument utilised
during refinance transactions 4.1 -
Gain on financial instruments recognised at fair value
through Income Statement 8.4 34.1
------------------------------------------------------- ----- -----
Total adjusting finance income 12.5 34.1
------------------------------------------------------- ----- -----
Total finance income 15.5 36.4
------------------------------------------------------- ----- -----
7 FINANCE EXPENSE
2022 2021
GBPm GBPm
-------------------------------------------------------------- ----- -----
Bank loans, overdrafts and senior secured notes 166.0 151.3
Foreign exchange loss on borrowings not designated as
part of a hedging relationship 156.2 12.4
Interest on lease liabilities 4.5 3.9
Net interest expense on the net Defined Benefit liability 1.4 1.3
Interest on contract liabilities held 8.0 4.8
-------------------------------------------------------------- ----- -----
Finance expense before adjusting items 336.1 173.7
Adjusting finance expense items:
Premium paid on the early redemption of Senior Secured
Notes 14.3 -
Write-off of capitalised borrowing fees upon early settlement
of Senior Secured Notes 16.4 -
Professional fees incurred on refinancing expensed directly
to the Income Statement 1.9 -
-------------------------------------------------------------- ----- -----
Total adjusting finance expense 32.6 -
-------------------------------------------------------------- ----- -----
Total finance expense 368.7 173.7
-------------------------------------------------------------- ----- -----
8 TAXATION
2022 2021
GBPm GBPm
---------------------------------------------------------- ----- ------
UK corporation tax on profits 0.2 0.5
Overseas tax 7.4 10.8
Total current income tax charge 7.6 11.3
---------------------------------------------------------- ----- ------
Deferred tax credit
Origination and reversal of temporary differences 29.4 (16.1)
Prior period movement (4.3) (2.4)
Effect of change in deferred tax rate - (17.3)
---------------------------------------------------------- ----- ------
Total deferred tax charge/ (credit) 25.1 (35.8)
---------------------------------------------------------- ----- ------
Total income tax charge/ (credit) in the Income Statement 32.7 (24.5)
---------------------------------------------------------- ----- ------
Tax relating to items credited to other comprehensive
income
Deferred tax
Actuarial movement on Defined Benefit plan 1.7 1.0
Fair value adjustment on cash flow hedges (0.8) (1.2)
Effect of change in deferred tax rate - (6.0)
0.9 (6.2)
---------------------------------------------------------- ----- ------
Tax relating to items charged in equity - deferred tax
Effect of change in deferred tax rate - (4.8)
---------------------------------------------------------- ----- ------
8 TAXATION continued
(A) RECONCILIATION OF THE TOTAL INCOME TAX CREDIT
The tax charge in the Consolidated Statement of Comprehensive
Income for the year is higher (2021: lower) than the standard rate
of corporation tax in the UK of 19% (2021: 19%). The differences
are reconciled below:
2022 2021
GBPm GBPm
---------------------------------------------------------- ------- -------
Loss from operations before taxation (495.0) (213.8)
---------------------------------------------------------- ------- -------
Loss on operations before taxation multiplied by standard
rate of corporation tax in the UK of 19.0% (2021: 19.0%) (94.0) (40.6)
---------------------------------------------------------- ------- -------
Difference to total income tax credit due to effects
of:
Expenses not deductible for tax purposes 2.0 0.5
Movement in unprovided deferred tax on current period
losses and restricted tax interest 84.7 15.0
Movement in unprovided deferred tax on current period
accelerated capital allowances 15.6 -
Derecognition of deferred tax assets 25.6 17.7
Irrecoverable overseas withholding taxes 0.8 1.4
Adjustments in respect of prior periods (4.3) (2.4)
Effect of change in deferred tax rate - (17.3)
Difference in UK tax rates 1.1 (4.8)
Difference in overseas tax rates 1.2 2.9
Other - 3.1
---------------------------------------------------------- ------- -------
Total income tax charge 32.7 (24.5)
---------------------------------------------------------- ------- -------
(B) TAX PAID
Total net tax paid during the year of GBP6.8m (2021:
GBP9.0m).
(C) Factors affecting future tax charges
The UK's main rate of corporation tax will increase from 19% to
25%, effective from 1 April 2023.
9 EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated by dividing the
loss for the year available for equity holders by the weighted
average number of ordinary shares in issue during the year.
On 28 September 2022 the Company issued 559.0m ordinary shares
by way of a rights issue. Due to the shares being issued at
substantially below market price, a bonus issue is deemed to have
taken place. A total of 211.6m shares issued were considered bonus
shares. The weighted average shares used to calculate earnings per
share in both the current and the prior year have been adjusted
accordingly.
2021
Continuing and total operations 2022 Restated*
-------------------------------------------------------------- -------- ----------
Basic earnings per ordinary share
Loss available for equity holders (GBPm) (528.6) (191.6)
Basic weighted average number of ordinary shares (million)(1) 424.7 327.1
Basic loss per ordinary share (pence) (124.5p) (58.6p)
-------------------------------------------------------------- -------- ----------
1.To aid users understanding of the movement in the basic and
diluted earnings per ordinary share presented for the comparative
period, the following table reconciles the numbers presented in the
2021 Annual Report and Accounts to those presented above
Continuing and total operations Bonus element
- 12 months ended 31 December As presented of rights issue As presented
2021 2021 Annual Report (note 11) above
-------------------------------- ------------------- ---------------- ------------
Basic earnings per ordinary
share
Loss available for equity
holders (GBPm) (191.6) - (191.6)
Basic weighted average number
of ordinary shares (million) 115.5 211.6 327.1
Basic loss per ordinary
share (pence) (165.9p) 107.3p (58.6p)
-------------------------------- ------------------- ---------------- ------------
Diluted earnings per ordinary
share
Loss available for equity
holders (GBPm) (191.6) - (191.6)
Diluted weighted average
number of ordinary shares
(million) 115.5 211.6 327.1
Diluted loss per ordinary
share (pence) (165.9p) 107.3p (58.6p)
-------------------------------- ------------------- ---------------- ------------
Diluted earnings per ordinary share is calculated by adjusting
basic earnings per ordinary share to reflect the notional exercise
of the weighted average number of dilutive ordinary share awards
outstanding during the year including the future technology shares
and warrants detailed above. The weighted average number of
dilutive ordinary share awards outstanding during the year are
excluded when including them would be anti-dilutive to the earnings
per share value.
2021
2022 Number
Number Restated*
---------------------------------------------------------------- ------- ----------
Diluted weighted average number of ordinary shares is
calculated as:
Basic weighted average number of ordinary shares (million) 424.7 327.1
Adjustments for calculation of diluted earnings per share:(1)
Long term incentive plans - -
Issue of unexercised ordinary share warrants - -
Issue of tranche 2 shares - -
---------------------------------------------------------------- ------- ----------
Weighted average number of diluted ordinary shares (million) 424.7 327.1
---------------------------------------------------------------- ------- ----------
The number of ordinary shares issued as part of the long term
incentive plans, the potential number of ordinary shares issued as
part of the 2020 issue of share warrants and the future issuance of
shares for access to MBAG technology have been excluded from the
weighted average number of diluted ordinary shares as including
them is anti-dilutive to diluted earnings per share
As part of the Strategic Cooperation Agreement entered into in
December 2020 with MBAG, shares were issued for access to tranche 1
technology. The Agreement includes an obligation to issue further
shares for access to further technology in a future period.
Warrants to acquire shares in the Company were issued alongside the
Second Lien SSNs in December 2020 which can be exercised from 1
July 2021 through to 7 December 2027. As a consequence of the
rights issue during the period (note 11) the number of ordinary
shares issuable via the options was increased by a multiple of 6 to
ensure the warrant holders' interests were not diluted. As at 31
December 2022 96,129,252 options, each entitled to 0.3 ordinary
shares, remain unexercised. Both the future MBAG tranches and the
future issuance of warrants may have a dilutive effect in future
periods if the Group generates a profit.
Adjusted earnings per share is disclosed in note 12 to show
performance undistorted by adjusting items to assist in providing
useful information on the underlying performance of the Group and
enhance the comparability of information between reporting
periods.
10 NET DEBT
The Group defines net debt as current and non-current borrowings
in addition to inventory repurchase arrangements and lease
liabilities, less cash and cash equivalents including cash held not
available for short term use.
2022 2021
GBPm GBPm
--------------------------------------------------------- --------- ---------
Cash and cash equivalents 583.3 418.9
Cash held not available for short term use 0.3 1.8
Inventory repurchase arrangement (38.2) (19.7)
Lease liabilities - current (7.4) (9.7)
Lease liabilities - non-current (92.4) (93.7)
Loans and other borrowings - current (107.1) (114.3)
Loans and other borrowings - non-current (1,104.0) (1,074.9)
--------------------------------------------------------- --------- ---------
Net debt (765.5) (891.6)
--------------------------------------------------------- --------- ---------
Movement in net debt
Net increase/(decrease) in cash and cash equivalents 164.4 (70.5)
Add back cash flows in respect of other components of
net debt:
New borrowings - (108.5)
Proceeds from inventory repurchase arrangement (75.7) (19.0)
Repayment of existing borrowings 172.7 37.3
Repayment of inventory repurchase arrangement 60.0 40.0
Lease liability payments 10.0 9.9
Movement in cash held not available for short term use (1.5) (8.1)
Transaction fees - 1.9
--------------------------------------------------------- --------- ---------
Decrease/(increase) in net debt arising from cash flows 329.9 (117.0)
Non-cash movements:
Foreign exchange loss on secured loan (156.2) (12.4)
Interest added to debt (15.7) (13.4)
Borrowing fee amortisation (25.4) (7.5)
Lease liability interest charge (4.5) (3.9)
Lease modifications (3.8) 0.4
New leases (2.2) (11.5)
Foreign exchange gain and other movements 4.0 0.4
--------------------------------------------------------- --------- ---------
Decrease/(increase) in net debt 126.1 (164.9)
Net debt at beginning of the year (891.6) (726.7)
--------------------------------------------------------- --------- ---------
Net debt at the end of the year (765.5) (891.6)
--------------------------------------------------------- --------- ---------
11 SHARE CAPITAL AND OTHER RESERVES
Capital
Number Nominal Share Share Merger redemption
Allotted, called up and of value capital premium reserve reserve
fully paid shares GBP GBPm GBPm GBPm GBPm
------------------------------- ----------- ------- -------- -------- -------- -----------
Opening balance at 1 January
2021 114,933,587 0.1 11.5 1,108.2 144.0 9.3
Exercise of warrant options(1) 1,525,926 0.1 0.1 15.1 - -
Transfer between reserves - - - 0.1 (0.1) -
Balance as at 31 December
2021 and 1 January 2022 116,459,513 0.1 11.6 1,123.4 143.9 9.3
------------------------------- ----------- ------- -------- -------- -------- -----------
Private placing(2) 23,291,902 0.1 2.4 75.7 - -
Rights issue(3) 559,005,660 0.1 55.9 498.3 - -
Closing balance at 31 December
2022 698,757,075 0.1 69.9 1,697.4 143.9 9.3
------------------------------- ----------- ------- -------- -------- -------- -----------
1. On 15 July 2021 945,131 ordinary shares in the Company were
issued to satisfy the redemption of 18,902,665 warrant options.
GBP9.5m of cash was received for the shares. On 22 July 2021
330,795 ordinary shares in the Company were issued to satisfy the
redemption of 6,615,932 warrant options. GBP3.3m of cash was
received for the shares. On 11 December 2021 250,000 ordinary
shares in the Company were issued to satisfy the redemption of
5,000,003 warrant options. GBP2.5m of cash was received for the
shares. Upon issuance of the shares the corresponding derivative
option liability is extinguished resulting in a total credit to
retained earnings during the year ended 31 December 2021 of
GBP14.8m.
2. On 9 September 2022 the Company issued 23.2m ordinary shares
by way of a private placing. The shares were issued at 335p raising
gross proceeds of GBP78.1m, with GBP2.4m recognised as share
capital and the remaining GBP75.7m recognised as share premium.
3. On 28 September 2022 the Company issued 559.0m ordinary
shares by way of a rights issue. The shares were issued at 103p
raising gross proceeds of GBP575.8m, with GBP55.9m recognised as
share capital and the remaining GBP519.9m recognised as share
premium. Share premium is reduced by GBP21.6m reflecting
transaction fees paid of which GBP3.0m are accrued as at 31
December 2022. Due to the shares being issued at substantially
below market price, a bonus issue is deemed to have taken place. A
total of 211.6m shares issued were considered bonus shares. The
weighted average shares used to calculate earnings per share (see
note 9) has been adjusted accordingly.
12 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 EBIT 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 12 months (LTM) Adjusted EBITDA.
ix) Free cash flow is represented by cash (outflow)/inflow from
operating activities less the cash used in investing activities
(excluding interest received) plus interest paid in the year less
interest received .
Income Statement
2022 2021
GBPm GBPm
--------------------------------------- ------- -------
Loss before tax (495.0) (213.8)
Adjusting operating expenses (note 5) 23.9 2.2
Adjusting finance income (notes 5, 6) (12.5) (34.1)
Adjusting finance expense (notes 5, 7) 32.6 -
Adjusted loss before tax (EBT) (451.0) (245.7)
Adjusted finance income (note 6) (3.0) (2.3)
Adjusted finance expense (note 7) 336.1 173.7
--------------------------------------- ------- -------
Adjusted operating loss (EBIT) (117.9) (74.3)
--------------------------------------- ------- -------
Adjusted operating margin (8.5%) (6.8%)
--------------------------------------- ------- -------
Reported depreciation 88.8 74.6
Reported amortization 219.3 137.6
--------------------------------------- ------- -------
Adjusted EBITDA 190.2 137.9
--------------------------------------- ------- -------
Adjusted EBITDA margin 13.8% 12.6%
--------------------------------------- ------- -------
Earnings per share
2021
2022 Restated*
GBPm GBPm
-------------------------------------------------------------- -------- ----------
Adjusted earnings per ordinary share
Loss available for equity holders (GBPm) (528.6) (191.6)
Adjusting items (note 5)
Adjusting items before tax (GBPm) 44.0 (31.9)
Tax on adjusting items (GBPm) - (8.3)
-------------------------------------------------------------- -------- ----------
Adjusted loss (GBPm) (484.6) (231.8)
Basic weighted average number of ordinary shares (million)(1) 424.7 327.1
Adjusted loss per ordinary share (pence) (114.1p) (70.9p)
Adjusted diluted earnings per ordinary share
Adjusted loss (GBPm) (484.6) (231.8)
Diluted weighted average number of ordinary shares (million) 424.7 327.1
Adjusted diluted loss per ordinary share (pence) (114.1p) (70.9p)
-------------------------------------------------------------- -------- ----------
* Earnings per ordinary share has been adjusted to reflect the
bonus element of the rights issue undertaken in September 2022.
Net debt
2022 2021
GBPm GBPm
-------------------------------------------------------- --------- ---------
Opening cash and cash equivalents 418.9 489.4
Cash inflow from operating activities 127.1 178.9
Cash outflow from investing activities (284.7) (184.1)
Cash inflow/(outflow) from financing activities 315.0 (66.5)
Effect of exchange rates on cash and cash equivalents 7.0 1.2
-------------------------------------------------------- --------- ---------
Cash and cash equivalents at 31 December 583.3 418.9
Cash held not available for short term use 0.3 1.8
Borrowings (1,211.1) (1,189.2)
Lease liabilities (99.8) (103.4)
Inventory repurchase arrangement (38.2) (19.7)
-------------------------------------------------------- --------- ---------
Net debt (765.5) (891.6)
-------------------------------------------------------- --------- ---------
Adjusted EBITDA 190.2 137.9
Adjusted leverage 4.0x 6.5x
-------------------------------------------------------- --------- ---------
Free cash flow
2022 2021
GBPm GBPm
------------------------------------------------------ ------- -------
Net cash inflow from operating activities 127.1 178.9
Cash used in investing activities (excluding interest
received) (286.9) (185.2)
Interest paid less interest received (139.0) (116.9)
------------------------------------------------------ ------- -------
Free cash flow (298.8) (123.2)
------------------------------------------------------ ------- -------
[1] For definition of alternative performance measures please
see Appendix
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