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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Aston Martin Lagonda Global Holdings Plc | LSE:AML | London | Ordinary Share | GB00BN7CG237 | ORD GBP0.10 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.80 | -1.78% | 154.20 | 154.30 | 155.30 | 159.60 | 153.80 | 158.50 | 1,547,209 | 16:35:22 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Motor Vehicles & Car Bodies | 1.63B | -228.1M | -0.2769 | -5.60 | 1.28B |
From Apr 2019 to Apr 2024
TIDMAML
RNS Number : 3487R
Aston Martin Lagonda Global Hld PLC
28 February 2019
28 February 2019
Aston Martin Lagonda Global Holdings plc
Preliminary results for the 12 months to 31 December 2018
Strong performance delivering the Second Century Plan targets for 2018;
Aston Martin Lagonda on track with future plans
Hot Features
Premium
GBPm 31-Dec-18 31-Dec-17 Change
---------- ----------
Total wholesale volumes (#)(1) 6,441 5,098 26%
Revenue(2) 1,096.5 876.0 25%
Adj. EBITDA(3) 247.3 206.5 20%
Adj. operating profit (EBIT)(3) 146.9 124.5 18%
Normalised adjusted diluted EPS
(pence)(3) 27.5 32.9 n.m.
Total Adjusting Items(4) (136.0) 11.4 -
--------------------------------- ---------- ---------- -------
Operating profit 72.8 148.8 (51%)
(Loss) / Profit before tax (68.2) 84.5 n.m.
Diluted EPS (pence) (31.0) 36.5 n.m.
--------------------------------- ---------- ---------- -------
(1) Number of vehicles including specials; (2) Excludes GBP20m reclassification in 2018, see Appendix page 11; (3) For definition of alternative performance measures please see Appendix page 11; (4) For more detail see "Adjusting items" on page 7
Record revenue of GBP1.1bn up 25%, adjusted EBITDA of GBP247m up 20% and total volumes of 6,441 up 26%
-- IPO on the London Stock Exchange in October 2018 marked a key milestone in the Company's history; GBP136m of associated costs, of which GBP29m were cash, led to a reported loss before tax of GBP(68)m (2017: profit GBP85m) and an adjusted profit before tax of GBP68m before one-off IPO costs (2017: GBP73m)
-- Total volumes up 26% which is ahead of guidance; core car volumes up 30%; special editions continue to be in high demand
-- Strong volume growth across all regions; APAC up 44% (with China up 31%), the Americas up 38%, UK up 17% and EMEA (ex. UK) up 13%
-- Net debt at GBP560m (2017: GBP673m) with adjusted net leverage of 2.3x adjusted EBITDA, stable at 2.1x adjusting for IPO and other one-off cash costs
Phase 2 "Core Strengthening" substantially complete; Phase 3 "Portfolio Expansion" progressing well
-- DBX, our first SUV, development on time and St Athan facility materially complete; First production trial (1PT) starting in Q2 2019
-- Cars wholesaled in China under the new "China 6" emissions regulations during December 2018
-- Five models successfully delivered in the year: new Vantage, DBS Superleggera and special editions of the Vanquish Zagato Shooting Brake, Vanquish Zagato Speedster and DB4 GT Continuation
"2018 was an outstanding year for Aston Martin Lagonda, delivering strong growth, with improving revenues, unit sales and adjusted profits. As the UK's only listed luxury automotive group, we have demonstrated our legitimacy in the global luxury market. Our well-defined expansion plans, that combine outstanding high-performance cars with iconic brand-status, are on track as we manage through the uncertainties and disruption impacting the wider auto industry.
Given our progress on the Second Century plan - including completion of our new manufacturing plant at St Athan and our preparations for the DBX, we are confident that Aston Martin Lagonda will deliver another year of growth. Whilst we are mindful of the uncertain and more challenging external environment, particularly in the UK and Europe, we remain disciplined in our execution and maintain our guidance for financial year 2019, whilst also reconfirming our medium-term objectives."
Dr Andy Palmer, Aston Martin Lagonda President and Group CEO
All metrics and commentary in the Group Financial Highlights and Business and Financial Review exclude adjusting items unless stated otherwise.
Certain financial data within this announcement have been rounded.
Enquiries
Investors and Analysts
Charlotte Cowley Director of Investor Relations +44 (0)7771 976764 charlotte.cowley@astonmartin.com
Media
Kevin Watters Director of Communications +44 (0)7764 386683 kevin.watters@astonmartin.com Grace Barnie Corporate Communications Manager +44 (0)7880 903490
grace.barnie@astonmartin.com
Teneo
Tim Burt, Doug Campbell, Haya Herbert-Burns +44 (0)20 7420 3189
-- There will be a presentation today at One Great George Street, Westminster London SW1P 3AA for investors and analysts at 09:30am
-- The presentation can be viewed live on the Aston Martin Lagonda website https://www.astonmartinlagonda.com/investors and can also be accessed live via a listen only dial-in facility on +44-33-3300-0804; PIN: 53918656#
-- The supporting slides and a replay facility will be available on the website later in the day
-- Aston Martin Lagonda will update on first quarter trading on 15 May 2019
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.
GROUP FINANCIAL HIGHLIGHTS
-- Revenue up 25% to GBP1.1bn, as total wholesale volumes reached 6,441 units, up 26% year-on-year
(2017: 5,098 units)
- Growth across all regions, with especially strong performances in APAC including China (+44%) and the Americas (+38%)
- Average selling price per vehicle GBP141k (ex. specials), and GBP157k (inc. specials)
-- Adjusted operating profit (EBIT) increased by 18% to GBP147m, representing an adjusted EBIT margin of 13.4%. Correspondingly, adjusted EBITDA increased by 20% to GBP247m with a margin of 22.6%
- Consultancy income of GBP20m reclassified from revenue to "other income". Prior to this reclassification, adjusted EBIT margin was 13.2% and adjusted EBITDA margin 22.1%
-- Adjusted profit before tax was GBP68m. Adjusting items of GBP136m relating to the IPO resulted in a reported loss before tax of GBP(68)m
-- Net cash generated from operating activities (pre-Capex) was GBP223m (2017: GBP344m), impacted by higher receivables, c.GBP90m of which were associated with supply chain delays in Q4 expected to substantially unwind in H1 2019. Capital expenditure was GBP311m as we continue to invest for the future (2017: GBP294m)
-- Return on Invested Capital (ROIC), measuring the efficient use of capital, was 12.8%
-- Net Debt at 31 December 2018 was GBP560m (2017: GBP673m) with adjusted net leverage of 2.3x adjusted EBITDA, stable at 2.1x adjusting for IPO and other one-off cash costs (2017: net debt GBP417m adjusting for preference shares, 2.0x)
-- Adjusted diluted EPS of 27.5p, normalised for the number of shares in issue since the IPO
Summary income statement
GBPm 31-Dec-18 31-Dec-17 change
---------- ----------
Revenue(1) 1,096.5 876.0 25%
Cost of sales (660.7) (496.2)
---------- ----------
Gross profit(1) 435.8 379.8 15%
Gross margin % 39.7% 43.4%
Operating expenses(2) (308.9) (255.3)
of which depreciation & amortisation (100.4) (82.0)
Other income 20.0 -
Adjusted operating profit 146.9 124.5 18%
Adjusted operating profit margin 13.4% 14.2%
Adjusting operating items (74.1) 24.3
---------- ----------
Operating profit 72.8 148.8 (51%)
Net financing expense (141.0) (64.3)
of which adjusting financing
items (61.9) (12.9)
---------- ----------
(Loss) / profit before tax (68.2) 84.5
Taxation 11.1 (7.7)
---------- ----------
Reported net income (57.1) 76.8 Adj. EBITDA 247.3 206.5 20% Adj. EBITDA margin 22.6% 23.6% Adj. profit before tax 67.8 73.1 (7%) Reported EPS (pence)(3) (31.0) 36.5 Normalised adjusted EPS (pence)(3) 27.5 32.9 ---------------------------------------- ---------- ---------- --------
(1) Excludes GBP20m reclassification; (2) Excludes adjusting items; (3) EPS is presented on a diluted basis. For definition of alternative performance measures please see Appendix and note 12 of the Financial Statements
BUSINESS REVIEW
2018 was a historic year for Aston Martin Lagonda, including our listing on the premium segment of the London Stock Exchange in October. In doing so, we became the only automotive business, and only the second luxury business, to be listed on the London main market.
Successful delivery of the Second Century Plan
Since launching the Second Century Plan (the "Plan") in 2015, Aston Martin Lagonda has successfully transformed into a global luxury business focused on creating the most beautiful and accomplished automotive art in the world. Through the course of the year, we continued to focus on executing against the Plan, and 2018 saw Phase 2, "Core Strengthening", substantially completed with the launch of Vantage and DBS Superleggera. In launching these cars our core sports car range has now been refreshed, with the convertible versions of DBS Superleggera and Vantage to follow, in 2019 and 2020 respectively. Phase 3, "Portfolio Expansion", is progressing well and in line with the Plan. Development of DBX, our first SUV, remains on track and the development of the Aston Martin Valkyrie continues apace. The latest addition to the mid-engined super car range, Project 003, continues to showcase our ambitions in that segment. The re-launch of the Lagonda brand, planned to be the world's first fully electric luxury brand, will complete this third phase of the Second Century Plan.
DBX and St Athan on track
We have materially completed our new manufacturing facility at St Athan in Wales, where the DBX will be produced. The first production trial of the DBX will commence in Q2 2019, with full production starting in H1 2020. We also confirmed in 2018 that St Athan will be our centre for battery electric vehicle production and will therefore be the manufacturing home of Lagonda and the Rapide E, our first electric vehicle, which is on track to start production in 2019.
Exclusive specials programmes once again in high demand
Complementing our portfolio of core cars, our exclusive special-editions continue to be in high demand. Deliveries of the Vanquish Zagato Speedster and Vanquish Zagato Shooting Brake commenced during 2018 and our first continuation model, DB4 GT completed production in the fourth quarter. During 2018 we announced our intention to build on this success, and to mark the centenary of the iconic Zagato design house, with 19 pairs of an ultra-exclusive DB4 GT Zagato Continuation alongside a contemporary DBS Zagato. The first car is planned for delivery during H2 2019. Finally, during 2018 we announced a highly limited run of 25 Goldfinger DB5 Continuation cars, one car for each Bond film produced, with production planned for 2020.
Expanding and upgrading global dealer network
We have continued to strengthen our dealer network to deliver world-class luxury customer experiences and consistent brand presentation. This included opening three new dealers in APAC, increasing our presence in a growing region, and changes in other locations including Madrid and Brussels. At the end of 2018 we had 162 Aston Martin dealerships across 53 countries globally, alongside flagship "brand centres" in key locations.
Plans in place for UK's withdrawal from the European Union
We have recruited a Chief Purchasing and Supply Chain Officer to strengthen the senior team and in anticipation of the United Kingdom's departure from the European Union. In addition, plans are in place to mitigate the impact on the business from potential supply chain disruption should the UK withdraw from the European Union without an agreement or in an unstructured manner. Plans for up to GBP30m of advanced working capital and/or operating expenses have been approved by the Board. If enacted, these one-off items would be reported separately through the year and will be excluded for performance measurement purposes. To date, the company has spent a minimal amount (on racking and packaging) and has committed, but not spent, c.GBP2m on revised supply chain routes.
FINANCIAL REVIEW
Revenue analysis
Wholesale volumes by region
31-Dec-18 31-Dec-17 Change
---------- ----------
UK 1,798 1,538 17%
Americas 1,761 1,277 38%
EMEA ex. UK 1,489 1,316 13%
APAC 1,393 967 44%
Total 6,441 5,098 26%
---------- ----------
Note: Includes specials
Wholesales in 2018 increased for the third year running to 6,441 units, a 26% increase year-on-year with core volumes (ex. specials) up 30%. Regionally, volumes became more balanced as we focused on key growth markets, expanding and upgrading our dealer network capabilities; and investing in appropriate brand and marketing activities. APAC was the fastest growing region, up 44%, now 22% of group volume (including China up 31%, with a particularly strong performance from V8 variants). This was closely followed by the Americas (up 38%), which was the best performing region during the second half of the year with customers responding strongly to new product launches. Wholesales in the UK and EMEA also grew at a double-digit rate.
With the ramp up in new models, October and November saw some supply chain disruption, which was resolved during December. This resulted in higher wholesale volumes in the final month of the year compared to the prior year, as we caught up with deliveries to dealers.
Revenue by Category
GBPm 31-Dec-18 31-Dec-17 Change
---------- ----------
Sale of vehicles 1,010.7 810.1 25%
Sale of parts 61.1 56.0 9%
Servicing of vehicles 14.6 9.9 47%
Brands and motorsport(1) 10.1 - n.m.
Total 1,096.5 876.0 25%
---------- ----------
(1) Excludes GBP20m of consultancy revenue from a significant contract relating to the sale of certain legacy intellectual property in the first half of the year, previously reported in revenue now recognised as "other income"
Revenue growth for the period was 25% driven largely by the increase in wholesale volumes. Total Average Selling Price (ASP) fell slightly to GBP157k (2017: GBP159k) driven by the planned decrease in the ASP of core vehicles to GBP141k (2017: GBP150k) as the model mix shifted as expected towards the new Vantage and DB11 V8 variants, and away from the higher priced DB11 V12 derivatives. This was partially offset by the introduction of DBS Superleggera in Q4, the highest priced of the core model line-up, alongside the delivery of higher priced special vehicles.
Revenue from the Sale of parts increased by 9% to GBP61m and revenue from Servicing by 47% to GBP15m as both continue to benefit from the growth in vehicle sales in recent years.
Revenues from Brands and motorsport of GBP10m were driven by sponsorship and race car sales resulting from Aston Martin's entry into the World Endurance Championship and revenue from AM Brands (AMB), which was acquired from a third party in December 2017. AMB currently manages 18 accounts, including recent relationships with TAG-Heuer, Beats, Waldorf Astoria and Sky. Revenues from Brands and motorsport in 2017 were immaterial and reported under Sale of vehicles.
Operating profit analysis
Adjusted operating profit increased by 18% to GBP147m (2017: GBP125m), with a margin of 13.4%, in-line with guidance. This included consultancy income of GBP20m from a significant contract relating to the sale of certain legacy intellectual property in the first half of the year, previously reported in revenue now recognised as "other income", which is not expected to repeat in 2019. Prior to this reclassification, adjusted operating margin would have been 13.2%. After adjusting operating items relating to the IPO of GBP74m, operating profit was GBP73m, down from GBP149m in 2017.
Gross profit increased by 15% to GBP436m (2017: GBP380m). The gross margin decreased as expected from 43.4% to 39.7% (prior to consultancy income reclassification 40.8%), due to the planned mix shift into new Vantage, partially offset by an outperformance in the higher margin regions and the introduction of the DBS Superleggera. Gross margin also benefited from the sale of fewer, but higher margin special vehicles.
Total operating expenses before depreciation, amortisation and adjusting items increased to GBP209m (2017: GBP173m), with the year-on-year increase driven by investment in marketing and associated selling costs supporting new model launches, the rebalancing of our geographic mix and the additional running costs of the St Athan facility. It also includes costs relating to AMB acquired in December 2017, non-capitalised engineering expenditure of GBP12m (2017: GBP11m) and higher than expected logistics costs due to the supply chain disruption in Q4.
Depreciation and amortisation increased to GBP100m (2017: GBP82m), reflecting the impact of new model launches throughout 2018. The "carry-over-carry-across" (COCA) principle, a cornerstone of the Second Century Plan, where every significant component utilises a part from a previous model or creates a part for a future model, underpinned new Vantage and DBS Superleggera, contributing to an GBP11m decrease in capitalised R&D at GBP202m.
Adjusted EBITDA increased by 20% to GBP247m (2017: GBP207m) with a margin of 22.6% (prior to consultancy income reclassification 22.1%).
Adjusting items
GBPm Income Statement Cash
-----------------
Pre-IPO long-term employee incentives 61.2 23.1
IPO professional fees 12.9 6.0
Adjusting operating items 74.1 29.1
Shareholder pension adjustment - 9.5
Premium on the redemption of preference 46.8 -
shares
Preference share fee write-off 15.1 -
Adjusting financing items 61.9 9.5
-----------------
Total adjusting items(1) 136.0 38.6
----------------------------------------- ----------------- -----
(1) Total operating and financing adjusting items, excludes any tax, for more detail please see note 5 of the Financial Statements
Adjusting items of GBP136m (2017: GBP24m credit) during the year represented the costs associated with the IPO in October. The GBP74m of adjusting operating items comprise GBP61m in respect of pre-IPO long-term incentive and remuneration expenses, and GBP13m in respect of professional fees. The GBP62m of adjusting financing items related to the conversion of preference shares. Of this, GBP47m was the true-up of accrued interest due over the remaining term which became immediately due on conversion. The balance of GBP15m was related to the write-off of fees incurred at the time of executing the preference shares, which were to have been amortised over the original term of the instrument.
Including the shareholder pension adjustment, GBP39m of adjusting items flowed through to cash. Of this sum, GBP23m related to company-wide long-term incentives and IPO bonuses, including associated National Insurance contributions (GBP16m) & other taxes. There was no cash component to the preference share conversion, with the remaining GBP10m of cash costs relating to a pension settlement for selling shareholders, which had no Income Statement impact.
Net financing expense
GBPm 31-Dec-18 31-Dec-17
----------
Bank deposit and other interest income 4.2 3.1
Net gain on financial instruments recognised
at fair value and foreign exchange gain - 32.5
Bank loans and overdrafts (44.6) (45.1)
Interest on preference shares, deposits
held and defined benefit liability (38.7) (41.9)
Net finance expense before adjusting
items (79.1) (51.4)
Adjusting financing items(1) (61.9) (12.9)
Net finance expense (141.0) (64.3)
----------
(1) More information on "Adjusting items" see above
The total net finance expense over the period was GBP141m (2017: GBP64m). The GBP77m increase was primarily due to GBP62m of adjusting financing items shown above. The adjusted net financing expense of GBP79m (2017: GBP51m) rose by GBP28m primarily as a result of a GBP33m fair value and foreign exchange gain that was recognised in 2017. Following the adoption of IFRS 9 from 1 January 2018, such gains or losses are now reported in changes in equity, rather than the Income Statement.
Profit before tax
Adjusted profit before tax was GBP68m (2017: GBP73m). Adjusting for IFRS 9 in 2017, the comparable adjusted profit before tax would have been GBP41m. Profit before tax in the period after adjusting items was GBP(68)m (2017: GBP85m).
Taxation
The effective tax credit rate for the year was 16.3% (2017: 9.1% charge). The tax credit on the adjusted profit before tax was GBP1m reflecting the benefit of the impact of previously unrecognised tax losses (GBP19m), a prior year credit (GBP5m) offset by disallowable interest on the preference shares which were converted to ordinary shares in the year. In 2017 the tax charge also benefitted from the impact of previously unrecognised tax losses of GBP13m.
Earnings per share
The normalised calculation of Earnings Per Share (EPS) is based on the 228m of ordinary shares in issue at 31 December 2018 (this represents an indication of the weighted average number of ordinary shares for evaluating future performance). With adjusted earnings of GBP63m, recognising tax on adjusting items as appropriate, normalised adjusted EPS was 27.5p.
The weighted average number of shares in issue during the year as a result of the share split at IPO was 202m, giving an adjusted diluted EPS of 31.1p and reported diluted EPS was (31.0)p.
Cash Flow / Net Debt
GBPm 31-Dec-18 31-Dec-17
----------
Cash generated from operating activities 222.6 344.0
Cash used in investing activities (306.3) (346.6)
Cash inflow from financing activities 57.8 69.9
Effect of exchange rates on cash and cash
equivalents 2.7 (1.2)
Net cash (outflow) / inflow (23.2) 66.1
---------------------------------------------- ---------- ----------
Cash balance 144.6 167.8
Borrowings 704.1 840.9
---------------------------------------------- ---------- ----------
Net debt 559.5 673.1
Preference share adjustment(1) - (255.9)
Net debt adjusted for preference shares 559.5 417.2
---------------------------------------------- ---------- ----------
Adj. Leverage 2.3x 2.0x
---------------------------------------------- ---------- ----------
IPO and other one-off cash adjustments(2) 38.6 -
Adj. Leverage (after IPO cash adjustments) 2.1x 2.0x
---------------------------------------------- ---------- ----------
ROIC 12.8% 12.4%
---------------------------------------------- ---------- ----------
(1) Preference shares, which were converted into ordinary shares at IPO, are included in borrowings in 2017, for more information please see note 10 of the Financial Statements; (2) Cash costs associated with the IPO and shareholder pension adjustment as at 31 December 2018
Cash generated from operating activities was GBP223m (2017: GBP344m) adversely impacted by a significant increase in working capital, including receivables of c.GBP90m associated with supply chain delays during Q4 and the consequential shifting of wholesale deliveries to the end of the period. This is expected to substantially unwind during the course of H1 2019. Capex increased to GBP311m (2017: GBP294m) as we continued to invest in future products and the St Athan facility. A change in the timing of anticipated spend meant this was lower than originally guided.
Net debt at 31 December 2018 was GBP560m (2017: GBP673m; GBP417m adjusting for preference shares). The increase in borrowings (ex. preference shares) reflected the net cash outflow of GBP23m and the re-valuation of the U.S. tranche of Senior Secured Notes, a new fixed rate loan to finance the construction of the paint shop at the St Athan manufacturing facility (GBP15m), and increased back-to-back facilities in China (GBP12m) alongside a partial drawdown of the RCF (GBP70m), supporting working capital requirements including the receivables increase noted above.
Adjusted net leverage was 2.3x, stable at 2.1x after adjusting for IPO and other one-off cash costs.
Return on Invested Capital (ROIC), measuring the efficient use of capital, was 12.8%. ROIC(1) is defined as net operating profit after tax divided by the sum of gross debt and equity.
No dividends have been paid or proposed as we invest in future growth and focus on the delivery of the Plan.
Outlook
Since our Third quarter trading update in November 2018, geopolitical and economic uncertainties have increased. In response, we have put contingency plans in place to protect production and customer deliveries should the UK leave the European Union without an agreement or in an unstructured manner. Plans for up to GBP30m of advanced working capital and/or operating expenses have been approved by the Board. If enacted, these one-off items would be reported separately through the year and will be excluded for performance measurement purposes. To date the company has spent a minimal amount (on racking and packaging) and has committed, but not spent, c.GBP2m on revised supply chain routes. Whilst we are mindful of these external factors and the uncertain and more challenging external environment, particularly in the UK and Europe, we remain disciplined in our execution and maintain our guidance for financial year 2019, whilst also reconfirming our medium-term objectives.
2019 guidance:
-- Wholesales: 7,100 - 7,300 (reconfirmed) -- Adjusted EBITDA margin: 24%
- Adjusted EBITDA is expected to be lower year-on-year in the first half of 2019 principally due to the non-repeat of the GBP20m of other income relating to the sale of certain intellectual property in the first half of 2018.
-- Adjusted operating profit (EBIT) margin: 13% -- Interest cost: GBP55m and D&A: GBP140m
- IFRS 16, the new lease accounting standard, is effective from 1 January 2019. It is estimated that a right-of-use depreciation charge of c.GBP11m and a lease liability interest charge of c.GBP5m will be recognised in the 2019 Consolidated Income Statement in place of a 2019 estimated IAS 17 operating lease charge of c.GBP12m (see note 1 to Consolidated Financial Statements)
-- Effective tax rate: 20%-22% -- Capex and R&D expenditure: GBP320m-GBP340m
Medium-term guidance (reconfirmed):
-- Wholesales: 14,000 -- Adjusted EBITDA margin: >30% -- Adjusted operating profit (EBIT) margin: >20%
(1) for full calculation please see Appendix.
APPICES
Dealerships
31-Dec-18 31-Dec-17
----------
UK 21 21
Americas 44 45
EMEA ex.UK 55 56
APAC 42 39
Total 162 161
----------
Number of Countries 53 52
--------------------- ---------- ----------
During 2018 we continued to strengthen our dealer network, opening three new dealers in APAC increasing our presence in a key growth region, with openings in other key locations including Madrid and Brussels.
Defined Benefit Pension Scheme
The net liability for defined benefit pension scheme obligations has decreased from GBP47m at 31 December 2017 to GBP39m at 31 December 2018. This decrease in obligations of 17% is largely due to improvements in financial assumptions partially offset by the change in the net minimum funding obligation in excess of assets after consideration of IFRIC 14.
ROIC calculation
GBPm 31-Dec-18 31-Dec-17
----------
Adj. Operating Profit (EBIT) 146.9 124.5
Adj. Profit before Tax 67.8 73.1
Tax Rate (0.9%) 4.9%
Tax (credit) / charge (0.6) 3.6
----------
Adj. NOPAT 147.5 120.9
Senior Secured Notes 590.9 570.2
Unsecured loans 1.4 1.3
Long-term borrowings 12.4 255.9
Short term borrowings 99.4 13.5
Gross Debt 704.1 840.9
Equity 449.4 136.1
Gross Debt + Equity 1,153.5 977.0
ROIC 12.8% 12.4%
----------
Q4 Highlights
GBPm FY 2018 FY 2017 Change Q4-18 Q4-17 Change
-------- -------- ------- ------
Total wholesale volumes
(#)(1) 6,441 5,098 26% 2,366 1,768 34%
Revenue(2) 1,096.5 876.0 25% 389.2 309.2 26%
Adj. EBITDA(3) 247.3 206.5 20% 87.0 85.4 2%
Adj. operating profit(3) 146.9 124.5 18% 55.4 61.0 (9%)
Operating profit 72.8 148.8 (51%) (16.9) 85.3 n.m.
(Loss) / profit before
tax (68.2) 84.5 n.m. (92.0) 62.6 n.m.
-------------------------- -------- -------- ------- ------- ------ -------
Note: For further detail see operating profit analysis on page 6; (1) Number of vehicles including specials; (2) excludes GBP20m reclassification; (3) For definition of alternative performance measures please see Appendix and note 12 of the Financial Statements
Reclassification of Consultancy Income
As Other In Revenue As Other In Revenue
Income (as reported) Income (for information)
(as reported)
---------------
GBPm H1 2018 H1 2018 FY 2018 FY 2018
--------- --------------- ---------------
Revenue 2,299 2,299 6,441 6,441
Gross Profit 424.9 444.9 1,096.5 1,116.5
Gross margin 180.4 200.4 435.8 455.8
Adj. EBITDA(1) 42.5% 45.0% 39.7% 40.8%
Adj. EBITDA margin 105.8 105.8 247.3 247.3
Adj. operating profit(1) 24.9% 23.8% 22.6% 22.1%
Adj. operating margin 64.3 64.3 146.9 146.9
-------------------------- --------- --------------- --------------- -------------------
(1) For definition of alternative performance measures please see Appendix and note 12 of the Financial Statements
New IFRS standards and interpretations adopted during 2018
In 2018 the following standards and amendments were endorsed by the EU, became effective and hence have been adopted by the Group:
-- IFRS 15 Revenue from Contracts with Customers -- IFRS 9 Financial Instruments -- IFRS 2 Share Based Payments (amendments to)
For more information please see note 1 of the of the Financial Statements.
The following standards and interpretations which are not yet effective or endorsed by the EU and have not been early adopted by the Group will be adopted in future accounting periods:
-- IFRS 16 'Leases' (effective 1 January 2019). For detail please see note 1 of the Financial Statements and guidance on page 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 profit (EBIT) is results from operating activities before adjusting operating items;
-- Adjusted EBITDA further removes depreciation, loss/ (profit) on disposal of fixed assets and amortisation from adjusted EBIT;
-- Adjusted EBT is the (loss) / profit before income tax and adjusting items;
-- Adjusted EPS is (loss) / profit after income tax before adjusting items, divided by the weighted average number of ordinary shares in issue during the reporting period;
-- Normalised adjusted EPS is (loss) / profit after income tax before adjusting items, divided by the number of ordinary shares in issue at the end of the reporting period;
-- Net Debt is current and non-current borrowings less cash and cash equivalents, both in-hand and at bank;
-- Adjusted leverage is the ratio of Net Debt, adjusted for adjusting IPO and other one-off cash items, to Adjusted EBITDA;
-- Return on invested capital represents adjusted operating profit after tax divided by the sum of gross debt and equity.
This is the first Financial Review since the Group listed in October 2018. For the majority of the year on which we are reporting a different pre-IPO capital structure was in place and the period also includes significant adjusting items. Accordingly, we have referred to adjusted results where appropriate within this report in order to present a more meaningful analysis.
Further details and definitions of adjusting items are contained in note 12 of the Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31 DECEMBER 2018
2018 2017 restated**
------------------------------- -------------------------------
Adjusting Adjusting
Notes Adjusted items* Total Adjusted items* Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------ --------- ---------- -------- --------- ---------- --------
Revenue 2 1,096.5 - 1,096.5 876.0 - 876.0
Cost of sales (660.7) - (660.7) (496.2) - (496.2)
--------- ---------- -------- --------- ---------- --------
Gross profit 435.8 - 435.8 379.8 - 379.8
Selling and distribution
expenses (89.8) - (89.8) (60.0) - (60.0)
Administrative and
other expenses 5 (219.1) (74.1) (293.2) (195.3) 24.3 (171.0)
Other income 4 20.0 - 20.0 - - -
--------- ---------- -------- --------- ---------- --------
Operating profit 3,5 146.9 (74.1) 72.8 124.5 24.3 148.8
Finance income 6 4.2 - 4.2 35.6 - 35.6
Finance expense 7 (83.3) (61.9) (145.2) (87.0) (12.9) (99.9)
--------- ---------- -------- --------- ---------- --------
(Loss)/profit before
tax 67.8 (136.0) (68.2) 73.1 11.4 84.5
Income tax credit/(charge) 8 0.6 10.5 11.1 (3.6) (4.1) (7.7)
--------- ---------- -------- --------- ---------- --------
(Loss)/profit for
the year 68.4 (125.5) (57.1) 69.5 7.3 76.8
--------- ---------- -------- --------- ---------- --------
Earnings per ordinary
share
Basic 9 (31.0p) 38.3p
Diluted 9 (31.0p) 36.5p
(Loss)/profit attributable
to:
Owners of the group (62.7) 74.2
Non-controlling
interests 5.6 2.6
-------- --------
(57.1) 76.8
-------- --------
Other comprehensive
income
Items that will
never be reclassified
to the Income Statement
Remeasurement of
defined benefit
liability 5.4 2.9
Related income tax 8 (0.9) (0.5)
Items that are or
may be reclassified
to the Income Statement
Foreign exchange
translation differences 0.7 (0.7)
Fair value adjustment
on cash flow hedges
and secured loan,
net of tax (23.5) -
-------- --------
Other comprehensive
income for the period,
net of income tax (18.3) 1.7
--------
Total comprehensive
income for the period (75.4) 78.5
-------- --------
Total comprehensive
income for the period
attributable to:
Owners of the group (81.0) 75.9
Non-controlling
interests 5.6 2.6
-------- --------
(75.4) 78.5
-------- --------
All operations of the Group are continuing.
* Adjusting items are defined in Note 1, with further detail shown in notes 5 and 7.
** The 2017 comparative period has been restated to reflect the adoption of IFRS 15 - see note 1.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Share Capital Non-controlling Translation Hedge Retained Total
Capital Premium Warrants Reserve Interest Reserve Reserve Earnings Equity
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
At 1 January
2018 (restated
-note 1) - 353.7 18.5 94.1 7.6 1.6 - (339.4) 136.1
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Total
comprehensive
income for the
period
(Loss)/profit
for the year - - - - 5.6 - - (62.7) (57.1)
Other
comprehensive
income
Foreign currency
translation
differences - - - - - 0.7 - - 0.7
Fair value
adjustment
on cash flow
hedges and
secured
loan - - - - - - (27.0) - (27.0)
Income tax on
fair value
adjustment
on cash flow
hedges and
secured
loan - - - - - - 3.5 - 3.5
Remeasurement
of defined
benefit
liability - - - - - - - 5.4 5.4
Dividend paid
to
non-controlling
interest - - - - (3.0) - - - (3.0)
Income tax on
other
comprehensive
income (note
8) - - - - - - - (0.9) (0.9)
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Total other
comprehensive
income - - - - (3.0) 0.7 (23.5) 4.5 (21.3)
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Total
comprehensive
income for the
period - - - - 2.6 0.7 (23.5) (58.2) (78.4)
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Transactions
with owners,
recorded
directly
in equity
Shares issued
during the year 2.1 - - - - - - - 2.1
Share premium
on shares
issued - 352.2 - - - - - - 352.2
Capital
reduction - (353.6) - (87.5) - - - 441.1 -
Exercise of
share warrants - - (18.5) - - - - 18.5 -
Charge for the
year under
equity
settled
share-based
payments - - - - - - - 24.1 24.1
Tax on items
credited to
equity - - - - - - - 13.3 13.3
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Total
transactions
with owners 2.1 (1.4) (18.5) (87.5) - - - 497.0 391.7
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
At 31 December
2018 2.1 352.3 - 6.6 10.2 2.3 (23.5) 99.4 449.4
----------------- -------- -------- --------- -------- ---------------- ------------ -------- --------- -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Share Share Share Capital Non-controlling Translation Hedge Retained Total
Capital Premium Warrants Reserve Interest Reserve Reserve Earnings Equity
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- -------
At 1 January
2017 - 368.8 18.5 94.1 5.0 2.3 - (416.0) 72.7
--------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Prior period
adjustment
(note 1) - (15.1) - - - - - - (15.1)
--------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- -------
At 1 January
2017
(restated) - 353.7 18.5 94.1 5.0 2.3 - (416.0) 57.6
Total
comprehensive
income for the
period
Profit for the
year
(restated) - - - - 2.6 - - 74.2 76.8
Other
comprehensive
income
Foreign
currency
translation
differences - - - - - (0.7) - - (0.7)
Remeasurement
of
defined
benefit
liability - - - - - - - 2.9 2.9
Income tax on
other
comprehensive
income
(note 8) - - - - - - - (0.5) (0.5)
--------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- -------
Total other
comprehensive
income - - - - - (0.7) - 2.4 1.7 --------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- ------- Total comprehensive income for the period - - - - 2.6 (0.7) - 76.6 78.5 --------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- ------- Transactions - - - - - - - - - with owners, recorded directly in equity (Prior period adjustment -note 1) At 31 December 2017 - 353.7 18.5 94.1 7.6 1.6 - (339.4) 136.1 --------------- --------- -------- --------- -------- ---------------- ------------ -------- --------- -------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2018
2017
Notes 2018 restated
GBPm GBPm
-------------------------------------------- ------ -------- ---------
Non-current assets
Intangible assets 1,071.7 930.7
Property, plant and equipment 313.0 243.9
Other receivables 1.8 2.1
Deferred tax asset 8 123.1 37.1
-------- ---------
1,509.6 1,213.8
Current assets
Inventories 165.3 127.8
Trade and other receivables 241.6 115.7
Other financial assets 0.1 7.0
Cash and cash equivalents 144.6 167.8
-------- ---------
551.6 418.3
-------- ---------
Total assets 2,061.2 1,632.1
-------- ---------
Current liabilities
Borrowings 99.4 13.5
Trade and other payables 696.1 483.1
Income tax payable 4.9 2.7
Other financial liabilities 4.2 18.2
Provisions 10.8 12.0
-------- ---------
815.4 529.5
Non-current liabilities
Borrowings 604.7 827.4
Trade and other payables 12.2 17.7
Other financial liabilities 4.4 -
Employee benefits 38.7 46.9
Provisions 25.4 13.9
Deferred tax liabilities 8 111.0 60.6
-------- ---------
796.4 966.5
-------- ---------
Total liabilities 1,611.8 1,496.0
-------- ---------
Net assets 449.4 136.1
-------- ---------
Capital and reserves
Share capital 2.1 -
Share premium 352.3 353.7
Share warrants - 18.5
Capital reserve 6.6 94.1
Translation reserve 2.3 1.6
Hedge reserve (23.5) -
Retained earnings 99.4 (339.4)
-------- ---------
Equity attributable to owners of the group 439.2 128.5
Non-controlling interests 10.2 7.6
-------- ---------
Total shareholders' equity 449.4 136.1
-------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER 2018
2017
2018 restated
Notes GBPm GBPm
-------------------------------------------------- ------ -------- ----------
Operating activities
(Loss)/profit for the year (57.1) 76.8
Adjustments to reconcile (loss)/profit
for the year to net cash inflow from operating
activities
Tax on continuing operations 8 (11.1) 7.7
Net finance costs 141.0 64.3
Other non-cash movements 13.3 (25.1)
Loss/(profit) on sale of property, plant
and equipment 3 0.4 (0.1)
Depreciation and impairment of property,
plant and equipment 3 32.4 27.4
Amortisation and impairment of intangible
assets 3 67.6 54.7
Difference between pension contributions
paid and amounts recognised in Income Statement (3.8) (21.8)
Increase in inventories (37.5) (10.6)
Increase in trade and other receivables (122.4) (7.8)
Increase in trade and other payables 197.7 166.7
Movement in provisions 10.0 12.5
-------- ----------
Cash generated from operations 230.5 344.7
Income taxes paid 8 (7.9) (0.7)
-------- ----------
Net cash inflow from operating activities 222.6 344.0
-------- ----------
Cash flows from investing activities
Interest received 6 4.2 3.1
Proceeds on the disposal of property, plant
and equipment - 0.2
Loan to shareholders - (5.6)
Payment to acquire subsidiary undertaking - (50.1)
Payments to acquire property, plant and
equipment (101.9) (75.0)
Payments to acquire intangible assets (208.6) (219.2)
-------- ----------
Net cash used in investing activities (306.3) (346.6)
-------- ----------
Cash flows from financing activities
Interest paid (42.2) (49.8)
Proceeds from equity share issue 4.6 -
Dividend paid to non-controlling interest (3.0) -
Movement in existing borrowings 0.3 (474.3)
New borrowings 98.1 606.1
Transaction fees on new borrowings - (12.1)
-------- ----------
Net cash inflow from financing activities 57.8 69.9
-------- ----------
Net (decrease)/increase in cash and cash
equivalents (25.9) 67.3
Cash and cash equivalents at the beginning
of the year 167.8 101.7
Effect of exchange rates on cash and cash
equivalents 2.7 (1.2)
-------- ----------
Cash and cash equivalents at the end of
the year 144.6 167.8
-------- ----------
Notes to the Consolidated Financial Statements
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 International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").
The Financial Statements are prepared on a going concern basis and under the historical cost convention.
The financial information set out does not constitute the Company's statutory accounts for the years ended 31 December 2018 or 2017 but is derived from those accounts. Statutory accounts for 2017 have been delivered to the registrar of companies, and those for 2018 will be delivered in due course. The auditors have reported on those accounts. Their report was unqualified, did not include references to any matters by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
On 3 September 2018 the Company obtained control of the entire share capital of Aston Martin Holdings (UK) Limited by way of a share for share exchange with one share in the Company being exchanged for one share in Aston Martin Holdings (UK) Limited. Consequently, the Group incorporated the assets and liabilities of Aston Martin Holdings (UK) Limited at their pre-combination carrying amounts without fair value uplift from the first date presented in these financial statements. The opening equity balance as of 1 January 2017 reflects the equity of Aston Martin Holdings (UK) Limited. The share capital of GBP2.1m as of 31 December 2018 reflects the share capital of the Company.
Although the share for share exchange resulted in a change in legal ownership, in substance the Consolidated Financial Statements reflect the continuation of the pre-existing group headed by Aston Martin Holdings (UK) Limited. The transaction has been accounted for as a reverse acquisition in line with IFRS 3.
The comparatives presented in these Financial Statements are the consolidated results of Aston Martin Holdings (UK) Limited. The prior year Consolidated Statement of Financial Position reflects the share capital structure of Aston Martin Holdings (UK) Limited. The current year Consolidated Statement of Financial Position presents the legal change in the ownership of the Group. The Consolidated Statement of changes in equity explains the impact of these transactions in more detail.
Prior year restatement
In 2013 Prestige Motor Holdings S.A., which is controlled by Investindustrial V L.P., acquired an equity interest in the group for a consideration of GBP150.0m. The agreement provided for a potential partial refund of this consideration or the issue of additional ordinary shares, dependent upon the average deficit of the defined benefit pension scheme over the four year period to June 2017. In the event a refund of GBP15.1m was made to Prestige Motor Holdings S.A with GBP5.6m paid in 2017 and GBP9.5m paid in 2018. The Group's share premium account at 1 January 2017 and therefore 1 January 2018 has been restated by GBP15.1m to reflect the total adjustment.
The GBP5.6m is shown as a receivable from shareholder at 31 December 2017 as this liability could not be settled until completion of the capital reduction undertaken during 2018 as distributable reserves were required to allow such settlement.
The impact on the Group Consolidated Financial Statements is:
As at 31 December 2017 GBPm
------------------------------------------------------------------ -------
Other financial assets before correction 1.4
Other financial assets as restated in the Consolidated Statement
of Financial Position and note 18 7.0
-------
5.6
Other financial liabilities before correction (3.1)
Other financial liabilities as restated in the Consolidated
Statement of Financial Position and note 22 (18.2)
-------
(15.1)
-------
Impact on Net assets (9.5)
-------
Share premium before correction 368.8
Share premium as restated in the Consolidated Statement of
Financial Position 353.7
-------
(15.1)
-------
Transactions with owners, recognised directly in equity before
correction (5.6)
Transactions with owners, recognised directly in equity as -
restated in the Consolidated Statement of Financial Position
5.6
-------
Impact on equity attributable to owners of the Group (9.5)
------------------------------------------------------------------ -------
There is no impact on the 2017 Income Statement, earnings per share or retained earnings as a result of this prior year adjustment.
New IFRS standards and interpretations adopted during 2018
In 2018 the following standards and amendments were endorsed by the EU, became effective and hence have been adopted by the Group:
-- IFRS 15 Revenue from Contracts with Customers -- IFRS 9 Financial Instruments -- IFRS 2 Share Based Payments (amendments to)
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.
The Group has carried out a detailed impact assessment of the provisions of IFRS 15 covering:
-- incentives -- restoration work -- deposits -- barter arrangements -- servicing -- residual value guarantees -- warranty -- separate performance obligations -- bill and hold
The impact on the results of the Group for 2017 and 2018 is the recognition of an interest expense on customer deposits held for a period in excess of one year. IFRS 15 did not have a material impact on the Group's accounting policies with respect to the timing of revenue recognition.
The Group has imputed an interest expense on deposits held for greater than 12 months to reflect the time-value of the funds at the Group's cost of borrowing. This deposit is held as a liability in the Statement of Financial Position with the imputed interest charged to the Income Statement within finance expenses. When the vehicles are sold, the liability will be released and the revenue relating to these vehicle sales will be credited to the Income Statement. The Group has fully retrospectively adopted the standard for 2017.
The following tables summarise the impact of adopting IFRS 15 on the Group's Consolidated Statement of Financial Position as at 31 December 2017, its Consolidated Income Statement and Consolidated Statement of Cash Flows for the year then ended for each of the line items affected.
Consolidated Statement of Financial Position
As at 31 December 2017 Pre- adoption
GBPm of IFRS IFRS 15
15 Adjustment As restated
-------------------------- -------------- ------------ ------------
Trade and other payables 480.9 2.2 483.1
-------------------------- -------------- ------------ ------------
Consolidated Income Statement
For the year ended 31 December 2017 Pre- adoption
GBPm of IFRS IFRS 15
15 Adjustment As restated
------------------------------------- -------------- ------------ ------------
Finance expense (note 7) (97.7) (2.2) (99.9)
Profit before tax 86.7 (2.2) 84.5
Basic earnings per share 39.4p (1.1p) 38.3p
Diluted earnings per share 37.6p (1.1p) 36.5p
------------------------------------- -------------- ------------ ------------
Consolidated Statement of Cash Flows
For the year ended 31 December 2017 Pre- adoption
GBPm of IFRS IFRS 15
15 Adjustment As restated
------------------------------------- -------------- ------------ ------------
Profit for the year 79.0 (2.2) 76.8
Other non-cash movements (27.3) 2.2 (25.1)
------------------------------------- -------------- ------------ ------------
The impact of adopting IFRS 15 on the Group's Consolidated Statement of Financial Position as at 31 December 2018, its Consolidated Income Statement and Consolidated Statement of Cash Flows for the year then ended for each of the line items affected is detailed below.
Consolidated Statement of Financial Position
As at 31 December 2018 Pre-adoption
GBPm of IFRS IFRS 15
15 Adjustment As reported
-------------------------- ------------- ------------ ------------
Trade and other payables 690.5 5.6 696.1
-------------------------- ------------- ------------ ------------
Consolidated Income Statement
For the year ended 31 December 2018 Pre- adoption
GBPm of IFRS IFRS 15
15 Adjustment As reported
------------------------------------- -------------- ------------ ------------
Finance expense (note 7) (139.6) (5.6) (145.2)
Loss before tax (62.6) (5.6) (68.2)
Basic earnings per share (28.2p) (2.8p) (31.0p)
Diluted earnings per share (28.2p) (2.8p) (31.0p)
------------------------------------- -------------- ------------ ------------
Consolidated Statement of Cash Flows
For the year ended 31 December 2018 Pre- adoption
GBPm of IFRS IFRS 15
15 Adjustment As reported
------------------------------------- -------------- ------------ ------------
Loss for the year (51.5) (5.6) (57.1)
Other non-cash movements 7.7 5.6 13.3
------------------------------------- -------------- ------------ ------------
No significant deposits were held for periods in excess of one year prior to 2017 and therefore there is no restatement to retained earnings at 1 January 2017.
There is no impact on the non-controlling interest for the periods ending 31 December 2018 and 31 December 2017.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments became effective on 1 January 2018 and the Group has adopted the standard from this date. The Group meets requirements for adopting hedge accounting in certain scenarios.
Changes in accounting policies resulting from the adoption of IFRS 9 have been applied retrospectively, except as described below.
-- The Group had no hedging relationships designated under IAS 39 at 31 December 2017.
-- The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.
-- The determination of the business model within which a financial asset is held.
-- The need for designation and revocation of previous designations of certain financial assets and financial liabilities as measured at fair value through Profit or Loss.
-- Changes to hedge accounting policies have been applied prospectively.
-- There is no impact on the 2017 comparative Earnings per Share as a result of adopting IFRS9.
From 1 January 2018, changes in the fair value of financial assets and liabilities are now included in the Other Comprehensive Income and the hedging reserve whereas previously they were included in finance interest or expense within the Income Statement.
Changes in the fair value of foreign currency contracts and the US Dollar denominated loan, to the extent determined to be an effective hedge, will be shown within Other Comprehensive Income and reserves as a hedging reserve, with the respective financial liability shown in the Consolidated Statement of Financial Position. The Group has adopted the simplified approach to credit losses relating to trade receivables. Having used a lifetime expected loss allowance for all amounts not covered by the Group's trade receivable insurance policy there has been no material change to the Group Consolidated Financial Statements.
IFRS 2 Share Based Payments (amendments to)
The adoption of IFRS 2 'Share Based Payments (amendments to)' has not had a material impact on the Group.
The following standards and interpretations which are not yet effective or endorsed by the EU and have not been early adopted by the Group will be adopted in future accounting periods:
- IFRS 16 'Leases' (effective 1 January 2019).
IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. Under IFRS 16 a lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The Group will apply the exemptions for short-term leases and leases of low value items and has chosen to adopt the modified retrospective approach.
The Group has assessed the impact of IFRS 16 and expects to recognise a right-of-use asset of c.GBP86m in the Statement of Financial Position at 1 January 2019 with a reduction in accruals due to lease incentives received from the lessor, and a lease liability of c.GBP118m. It is estimated that a corresponding right-of-use depreciation charge of c.GBP11m and a lease liability interest charge of c.GBP5m will be recognised in the 2019 Consolidated Income Statement in place of a 2019 estimated IAS 17 operating lease charge of c.GBP12m (2018: GBP10m).
Significant lease incentive payments received will be deducted from the value of the right-of-use asset with a corresponding entry to deferred income.
Lease payments for short-term leases, low-value assets and variable lease payments have not been included in the measurement of the lease liability and will be classified in the Statement of Consolidated Cash Flows as cash flows from operating activities. The principal portion of the lease payments will be recognised within cash flows from financing activities and the interest portion within cash flows from operating activities.
Management have implemented new processes and procedures throughout the Group to ensure compliance with the new accounting standard.
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. The tax effect is also included.
Details in respect of the adjusting items recognised in the current and prior year are set out in note 5 and 7.
2. Segmental information
Operating segments are defined as components of the Group about which separate financial information is available and is evaluated regularly by the chief operating decision-maker in assessing performance. The Group operates in the automotive segment. The automotive segment includes all activities relating to design, development, manufacture and marketing of vehicles, as well as the servicing and sale of related parts from which the Group derives its revenues. The Group has only one operating segment, so no separate segment reporting is given.
Revenue 2018 2017
GBPm GBPm
-------------------------------------- --------- -------
Analysis by category
Sale of vehicles 1,010.7 810.1
Sale of parts 61.1 56.0
Servicing of vehicles 14.6 9.9
Brands and motorsport 10.1 -
--------- -------
1,096.5 876.0
--------- -------
Revenue 2018 2017
GBPm GBPm
-------------------------------------- --------- -------
Analysis by geographic location
United Kingdom 255.4 227.9
The Americas 305.7 242.1
Rest of Europe, Middle East & Africa 247.1 201.2
Asia Pacific 288.3 204.8
--------- -------
1,096.5 876.0
--------- -------
3. Operating Profit
The Group operating profit is stated after charging/(crediting):
2018 2017
GBPm GBPm
---------------------- ------------------------------ -------- --------
Depreciation and impairment of property, plant
and equipment 32.4 27.4
Amortisation and impairment of intangible assets 67.6 54.7
Loss/(profit) on sale of property, plant and
equipment 0.4 (0.1)
Provision for the impairment of trade receivables 0.1 -
Net foreign currency differences 1.7 3.8
Cost of inventories recognised as an expense 552.9 435.9
Write-down of inventories to net realisable
value 1.1 1.9
Operating lease payments (gross of sublease
receipts)
* Land and buildings 7.5 5.3
* Plant and machinery 2.2 1.6
Operating sublease
receipts * Land and buildings (0.3) (0.3)
Research and development expenditure recognised
as an expense 11.5 11.1
Research and development expenditure is further
analysed as follows:
Total research and development expenditure 213.8 224.4
Capitalised research and development expenditure (202.3) (213.3)
-------- --------
Research and development expenditure recognised
as an expense 11.5 11.1
-------- --------
4. Other income
2018 2017
GBPm GBPm
------------------------------ ------ ------
Sale of intellectual property 20.0 -
During the year ended 31 December 2018 other income of GBP20.0m was recognised from the sale of certain legacy intellectual property.
5. Adjusting items
2017
2018 restated
GBPm GBPm
-------------------------------- ------- ----------
Adjusting operating expenses:
Initial public offering costs:
Staff incentives (61.2) -
Professional fees (12.9) -
------- ----------
(74.1) -
Past service pension benefit - 24.3
------- ----------
Adjusted items before tax (74.1) 24.3
Tax on adjusting items 10.5 (4.1)
------- ----------
Adjusted items after tax (63.6) 20.2
------- ----------
On 8 October 2018 the Company listed on the London Stock Exchange for which costs of GBP74.1m were incurred.
In 2017 the benefits provided by the defined benefit pension scheme were agreed to change from being based on final salary to benefits based on career average revalued earnings (CARE) which resulted in a past service pension benefit.
6. Finance income
2018 2017
GBPm GBPm
---------------------------------------------- ------ ------
Bank deposit and other interest income 4.2 3.1
Net gain on financial instruments recognised
at fair value through the Income Statement - 7.6
Net foreign exchange gain - 24.9
------ ------
Total finance income 4.2 35.6
------ ------
7. Finance expense
2018 2017
GBPm restated
GBPm
---------------------------------------------------- ------ ----------
Bank loans and overdrafts 44.6 45.1
Net interest expense on the net defined benefit
liability 1.1 1.8
Interest on preference shares classified as
financial liabilities 32.0 37.9
Discounting of long-term deposits held 5.6 2.2
------ ----------
Finance expense before adjusting items 83.3 87.0
Adjusted finance expense items:
Premium paid on the redemption of preference 46.8 -
shares
Preference share fee write-off 15.1 -
Loan interest on the redemption of Senior Secured
Loan notes and Senior Subordinated PIK notes - 10.5
Write-off of capitalised arrangement fees on
Senior Secured Loan notes and Senior Subordinated
PIK notes - 2.4
------ ----------
Total finance expense 145.2 99.9
------ ----------
8. Tax expense on continuing operations
2018 2017
Current tax (credit)/charge GBPm GBPm
------------------------------------------------------ ------- ------
UK corporation tax on profits 1.3 3.1
Overseas tax 6.4 1.4
Prior period movement 0.9 -
------- ------
Total current income tax charge 8.6 4.5
------- ------
Deferred tax (credit)/charge
Origination and reversal of temporary differences (13.5) 4.2
Prior period movement (6.2) (1.0)
------- ------
Total deferred tax (credit)/charge (19.7) 3.2
------- ------
Total tax (credit)/charge in the Income Statement (11.1) 7.7
------- ------
Tax relating to items charged in other comprehensive
income
Deferred tax
Actuarial gains on defined benefit pension plan 0.9 0.5
Fair value adjustment on cash flow hedges (3.5) -
------- ------
(2.6) 0.5
------- ------
Tax relating to items charged in equity
Deferred tax
Share based payments (13.3) -
------- ------
(b) Reconciliation of the total tax (credit)/charge
The tax (credit)/charge in the Consolidated Statement of Comprehensive Income for the year is lower than the standard rate of corporation tax in the UK of 19.00% (2017: 19.25%). The differences are reconciled below:
2017
2018 restated
GBPm GBPm
---------------------------------- ------- ------- ------- ----------
(Loss)/profit from operations
before taxation (68.2) 84.5
(Loss)/profit on operations
before taxation multiplied
by standard rate of corporation
tax in the UK of 19.00% (2017:
19.25%) 19.00% (13.0) 19.25% 16.3
Difference to current tax
(credit)/charge due to effects
of:
Recognition of previously
unrecognised tax losses (18.9) (13.0)
Expenses not deductible for
tax purposes 21.3 8.6
Adjustments in respect of
prior periods (5.3) (1.0)
Effect of change in tax laws (0.1) (2.3)
Difference in overseas tax
rates 1.5 (0.9)
Other 3.4 -
------- ----------
Total tax (credit)/charge (11.1) 7.7
------- ----------
The adjustments in respect of prior periods for 2018 primarily related to additional tax allowances claimed in the tax return for 2017 which were not assumed at the time of preparing the 31 December 2017 financial statements. The previously unrecognised tax losses relate to losses that became available for utilisation following the group reorganisation prior to the Initial Public Offering.
(c) Tax paid
Total net tax paid during the year of GBP7.9m (2017: GBP0.7m) comprises GBP7.7m (2017: GBP0.7m) paid in respect of operating activities and GBP0.2m (2017: GBPnil) paid in respect of investing activities. A reconciliation of tax paid to the current tax credit in the income statement follows:
2018 2017
GBPm GBPm
------------------------------------------------- ------ ------
Current tax credit in the income statement (8.6) (4.5)
------ ------
Total current tax charge (8.6) (4.5)
------ ------
Timing differences of cash tax paid and foreign
exchange differences 0.7 5.2
------ ------
Tax paid per cash flow 7.9 0.7
------ ------
Cash tax rate on total profits n/a 0.9%
(d) Factors affecting future tax charges
A reduction in the UK corporation tax rate to 17% (effective 1 April 2020) was substantially enacted on 6 September 2016. This will reduce the Group's future current tax charge accordingly. The deferred tax assets and liabilities at 31 December 2018 have been calculated based on this rate.
(e) Deferred tax
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Assets Liabilities Liabilities
2018 2017 2018 2017
GBPm GBPm GBPm GBPm
------------------------------------- -------- ------- ------------ ------------
Property, plant and equipment (49.3) - - 8.8
Intangible assets - - 111.0 51.8
Employee benefits (6.6) (8.0) - -
Provisions (0.6) (1.4) - -
Interest deductible in future (7.6) - - -
periods
Losses (59.0) (27.7) - -
-------- ------- ------------ ------------
Tax (assets)/liabilities (123.1) (37.1) 111.0 60.6
-------- ------- ------------ ------------
Set off of tax liabilities/(assets) 111.0 37.1 (111.0) (37.1)
-------- ------- ------------ ------------
Recognised
1 January in income Recognised Acquisition 31 December
Movement in deferred 2018 and OCI in equity of subsidiary 2018
tax in 2018 GBPm GBPm GBPm GBPm GBPm
---------------------- ---------- ----------- ----------- --------------- ------------
Property, plant and
equipment 8.8 (58.1) - - (49.3)
Intangible assets 51.8 59.2 - - 111.0
Employee benefits (8.0) 1.4 - - (6.6)
Provisions (1.4) 0.8 - - (0.6)
Interest deductible
in future periods - (7.6) - - (7.6)
Losses (27.7) (18.0) (13.3) - (59.0)
---------- ----------- ----------- --------------- ------------
23.5 (22.3) (13.3) - (12.1)
---------- ----------- ----------- --------------- ------------
Recognised
1 January in income Recognised Acquisition 31 December
Movement in deferred 2017 and OCI in equity of subsidiary 2017
tax in 2017 GBPm GBPm GBPm GBPm GBPm
---------------------- ---------- ----------- ----------- --------------- ------------
Property, plant and
equipment (0.3) 9.1 - - 8.8
Intangible assets 42.6 (0.2) - 9.4 51.8
Employee benefits (11.9) 3.9 - - (8.0)
Provisions (1.7) 0.3 - - (1.4)
Losses (18.2) (9.5) - - (27.7)
---------- ----------- ----------- --------------- ------------
10.5 3.6 - 9.4 23.5
---------- ----------- ----------- --------------- ------------
Deferred tax assets have not been recognised in respect of the following items:
2018 2017
GBPm GBPm
Tax losses - 18.9
------- ------
Deferred tax assets have not been recognised where it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.
A deferred tax asset has been recognised in respect of losses in trading companies where future trading profits are probable.
9. Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing the (loss)/profit for the year available for equity holders by the weighted average number of ordinary shares in issue in the year.
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.
Information concerning non-GAAP measures can be found in note 12.
Continuing and total operations 2017
2018 restated
----------------------------------------------------- -------- ----------
Basic earnings per ordinary share
(Loss)/profit available for equity holders (GBPm) (62.7) 74.2
Basic weighted average number of ordinary shares
(million) 202.1 193.8
Basic earnings per ordinary share (pence) (31.0p) 38.3p
Diluted earnings per ordinary share
(Loss)/profit available for equity holders (GBPm) (62.7) 74.2
Diluted weighted average number of ordinary
shares (million) 202.1 203.2
Diluted earnings per ordinary share (pence) (31.0p) 36.5p
2018 2017
Number Number
----------------------------------------------------- -------- ----------
Diluted weighted average number of ordinary
shares is calculated as:
Basic weighted average number of ordinary shares(1)
(million) 202.1 193.8
Adjustments for calculation of diluted earnings
per share(2) :
Options(3) - 1.3
Warrants - 8.1
-------- ----------
Weighted average number of ordinary shares and
potential ordinary shares (million) 202.1 203.2
-------- ----------
1. Additional ordinary shares issued as a result of the share split conducted in 2018 have been incorporated in the earnings per share calculation in full without any time apportionment.
2. The adjustments made in calculating the weighted average number of ordinary and potential ordinary shares have been increased to reflect the share split in full without any time apportionment in the comparative period.
3. The number of options disclosed in the year ended 31 December 2017 does not include the ordinary shares awarded under the executive legacy Long Term Incentive Plan in 2018. The vesting condition at the year ended 31 December 2017 was not probable in accordance with IFRS 2.
Adjusted earnings per share is disclosed in note 12 to show performance undistorted by adjusting items and give a more meaningful comparison of the Group's performance.
10. Net Debt
2018 2017
GBPm GBPm
------------------------------------------------------ -------- --------
Cash and cash equivalents 144.6 167.8
Loans and other borrowings - current (99.4) (13.5)
Loans and other borrowings - non-current (604.7) (571.5)
Preference shares - (255.9)
-------- --------
Net debt (559.5) (673.1)
-------- --------
Movement in net debt
Net (decrease)/increase in cash and cash equivalents (25.9) 67.3
Add back cash flows in respect of other components
of net debt:
New borrowings (98.1) (606.1)
Movement in existing borrowings (0.3) 474.3
Transaction fees - 12.1
-------- --------
Increase in net debt arising from cash flows (124.3) (52.4)
Non-cash movements:
Conversion of preference shares to ordinary 302.9 -
shares
Foreign exchange (loss)/gain on secured loan (18.4) 24.9
Interest added to debt (49.3) (44.9)
Exchange and other adjustment 2.7 (1.2)
-------- --------
Decrease/(increase) in net debt 113.6 (73.6)
Net debt at beginning of the year (673.1) (599.5)
-------- --------
Net debt at the end of the year (559.5) (673.1)
-------- --------
11. Capital Commitments
Capital expenditure contracts to the value of GBP94.2m (2017: GBP58.5m) have been committed but not provided for as at 31 December 2018.
12. Non-GAAP measures
In the reporting of financial information, the Directors have adopted various Alternative Performance Measures ("APMs"), previously called 'Non GAAP measures'. 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 profit/(loss) before income tax and adjusting items as shown in the Consolidated Income Statement.
ii) Adjusted EBIT is profit/(loss) from operating activities before adjusting items.
iii) Adjusted EBITDA further removes depreciation, loss/(profit) on sale of fixed assets and amortisation from adjusted EBIT.
iv) Adjusted Earnings Per Share is (loss)/profit after income 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.
v) Normalised Adjusted Earnings Per Share is (loss)/profit after income tax before adjusting items as shown in the Consolidated Income Statement, divided by the closing number of ordinary shares in issue at the end of the reporting period.
vi) Net Debt is current and non-current borrowings less cash and cash equivalents as shown in the Consolidated Statement of Financial Position.
vii) Adjusted leverage is represented by the ratio of Net Debt to Adjusted EBITDA as defined above.
viii) Return on Invested Capital represents adjusted operating profit after tax divided by the sum of gross debt and equity.
Income statement
2018 2017
GBPm GBPm
--------------------------------------------- ------- -------
(Loss)/profit before tax (68.2) 84.5
Adjusting operating expenses/(income) (note
5) 74.1 (24.3)
Adjusting finance expenses (note 7) 61.9 12.9
------- -------
Adjusted profit before tax (EBT) 67.8 73.1
Adjusted finance income (4.2) (35.6)
Adjusted finance expense 83.3 87.0
------- -------
Adjusted operating Profit (EBIT) 146.9 124.5
Reported depreciation 32.4 27.4
Reported amortisation 67.6 54.7
Loss/(profit) on disposal of fixed assets 0.4 (0.1)
------- -------
Adjusted EBITDA 247.3 206.5
------- -------
Earnings per share
2018 2017
GBPm GBPm
-------------------------------------------------------- ------- -------
Adjusted earnings per ordinary share
(Loss)/profit available for equity holders (GBPm) (62.7) 74.2
Adjusting items (note 5 and 7)
Adjusting items before tax (GBPm) 136.0 (11.4)
Tax on adjusting items (GBPm) (10.5) 4.1
------- -------
Adjusted earnings (GBPm) 62.8 66.9
Basic weighted average number of ordinary shares(1)
(million) 202.1 193.8
Adjusted earnings per ordinary share (pence) 31.1p 34.5p
Adjusted diluted earnings per ordinary share
Adjusted earnings (GBPm) 62.8 66.9
Diluted weighted average number of ordinary
shares(1) (million) 202.1 203.2
Adjusted diluted earnings per ordinary share
(pence) 31.1p 32.9p
2018 2017
GBPm GBPm
Normalised adjusted earnings per ordinary share
Adjusted earnings (GBPm) 62.8 66.9
Basic number of ordinary shares as at 31 December(2)
(million) 228.0 193.8
Normalised adjusted earnings per ordinary share
(pence) 27.5p 34.5p
Normalised adjusted diluted earnings per ordinary
share
Adjusted earnings (GBPm) 62.8 66.9
Diluted number of ordinary shares as at 31 December(2)
(million) 228.0 203.2
Normalised adjusted diluted earnings per ordinary
share (pence) 27.5p 32.9p
1. Additional ordinary shares issued as a result of the share split conducted in 2018 have been incorporated in the earnings per share calculation in full without any time apportionment.
2. The basic and diluted number of ordinary shares as at 31 December have been used as the basis for the current year normalised EPS calculation. This represents an indication of the future weighted average number of ordinary shares for evaluating performance of the Group. The comparative number of ordinary shares reflects the share split conducted in 2018 in full without time apportionment. The prior year comparative number of basic and diluted ordinary shares represents the weighted average quantity of shares in issue during the year ended 31 December 2017 (see note 9).
Net debt
2018 2017
GBPm GBPm
-------------------------------------------------------- -------- --------
Opening cash and cash equivalents 167.8 101.7
Cash inflow from operating activities 222.6 344.0
Cash outflow from investing activities (306.3) (346.6)
Cash inflow from financing activities 57.8 69.9
Effect of exchange rates on cash and cash equivalents 2.7 (1.2)
-------- --------
Cash and cash equivalents at 31 December 144.6 167.8
Borrowings (704.1) (840.9)
-------- --------
Net Debt (559.5) (673.1)
Preference shares (re-designated as part of
the IPO process) - 255.9
IPO and other one-off cash adjustments 38.6 -
-------- --------
Adjusted Net Debt (520.9) (417.2)
-------- --------
Adjusted EBITDA for the period ended 31 December 247.3 206.5
Adjusted leverage 2.3x 3.3x
Adjusted leverage (excluding IPO and other one-off
cash adjustments) 2.1x 2.0x
Return on Invested Capital
2018 2017
GBPm GBPm
-------------------------------------------------------- -------- --------
Adjusted operating profit (EBIT) 146.9 124.5
Tax credit/(charge) 0.6 (3.6)
-------- --------
Adjusted operating profit after tax 147.5 120.9
Senior Secured Notes 590.9 570.2
Unsecured loans 1.4 1.3
Current loans and borrowings 99.4 13.5
Non-current loans and borrowings 12.4 -
Preference Shares - 255.9
-------- --------
Gross Debt 704.1 840.9
Total Shareholders' equity 449.4 136.1
-------- --------
1,153.5 977.0
-------- --------
Return on Invested Capital 12.8% 12.4%
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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